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IPR: Not a Taking; Not an Illegal Exaction
By: Dennis Crouch
on August 25, 2020 at 4:41 pm
Publication: Patent – Patently-O

by Dennis Crouch

Christy, Inc. v. US (Fed. Cir. 2020)

David McCutchen is the inventor of U.S. Patent No. 7,082,640 – a shop-vac that can reverse the air flow (back-flush) in order to clear the filter.  The video below shows how this is implemented.  McCutchen passed-away in 2019, but assigned his patent to his company – Christy, Inc. – which is apparently named after his daughter (Christy).

The patent here issued in 2003 — well before the AIA was even a concept.  However, when Christy attempted to enforce its patent against Black & Decker, the company turned around and petitioned for inter partes review. The PTAB cancelled most of the patent claims — a judgment affirmed on appeal without opinion.

At that point, Christy filed a class-action lawsuit in the Court of Federal Claims (CFC) against the U.S. Government — alleging that the cancellation constituted a 5th Amendment taking that required compensation.

nor shall private property be taken for public use, without just compensation.

U.S. Const. 5th Amendment.  In Oil States, the Supreme Court explained that patents are a “public right” also known as a “public franchise” rather than being pure “private property.” However, the Oil States majority was careful to cabin-in that decision only to the question presented in the case.

We emphasize the narrowness of our holding. We address the constitutionality of inter partes review only. . . . [O]ur decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.

Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 138 S. Ct. 1365, 1379 (2018).  In its decision in Christy, the CFC sided with the Gov’t and found that IPR cancellation is not a compensable taking. This result comports with the Court’s prior decisions in Celgene Corp. v. Peter, 931 F.3d 1342, 1360 (Fed. Cir. 2019), cert. denied, 19-1074, 2020 WL 3405867 (U.S. June 22, 2020) and Golden v. United States, 955 F.3d 981 (Fed. Cir. 2020).   I’ll note that the not-a-taking holding is based upon the Federal Circuit’s legal conclusion that “IPRs do not differ sufficiently” from inter partes and ex parte reexaminations available pre-AIA.

The illegal exaction theory is interesting — Christy asks for a refund of its issuance and maintenance fees.  Since this is a class-action, that amount could add-up if we look at all of the patent claims cancelled via IPR.

On appeal, the Federal Circuit found that the CFC does have jurisdiction to hear the illegal exaction case under the Tucker Act, but found that the case lacks merit.

An illegal exaction occurs when money is “improperly paid, exacted, or taken from the claimant in contravention of the Constitution, a
statute, or a regulation.” Norman v. United States, 429 F.3d 1081 (Fed. Cir. 2005).  Given that the Board did not violate Christy’s Fifth Amendment rights by canceling its patent claims, Christy asserts no constitutional provision, statute, or regulation that the PTO violated by failing to refund Christy’s issuance and maintenance fee payments for the ’640 patent. Instead, Christy is left to contend that the PTO’s requiring Christy to pay issuance and maintenance fees for the ’640 patent was in error, and therefore the fees should be refunded. . . .

Christy’s argument fails because the law requires payment of these issuance and maintenance fees without regard to any later result of post-issuance proceedings, see, e.g., 35 U.S.C. §§ 41, 151. Christy identifies no statute, regulation, or constitutional provision compelling the fees’ refund if claims are later canceled in post-issuance proceedings.

Slip Op.

 

 

 

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