John Golden

Private Property and Public Franchise: Patents Under the Supreme Court’s “Public-Rights Doctrine”

by

Post by John Golden

In an April 24 decision in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 584 U.S. __ (2018), the United States Supreme Court addressed a question previously highlighted on this blog (see posts of May 30, June 13, and December 4, 2017): the extent to which patents involve public or private rights for purposes of U.S. constitutional law. Specifically, the Court held that whether a patent claim should be canceled for lack of novelty or nonobviousness is “a matter involving public rights” and therefore may be determined by an administrative agency, the U.S. Patent and Trademark Office (USPTO), rather than an Article III court. With Justice Thomas writing for a seven-Justice majority, the Court emphasized its view that, although patents are a “form of property,” the decision to grant a patent—a matter long consigned to the USPTO—is a decision on “the grant of a public franchise” and thus liable to congressional reservation of administrative power “to revoke or amend” the grant. The Court thereby signals the existence of a subcategory of privately held property—namely, public franchises granted to private persons—that is particularly susceptible to administrative adjudication.

But what is a “public franchise”? The Court does not give a crisp definition. Nonetheless, by pointing to aspects of patents that apparently support their classification as public franchises, the Court provides some hints. First, the Court notes that the right to exclude provided by a patent “ ‘did not exist at common law’ ” (quoting Gayler v. Wilder, 51 U.S. (10 How.) 477, 494 (1851)), and is instead “a ‘creature of statute law’ ” (quoting Crown Die & Tool Co. v. Nye Tool & Mach. Works, 261 U.S. 24, 40 (1923)). Further, Congress has authorized such rights by exercising its constitutionally granted “power ‘[t]o promote the Progress of Science and useful Arts’ ” (quoting U.S. Const. art. I, § 8, cl. 8). In other words, Congress has provided for patents pursuant to a public purpose. These observations comport with a definition of “public franchise” that Justice Thomas has proffered before: a right or set of rights “ ‘which public authorities ha[ve] created purely for reasons of public policy and which ha[ve] no counterpart in the Lockean state of nature.’ ” Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 848 n.2 (2015) (Thomas, J., dissenting) (quoting Caleb Nelson, Adjudication in the Political Branches, 107 Colum. L. Rev. 559, 567 (2007)).

Read more

Patents and the Public-versus-Private-Rights Distinction: Oral Argument in Oil States Energy Services v. Greene’s Energy Group

by

Post by John Golden

On November 27, the United States Supreme Court heard oral argument in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712, a case that gives prominence to a question flagged in prior posts of May 30 and June 13: namely, whether patents involve public or private rights for purposes of the constitutionality of administrative cancellation of issued patent claims.  Article III of the U.S. Constitution states, “The judicial Power of the United States, shall be vested in one Supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.”  The Supreme Court has held that, despite this assignment of “judicial Power” and the more general principle of separation of powers, “a matter of ‘public right’ … can be decided outside the Judicial Branch.”  Stern v. Marshall, 564 U.S. 462, 488 (2011).  The Court has recognized that this “public rights exception” extends beyond “actions involving the Government as a party” and encompasses “cases in which the claim at issue derives from a federal regulatory scheme, or in which resolution of the claim by an expert government agency is deemed essential to a limited regulatory objective within the agency’s authority.”  Id. at 490.

In Oil States, the Court confronts the question “[w]hether inter partes review—an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents [whose claims have been challenged by a third party]—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”  The Petitioner argues that the answer is “Yes” because issued patent rights are private property whose validity “Article III permits only courts to adjudicate.”  Brief for Petitioner 3.  Respondent Greene’s Energy Group argues that the answer is “No” because “[p]atent rights are public rights, that is, derived from a ‘federal regulatory scheme’ and ‘integrally related to particular Federal Government action.’ ”  Brief for Respondent Greene’s Energy Group, LLC 9 (quoting Stern, 564 U.S. at 490–91).  The U.S. government as “Federal Respondent” likewise argues that inter partes review addresses matters of public right and contends that the Petitioner’s “argument confuses the distinct concepts of private property and ‘private rights’—those rights that are not integrally related to federal government action.”  Brief for the Federal Respondent 18, 21. 

Over fifty amicus curiae briefs were filed in Oil States.  These briefs are, in general, too numerous to have their contents described in this blog posting, but you can find discussions of various amicus briefs in separate postings by Dennis Crouch on the Patently-O blog dated August 20, August 28, September 1, and November 1.  For purposes of disclosure, I should note that I participated in the filing of an amicus brief in support of the Respondents contending that questions of patent claims’ validity are matters of public right.  Brief of Amici Curiae Professors of Administrative Law, Federal Courts, and Intellectual Property Law in Support of Respondent 18–26.  This brief also noted a long-held (albeit not unanimously held) scholarly view that, under the Court’s precedents, even questions of “private right” may, generally speaking, be subjected to administrative adjudication as long as the rights in question are creatures of federal statutory law and as long as the results of administrative adjudication are subject to judicial review that is de novo on questions of law and at least in the nature of substantial-evidence review on questions of fact.  Id. at 28–29.  Under this view, Article III constraints seem satisfied by the Patent Act’s provision of a right to appeal the results of inter partes review to the U.S. Court of Appeals for the Federal Circuit.  Id. at 29–31.

Read more

The Supreme Court Takes on Patents and the Private-Versus-Public-Rights Distinction — John Golden

by

Post by John Golden

On June 12, the United States Supreme Court granted certiorari with respect to the first question presented in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712 (S. Ct. 2017):

Whether inter partes review—an adversarial 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.

This grant gives new prominence to a question flagged in my post of May 30, the question of whether patents involve public or private rights for purposes of U.S. administrative law.  In this context, the question is refracted through a definition of “public rights” that the Supreme Court has developed to delimit the scope of Article III courts’ exclusive powers.  A determination that patent rights are more properly viewed as “private” than “public” could lead to a conclusion that inter partes review, as well as other new mechanisms for the administrative review of patent validity, are unconstitutional. 

Read more

The Supreme Court on Laches, Patent Exhaustion, and Lord Coke — John Golden

by

Post by John Golden

Intersections between statutory law and traditional private law principles loom large in two recent patent law decisions of the United States Supreme Court.  For this, we can partly thank the United States Court of Appeals for the Federal Circuit.  As discussed in my first NPL blog post, the Federal Circuit preceded the Supreme Court in taking the cases for en banc review.  The en banc circuit obligingly produced holdings that the Court could not resist overruling.

In the first case, SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 137 S. Ct. 954 (2017), the Supreme Court held that laches cannot block a claim for damages from patent infringement when that infringement has occurred within the statutorily allowed period of six years before the filing of the claim.  Seven of the eight Justices involved in deciding SCA Hygiene agreed that this outcome followed straightforwardly from the Court’s 2014 decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014), which addressed similar questions regarding laches, damages, and the Copyright Act’s three-year statute of limitations.  Writing for the Court with what appeared to be restrained exasperation, Justice Alito began his opinion by stating, “We return to a subject that we addressed in Petrella ….”  Alito’s opinion proceeded to emphasize that laches arose from equity and that the case before the Court involved “application of the defense to a claim for damages, a quintessential legal remedy.”  In the Court’s view, a statute of limitations such as the Patent Act’s six-year limitation on backward-looking damages “necessarily reflects a congressional decision that the timeliness of covered claims is better judged on the basis of a generally hard and fast rule rather than the sort of case-specific judicial determination that occurs when a laches defense is asserted.”  Application of a laches defense in the face of this congressional judgment “is beyond the Judiciary’s power.”

Read more

Patents and the Private-Versus-Public-Rights Distinction

by

Post by John Golden

Are patent rights public or private rights?  Generally speaking, patents are privately held, and their enforcement is limited to civil suits brought by their private holders.  Hence, in some sense, the answer might seem obvious.  But for purposes of addressing issues of separation of powers and the right to a jury trial, the answer is not so straightforward.  For these purposes, the United States Supreme Court has made central a public-versus-private-rights distinction under which the key question is whether the rights at issue are “integrally related to particular government action” because “the claim at issue derives from a federal regulatory scheme, or … the resolution of the claim by an expert government agency is deemed essential to a limited regulatory objective within the agency’s authority.”  Stern v. Marshall, 564 U.S. 462, 491–92 (2011).  If the answer to this question is “yes,” the right in question is a “public right” whose application Congress may entrust to adjudication by an administrative body.  If, on the other hand, the claim is one of “private right,” a category typically understood to include suits traditionally brought at common law, the Court’s understanding of constitutional requirements of separation of powers means that authoritative trial-level adjudication may occur only in an Article III court, one in which the presiding judge or judges enjoy the protections of life tenure and salary protection mandated for the judicial branch by Article III of the United States Constitution.

Controversy rages over the extent to which patent rights—or, at least, challenges to patent rights’ validity—fall within the “public rights” exception to Article III adjudication.  The motive force for this controversy is the popularity of new procedures for post-issuance review of patent claims by administrative patent judges of the U.S. Patent and Trademark Office (PTO).  Starting in the early 1980s, Congress authorized the PTO to conduct post-issuance proceedings that could reconsider the validity of issued patent claims on either the PTO’s own initiative or that of a third party.  Through the America Invents Act of 2011, Congress revised and elaborated on PTO post-issuance proceedings.  One form of the revised set of proceedings, so-called “inter partes review,” has flourished since 2011: the PTO currently receives over 1,000 petitions for inter partes review each year.  In such a proceeding, the patent holder and a patent challenger contest the validity of issued patent claims before administrative patent judges of the PTO’s Patent Trial and Appeal Board (PTAB).

Read more

“Channeling” District Court Discretion in IP and Beyond — John Golden

by

Post by John Golden

In both a patent case and a copyright case from soon-to-end October Term 2015, the U.S. Supreme Court continued a long struggle to define the proper bounds of trial court discretion in various contexts. See generally Henry J. Friendly, Indiscretion About Discretion, 31 Emory L.J. 747, 748–50 (1982). Such questions of trial court discretion commonly relate to questions about the proper nature of equity or equity-like reasoning in district court decision-making, questions that are presumably of interest to a number of readers of this blog.

Questions about trial court discretion have recently had particular prominence in patent law. In this area, an ever-growing string of Supreme Court decisions has, over the course of a decade, rejected what the Court has perceived as excessively rigid rules developed by the U.S. Court of Appeals for the Federal Circuit. See David O. Taylor, Formalism and Antiformalism in Patent Law Adjudication: Rules and Standards, 46 Conn. L. Rev. 415, 464–65 (2013). The newest addition to the string came in June in Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S. Ct. 1923 (2016). In an opinion by Chief Justice Roberts, the Court rejected as “unduly rigid” a Federal Circuit rule permitting the enhancement of patent damages for willful infringement only when the infringer’s conduct was objectively reckless with respect to violation of relevant patent rights. Id. at 1932 (internal quotation marks omitted).

Read more

Bagchi, Dagan, and Hesselink at “Contract Law in a Liberal Society” Summer School in June — John Golden

by

Post by John Golden

From June 29 to July 1, the University of Amsterdam hosted a “summer school” on “Contract Law in a Liberal Society.”  The gathering featured extended presentations by Aditi Bagchi of the Fordham University School of Law, Hanoch Dagan of Tel Aviv University’s Buchmann Faculty of Law, and Martijn Hesselink of the University of Amsterdam, as well as additional short presentations of completed works or works in progress by more junior scholars.  This post describes aspects of the presentations by Bagchi, Dagan, and Hesselink as I perceived them.

Read more

Samuelson on Merger in Copyright Law and Questions of Redundancy in Legal Design — John M. Golden

by

Post by John Golden

In the forthcoming article Reconceptualizing Copyright’s Merger Doctrine, Pamela Samuelson of Berkeley Law provides an extended review of copyright law’s merger doctrine.  Courts have periodically invoked this doctrine in restricting the extent to which copyright protections apply to the expression of an idea when, as Samuelson puts it, “that idea is incapable of being expressed, as a practical matter, in more than one or a small number of ways.”  Samuelson’s article seeks to quash a number of “myths” about the doctrine, touching on aspects of its substantive scope, the frequency of the doctrine’s applicability, and its history as a creature of “common law adjudication.”  Samuelson concludes, among other things, that (1) the doctrine serves as an important “limiting principle of U.S. copyright law”; (2) the doctrine can affect copyrightability as well as copyright scope; and (3) courts should avoid an overly narrow view of the doctrine, thereby helping it realize its potential as a means for “mediating conflicts between and among the interests of first and second-generation authors, of third parties affected by those disputes, and of the public.”

This blog post focuses on another aspect of Samuelson’s article, its discussion of how the merger doctrine relates to other limiting doctrines in copyright.  These other doctrines include the following: (1) the scènes à faire doctrine, which limits the extent to which copyright covers standard or indispensable elements of expression (such as conventional poses in portraits, see William W. Fisher III et al., Reflections on the Hope Poster Case, 25 Harv. J.L. & Tech. 243, 259 (2012)); (2) copyright law’s originality requirement; (3) exclusions of facts, ideas, and other functional subject matter from copyright protection.  At one point, Samuelson suggests that courts’ relative lack of confidence in their mastery of copyright law’s content or justifications might explain some of the apparent proliferation of doctrinal overlaps.  She writes, “Courts sometimes perceive the other doctrines as overlapping with merger, but in some cases, courts invoke multiple doctrines when seemingly unsure which doctrine would provide the soundest grounding for the court’s decision.”

Read more

Hanoch Dagan on “an Autonomy-Based Private Law” — John Golden

by

Post by John Golden

In a paper posted on SSRN, The Challenges of Private Law: Towards a Research Agenda for an Autonomy-Based Private Law, Hanoch Dagan lays out a vision of private law as a “law of our interpersonal (horizontal) relationships” that strives to “establis[h] ideal frameworks for respectful interaction between self-determining individuals.”  Dagan thereby seeks to escape the “deadlock” between views of private law as (1) “a garden-variety mode of regulation” and (2) a branch of law whose focus on “individual independence” makes it “resistant to demanding interpersonal claims.”  Dagan argues that, in a world “of interdependence and of personal difference,” “tak[ing] seriously law’s commitment to autonomy as self-authorship or self-determination” requires subjecting private law to a “prescription of structural pluralism and [an] injunction of relational justice.”  In accordance with the prescription of pluralism, private law should provide individuals with “meaningful choices.”  Indeed, private law theory should “celebrate [a] multiplicity of contract types and property institutions rather than suppress … or marginalize them.”  In accordance with concerns of relational justice, private law needs provisions for “interpersonal accommodation” to help ensure that individuals “respect each other’s right to self-determination and thus to substantive equality.”

Read more

Legal Remedies and Laches in a Statutory Regime: The Federal Circuit Distinguishes Patent from Copyright — John Golden

by

Post by John M. Golden

What place do distinctions between law and equity have in modern law?  In the United States, answering this question can be complicated by not only a twentieth-century merger of law and equity under the Federal Rules of Civil Procedure, but also the frequent embedding of common-law principles within a substantive statutory regime.  The subject has attracted scholarly attention.  A forthcoming article by Sam Bray of the UCLA School of Law argues that the U.S. Supreme Court has properly emphasized distinctions between legal and equitable remedies in modern U.S. law.

Read more

More Common Law in the Interpretation of Statutes: Akamai v. Limelight Part II – John Golden

by

Post by John Golden

In June, I posted on a court opinion in Akamai Technologies, Inc. v. Limelight Networks, Inc. In this opinion, a panel of the U.S. Court of Appeals for the Federal Circuit invoked common law limits on joint tortfeasor liability to justify a narrow view of “divided infringement” as a form of direct infringement under § 271(a) of the U.S. Patent Act. Generally speaking, potential “divided infringement” situations are ones in which two or more actors split between themselves the performance of acts that, if performed by one, would constitute direct infringement. Realities of our networked world have intensified concerns with how to handle such situations—particularly for computer technologies for which it is relatively easy to distribute performance of process steps across different entities and locations.

Read more

Tort and the Taking or Assigning of Responsibility – John Golden

by

Post by John Golden

Readers of this blog might be interested in a Jotwell post by Scott Hershovitz of the University of Michigan and the associated draft paper by David Enoch of Hebrew University, Tort Liability and Taking Responsibility. (Thanks to my colleague Susan Morse for pointing this out!) The paper by Enoch explores the question of what benefit a tort system focused on negligence might provide that is absent from an idealized version of New Zealand’s no-fault system of compensation through the Accident Compensation Corporation. As described on page 4 of Enoch’s paper, “[w]e are to imagine the best (realistic) version of the New Zealand” system:

Accidents happen … at roughly the rates they happen elsewhere. People are harmed and compensated. But they are not compensated by “their” harmers. Rather, all risk-creators contribute to a general pool …, and those harmed are then compensated from this general pool.

Read more

Property and Contract at a Legal Acme? Stare Decisis and the Supreme Court — John Golden

by

Post by John M. Golden

In Kimble v. Marvel Entertainment, LLC, No. 13-720, slip op. (U.S. S. Ct. June 22, 2015), the U.S. Supreme Court kicked off a momentous week with an opinion highlighting the importance of stare decisis.  More particularly, the justices grappled with whether to overrule a half-century-old holding “that a patent holder cannot charge royalties for the use of his invention after its patent term has expired.”  Id. at 1.  A six-justice majority chose to stick with the prior holding despite what the majority conceded to be a “broad scholarly consensus” criticizing this precedent on economic grounds.  Id. at 13.  In explanation of the decision, Justice Kagan wrote, inter alia, that (1) “[r]especting stare decisis means sticking to some wrong decisions”; (2) precedent involving interpretation of a statute has “enhanced force” compared to, say, precedent involving an interpretation of the U.S. Constitution; and (3) precedent involving property or contract rights, such as the patent law precedent in question, is further “superpowered” “because parties are especially likely to rely on such precedents when ordering their affairs.”  Id. at 7-10.  Indeed, according to the Court, “considerations favoring stare decisis are ‘at their acme’” in “‘cases involving property and contract rights.’”   Id. at 9 (quoting Payne v. Tennessee, 501 U.S. 808, 811 (1991) (Rehnquist, C.J.)).

Read more

Common Law in the Interpretation of Statutes: Akamai v. Limelight at the Federal Circuit — John Golden

by

Post by John M. Golden

In patent law, networked technologies have brought to the fore difficult questions about liability in situations involving so-called “divided infringement.”  In a typical such situation, multiple parties contribute to the exploitation of a patented method, but no party performs all steps of the method.  Notably for the purposes of this blog, questions about whether anyone is liable for infringement in such situations have led judges at both the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit to direct attention to common law standards for joint tortfeasor liability.  In the end, more straightforward issues of statutory interpretation might dominate concerns about common law principles.  Cf. John F. Duffy & Richard Hynes, Statutory Domain and the Commercial Law of Intellectual Property, 102 Va. L. Rev. (forthcoming) (contending that “modern commentators are wrong in asserting that [patent and copyright] exhaustion doctrine evolved from common-law decisionmaking” as opposed to statutory interpretation) .  Nonetheless, the current debate highlights the extent to which modern statutory regimes can trigger reference to (and opportunities for academic guidance on) background principles of common law.

Read more

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

by

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.

Read more

Fodder for Private Law Mavens: The Federal Circuit, Laches, and Exhaustion — John Golden

by

Post by John Golden

Private law mavens might have interest in two patent cases that the U.S. Court of Appeals for the Federal Circuit has taken en banc. In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, No. 2013-1564 (Fed. Cir. Dec. 30, 2014) (en banc), the Federal Circuit will review precedent indicating that the defense of laches is available “to bar a claim for damages based on patent infringement occurring within [a] six-year damages limitation period” set by the U.S. Patent Act. In Lexmark International, Inc. v. Impression Products, Inc., Nos. 2014-1617, 2014-1619 (Fed. Cir. Apr. 14, 2015) (en banc), the Federal Circuit will review additional precedent involving the doctrine of patent exhaustion, a doctrine under which, in the Supreme Court’s words, “the initial authorized sale of a patented item terminates all patent rights to that item.” Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617, 625 (2008).

Read more