Federal Circuit Affirms Court of Federal Claims Decision Dismissing Suit Seeking Compensation for Cancelled Patent Claims

In Christy, Inc. v. U.S., No. 2019-1738 (Fed. Cir. Aug. 24, 2020), the Federal Circuit affirmed the decision of the Court of Federal Claims to dismiss a suit brought by a patent owner against the United States alleging that the United States owes the patent owner just compensation for the cancellation of its patent claims in an inter partes review.

Christy, Inc.’s U.S. Patent No. 7,082,640 (“the ’640 patent”) issued in 2006. Christy and its licensee, CDC Larue Industries, Inc., sued two competitors alleging infringement of the ’640 patent. One of the competitors filed two petitions for inter partes review of the ’640 patent. The PTAB cancelled the 18 challenged claims, leaving only two remaining claims. The Federal Circuit summarily affirmed the PTAB’s final written decision. Christy subsequently filed a class-action suit in the Court of Federal Claims raising, among other claims, a Fifth Amendment takings claim and an illegal exaction claim, seeking just compensation from the government for its cancelled patent claims and a refund of its USPTO fees. The government moved to dismiss all claims for lack of subject matter jurisdiction and failure to state a claim. The Court of Federal Claims dismissed each of Christy’s claims. Christy appealed.

On appeal, Christy argued that the Court of Federal Claims erred in three ways: by (1) finding that Christy failed to state a plausible Fifth Amendment takings claim; (2) finding that the court lacked subject matter jurisdiction over the illegal exaction claim; and (3) finding that Christy failed to state a plausible illegal exaction claim. The Federal Circuit, citing its decision in Golden v. United States, 955 F.3d 981 (Fed. Cir. 2020), held that Christy failed to state a plausible takings claim because the “cancellation of patent claims in [an] inter partes review cannot be a taking under the Fifth Amendment.”

Regarding Christy’s two remaining arguments, the Court noted that the government conceded that the Court of Federal Claims had jurisdiction to hear Christy’s illegal exaction claim. Thus, the Federal Circuit only had to address whether Christy stated a plausible illegal exaction claim. The Federal Circuit rejected Christy’s argument and affirmed the Court of Federal Claims, holding that the law required payment of the relevant USPTO fees regardless of any later post-issuance proceeding. The Court, noting Christy’s failure to identify any statute, regulation, or constitutional provision requiring a refund of its USPTO fees, held that the issue of whether a patent owner is entitled to a refund after cancellation of a patent in an IPR is a policy question that is best answered by Congress or the USPTO.