Inter Partes Reviews Do Not Violate the Takings Clause: Court of Federal Claims | Practical Law

Inter Partes Reviews Do Not Violate the Takings Clause: Court of Federal Claims | Practical Law

In Christy, Inc. v. United States, the US Court of Federal Claims held that inter partes reviews do not violate the Takings Clause because patent rights are public rights, not private rights that are compensable in a Fifth Amendment takings claim.

Inter Partes Reviews Do Not Violate the Takings Clause: Court of Federal Claims

Practical Law Legal Update w-018-7974 (Approx. 4 pages)

Inter Partes Reviews Do Not Violate the Takings Clause: Court of Federal Claims

by Practical Law Intellectual Property & Technology
Published on 31 Jan 2019 • USA (National/Federal)
In Christy, Inc. v. United States, the US Court of Federal Claims held that inter partes reviews do not violate the Takings Clause because patent rights are public rights, not private rights that are compensable in a Fifth Amendment takings claim.
On January 29, 2019, in Christy, Inc. v. United States, the US Court of Federal Claims dismissed a claim that the invalidation of patent rights in an inter partes review (IPR) gives rise to a takings claim under the Takings Clause of the Fifth Amendment ( (Fed. Cir. Jan. 29, 2019)).
Christy, Inc. owns US Patent No. 7,082,640 (the '640 patent), which covers an ambient air filter vacuum. In June 2014, Christy sued Black & Decker (US), Inc. (B&D) for infringement of the '640 patent. In December 2014, B&D filed two IPR petitions for the '640 patent. The Patent Trial and Appeal Board (PTAB) instituted both IPRs and, in final written decisions, found all claims invalid on several grounds. Christy appealed the PTAB's decisions to the US Court of Appeals for the Federal Circuit. In September 2017, the Federal Circuit affirmed one of the PTAB's decisions and dismissed Christy's other appeal as moot. In August 2018, the PTAB issued an IPR certificate officially cancelling claims 1-18 of the '640 patent.
In May 2018, Christy filed suit against the US Government in Federal Claims court asserting, among other things, that the cancellation of the '640 patent claims is an illegal taking of its property rights without just compensation under the Takings Clause. The Government then filed a motion to dismiss for failure to state a claim upon which relief can be granted.
In response to the Government's motion, the Court of Federal Claims dismissed Christy's takings claim, explaining that to prevail on this claim, a plaintiff must:
  • Identify a valid private property interest under the Fifth Amendment.
  • Show a governmental action that amounts to a compensable taking of the property interest.
The court then found that Christy's patent rights are not a valid property interest for Takings Clause purposes, noting that:
  • Other courts have held that patent rights are not property interests subject to the Takings Clause.
  • Christy's rights derive wholly from federal law and Congress is free to define those rights as it sees fit.
  • Congress has not expressed any intent to subject patent rights to the Takings Clause.
The court also held that Christy's argument is not supported by the Supreme Court's recent decision in Oil States Energy Services, LLC v. Greene's Energy Group LLC (138 S. Ct. 1365 (2018)). The court explained that:
  • The Oil States decision does not suggest that patents are property for Takings Clause purposes. Rather, the Supreme Court merely specified that its holding regarding the constitutionality of IPRs should not "be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause" (Oil States, 138 S. Ct. at 1379).
  • Several parts of the Oil States decision support the conclusion that IPRs do not violate the Takings Clause, including the Supreme Court's statements that:
    • the decision to grant a patent is one involving public rights (a public franchise);
    • patent owner's rights are qualified by, and subject to, the patent laws; and
    • the patent laws give the US Patent and Trademark Office the continuing authority to review and potentially cancel issued patents.
Accordingly, the court dismissed Christy's takings claim on the ground that patents are public franchises, not private property that is compensable under the Takings Clause. The court also dismissed Christy's other claims for breach of contract, breach of the implied duty of good faith and fair dealing, unjust enrichment, and unjust exaction.
For more information on the Supreme Court's Oil States decision, see Legal Update, Supreme Court: Inter Partes Reviews Do Not Violate Article III or the Seventh Amendment.