The Latest Setback for Property Rights

Wednesday, April 25, 2018

In a 7-2 ruling, the U.S. Supreme Court upheld an Obama-era change to the way patents are challenged:

Justice Clarence Thomas wrote the court's majority opinion, rejecting contentions that issued patents are the type of rights that must be adjudicated only in the federal courts."

The decision to grant a patent is a matter involving public rights -- specifically, the grant of a public franchise," Thomas wrote. The review system "is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO's authority to conduct that reconsideration."
In a statement at the web site of the Center for the Protection of Intellectual Property, Professor Adam Mossoff issued a statement on the ruling that reads, in part:
Image via Wikipedia.
For the first time, the Supreme Court holds that patents for new inventions are regulatory grants similar to monopoly grants for bridges or toll roads. The decision ignores the Supreme Court's own substantial case law over the past two centuries that patents are private property rights that secure the fruits of productive labors under the Constitution -- like all other property rights in homes, farms, and animals. Instead, the Court rules that the U.S. follows the original practice by English Kings and Queens who bestowed royal privileges on their subjects as "patent" grants, applying to U.S. patent owners the historical dictum that "what the government giveth, the government can taketh away."
In a prefatory note, the CPIP links to a couple of scholarly articles by Mossoff that were "heavily cited" in the dissenting opinion written by Neil Gorsuch. I can only add that laymen might also find helpful Mossoff's Townhall op-ed, "Patents Are Property Rights, Not A 'Bizarre Regulatory Lobby'."

-- CAV


Jennifer Snow said...

If patents are property rights instead of monopoly grants, why do you need to register them in the first place? Why can't you independently develop a virtually-identical product without being blocked from selling it by patent enforcement?

Why are upwards of 60% of new patent lawsuits created by companies that produce NO products and manufacture NOTHING but instead just hold patents and file lawsuits?

Current patent law has functionally different implementation than the simple exercise of your rights and does amount to a monopoly "grant"--a monopoly that you can enjoy even if you're not actually selling ANY product using that patent.

So, yeah, I'd say it's incumbent upon the court to recognize how the patent system is *actually applied*.

Of course, legally exercising your ACTUAL rights in such a setup (since I doubt this is going to trigger pro-rights reforms without a fight) is probably going to be a nightmare. We'll see, I'm not going to start making predictions because this is a fine distinction and the actual implementation is going to be all-but impossible to predict.

Gus Van Horn said...

Hi Jenn,

"If patents are property rights instead of monopoly grants, why do you need to register them in the first place?"

For the same reason someone obviously occupying and using a piece of land needs a title. The analogy between land and intellectual property, although not perfect, extends when one recalls homesteading: He who gets there first should have the property.

I have in past posts addressed many of your other concerns, but Professor Mossoff is famous for explaining in the case of the sewing machine how licensing -- somewhat analogous to renting -- actually furthers invention. As with any other property, IP is property to do with as the owner pleases. That said, few owners are going to sit on their patents: They will either manufacture something or allow others to do so for a fee, on which market forces will act.