Public vs. Private Rights: Another PTAB Distraction

We all remember the "Great BRI Debate" that was Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2143–44 (2016). PTAB critics argued that the Board's "broadest" claim construction rubric was unfairly stretching claims to embrace prior art — resulting in inevitable invalidity determinations. And that since the PTAB was now in the business of litigation, they must follow litigation claim construction practices deemed more favorable to patent holders (especially since the PTAB amendment process, the justification for BRI, was argued as illusory).

In reality, the difference between BRI and the district court Philips practices is the label used to reference each. Both constructions apply the ordinary and customary meaning of a claim term at the time of the invention from the perspective of one of skill in the art. The difference in outcomes is a simple reflection of expert agency's technical insight, not a meaningful difference in claim construction frameworks. For this reason, and many others, Cuozzo failed.

Attempts to derail PTAB trial proceedings still persist some 5 years into its life. These attempts now include recycling failed constitutional arguments against Article I adjudication practices.

Over the years the constitutionality of USPTO post-grant procedures have been repeatedly challenged. Typically, it is argued that the 7th Amendment's guarantee to a jury trial is inconsisentent with Article I adjudication. Most recently, the Supreme Court denied certiorari in two cases challenging the constitutionality of PTAB trial proceedings. MCM Portfolio LLC v. Hewlett-Packard Co. et al., and Cooper et al. v Lee et al. These cases largely presented the same constitutional challenge as that lodged against the USPTO's patent reexamination system in the 1980s, in Patlex Corp. v. Mossinghoff, 758 f . 2d 594 (Fed. Cir. 1985). That is, as a private property right, a patent may not be adjudicated by an Article I Court without violating the 7th amendment. As explained by the Federal Circuit in MCM, patent validity is found to fall within the "public rights exception," permitting adjudication before non-Article III tribunals.

The debate as to whether a patent is purely a private right or public right has continued. Last week en banc review of the MCM was denied (here) in Cascades Projection v. Epson and Sony, but a pending petition for certiorari in Oil States Energy Services v. Greene’s Energy Group also remains (gov't brief here).

While it seems clear that neither the Federal Circuit nor the Supreme Court are the least bit uncomfortable with Article I adjudication of patent rights — as practiced for decades at both the ITC and USPTO— the academic distraction of whether a patent is truly a private right, or something in between private and public rights, remains.

Today's debate centers around a 19th century Supreme Court decision, McCormick Harvesting Mach. Co. v. Aultman-Miller Co., 169 U.S. 606 (1898). In Harvesting, the Court considered whether a patent resissue filing could result in the cancellation of originally issued claims if the reissue application were abandoned. Stated another way, would the original claims stand as valid even though the patent examiner found them unpatentable during the now abandoned reissue proceeding?

In upholding the validity of those claims, the high court explained:

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.

Divorced from context, this quote is cited for the proposition that patent validity is the sole province of the courts, and can never be properly delegated to an Article I court.
Not so fast.

First, Harvesting was a discussion of patent reissue at a time in history where no PTO post-grant challenges existed. So, of course, the only authority at that time was the courts. (i.e., no enabling statute existed for the examiner in Harvesting to have cancelled claims of an issued patent). Harvesting was a decision on statutory authority, nothing more. Patent reissue, to this day, operates the exact same way with respect to claim surrender. While a patent examiner is free to reject originally issued claims in reissue proceedings, a reissue applicant is free to abandon the proceeding without surrendering those original claims. Since Harvesting, of course, Congress has created numerous post-grant patent challenge mechanisms, starting in the 1980s with patent reexamination.

Patlex decided that patent reexamination was a proper challenge to validity delegated to an expert administrative agency by Congress. In an attempt to distinguish Patlex, as was tried in Cuozzo, it is argued that AIA trial proceedings are litigation-like, and that examiner based proceedings are somehow different — nonsense. While patent reexamination begins with an examiner, it ends at the Board. The Federal Circuit affirms the Board; this is a distinction without a difference. There is no meaningful way to distinguish Patlex as to USPTO procedures.

Ultimately, one is left going back to the original question, is a patent a private or public right? The correct answer is that a patent has components of both private and public rights.

The proper definition of how a government issued (intangible) property right should be classified with respect to public vs. private right is best enunciated in B&B Hardware, Inc. v. Hargis Indus., Inc.,135 S. Ct. 1293, 1316-17 (2015) (Thomas, J., dissenting), which described the idea of a "quasi-private right":

[T]rademark registration under the Lanham Act has the characteristics of a quasi-private right” and that, because registration is a “statutory government entitlement, no one disputes that the [Trademark Trial and Appeal Board] may constitutionally adjudicate a registration claim.” Id. at 1317. But the “right to adopt and exclusively use a trademark appears to be a private property right . . .

(emphasis added)

In my view, the B&B delineation between infringement (private right) and validity (public right) is the most sensible. To the extent the Supreme Court or CAFC ever take up this debate again, it will be to clarify this principle, not to unravel a half century or more of Article I adjudication practices.

Scott A. McKeown is an author of the Patents Post Grant.