PUBLIC RIGHTS AFTER OIL STATES ENERGY.

Author:MacLeod, Adam J.
 
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The concept of public rights plays an important role in the jurisprudence of the Supreme Court of the United States. But as the decision in Oil States last Term revealed, the Court has often used the term to refer to three different concepts with different jurisprudential implications. Using insights drawn from historical and analytical jurisprudence, this Article distinguishes the three concepts and examines how each of them is at work in patent law. A precise reading of Oil States also bears lessons for other areas of law that implicate both private rights and duties and the administration of public, regulatory schemes.

INTRODUCTION

The Supreme Court of the United States is quietly taking a jurisprudential turn. The Court's October 2017 Term produced profound debates between and among the Justices over terms and concepts drawn from classical jurisprudence, such as vagueness as a criterion of legal invalidity, (1) the role of culpable intention in shaping public accommodation licenses, (2) and the nature of sovereign immunity over title to land at common law. (3) In several cases, analysis of the law and the holdings that followed turned on jurisprudential questions; pragmatic or policy considerations were ancillary.

Even in patent law, which is often thought to be exceptional, autonomous, forward looking, and utilitarian in its orientation, (4) traditional legal concepts play a critical role. A conceptual distinction determined the result in the most-discussed patent case of the term, Oil States Energy Services, LLC v. Greene's Energy Group, LLC. (5) The case turned on the question whether patents are private or public rights. That distinction has girded the architecture of common-law jurisprudence since the seventeenth century, (6) and its antecedents can be traced all the way back to ancient Roman jurisprudence. (7) Ultimately, the majority ruled that patents confer public rights for Article III purposes because they result from a government-issued franchise. (8) The idea of a franchise originates in early Norman law of the eleventh and twelfth centuries. The result in Oil States therefore turned on legal concepts that occupied Justinian, (9) Matthew Hale, (10) William Blackstone, (11) and other jurists who never encountered a light bulb, much less artificial intelligence.

The Court's use of the concept of public rights in Oil States has profound implications not only for patent law but also for admiralty and maritime law, (12) bankruptcy, (13) federal regulation of employment contracts and other commerce, (14) native tribal sovereignty, (15) and other areas of law that implicate both private rights and the administration of federal law. (16) As the Court affirmed in Oil States, patents are private property rights for many purposes, and patent disputes are like tort disputes. But patents are also governed by a substantial administrative apparatus, and the issuance of a patent is like a public grant. (17) The ruling suggests that Congress may bring private property rights within the public rights exception to Article III jurisdiction and the Seventh Amendment if those rights exhibit certain public features.

The majority in Oil States upheld a provision of the Leahy-Smith America Invents Act (AIA) by which Congress conferred on an executive agency, the Patent and Trademark Office, jurisdiction to adjudicate patent validity, a power traditionally exercised by courts of law and civil juries. (18) However, the Court also affirmed that patents are property rights for Fifth Amendment purposes, thus inviting future challenges to the ALA under the Due Process and Takings Clauses. (19) The Court employed the concept of "public rights" as the fulcrum for its analysis.

The concept of public rights used in Oil States is in potentiality and principle the fulcrum for all contests that implicate both private law and federal executive power. (20) So, it is important to know what the Court meant by "public rights." Unfortunately, as the majority in Oil States conceded, the Court has never "definitively explained" the idea (21) and has failed to employ it consistently. (22) After attempting to employ the concept in a case supposed to be within the concept's ambit, a lower court expressed in frustration that "this Court is convinced that the Supreme Court has no precise notion of the public/private right distinction." (23) The concept is important and muddled.

Fortunately, Oil States contains several clues that might help us achieve clarity. Close attention to the opinions reveals three distinct concepts, (24) each drawn from a different strand of classical jurisprudence: (1) rights that the public as a whole enjoys not to be defrauded by an ill-gotten patent or otherwise wronged; (2) rights generated by positive laws that are not primarily determined by natural rights but are instead matters of indifference that lawmakers settle by their choices; and (3) rights that are derived from prerogative grants, such as franchises and letters patent. Each of these three kinds of rights is found in a patent, but in different aspects. And each has different legal and constitutional implications for private and public law. The first and third senses determine who may initiate an action concerning the validity or limits of a right. The second and third senses determine who has the power to adjudicate the boundaries of rights.

The idea of public rights performs important work in many areas of law, and legal scholars continue to examine and discuss the idea's meaning, just as Justinian and Blackstone did. (25) But contemporary legal scholarship does not generally differentiate which meaning or sense of "public rights" is on the table in any particular case, and so tends to run together different meanings that have different legal implications. Like other legal concepts, the idea of public rights is useful as a modular referent that facilitates legal analysis and reduces the information costs of legal practice. (26) But if the idea is used in a way that confuses more than it clarifies, then the benefits of the concept are lost, and legal analysis can go awry.

The most useful feature of the concept of public rights, and the reason why its career continues in American jurisprudence, is that it signals who has which powers over a proceeding that can produce a valid judgment of a right's validity or limits. The first sense of "public right," as what is at stake in a public wrong, concerns who has power to initiate a proceeding that might affect the right holder's legal status in some way, as by depriving him of a liberty or imposing on him some liability. Standing is one instance of this first sense. The second sense, as positive law's authoritative settlement of a matter of indifference, concerns who has power to adjudicate a right, such as a court of law, a jury, chancery, or a commission. This was the issue in Oil States. The third sense, as a right emanating from a public grant or franchise, determines both the power to adjudicate and the power to initiate an adjudication but within the constraints of due process.

Those issues are among the questions that the Court expressly bracketed and set aside in Oil States. The AIA stretches traditional legal concepts in challenging ways. And the Court signaled that its decision in Oil States will not be the final word on the private or public status of patents but the first. (27) For example, the Court reiterated that patents are private property within the meaning of the Fifth Amendment, though not fully private rights within the meaning of the Seventh Amendment. Lower federal courts are still seeing takings claims for patent rights, (28) and the United States Court of Appeals for the Federal Circuit recently issued an opinion meant to control the "growing number of retroactivity challenges" to the AIA, which cite Oil States as precedential authority. (29) Those claims, which the majority in Oil States expressly bracketed and seemed to invite, presuppose that patents are, at least in part, vested private rights. (30) Furthermore, the very next term after Oil States, the Supreme Court ruled in Return Mail, Inc. v. United States Postal Service that the U.S. Postal Service is a public sovereign and not a "person" who possesses the private right of an accused infringer to initiate a covered business method proceeding at the Patent and Trademark Office. (31) This means that patents implicate private rights for some interested parties and public rights for others.

So, it seems that the Court will continue to revisit the concept of public rights in the near future. The Court will have opportunities to clarify the senses in which it is using the term and the implications for legal challenges to the AIA. Those rulings will establish precedents for many other areas of law.

After this introduction, Part I examines the reasoning of the Oil States decision, digging below the terminology to uncover the underlying concepts at work. This examination reveals that the Court had different legal concepts in mind, though it used the same term to describe them, and that those concepts have different implications for future cases. Part II explains the common-law concept of public rights, how public rights differ from private rights, and why that distinction determines who has power to initiate a legal proceeding to sanction or remedy a wrong. Part III examines more closely the concept that explains the holding in Oil States. That concept refers not to a right's publicity but rather to its original authority, which determines who has power to adjudicate a right's validity and boundaries. Part IV examines the Court's concept of a patent as a "franchise," and shows how common-law franchises partake of both publicity and positive authority. Part V picks up where Oil States and Return Mail left off. It examines which aspects of a patent are private and which are public, which implicate legal rights and which...

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