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Archived updates for Tuesday, August 29, 2006

Patents and the Takings Clause

In Zoltek v. United States (2006, 04–5100) the Federal Circuit held that Zoltek could not allege patent infringement by the government as a Fifth Amendment taking under the Tucker Act. According to the per curium opinion,

In Schillinger v. United States, 155 U.S. 163 (1894), the Supreme Court rejected an argument that a patentee could sue the government for patent infringement as a Fifth Amendment taking under the Tucker Act. Id. at 169. Schillinger remains the law.
Dennis Crouch's Patently-O Blog promptly noted that there was "lots more more here for a law review article," and Professor Adam Mossoff has kindly obliged with his 35-page take on why the Federal Circuit got it wrong.

In "Patents as Constitutional Private Property: The Historical Protection of Patents under the Takings Clause," Mossoff argues that federal court decisions in the 19th century, such as in McKeever v. United States, 14 Ct. Cl. 396 (1878), held that patents were secured under the Takings Clause as constitutional private property:

This history establishes that courts and scholars have been relying on incorrect historical claims to justify their decisions and policy prescriptions today. This is significant, because patented drugs and other inventions are increasingly the subject of regulations, and thus the constitutional security in these legal entitlements is a particularly salient issue in our public policy debates. Following September 11, 2001, for instance, the federal government threatened to suspend Bayer’s Cipro patent in order to obtain cheaply vast quantities of the antibiotic that best treats anthrax. Given the status of patents as property, these and other state actions raise questions concerning the constitutional limitations imposed on the government vis-à-vis the patents it grants to inventors.

"Ultimately, this paper has profound implications today," boasts Mossoff. "Lots of patents, such as pharma patents, are the subject of increasingly restrictive regulations. This paper reveals how patentees have long-standing expectations in the constitutional security in their property, which would be central to a regulatory takings assessment today under the investment-backed expectation prong of the Penn Central test."

But don't bet the pharm just yet. Professor Mossoff himself also acknowledges that

It is unlikely that the James Court intended to overrule McKeever, Cammeyer, Burns, or McClurg when it acted as if this jurisprudence, reaching back to the antebellum era, did not even exist. In fact, the absence of any references to McKeever, Cammeyer, Burns, or McClurg is striking, particularly given that the Circuit Court repeatedly cited these cases in the decision on appeal. Second, and more significant, Justice Bradley’s musings were only dicta, as the Court ended its brief discussion of the takings issue by noting that "the conclusion which we have reached in this case does not render it necessary to decide this question." Perhaps the Justices did not feel compelled to review the Court’s own precedents on this
constitutional issue given that it was unnecessary to decide the case before

In any event, it is difficult to argue that these remarks were intended to overrule the prior patent-takings jurisprudence when they were made in dicta. In the end, though, Justice Baldwin’s unprecedented musings succeeded in muddying the waters, and subsequent cases relied on James only, continuing to call into question the right of patentees to sue under the Takings Clause and continuing to disregard the earlier nineteenth-century precedent directly on point. See, e.g., Palmer v. United States, 128 U.S. 262 (1888) (holding that patentees could not sue except on the basis of a contract with the government, citing only Burns); Schillinger v. United States, 155 U.S. 163 (1894) (holding, without any acknowledgement of Burns, Cammeyer, or McKeever, that patentees were precluded from suing under the Takings Clause); Crozier v. Fried Krupp Aktiengesellschaft, 224 U.S. 290 (1912) (repeating Schillinger holding and citing only cases decided after James).

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