Inter Partes Review of Pre-AIA Patents is Constitutional

Celgene Corp. v. Peter, Appeal Nos. 2018-1167, -1168, -1169 (Fed. Cir. July 30, 2019)

By John Isacson

Celgene owned two patents that pertained to methods of safely distributing potentially hazardous drugs.  The patents were challenged in an inter partes review (IPR) as obvious over the prior art.  The Board determined that the patents were obvious.

On appeal, Patentee Celgene challenged the Board’s judgment and raised a new argument to contest the constitutionality of the IPR procedure for patents that issued prior to enactment of the America Invents Act (AIA), which created IPRs.  Patentee argued that retroactive application of the IPR procedure to pre-AIA patents without compensation is a unconstitutional taking under the Fifth Amendment.

In considering Patentee’s constitutional challenge, the Federal Circuit reviewed the state of pre-AIA law, which permitted administrative patent challenges through ex parte and inter partes reexamination.  The Federal Circuit opined that the IPR procedure had similarities of purpose and substance with the reexamination predecessors, and noted that patents also can be challenged in court.  Ultimately, the Federal Circuit determined that retroactive application of the IPR procedure was not an unconstitutional taking because patentees already had an expectation that the validity of their patents could be challenged in the patent office and the courts.  The Board’s judgment of invalidity was affirmed, and retroactive application of the IPR procedure was not held to be unconstitutional.