Posts Tagged: "Article I"

James Madison — the fourth President of the United States and the father of the U.S. Constitution — wrote the usefulness of the power granted to Congress in Art. I, Sec. 8, Clause 8 to award both patents and copyrights will scarcely be questioned… There is little doubt that patents were viewed by both Washington and Madison to be centrally important to the success of the new United States. The importance is only underscored by the fact that the only use of the word “right” in the U.S. Constitution is in reference to authors and inventors being granted exclusive rights. In other words, the only “rights” mentioned in the Constitution are patents and copyrights.

69% of cases reaching a final decision by the PTAB have all claims invalidated. 82.5% of patents reviewed by PTAB in a final decision are found defective… As the facts laid out in this article show, the PTAB is substantially more likely to find patents to be defective than a Federal District Court. This reality is a significant problem for patent owners, and should be a serious concern for anyone at all concerned with separation of powers. Even after prevailing in Federal District Court, and even after prevailing at the Federal Circuit as VirnetX had done, the PTAB can still invalidate claims already adjudicated as valid by an Article III tribunal. If patents are to be considered any kind of property right (as the statute says) title must at some point quiet, and an Article I administrative tribunal simply cannot have the power to overrule an Article III tribunal. If patent owners cannot have full faith and confidence in the patent granted by the Federal Government, and they similarly cannot have full faith and confidence in a final adjudication by the federal courts, how can they be expected to invest the millions, and sometimes billions, required to bring technology to the marketplace?

As we mark the close of yet another year, we’re provided with a perfect opportunity to look back on the previous twelve months and see what has transpired. No one could call it a good year for patent owners (except those with the largest pockets, of course) starting with the United States’ 10th-place ranking among national patent systems in the U.S. Chamber of Commerce’s IP Index, and it didn’t appear as though any weaknesses in uncertain patentability across the U.S. technological landscape were addressed in a positive manner this year. It’s inevitable that the ball will drop on New Year’s Eve and calendars everywhere will turn from 2017 to 2018. Whether the U.S. federal government will be able to stop the death knell sounding doom for our nation’s patent system, however, is still anyone’s guess and it seems far from likely.

After oral arguments were held on Monday, November 27, 2017, I again asked a number of industry insiders what thoughts and predictions they now have after having the benefit of hearing the Q&A that took place between the Justices and the attorneys representing the petitioner, respondent and federal government. Their answers follow, and show that there is little agreement among those watching this case with respect to what the likely outcome will be.

If wrongly decided, Oil States Energy Services v. Greene’s Energy Group may be the next Kelo v. City of New London decision. At bottom, the case will decide whether patent rights – which are enshrined in our Constitution – are fundamental private property rights, or something less. If the Court adopts the latter perspective, it would radically change the American view of property rights and endanger an innovation edge enjoyed by American companies and consumers alike… Conservatives must be vigilant about the importance of the Oil States case and understand what is at stake. We do not want to wake up on the morning after this decision and find, just as we did after the Kelo decision, that more of our property rights are slipping away. The Supreme Court must uphold our constitutional patent rights and end the administrative usurpation of this judicial responsibility. Our constitutional principles, and the future of American innovation, depend on it.

Justice Gorsuch seems the most likely, based on his questions, to support the petitioner’s position that there is a constitutional infirmity surrounding IPR proceedings. Chief Justice Roberts also seemed to have substantial concerns with respect to IPR proceedings. Perhaps somewhat predictably, Justice Breyer and to a lesser extent Justices Sotomayor and Kagan, seemed through their questions to view IPR proceedings as just another opportunity for the Patent Office to make sure the correct determination has been reached at the time the patent was granted by the Patent Office. Justice Kennedy overall seemed more in line with the thinking of the liberals on the Court, Justice Ginsberg asked difficult questions and seemed difficult to predict how she might rule. Justice Thomas characteristically remained silent, although his judicial philosophy would be typically in line with Justice Gorsuch. Justice Alito asked only a few questions of the petitioner’s counsel, Allyson Ho, which focused on whether the Constitution requires a Patent Act and whether Congress could put limitations on the grant of “these monopolies.”

The United States Constitution grants to the Congress the power to grant patents. The relevant portion of the Constitution is Article I, Section 8, clause 8. This clause uses of the word “Right” and is the only place in the Constitution the Founding Fathers actually used the word “Right.” Yet today the Supreme Court is poised to determine whether this most fundamental of all rights, a right deemed so important that it was the only right specifically mentioned in the Constitution itself, is a private right or a public right that can be stripped with proceeding in an Article III federal court.

Only Article III courts can provide a fair, neutral and unbiased forum for assessment of patent validity. For over two hundred years, patent validity, patent infringement and patent damages have been consolidated to be heard in federal district courts. Federal courts supply impartial judges that are immune from influence by the executive or legislative branches. Furthermore, federal courts supply jury trials that enable a fair application of due process rights in the hearing of a patent dispute. Patent validity review is only a single component of patent infringement cases and it is efficient to have this component of the matter reviewed in a single matter.

The PTO systematically administers a collection of procedures in IPRs to unduly harm patent holders and benefit big tech company infringers. The data show that the plain result of PTAB procedures appears to benefit infringers with a clear bias against patent holders. PTAB cancels challenged claims in 76% of instituted patent reviews, a rate that is 2 ½ times greater than in the federal district courts. The reason is that PTAB employs a set of procedures that stacks the deck against patent holders. There is clear bias at every step of the process of reviewing patent validity. However, there are several components of PTAB procedures that are particularly onerous and problematic and that go to the heart of the due process issues that infect IPRs.

Due process is an essential condition for a fair proceeding involving a matter in which property rights are in dispute. Unfortunately, there is no interpretation of PTAB procedures under which due process applies. PTAB omits due process and is fundamentally unfair. As a consequence, the PTAB conclusions, and the structure and process of PTAB determinations, are unconstitutional.

The argument that patents are private rights is supported by over two centuries of jurisprudence. Patent rights derive from Article I, section 8, clause 8 of the U.S. Constitution, which empowers Congress to promote progress by creating laws involving patents and copyrights. The patent bargain exchanges disclosure of new and useful inventions for a limited term exclusive right. The public benefits from the patent bargain in two ways. First, the disclosure enables others to build on the invention. Second, after a twenty year period, the public receives the benefits of the invention for free as the rights flow to the public domain. The patent bargain stimulates incentives to invent, to invest in innovation and to take ex ante risks.

There appears to be a consistent pattern of public rights cases from Murray’s Lessee to Stern. Congress may establish a public right, separate from actions that affect the federal government, that involves an action related to protection of the public, such as health or welfare, and may establish an executive tribunal in which to adjudicate these rights. An Article I tribunal may adjudicate these public rights, primarily by advancing a fact-finding role, but within the constraints of consent, due process and review by an Article III court. On the other hand, private rights or rights involving matters between private parties that have been adjudicated in common law in Article III courts will continue to be resolved only in the federal courts. A right to a jury to hear facts in federal courts will be maintained in those disputes between private rights involving private parties.

The modern public rights jurisprudence flows from Atlas Roofing in 1977 to Stern in 2011. Although the case law does not provide a straight line, there is a consistent pattern illustrating the clear constraints of administrative agency adjudication. These constraints include consent of the parties, due process and review by Article III courts. Without these elements, according to a continuous line of Supreme Court jurisprudence, administrative proceedings are illegitimate and unconstitutional. Stern is the governing precedence on the issue of the public rights doctrine, with the composition of the Court today substantially identical to that of the Stern Court.

The Crowell Court distinguishes between matters of common law adjudicated in the federal courts and matters that may be reviewed in administrative agencies. However, the Court is concerned mainly with the maintenance of due process in administrative tribunals… The Crowell Court is thus concerned about the “essential demands of due process” and the limits of federal government authority. Enabling administrative tribunals to act merely as finders of fact, within the bounds of due process, and allowing for their findings to be reviewed in Article III courts, the issue of separation of powers is prominent in the preservation of the independence of the judiciary.