Amici Urge Supreme Court to Grant Celgene’s Petition on Constitutionality of Retroactive IPRs

On March 31, 2020, Intellectual Property Law Professors Gregory Dolin of the University of Baltimore School of Law, Kristen Osenga of the University of Richmond School of Law, and Irina D. Manta of the School of Law at Hofstra University (the Professors) filed an amicus brief in support of the Celgene Corporation’s petition for writ of certiorari to take up Celgene Corp v. Peter on appeal from the U.S. Court of Appeals for the Federal Circuit (CAFC).  In Celgene the CAFC addressed the applicability of the Takings Clause of the Fifth Amendment to inter partes reviews (IPRs), holding “that the retroactive application of inter partes review (IPR) proceedings to pre-America Invents Act (AIA) patents is not an unconstitutional taking under the Fifth Amendment.”

Celgene Revisited

Celgene involved IPR challenges to two patents, U.S. Patent No. 6,045,501 and U.S. Patent No. 6,315,720, which were directed to methods of safely providing teratogenic agents to patients without risking distributing the drug to patients who are pregnant or may become pregnant. The ‘501 and ‘720 patents were issued about a decade before the AIA’s effective date of September 16, 2012. The PTAB instituted review of the patents and invalidated as obvious all of the claims of the ‘501 patent and all but one claim of the ‘720 patent. On appeal to the CAFC, Celgene asserted that the Board erred in finding the claims obvious and argued that the retroactive application of IPRs constituted an unconstitutional “taking” of private property under the Fifth Amendment. The CAFC affirmed the PTAB’s obviousness finding and held that retroactive application of IPRs did not violate the Constitution. Celgene filed a petition for en banc rehearing, wherein it argued that the CAFC’s panel opinion is contrary to Supreme Court precedent and the issue addressed is one of national importance, but the CAFC denied en banc review.

Celgene’s Petition

On February 26, 2020, Celgene filed a petition for writ of certiorari with the Supreme Court, which presented the question of “whether retroactive application of inter partes review to patents issued before passage of the America Invents Act violates the Takings Clause of the Fifth Amendment.”  The petition set forth three reasons why review of Celgene was warranted: 1.) the question presented was important because the “AIA imposes a revolutionary change to the administrative patent system, a change that has eviscerated settled expectations in property rights in every patent in force that issued before the AIA”; 2.) the retroactive application of inter partes review violates the Constitution as it constitutes the taking of private property without compensation; and, 3.) Celgene “is a uniquely good vehicle for resolving the question presented” because the CAFC addressed the merits of this issue for the first time. Celgene emphasized that the AIA eliminated a patent owner’s right to claim amendments that existed under inter partes reexamination. Further, Celgene emphasized that retroactive application of the AIA is a taking since it is a “regulatory program that destroys all economic value in property.”

Intellectual Property Law Professors in Support of Celgene

The Professors’ amicus brief was based on their mutual concerns and interests in promoting and securing legal protection for patent owners and encouraging innovation. The Professors asserted that the Supreme Court should grant Celgene’s petition for a writ of certiorari because the question of whether there is an unconstitutional taking in the retroactive application of inter partes reviews is a question that affects “thousands of patents and its resolution calls into question the constitutionality of a federal statute.”  The Professors noted that IPR is signi?cantly different from pre-AIA reexamination, particularly since in reexamination, the patentee is free to amend its claims an unlimited number of times, but during IPR there is “no back-and-forth between the patentee and examiner seeking to resolve claim scope ambiguity; there is no robust right to amend.”  Citing Monsanto, the Professors stated that patent owners “disclosed data and information to the public in exchange for exclusive right to practice the disclosed invention and under an understanding that this right could be abrogated only upon clear and convincing evidence that it was improperly granted”, but the “AIA abrogated these guarantees and allowed cancellation of claims under a preponderance of evidence standard and absent an opportunity to amend the claims.”  According to the Professors, this is a “bait-and-switch” that constitutes a compensable taking under Monsanto.

The Professors also noted that their empirical research and the research of others support Celgene’s position that the retrospective application of IPR is a regulatory taking. They explained that 64% of cases in which the PTAB reached a final decision resulted in all claims being found unpatentable, which “confirms that IPR proceedings are extremely hostile terrain for patentees.”  The possibility of a patent later being declared invalid is a factor that must be considered when determining the economic value of a patent, the Professors explained. Thus, they concluded that “the retroactive imposition of the IPR scheme is a taking because it has a significant negative economic impact on patent owners and diminishes the value of patents, thereby upsetting the investment backed expectations of patent holders.”

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Author: zimmytws