“In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved…” unless the controversy involves the validity of a patent as determined by the Patent and Trademark Office (PTO). A patent is commonly referred to as a property right, thus the term intellectual property, but unspoken is the important distinction that a patent is a matter of public right and therefore its validity can be delegated to non-Article III courts where the Seventh Amendment does not always apply.
The constitutionality of the post-grant review process, in particular inter partes review, was recently challenged and upheld by the Federal Circuit in MCM Portfolio LLC v. Hewlett-Packard Company, No. 2015-1091 (Dec. 2, 2015). The Appellant and patent holder urged the Panel that such a review capable of revoking a patent must be tried in district court under the protections of the Seventh Amendment right to a jury trial. The Federal Circuit disagreed, explaining that “Congress has the power to delegate disputes over public rights to non-Article III courts.”[1] Although the public rights exception is typically applied to disputes involving the government, it has been extended to disputes between private parties concerning a matter of public rights.[2] Relying on a case upholding the constitutionality of binding arbitration provided by a federal statute, the Panel agreed that “Congress, acting for a valid legislative purpose to its constitutional powers under Article I, may create a seemingly ‘private’ right that is so closely integrated into a public regulatory scheme as to be a matter appropriate for agency resolution with limited involvement by the Article III judiciary.” [3] A right is deemed “public” when it “flows from a federal statutory scheme,” are “completely dependent upon adjudication of a claim created by federal law,” and involve “a situation in which Congress devised an expert and inexpensive method for dealing with a class of questions of fact which are particularly suited to examination and determination by an administrative agency specially assigned to that task.”[4]
The grant of a patent by the US government is primarily a public concern; therefore, post-grant review of patents granted by the PTO is a process that involves a public right.[5] Congress created the PTO and delegated to it the power to issue patents, so “[i]t would be odd indeed if Congress could not authorize the PTO to reconsider its own decisions.”[6]
The continued viability of post-grant review in general, and inter partes review in particular, leaves defendants of patent infringement suits a large weapon in their arsenal to challenge the patent owner on two fronts—before the district court and at the PTO.
[1] MCM, at 10.
[2] Id.
[3] Thomas v. Union Carbide Agricultural Prod. Co., 473 U.S. 568, 593-94 (1985).
[4] MCM, at 11-12 (citing Stern v. Marshall, 131 S.Ct. 2594, 2614-15 (2011)).
[5] Id. at 13 (citing Patlex Corp. v. Mossinghoff, 758 F.2d 594, 604 (Fed. Cir. 1985))
[6] Id. at 12.
