The Supreme Court will soon hear a patent case in which the future of American innovation could be dramatically shifted.
Oil States Energy Services v. Greene’s Energy Group centers on whether an administrative body, called the Patent Trial and Appeal Board, may judge patent validity challenges.
This may seem down in the weeds, but the answer to the question before the court holds profound consequences. Two critically important matters hang in the balance. One is whether patents secure a private property right. The other is whether to allow a branch of government other than the judiciary to settle property disputes.
PTAB uses a proceeding created in the 2011 America Invents Act. “Inter partes” review gives private parties an administrative venue to fight out whether an issued patent is valid. Before the AIA, such disputes could only be resolved in federal court.
On the matter of property rights, if patents are private property, then patents carry certain fundamental ownership rights and no administrative tribunal may deprive the owner of that property. The Constitution reserves private property questions to federal court.
Throughout our history, inventions have been recognized as the private property of the inventor. Chief Justice John Marshall, in an 1813 circuit case, said a property right is “vested in the inventor, from the moment of discovery” — before a patent is issued. The property right is simply “perfected by the patent,” while the inventor has “indefeasible property in the thing discovered.”
Over the past two centuries, federal courts have repeatedly affirmed the private property right in one’s invention. For example, in 1897 the Supreme Court said, “The patentee … received nothing which he did not have without the patent.” A patent simply secures the right by making it enforceable as a property right.
Further, the court has drawn “no distinction between … a patent [for land] and one for an invention or discovery,” as it stated in 1869. The courts have long affirmed that private property interests in a patent do not differ from one’s private property rights in physical property.
The high court ruled in 2002 in Festo (and reiterated by citing that case in Nautilus v. Biosig in 2014) that a patent “is a property right.”
It’s critically important to maintain this property rights principle. Troublingly, the government has asserted that patents grant mere public rights. But “public rights” aren’t property rights at all. What the government giveth, the government can take away.
The second matter involves whether any government entity, other than a court in the federal judicial branch, can decide patent property rights disputes.
The Supreme Court in 1897 clearly answered this: “It has been settled by repeated decisions of this court that when a patent has … had affixed to it the seal of the patent office, it has passed beyond the control and jurisdiction of that office, and is not subject to be revoked or canceled by the president, or any other officer of the government. It has become the property of the patentee, and as such is entitled to the same legal protection as other property.
“The only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent.”
For an administrative officer or panel to deprive property rights abrogates the separation of powers, the checks and balances designed to protect citizens from government’s abuse.
The judicial branch affords property owners due process safeguards and application of the rule of law. The political branches don’t. These constitutional protections are sacrosanct.
The Patent Trial and Appeal Board has amassed a dishonorable record, with inter partes reviews derisively known as “patent death squads.” Federal courts cancel 30 percent of patent claims. In contrast, these reviews invalidate 76 percent of challenged patent claims.
An amicus brief in Oil States notes that these procedures “are plagued by what in any other forum would be considered to be ‘procedural irregularity.’” For example, PTAB reconstitutes panels mid-case to get a politically desired result. It doesn’t observe the statute of limitations. There’s no standing requirement, so anyone may seek an inter partes review, even for speculative financial gaming. The same claims can be repeatedly argued and the same patent can have its validity challenged both in real court and PTAB.
In conclusion, justice demands that the Supreme Court affirm in Oil States that patents secure private property rights and, thus, PTAB unconstitutionally deprives patent owners of their private property.
James Edwards is executive director of Conservatives for Property Rights.
If you would like to write an op-ed for the Washington Examiner, please read our guidelines on submissions here.
