Federal Circuit Finds IPRs Constitutional

| Kerry S. Taylor, Ph.D.

Yesterday, in MCM Portfolio LLC v. Hewlett-Packard Company, the Federal Circuit found inter partes reviews constitutional.

HP filed for inter partes review (IPR) of several of the claims of MCM’s patent.  MCM argued that IPRs are unconstitutional for violating Article III and the Seventh Amendment because any action revoking a patent must be tried in an Article III court with the protections of the Seventh Amendment.  MCM based this argument on McCormick Harvesting Machine Co. v. Aultman (“McCormick II”), 169 U.S. 606, 612 (1898), where the Supreme Court concluded that any “attempt [by the Commissioner of Patents] to cancel a patent upon an application for reissue when the first patent is considered invalid by the examiner . . . would be to deprive the applicant of his property without due process of law, and would be in fact an invasion of the judicial branch of the government by the executive.”  The Patent Trial and Appeal Board (PTAB) rejected this argument, and MCM appealed.

The Federal Circuit rejected MCM’s constitutionality argument, pointing out that the McCormick case was not an interpretation of Article III and that Congress had specifically granted to the Patent and Trademark Office (PTO) authority to correct and reconsider its own decisions.  The court noted that the Federal Circuit had also addressed and rejected a similar argument challenging the constitutionality of the ex parte reexamination statute in Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985), modified on other grounds on reh’g, 771 F.2d 480 (Fed. Cir. 1985).  The court further analogized PTO review of patents to other executive branch agencies who adjudicate decisions without violating Article III.

What This Means

The Federal Circuit’s decision affirms the constitutionality of the post-issuance proceedings brought in by the American Invents Act.  A reversal of the PTAB could have brought about drastic consequences in which all PTAB proceedings could have been nullified.  However, unless this decision by the Federal Circuit is reversed en banc or by the Supreme Court, the PTAB proceedings will continue as they have since their inception.