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Inter Partes Reviews Are Not Takings: You Never Had a Right [Brief for the Petitioner, Advanced Audio Devices, LLC v. HTC Corp., 139 S. Ct. 334 (2018) (No. 18-183), 2018 WL 3819620]

Jesse T. Nation | February 28, 2019 | PDF Version (251 KB)

Summary: Inter partes reviews (“IPRs”) are not takings. This Comment will argue the background principle defense is an affirmative defense that bars patent owners from winning a takings challenge against IPRs because if an IPR cancels a patent, the patent owner never had a right to the patent.

Preferred Citation: Jesse T. Nation, Inter Partes Reviews Are Not Takings: You Never Had a Right, 58 Washburn L.J. Online 89 (2019), http://washburnlaw.edu/wljonline/nation-interpartesreviews

I. Introduction

Inter partes reviews (“IPRs”) are not takings by the government because the Constitution does not protect property interests that the owner never owned. This Comment will explain that the background principle defense is an affirmative defense that would prevent a patent owner from winning a takings claim against an IPR proceeding. The patent owner will lose because if an IPR canceled a patent owner’s patent, the patent owner never had a right to the patent in the first place, therefore the Constitution will not protect the patent owner from an IPR.

II. Background

A. The America Invents Act

In 2011, Congress created IPRs with the America Invents Act (“AIA”).[1] IPRs are a process where the United States Patent and Trademark Office (“PTO”) can cancel an issued patent or an issued patent claim.[2] Patent claims can be thought of as the metes and bounds of the patent, but patent claims can be independent or dependent on the patent’s other claims.[3] IPRs can be started with a petition from any person other than the patent owner.[4]

IPR petitions can only challenge a patent claim by showing prior art: other patents or printed publications that existed at the critical date before the patent’s priority date.[5] For patents that were filed on or after March 16, 2013, the critical date is the time when the patent was filed.[6] For patents that were filed before March 16, 2013, the critical date is one year before the patent was filed.[7] A patent owner may file a response to an IPR petition that is filed against their patent.[8] The Director of the PTO may institute an IPR if the Director determines there is “a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged.”[9]

IPRs function like adversarial administrative quasi-trials, where a board of administrative law judges exclusively focus on whether prior art teaches the patent or the individual patent claims.[10] Prior art that teaches the patent claim proves the patent was not original when the patent was filed; consequently, the patent claim should not have been issued in the first place.[11] If the patent claim was already taught by prior art, the inventor cannot satisfy the quid pro quo of patent law.[12] The inventor cannot exchange a new idea for monopoly protection because the inventor did not really have a new idea.[13]

If the Board determines prior art teaches the patent claim, the patent claim is canceled by the PTO.[14] However, if the Board finds the prior art does not teach the patent claim, the patent claim is not canceled.[15] If the Board determines the prior art only teaches some of the patent claims, then the claims that were dependent on the prior art will be canceled.[16] The losing party can appeal the Board’s decision to the Federal Circuit Court of Appeals.[17]

Congress created IPRs to provide a quick mechanism to cancel patents that should never have been issued in the first place.[18] The legislative history of the AIA makes this clear: “[o]nly the worst patents, which probably never should have been issued, will be eligible for review in this proceeding.”[19] “The new transitional program included in the House bill creates an inexpensive and speedy alternative to litigation—allowing parties to resolve these disputes more efficiently rather than spending millions of dollars in litigation costs. In the process, the proceeding will also prevent nuisance litigation settlements.”[20]

B. The Case

Advanced Audio Devices’ (“AAD”) certiorari petition is about whether IPRs are takings under the Takings Clause.[21] In Advanced Audio Devices, LLC v. HTC Corp.,[22] HTC filed five IPR petitions against five of AAD’s patents.[23] These petitions challenged many of AAD’s patent claims.[24] The Director instituted IPRs against all five patents.[25] HTC was successful and AAD’s patent claims were canceled because the Board found AAD’s patent claims were taught by prior art.[26] AAD appealed to the Federal Circuit Court of Appeals.[27] AAD lost on appeal because the appeals court affirmed the findings of the Board without an opinion.[28] On August 3, 2018, AAD petitioned the Supreme Court and included, for the first time, an argument that all IPRs are takings.[29]

C. The Defense

In Lucas v. South Carolina Coastal Council,[30] the Supreme Court created an affirmative defense that the federal government has routinely used to defeat takings claims.[31] Private property advocates and defenders of government power both believed Lucas would usher in a new era of compensation and deregulation.[32] For this reason, Lucas’ legacy has become one of the “starkest” examples of unintended consequences.[33] Scholars have concluded that Lucas is best known for creating an affirmative defense that is used to defeat takings claims.[34]

Justice Scalia’s majority opinion in Lucas held the government cannot take something that a person does not own.[35] Essentially, the background principle defense stands for the proposition that the government cannot take a stick from the property owner’s bundle, when that specific stick was never in the bundle.[36] For example, a lake-bed owner would not be entitled to compensation when the Environmental Protection Agency prevented the lake-bed owner from filling her lake with fill material if filling the lake would flood another’s land.[37] Such an action would create a common law nuisance.[38] Similarly, the owner of a nuclear energy plant would not be entitled to compensation when an agency prevents the owner from continuing operations when the plant is located near an earthquake fault, because this act would be a common law nuisance.[39] Justice Scalia’s majority opinion reasoned the owners never had a right to those uses of their property because those uses were prohibited by the background principles of nuisance in property law.[40] The lake-bed owner never had the right to flood another’s land.[41] The nuclear plant owner never had a right to operate a nuclear plant near an earthquake fault.[42] Justice Scalia concluded these restrictions on the owner’s property inhered in the title of the property itself.[43] Thus, these prohibited uses are sticks the owner never had in his or her bundle.

III. Commentary

IPRs cannot be takings because the owner never had a patent right in the first place. The federal government can assert the background principle defense as an affirmative defense to a takings challenge against IPRs.

A. Federal Patent Law Provides the Relevant Background Principles

The existence of a valid patent right is exclusively a question of federal patent law. Although the Takings Clause protects intellectual property from being taken without compensation, “the [Takings Clause] protects rather than creates property interests, the existence of a property interest is determined by reference to ‘existing rules or understandings that stem from an independent source such as state law.’”[44] When deciding an issue regarding real property, the state’s common law of property will determine the existence of a property right.[45] In the case of patent law, the background principles of federal patent law will determine the existence of a property right.[46]

For example, if a real property owner brings a takings claim against the government because the government has prevented the owner from using fill material to fill a lake-bed, a court will look to the state’s common law of property to determine whether the property owner had a right to fill the lake-bed.[47] Similarly, if a patent owner brings a takings claim against the government because the government has canceled the owner’s patent, a court will look to federal patent law to determine whether the patent owner had a right to the patent.[48]

B. Under Federal Patent Law, an Inventor is not Entitled to a Patent Taught by Prior Art

Patents or patent claims that are taught by prior art are not patentable and should never be granted protection under patent law. “The primary distinction between inter partes review and the initial grant of a patent is that inter partes review occurs after the patent has issued.”[49] In Oil States Energy Services, LLC v. Greene’s Energy Group, LLC,[50] the Supreme Court determined that this temporal distinction does not make a difference for a Seventh Amendment challenge, but expressly left open the question of whether this distinction would matter for a takings challenge.[51]

This distinction should not matter for a takings challenge because federal patent law, both before and after the AIA, claimed that patents could not be issued if prior art taught the patent or the patent’s claims.[52] IPRs simply “offer[] a second look at an earlier administrative grant of a patent.”[53] “The Board considers the same statutory requirements that the PTO considered when granting the patent.”[54] If anything, the patent should not have been issued and the IPR process is only a safety valve on the system.[55] Congress created IPRs to further ensure that patent monopolies are “kept within their legitimate scope,”[56] because if prior art teaches a patent, the quid pro quo of patent law is not satisfied.[57] The inventor did not fulfill their requirement of disclosing a novel idea to the world in exchange for getting a monopoly.[58]

C. IPRs Cannot be Takings Because the Government Cannot Take Something That Does Not Have an Owner

IPRs are a process where third parties can prove that a patent should never have been issued because of prior art.[59] If an IPR cancels a patent, it means the patent should have never been issued in the first place because the inventor had no right to the patent under the background principles of patent law.[60] Therefore, if an IPR cancels a patent, there is no property right for the government to take because the property—in this instance a patent—should have never existed.

D. Prior Art Inheres in the Title Itself

In a real property context, the risk that certain uses may be prohibited at common law “inheres” in the title of the real property.[61] Similarly, the risk that prior art can cancel a patent or a patent’s claims “inheres” in the patent claim itself.[62] When an inventor applies to get a patent, patent law makes it clear that patents should not be issued if there is prior art.[63] If prior art does exist, the issuance of a patent is unlawful.[64] Even before the AIA, a third party could bring a declaratory action and cancel a patent by proving it was a mistake to issue the patent in the first place in light of a patent’s prior art.[65] Further, defendants could have always asserted a patent’s invalidity due to prior art as a defense to a patent infringement suit.[66] Thus, the risk that an issued patent can become a canceled patent upon a showing of prior art is now and has always been a background principle of federal patent law.[67] Essentially, the inventor should never have had a stick or a bundle of sticks in the first place.

IV. Conclusion

IPRs are not takings. The government cannot take property rights that you do not own. It is unlawful to use property in ways that are prohibited by common law nuisance; therefore, if the property is being used in a way that is unlawful, the property cannot be considered taken by the government. For this same reason, IPRs are not takings because such patents are prohibited by federal patent law.


1. Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365, 1370 (2018). [Return to Text]

2. Id. The following block quote describes what a patent is:

A patent for an invention is the grant of a property right to the inventor, issued by the United States Patent and Trademark Office. Generally, the term of a new patent is 20 years from the date on which the application for the patent was filed in the United States or, in special cases, from the date an earlier related application was filed, subject to the payment of maintenance fees. U.S. patent grants are effective only within the United States, U.S. territories, and U.S. possessions. Under certain circumstances, patent term extensions or adjustments may be available. The right conferred by the patent grant is, in the language of the statute and of the grant itself, “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or “importing” the invention into the United States. What is granted is not the right to make, use, offer for sale, sell or import, but the right to exclude others from making, using, offering for sale, selling or importing the invention. Once a patent is issued, the patentee must enforce the patent without aid of the USPTO.

Patent & Trademark Off., General Information Concerning Patents: What Are Patents, Trademarks, Servicemarks, and Copyrights?, (Oct. 2015), https://www.uspto.gov/patents-getting-started/general-information-concerning-patents#heading-2 [https://perma.cc/U8TF-D7CK]. [Return to Text]

3. See Oil States, 138 S. Ct. at 1370; Corning Glass Works v. Sumitomo Elec. U.S.A., Inc., 868 F.2d 1251, 1257 (Fed. Cir. 1989) (“A claim in a patent provides the metes and bounds of the right which the patent confers on the patentee to exclude others from making, using, or selling the protected invention.”). [Return to Text]

4. 35 U.S.C. § 311(a) (2012); Oil States, 138 S. Ct. at 1371. [Return to Text]

5. See 35 U.S.C. § 311(b); Oil States, 138 S. Ct. at 1371. [Return to Text]

6. See 35 U.S.C. § 102 (2012); Colt Int’l Clothing Inc. v. Quasar Sci., LLC, 304 F. Supp. 3d 891, 893 (C.D. Cal. 2018). [Return to Text]

7. 35 U.S.C. § 102; Quasar, 304 F. Supp. 3d at 893. [Return to Text]

8. 35 U.S.C. § 313 (2012); Oil States, 138 S. Ct. at 1371. [Return to Text]

9. 35 U.S.C. § 314(a) (2012); Oil States, 138 S. Ct. at 1371. [Return to Text]

10. 35 U.S.C. § 311 (2012); Oil States, 138 S. Ct. at 1371. I am using the phrase “teaches” to mean the prior art discloses the novel ideas behind the patent. [Return to Text]

11. See Oil States, 138 S. Ct. at 1371. [Return to Text]

12. See Cridlebaugh v. Rudolph, 131 F.2d 795, 800 (3d Cir. 1942) (holding that the failure of novelty automatically denies a patent’s patentability); Luck’s Music Library, Inc. v. Gonzales, 407 F.3d 1262, 1266 (D.C. Cir. 2005) (“For example, the Eldred Court saw the ‘quid pro quo’ idea as having a special force in patent law, where the patentee, in exchange for exclusive rights, must disclose his ‘discoveries’ against his presumed will.”) (citation omitted). [Return to Text]

13. See 35 U.S.C. § 102 (2012); Cridlebaugh, 131 F.2d at 800; Luck’s Music, 407 F.3d at 1266. [Return to Text]

14. See 35 U.S.C. § 314(a) (2012); Oil States, 138 S. Ct. at1371. [Return to Text]

15. See 35 U.S.C. § 314(a); Oil States, 138 S. Ct. at 1371. [Return to Text]

16. See 35 U.S.C. § 314(a); Oil States, 138 S. Ct. at 1371. [Return to Text]

17. See 28 U.S.C. § 1295 (2012); 35 U.S.C. § 319; Oil States, 138 S. Ct. at 1371. The Federal Circuit Court of Appeals has exclusive jurisdiction over patent appeals. 28 U.S.C. § 1295. [Return to Text]

18. 157 Cong. Rec. S7413 (daily ed. Nov. 14, 2011). [Return to Text]

19. Id. [Return to Text]

20. Id. [Return to Text]

21. Brief for Petitioner, Advanced Audio Devices, LLC v. HTC Corp., 139 S. Ct. 334 (2018) (No. 18-183), 2018 WL 3819620. [Return to Text]

22. 139 S. Ct. 224 (2018). [Return to Text]

23. Brief for Petitioner, supra note 21, at 3. [Return to Text]

24. Id. [Return to Text]

25. See id. [Return to Text]

26. See id. [Return to Text]

27. See id. at 1. [Return to Text]

28. See id. at 3. [Return to Text]

29. See Brief for Petitioner, supra note 21, at 3. [Return to Text]

30. 505 U.S. 1003 (1992). [Return to Text]

31. Michael C. Blumm & Lucus Ritchie, Lucas’s Unlikely Legacy: The Rise of Background Principles As Categorical Takings Defenses, 29 Harv. Envtl. L. Rev. 321, 321–23 (2005). [Return to Text]

32. Id. [Return to Text]

33. Id. [Return to Text]

34. Id. at 322. [Return to Text]

35. Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1029–30 (1992). [Return to Text]

36. See Blumm & Ritchie, supra note 31, 325–26. [Return to Text]

37. See Lucas, 505 U.S. at 1029. [Return to Text]

38. Id. [Return to Text]

39. Id. [Return to Text]

40. Id. [Return to Text]

41. Id. [Return to Text]

42. Id. [Return to Text]

43. See Lucas, 505 U.S. at 1029. [Return to Text]

44. E. Enter. v. Apfel, 524 U.S. 498, 554 (1998) (Breyer, J., dissenting); Phillips v. Wash. Legal Found., 524 U.S. 156, 163–64 (1998). [Return to Text]

45. Lucas, 505 U.S. at 1029–30. [Return to Text]

46. See U.S. Const. art. I, § 8, cl. 8; 35 U.S.C. § 2 (2012). The existence of a federal patent right is exclusively a federal question. See U.S. Const. art. I, § 8, cl. 8; 35 U.S.C. § 2; 28 U.S.C. § 1338(a). [Return to Text]

47. See Apfel, 524 U.S. at 554 (Breyer, J., dissenting); Phillips, 524 U.S. at 163–64; Lucas, 505 U.S. at 1029. [Return to Text]

48. See Apfel, 524 U.S. at 554 (Breyer, J., dissenting); Phillips, 524 U.S. at 163–64; Lucas, 505 U.S. at 1029. [Return to Text]

49. Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365, 1374 (2018). [Return to Text]

50. Id. at 1374, 1379. [Return to Text]

51. Id. at 1379. [Return to Text]

52. Compare 35 U.S.C. §§ 102–03 (2012), with 35 U.S.C. §§ 102–03 (2008). [Return to Text]

53. Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2144 (2016). [Return to Text]

54. Oil States, 138 S. Ct. at 1374. [Return to Text]

55. Id. [Return to Text]

56. See Cuozzo, 136 S. Ct. at 2144. [Return to Text]

57. Luck’s Music Libr., Inc. v. Gonzales, 407 F.3d 1262, 1266 (D.C. Cir. 2005). [Return to Text]

58. See Cuozzo, 136 S. Ct. at 2144; Luck’s, 407 F.3d at 1266. [Return to Text]

59. See 35 U.S.C. §§ 102–03. [Return to Text]

60. See id. [Return to Text]

61. Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1029 (1992). [Return to Text]

62. Id. [Return to Text]

63. See 35 U.S.C. §§ 102–03. [Return to Text]

64. See id. [Return to Text]

65. See Jungersen v. Ostby & Barton Co., 335 U.S. 560, 563 (1949). [Return to Text]

66. Compare 35 U.S.C. § 282(b) (2012), with 35 U.S.C.§282(b) (2002). [Return to Text]

67. See Jungersen, 335 U.S. at 563. [Return to Text]