PTAB Involved in Unlawful Takings?
Celgene Corporation v. Peter
On June 3, the U.S. Court of
Appeals for the Federal Circuit heard constitutional arguments from Celgene
Corporation (appellant) and the U.S. Patent and Trademark Office (Deputy
Director Laura Peter, intervenor) in an appeal from three inter partes reviews
(IPRs) relating to Celgene’s U.S. Patent No. 6,315,720. Celgene
Corporation. v. Peter (Nos. 2018-1167, -1168, -1169). The petitioner in the IPR was the Coalition
for Affordable Drugs VI LLC, which Celgene referred to as a “reverse patent
troll.” The Coalition did not
participate in the appeal.
The involved technology relates to
a patient pre-screening method for prescribing a drug. Although Celgene discussed the invention in
the context of teratogenic thalidomide drugs, the claims are not limited to any
particular drugs.
Celgene’s appeal raised the
constitutional question: Are patents granted before the American Invents Act
(AIA) subject to cancellation in an IPR, a procedure authorized in the AIA in
2011? Celgene urged that cancellation of
a patent in an IPR constituted an uncompensated taking of property under the
Fifth Amendment of the U.S. Constitution.
As a threshold issue, the U.S. Patent
and Trademark Office (USPTO) argued that Celgene had forfeited its right to
raise the takings issue on appeal because it had not raised it during the Patent
Trial and Appeal Board (PTAB) proceeding.
Celgene urged that it would have been futile to raise the issue below
because: (1) the PTAB has refused to address the issue in some other cases; (2)
it would not be appropriate for an Article I court to address constitutional
issues with the statute that authorizes its action; and (3) the decision to
cancel the patent’s claims was not yet a final decision, and therefore, the
question was not ripe for review.
Discussing the substance of the
matter, all parties agreed that a patent is a property right. But the USPTO asserted that there was no
valid property right at the heart of this case because the ‘720 patent was not
valid when granted. Celgene labeled this
argument circular. The USPTO further
compared the PTAB action to a U.S. district court’s cancellation of a patent,
which is not considered an unconstitutional taking.
Celgene contrasted a district court
procedure with an IPR, noting the differences in the presumption of validity,
claim construction, and standards of proof.
The USPTO argued that this was not the relevant comparison to make,
because patents could be challenged in a district court both before and after
the AIA. Rather, the USPTO compared
pre-AIA inter partes re-examination with post-AIA IPR, and found only the
procedure changed, but not substantive rights.
The USPTO urged that a patentee has no property interest in a procedure.
The panel that heard arguments in the
case consisted of Chief Judge Sharon Prost, Judge Jimmie Reyna, and Judge
William Bryson. Chief Judge Prost voiced
concern that multiple cases challenging the retroactivity of IPRs were
percolating and most of the others seemed to have poorly developed records on
this issue. She also expressed unease
that different panels at the PTAB could decide inconsistently on this issue
without a decision from the Federal Circuit to guide them. Additionally, she noted that a PTAB decision
not to institute an IPR because of a conclusion that a pre-AIA patent should
not be subject to an IPR was a non-reviewable decision. These considerations weigh in favor of the
court taking up the issue, despite possible waiver. Judge Reyna questioned whether the Federal
Circuit was the proper venue for deciding the takings issue, rather than the
U.S. Court of Claims. Judge Bryson used
creative hypothetical situations to push each party to define the bounds of its
position. In one, he pushed Celgene to
define the extent of its position that a new procedure to enforce an existing
law constitutes a taking. He posited a
no-felon homesteader provision in the Homestead Act of 1862 that was initially
not enforced, but later a procedure was set up to investigate homesteaders’
felony records. (Celgene: yes, that
would probably be a taking.) In another,
Judge Bryson pushed back against Celgene’s assertion that it would be at least
“passing strange” or impossible for an Article I agency to find its own mandate
unconstitutional. He hypothesized a
temporary emergency court of appeals that consisted of both Article I and
Article III judges and asked Celgene if such a court could find itself
unconstitutional. (Celgene: that would
be a harder question than we have here.)
This appeal may give the court an
opportunity to rule on the constitutionality of retroactive applications of
IPRs to pre-AIA patents. A condition for
such a ruling, however, is that the court affirms the PTAB’s cancellation of
the ‘720 patent’s claims.
Click here
to listen to the arguments in Celgene
Corporation. v. Peter.