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A Goliath Story: Challenging the Constitutionality of IPRs

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Post issue review processes like inter partes review (IPR) were touted during drafting passage of the America Invents Act (AIA) as the perfect tool to combat the plague of non-practicing entities, more commonly known as patent trolls.  However, reality turned out to be much different than what was intended by lawmakers.  When challenged by IPRs, patent holders have had a nearly insurmountable barrier to overcome and maintain their hard earned patent coverage.

At least two entities are hoping to change the bleak outlook.  Separate cases have been filed both with the Federal Circuit and with the 4th Circuit challenging the constitutionality of the post issue proceedings.  First, in MCM v. HP, the patentee MCM lost on the merits during an IPR proceeding instigated by HP.  MCM immediately appealed to the Federal Circuit, asking the court to find the IPR unconstitutional for violating the 7th Amendment rights of patent holders.  MCM as stated the question presented as “[w]hether actions to cancel or revoke a patent must be tried in Article III Courts with access to a jury under the Seventh Amendment to the United States Constitution.”

In support of its position, MCM relies on an 1898 Supreme Court decision which, in part, states,

[W]hen a patent has received the signature of the Secretary of the Interior, countersigned by the Commissioner of Patents, and has had affixed to it the seal of the Patent Officeit has passed beyond the control and jurisdiction of that office, and is not subject to be revoked or cancelled 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.

McCormick Harvesting Mach. Co. v. Aultman, 169 U.S. 606, 609 (1898).  Under this precedence, MCM looks to invalidate all post-issuance proceedings for violation of the Constitution.

Similarly, in the case Cooper v Lee, Cooper is seeking to invalidate IPRs as unconstitutional in the light of cited authority on property rights as well as against the 7th Amendment.  Unlike MCM, Cooper did not wait for the PTAB’s ruling; but filed its lawsuit as soon as Cooper’s patents were challenged with IPR.  The Eastern District of Virginia dismissed the case because Cooper had not “exhaust[ed] administrative remedies.”  Cooper has appealed to the 4th Circuit and makes many of the same arguments as MCM.  Also relying on McCormick Harvesting, Cooper seeks to assert that the PTAB has no constitutional authority to invalidate the patents post-issue.  In a call for amici curiae briefs, the attorney for Cooper, Robert Greenspoon, further cites to McCormick to say “[t]he 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.”

Both MCM and Cooper have loaded up on with heavy ammunition to challenge to troubled post-issuance system.  However, the PTO is unlikely to back down as caselaw exists which could be interpreted to support the constitutionality of the new proceedings, namely that ex parte examinations are constitutional and of a kind with IPRs.  As the Circuits grapple with this novel issue before them, it is entirely possible that the Supreme Court will once again step in and create waves within a patent law system still recovering from the tsunamis delivered in recent months.



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