Inter Partes Reviews Are Constitutional

Date: 12/3/2015
 December Intellectual Property Update

By Joseph A. Saltiel

In 2011, the United States passed the America Invents Act ("AIA") that allowed third parties to challenge the validity of U.S. patents before the United States Patent and Trademark Office ("PTO") by filing inter partes reviews ("IPR"). Since then, companies have routinely, and with great success, used IPRs to invalidate patent claims. Recently, Hewlett-Packard successfully invalidated a patent owned by MCM Portfolio using an IPR. MCM appealed the invalidation of its patent by the PTO on several grounds to the Federal Circuit. MCM Portfolio LLC v. Hewlett-Packard Co., (Fed. Cir. Dec. 2, 2015). MCM first argued that the PTO improperly instituted the IPR. The Federal Circuit refused to hear this argument because parties cannot appeal the PTO's decision on whether to institute an IPR. Next, MCM argued that IPRs are unconstitutional because a patent can only be invalidated through litigation in a U.S. court, not by a government administrative agency like the PTO. The Federal Circuit disagreed holding that Congress has the right to delegate disputes over public rights to agencies like the PTO. Before the AIA, Congress has granted the PTO the right to invalidate claims in other proceedings, for example, ex parte reexaminations. Lastly, MCM argued IPRs violated MCM's right to a jury trial guaranteed by the Seventh Amendment to the U.S. Constitution. The AIA, however, requires IPRs to be decided by the PTO, not a jury. The Federal Circuit held that the AIA was not unconstitutional. When Congress creates new types of procedures, like IPRs, Congress is not required by the Seventh Amendment to require a jury trial. It can delegate those new type of procedures to an administrative agency like the PTO.

This case confirms that decisions by the PTO on whether to institute an IPR are not appealable and that there is no constitutional right to have an invalidity claim heard by a jury. There was no dissent to the Federal Circuit's ruling. Hence, it is unlikely that this case will be reheard en banc or that the U.S. Supreme Court will hear it. Therefore, unless Congress passes a new law, parties will not be able to appeal the PTO's decision on whether to institute an IPR or challenge the constitutionality of an IPR.

For more information about this article, contact Joseph A. Saltiel, Vice Chair of the Intellectual Property & Technology Group, at 312.245.7500 or via e-mail at jsaltiel@masudafunai.com.