Double Jeopardy: Patents of Invention As Contracts, Invention Disclosure As Consideration, and Where Oil States Went Wrong
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Fordham Intellectual Property, Media and Entertainment Law Journal Volume 30 XXX Number 3 Article 1 2020 Double Jeopardy: Patents of Invention as Contracts, Invention Disclosure as Consideration, and Where Oil States Went Wrong N. Scott Pierce Foley Hoag LLP, [email protected] Follow this and additional works at: https://ir.lawnet.fordham.edu/iplj Part of the Intellectual Property Law Commons Recommended Citation N. Scott Pierce, Double Jeopardy: Patents of Invention as Contracts, Invention Disclosure as Consideration, and Where Oil States Went Wrong, 30 Fordham Intell. Prop. Media & Ent. L.J. 645 (2020). Available at: https://ir.lawnet.fordham.edu/iplj/vol30/iss3/1 This Article is brought to you for free and open access by FLASH: The Fordham Law Archive of Scholarship and History. It has been accepted for inclusion in Fordham Intellectual Property, Media and Entertainment Law Journal by an authorized editor of FLASH: The Fordham Law Archive of Scholarship and History. For more information, please contact [email protected]. Double Jeopardy: Patents of Invention as Contracts, Invention Disclosure as Consideration, and Where Oil States Went Wrong Cover Page Footnote Partner at Foley Hoag LLP in Boston, MA. The author is solely responsible for the views of this Article, which do not necessarily represent those of his Firm, or any client or organization. This article is available in Fordham Intellectual Property, Media and Entertainment Law Journal: https://ir.lawnet.fordham.edu/iplj/vol30/iss3/1 Double Jeopardy: Patents of Invention as Contracts, Invention Disclosure as Consideration, and Where Oil States Went Wrong N. Scott Pierce* Patents in England were once favors granted by the King with the requirement that the subject matter be practiced, or worked, for the benefit of the public. However, by the late eighteenth century patents were viewed as contracts with the government. Concomitant with this shift, the requirement to practice an invention was replaced by submission of a written specification disclosing to the public how to work the subject matter of the patent. In essence, advancement of the public good by grant of an exclusionary right to practice an invention at royal discretion was substituted with public disclosure as consideration for grant of that right by contract. The contractual nature of patents that evolved in England was adopted in the United States shortly after its founding. Disclosure of an invention can be offered as consideration by an inventor because, unlike most substance of sovereign dispensation, it is not otherwise available. Also unlike favor, disclosure of an invention cannot be withdrawn once it has been made. The Supreme Court in Oil States v. Greene’s Energy Group failed to acknowledge these distinctions by improperly construing nineteenth century dicta to conclude that patents “take from the public rights of immense value” and by asserting more recent dicta that inter partes review is nothing but “a second look” at an earlier administrative decision. Dismissing the genesis and irretrievable nature of invention dis- * Partner at Foley Hoag LLP in Boston, MA. The author is solely responsible for the views of this Article, which do not necessarily represent those of his Firm, or any client or organization. 645 646 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. XXX:645 closure by implying that patent rights are taken from the public by virtue of patent grant obliterates the distinction made over two hundred years ago that patents are not privileges subject to sovereign volition. The Supreme Court’s new understanding of patents causes an overlap of Article I “legislative courts” under the purview of the executive branch, with “constitutional courts” controlled by Article III of the Constitution. The result is double jeopardy for patentees and reduced certainty in the business community, both of which are anathema to the intent behind creation of ex parte reexamination, introduced under the Bayh–Dole Act of 1980, and extending to the several proceedings inaugurated with the America Invents Act, such as inter partes review. 2020] DOUBLE JEOPARDY 647 INTRODUCTION ..................................................................... 649 I. ANTECEDENTS TO INTER PARTES REVIEW—EX PARTE AND INTER PARTES REEXAMINATION ....... 653 II. OIL STATES AND ARTICLE III ................................ 658 A. Summary of the Majority Opinion—The Patent “Franchise” of “Public Rights” .................... 658 B. Historical Precedent to Article III Consideration of Patent Validity ........................................... 660 1. A Short Critique of the Majority View of Nineteenth-Century Precedent ................ 660 2. Justice Gorsuch’s Dissenting View ......... 664 3. The Effect of Recent Precedent—Cuozzo Speed Technologies, LLC v. Lee ............. 668 C. Patents as “Franchises” ................................ 671 1. Use of the Term “Franchise” to Define Patents ..................................................... 672 2. Public Interest in Patent Rights—Protecting Against Restraint of Trade ...................... 677 3. Broadening “Public Interest” Against Patents as “Franchises” Beyond Restraint of Trade ........................................................ 681 D. Patent Validity and Separation of Powers Under Article III ........................................................ 684 1. Patents as “Public Rights” ....................... 684 2. “Public Interest” and Separation of Powers Under the Constitution ............................ 685 III. OIL STATES AND THE SEVENTH AMENDMENT ....... 688 IV. THE ROOTS AND DEVELOPMENT OF AMERICA’S ARTICLE III JURISPRUDENCE ................................ 689 A. American Roots of “Private” vs. “Public” Rights ............................................................. 689 B. Expanding the Authority of Article I Courts to Adjudicate “Seemingly” Private Rights ........ 693 648 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. XXX:645 V. ARTICLE III JURISPRUDENCE AS APPLIED TO PATENTS OF INVENTION ...................................................... 697 A. Historical Limits on the Government’s Ability to Invalidate Issued Patents ............................... 698 B. Private Rights vs. Protection of the Public .... 701 C. Resolution of Competing Private and Public Interests in Patents, and Recent Decisions by the Federal Circuit ............................................... 705 VI. DOUBLE JEOPARDY: PATENTS AS CONTRACTS AND THE CONSTITUTIONALITY OF OVER- LAPPING UNILATERAL REVOCATION BY THE GOVERNMENT ...................................................... 710 A. Patents as “Contracts” .................................. 711 B. The Link Between Inter Partes Review and Ex Parte Reexamination ...................................... 720 1. Overlapping Jurisdiction Consequent to Third-Party Standing ............................... 721 2. A Case Study in Consequences of Reexamination of Patents as Contracts— Fresenius USA v. Baxter International ... 723 C. A Plea for Reconsideration of Post-Grant Patent Examination. .................................................. 730 CONCLUSION ......................................................................... 732 2020] DOUBLE JEOPARDY 649 That labour put a distinction between them and common. That added something to them more than nature, the common mother of all, had done, and so they became his private right. –John Locke1 INTRODUCTION The Supreme Court held in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC that inter partes review (“inter partes review” or “IPR”) “does not violate Article III or the Seventh Amendment.”2 An IPR is one of five post-grant proceedings insti- tuted under the America Invents Act (“AIA”),3 the others being covered business methods (“CBMs”),4 post grant review (“PGR”),5 supplemental examination,6 and derivation proceedings,7 all of which are conducted by the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office (vari- ously “USPTO,” “PTO,” or “Patent Office”). A primary motive for enacting IPRs was a general impression that the economic benefit of patents was being impeded by a large number of “low quality” patents covering subject matter not deserving of protection, and that 1 JOHN LOCKE, THE SECOND TREATISE ON CIVIL GOVERNMENT 20 (Prometheus Books 1986) (1690). 2 Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365, 1379 (2018) (“Because inter partes review does not violate Article III or the Seventh Amendment, we affirm the judgment of the Court of Appeals.”). The Court affirmed a judgment by the Court of Appeals for the Federal Circuit (CAFC) upholding a final written decision in an IPR by the Patent Trial and Appeal Board (PTAB) at the United States Patent and Trademark Office (USPTO, PTO, or Patent Office). In that proceeding, the PTAB determined claims 1 and 22 of U.S. Patent No. 6,179,053 (‘053 patent), owned by Oil States Energy Services, LLC (Oil States), to be unpatentable. See Greene’s Energy Grp., LLC v. Oil States Energy Servs., LLC, No. IPR2014-00216, 2015 Pat. App. LEXIS 5328, *1 (P.T.A.B. May 1, 2015). 3 Leahy–Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (2011) (codified in scattered sections of 35 U.S.C. (2018)). In many sources, “AIA 35 U.S.C.” is used to refer to the now-codified updated provisions, while “Pre-AIA 35 U.S.C.” is used to refer to the provisions in place prior to the AIA amendments. 4 See 35 U.S.C. §§ 311–19 (AIA § 18). 5 See id. §§ 321–29. 6 See id. § 257. 7 See id. § 135.