Every month here at Fed Circuit Blog we highlight recent scholarship related to the Federal Circuit and the law under its jurisdiction. This jurisdiction, of course, includes patent law, but also many other areas of law. This month we highlight three articles, two in the field of patent law and one in the field of takings law. The patent law articles address, respectively, the role of the United States Solicitor General vis-à-vis the Patent Office in formulating patent policy, and whether intellectual property licenses act as a “tax” that limits access to technology assets. The takings law article takes a fresh look at the law governing alleged physical takings.

Tejas N. Narechania, Defective Patent Deference, SSRN (December 23, 2019)

In this article, Berkeley law professor Tejas Narechania highlights the important role of the United States Solicitor General in recommending to the Supreme Court whether it should grant or deny review in patent cases decided by the Federal Circuit. Indeed, he says, “What the Solicitor General requests, the Solicitor General typically receives.” (Notably, he wrote this before the Supreme Court rejected the Solicitor General’s recommendation to grant review in Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC.) He notes, however, that the Solicitor General’s decision-making process is cloaked in secrecy. “This,” in his view, “is problematic.” Moreover, he points out, “[t]he Patent Office has never claimed to exercise any substantive rulemaking power.” As a result, it is the Solicitor General that “develops and advocates for patent policy outcomes, but behind closed doors, without deep internal expertise, and under the time constraints of appellate litigation.” As a result of “[t]hese shortcomings (among others),” he has engaged in a reexamination of “the Solicitor General’s influence over patent policy in favor of alternate interpretive practices that improve Executive Branch decisionmaking.” In the end, he argues that—rather than the Solicitor General— “the Patent Office ought to exercise primary jurisdiction over questions of patent policy.”

John D. Echeverria, What is a Physical Taking?, SSRN (December 20, 2019)

The Federal Circuit hears appeals from the Court of Federal Claims in cases involving alleged takings by the federal government. In this article, Vermont Law School’s John Escheverria explores physical takings, and in particular compares the law governing physical takings with the law governing regulatory takings. He notes that “the Supreme Court first articulated the idea of a per se rule for physical takings after, and in reaction to, the establishment of modern regulatory takings doctrine.” But he recognizes that “the Court has provided contradictory signals on whether it is committed to a per se rule or (what amounts to the same thing) how it defines per se in this context.” Analyzing Federal Circuit decisions (as well as those from courts across the country, including the Supreme Court), he finds that courts “routinely reject takings claims based on appropriations or occupations, suggesting that the ostensible per se rule may be more myth than reality.” After taking a “fresh look for possible justifications for distinctive treatment of physical takings claims,” he sets forth “new normative underpinnings for distinctive treatment of physical takings claims.” Based on these underpinnings, he argues that “courts should evaluate physical takings without regard to the economic impact of the government action,” and that “courts should determine whether an appropriation or occupation results in a taking by considering the extent of interference with the owner’s reasonable expectations and the purpose of the government action.”

Jonathan Barnett, The ‘License As Tax’ Fallacy, SSRN (December 12, 2019)

According to USC law professor Jonathan Barnett, there is currently a prevailing, yet wrongheaded view that intellectual property licenses act “as a ‘tax’ that limits access to technology assets, thereby stunting innovation by intermediate users and inflating prices for end-users.” As examples, he cites “recent Supreme Court decisions on IP licensing and enforcement actions by competition regulators in the U.S. and other commercially significant jurisdictions.” Moreover, he contrasts specific instances in which “Congress essentially codified the Federal Circuit’s new approach by requiring a showing of market power for certain claims of patent misuse” and, more recently, when the Supreme Court overturned “the Federal Circuit’s approach reflect[ing] the fact that, as an economic matter, there is nothing intrinsically objectionable about placing a restriction on the use of an IP asset, so long as the restriction is made known to the purchaser and therefore reflected in market pricing.” But, instead of a tax, he argues, “IP licenses typically play an enabling rather than exclusionary function by mitigating expropriation risks that would otherwise frustrate transactions between the holders of complementary specialized IP and non-IP assets.” Moreover, according to Barnett, “[t]hese transactions support a robust innovation ecosystem by facilitating value-creating exchanges of knowledge assets, promoting the division of labor among innovation and production specialists, and lowering entry costs for firms that excel in innovation but lack capital-intensive production and distribution capacities.” He thus concludes that “it may be time to rethink the recent renewal of skepticism toward IP licensing.”