Taking Patents

Abstract

The America Invents Act (AIA) was widely hailed as a remedy to the excessive number of patents that the Patent & Trademark Office issued, and especially ones that would later turn out to be invalid. In its efforts to eradicate “patent trolls” and fend off other ills, however, the AIA introduced serious constitutional problems that this Article brings to the fore. We argue that the AIA’s new “second-look” mechanisms in the form of Inter Partes Review (IPR) and Covered Business Method Review (CBMR) have greatly altered the scope of vested patent rights by modifying the boundaries of existing patents. The changes in the boundaries of the patent grant made it significantly more likely that the patent owner would see his patent invalidated. This new state of affairs has already reduced the value of some patents that were obtained before the AIA became effective, and further declines will likely follow. We show on the basis of constitutional takings jurisprudence that the loss of value that some patent owners have suffered as a result of the new procedures — even if their patents have not been specifically subjected to them — potentially compare with physical takings and definitely fall under the umbrella of regulatory takings. The way to remedy these failings is for the government either to change its procedures or provide just compensation to the patent owners that received patents from the PTO before the enactment of the AIA.

Keywords: constitutional law, intellectual property, takings, property, eminent domain, post-issuance review, inter partes review, IPR, covered business method review, CBMR, patent reform, Fifth Amendment

JEL Classification: O34, K11