Inter partes review over patents is a public right— agencies are permitted to review and no shift from existing federalism

For many decades the U.S. Supreme Court has grappled with the constitutional issues that arise when a federal institution other than an Article III court makes a decision based on the application of law to fact, where that institution’s conclusion will not be subject to de novo consideration in an Article III tribunal.8 The Court under Chief Justice Marshall discussed the status of the courts of the federal territories, which functioned much like state courts but many of which did not have life-tenured judges.9 The problem of adjudication outside the Article III courts continued to come before the Court.10 In 1982, in Northern Pipeline Co. v. Marathon Pipe Line Co., 11 the Court considered the constitutionality of the bankruptcy courts that Congress had established in the Bankruptcy Reform Act of 1978. The judges of those courts did not serve for life, and the courts were authorized to decide a wide range of issues subject to only limited review by Article III courts.12 Northern Pipeline involved a claim under state law, not a question of federal bankruptcy law. Northern Pipeline had filed for bankruptcy reorganization and, as allowed by the Bankruptcy Act, brought a proceeding in the bankruptcy court against Marathon Pipe Line, seeking damages for breach of contract, warranty, misrepresentation, coercion, and duress.13 The Court concluded that Article III barred that jurisdiction but produced no opinion for the majority.

Speaking for four of the Justices in the majority, Justice Brennan sought to find the pattern in the Court’s precedents. The United States, as amicus curiae in support of the Act’s constitutionality, had argued that under the Court’s cases, “pursuant to its enumerated Article I powers, Congress may establish legislative courts that have jurisdiction to decide cases to which the Article III judicial power of the United States extends.”14 According to the Solicitor General, that power included specialized areas such as bankruptcy law.15 Justice Brennan responded that “when properly understood, these precedents [relied on by the Solicitor General] represent no broad departure from the constitutional command that the judicial power of the United States must be vested in Art. III courts.”16 Instead, “they reduce to three narrow situations not subject to that command, each recognizing a circumstance in which the grant of power to the Legislative and Executive Branches was historically and constitutionally so exceptional that the [assertion of congressional power] was consistent with, rather than threatening to, the constitutional mandate of separation of powers.”17 Two of those narrow, exceptional situations involved territorial courts and courts-martial.18 The third, and the subject of current controversy and this Article, were cases “in which [the] Court has upheld the constitutionality of legislative courts and administrative agencies created by Congress to adjudicate cases involving ‘public rights.’”19.

The historical practice underlying the Court’s concept of public rights adjudication was the subject of a major study published by Professor Caleb Nelson in 2007.20 As he explained, under nineteenth and early twentieth century doctrine, executive officials could make decisions based on the application of law to fact that would be subject to limited or no review in Article III courts when the legal interests at stake fell into certain categories.21 As recounted in more detail below, Nelson found that executive adjudication was permissible with respect to public benefits and so-called public franchises, like corporate charters, but not with respect to what he calls “core private rights.”22 Ordinary private interests based on property and contract were leading examples of core private rights. The Court recently has again noted the distinction between public and private rights in discussing its cases that rely on the presence of the former. Writing for the Court in Stern v. Marshall, 23 Chief Justice Roberts wrote that its decisions have “contrasted cases within the reach of the public rights exception” with those involving matters of private right.24 In Oil States, the Court, through Justice Thomas, explained that “[w]hen determining whether a proceeding involves an exercise of Article III judicial power, this Court’s precedents have distinguished between ‘public rights’ and ‘private rights.’”25 He found that the inter partes review of patents at issue in that case “falls squarely within the public-rights doctrine.”26 Justice Breyer concurred, adding that in his view the Constitution makes the presence of a public right a sufficient but not necessary condition for agency adjudication that is subject to only limited judicial review.27 Justice Gorsuch dissented: he rejected the argument that patents are “a species of public franchises” and therefore subject to cancellation by the executive.28 Public franchises are one of the categories of public as opposed to private rights that Professor Nelson finds in nineteenth century practice.29