IPR: the end of the road for Fifth Amendment challenges?
On June 22, 2020, the US Supreme Court denied certiorari for three petitions seeking to render the inter partes review (IPR) of patents issued before the America Invents Act (AIA) as unconstitutional.
The cases were Celgene v Peter, 931 F.3d 1342 (Fed. Cir. 2019); Collabo Innovations v Sony, 778 Fed. App’x 954 (Fed. Cir. 2019); Enzo Life Scis v Becton, Dickinson & Co, 780 Fed. App’x 903 (Fed. Cir. 2019).
The US Court of Appeals for the Federal Circuit had rejected petitioners’ arguments in the underlying cases that there was a violation of either the Due Process or the Takings Clauses of the Fifth Amendment by retroactively applying IPRs to pre-AIA patents.
In Celgene, the Federal Circuit held that invalidating patents via IPRs is not an unconstitutional taking. The Federal Circuit recounted the US Patent and Trademark Office’s (USPTO) history of evaluating the patentability of pre-AIA patents, such as in ex parte and inter partes re-examinations, and found that using different procedures in IPRs does not arise to a taking under the Fifth Amendment. The Takings Clause of the Fifth Amendment states that private property (e.g., a patent) shall not “be taken for public use, without just compensation.” Here, Celgene argued that the retroactive applications of IPRs to their pre-AIA patents without just compensation is an unconstitutional taking under the Fifth Amendment.
In rejecting Celgene’s argument, the Federal Circuit reasoned that “Celgene’s pre-AIA patents were therefore granted subject to existing judicial and administrative avenues for reconsidering their validity” and “for several decades [prior to Celgene applying for its patents], the USPTO has also possessed the authority to re-examine—and perhaps cancel—a patent claim that it had previously allowed”.
Ultimately, the Federal Circuit affirmed the holding of two patents owned by Celgene as obvious in view of the prior art.
In Enzo and Collabo, the Federal Circuit drew upon its precedent in the Celgene case and summarily dismissed the challenge that subjecting pre-AIA patents to IPR is unconstitutional.
In Enzo, the Federal Circuit stated:
“We recently addressed this issue in Celgene, which is now precedent that governs this case. Celgene held that ‘retroactive application of IPR proceedings to pre-AIA patents is not an unconstitutional taking under the Fifth Amendment’. Accordingly, we hold that the retroactive application of IPR proceedings to the ‘197 patent, which issued before the enactment of the AIA, is not an unconstitutional taking under the Fifth Amendment.”
Constitutionality
These three denials virtually close the door on challenging constitutionality of IPRs under the Fifth Amendment. Reading the tea leaves, it is unlikely the Supreme Court will consider future arguments against the constitutionality of post-grant proceedings set forth in the AIA. Although there remains one outstanding petition for certiorari to the Supreme Court on the constitutionality of retroactive IPRs , these denials do not bode well for the petition filed by Arthrex, which deals with, among other things, patents that were applied for pre-AIA, but issued after.
Nonetheless, patentees with issued final written decisions may fare better challenging the constitutionality of IPRs under the Federal Circuit’s ruling late last year that the statutory scheme of appointing Patent Trial and Appeal Board administrative patent judges violates the Appointments Clause of the US Constitution, provided such a defence was properly preserved and the patentee is the IPR petitioner, or the final written decision in the IPR was issued before Arthrex (ie, October 31, 2019).
Notably, this preservation issue is one of the other issues raised in Arthrex’s petition for certiorari. In any event, unless the Supreme Court carves out a distinction in Arthrex v Smith & Nephew, the question of whether IPRs are unconstitutional under the Fifth Amendment is well settled. As such, patentees may want to rethink their constitutionality challenges under the Fifth Amendment going forward.
Aziz Burgy is a partner at Axinn. He can be contacted at: aburgy@axinn.com
