High Court Urged To Find Retroactive IPRs Unconstitutional
By Ryan Davis
Law360 (November 12, 2019, 7:13 PM EST) -- A major patent licensing firm has told the U.S. Supreme Court that it is unconstitutional for patents issued prior to the America Invents Act to be invalidated under the law’s review system, saying it was “both arbitrary and irrational” for Congress to make the reviews retroactive.
Collabo Innovations Inc., whose image sensor patent was successfully challenged in an AIA inter partes review requested by Sony Corp., said in a Nov. 4 petition for a writ of certiorari that the decision invalidating the patent violated both the takings clause and the due process clause of the U.S. Constitution.
The company, a unit of licensing company Wi-LAN Technologies Inc., said that when the patent was issued in 1999, 12 years before the AIA was passed, it was impossible to know that a new system for challenging patents would one day be created. Subjecting the patent to inter partes review disrupted the company’s expectations and violates the Constitution, it said.
“No one could have anticipated that Congress would retroactively make the ... patent subject to a wholly new procedure like inter partes review — the patent ‘death squad,’” Collabo wrote. “Had the patent owner known of this risk, it might have sought narrower claims in examination or, in the alternative, forego[ne] patent protection altogether by keeping its inventions a trade secret.”
Congress had no authority to make AIA reviews retroactive when enacting the law in 2011, Collabo said. The invalidation of patents by the Patent Trial and Appeal Board is a taking of property by the government that violates the Constitution’s takings clause, and the use of reviews on pre-AIA patents strips away the legal rights of patent owners without due process, the company said.
"Congress identified no rationale for its decision to make inter partes review retroactive. There is none," the petition said.
Collabo made the same arguments to the Federal Circuit, which rejected them in August. The appeals court affirmed the PTAB's decisions invalidating Collabo's patents, and cited a decision in a separate case days earlier that found the retroactive applications of AIA reviews was constitutional.
In that case, Celgene Corp. v. Peter , the Federal Circuit concluded that patent owners have known for decades that issued patents may be subject to further review by the patent office in proceedings like ex parte reexamination, which was created in 1980. The new inter partes review system created by the AIA is not different enough that its use on pre-AIA patents is unconstitutional, the court said.
"Although differences exist between IPRs and their reexamination predecessors, those differences do not outweigh the similarities of purpose and substance and, at least for that reason, do not effectuate a taking of Celgene's patents," it wrote.
Collabo urged the high court to reject the Federal Circuit’s reasoning, pointing to what it said are numerous differences between ex parte reexaminations and inter partes reviews. For instance, the new proceedings involve the active participation of the challenger, and it is much more difficult to amend claims in IPRs than in reexaminations, the company said.
"Inter partes review is not simply a new mode of procedure for a preexisting proceeding," it said. "Nor does it simply change the tribunal adjudicating that proceeding. It is an entirely new proceeding that Congress has unlawfully imposed on patents that issued under an 'old regime.'"
The company noted that Congress appears to have made AIA reviews retroactive in part to crack down on what lawmakers viewed as frivolous lawsuits by so-called patent trolls. However, the company cited a Supreme Court holding that Congress cannot make laws retroactive "as a means of retribution against unpopular groups or individuals."
"Wi-LAN Inc., Collabo’s parent, has been unjustly smeared with the unfortunate label of 'patent troll,'" the petition said. "But it should not have to suffer the consequences of retroactive legislation as a result."
If the justices were to agree with Collabo, it would significantly curtail the reach of inter partes review. The petition cited statistics showing that nearly two-thirds of patents challenged in inter partes review were issued prior to the AIA.
Collabo’s petition brings an issue to the Supreme Court that the justices expressly left unresolved in a last year’s Oil States v. Greene’s Energy decision, which rejected an argument that it is unconstitutional for the PTAB, rather than a court, to invalidate patents.
The court stressed that it was addressing "only the precise constitutional challenges" raised by Oil States, and pointed out that those did not include challenging the retroactive application of IPRs or arguing that they violate due process.
While Collabo opted to the take the issue directly to the Supreme Court, Celgene requested en banc rehearing of its case in September. The full Federal Circuit has not yet decided whether to review the case.
The petition comes weeks after the Federal Circuit ruled in an unrelated case that the structure of the PTAB is unconstitutional because its judges do not have enough supervision by the director of the U.S. Patent and Trademark Office.
The court therefore made it easier for the director to fire the judges, saying that fixed the violation of the Constitution’s appointments clause. However, some patent owners have argued that the decision didn’t go far enough and the entire inter partes review system must be struck down.
Attorneys for Collabo and Sony declined to comment on the case.
The patent-in-suit is U.S. Patent Number 5,952,714.
Collabo is represented by Patrick Conroy, Monte Bond and Daniel Olejko of Bragalone Conroy PC.
Counsel information for Sony at the Supreme Court was not immediately available. At the Federal Circuit, it was represented by Smith Baluch LLP and Turner Boyd LLP.
The case is Collabo Innovations Inc. v. Sony Corp, case number 19-601, in the U.S. Supreme Court.
--Editing by Jack Karp.
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