“Private property began the instant somebody had a mind of his own.” — E.E. Cummings

Among other rights, the Fifth Amendment guarantees that private property shall not “be taken for public use, without just compensation.” Both the Patent Act and the Supreme Court have classified patents as personal property. And in 2015, the Supreme Court made clear that the Takings Clause of the Fifth Amendment applies not only to real property but to “personal property” as well. Is the PTAB, then, by finding unpatentable more than 80% of claims instituted in an IPR proceeding, taking private property “without just compensation”? For four IP law professors, the answer is a resounding “yes.”

In Cuozzo Speed Technologies, LLC v. Lee, the Supreme Court will address whether the Federal Circuit erred in holding that, in an IPR proceeding, the PTAB may construe claims in an issued patent according to their broadest reasonable interpretation (BRI) rather than their plain and ordinary meaning. Because this case will likely have significant impact on the IPR process, numerous amici curiae briefs have been filed with the Supreme Court, including one by a group of law professors. In it, the professors argue that the PTAB’s BRI standard is an unconstitutional taking in two ways.

First: A Physical Taking

The professors first argue that the PTAB’s BRI standard operates as a per se physical taking of private personal property because it changes the boundaries of the patent owner’s property rights—in other words, the scope of the claims. According to the professors, in return for agreeing that its invention will be examined under the BRI standard, a patent owner expects that after issuance its patent’s claims will be examined under the narrower Philips standard. The professors argue that the PTAB, by applying the BRI standard to issued patents, alters the settled boundaries of the patent claims, and therefore exacts an unconstitutional physical taking of the private personal property.

Ironically, the alteration that occurs under the BRI standard is a broadening of the patent owner’s rights, but this broadening is artificial, the professors argue, because when the patent owner attempts to enforce its property right through district court litigation, the broadened scope of the claims will not apply; the narrow Philips scope will. Moreover, by broadening the scope of the challenged claims, the BRI standard dramatically increases the likelihood that the claims will be found unpatentable. To buttress this proposition, the professors point to stats showing that claims are nearly twice as likely to be found unpatentable in an IPR than in district court litigation.

Second: An Economic, Regulatory Taking

Alternatively, the professors argue that the BRI standard is an economic, regulatory taking. To determine if a regulatory taking has occurred, the Supreme Court evaluates [1] the economic impact of the regulation, [2] its interference with reasonable investment-backed expectations, and [3] the character of the governmental action.

On the first point—economic impact of the regulation—the professors identify a study that claims the value of patents has dropped by nearly two-thirds since the AIA was passed. For the second point—interference with reasonable investment-backed expectations—the professors note that patent owners invest considerable resources in securing patent claims with the expectation that these claims will be interpreted under the Philips standard, not the BRI standard. For the third point—the character of the governmental action—the professors concede that most patents have retained at least some value post-AIA, but they argue that a complete deprivation of value is not necessary for a regulatory taking to occur; rather, there must be a “significant reduction in value.” The professors imply that the previously mentioned reduction in patent value is significant.

Takeaways

Although a fascinating read, the likelihood that the Supreme Court will overrule the PTAB’s BRI standard on Fifth Amendment grounds is very low. For one, Cuozzo—the party seeking reversal of the BRI standard—did not argue that the standard violated the Fifth Amendment; it focused instead on the historical distinction between examinational proceedings (in which BRI has historically been used) and adjudicative ones (in which the claims’ actual meaning to a skilled artisan has historically been used).

Moreover, no other amici curiae have voiced similar concerns that the BRI standard violates the Fifth Amendment, and the issue was not raised before the Federal Circuit either. Although the argument it advances is unlikely to win the day, the professors’ brief should at least remind the Supreme Court that even in today’s environment of patent reform, patent claims are important property rights that should not be revoked lightly.