Federal Circuit Holds Inter Partes Reviews Are Constitutional

The United States Court of Appeals for the Federal Circuit held today in MCM Portfolio LLC v. Hewlett-Packard Co. that inter partes review proceedings before the Patent Trial and Appeal Board are constitutional, rejecting MCM Portfolio’s bid to escape the PTAB’s earlier ruling that invalidated the company’s patent claims.  The Federal Circuit rejected MCM Portfolio’s arguments that IPRs violate Article III and the Seventh Amendment of the Constitution.

With respect to Article III, which articulates the powers of the Judicial Branch, the Federal Circuit held that actions to revoke patent rights need not be tried before federal courts.  Instead, relying on Supreme Court precedent, the court concluded, “Congress has the power to delegate disputes over public rights to non-Article III courts[,]” such as administrative tribunals like the PTAB.  Patent rights, which are products of federal law, are public rights subject to Congress’s power to delegate disputes to non-Article III courts.

Based on largely the same reasoning, the Federal Circuit also rejected MCM Portfolio’s argument that IPRs deprive patent owners of their Seventh Amendment right to a jury trial.  In particular, the court explained it is well established that “the Seventh Amendment is generally inapplicable in administrative proceedings, where jury trials would be incompatible with the whole concept of administrative adjudication[.]”  Under the Seventh Amendment and Article III, the Federal Circuit previously held that administrative ex parte reexamination proceedings were constitutional, and the court could find no basis to distinguish IPRs from ex parte reexamination

The Federal Circuit also rejected MCM’s request that the court review the PTAB’s decision to institute inter partes review, affirming its prior case law that held the court lacks jurisdiction under 35 U.S.C. § 314(d) to review a PTAB decision to institute such proceedings.

Absent a contrary ruling from the Federal Circuit en banc or the Supreme Court, MCM Portfolio permits the PTAB to continue deciding IPRs.