Inter Partes Review Passes Constitutional Muster

Last week, the US Court of Appeals for the Federal Circuit (Federal Circuit) held that a final written decision from the Patent Trial and Appeal Board (Board) does not violate Article III or the Seventh Amendment of the US Constitution. Additionally, the Federal Circuit confirmed once again that it lacks jurisdiction to review inter partes review institution decisions. MCM Portfolio LLC v. Hewlett-Packard Company, Appeal No. 2015-1091 (Dec. 2, 2015). This decision affirms that companies may continue to challenge effectively patents using the post-grant proceedings under the America Invents Act (AIA), such as inter partes review (IPR), post-grant review (PGR) and transitional covered business method review (CBM).

MCM Portfolio represents the third time that the Federal Circuit has made clear "that there is 'no appeal' from the decision to institute inter partes review," regardless of whether the PTAB issues a final written decision. Slip Op. 7. This holding was not instrumental to its final opinion, however, as the Federal Circuit confirmed that it has jurisdiction to review final written decisions from the PTAB.

More important was the Federal Circuit's rejection of Appellant's argument that inter partes review unconstitutionally usurps patentees' Seventh Amendment rights to a jury trial in an Article III court before revoking a patent. The Appellant rested its argument on the US Supreme Court's holding in McCormick Harvesting Machine Col. v. Aultman (McCormick II), 169 U.S. 606 (1898) that only an Article III court may invalidate a patent. McCormick II came before the Supreme Court from a decision by the USPTO on a reissue application, where the USPTO found certain original claims unpatentable, but other original claims and new claims patentable. The patent owner then abandoned the reissue application, and the USPTO returned the original patent to the patent owner. The trial court held no infringement because the USPTO found claims invalid.

In McCormick II, the Supreme Court held the original patent claims were not invalid because the patent owner was entitled to the return of the original patent as it was prior to filing the reissue application, if the patent owner abandoned the reissue application. The patent owner would not surrender the original patent until the issuance of the reissue patent. Thus, the Supreme Court concluded that, since the patent owner did not surrender the original patent, the USPTO's rejection of the original...