The Supreme Court on Public v. Private Law – John Golden

Post by: John Golden

While we debate the nature of the distinction—or the lack thereof—between public and private law, perhaps we should take note that the U.S. Supreme Court has recently decided the issue.  Well, not by a long shot, of course, but in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015), justices engaged in spirited debate over the extent to which the interpretation of patent claims should be viewed as more analogous to the interpretation of private “written instruments such as deeds and contracts” than to the interpretation of statutes.  Id. at 840.  The dissenters in Teva explicitly linked this question to a traditional distinction between “‘core’ private rights” and “‘public rights,’” id. at 848 n.2 (Thomas, J., dissenting).  The justices viewed these questions as significant for—if not decisive of—whether the U.S. Court of Appeals for the Federal Circuit was right in viewing patent claim construction as a question of law for which appellate review is uniformly de novo even when a lower court’s claim construction reflects underlying factual findings.  A seven-justice majority rejected the Federal Circuit’s position.  En route to this result, the majority and dissenters produced opinions with snippets that relate to potential ways of distinguishing between public and private law.

Justice Breyer’s opinion for the Court explained why the majority found factfinding in association with patent claim construction to lack “sufficien[t] similar[ity] to the factfinding that underlies statutory interpretation.”  Id. at 840.  According to Breyer’s opinion, there are several significant distinctions between patent claims and statutory provisions:

Statutes, in general, address themselves to the general public; patent claims concern a small portion of that public.  Statutes typically (though not always) rest upon congressional consideration of general facts related to a reasonably broad set of social circumstances; patents typically (though not always) rest upon consideration by a few private parties, experts, and administrators of more narrowly circumscribed facts related to specific technical matters.  The public, and often an adversarial public, typically considers and discusses the relevant general facts before Congress enacts a statute; only private parties, experts, and administrators likely consider the relevant technical facts before the award of a patent.

Id.  Consequently, Justice Breyer found it “not surprising that this Court has never previously compared patent claim construction in any here relevant way to statutory construction.”  Id.  Instead, the Court had “repeatedly compared patent claim construction to the construction of other written instruments such as deeds and contracts.”  Id.

Justice Thomas, joined by Justice Alito, dissented.  Justice Thomas contended that, “[b]ecause [patents] are governmental dispositions and provide rules that bind the public at large, patent claims resemble statutes.”  135 S. Ct. at 847 (Thomas, J., dissenting).  He observed that “Article I of the U.S. Constitution vests the patent power in Congress” and that “Congress could issue such patents as special statutes” though it has instead “mostly acted by authorizing the Executive Branch to issue patents when certain statutory requirements are met.”  Id.  Evoking Mark Lemley’s recent emphasis on viewing intellectual property rights as “a form of government regulation of the free market,” Mark A. Lemley, Faith-Based Intellectual Property, UCLA L. Rev. (forthcoming), available at http://ssrn.com/abstract=2587297, Justice Thomas stressed that “patents have a regulatory effect” and that factual findings associated with patent claim construction thus “contribute to rules that limit conduct by the public at large.”  135 S. Ct. at 847 (Thomas, J., dissenting).

In a footnote, Justice Thomas elaborated on these arguments.  The footnote began:

The Anglo-American legal tradition has long distinguished between “core” private rights—including the traditional property rights represented by deeds—and other types of rights. Nelson, Adjudication in the Political Branches, 107 Colum. L.Rev. 559, 567 (2007) (Nelson). These other rights fall into two categories: “‘public rights belonging to the people at large,’” and “privileges” or “franchises,” “which public authorities ha[ve] created purely for reasons of public policy and which ha[ve] no counterpart in the Lockean state of nature.” Id., at 566-567 Notwithstanding a movement to recognize a “core” property right in inventions, the English common law placed patents squarely in the final category, as franchises that “depend upon express legislation,” and “hath [their] essence by positive municipal law.” 7 W. Holdsworth, A History of English Law 479, n. 7, 480, and n. 4, 497 (1926). The distinction between “core” private rights, on the one hand, and public rights and government-created privileges, on the other, has traditionally had significant implications for the way in which rights are adjudicated. Nelson, supra. Thus, no matter how closely a franchise resembles some “core” private right, it does not follow that it must be subject to the same rules of judicial interpretation as its counterpart.

Id. at 848 n.2.

An interesting question that this clash of opinions suggests is whether the justices would take a different view of the interpretive process if a patent were in the form of a “private statute” directly enacted by Congress.  Would the Court hold that, on appeal, purely de novo review—with no formal deference to lower-court fact finding—applies to the interpretation of such a patent’s claims?   If so, the nature of the rights in question, whether “private” or “public,” seems less critical to the standard of review than the process by which those rights were created.  Although courts have sometimes indicated that somewhat different rules apply to interpretation of so-called private statutes as opposed to so-called public ones, see 2 Norman J. Singer & J.D. Shambie Singer, Statutes and Statutory Construction §43.4, at 576 (7th ed. 2009), my intuition is that, for interpretation of a private statute granting patent rights, purely de novo review would be appropriate.  This intuition is in line with the apparent understanding of the dissenters in Teva.  Unlike the dissenters, however, I feel comfortable combining this intuition with acceptance of the notion that the majority’s mixed standard of review—de novo review for the ultimate question of construction and clear-error review for fact findings relating to “extrinsic evidence”—should apply to the interpretation of patent claims resulting from standard processes of U.S. Patent and Trademark Office examination.  But perhaps I am missing something?