IPRs of Pre-AIA Patents Are Not Unconstitutional Takings

CELGENE CORPORATION v. PETER

Before Prost, Bryson, and Reyna. Appeal from the Patent Trial and Appeal Board.

Summary: Retroactive application of IPR proceedings to pre-AIA patents is not an unconstitutional taking under the Fifth Amendment.

The Coalition for Affordable Drugs VI LLC, (“CFAD”) requested Inter Partes Review of two patents owned by Celgene Corporation (“Celgene”). The patents at issue described and claimed methods for delivering a drug to patients in a way that prevents the occurrence of adverse side effects. The Board held that all challenged claims were unpatentable  as obvious. Celgene appealed the Board’s decisions, arguing that the Board erred in its obviousness findings.  Additionally, although it did not raise the argument before the Board, Celgene argued on appeal that the retroactive application of IPRs to patents filed pre-AIA is an unconstitutional taking.

The Federal Circuit affirmed the Board’s decisions regarding obviousness for both patents. On the constitutional argument, the Federal Circuit first considered whether to decide the issue since it had not been raised before the Board.  In deciding to reach the issue, the Federal Circuit cited its discretion to reach issues raised for the first time on appeal in exceptional cases. The Federal Circuit then held that the retroactive application of IPR proceedings to pre-AIA patents is not an unconstitutional taking. The Federal Circuit explained that IPRs do not differ significantly enough from the pre-AIA review mechanisms for reevaluating the validity of issued patents to effectuate a taking. Specifically, the Federal Circuit explained that there are more significant similarities than differences between pre-AIA review mechanisms and IPRs, namely: the substantive grounds for review, the standard of proof, and the broad claim construction standard. The Federal Circuit also noted these procedures shared the same purpose of reexamining an earlier agency decision. While the Federal Circuit acknowledged some procedural differences between IPRs and pre-AIA reexaminations, it explained that there is no vested right in any given mode of procedure.  Thus, because patent owners have had the expectation that the PTO could reconsider the validity of issued patents for nearly forty years, it held that IPRs do not constitute an unconstitutional taking.   

Editor: Paul Stewart

Written by: Victoria E. Ellis & Andrea Cheek