It took many people by surprise when the Supreme Court ignited a firestorm in the now-infamous Kelo case by giving cities the ability to seize personal property from a private owner and give it to a developer for the alleged “public purpose” of increasing tax revenues. The Court will have another chance to rule on key property rights in what may be this term’s sleeper blockbuster: a patent case that has major implications for constitutional due process guarantees and protecting private property.
From a policy perspective, the PTAB has undermined its own goal. Instead of freeing up the innovation economy, it has created a new set of legal procedures that can be abused to extort money from patent owners and invalidate legitimate patents. The result is exactly the opposite of that intended by the America Invents Act: more litigation, less certainty for inventors, and higher costs of innovation.
But the deeper constitutional problem is that the patent tribunal is taking away people’s property without adhering to our constitutional guarantees of due process, and that could have implications for other types of property rights as well. The PTAB is a constitution-free zone without jury trials, with strict limits on the evidence patent owners may present, and where virtually anyone can challenge a patent, opening the door to rampant abuse. Rather than making the process more efficient, patent owners can now face challenges on two fronts – at both the PTAB and in the courts. In an amicus brief for the CATO Institute and the American Conservative Union Foundation, Ilya Shapiro and Greg Dolin write that “the PTAB draws power away from the judicial branch in favor of the executive” and makes all decisions by the courts subject to “revision and modification by the executive branch” – raising serious constitutional issues.
The goal of the America Invents Act was a good one, aimed at bolstering the legitimate property rights of patent owners. But in this case the cure is worse than the disease and has created an out of control administrative tribunal that undermines constitutionally protected property rights. If the Supreme Court allows the government to start exempting whole categories of property from constitutional protection, we will all be the poorer for it.