United States: A Path Less Traveled: Where Oil States Meets Bike Trails

This article by counsel Matthew Rizzolo was published by Law360 on May 2, 2018.

In the recent case of Oil States v. Greene's, the U.S. Supreme Court upheld the constitutionality of inter partes review — the popular proceedings created in the America Invents Act and commonly used by defendants to challenge the validity of patents. In doing so, however, the Supreme Court reaffirmed that patents are property rights that are protected by the due process and takings clauses of the Fifth Amendment.1 In the wake of Oil States, some have wondered whether patent owners might raise other constitutional challenges to inter partes review or other U.S. Patent and Trademark Office post-grant proceedings, and much of the initial attention has focused on the due process clause. But the court's reference to the takings clause has received less scrutiny. Clues to what might happen next may come from a surprising place in history — legislation and litigation involving conversions of abandoned railroads to bike trails.

Trails Act Takings

In 1983, Congress enacted a statute, the National Trails System Act Amendments of 1983, which was designed to facilitate the conversion of thousands of miles of unused rail lines crisscrossing the country into public recreational trails. It was no doubt a worthy objective — to incentivize the creation of walking and biking paths over land once occupied by now-abandoned railroad lines. But Congress did not consider that in many cases, the railroads did not actually own the rights-of-way, often instead holding temporary interests known as easements.

A few years after its enactment, the Trails Act was challenged in court as an overreach of congressional authority. In Preseault v. ICC,2 the Supreme Court upheld Congress' authority to pass the statute, finding that it had acted for a proper public purpose. But, as in Oil States, the court noted that the plaintiffs had property rights that were still subject to the Fifth Amendment's takings clause — the requirement that private property cannot be taken for a public purpose without providing just compensation to the owner. As a result, in the last few decades, the U.S. government has litigated dozens and dozens of cases in the U.S. Court of Federal Claims and paid out hundreds of millions of dollars to thousands of property owners who have had bike trails built on abandoned railroad rights of way, either on or adjacent to the property owners' land.

America Invents Act of 2011

Nearly 30 years after the Trails Act, in 2011, Congress enacted the AIA, which created procedures, such as inter partes review and covered business method review, that provided an avenue for the patent office to cancel patent claims that it later found it had erroneously issued. As the Supreme Court recently affirmed in Oil States, patents are special property rights — a "public franchise" — which are expressly provided for in the Constitution. Patents are issued by the government as part of a quid pro quo: in exchange for disclosing new technology to the public, the patent owner is provided with a property right for limited time (currently, 20 years from the filing of the patent application) allowing the patentee to exclude all others from making, using, or selling the patented invention. The Supreme Court has long held (and in Oil States, reiterated) that patents are property rights afforded protection under the takings clause of the Fifth Amendment.

IPRs and CBMs came about over concerns that the patent office was erroneously issuing overbroad or incorrect patents, and that such patents were often asserted by so-called patent trolls. IPRs allow for challenges to all patents on a specific subset of grounds — invalidity for anticipation and obviousness based on printed prior art — that had been used by the patent office since 1980 to revoke issued patent claims. CBMs, on the other hand, allowed for revocation of claims in a narrower set of patents — those relating to financial products or services — but on several additional grounds that had never previously been allowed to be reconsidered by the patent office once a patent issued, such as patentable subject matter, indefiniteness, and lack of written description. Both proceedings applied retroactively, even to patents that had issued prior to the AIA.

Under the patent laws, a patent is presumed to be valid, which means that its claims cannot be revoked or cancelled absent "clear and convincing" evidence that it should not have been issued by the patent office in the first place. Yet Congress also expressly provided that the presumption of validity does not apply in IPRs or CBMs, much as it did not apply in prior post-grant proceedings such as ex parte re-examination and inter partes re-examination. So it's not surprising that since the creation of IPR these proceedings, thousands of patents have been canceled in IPR or CBM proceedings.

For those patents canceled in IPRs as anticipated or obvious, it can be argued that the patent owners agreed as part of the quid pro quo with the government that their patent claim could be cancelled on those grounds, as the patent office has done so for decades. But by broadening the grounds on which a patent's claims could be revoked, CBMs retroactively changed the terms of the patent bargain. The owners of dozens of patents whose claims were cancelled in CBM proceedings on the grounds that they covered unpatentable "abstract ideas," for example, arguably had no reasonable expectation at the time they procured the patents that the patent office could later revoke the patent for this reason. And because a patent provides the patent owner with only a negative right — the right to exclude — once its claims have been canceled by the patent office, the patent has no value whatsoever.

AIA Takings Claims?

It's possible, then, that just like the Trails Act led to widespread takings claims involving real property throughout the United States, we might soon see multiple patent owners filing suits against the U.S. government in the Court of Federal Claims under the Tucker Act,3 arguing that the cancellation of patent claims in certain Patent Trial and Appeal Board proceedings is a taking requiring compensation under the Fifth Amendment. But the success of any such claims is likely dubious in some circumstances, and at most questionable in others.

A plaintiff asserting a takings claim must prove both a cognizable property interest and that this property interest was taken from him by the government. In the context of IPRs, as noted above, the ability for the patent office to cancel the patent claims on the particular grounds formed part of the patent bargain, so a patent owner may have an uphill battle to argue that anything was actually "taken." As Justice Clarence Thomas noted in Oil States, a patent, as a public franchise, is a qualified right — the government has for decades reserved its authority to revoke patent claims on particular grounds, and the patent owner was fully aware of that fact at the time of issuance. While in the context of pre-AIA patents and CBMs, the inquiry is somewhat different (because 35 U.S.C. § 101 and § 112 could never before be considered by the PTO after issuance), a CBM-related takings claim might still face problems. The patent claims are canceled only after the PTO concludes, in a proceeding whose constitutionality has effectively been blessed by the Supreme Court,4 that the property right should never have been granted to the inventor in the first place. Thus, it could be argued that there is no property right that the government has taken for which compensation would be due — while the patent may have existed on paper, it was in fact invalid ab initio.

The parallels with the past are interesting. In the face of constitutional challenges, the Supreme Court found that both the Trails Act and the AIA — and their intended outcomes and benefits to the public — are well within the authority of Congress, which has plenary power over railroads, interstate commerce, and the patent system. And Congress' goals in enacting these statutes were laudable — you'll be hard-pressed to find many people who are in favor of low quality patents, or who prefer abandoned railway lines to well-used bike paths. But a proper public purpose alone isn't enough to prevent takings claims — the mere fact that legislation is intended to benefit the public does not excuse the government from adhering to its constitutional obligation to provide just compensation to the owner of property taken by the government in pursuit of a publicly beneficial objective.

Justice Oliver Wendell Holmes famously said that "a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change."5 The history of takings claims associated with the Trails Act tells us that now, in the wake of Oil States, some patent owners whose property rights have been invalidated may argue that doing so in certain patent office proceedings, rather than district court, is a shortcut that requires compensation under the Fifth Amendment. The government may soon find itself defending against patent-related takings litigation at the Court of Federal Claims. Time will tell whether any such claims may be successful.


1. 584 U.S. ___, slip op. at 17 (2018) ("Finally, our decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause of the Takings Clause.").

2. 494 U.S. 1 (1990).

3. 28 U.S.C. § 1491. This statute provides the Court of Federal Claims with exclusive jurisdiction over claims against the U.S. founded upon the Constitution, including the Takings Clause, which exceed $10,000.

4. While Oil States addressed only the constitutionality of inter partes review, it seems likely that CBM would fare the same under the Court's analysis. However, the Court expressly stated that it was not deciding whether the retroactive effect of the inter partes review statute comported with the Due Process Clause. 584 U.S. ___, slip op. at 17.

5. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 416 (1922).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Marshall, Gerstein & Borun LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Marshall, Gerstein & Borun LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions