Shifting Constitutional Sands: Can and Should Patentholders Rely on the Due Process Clause to Thwart Government Action?
42 Pages Posted: 23 Jul 2008
Date Written: July, 22 2008
Abstract
Today there are more patentholders than ever who may seek relief when government action detrimentally affects the value of their patents. The expected explosion in patentholders' due process claims creates a danger of enjoining government policy changes or crucial government use. Historically, courts have characterized patents as "property" and thus accorded them protection under the Takings and Due Process Clauses. But patents are not a form of traditional property; rather, they are federally granted benefits. In light of the Federal Circuit's recent repudiation of patentholders' rights to Takings Clause protection, and the Supreme Court's denial of certiorari, it is fair to say that courts are no longer reflexively granting patentholders property protection. If the courts choose to reconsider that protection, it would make sense for them to analyze patentholders' rights to such protection using the same test that is used to determine the due process rights of recipients of other government benefits.
Applying this same standard, there is substantial doubt as to whether patents satisfy the requirements for due process protection. Patents have some - but not all - of the characteristics of a protectible federal benefit. Unlike other federal benefits previously awarded protection, patents do not have an easily discernible value, because the value of each patent is dependent on the market for the patented technology. Moreover, because patents, unlike welfare, do not furnish basic living requirements, they do not fall within the realm of "essential" federal benefits. Thus, patentholders should be aware that if this standard is applied, there is some doubt that they will be en-titled to due process protection.
Moreover, the Federal Circuit's recent hesitation to accord patents full property status is easily understood in light of the potential impact for providing incumbent protections. Recognizing a patentholder's right to due process protection could have a dramatic effect on government activities. Government action, either in the form of appropriation of an invention or in the form of legislation, may be susceptible to either injunctive or monetary relief. If unlicensed use of an invention is found to violate due process, the government may find its use enjoined, possibly making some of its most important government functions more costly or complicated. Similarly, the government may find the patentholders successful in either enjoining retroactive legislation, or obtaining damages up to the value of the patentholders' economic loss - damages that, but for currently proposed legislation, could be as high as $1 billion dollars. If courts hesitate to accede to these potential outcomes, they could choose to reverse course and deny patentholders that particular protection.
In sum, while patentholders might view their right to due process protection as firmly established, the Federal Circuit's recent decision should give them pause. In circumstances involving government use of inventions or government policy changes, patentholders bringing such claims should expect caution from the courts in reaffirming their right to due process protection.
Keywords: Fifth Amendment, Due Process Clause, Patents, Regulatory Takings, Property, Government Benefits, Goldberg, Roth
JEL Classification: K19, K30
Suggested Citation: Suggested Citation