Inter partes review improperly delegates judicial functions to administrative agencies---making IPR proceedings advisory solves, avoids the trolls DA, and broadly cabins delegation of Article III judicial functions to agencies

This case raises a constitutional challenge to new post-grant patent proceedings. This Court has just granted certiorari to review statutory and discretionary matters within such proceedings. See Cuozzo Speed Techs., LLC v. Lee, No. 15-446 (cert. granted January 15, 2016). It stands to reason that the Court should, in addition, analyze constitutional validity. This Court may thus hear the two cases together, the one raising smaller issues (Cuozzo) alongside the one raising larger issues (this case). That would secure a more complete vetting of administrative agency authority.

Confusion over this Court’s Article III “public rights” jurisprudence reached its apex with this case. The lower court here endorsed a spectacular anomaly. Congress may now delegate authority to an administrative tribunal to determine the validity of private property rights amongst private litigants embroiled in a private federal dispute of a type with clear historical antecedents to 1789. Under the lower court’s decision, the “judicial power” is no longer reserved to Article III courts, unless a state law claim is in play. Under that reasoning, if Congress swoops in to regulate an area, the Separation of Powers question is decided in the negative at the moment Congress does regulate it, irrespective of whether it “originate[s] in a newly fashioned regulatory scheme or possess[es] a long line of common-law forebears.” Granfinanciera, SA v. Nordberg, 492 U.S. 33, 52 (1989) (citation omitted). Countless decisions of this Court direct otherwise.

In this case, the Court of Appeals for the Federal Circuit rejected a constitutional challenge to inter partes review, a process in which employees of the United States Patent and Trademark Office (the “Patent Office”) convene an adjudicatory tribunal to conduct a trial and decide whether to cancel (i.e., invalidate) previously issued and fully vested private patent rights. Patent validity adjudications – even stand-alone invalidity petitions brought in the absence of an infringement counterclaim – existed in the common law courts since before the Founding. This is precisely the type of adjudication that Congress cannot place before an agency without conflicting with this Court’s precedents.

Never before has this Court, nor any court of appeals, approved such a deviation from Separation of Powers principles. No previous court has ever approved delegating validity-determination authority over common-law-adjudicated property rights to a non-Article III decisionmaker. The very fact that the lower court believed itself to be faithfully applying this Court’s latest “public rights” pronouncements indicates how deeply this area of law is in disrepair. Absent clarification, almost nothing remains of the high walls this Court has occasionally had to invoke to prevent Congressional encroachments on the Judicial branch.

Two powerful reasons thus support review in this Court.

Most obviously, as explained in detail below, the lower court’s decision directly conflicts with this Court’s long-standing precedent relating to agency actions affecting patents for both invention and land. See, e.g., McCormick Harvesting Mach. Co. v. Aultman-Miller Co., 169 U.S. 606 (1898). This Court should review to confirm that final adjudications of patent validity may only occur in Article III trial courts. However, this is not to say that this Court must abolish the inter partes review process as a whole. Rather, this Court may make the process constitutionally sound by doing what it has always done under these circumstances: make the outcome of inter partes review advisory and subject to de novo treatment in an Article III trial court. So corrected, inter partes review may still identify and appropriately target “junk patents,” though an Article III trial court will need to perform the final act of invalidation.

More deeply, this case presents a rare chance to clarify the Court’s public rights jurisprudence, especially in the context of agency delegations. This significance extends beyond the patent system. Congress presently lacks clear guidelines on how it may, and how it may not, delegate decisionmaking powers to administrative agencies without offending the Constitution. Litigants caught within questionable tribunals are equally at sea in knowing whether and how to challenge them. And as this case shows, the lower courts, believing themselves to be applying this Court’s precedents, have reached absurd results. If something so obviously a “private right” under Article III jurisprudence, i.e., a private dispute with roots in the common law courts of 1789, may be denominated a “public right” in order to shoehorn it into some of the less rigid statements by this Court about Article III, then something is wrong with this Court’s past Article III guidance. The way forward lies in unambiguously reaffirming that the Stern v. Marshall “historical antecedents” test is a threshold question that applies not just to bankruptcy contexts, and not just state law, but to Congress’s delegation of agency authority and to federal law issues as well.