Patent Validity Review in an Article I Tribunal is Unconstitutional Under the Public Rights Doctrine

Abstract

In 2011, Congress passed legislation authorizing the Patent and Trademark Office (PTO) to institute an inter partes review (IPR) of issued patents. Congress sought to solve a problem driven by a narrative that criticized low patent quality and suggested that the solution would be after grant patent reviews in the PTO. This experiment in patent validity review in the PTO, an executive agency, and the Patent Trial and Appeal Board (PTAB), an Article I tribunal in the PTO, has been unsuccessful. The evidence shows that 76% of patents in which a patent review is instituted result in cancellation of challenged claims in the PTAB, compared to 28% of patents invalidated in U.S. district courts. The main reason for the disparity in patent invalidity rates lies in the application of low standards for due process in the PTO. Unlike in the Article III courts, which maintain high standards for due process, PTAB sustains minimum standards of due process. The justification for patent validity review in an executive agency lies in Congressional power to establish an Article I tribunal to resolve matters that may involve a public right. The public rights doctrine is specified in a line of Supreme Court cases from Murray’s Lessee (1856) to Stern (2011). While a strong case can be made that patents embody private property rights, that patent disputes are between private parties and that patents are adjudicated in common law in federal courts by judges and juries, even if one grants the argument that patent validity review in an Article I tribunal may be made according to the public rights exception jurisprudence, the actual procedures employed by PTAB illustrate that IPRs are unconstitutional according to any standard of application of the public rights doctrine. The chief constraints of the public rights doctrine involve consent and due process by an Article I tribunal and review of tribunal determinations by an Article III court. None of these features are present in the PTAB review of issued patents. In fact, the PTAB has shown a massive number of institutional abuses of IPRs that have undermined its legitimacy and negated its determinations. This paper elucidates the public rights doctrine by reviewing in detail the Supreme Court jurisprudence. The argument is advanced that even if the public rights doctrine is applicable – an assumption that is historically unjustified in light of the application of private rights in common law to patent validity review in the last two hundred and twenty five years – the PTO and the PTAB do not satisfy any of the public rights tests of legitimacy. Consequently, the review of patent validity in an Article I tribunal such as PTAB is unconstitutional. The Court should restore the exclusive domain for patent validity review to Article III courts in order to preserve the independence of the judiciary and the separation of powers.