Amicus Curiae Brief — Oil States Energy Servs., LLC v. Greene's Energy Grp., LLC, 138 S. Ct. 350 (2017) (No. 16-712)

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Text

ii, _

FILED

No. 16-712 AUG 31 2017

‘ ———— aaa, HE CRETE

onare IN THE _

Supreme Court of the Anited States

OIL STATES ENERGY SERVICES, LLC,

Petitioner,

GREENE’S ENERGY GROUP, LLC, £7 AL.,

Respondents.

On Writ of Certiorari

to the United States Court of Appeals

for the Federal Circuit

BRIEF OF THE PHARMACEUTICAL RESEARCH

AND MANUFACTURERS OF AMERICA AS

AMICUS CURIAE IN SUPPORT OF PETITIONER

JUSTIN B. WEINER JEFFREY A. LAMKEN

MoOLOLAMKEN LLP Counsel of Record

300 North LaSalle St. Eric R. NITz

Chicago, IL 60654 JAMES A. BARTA

MOLOLAMKEN LLP

JAMES C. STANSEL The W Suite 660

DavID E. KORN 600 New Ave., N.W.

PHARMACEUTICAL W. n, D.C. 20037

aoettiadromes OF (308) =

ne jlamken@mololamken.com

950 F Street, N.W.

Suite 300

Washington, D.C. 20004

Counsel for Amicus Curiae

QUESTION PRESENTED

Whether iter partes review-—an adversaria! process

used by the Patent and Trademark Office (PTO) to

analyze the validity of existing patents—violates the

Constitution by extinguishing private property rights

through a non-Article III forum without a jury.

(i)

TABLE OF CONTENTS

Interest Of Amicus Curiae ..........0.00seceserssesssseseresecesees

I. American Law Has Long Regarded

Patent Rights as Private Property—Not

Purblic Rights ........0.c..cc.cceccccsecssesscensnesversseeereness

A. For Centuries, the Courts,

Congress, and Commentators Have

Understood That Issued Patents

Are Private Property ...........c0cccecseeeeeeeeees

B. Common Sense Compels the

Conclusion That Patents Are

Private Property Rights............:.:ce

C. Analogous Areas of Law Confirm

That Issued Patents Are Private

D. The Federal Circuit Improperly

Conflated the Process of Patent

Issuance with the Status of Issued

I sslgcusantdoersduennivniepamnagaieinanten

Il. Constitutional Policy Recognizes Patents

as Individual Property. ................-:.-s.sssesseeseees

ITT. Reversal Is Warranted ...............--.00.020-.-se0000:.

aan ao di ceedeanseseravennianieoneas

(ili)

Page

TABLE OF AUTITORITIFS

Page(s)

CASES

Alden v. Maine, 527 U.S. 706 (1999) .........--..000 1]

Atlas Roofing Co. v. Occupational Safety

& Health Review Comm'n,

Ie Ri Oe RO itsctsnnsticsietascinciniticions 3, 7,14

BEP vy. Resolution Tr. Corp., 511 U.S. 531

Lie ascesecisinienieiiinceiiehainianssinensettenasitcaitalh Hiakinbpttotegienate 29

Brown v. Duchesne, 60 U.S. (19 How.) 183

ERS a Ae alae Ae Since En a EE 15

Butler v. Pennsylvania,

Be ech Ce OF CONE Posse sccecdeccanceoccceonns 16

Cammeyer v. Newton, 94 U.S. 225 (1877)......... 8,15

Cuscades Projection LLC vy. Epson Am.,

Tnc., 864 F.3d 1309 (Fed. Cir. 2017) ..0000..0000.... 22

Cleveland v. United States, 531 U.S. 12

RR hc aates Spee neat PN Sd TS yap me

Clevelund Bud. of Educ. v. Loudermill,

Ee is Ge Caio rccc cela bcreccniirasiecemmecibene 26

Coll. Sav. Bunk v. Fla. Prepaid

Postsecondary Educ. Foapense Bd.,

a et 14

Colorado v. New Mexico, 467 U.S. 310

Tne Aiba Batts a3 wna teas PES A 29

Commodity Futures Trading Comm'n v.

Schor, 478 U.S. 833 (1986) ...............0000---s000 27, 32

Consol. Fruit-Jar Co. v. Wright,

SE inate cisatcnctinsonecesmeiames 200

TABLE OF AUTHORITIFES—Continued

Page(s)

Cout'l Paper Bag Co. v. E. Paper Bag Co.,

I Eee i iteticestintionnnccernscresescostnomensan sets 14

Coombes v. Getz, 285 U.S. 434 (1982) .....--- ee 16

Creede & Cripple Creek Mining &

Milling Co, v. Uinta Tunnel Mining &

Transp. Co., 196 U.S. 337 (1905) ......-eeccereeees 18

Curtis v. Loether, 415 U.S. 189 (1974) 0... 32

Dolan v. City of Tigard, 512 U.S. 374

Ci icsecssncntdnescusisatenenncsinsgnsensaveininmeatasnmissecvesetos 14

Eldved vy, Ashcroft, 537 U.S. 186 (2003) ...........-+ 19

Ex parte Bakelite Corp., 279 U.S. 438

RIN a circ nadie ccneseuscsosihisieanincomtaipvabniinaiooneedeioobee 14

E.c parte Wood, 22 U.S. (9 Wheat.) 603

Se aisicrccuesesiestassabteniuenintinnseniateiiincwiniiniaibnesennte 8, 10

Feltner v. Columbia Pictures Television,

yk by ee 10, 19

Fla. Prepaid Postsecondary Educ.

Ezepense Bd. v. Coli. Sav. Bank,

gle . g) | SRN orors 7, 15, 32

Fox Film Corp. v. Doyal, 286 U.S. 123

(RSAC a alae EE SE 20

Fresenius USA, Inc. v. Baxter Int'l, Inc.,

T21 P.B4 1EB0 CPOs. Cir. BOD) .0ccceoececcssrerse0e- 25

(rutierrez-Brizuela v. Lynch,

834 F.3d 1142 (10th Cir. 2016)..... 00... cece 25

Halstead v. Grinnan, 152 U.S. 412 (1894)........... 29

Horne v. Dep't of Agric., 135 8. Ct. 2419

oe a dicen adi ceanlahsioobentnecten 15

Hovey v. Henry, 12 F. Cas. 608

(CAC DD; Waa. SO ae = ncsniins ens cnsensevercecsnvescovee 8

TABLE OF AUTITORITIES—Continued

Page(s)

fron Silver Mining Co. v. Campbell,

UE Re Ne OD iis tarcpsssdsouticniinicisnoncdsonci 17, 18, 19

James v. Campbell, 104 U.S. 356 (1882) .............. 15

Johnson v. Towsley, 80 U.S. (13 Wall.) 72

1 ty SINISE TRC ae Wee ee EES pussim

Kimble v. Marvel Comics Kntm't, LLC,

Se i ns TE Ce iilicsicescntnsicceoniecticsoischacctcaicos 30

Lynch v. United States, 292 U.S. 571

RU cinss0adsdastltiandeie lind cteihearemdanubbinssdeirerenicbabincincshzdads 16

McClurg v. Kingsland,

42 US. (1 How.) 202 (1843).................. 9, 12, 15, 26

McCormick Harvesting Mach. Co. v.

Aultman, 169 U.S. 606 (1898)...00000000 0. 9, 19, 22

MCM Portfolio LLC v. Hewlett-Packard

Co., 812 F.3d 1284 (Fed. Cir. 2015).......... PASSsiI

Mich. Land & Lumber Co. v. Rust,

Ss I NI aincencnctinnctiinshinsetgniceeeckcotuinesinies 18

Moore v. Robbins, 96 U.S. 530 (1878) .......... 18, 24, 25

Murray's Lessee v. Hoboken Land &

{mprovement Co., 59 U.S. (18 How.) 272

SI icrslieisicsichshaciisncinesinssenibionipdesdineicebienesolosdetousoes 10

N. Alaska Envtl. Ctr. v. Lujan, 872 F.2d 901

I ici caeshecdiesircyasienasiccetitenntescn dace 18

Nidec Motor Corp. v. Zhongshan Broad

Ocean Motor Co., No. 16-2321,

F.3d —, 2017 WL 3597455

(RP iS PONIES IED cocceserciesccecadssnedosncessacere 33

Novartis AG v. Noven Pharm. Inc.,

853 F.3d 1289 (Fed. Cir. 2017) 0... cee cco ee 25

vii

TABLE OF AUTHORITIFS—Continued

Page(s)

Patiex Corp. v. Mossinghoff, 758 F.2d 594

Cad, Che, Pi iietesieiesenesasecstesseacentastsontetmasion 27

Plaut v. Spendthrift Farm, Luaec.,

B24 US. BET CHI scscaccecisnniise rsneniccesceisietancaesanenn 25

Printz v. United States, 521 U.S. 898

(SOT acca caswseesesvecsssnctecaserevociennineiianbaniapmenaentiass 11

Richmond Screw Anchor Co. v. United

Staten, 275 U.S. S81 (LGZR)......ccrscccorosseessvesese ses 16

SCA Hygiene Prods. Aktiebolag v. First

Quality Baby Prods., 1378. Ct. 964

(DET evevcsiecoxscocerteenssnsesncvensismabinannensentinateanmtanas 19

Seymour v. Osborne, 78 U.S. (11 Wall.) 516

(BIT inc ccccocacsssvcovcnsneccevincsenesteijusinasmmamiaamanammmet 8

Smelting Co. v. Kemp, 104 U.S. 636 (1880).......... 18

Soe’y for the Propagation of the Gospel in

Foreign Parts v. Town of New Haven,

21 U.S. (8 Wheat.) 464 (1828) ce eeeeeeeeceeee 9,16

Star Salt Caster Co. v. Crossman,

22 F. Cas. 1132 (C.C.D. Mass. 1878).......c00 14

Stern v. Marshall, 564 U.S. 462 (2011)........ pussim

United States v. Am. Bell Tel. Co.,

128 US. BIB (1GBB) .....ncccccvsicccssccseensnessessnscsconnsss 17

United States v. Am. Bell Tel. Co.,

LOT UG, BOG CEG sek vencrieresiisstaciiinistiicemnmnn 28

United States v. Beebe, 127 U.S. 388

CUI , caccccencseosnsencscnestsnniessestsieninieacnieetiiamanmnptannia’ 29

United States v. Maxwell Land-Grant Co.,

bi eis Se 24) (| ee 29

United States v. Schwrz, 102 U.S. 378

viii

TABLE OF AUTITORITIES—Continued

Page(s)

United States v. Stone, 69 U.S. (2 Wall.)

Whitney v. Hmmett, 29 F. Cas. 1074

i a, se rsncncbactonsene 9

Wyeth v. Stone, 30 F. Cas. 723

a ss eunenensotnonsbasee ~

CONSTITUTIONAL PROVISIONS,

STATUTES, AND RULES

a I I GE OD occ ccikccecnesecesecsecsss 13, 20, 29

TS SL SE 16, 26

TE A 24

EE 26

I I I ccs adstneenenensscnscoveceseons 24

ee hy UD MIU) acccccvcncessssssssssscsevesesvesenevse 24

a SEEN RE tle 24

EEE 24

i sc ennnsonmnanotones 23

i sceensttanesicusiosornven 23

8 ET 10

CE 4,14

a cseeuvennenwennonnes Reg

a cuandnpeuenannoveninine 28

EE a 28

ec selibenehiceamennenaneswonenennee 28

TABLE OF AUTHORITIES—Continued

Page(s)

ita caic ies cea cciceeciamaemamtnateal 28

Bey NID iciiscrasinsovmvedvoenitinaenencinesbeininetstnunttsioens 25

ha stccaccopnecnissmnsntihieshinctangpemmtnasennnnion 25

Patent Act of 1790, ch. 7, 1 Stat. 109.000.000.000... 10

a Te i coal eect ia aa 10

Patent Act of 1793, ch. 11, 1 Stat. 318........ 8, 9, 10, 12

Be Bi Bis Bia cceehctcnsderatsemsensevetineincentbstdnatatens 3,9

Bi ie EE docrissniooicensitiipeiestadiaaetensinmenianbermmnnig 10

Be BA IIE oct sccercbeccianectispesictsentsomsinoiemnasennen 12

fea Yo) eae 10

Patent Act of 1836, ch. 357, 5 Stat. 117........ 10, 11, 18

On IN I so scinciesicsincinignetuntbocenvenndetent 13

se SE EE veisinctsnniccesnsintctignneteednateninn 10

8 Een

ON SS Eee 10, 11

i cessseniteneniiemeuibsoeituinioniee 1}

Be i IIE ge cencertencidiettnasisenesmmnsesmnense 11

2 a 2) Sere 11

Patent Act of 1870, ch. 230, 16 Stat. 198.............. 11

Se anaes 11

I I in teeetierloemtnenen 11

a retaeantl ll

Patent Act of 1952, Pub. L. No, 82-593,

ig UE ERE: i oe 10

Act of Apr. 21, 1792, ch. 25, 1 Stat. 257.............. 12, 16

Act of May 5, 1792, ch. 30, 1 Stat. 266... 12

Act of Jan. 21, 1808, ch. 13, 6 Stat. 70................. 12, 13

Act of Feb. 7, 1815, ch. 36, 6 Stat. 147.................. 12

Act of Jan. 25, 1828, ch. 3, 6 Stat. 370................... 12

TABLE OF AUTHORITIES—Continued

Page(s)

Act of June 30, 1834, ch. 213, 6 Stat. 589 0000000... 18

Act of July 2, 1836, ch. 336, 6 Stat. 678 ............ 12

Act of Feb. 2, 1838, ch. 6, 6 Stat. 702.......00000...... 12

Act of May 31, 1838, ch. 90, 6 Stat. 717................ 12

Pub. L. No. 96-517, 94 Stat. 8015 (1980) ..00000000.... 27

Pub. L. No. 106-113, 113 Stat. 1501 (1999) 0000... 27

is rs i Si caitstacalecceintaehadiacsniceaidiecatcce cede eka 1

LEGISLATIVE MATERIALS

H.R. Rep. No. 112-98, pt. 1 (2011) ...................0000. 28

S. Doc. 338, 24th Cong., Ist Sess. (1836).............. 11

EXECUTIVE MATERIALS

77 Fed. Reg. 48,680 (Aug. 14, 2012)... 31

OTHER AUTHORITIES

Bruce W. Bugbee, Genesis of American

Patent and Copyright Law (1967)... 12

George Ticknor Curtis, A Treatise on the

Law of Patents for Useful Inventions

FN Ma ciccttstectanserapetitniiendninnascivenundascaacna 13

Joseph A. DiMasi et al., Innovation in the

Pharmaceutical Industry: New

Estimates of R&D Costs, 47 J. Health

SP 30

Frank H. Easterbrook, /ntellectual

Property Is Still Property,

13 Harv. J.L.. & Pub, Pol’y 108 (1990).......... 26, 30

The Federalist No. 4.3 (Madison)

FS, 20

TABLE OF AUTHORITIES—Continued

Page(s)

IPR Report, Vol. 16, Harnessing Patent

Office Litigation, Harness Dickey

(Dec. 16, 2016), available at http://ipr-

pgr.com/wp-content/uploads/201 7/03/

IPR-PGR-Report-Vol.-16. pdf ......cccccccceeseserees 28

iidmund W. Kitch, The Nature and

Function of the Patent System,

Pe li ss Se 30, 31

Lisa Larrimore Oueliettc, Note, How

Many Patents Does It Take To Make a

Drug?, 17 Mich. Telecomm. & Tech. L.

Rev. 299 (20190) ... sehenpminlinane he. ae

PWC, 2017 Patent Litigation Study (May

2017), https://www.pwe.com/us/en/for

ensic-services/publications/assets/2017-

patent-litigation-study. pdf... cece 15

William C. Robinson, The “aww of Patents

for Useful Inventions (1890) ........cseeee 11, 18,14

USPTO, General Information Concerning

Patents (Oct. 2015), htlps:/Awww.uspto

.gov/patents-getting-started/general-

information-concerning-patents# head

BN vis tniccnsnicivniainietslanteinineditenaininiaiacamineimnnieenes 23

USPTO, Patent Trial & Appeal Bourd

Trial Statistics (July 31, 2017), https://

www.uspto.gov/siles/default/files/docu

ments/Trial_Statistics_2017_07_ 31.pdf.......... 33

Albert H. Walker, Tew/-Book of the

Patent Laws (8d ed. 1895) ............--cceseeee 3, 13, 14

IN THE

Supreme Court of the Anited States

No. 16-712

Or. STATES ENERGY SERVICES, LLC,

Petitioner,

Vv.

GREENE’S ENERGY Group, LLC, ET AL.,

Respondents.

On Writ of Certiorari

to the United States Court of Appeals

for the Federal Circuit

BRIEF OF THE PHAKMACEUTICAL RESEARCH

AND MANUFACTURERS OF AMERICA AS

AMICUS CURIAE IN SUPPORT OF PETITIONER

INTEREST OF AMICUS CURIAE

The Pharmaceutical Research and Manufacturers of

America (PhRMA) is a voluntary, nonprofit association

representing the Nation's leading research-based phar-

maceutical companies.’ PhRMA’s members research and

' Pursuant to this Court’s Rule 37.6, counsel for canis cree states

that no counsel for a party authored this brief in whole or part. No

counsel or party made a monetary contribution intended to fund the

preparation or submissioa of this brief, and no person other than

ances, its members, or its counsel made such a contribution. All

develop innovative medicines, treatments, and vaccines

that, save, prolong, and improve the quality of the lives of

countless individuals around the world every day.

The question in this case turns on the fundamental na-

ture of patent rights. lor two centuries of this Nation’s

history, an issued patent was—like other conveyances of

property—not subject to withdrawal, revocation, or can-

cellation except un court order following judicial pro-

ceedings. In 2011, however, Congress created an adver-

sary proceeding for the cancellation of already-granted

(and potentially fully commercialized) patents; authorized

the initiation of that proceeding at almost any point dur-

ing a patent’s life; and vested adjudicative authority over

that proceeding in an administrative agency. Whether

that “inter partes review” scheme comports with Article

III and the Seventh Amendment requires the Court to

evaluate whether issued patents are public rights—like

tariffs or safe-working regulations—or private property.

PhRMA has a profound interest in that question.

From 2000 to 2017, PhRMA members invested over half

a fridlion dollars in researching and developing new

medicines. In 2016 alone, PhRMA members invested

$65.5 billion in research and development. PhRMA mem-

ber companies rely on the patent system to protect the

innovations resulting from those enormous investments.

Moreover, PhRMA’s members are sometimes defendants

in patent infringement actions. And PhRMA’s members

buy, sell, and license patents. PhRMA thus has unique

and uniquely balanced insights on the implications of the

issues before the Court, as well us the need for an ef-

parties have consented to the filing of this brief. Copies of letters

granting consent have been filed with the Clerk.

ficient patent system that fosters, rewards, and protects

innovation and compctition alike.

SUMMARY OF ARGUMENT

From the earliest days of the Kepublic, courts and

Congress understood that issued patents are property—

just like granted rights in land and chattels—and must

be protected as such. Whatever leeway Congress has to

dictate the terms on which patents issue, cancellation and

invalidation of already-issuwed patents must conform to

the requirements applicable to private property. In this

ease, the Federal Circuit upheld inter partes review

based on the mistaken view that patent rights are public

rights, even after the patent is issued and vests. That

misconception cannot be sustained. Text, history, and

common sense all demonstrate that patents, once issued,

are personal property, not public rights.

{-A. While the boundary between private and public

rights has sometimes been unclear, disputes over private

property have always fallen on the private-rights side of

the line. For “(wJholly private tort, contract, and proper-

ty cases,” the public-rights doctrine is “not at all implica-

ted.” Atias Roofing Co. v. Occupational Safety & Health

Review Comm’n, 430 U.S. 442, 458 (1977). Once issued

and vested, patents are property rights, not public rights.

Courts have understood as much for at least a century

and a half; so did Framing-era Congresses. The Patent

Act of 1793, for example, identified patents as “exclusive

property.” See. 1, ch. 11, 1 Stat. 318, 320. As one early

treatise concisely put it: “Patents are property.” Albert

H. Walker, Text-Book of the Patent Laws §151 (3d ed.

1895).

Like their contemporary counterparts, early Congres-

ses confronted issues of patent quality (and even fraudu-

lent procurement). But, for nearly 200 years, Congress

addressed those issues by allowing the validity of issued

patents to be challenged the way property rights are

traditionally challenged—in court.

B. Issued patents have all the “attributes of personal

property.” 35 U.S.C. §261. Patents confer the right to

exclude others, and to bring suit against those who

invade that right. They can be bought, sold, and inher-

ited. Patents are protected from government takings

without compensation, from retroactive annulment by

Congress, and from deprivation without due process.

Public rights traditionally bear none of those hallmarks

of private property.

C. Patents are similar to other government-conferred,

private rights. Land patents and mining patents transfer

property from the sovereign to individuals pursuant to a

statutory scheme administered by an agency. Once

issued, however, land and mining patents are “private

rights of great value,” Johnson v. Towsley, 80 US. (13

Wall.) 72, 84 (1871); the lands they cover “cease| | to be

the lund of the government,” L’nited States v. Schurz, 102

U.S. 378, 396-397 (1880). Copyrights arc also “private

rights,” in large part because, like patents, they confer

rights of exc!usion. Even licenses that are not property

in the hands of the government can become private

property once issued to individuals. Once issued, patents

are private property as well.

D. The Federal Cireuit focused on the fact that

patents exist by virtue of statute and are granted by an

administrative agency. But that speaks to how patents

come into existence—not whether they are private prop-

erly once issued. Once a land patent or mining patent is

issued—by an agency under statutory authority—the

land at issue becomes private property, not a public

right. Issuance is thus a watershed moment. Congress

may be able to grant agencies time-limited authority to

corral mistakes in issuance before rights vest. But that

does not include authority to continuously revisit and

upset vested private property rights in perpetuity.

Il. The Framers recognized that respect for private

property was critical to the Nation’s prosperity. The con-

stitutional power “to secure” patent rights to inventors

reflects that understanding. Our patent system can pro-

mote investment in research and development, and

facilitate licensing of inventions, only if issued patents are

accorded the respect accorded other forms of private

property. Treating patents as public rights, as opposed

to the private rights the Constitution directs Congress to

“secur[e|,” is inconsistent with constitutional goals.

III. The Federal Circuit upheld “inter partes” adver-

sary litigation before an agency, over Seventh Amend-

ment and Article 11I challenges, based on the erroneous

view that issued patent rights are public rights rather

than private property. ‘That fundamental error at the

threshold of the Federal Circuit’s analysis infected

everything that came after. Once a court determines that

a right is private, it must at the very least apply

“searching” scrutiny to any scheme that provides for ad-

judieation of that right before an agency. That searching

review may inchaide inquiry into consent (not granted

here), or consent’s significance in the particular context.

Because the Federal Circuit mistakenly deemed issued

patents Lo be public rather than private property rights,

its analysis fell short of the searching review required

when private rights are at stake. Reversal is warranted.

ARGUMENT

Once issued to the inventor, patents are private prop-

erty—not “public rights.” This Court’s cases, historical

practice, the enactments of the earliest Congresses, and

common sense all reflect that understanding. The Con-

stitution grants Congress authority to “promote the

Progress of Science and useful Arts” by “securing” to in-

ventors “the exclusive Right” to their inventions. Our

patent system can achieve that constitutional goal only if

patents are accorded the stability and respect that is due

other forms of property. The pharmaccutical industry

invests hundreds of billions of dollars in researching and

developing new treatments to improve the health and

welfare of the public across the globe. Those investments

make sense only because the resulting intellectual prop-

erty is respected as property.

The question presented in this case asks whether Con-

gress exceeded constitutional boundaries by granting the

Patent and Trademark Office (PTO)—an administrative

agency—authority to conduct adversary adjudications

over the invalidation of issued patents. How that ques-

tion is answered hinges on whether patents, once issued,

are private property. Congress may have broad author-

ily to assign determinatiuns about public-rights questions

to administrative agencies. But efforts to assign adjudi-

cation of “private rights” outside of the judicial branch

are at the very least subject to “searching” review. The

Federal Circuit upheld inter partes review based on its

conclusion that patents are public rights even after they

are issued to inventors. That conclusion cannot be

reconciled with text, history, or common sense. It may

be that questions over whether to issue a patent in the

first place are questions of public rights. But once the

patent has isswed, the rights it conveys are private

property rights—no less than the right to land granted

by a government-issned land patent or the right to a

chattel conveyed by a government sale. Because the

‘

Federal Circuit faltered at the very first step of the

analysis, the judgment below cannot be sustained.

1. AMERICAN Law Has LONG REGARDED PATENT

Ricuts As PRivate PROPERTY—NoT PUBLIC

RIGHTS

While the boundary between “public” and “private”

rights may not always have been clear, there should be

no doubt that rights to private property fall on the

“private rights” side of that divide. Whatever the scope

of the “public rights” doctrine generally, “(wJholly pri-

vate tort, contract, and property cases, * * * are not at all

implicated” by it. Atlas Roofing Co. vy. Occupational

Safety & Health Review Comm'n, 480 U.S. 442, 458

(1977) (emphasis added). Because they concern the “tia-

vility of one individual to another under the law as

defined,” disputes over property are “matters ‘of private

right’”—not public rights. Stern v. Marshall, 564 U.S.

462, 489 (2011).

Because issued patents are private property, they—

and disputes about them—likewise fall on the “private”

side of the divide. Issued “|p Jatents * * * have long been

considered a species of property,” like land and chattels.

Fla. Prepaid Postsecondary Educ. Kxpense Bd. v. Coll.

Sav. Bank, 527 U.S. 627, 642 (1999). For more than two

centuries, the courts, Congress, and commentators have

understood that issued patents are private property.

That is true even though patent rights derive from gov-

ernment action. When the government is considering

whether to grant property to an individual—whether

through a utility patent or a land patent—the individual

may have no “vested right.” Johnson v. Towsley, 80 U.S.

(13 Wall.) 72, 84 (1871). Some unissued rights in the

government's hands may not even qualify as “property.”

Cf. Cleveland v. United States, 531 U.S. 12, 25-26 (2000).

But once the government has conferred property to a

citizen, “title * * * passe|s| from the government,” and

any dispute concerning the property “bec[o]me[s] one of

private right.” Juoknson, 80 U.S. (13 Wall.) at 87. Pat-

ents, once issued, are the private property of the

inventors to whom they are issued, no less than issued

land patents or other rights the government might con-

fer.

A. For Centuries, the Courts, Congress, and

Commentators [lave Understood That Issued

Patents Are Private Property

1. This Court and its members concluded long ago

that patent rights, once issued, are private property. By

1824, this Court was already ecquating patents with

“property.” Ex parte Wood, 22 U.S. (9 Wheat.) 608, 608

(1824). Reiterating that conclusion nearly a century and

a half ago, this Court observed that “|iJnventions secured

by letters patent are property in the holder of the pat-

ent.” Seymour v. Osborne, 78 U.S. (11 Wall.) 516, 533

(1871). Patent rights “rest| | on the same foundation” as

other property, Consol. Fruit-Jar Co. v. Wright, 94 U.S.

92, 96 (1877), and are “as much entitled to protection as

any other property,” Cammeyer v. Newton, 94 U.S. 225,

226 (1877).

As one Justice summarized: “An inventor holds a

property in his invention by as good a title as the farmer

holds his farm and flock.” Hovey v. Henry, 12 F. Cas.

603, 604 (C.C.D. Mass. 1846) (Woodbury, Circuit Justice).

Justice Story agreed, describing patent infringement

suits as cases about “private rights.” Wyeth v. Slone, 30

F. Cas. 723, 728 (C.C.D. Mass. 1840), Patents thus con

cern “a question of property, of private right, uncon-

nected with the public interest, and without any ref-

erence to the public, unless a case is made out of a design

to deceive them.” Whitney v. Emmett, 29 F. Cas. 1074,

1080 (C.C.E.D. Pa. 1831) (Baldwin, Circuit Justice) (em-

phasis added).

This Court gave effect to that understanding early in

this Nation’s history. Because issued patents are proper-

ty of the inventor, the Court held, Congress cannot re-

scind them by repealing the underlying patent law.

McClurg v. Kingsland, 42 U.S. (i Tow.) 202 (1843). Con-

gress, the Court declared, could not “take away the

rights of property in existing patents.” /d. at 206. Per-

mitting Congress to do so would contravene “well-

established principles,” 2bid., including the rule that the

legislature cannot “extinguish[{ |” by repeal “rights of

property already vested,” Soc’y for the Propagation of

the Gospel in Foreign Paris v. Town of New Haven, 21

U.S. (8 Wheat.) 464, 493-494 (1823).

In McCormick Harvesting Machine Co. v. Auliman,

169 U.S. 606 (1898), the Court likewise rebuffed the Exe-

cutive’s attempt “to set * ** aside” an already-issued

patent. Jd. at 609. Upon issuance, the patent “passed be-

yond the control and jurisdiction” of the Executive. /d. at

608. It became “the property of the patentee * * * enti-

tled to the same legal protection as other property.” Jd.

at 609. The Patent Office loses the “power to revoke,

cancel or annul” a patent “upon [its] issue”; a contrary

ruling would “deprive the applicant of his property

without due process of law, and would be in fact an

invasion of the judicia! branch of the government by the

executive.” /d. at 612.

2. arly Congresses understood that patents confer

property—“exclusive property,” Patent Act of 1798, §1,

ch. 11, 1 Stat. 318, 320—to inventors. The Patent Acts of

1790 and 1793 (as well as the 1836 Act) authorized a pat-

entee to seek damages from infringers by affording them

“a right to sue at common Jaw.” Hx parte Wood, 22 U.S.

at 608. This Court has “long recognized” that “‘suit{s] at

common law’” involve private rights—not public rights.

Stern, 564 U.S. at 484 (quoting Murray's Lessee v. Hobo-

ken Land & Improvement Co., 59 U.S. (18 How.) 272

(1856)).

The 1790, 1793, and 1836 Patent Acts, moreover, speci-

fied the form of action, authorizing an “action on the

case.” Patent Act of 1836, §14, ch. 357, 5 Stat. 117, 123;

Patent Act of 1793, §5, ch. 11, 1 Stat. 318, 322; Patent Act

of 1790, §4, ch. 7, 1 Stat. 109, 111. An “action on the case”

was a then-commonplace form of action used to obtain

“damages for invasions of other property rights.” Felt-

ner v. Columbia Pictures Television, Inc., 523 U.S. 340,

349 (1998).

Indeed, for nearly 200 years—from 1790 until at least

1981—Congress provided only one mechanism for with-

drawing wrongfully issued patent rights—an action in

court. Patent Act of 1793, $10, ch. 11, 1 Stat. 318, 323;

Patent Act of 1836, $12, ch. 357, 5 Stat. 117, 121-122; Pub.

L. No. 82-593, § 281, 66 Stat. 792, $12 (1952). That is con-

sistent with the understanding that patents, once issued,

become personal property entitled to the protections af-

forded land and other forms of property. If Congress

thought vested patent rights were not personal property

(but mere public rights), it surely would have attempted

to create an administrative process to rescind wrongfully

* Since 1836, Congress has provided for “reissue| |” of “inuperative”

or “defective” patents. Patent Act of 1836, $13, ch, 357, 5 Stat. 117,

122; 35 U.S.C. §251(a). But the inventor invokes that procedure,

which allows him to voluntarily surrender the defective patent in

exchange for a reissued patent that covers “the invention disclosed in

the original patent.” 35 U.S.C, §251{a).

issued patents at sume point during the first 190 years of

the Republic’s history. See Printz v. United States, 52)

U.S. 898, 905 (1997) (If “earlier Congresses avoided use

of this highly attractive power, we would have reason to

believe the power was thought not to exist.”). Yet it did

not.

That inaction was not for lack of incentives. The 1793

Patent Act was blamed for a surge in low-quality patents

for non-useful innovations, as well as “extensive and

serious” frauds. See S. Doc. 338, 24th Cong., Ist Sess., at

3 (1886) (noting that the 1793 Act “open|ed| the door to

frauds, which have already become extensive and seri-

ous” and that. “|a] considerable portion of all the patents

granted are worthless and void”). Through the Patent

Act of 1836, Congress attempted to promote greater

discernment in the issuance of patents, 1 William C.

Robinson, The Law of Patents for Useful Inventions

§§ 49-50 (1890), and it revamped procedures in the 1870

Patent Act as well, id. §48. But questions concerning the

validity of granted patents, like other property disputes,

were left to the courts. See Patent Act of 1836, §§ 14-17,

ch. 357, 5 Stat. 117, 122-124; Patent Act of 1870, §§59-61,

ch. 230, 16 Stat. 198, 207-208; 2 Robinson, supra, §§721-

730.

Simply put, despite myriad revisions to the patent

laws spanning nearly two centuries, Congress consistent-

ly refused to treat issued patents as anything less than

granted and vested property rights. “The ‘numerousness

of these slatutes’” requiring the sort of process associ-

ated with private property, “‘contrasted with the utter

lack of statutes’” permitting an agency to rescind a

patent without those protections, “suggests an assumed

absence of such power.” Alden v. Maine, 527 U.S. 706,

744 (1999). Indeed, only once did Congress (arguably)

purport to repeal issued patents itself—an effort this

Court swiftly rebuffed. McClurg, 42 U.S. (1 How.) at

206-207."

Congress has, of course, enacted private bills granting

(or restoring or extending) patents. Sec, e.g., Act of Jan.

25, 1828, ch. 3, 6 Stat. 370; Act of Feb. 7, 1815, ch. 36, 6

Stat. 147; Act of Jan. 21, 1808, ch. 13, 6 Stat. 70. As ex-

plained below, however, Congress’s power to grant pat-

ent rights does not mean that already-granted patent

rights are not property. See pp. 25-26, infra. Early Con-

gresses also granted land patents. Act of Apr. 21, 1792,

ch. 25, 1 Stat. 257; Act of May 5, 1792, ch. 30, 1 Stat. 266.

Yet no one would say that land, once granted to an indi-

vidual, is anything but that individual’s private property.

The same thing is true of utility patents once granted to

inventors.*

* Congress even declined tv rescind patents the States had granted

before the Constitution's ratification. Before 1789, Congress lacked

power to issue patents, and the States issued patents for inventions.

See Bruce W. Bughee, Genesis of American Patent and Copyright

Lm 84-103 (1967). Congress did not cance! those state patents.

Instead, the Patent Act of 1793 required federal patent applicants to

“relinguish| J” state patents as a condition of receiving federal pat-

ents. Patent Act of 1798, §7, ch. 11, 1 Stat. 318, 322. That relinquish-

ment, however, was voluntary; inventors could choose instead to

retain existing state patents. See ibid. State-issued patents were

likewise treated as property. While a few States had provided for

cancellation by the legislature, they required the State to pay the

patentee a significant sum as compensation. See Bughee, snr, at

96-97. Such conditions functioned like buyout clauses.

" Even when Congress issued or extended patents, it regularly

protected the interests of those who had already licensed or pur-

chased the invention. Sve, eg., Act of May 31, 1838, ch. 90, 6 Stat.

717; Act of Feb. 2, 1838, ch. 6, 6 Stat. 702; Act of July 2, 1836, ch. 336,

The Constitution provides that Congress may promote

scientific progress by “securing” for inventors the “ex-

clusive Right|s}” in their inventions. U.S. Const. art. I,

§8, cl. 8. Until recently, Congress confined itself to doing

that. It created the Patent Office (Patent Act of 1836, § 1,

ch. 357, 5 Stat. 117, 117-118), sometimes extended patent

terms (see p. 12, supra), and permitted inventors to re-

tain state-issued patents (see p. 12 n.3, supra). Consist-

ent with the Constitution's text, for 190 years, Congress’s

enactments ali sought to “secure” private property to

inventors. Congress did not understand itself to have

authority to do the opposite—tu rescind property rights,

already issued and secured to the inventor—at least not

without the protections that would apply to efforts to

divest a citizen of any other form of property.

3. Although dedicated patent treatises first took hold

midway through the 19th century, they recognized from

the outset that issued patents are property. Reflecting

on nearly 100 years of practice, they observed that “[p |at-

ents are property.” Albert H. Walker, Text-Book of the

Patent Laws $151 (3d ed. 1895); see also 2 Robinson,

supra, §752; George Ticknor Curtis, A Treatise on the

Law of Patents for Useful Inventions, at xx (4th ed.

1873). That conclusion carried with it the expected impli-

cations. It meant that a patentee could transfer his title

through an assignment or license. See 2 Robinson,

supra, $752; Curtis, supra, §§ 167-168. It meant a pat-

entee was entitled to compensation for use of his

invention by the government. See Walker, supra, § 157.

And it meant Congress could not “destroy” or “impair”

6 Stat. 678; Act of June 30, 1834, ch. 213, 6 Stat. 589; Act of Jan. 21,

1808, ch. 13, 6 Stat. 70.

patent rights: “Patent rights, once vested, are * * *

incapable of being divested by act of Congress.” Walker,

supra, §151; see 1 Robinson, supra, §46. In short, trea-

tise writers from the earliest times recognized that pat-

ents are individual property rights—not public rights.

B. Common Sense Compels the Conclusion That

Patents Are Private Property Rights

Common sense supports the same conclusion: Patent

rights are in the nature of “[w)holly private * * * proper-

ty” rights, Atlas Roofing, 430 U.S. at 448, and are no-

thing like public rights such as tariffs, Fx parte Bakelite

Corp., 279 U.S. 438, 458-461 (1929), tribal membership,

Wallace v. Adams, 204 U.S. 415, 423-425 (1907), and

working-condition regulations, Atlas Roofing, 430 U.S. at

441-442.

“The hallmark of a protected property interest is the

right to exclude others.” Coll. Sav. Bank v. Fla. Prepaid

Postsecondary Educ. Expense Bd., 527 U.S. 666, 673

(1999). Patent righis include that “‘most essential stick| ]

in the bundle of rights thal are commonly characterized

as property.’” Dolan v. City of Tigard, 512 U.S. 374, 384

(1994). Indeed, “exclusion” has been said to be “of the

very essence of the right conferred” by patents. Cont’

Paper Bay Co. v. EF. Paper Bag Co., 210 U.S. 405, 429

(1908). Patents can also be bought, sold, and inherited as

“personal property.” 35 U.S.C. $261; Star Salt Caster

Co. v. Crossman, 22 F. Cas. 1182, 1136 (C.C.D. Mass.

1878) (Clifford, Circuit Justice) (holder of patent “may

sell, assign, lease, or give away the property” as “with

any other personal property”). Public righis, by contrast,

share none of those attribuics. No one would suppose

that the public right to bring a citizen suit for Clean

Water Act violations could be sold by one environmental

group to another.

Patentees can suc private parties who infringe their

patent rights for damages, sec 35 U.S.C. §284—another

traditional marker of private property rights. See Stern,

564 U.S. at 489. The resulting damages awards can be

millions or hundreds of millions of dollars. PWC, 2017

Patent Litigation Study 9 (May 2017), https:/Avww.

pwe.com/us/en/forensic-services/publications/assets/2017-

patent-litigation-study.pdf. It blinks reality to suggest

thal those actions involve “public” rights akin to a citizen

suit. The “‘liability of one individual to another’” is quin-

tessentially a question of private rights. Stern, 564 U.S.

at 489,

Nor can the government “reserve to itself, either ex-

pressly or by implication,” the prerogative of using a

patent without negotiating a license. James v. Campbell,

104 U.S. 356, 358 (1882). That is because a patent, like

other forms of personal property, “cannot be appro-

priated or used by the government itself, without just

compensation.” Horne v. Dep't of Agric., 135 S. Ct. 2419,

2427 (2015) (quoting James, 104 U.S. at 358); see also

Cammeyer, 94 U.S. at 234-235; Brown v. Duchesne, 60

U.S. (19 How.) 183, 198 (1857). Patents are also “inelud-

ed within the ‘property’ of which no person may be

deprived by a State without due process of law.” Fla.

Prepaid, 527 U.S. at 642. And patents cannot be retro-

actively annulled, even after repeal of the law that au-

thorized them. This Court long ago rejected the argu-

ment that Congress could “impair” a patentee’s existing

“right of property” by retroactively changing the criteria

for patentability. McClurg, 42 U.S. (1 How.) at 206. That

conclusion, the Court explained, derives from the general

prohibition on legislative repeal of other private rights.

See ibid.; p. 9, supra.” That feature is common for pri-

vate property rights—and less common for public rights.

See Lynch v. United Slates, 292 U.S. 571, 577 (1934),

Coombes v. Getz, 285 U.S. 434, 441-442 (1932); Butler v.

Pennsylvania, 51 U.S. (10 How.) 402, 416 (1851); Soc’y

for Propagation of Gospel, 21 U.S. (8 Wheat.) at 493-494.

Those characteristics belie the notion that patent rights,

oncc issued, are anything but private property.

C. Analogous Areas of Law Confirm That Issued

Patents Are Private Rights

Patents share many characteristics with other rights

having statutory origins, including land patents, mineral

patents, and copyrights. Precedent from those areas of

law confirms that, once patents are issued, they are the

personal property of the grantee.

1. From the time of the Framing, Congress and the

Executive have transferred public property—lands own-

ed by the federal government—to private citizens

through land patents. See, e.g., United States v. Schurz,

102 U.S. 378, 396-397 (1880); Act of Apr. 21, 1792, ch. 25,

1 Stat. 257. Like utility patents, Congress’s authority to

issuc land patents derives from a specific constitutional

provision—in the case of land patents, art. IV, §3, el. 2,

which gives Congress the “Power to dispose of * * *

Property belonging to the United States.” “{TJhere is a

striking similarity” in that clause and the one “conferring

the power upon the government under which patents are

—

* Indeed, to avoid “serious * * * constitutional ]” questions, this

Court refused to interpret a statute to “take away” a patent holder's

right to sue government contractors for infringement. Richmond

Sevew Anchor Co, v. United States, 275 U.S. 331, 345-346 (1928).

issued for inventions.” t/nited States vy. Am. Bell Tel.

Co., 128 U.S. 315, 358 (1888).

‘Indeed, as with utility patents, Congress has some-

times exercised the power to issue land patents directly,

but has generally exercised its powers by establishing

laws implemented by the Executive Branch. Am. Bell,

128 U.S. at 357-359. Like their intellectual property

cousin, land patents are thus issued by virtue of statule

and are administered by an Executive agency. This

Court has long recognized the analogy between gov-

ernment-issued utility patents and land patents. “The

power * * * to issue a patent for an invention, and the

authority to issue such an instrument for a grant of land,

emanate from the same source” and “are of the same

nature, character and validity.” /d. at 358-359.

Land patents, once issued, represent private property,

not public rights. Granted land patents are “private

rights of great value.” Johnson, 80 U.S. (13 Wall.) at 84

(emphasis added). That is because an issued land patent

confers a “vested right,” id. at 84-85—“title” in the

property that is the subject of the patent, [/nited States

v. Stone, 69 U.S. (2 Wall.) 525, 535 (1865). Consequently,

issued land patents cannot be canceled by the Executive

without resort tu judicial process. As this Court has

explained, canccllation or annulment of an issued land

patent “is a judicial act, and requires the judgment of a

court.” /did. The act of invalidating a land patent “is

always and ultimately a question of judicial cognizance,”

Iron Silver Mining Co. v. Campbell, 185 U.S. 286, 293

(1890)—“the very essence of judicial authority,” Johnson,

80 U.S. (13 Wall.) at 85.

For over a century, mining patents too have been con-

ferred on individuals by executive agencies under federal

statutes. But, for nearly as long, this Court has recog-

nizec that such patents confer a “fee simple title” in the

grantee. Creede & Cripple Creek Mining & Milling

Co. v. Uinta Tunnel Mining & Transp. Co., 196 U.S. 337,

347 (1905); see Smelting Co. v. Kemp, 104 U.S. 636, 653

(1880) (“The object in allowing patents is to vest the fee

in the miner * * * .”). The patent’s issuance thus removes

the patent from the Executive’s reach. Whereas the

“government or private individuals can contest an unpat-

ented claim” in an administrative proceeding, such a

challenge “cannot be brought against a patented claim.”

N. Alaska Envtl. Ctr. v. Lujan, 872 F.2d 901, 904 n.2 (9th

Cir. 1989). The “only way in which the title” from a

mining patent “can be impeached is by a bill in chan-

cery.” Tron Silver Mining, 135 U.S, at 301.

That such patents have their origins in government

action, through a government program, subject to stat-

utory requirements as a precondition to their issuance,

makes no difference. Once a land patent is issued, the

“land has ceased to be the land of the government” and

“legal title has passed from the government” to the

patent’s recipient. Schurz, 102 U.S. at 402; see also

Mich. Land & Lumber Co. vy. Rust, 168 U.S. 589, 593

(1897) (“Afver the issue of the patent the matter becomes

subject to inquiry only in the courts and by judicial

proceedings.”); Moore vy. Robbins, 96 U.S. 530, 533 (1878)

(issuance of patent “passes away all authority or control

of the Executive Department over the land, and over the

title which it has conveyed”). Once “the government has

issued and delivered” a mining patent, “the control of the

department over the title to such land has ceased” as

well. Jron Silver Mining, 135 U.S. at 301. Control over

land and natura] resources is undoubtedly a matter of

great import to this Nation’s prosperity, economic devel-

opment, and security. But once the patent issues, the

land becomes the patentee’s private property, entitled to

all the protections accorded other forms of private

property.

Utility patents are no different. In McCormick, for

example, this Court relicd heavily on land-patent prece-

dents to hold that the “only authority competent to set a

lutility] patent aside, or to annul it, or Lo correct it for any

reason whatever, is vested in the courts of the United

States.” 169 U.S. at 609 (citing Stone, 69 U.S. (2 Wall.) at

535, and Iron Silver Mining, 135 U.S. at 286); see p. 9,

supra. That holding rested on constitutional principles

derived from the fact that patents, once issued, are

private property: An examiner’s “attempt to cancel a

patent upon an application for rcissue * * * would be to

deprive the applicant of his property without due process

of law.” McCormick, 169 U.S. at 612. Issued patents—

whether in real or intellectual property—convey private

property to the recipient.

2. This Court looks to patent principles when ad-

dressing copyright questions given their common origins.

See, e.g., Eldred v. Ashcroft, 537 U.S. 186, 201 (2003); see

SCA Hygiene Prods. Aktiebolag v. First Quality Baby

Prods., 137 S. Ct. 954, 960-961 (2017). And copyrights

are unquestionably private property. As explained

above, this Court hus held that “‘matters of common

law’” and “‘traditional actions at common law” arc

private rights. Stern, 564 U.S. at 484. And copyright

infringement was a traditional action at common law.

“(T]he common law and statutes in England and this

country granted copyright owners causes of action for

infringement,” which were “tried in courts of law, and

thus before juries.” Feltner, 523 U.S, at 348-349. That

was equally true of statutory and common law copy-

rights. /d. at 353. Moreover, copyrights possess all the

qualities of traditional property, including the right to

exclude others and the capacity to be bought, suld, and

transferred. See Fox Film Corp. v. Doyal, 286 U.S. 123,

127 (1932).

Issued patents are no less private property than copy-

rights. Patents and copyrights share the same hallmarks

of private property. They spring from the same consti-

tutional provision—indeed, from the same sentence. U.S.

Const. art. I, §8, cl. 8. And the Framers understood

them both to convey the sume sort of right on inventors

and authors. As James Madison wrote, “[t]he copyright

of authors has been solemnly adjudged in Great Britain

to be a right of common law. The right to useful inven-

tions seems with equal reason to belong to the inven-

tors.” The Federalist No. 43, at 268 (Madison) (Rossiter

ed., 2008). Just as copyrights are “a right of” authors,

patents “belong to”—they are property of—the

inventors.

3. This Court’s (somewhat less analogons) criminal-

law jurisprudence confirms that issued patents are pri-

vate property, even if wnisswed patents are not. In

Cleveland, for example, this Court addressed the scope of

the mail-fraud statute, which prohibits fraudulent

schemes to obtain another’s “property” using the mails.

531 U.S. at 18-19. The Court held that the mail-fraud

statute does not reach fraudulent acquisition of “a state

or municipal license [because] such a license is not

‘property’ in the government regulator’s hands.” /d. at

20. Prior to issuance, such licenses were “regulatory”

and “paradigmatic exercises of the States’ traditional

police powers.” Jd. at 23.

The Court recognized, however, that the character of

the licenses fundamentally changes once they are issued

to private individuals. Upon issuance, such licenses “be-

come property in the recipient’s hands.” Cleveland, 531

U.S. at 15. In other words, such granis are individual!

property even though they werc initially granted by the

government in service of a regulatory gual. That conclu-

sion applies with special foree in the patent context,

where the right’s historical pedigree and atiributes—

including the right to exclude others—make clear that it

becomes the inventor’s personal property upon issuance.

As the government’s brief in Cleveland observed: “It is

well established that patents are a ‘species of property.’”

U.S. Br. at 33-34, Cleveland v. United States, 531 U.S. 12

(2000) (No. 99-804) (citing cases).

This Court agreed with thal assessment in Cleveland,

even as it rejected the government's other arguments.

The government had attempted to “compare| | the State’s

interest in” not-yet-issued “poker licenses to a patent

holder’s interest in” an issued “patent that she has not

yet licensed.” Cleveland, 531 U.S. at 23. Rejecting the

comparison, the Court explained that unzssued licenses

could not be analogized to issued patents. The “better

analogy” for unissued licenses was “to the Federal Gov-

ernment’s interest in an unissued patent.” J/bid. (em-

phasis added). But the Court left no doubt that issued

patents are private property belonging to the inventor.

An issued patent, it explained, could be sold and carried

the “‘attributes of personal property.” /bid. If an is-

sued patent is private property of the inventor for

purposes of trade—and for criminal prosecutions—then

surely it must be private property when courts consider

whether adversary proceedings to take it away can be

vested in an administrative agency.

D. The Federal Circuit Improperly Conflated the

Process of Patent Issuance with the Status of

Issued Patents

In MCM Portfolio LLC v. Hewlett-Packard Co., 812

F.3d 1284, 1290 (Ted. Cir. 2015), the Federal Circuit held

that patents are public rights because the PTO issues

them through a “federal regulatory scheme.” The Fed-

eral Circuit also relicd on the fact that patents are issued

pursuant to statute. /d. at 1293; see Cascades Projection

LLC v. Epson Am., Inc., 864 F.3d 1309, 1811 (Fed. Cir.

2017) (Dyk, J., concurring in denial of rehearing en banc,

joined by the other two members of the MCM pancl).

That reasoning is insufficient.

1. The Federal Circuit’s assertion that patents are

issued by the PTO as part of a “federal regulatory

scheme” doubly fails. First, it looks at the wrong end of

the elephant. The PTO’s operations for issuing patents

in the first instance may involve a regulatory process,

and that process may even involve questions of “public

rights.” But once the patent has been issued, the patent

and the rights inhering in it become the inventor’s

private property. See pp. 8-14, supra. This Court made

exactly that point in connection with land patents, John-

son, 80 U.S. (13 Wall.) at 87 (“after the title had passed

from the government, * * * the question became one of

private right”); state-issued licenses, Cleveland, 531 U.S.

at 15 (licenses “becjajme property in the recipient’s

hands”); and utility patents themselves, McCormick, 169

U.S. at 612 (“attempt to cancel a patent upon an appli-

cation for reissue * * * would be in fact an invasion of the

judicial branch of the government by the executive”).

Second, it is wrong to describe issued patents as part

of a “regulatory scheme.” Patents bear no resemblance

to licenses from the FDA or other regulators, where

maintenance of the license requires continuous inter-

action “‘between the Government and persons subject to

its authority in connection with the performance of the

constitutional functions.’” Stern, 564 U.S. at 489. The

PTO does not monitor, control, or regulate the assertion

and use of the patents it issues. ‘To the contrary, the

PTO is “responsible” only “for the granting and issuing

of patents” and for “disseminating to the public infor-

mation with respect to patents.” 35 U.S.C. §2(a)(2)(A).

It has rulemaking authority only with respect to “the

conduct of proceedings in the [PTO].” Jd. §2(b). It

neither has, nor attempts to exercise, authority over the

use or assertion of patents once they are issued; other

than receiving maintenance fees, it has virtnally no

involvement at all. See USPTO, General Information

Concerning Patents (Oct. 2015), https:/Avww.uspto.gov/

patents-getting-started/gencral-information-concerning-

patents#heading-6 (“The USPTO has no jurisdiction

over questions of infringement and the enforcement of

patents.”). Issued patents are no more part of a “regu-

latory scheme” than, for example, formerly federal lands

the government conveyed to homesteaders (or surplus

chattels sold by the government). Once conveyed, the

use of that property is in the hands of the patentee.

Nor does it matter that, in conducting inter partes

review, the PTO may in some sense reconsider whether it

should have issued the patent in the first instance.

MCM, 812 F.3d at 1291 (suggesting that it “would be

odd” if the PTO could not be authorized “to reconsider its

own decisions”). Jnler partes review is not a time-limited

reconsideration process that allows further agency con-

templation before rights vest. It is an adversary ad-

judication used to challenge patents long after they have

issued and vested—indeed, after millions may have been

invested in commercialization—that can take place

almost any time during a patent's life. This Court has

already rejected the notion of an infinite reconsideration

period in the land-patent context, and with good reason.

If the “right to reconsider and annul a [land] patent after

it has once become perfect cxists in the Executive

Department,” the Court explained, “it can be exercised ut

anytime, however remote.” Moore, 96 U.S. at 534. That

‘Is utterly inconsistent with the universal principle on

which the right of private property is founded.” Jbid.;

see pp, 17-19, supra. Once private property is granted

and vests in the inventor, the time for reconsideration

ends. The first two Patent Acts thus required the Execu-

tive to go to court to cancel even fraudulently procured

patents. See pp. 10-11, spra.

The government’s attempt to analogize inter partes

review to statutes that “allow agencies to correct their

own errors” and “recover| | erroneous disbursements of

money to private parties,” U.S. Br. in Opp. 12, practically

disproves itself. The cited debt-collection statutes, for

cxample, provide administrative process only for offsets

from future payments and wages. See 31 U.S.C.

§§3711(¢)(9), 3716, 3720D. Property already issued to

the debtor cannot be reached eacept by “litigation or

foreclosure.” /d. §3711(¢)(9)(H). Those statutes thus

reflect a distinction that pervades the law—between

withholding not-yct issued property from an individual,

and attempting to seize or destroy already-issued, vested

property rights. The government ignores that distine-

tion.*

—— —————

° Those statutes also preclude governmental recovery where the

recipient was not at fault for the erroneous disbursements, 5 U.S.C,

Inter partes review, moreover, has been extended well

beyond allowing the agency to reconsider its own deci-

sions. The PTO uses inter partes review to reconsider—

and effectively overturn—dccisions of Article [II courts.

See, e.g., Novartis AG v. Noven Pharm. Inc., 853 F.3d

1289, 1293 (Fed. Cir. 2017). Under the AIA, the PTO

claims authority to invalidate a patent even after a dis-

trict court has held it not invalid, and even after that

judgment has been affirmed on appeal—in litigation

involving the very same arguments—so long as some

collateral matter is still in litigation. /bid.; cf. Fresenius

USA, Ine. v. Baxter Int'l, Inc., 721 F.3d 1330, 1344 (Fed.

Cir. 2013) (same result in ex parte reexamination); id. at

1348 (Newman, J., dissenting). Permitting an agency to

“tell [a court] to reverse [its] decision like some sort of

super court of appeals” raises grave separation-of-

powers concerns. Gutierrez-Brizuela v. Lynch, 834 F.3d

1142, 1150 (10th Cir. 2016) (Gorsuch, J., concurring); cf.

Plaut v. Spendthrift Farm, Inc., 514 U.S, 211, 228 (1995)

(Congress may not, consistent with “separation-of-

powers” principles, “deprivie) judicial judgments of * * *

conclusive effect.”).

2. The Federal Circuit also invoked the fact that

patent rights exist by virtue of statute. MCM, 812 F.3d

at 1290-1291. That, however, cannot deprive issued pat-

ents of their status as personal property. Land and min-

ing patents, which grant individuals property formerly

owned by the government, likewise exist only by virtuc of

the various statutes under which they are authorized and

administered. Moore, 96 U.S. at 531. Indeed, statutory

§8470(b), and where recovery is against equity and yuod conscience,

38 U.S.C. § 5802(a); 42 U.S.C. § 404(b).

authorization to dispose of such property is constitu-

tionally required. U.S. Const. art. IV, §3, el. 2. None-

theless, Jand and mining patents confer private rights.

See Johnson, 80 U.S. (18 Wall.) at 84-85; see pp. 16-19,

supra.

Today's farmers would surely be surprised to learn

that the fields they have worked for generations are not

their private property, but public rights the Department

of Interior can reconsider any time so long as title traces

back to a centuries-old, statutorily authorized land grant.

Copyrights are governed by statute as well. See, ¢.g., 17

U.S.C. §102. But they are considered private rights. See

pp. 19-20, supra. Patents are no different.’

3. The Federal Circuit likewise erred to the extent it

assumed that Congress, while authorizing the issuance of

patents, could preclude them from being property by

providing for continuous inter partes reconsideration

throughout the patents’ lifespans. For one thing, the pat-

ents before the Court in this case were not so limited.

They were issued before the effective date of the AIA

and the creation of the inter partes review process at

issue. Pet. App. 5. This Court held long ago that Con-

gress cannot, by statute, retroactively “impair the right

of property then existing in a patentee.” McClurg, 42

U.S. (1 How.) at. 206.

Besides, “‘{pjroperty’ cannot be defined by the proce-

dures provided for its deprivation.” Cleveland Bd. of

’ Patents undoubtedly affect the publie by restricting use of inno-

vations for limited Limes. But that is true of other property. “Intel-

lectual property is intangible, but the right to exelude is no different

in principle from General Motors’ right to exclude Ford from using

its assembly line * * * .” Frank H. Easterbrook, Jntellectnal Prop-

erty Ls Stilt Property, 13 Harv. J1,. & Pub. Pol'y 108, 109 (1990).

Educ. v. Loudermill, 470 U.S. 532, 541 (1985). Patent

rights are private rights. They do not become something

less based on the procedures Congress establishes for

their deprivation. The procedures for terminating a vest-

ed property right do not determine whether that right is

public or private. Rather, the status of the right deter-

mines the procedures needed to terminate it. See Com-

modity Futures Trading Comm'n v. Schor, 478 US. 833,

853 (1986). Were it otherwise, Congress could transform

a right from private to public “simply by deeming it part

of some amorphous ‘public right,’ |and| Article III would

be transformed from the guardian of individual liberty

and separation of powers * * * into mere wishful think-

ing.” Stern, 564 U.S. at 495.

4. Finally, the Federal Circuit placed undue weight

on the existence of ex parte and inter partes reexam-

inations before the PTO. MCM, 812 F.3d at 1290-1291.

Ex parte reexaminations were first authorized in 1980,

and inter partes reexaminations were first authorized in

1999. Pub. L. No. 96-517, 94 Stat. 3015 (1980); Pub. L.

No. 106-113, 113 Stat. 1501 (1999). Those procedures do

not have a historical pedigree that approaches even bell-

bottoms or MTV, much less anything that would have

been familiar to the Framers. Patents were private

rights for nearly two centuries before reexamination pro-

ceedings were a glimmer in anyone’s eye. That history

controls the constitutional analysis of more recent enact-

ments—not the other way around. Moreover, as ex-

plained above, Congress cannot convert private property

into public rights by enacting new procedures to term-

inate those rights. And, while the Federal Circuit upheld

ex parte reexaminations, it made the same error it

repeated here—its ruling rested on the assertion that

patents are public rights. Patlex Corp. v. Mossinghoff,

758 F.2d 594, 604 (Fed. Cir. 1985). Recycling that mis-

taken rationale in this context just compounds the error.

Besides, ex parte and inter partes reexaminations are,

as their names suggest, examinational rather than ad-

versarial proceedings. By contrast, inter paries reviews

are initiated by a private adversary who pursues an

invalidity case against the patent owner. See 35 U.S.C.

§§311-312, 316(a), (d). Congress intended inter partes

review to “convert( ] inter partes reexamination from an

examinational to an adjudicative proceeding.” H.R. Rep.

No. 112-98, pt. 1, at 46 (2011). Nearly 80% of all petitions

for inter paries review relate to district court litigation

involving the same parties. See IPR Report, Vol. 16,

Harnessing Patent Office Litigation, Harness Dickey

(Dec. 16, 2016), available at http://ipr-pgr.com/wp-

content/uploads/2017/03/IPR-PGR-Keport-Vol.-16.padf.

The distinction between adversarial proceedings and

examinational ones may mean that the procedures for

inter partes review now before the Court and reexam-

inations (not before the Court) will follow different

constitutional paths. See U/nited States v. Am. Bell Tei.

Co., 167 U.S. 224, 264-265 (1897) (ruling that government

could “discharge its obligations to the public” by bringing

a lawsuit “to set aside one of its patents” when wrongly

issued, but that it could not bring “suit simply to help an

individual; making itself, as it were, the instrument by

which the right of that individual against the patentee

can be established”). But it cannot change the fact that

patents, once issued, are the personal and private prop-

erty of the inventor to whom they are issued.

I]. CONSTITUTIONAL POLICY RECOGNIZES PATENTS AS

INDIVIDUAL PROPERTY

Private property is the foundation of this Nation’s eco-

nomic prosperity. It is the stability of property rights,

and the legal protection accorded them, that “induces

*** willingness to improve property in possession.”

Halstead v. Grinnan, 152 U.S. 412, 416 (1894); see

Colorado v. New Mesico, 467 U.S. 310, 316 (1984); BFP v.

Resolution Tr. Corp., 511 U.S. 531, 544 (1994) (recog-

nizing “essential state interest” in “‘security of the titles

to real estate’”). As this Court explained (with respect to

federally granted land patents), “the immense impor-

tance and necessity of the stability of titles dependent

upon these official instruments” cannot “be dependent

upon the hazard of successful resistance to the whims

and caprices of every person who chooses to attack

them.” United States v. Maawell Land-Grant Co., 121

U.S. 325, 381 (1887). Commerce in land “rest{s] upon

faith in the patent issued by the United States Govern-

ment.” United States v. Beebe, 127 U.S. 338, 348 (1888).

The Framers recognized that intellectual property is

no different. The Constitution they adopted does not

merely authorize Congress to “promote the Progress of

Science and useful Arts,” but also directs the means for

accomplishing the goal—“by securing to authors and

inventors the exclusive right to their respective Writings

and Discoveries.” Art. I, §8, cl. 8. (emphasis added).

Deeming patents to be public rather than property

rights—and thus subject to continuous potential agency

reconsideration and withdrawal throughout a patent's

lifespan without searching judicial scrutiny—is inconsis-

tent with both the constitutional delegation of authority

and accompanying goal. Patents encourage innovation

precisely because, once granted, they give patent owners

a property right that has the hallmarks of and is

accorded the same solicitude as other property rights.

Recognizing the special need for stability in this context,

this Court accords its patent rulings particular stare

decisis effect: For “property (patents) and contracts (li-

eensing agreements),” the Court has held, “considera-

tions favoring stare decisis are ‘at their acme.’” Kimble

v. Marvel Comics Entm'’t, LLC, 135 S. Ct. 2401, 2410

(2015).

The need for stability and respect is nowhere more

pressing than when it comes to developing potentially

life-saving medications. It requires on average $2.6 bil-

lion in research and development to bring a single, new

drug to market. Joseph A. DiMasi et al, Jnnovation in

the Pharmaceutical Industry: New Estimates of R&D

Costs, 47 J. Health Econ. 20, 31 (2016). Few drugs make

it to clinical testing, and fewer than 12% that enter

clinical studies ever receive FDA approval. Jd. at 23.

Such huge investments are justified only because, in the

end, inventors can obtain a property interest—a patent.

Lisa Larrimore Ouellette, Note, How Many Patents

Does It Take To Make a Drug?, 17 Mich. Telecomm. &

Tech, L. Rev. 299, 303 (2010) (collecting studies).

Patents—like other property interests—are aiso crili-

cal to the cooperation upon which commerce and pro-

gress depend. Patents “convey rights to coordinate de-

velopment.” Easterbrook, supra, at 111. “[TJhe patent

owner” is “in a position to coordinate the search for

technological and market enhancement” by licensing his

discovery to others. Edmund W. Kitch, The Nature and

Function of the Patent System, 20 J.L. & Econ. 265, 276

(1977). The “patent system lowers the cost for the owner

of technological information of contracting with other

firms possessing complementary information and re-

sources.” /d, at 277. For example, patents allow start-

ups with fewer resources to reveal discoverics to larger

organizations, and potentially obtain their support and

cooperation, with greater security than contractual confi-

dentiality provisions could provide. /d. at 278-279.

Patents cannot achieve those goals—they fail to

“securle]|” the inventor in his rights—if they are accorded

lesser respect than other forms of property. Property

that is subject to a regime of virtually unlimited, con-

tinuous agency reconsideration and revocation through-

out its lifespan, without searching scrutiny of that regime

by this Court, is not really property at all. For at least

190 years, this Court and Congress treated patents

accordingly. In the last 40 years, however, Congress has

given us ex parte reexamination, inter partes reexam-

ination, inter partes review, and other means for an

agency to invalidate already-granted and potentially fully

commercialized patents. 77 Fed. Reg. 48,680 (Aug. 14,

2012). Because the rights inhcring in isswed patents are

individual property—no less than land issued under land

patents, minerals subject to mining patents, or the rights

secured by a copyright—that novel mechanism at the

very least must be subjected to “searching review.”

III. REVERSAL Is WARRANTED

The Federal Circuit resolved the issues before this

Court based on the erroneous premise that patents, even

after issuance, are public rights. With respect to Article

III, the Federal Circuit concluded that “patent rights are

public rights,” MCM, 812 F.3d at 1293, and deemed that

conclusion largely determinative, id. at 1290. The Feder-

al Circuit short-circuited its Seventh Amendment analy-

sis based on the same error. “Recause patent rights are

public rights,” it declared, “the Seventh Amendment

poses no barrier to agency adjudication without a jury.”

‘ed. at 1293. But issved patents—granted to and vested

in inventors—are private property, not public rights.

Because the Federal Circuit erred at the first step, it

never conducted a proper Article III and Seventh

Amendment analysis.

For example, while “the distinction between public

rights and private rights” may not be “determinative for

Article III purposes,” it affects the anulysis profoundly.

Schor, 478 U.S. at 853. The “‘danger of encroaching on

the judicial power’ is less” grave when public rights are

at issue, but more scrious “when private rights * * * are

relegated as an initial matter to administrative adjudica-

tion.” Jd. at 854. Consequently, where private rights are

ut stake, courts must at least conduct “searching” scru-

tiny to ensure that the “adjudicative function does not

create a substantial threat to the separation of powers.”

fvbid. That “searching” review may examine consent,

Stern, 564 U.S, at 491—there was none here—or whether

consent can obviate the particular intrusion, Wellness

Intl v. Sharif, 185 S. Ct. 1932, 1946 (2015); id. at 1956-

1957 (Roberts, C.J., dissenting). Because the Federal

Circuit erroneously held that patents embody “public

rights,” it departed from the “searching” scrutiny that (at

a minimum) is required when private rights are at stake.

Nor did the Federal Circuit address the separation-of-

powers concerns that arise when an administrative

agency has the ability to contravene the judgment of a

district court. See p. 25, supra. And for the same reason,

the Federal Circuit never conducted a proper Seventh

Amendment inquiry. For example, because it erroneous-

ly ruled patents to be public rights, the Federal Circuit

did not address whether invalidity challenges were part

of the “right to jury trial as it existed in 1791.” Curtis v.

Loether, 415 U.S. 189, 193 (1974).

Moreover, while patents “are surely included within

the ‘property’ of which no person may be deprived by a

State without duc process of law,” Fla. Prepaid, 527 U.S.

at 642, the Federal Circuit has yet to seriously address

the due-process issues raised by inter partes review.

‘That procedure has an extraordinarily lopsided track rec-

ord. Roughly two-thirds of petitions are granted, and at

least one claim is found unpatentable 82% of the time.

See USPTO, Patent Trial and Appeal Roard Trial Sta-

tistics (July 31, 2017), https:/Awww.uspwo.gov/sites/default/

files/documents/Trial Statistics 2017_07_3l.pdf. Proce-

dural unfairness creates grave concerns as well. For

example, the same panel decides whether to institute

review and then decides the review on the mer‘ts. And

the PTO has admitted to reconfiguring panels to alter

outcomes. See Nidec Motor Corp. v. Zhongshan Broad

Ocean Motor Co., No. 16-2321, — F.3d —, 2017 WL

3597455, at *6 (Fed. Cir. Aug. 22, 2017) (Dyk, J., con-

curring) (describing panel-packing practice). For those

reasons—and because the !ederal Circuit short-circuited

its analysis with error at the outset—the decision below

cannot be sustained.

CONCLUSION

The judgment of the court of appeals should be

reversed.

Respectfully submitted.

JUSTIN B. WEINER JEFFREY A. LAMKEN

MOLUOLAMKEN LLP Counsel of Record

300 North LaSalle St. ERIC R. NITz

Chicago, Il. 60654 JAMES A. BARTA

.o i MOLOI.AMKEN LLP

JAMES C. STANSEL The Watergate, Suite 660

DAVID kK. KORN 600 New Hampshire Ave., NW.

PHARMACRUTICAL Washington, D.C. 20037

RESEARCH AND (202) 556-2000

MANUFACTURERS OF jlamken@mololamken.com

AMERICA

960 F Street, N.W.

Suite 300

Washington, D.C. 20004

Counsel for Amicus Curiae

August 2017

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