Supreme Court to Decide Whether a Patent is a Compensatory Interest under the Fifth Amendment

Post Authored By: Peter Danos

The United States Court of Appeals for the Federal Circuit (the “Federal Circuit”) has determined that the invalidation of a patent via an inter partes review (“IPR”) is not a compensable taking under the Fifth Amendment.  See generally Christy Inc. v. United States, 971 F.3d 1332, 1337 (Fed. Cir. 2020). 

On July 18, 2003, Christy, Inc. (“Christy”) applied for patent protection of its ambient air backflushed filter vacuum, which issued as U.S. Pat. No. 7,082,640 (“’640 patent”) on March 2, 2006.  Christy paid the issue fee and subsequent maintenance fees under 35 U.S.C. § 41(b)(1).  In 2014, Christy and its licensee, CDC Larue Industries, Inc., sued two competitors for patent infringement.  In response, one of the Defendants filed two petitions for IPR of the ’640 patent.  The Patent Trial and Appeal Board (the “Board”) issued a written opinion, finding the challenged claims unpatentable.  On appeal, the Federal Circuit affirmed the Board’s decision.

Christy subsequently filed a class action suit against the United States in the Court of Federal Claims (“Federal Claims Court”) that included, in relevant part, a count alleging a Fifth Amendment taking.[1]  Specifically, Christy claimed that it had a property right in its claimed invention, as well as “the issue fees and maintenance fees paid, investments in the underlying technologies to the invalidated claims, and to the monies spent in defending” the IPR.  Christy argued that all of this property was taken without just compensation through the IPR process that ultimately invalidated the challenged claims of the ’640 patent. 

The Takings Clause of the Fifth Amendment provides that private property shall not “be taken for public use, without just compensation.”  Lingle v. Chevron U.S.A. Inc., 544 U.S. 528,536 (2005).  To prevail, plaintiff must “identify[] a valid property interest” and show a “governmental action [that] amounted to a compensable taking of that property interest.”  To support its position, Christy cited Oil States Energy Services, LLC v. Greene’s Energy Group, Limited Liability Company, 138 U.S. (2018), to argue that the Supreme Court has acknowledged “patents are property subject to a Fifth Amendment taking.”  The Federal Claims Court disagreed, explaining that Oil States took no such position, and instead explained that an issued patent is a government-granted franchise, as opposed to a personal property right.  Christy timely appealed to the Federal Circuit.

The Federal Circuit affirmed the Federal Claims Court’s decision.  Specifically, the Federal Circuit stated that it was bound by Golden, finding that the “cancellation of patent claims in [an IPR] cannot be a taking under the Fifth Amendment.” Golden v. United States, 955 F.3d 981, 989 n.7 (Fed. Cir. 2020).  As explained in Golden, its decision was predicated upon Celgene Corporation v. Peter, which held that the retroactive application of an IPR proceeding to Pre-AIA patents is not an unconstitutional taking as “[p]atent owners have always had the expectation that the validity of patents could be challenged in the district court.”  955 F.3d 981,989 (Fed. Cir. 2020).[2] 

Christy subsequently filed a writ of certiorari, which the United States Supreme Court denied on February 22, 2021. 

[1] Christy also alleged four claims on contractual theories, and an illegal extraction claim. 

[2] The Celgene Court further noted that the “patent owners in Patlex and Joy Technologies had a stronger argument that Celgene because, before the creation of ex parte reexaminations, there were no PTO reexamination procedures.”  Celgene Corp., 931 F.3d at 1358.  See generally Patlex Corp v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985) and Joy Technologies, Inc. v. Manbeck, 959 F.2d 226 (Fed. Cir. 1992). 

About the Author:

Pantelis (“Peter”) Danos is an associate at Irwin IP.  His practice involves all areas of Intellectual Property law and focuses on patent litigation, where he works on technical subject matter spanning myriad technology areas.   


Leave a Reply