Adam Mossoff: Are Property Rights Created By Statute "Public Rights"?
I greatly enjoyed Professor Adam Mossoff's new article, Statutes, Common-Law Rights, and the Mistaken Classification of Patents as Public Rights, forthcoming in the Iowa Law Review. Mossoff's article is written in the wake of Oil States Energy Services v. Green's Energy Group, where the Supreme Court held it is not unconstitutional for the Patent Trial & Appeals Board (PTAB), an agency in the Department of Commerce, to hear post-issuance challenges to patents, without the process and protections of an Article III court. Justice Thomas' opinion concluded that patents are "public rights" for purposes of Article III; therefore, unlike, say, property rights in land, patents can be retracted without going through an Article III court.
Mossoff's article objecting to this conclusion is a logical follow on to his prior work, while also providing new insights about the nature of patents, property, and the public rights doctrine. He does so quite concisely too, with the article coming in at only 21 pages.
The Public Rights Doctrine
The general rule is that Article III mandates that disputes involving "private rights"—rights that arise as between citizens, such as rights arising under contract, tort, or property law—must be adjudicated in Article III courts. (Mossoff, at 5). But there is an exception for rights classified as "public rights," created not from relations between individual citizens, but from relations with the sovereign. (Mossoff, 4) ("[A] public right is a privilege granted to or created in a citizen 'in connection with the performance of the constitutional functions of the executive or legislative departments.' ") (quoting Crowell v. Benson, 285 U.S. 22, 50 (1932)). If a legal entitlement is classified as a public right, this means the legislature has discretionary power to retract it, and to give non-Article III agency courts in the political branch, such as the PTAB, power over this process. Mossoff summarizes the basic idea behind the public rights exception thus: " '[as] Congress giveth, Congress [can] taketh away' ..." (Mossoff, at 5) (quoting NGS American, Inc. v. Barnes, 998 F.2d 296, 298 (9th Cir. 1993) (referring to Congress’ authority with respect to employee benefit plans under ERISA)).
Importantly, Article III's mandate that disputes over private rights be adjudicated by the judicial branch arises from a concern over separation of powers, not procedural due process. As Professor Greg Dolin puts it in his recent article, Yes, The PTAB is Unconstitutional, Article III's solicitude for adjudications involving private rights has two purposes: to protect litigants’ right to have claims decided before judges whose decisions are not affected by other branches of government, and to preserve separation of powers at an institutional level by dividing responsibilities and maintaining the balance between the legislature, the executive, and the judiciary. Due process, which mandates certain procedural safeguards when government takes actions that threaten "liberty" or "property" interests within the meaning of the Due Process Clause of the Fifth or Fourteenth Amendment, is a separate issue. A right that is classified as "private" for purposes of Article III receives a fuller panoply of protection, including both a guarantee of an Article III forum and potential compensation against a Taking under the Fifth or Fourteenth Amendment. But a right that is classified as "public" for purposes of Article III's public rights exception still triggers procedural due process. Thus, the Court's' decision in Oil States that patents are public rights does not deprive patentees of standard due process protections.
Mossoff's Argument
It is not surprising that Mossoff would object to Justice Thomas' decision classifying patents as public rights. In his 2007 article, Who Cares What Thomas Jefferson Thought About Patents? Reevaluating the Patent 'Privilege' in Historical Context, Mossoff questioned the common assumption that patents are merely "privileges" that are granted at the whim of the sovereign. By retracing what the term "privilege" actually meant in historical context, Mossoff argued patents were in fact not viewed as rights contingent on the sovereign, but as private property rights based on a Lockean labor theory of property and natural rights philosophy.
Although many may disagree with Mossoff's argument that patents are based on natural rights, it is hard to ignore the historical case law Mossoff unearthed. His work, in that article and thereafter, has clearly been influential. The dissent in Oil States, written by Justice Gorsuch and joined by Chief Justice Roberts, cited extensively to Mossoff's scholarship in order to support their view that allowing an executive agency to revoke patents was a departure from historical practice, since, Justice Gorsuch wrote, "[o]nly courts could hear patent challenges in England at the time of the founding[,]" and risked undermining "the promise of judicial independence."
Mossoff's new article is not duplicative of his prior work. Nor is it duplicative of Gorsuch's dissent. Rather, Mossoff makes important insights about how patents are classified in the private rights/public rights framework, and about how we tend to think about the private rights/public rights framework more generally. In short, his article illustrates the inaccuracy of a common assumption, which both sides sometimes made in the course of the Oil States case: that property rights created through common law are "private rights," while property rights created through statutes are "public rights." Here is an excerpt from Justice Thomas' opinion in this regard (case citations and Latin removed):
[P]atents are “public franchises” that the Government grants “to the inventors of new and useful improvements.” The franchise gives the patent owner “the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States.” That right “did not exist at common law.” Rather, it is a “creature of statute law.”Mossoff, I think rightly, argues that this distinction, between statutes as public rights and common law rights as private rights, is far too simplistic. It actually makes little sense in light of history and in light of how property law works today. Many property rights have mixed statutory and common law origins. Mossoff draws this out in the paper, with comprehensive citations to historical case law. Here is the key argument:
At common law and in the early American Republic, courts and commentators recognized that the distinction between statutes and common law rights was merely a generalized distinction that did not reflect the complex institutional relationship between legislatures and courts in creating and applying legal rights. ... The reason is simple: all legal rights share a mixed provenance in both statutes and judicial decisions, and thus this distinction between statutes and judicial decisions could never serve as a coherent rule for distinguishing public rights and private rights.
(Mossoff, 10).
Mossoff goes on to document copious examples of property rights with their basis in (often both) statutory and common law:
The fundamental role of statutes in creating property rights in land has continued in the states from the early years of the American Republic up through today. State legislatures have enacted statutes codifying and securing the rights of adverse possessors, creating title recordation requirements, defining and securing conveyance rights, defining and securing wills and the creation of future interests in land...
...
Even the notorious common-law doctrine, the rule against perpetuities, has been codified in many states.
(Mossoff, 12-13).
The upshot, for Mossoff, is as follows. The fact that patents are created under a statutory regime codified in the Patent Act (which incidentally was passed pursuant to a specifically delineated constitutional power under Article I, Section 8, Clause 8) is not determinative of whether patents are private or public rights for purposes of Article III.
There are two reasons. First, as just explained, many classic property rights are, to quote Justice Thomas' quotation, a "creature of statute law." Thus, patents being creatures of statute law does not answer whether they are private or public rights. Second, patent law has evolved through a lawmaking process that resembles common law. As Mossoff puts it, citing to case law and appropriate scholarship on the issue,
[In patent law,] courts have created out of whole cloth new substantive legal rights that are not listed anywhere in the patent statutes. For instance, courts created the exhaustion doctrine, secondary liability, the experimental use defense [...etc.]... [I]n addition ... courts have created substantive doctrines in interpreting and applying statutory provisions in the Patent Act. These judicially-created doctrines become “the law” that is subsequently applied by courts, and patent law is replete with them. For example, the “all elements rule” in comparing a patent to a product or process in finding either literal or equivalents infringement is found nowhere in § 271... [etc.](Mossoff, 17-18).
The implication of the fact that patent law, despite being statutory, proceeds through a common law method, is to melt away the notion that patents are simply creatures of statute. If anything, patents are creatures of mixed statutory and common law—not that different from certain property rights in land like those generated through adverse possession.
I think this reasoning is sound, and am grateful for the impetus to reexamine my own assumption about the nature of a "public right." Of course, it will almost certainly not change people's minds on whether patents are public rights or on whether Oil States was rightly decided. Even after we dispose of the overly simplistic distinction between statutory and common law property rights, many will still argue, quite reasonably, that patents are public rights. But this is a different argument that Professor Mossoff can have with Justice Thomas, and the others whose work Mossoff discusses in the paper, such as Professor Mark Lemley and Professor Greg Reilly.
Public Rights, State Patents, and State Courts
I do have one comment. I was surprised not to see more discussion, or citation to literature, regarding state and colonial patents. Mossoff mentions them, but only very briefly.
From the first enactments of copyright and patent statutes by the states under the Articles of Confederation, and then by Congress enacting the first federal patent and copyright statutes in 1790, courts interpreted, applied and extended these statutes in common law fashion in crafting the doctrines that comprise the fundamental rights and duties in U.S. patent law.
(Mossoff, 17).
As I discussed in my article on this subject, State Patent Laws in the Age of Laissez-Faire, state and colonial patents (at least those I reviewed) do resemble, superficially, "public rights" that could be retracted by the sovereign if the requirements of the grant were not met. Indeed, some were retracted, such as John Fitch's steamboat patent from the state of New York. As I wrote, "New York’s retraction of Fitch’s 1787 grant in 1798 suggests that the state could have rescinded an inventor’s patent for failure to establish a working technology in state jurisdiction even when the patent contained no explicit working clause." (Hrdy, 66, n. 83) (quoting Livingston v. Van Ingen, 9 Johns. 507 (N.Y. 1812)).
After reading Mossoff's article, I agree that the fact that state and colonial grants were statutory rights is not dispositive on the issue of whether they are public rights or private rights under Article III. But I would like to see Professor Mossoff's answer as to whether state patents were, despite appearances, more like private rights than public rights, and what state and colonial practice tells us about patents' status today under the federal Patent Act. If patents were being retracted by state legislatures before, and after, ratification of the Constitution with very little legal process (probably not even due process in Fitch's case), doesn't this suggest patents were seen as "public rights" at the time of ratification, and when the first Patent Act was passed in 1790?
I raised this question with Professor Dolin. His response was that the grounds for the cancellation matter, as does the process through which the revocation is effectuated. If the state cancelled the patent based on a failure to meet the requirements of a working clause, for instance, this may not undermine the notion that this was a private right. The patent grant may have been akin to a real property right granted subject to a condition subsequent, with a right of reentry, depending on the terms of the original grant. The real question, Dolin said, is whether such revocations of state patents were contestable in courts with some degree of independence from the political branches. At that time, this would have been state courts. (Federal courts did not even gain their exclusive jurisdiction over federal patent cases until some time later, and uncertainty over state courts' jurisdiction in patent cases continued into modern times).
This leads to a related conundrum that bugs me about the public rights doctrine: the doctrine does not much care about what happens in state courts. As explained above, the purpose of Article III's public rights versus private rights distinction is to preserve the separation of powers as between Congress and the federal judiciary. But it is not a guarantee of due process, or a guarantee of federal process. This means Article III would not allow a vested property right, such as a piece of land, to be adjudicated in a non-Article III court, based on the concern that this would deprive litigants of a forum free of influence by the political branches. But at the same time, under Article III, Congress is not required to create lower federal courts and is free to authorize state courts to hear disputes arising under federal law. Indeed, most claims can brought in state or federal court. Most property rights could be invalidated in a state court and not get a true Article III court. This is the case regardless of whether state judges are elected or appointed, and regardless of how sloppy a state's rules of procedure are.
If Congress relaxed patents' exclusive jurisdiction, amended 28 U.S.C. § 1338, and declared tomorrow that federal patents can be litigated and potentially invalidated in state courts (beyond the confines of "backward" looking situations like Gunn v. Minton), this would actually be okay under the Article III public rights doctrine. When you consider state courts as a backdrop option, in a world where there was not exclusive federal jurisdiction in patent cases, the public rights doctrine seems a bit silly. It would be okay for patents to be litigated in state courts so long as other constitutional protections like due process were satisfied...but not in the PTAB.
----
In sum, Mossoff does a great service in calling out the oversimplification that creatures of statute are not necessarily "public rights" for purposes of Article III. I am not sure this leads to the conclusion that patents deserve the full panoply of protection given to private rights, now or historically. Whether government should, at a normative level, be able to re-review patents is a very interesting and difficult question, on which people have different views. Many of these issues are drawn out by Professor Dolin and Professor Irina Manta in Taking Patents. I co-authored a response with Ben Picozzi expressing disagreement, opining that the America Invents Act was not a taking, and that government may constitutionally reconsider patent grants under the Takings Clause. I reach the same conclusion under Article III, though agree with Professor Mossoff that how we reach this conclusion is not altogether clear when we consider treatment of other forms of property rights.
After reading Mossoff's article, I agree that the fact that state and colonial grants were statutory rights is not dispositive on the issue of whether they are public rights or private rights under Article III. But I would like to see Professor Mossoff's answer as to whether state patents were, despite appearances, more like private rights than public rights, and what state and colonial practice tells us about patents' status today under the federal Patent Act. If patents were being retracted by state legislatures before, and after, ratification of the Constitution with very little legal process (probably not even due process in Fitch's case), doesn't this suggest patents were seen as "public rights" at the time of ratification, and when the first Patent Act was passed in 1790?
I raised this question with Professor Dolin. His response was that the grounds for the cancellation matter, as does the process through which the revocation is effectuated. If the state cancelled the patent based on a failure to meet the requirements of a working clause, for instance, this may not undermine the notion that this was a private right. The patent grant may have been akin to a real property right granted subject to a condition subsequent, with a right of reentry, depending on the terms of the original grant. The real question, Dolin said, is whether such revocations of state patents were contestable in courts with some degree of independence from the political branches. At that time, this would have been state courts. (Federal courts did not even gain their exclusive jurisdiction over federal patent cases until some time later, and uncertainty over state courts' jurisdiction in patent cases continued into modern times).
This leads to a related conundrum that bugs me about the public rights doctrine: the doctrine does not much care about what happens in state courts. As explained above, the purpose of Article III's public rights versus private rights distinction is to preserve the separation of powers as between Congress and the federal judiciary. But it is not a guarantee of due process, or a guarantee of federal process. This means Article III would not allow a vested property right, such as a piece of land, to be adjudicated in a non-Article III court, based on the concern that this would deprive litigants of a forum free of influence by the political branches. But at the same time, under Article III, Congress is not required to create lower federal courts and is free to authorize state courts to hear disputes arising under federal law. Indeed, most claims can brought in state or federal court. Most property rights could be invalidated in a state court and not get a true Article III court. This is the case regardless of whether state judges are elected or appointed, and regardless of how sloppy a state's rules of procedure are.
If Congress relaxed patents' exclusive jurisdiction, amended 28 U.S.C. § 1338, and declared tomorrow that federal patents can be litigated and potentially invalidated in state courts (beyond the confines of "backward" looking situations like Gunn v. Minton), this would actually be okay under the Article III public rights doctrine. When you consider state courts as a backdrop option, in a world where there was not exclusive federal jurisdiction in patent cases, the public rights doctrine seems a bit silly. It would be okay for patents to be litigated in state courts so long as other constitutional protections like due process were satisfied...but not in the PTAB.
----
In sum, Mossoff does a great service in calling out the oversimplification that creatures of statute are not necessarily "public rights" for purposes of Article III. I am not sure this leads to the conclusion that patents deserve the full panoply of protection given to private rights, now or historically. Whether government should, at a normative level, be able to re-review patents is a very interesting and difficult question, on which people have different views. Many of these issues are drawn out by Professor Dolin and Professor Irina Manta in Taking Patents. I co-authored a response with Ben Picozzi expressing disagreement, opining that the America Invents Act was not a taking, and that government may constitutionally reconsider patent grants under the Takings Clause. I reach the same conclusion under Article III, though agree with Professor Mossoff that how we reach this conclusion is not altogether clear when we consider treatment of other forms of property rights.
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