Public rights doctrine is that some rights are “so closely integrated into a public regulatory scheme as to be a matter appropriate for agency resolution with limited involvement by the Article III judiciary.” Thomas v. Union Carbide Agricultural Products Co., 473 U.S. 568, 593-594, 105 S. Ct. 3325, 87 L. Ed. 2d 409 (1985). See also Wellness Int'l Network, Ltd. v. Sharif, 135 S. Ct. 1932, 1967 (2015).
In 2017 there is a big dispute as to whether patents fall under public rights doctrine so as to deny patent-holders full rights to adjudication by only the courts, and instead subject them to rescission by the Patent and Trademark Office. The Federal Circuit held against individual patent rights, and in favor of public rights doctrine, in MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284, 1290-91 (Fed. Cir. 2015). The Supreme Court then denied the petition for certiorari in October 2016. The Federal Circuit ruled in MCM Portfolio as follows:
- The Court expounded on the public rights doctrine in Stern v. Marshall, 564 U.S. 462, 131 S. Ct. 2594, 180 L. Ed. 2d 475 (2011). Stern explained that the Court continued to apply the public rights doctrine to disputes between private parties in "cases in which the claim at issue derives from a federal regulatory scheme, or in which resolution of the claim by an expert government agency is deemed essential to a limited regulatory objective within the agency's authority. ... [W]hat makes a right 'public' rather than private is that the right is integrally related to particular federal government action." Id. at 2613.
- In Stern, however, the Court held that, under Article III, a bankruptcy court could not enter judgment on a state law counterclaim sounding in tort, because state law counterclaims "[do] not flow from a federal statutory scheme," id. at 2614, "[are] not completely dependent upon adjudication of a claim created by federal law," id. (quotation marks omitted), and do not involve "a situation in which Congress devised an expert and inexpensive method for dealing with a class of questions of fact which are particularly suited to examination and determination by an administrative agency specially assigned to that task," id. at 2615 (quotation marks omitted).
- Patent reexamination and inter partes review are indistinguishable from the agency adjudications held permissable [sic] in Thomas and Schor, and wholly distinguishable from the review of state law claims at issue in Stern. Here, as in Thomas and Schor, the agency's sole authority is to decide issues of federal law. The patent right "derives from an extensive federal regulatory scheme," Stern, 131 S. Ct. at 2613, and is created by federal law. Congress created the PTO, "an executive agency with specific authority and expertise" in the patent law, Kappos v. Hyatt, 132 S. Ct. 1690, 1696, 182 L. Ed. 2d 704 (2012), and saw powerful reasons to utilize the expertise of the PTO for an important public purpose—to correct the agency's own errors in issuing patents in the first place. Reacting to "a growing sense that questionable patents are too easily obtained and are too difficult to challenge," Congress sought to "provid[e] a more efficient system for challenging patents that should not have issued" and to "establish a more efficient and streamlined patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs." H.R. Rep. No. 112-98, at 39-40. There is notably no suggestion that Congress lacked authority to delegate to the PTO the power to issue patents in the first instance. It would be odd indeed if Congress could not authorize the PTO to reconsider its own decisions.
- The Board's involvement is thus a quintessential situation in which the agency is adjudicating issues under federal law, "Congress [having] devised an 'expert and inexpensive method for dealing with a class of questions of fact which are particularly suited to examination and determination by an administrative agency specially assigned to that task.'" Stern, 131 S. Ct. at 2615 (quoting Crowell, 285 U.S. at 46). The teachings of the Supreme Court in Thomas, Schor, and Stern compel the conclusion that assigning review of patent validity to the PTO is consistent with Article III.
MCM Portfolio, 812 F.3d at 1290-91.