Markman Advisors
Patent Valuation, Monetization and Investments

Blog

Intellectual Property

Are patents public rights? A summary of the Respondents argument in Oil States.

 

Zachary Silbersher
Markman Advisors, LLC

The Supreme Court is scheduled to hear oral argument on November 27, 2017 in Oil States Energy Services v. Greene’s Energy Group.  The case is shaping up to be one of the most important patent decisions expected to issue from the Supreme Court in years.  Those arguing that IPRs are constitutional recently filed their briefs, including the USPTO, DOJ and the Respondent, Greene’s Energy (collectively, the Respondents).  What is their argument?

The question presented by this case is simple:  are IPRs constitutional?  Yet, the real question is more abstract:  are patents private rights or public rights?  Oil States has argued that IPRs are unconstitutional because the right to a patent is a “private” right.  The Constitution requires private rights to be adjudicated by an Article III judge, and in some cases decided by a jury,  whereas IPRs are presided over by Administrative Law Judges without recourse to a jury.

One could ask what the fuss is over Article III judges?  After all, the ALJ’s who preside over IPRs at the Patent Office are pedigreed attorneys with decades experience litigating patents.  They are specialized judges uniquely equipped with the training and experience to address the often hairy issues presented in deliberating the validity of patent.  Aren’t they exactly the sort of expert we want deciding these issues?

The short answer is that the fuss is all about due process.  Due process, which is embodied in the Constitution, is essentially the right to be heard and contest the Government’s deprivation of your right before it happens.  That is basically the thrust of the Fourteenth Amendment.  The amount of due process required is typically commensurate with the severity of the right being taken from you.  If you are on trial for murder, then due process dictates a jury can only convict if persuaded beyond a reasonable doubt of your guilt.  By contrast, if you are being sued for damages in a slip-and-fall case, where only your money is at stake, much less due process is required. 

Thus, for the adjudication of “private” rights, due process demands an Article III judge.  Article III judges enjoy lifetime tenure and protection against salary reduction.  This, in theory, affords partiality required to comport with due process.  (This is not an irrelevant concept, especially given that alleged conflicts at the PTAB undoubtedly raise due process concerns.)  Yet, the entire scheme that rights must be adjudicated by an Article III judge technically only applies to “private” rights.  That is why Oil States argues that a patent is a “private” right that belongs to the inventor.  By contrast, the Respondents argue that patents are not actually “private” rights, but instead “public” rights.  If they are “public” rights, an Article III judge is not required, and the ALJs at the PTAB can permissibly take away your patent without violating the Constitution.

The distinction between private and public rights is undoubtedly an abstract and slippery one.  Private rights are typically those that existed at common law affecting personal life, liberty or property.  At its most extreme, the right to your life, if you’re on trial for murder, is an indelible private right.  The right to protect your property against trespass or conversation is also a private right, no matter how that property manifests.  (In other words, “property” does not have to be tangible.) 

By contrast, “public” rights are typically those created pursuant to a Federal Government action.  In the case of patents, the argument goes, the Constitution gives Congress the power to grant patents to promote arts and sciences.  Yet, that right, the Respondents argue, did not exist at common law and is not a natural right.  Rather, it exists only because Congress created it.  That is unlike, say, the right to your life or your property, which existed at common law, and more importantly, presumably existed before any laws.

Viewed through that lens, the Respondents argue there is nothing unconstitutional about IPRs.  Congress was expressly given the power to grant patents within the Constitution.  Congress has delegated that power to a federal agency, namely, the USPTO.  Any “right” to a patent therefore derives directly from a Federal Government action, and by that token, it is a public right.  In other words, patents do not embody a natural right of the inventor to exclude others from using his or her invention.  Rather, a patent only exists because Congress has expressly provided for it. 

Taking the argument even further, Respondents argue that the lord giveth and the lord taketh away.  Thus, to the extent that patents only exist by virtue of Congress bestowing that privilege, they are equally subject to revocation without implicating the Constitution (or more specifically, the Fourteenth Amendment.)  Congress has empowered the USPTO to issue patents, but also to revoke them in the event an error was made, when after a second look, the claims do not satisfy the criteria for patentability.  That is all that IPRs are, Respondents argue.  Indeed, they are part of a history of different post-grant review procedures, including ex parte and inter partes re-examination, that have been revoking previously-issued patents in the absence of an Article III judge for decades. 

According to the Respondents, the fact that IPRs may resemble litigation, rather than typical examination, is a matter of form, not substance.  It cannot denigrate the fact that the inherent nature of a patent right remains public, rather than private.  Indeed, by permitting challengers to the validity of a patent to participate in an IPR, that only increases the efficiency and rigor of the decision eventually made.  Technically, Congress could have provided for the public’s right to comment on the purported patentability for every filed patent application before issuance.  That, Respondents argue, would be inefficient and burdensome.  (That said, it would probably greatly improve the quality of issued patents and redeem the esteem that the United States patent system has lost.)  Instead, IPRs act as an efficient error-correcting mechanism that helps the USPTO—the very agency delegated with the power to issue patents—to weed out invalid patents that should not have been granted in the first instance.

In sum, that is essence of the argument that IPRs are constitutional.  Whether the Supreme Court will buy it remains to be seen.  Indeed, the trouble with these arguments, on both sides, is that it is all so incredibly abstract, and application of the “public” versus “private” right framework to patents makes it more so.  For instance, Respondents argue that patents are presumably “public” because they are created pursuant to a Federal Government action.  That sounds true enough, yet it’s still slippery.  One could also argue that private property only exists because the Government has enacted mechanisms for enforcing and protecting it.  Absent that government action, any practical right to property does not really exist.  Taking another argument, Respondents argue that there is no inherent or natural right to a patent, at least not before Congress granted that right.  That also sounds true enough, but is it?  Is there not an inherent or natural right to your ideas or the inventions?  Did nothing of that sort exist at common law?  Is the right to your ideas or inventions any different than the right to your property?  Indeed, in the absence of Congressional action, wouldn’t almost all forms of private property collapse?

These are tough questions, for which they are likely no actual answers.  Despite that, like many instances in the law, there will nonetheless be a decision.  Looming over the abstract discussion about public versus private rights of patents will undoubtedly be larger policy considerations. That will include pragmatic questions addressing what the ramifications will be if IPRs are deemed unconstitutional.  We previously addressed some thoughts on this question here.  The oral argument on November 27, 2017 is likely to provide greater insight into how the Supreme Court is considering this very important decision.