why h.r. 1249 is unconstitutional
TRANSCRIPT
Why H.R. 1249 is Unconstitutional
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Analyses
By
Jonathan S. Massey
Adam Mossoff
Maurice A. Thompson
(Full text of briefs can be read at www.noonhr1249.org)
Summary
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H.R. 1249 Would Violate the Constitution, Bailout Banks and Expose the Treasury to a Billion-Dollar Liability.
Jonathan S. Massey - Partner, Massey and Gail, LLP (Washington, D.C.) "Historically, our patent system is based on ingenuity and hard work, not administrative filings or ministerial acts. There is no reason to depart from this tradition, because the bill will actually undermine innovation and cost American jobs. Our nation's founders understood that technological progress depends on securing patent rights to genuine inventors, to enable them to profit from their talents, investment, and effort… If the bill's provisions had been law in the Twentieth Century, the Wright Brothers would have been denied a patent for the airplane."
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The First-to-File Provision in H.R. 1249 is Unconstitutional: A Textual and Historical Analysis.
Adam Mossoff - Professor of Law, George Mason University School of Law (Arlington, Virginia) "[T]he drafters of § 2 of the America Invents Act know that there is a constitutional problem with this radical change to the American patent system, and they are engaging in linguistic legerdemain to obscure this substantive defect in the legislation. In shifting from a first-to-invent to a first-to-file system, the America Invents Act contradicts both the text and the historical understanding of the Copyright and Patent Clause in the Constitution."
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H.R. 1249 Circumvents Constitutional Patent Authority. Maurice A. Thompson - Executive Director of the 1851 Center for Constitutional Law (Columbus, Ohio) H.R. 1249 is nothing more than special interest legislation, benefiting large corporate and financial interests at the expense of small businesses and small entity inventors, that flouts the Constitution in many important respects.
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Jonathan S. [email protected]
Jonathan S. Massey served as a law clerk to Supreme Court Justice William J. Brennan, Jr., 1989 Term,and to Judge Abner J. Mikva, U.S. Court of Appeals for the D.C. Circuit, 1988-1989.
His nearly two decades of experience have involved a wide range of complex legal questions in trial andappellate courts, including federal and state constitutional issues, antitrust, bankruptcy,telecommunications, preemption, securities, financial services, tax, environmental issues (includingCERCLA, the Clean Air Act, and the Clean Water Act), Indian tribal court jurisdiction, the ForeignSovereign Immunities Act, the federal RICO statute, MDL procedure, product liability, punitive damages,scientific evidence, and class action procedure.
He has argued over 30 cases in federal and state courts, including the U.S. Supreme Court and numerousU.S. Courts of Appeals. He has filed briefs in dozens of other matters, including more than 65 in the U.S.Supreme Court alone. He has worked closely with such noted legal scholars as Laurence Tribe, CharlesFried, Kenneth Starr, Richard Epstein, Arthur Miller, Erwin Chemerinsky, David Shapiro, StephenSaltzburg, and Stephen Burbank.
In addition to appearing on behalf of many leading business corporations, he has also represented former Vice President Al Gore (in Bush v.Gore); numerous Members of Congress (including Senators Durbin, Feingold, Feinstein, Harkin, Kennedy, Leahy, Levin, Sanders, andWhitehouse and Representatives Barrett, Blackburn, Burton, Campbell, Conyers, Dingell, Fleming, Gingrey, Graves, Herger, Hoekstra, King,Lamborn, Lofgren, McCotter, Mckeon, Pallone, Pence, Posey, Price, Rogers, Ryan, Sánchez, Sessions, Shimkus, Stupak, Terry, WassermanSchultz, Waters, Waxman, Welch, and Westmoreland); the governments of Canada, Venezuela, and Guatemala; the States of Florida,Massachusetts, Mississippi, and Texas; and Harvard, Yale, Princeton, Brown, and Duke Universities, the University of Chicago, the Universityof Pennsylvania, and Dartmouth College.
He has served as adjunct professor of law at Georgetown University Law Center (1996-2000) and Deputy Special Counsel to IndependentCounsel Lawrence Walsh (1993-1994). He is a member of the bars of the District of Columbia, New York, and Maryland; of the U.S.Supreme Court; of the U.S. Courts of Appeals for the D.C., Second, Third, Fourth, Fifth, Sixth, Ninth, and Tenth Circuits; and of the U.S.District Courts for the District of Columbia and the Southern District of Texas. He is not admitted to practice in Illinois.
He graduated from Harvard College, A.B. magna cum laude 1985, where he was National Debate Champion and a member of Phi BetaKappa. He graduated from Harvard Law School, J.D. magna cum laude 1988, where he was an editor of the Harvard Law Review and aresearch assistant to Laurence Tribe and Lawrence Summers.
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Why First To File Is Unconstitutional
Jonathan S. Massey
The so-called “first-inventor-to-file” patent system would be unconstitutional. Article I, Section 8, Clause 8 of the Constitution (the IP Clause) provides Congress with the power “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The Supreme Court has recognized that this language “is both a grant of power and a limitation.” Graham v. John Deere Co., 383 U.S. 1, 5 (1966). As Justice Douglas observed, “Congress does not have free rein . . . to decide that patents should be easily or freely given.” Great A. & Pac. Tea Co. v. Supermarket Equip. Co., 340 U.S. 147, 154 (1950) (concurring opinion). “The Intellectual Property Clause is unique in that it is the only one of the Enumerated Powers where the drafters mandated ‘a specific mode of accomplishing the particular authority granted,’ i.e., ‘by securing exclusive rights for limited times to authors and inventors in their respective writings and discoveries.’” Figueroa v. U.S., 66 Fed.Cl. 139, 149 (Fed.Cl. 2005) (citation omitted).
Congress is authorized to make patents available only to “inventors” and only for their “discoveries.” At the time of the Constitution’s framing, the common understanding of an “inventor” was the same as it is today: “one who produces something new; a devisor of something not known before,” in the words of Samuel Johnson’s 1787 dictionary (emphasis added). That same dictionary defined “discoverer” as “one that finds anything unknown before.” Only the first inventor can discover something “not known before.” A second “inventor” is an oxymoron; that person merely rediscovers that which was already discovered by the first inventor. When the first inventor makes a new discovery, the constitutional directive is not held in suspension. Rather, the IP Clause secures exclusive rights in the first and true inventor, and that constitutionally recognized property cannot be divested by an earlier PTO filing by a different person. Administrative expediency does not trump the Constitution.
A first-inventor-to-file system violates the Constitution because it would award a patent to the winner of the race to the PTO, not to the actual inventor who makes the first discovery. Such a system also violates one of the key purposes behind the Intellectual Property Clause, which was to avoid the abusive system of royally-granted monopolies that had emerged under the Crown in England. Under the framers’ conception, government does not create property rights, but rather secures pre-existing rights, following the Natural Law philosophy of John Locke. It is significant that the IP Clause calls for “securing . . . exclusive Rights” – pre-existing rights – rather than creating new rights in a grant. In his 1792 treatise, Joseph Barnes, one of the early American patent commentators, explained the idea of a patent “securing” a pre-existing right: “[A] system for securing property in the products of genius is a mutual contract between the inventor and the public, in which the inventor agrees, on proviso that the public will secure to him his property in, and the exclusive use of his discovery for a limited time, he will, at the expiration of such time, cede his right in the same to the public....” Allowing the government to redefine an “inventor” to be the person officially designated as such, on the basis of a procedural filing rather than scientific ingenuity and diligence in moving forward to disclose the invention, flies in the face of the framers’ concern that government-bestowed monopolies should be strictly limited.
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The parallel between patents and copyrights in the Intellectual Property Clause fortifies this conclusion. The person entitled to a copyright is the “author” of a book – i.e., its writer or creator – just as the person entitled to a patent is the actual inventor. James Madison, writing in Federalist No. 43, saw the similarity between the two: “The copyright of authors has been solemnly adjudged, in Great Britain, to be a right of common law. The right to useful inventions seems to with equal reason to belong to the inventors. The public good fully coincides in both cases with the claims of individuals.” Madison’s commentary suggests that the term “Inventors” in the Constitution refers to the actual creator, not to the person who obtains a government-granted monopoly.
Early Acts of Congress are often considered to be highly probative of constitutional intent, because of the 55 delegates at the Convention, 19 later served as Senators and 13 as Representatives. The first patent statutes strongly support the first-to-invent standard. The Patent Act of 1790, enacted in the second session of the First Congress, authorized the grant of a patent to one having “invented or discovered any useful art . . . not before known or used,” and provided for repeal of a patent “if it shall appear that the patentee was not the first and true inventor.” During the drafting of the bill, the House committee decided not to follow the English practice of extending patent rights to the “first importer” of overseas inventions. Rep. Thomas Fitzsimmons wrote: “The 6th Section, allowing Importers, was left out, the Constitutional power being Questionable.” Madison also voiced concern that patents of importation were unconstitutional, and judicial decisions refused to recognize them.
The Patent Act of 1793 similarly authorized the issuance of a patent on the basis of a petition demonstrating, not that the applicant was the first filer, but rather that the applicant had “invented any new and useful art, machine, manufacture or composition . . . not known or used before the application.” The 1793 statute also required that the applicant “swear or affirm that he does verily believe, that he is the true inventor or discoverer of the art, machine, or improvement, for which he solicits a patent.” The law permitted a defendant to plead for a declaration of invalidity if “the thing, thus secured by patent, was not originally discovered by the patentee.”
The 1793 Act also created the first interference provision, an administrative procedure for resolving competing claims to the same invention. In one of the best known early cases, involving four claimants to a steamboat patent, the Patent Board rejected the proposal that the patent should be awarded to the first person to file an application. Thomas Jefferson served as one of the members of the original Patent Board, and his role in the decision to reject the first-to-file approach gives added weight to the history. Jefferson’s influence on American patent law is well established.
In addition, the courts’ early construction of “Inventor” further indicates that the first-to-invent standard was the commonly understood meaning at the time of the Constitution’s adoption. For example, Chief Justice John Marshall explained that the law recognized a property right in the inventor “from the moment of invention,” which was “only perfected by the patent.” Evans v. Jordan, 8 Fed. Cas. 872, 873-74 (C.C.D.Va. 1813). In 1829, the Supreme Court opined that, under the Constitution, “the right is created by the invention, and not by the patent.” Pennock v. Dialogue, 27 U.S. 1, 12 (1829). The Court held that “it clearly appears, that it was the intention of the legislature, by a compliance with the requisites of the law, to vest the exclusive right in the inventor only.” Shaw v. Cooper, 32 U.S. 292, 319 (1833). A New York district judge noted in 1826 that “[i]t is very true that ‘the right to a patent belongs to him who is
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the first inventor, even before the patent is granted.’ That is, none but the first inventor can have a patent.” Thompson v. Haight, 23 Fed. Cas. 1040, 1048 (C.C.S.D.N.Y. 1826). A federal court in Ohio instructed a jury that the plaintiff in an infringement suit was “protected by the law” against issuance of a rival patent, “unless the defendant’s invention entitled him to a patent before the plaintiff applied for his patent.” Allen v. Hunter, 1 Fed. Cas. 476, 477 (D. Ohio 1855).
Finally, even if one were to find an alternate source of constitutional power to grant patents unconstrained by the inventorship requirement of the IP Clause, such a source would be insufficient to convert the American system away from the first-to-invent. In the absence of a way to deny the patent to the first inventor, granting the patent to the first filer deprives the inventor of “the exclusive right” guaranteed by the Constitution and is therefore unconstitutional. It is only upon forfeiture of his rights by his action or inaction, that a first inventor may be denied the patent, just as the citizen can forfeit other constitutional rights (e.g., to vote) by his inaction (failing to register to vote) or actions (giving incomplete or inaccurate information on the voting registration form). Statutory and common law has long cautioned the first inventor to act diligently lest he lose his rights. Howe v. Underwood, 12 Fed. Cas. 678, 679 (C.C. D. Mass. 1854) (first inventor “gave nothing to the public” and had “only an idea, never carried out in a machine [i.e., actually reduced to practice] that could anticipate one subsequently invented”). The fact that circumstances of forfeiture or abandonment of such rights can arise and that a second inventor may receive the patent as a result, is unavailing as any proof that a law granting patents to first-inventors-to-file would be constitutional.
First-to-invent has remained the accepted patent standard under the Constitution for over 200 years and should not be changed.
Author Note: Jonathan S. Massey is a partner at Massey & Gail LLP, with extensive experience in constitutional litigation. He served as law clerk to Supreme Court Justice William J. Brennan, Jr., and to Judge Abner J. Mikva, U.S. Court of Appeals for the D.C. Circuit.
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SECTION 18 OF H.R. 1249 WOULD BAIL OUT BANKS AND EXPOSE THE TREASURY TO BILLION-DOLLAR LIABILITY
Jonathan S. Massey
Jonathan S. Massey is a partner at Massey & Gail LLP (www.masseygail.com), with extensive experience in constitutional litigation. He served as law clerk to Supreme Court Justice William J. Brennan, Jr., and Judge Abner J. Mikva, U.S. Court of Appeals for the D.C. Circuit.
Section 18 of H.R. 1249 establishes a special “Transitional Program for Covered
Business Method Patents,” which would create a special class of patents in the financial services
field subject to their own distinctive post-grant administrative review. “Covered business
method patents” are defined as patents that claim “a method or corresponding apparatus for
performing data processing or other operations used in the practice, administration or
management of a financial product or service, except that the term does not include patents for
technological inventions.”
Section 18 creates an extraordinary review procedure to would allow banks and other
financial services companies to challenge the validity of patents that are the basis of infringement
actions against them. This provision supplements the two re-examination options already
available to every other patent holder -- the ex parte process, in which an infringer or competitor
can anonymously challenge a patent’s validity, and the inter partes process, in which the
challenger actively participates in the re-examination.
In effect, Section 18 bestows a unique benefit – a third bite at the apple -- on financial
services companies defending infringement actions. It is special interest legislation, pure and
simple. Under Section 18, a person may not file a petition for the transitional proceeding unless
the real party in interest has been sued for patent infringement or has been charged with patent
infringement. This transitional procedure is repealed effective 4 years from the date that the
PTO issues implementing regulations.
Section 18 is a special, stop-gap administrative procedure designed to invalidate a
targeted group of patents that already have been confirmed through multiple examination and re-
examination proceedings. It creates grave constitutional questions. Section 18 would apply
retroactively to already existing patents. It would change the rules of the game, after the fact,
and reduce the enforceability of constitutionally protected forms of private property. The
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Supreme Court has long ruled that governmental abrogation of patent rights effects a taking of
property and therefore triggers the Fifth Amendment obligation to pay just compensation.1 The
Court has also held that legislation depriving a patent owner of its infringement remedy triggers
an obligation on the part of the government to provide just compensation.2
Accordingly, there is a very substantial risk that the patent holders singled out by Section
18 could bring suits for compensation against the federal government, on the ground that the
special abrogation of their patents qualifies as a “taking” of private property. The “just
compensation” in such circumstances would be the fair market value of the patent.
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Section 18, in other words, represents a Wall Street bailout that could shift the cost of
patent infringement from financial services firms to the U.S. Treasury. The public would be
forced to pay the reasonable value of the patents, in the form of just compensation to the patent
holders.
The same scenario played out only a few years ago. In 2007, the Congressional Budget
Office (CBO) analyzed the Sessions Amendment to S. 1145, the Patent Reform Act of 2007,
which purported to remove the infringement remedies available to the very same patent holders
targeted by Section 18. The CBO concluded that the Sessions Amendment worked a taking of
private property under the Fifth Amendment to the U.S. Constitution and therefore would subject
1 Cammeyer v. Newton, 94 U.S. (4 Otto) 225, 234-35 (1876) (“an invention [secured by a valid letter-
patent] is property in the holder of the patent, and *** is as much entitled to protection as any other property *** [¶] Public employment is no defense [sic] to the employee for having converted the private property of another to the public use without his consent and without just compensation.”) (citations omitted); James v. Campbell, 104 U.S. 356, 357-58 (1881) (“That the government of the United States when it grants letters-patent for a new invention or discovery in the arts, confers upon the patentee an exclusive property in the patented invention which cannot be appropriated or used by the government itself, without just compensation, any more than it can appropriate or use without compensation land which has been patented to a private purchaser, we have no doubt.”); Crozier v. Fried, Krupp Aktiengesellschaft, 224 U.S. 290, 306 (1912) (applying to the patent context “the well-established and indeed elementary requirements in favor of property rights essential to be afforded in order to justify the taking by government of private property for public use”).
2 Richmond Screw Anchor Co., Inc. v. United States, 275 U.S. 331, 343-45 (1928).
3 United States v. 50 Acres of Land, 469 U.S. 24, 29 (1984) (just compensation is “‘market value of the property at the time of the taking’”) (quoting Olson v. United States, 292 U.S. 246, 255 (1934)); see also Kirby Forest Industries, Inc. v. United States, 467 U.S. 1, 10 (1984); Almota Farmers Elevator & Warehouse Co. v. United States, 409 U.S. 470, 474 (1973); United States v. Commodities Trading Corp., 339 U.S. 121, 130 (1950); United States v. Petty Motor Co., 327 U.S. 372, 377 (1946).
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the government to claims for just compensation. The CBO stated that the Sessions Amendment
had budgetary implications and required that the legislation be “scored” for budgetary purposes.
Section 18 would have similar budgetary impacts. It is special interest legislation that
would require the public to pay for patent infringements committed by financial services firms.
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Professional InformationSocial Science Research Network HomePageSubjects Taught: Internet Law, PatentLaw, PropertyCurriculum Vitae: CV in PDF formatArea(s) of Expertise: IntellectualProperty Law, Internet Law, LegalHistory, Natural Rights Philosophy,Patents, Property Law
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Adam MossoffProfessor of Law
B.A., University of Michigan; M.A., Columbia University; J.D., University of Chicago Law School
Biographical Sketch
Professor Adam Mossoff joined the Mason Law faculty in fall 2008 from Michigan State University College of Law,where he pursued his interest in the theoretical and doctrinal intersections between property and intellectualproperty, with a special focus on the intellectual history of patents. He has taught in the areas of patent law,property, cyberlaw, jurisprudence, estates and trusts, and property theory.
Professor Mossoff graduated in 2001 with honors from the University of Chicago Law School, where he was aresearch assistant to Richard A. Epstein and held the Bradley Governance Fellowship. Following law school, ProfessorMossoff spent the academic year 2001-2002 at Northwestern University School of Law, where he was a John M. OlinFellow in Law. Just prior to joining the faculty at MSU, Professor Mossoff completed a clerkship for the HonorableJacques L. Wiener Jr. of the U.S. Court of Appeals for the Fifth Circuit. He holds an MA in philosophy, specializing inlegal and political philosophy, from Columbia University and a BA in philosophy from the University of Michigan,where he graduated magna cum laude.
Last updated: 28 April 2011
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The Patent Reform Bill Upends the Patent System Created by the Founders Adam Mossoff* The America Invents Act of 2011 that is currently working itself through Congress will radically restructure the American patent system. Although pitched by supporters as making minor adjustments to an antiquated patent system and fulfilling international treaty obligations, it will instead alter the foundation of the American patent system: It eliminates the rule that only a first inventor may receive a patent. It replaces it with the rule in England and in other countries that the first person to file for a patent receives the intellectual property right. In foisting a first-to-file rule on American inventors, the America Invents Act contradicts the unique patent system that was created by the American Founders in the Constitution. Congress does not have unfettered discretion in enacting patent legislation. Its authority to protect patents is granted to it by the Constitution in Article I, Section 8, Clause 8, which provides that Congress can “secure” to “Inventors the exclusive Right to their . . . Discoveries” in order to “Promote the Progress of . . . useful Arts.” The operative term here is “Inventors.” In the Founding Era and throughout the early years of the American Republic in which Congress and the courts constructed the basic rules of the American patent system, this term meant first inventors. As Chief Justice John Marshall recognized in a court decision in 1813: the “constitution and law, taken together, [give] to the inventor, from the moment of invention, an inchoate property therein, which is completed by suing out a patent.” Today, many people do not realize how distinctive the American approach was in securing property rights to first inventors. At the time, other countries, such as England, viewed patents as special privileges doled out by the government in pursuit of its regulatory and economic policy objectives. Thus, these countries adopted first-to-file rules and developed patent systems that were more akin to modern regulatory agencies. Unsurprisingly, the American Founders radically broke with the English tradition of patent protection. American patent law secured property rights only to first inventors, and it did so through a set of legal institutions and doctrines built around the rule of law. As many historians and commentators have recognized, American patent law was as exceptional as the rest of the American approach to government and law. Many early American congressmen and judges thus looked to natural rights philosophy to justify the protection of a first inventor’s property rights under the law—invoking the classic natural rights claim that patents secured the fruits of the intellectual labors of inventors. The famed antebellum congressman, Daniel Webster, declared in 1824 that “the right of the inventor is a high property; it is the fruit of his mind—it belongs to him more than any other property . . . and he ought to be protected in the enjoyment of it.” In 1845, Supreme Court Justice Levi Woodbury wrote in a patent case that “we protect intellectual property, the labors of the mind, productions and interests as much a man’s own, and as much the fruit of his honest industry, as the wheat he cultivates, or the flocks he rears.” Justice Woodbury and other judges acted on this belief, using
* Adam Mossoff is a Professor of Law at George Mason University School of Law, where he teaches patent law, internet law, and property law. His academic articles detail the intellectual history of the American patent system, with a special emphasis on the influence of natural rights philosophy on American patent law. His articles can be downloaded at http://papers.ssrn.com/author=345663 and any comments can be sent to [email protected].
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common law property doctrines to construct the legal rules of the American patent system; they construed patents liberally in favor of their owners, secured patentees’ commercialization rights, and provided constitutional protection to patents against unauthorized government uses. In fact, the complaints today about the alleged failings of the patent system—that it is costly to administer or that it serves the interests of monopolists—are nothing new. Such criticisms have been made by patent skeptics since the inception of the American patent system. Nineteenth-century judges repeatedly responded by explaining how American patents rightly secure property rights in new inventions. Justice Noah Swayne, for example, instructed a jury in 1869 that “The rights secured by a patent for an invention or discovery are as much property as anything else, real or incorporeal. The titles by which they are held, like other titles, should not be overthrown upon doubts or objections .... This principle should be steadily borne in mind by those to whom is [e]ntrusted the administration of civil justice.” Although the American patent system protects very different technology today, its foundational principle of securing to first inventors their intellectual property rights remains firmly grounded in the Constitution, in the patent statutes, and in innumerable court decisions reaching back to the founding of this country. In the words of Justice Swayne, the titles rightly earned by first inventors should not be “overthrown upon doubts or objections,” whether those objections are borne of concerns about either administrative costs or treaty commitments. The Constitution—and the resulting statutes and court decisions that have secured property rights to first inventors for more than two hundred years—deserves no less.
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“The First Inventor to File”
“Exclusivity”
Progress of Science and the Useful Arts
