Niskanen Center files Amicus Brief in US v Arthrex

The Niskanen Center has filed an amicus brief in support of the petitioner, the United States of America, in United States v. Arthrex Inc. The Supreme Court granted certiorari in October 2020 and consolidated this case with Smith & Nephew Inc. v. Arthrex Inc.

At issue in this case is the constitutionality of administrative patent judges (APJ) appointments under the Appointments Clause of the U.S. Constitution. Respondent Arthrex, a medical device company that had patent claims invalidated before the Patent Trial and Appeal Board (PTAB), and on appeal to the Court of Appeals for the Federal Circuit (CAFC), Arthrex raised an Appointments Clause challenge, arguing that the APJs were “superior officers” who had been unconstitutionally appointed. The CAFC agreed, and as a remedy, removed the civil service protections APJs currently enjoy, which had allowed them to be removed “only for such cause as will promote the efficiency of the service.”

Should the CAFC’s ruling stand, it would allow the USPTO director to remove APJs for any reason, giving the director even more control than now over the inter partes review process . This would make the PTAB vulnerable to capture by making APJs’ employment at the mercy of a political appointee.

Though the case is mostly a Constitutional question centering on the Appointments Clause, Niskanen wanted to file our brief in support of the petitioners to underscore the PTAB’s importance in its current form as a tool to protect private property rights. For nearly two centuries, the Supreme Court has viewed patents as a public right–specifically a public franchise. It is a tool to “promote the Progress of…the useful Arts,” but not a property right. 

Patents are not “property”; they are a “public franchise”, a monopoly right created by law. As Congress emphasized in the Patent Act, patents merely have “attributes of personal property” (35 U.S.C. 261; emphasis added), and all such attributes are “subject to the provisions of this title.” Id. “This provision qualifies any property rights that a patent owner has in an issued patent, subjecting them to the express provisions of the Patent Act.” Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 138 S. Ct. 1365, 1375 (2018). In short, patents are not private property in the sense of being an inalienable right, and instead carry with them only whatever rights Congress grants and subject to whatever conditions Congress imposes, one of which is review by the PTAB.

Further, our brief clarifies  the nature of a patent as a means of infringing on the property rights of those who hold physical property.

This Court has always recognized that a patent benefits the patentee at the expense of the general public: “[I]ssuing . . . patents . . . take[s] from the public rights of immense value, and bestow[s] them upon [a] patentee. [This] take[s] from the people this valuable privilege, and confer[s] it as an exclusive right upon the patentee.” United States v. Bell Telephone, 128 U.S. 315, 370 (1888). And for more than 150 years, this Court has acknowledged that the exclusive right to an invention is solely the creation of the patent, and does not arise from the invention itself: “The inventor of a new and useful improvement certainly has no exclusive right to it, until he obtains a patent. This right is created by the patent.” Gayler v. Wilder, 51 U.S. 477, 493 (1850) (emphasis added). “[T]he right of property which a patentee has in his invention, and his right to its exclusive use, is derived altogether from these statutory provisions; and this court have always held that an inventor has no right of property in his invention, upon which he can maintain a suit, unless he obtains a patent for it, according to the acts of Congress; and that his rights are to be regulated and measured by these laws, and cannot go beyond them.” Brown v. Duchense, 60 U.S. 183, 195 (1856).

Finally, we  clarify the economic benefits of the PTAB in its current form. The Court has recognized that despite the diligent work of patent examiners, “[s]ometimes…bad patents slip through.” Patent examiners granted over 350,000 patents in 2019 and spent an average of 19 hours examining each patent. In such a system, invalid patents will inevitably  slip through. The PTAB, by invalidating in part or in whole over 6,000 patents, has saved an estimated $2.3 billion in litigation costs and likely billions more by preventing the assertion of invalid monopoly rights against those who are making use of their private property to make a living.