Federal Circuit Unanimously Upholds The Constitutionality Of Inter Partes Review In MCM Portfolio LLC v. Hewlett-Packard Company

On December 2, 2015, the Federal Circuit issued its decision in MCM Portfolio LLC v. Hewlett-Packard Company (No. 2015-1091), finding inter partes reviews (IPRs) by the Patent Trial and Appeal Board (the Board) constitutional under Article III and the Seventh Amendment, and putting to rest an increasingly common attempt by patent owners to attack the Board's authority rather than the merits of the Board's rulings. The court also reiterated its holding in In Re Cuozzo Speed Techs. that IPR institution decisions are unreviewable. Judge Dyk authored the court's unanimous opinion, joined by Chief Judge Prost and Judge Hughes.

Patent Owner MCM had argued that only an Article III court may invalidate a patent, and that IPR proceedings are therefore unconstitutional. Judge Dyk rejected that argument, finding McCormick Harvesting Machine Co. v. Aultman, 169 U.S. 606 (1898) - a decision on which MCM relied that related to a reissue situation in which Congress had not granted the PTO authority to cancel a patent - inapposite. Instead, the court explained that Supreme Court precedent establishes Congress' authority to delegate public rights disputes to administrative agencies, and concluded that such precedent "compel[s] the conclusion that assigning review of patent validity on the PTO is consistent with Article III." After reciting the history of Congressionally enacted post-grant proceedings - from ex parte and inter partes reexamination through IPR, post-grant review and covered business method (CBM) review - the court further noted that "[t]he board's involvement is [] a quintessential situation in which the agency is adjudicating issues under federal law, 'Congress [having] devised an expert and inexpensive method for dealing with a class of questions of fact which are particularly suited to examination and determination by an administrative agency specially assigned to that task.'" The court also recognized that "[t]here is notably no suggestion that Congress lacked authority to delegate to the PTO the power to issue patents in the first instance. It would be odd indeed if Congress could not authorize the PTO to reconsider its own decisions." After its relatively detailed discussion of relevant Supreme Court precedent, the Federal Circuit addressed relevant Federal Circuit authority. The court found further support for the constitutionality of IPRs in Patlex Corp. v. Mossinghoff, 758 F.2d 594, 598 (Fed. Cir. 1985) and Joy Technologies v...