Upheaval continues to roil the patent world, and this time, the entire edifice of administrative trials over patent validity is the Supreme Court’s latest target.
Hot on the heels of significantly restricting (0) the geographic scope of patent suits, the high court agreed last week (1) to grant certiorari to a petition challenging the very notion of inter partes reviews, the most prominent type of Patent and Trademark Office trial.
As I’ve explained several times (2) in this space, these administrative proceedings were created by the landmark 2011 America Invents Act as a fast, cheap way to stamp out unworthy patents. Instead of the lengthy, expensive, tortuous (and sometimes torturous) course of full-blown patent litigation in district court, patent challengers could now pummel weak patents in the Patent Office itself.
This is exactly the proceeding of which Greene’s Energy Group (3) availed itself when it filed an inter partes review challenge to a hydraulic fracking patent owned by a company called Oil States shortly after Oil States had sued in district court for patent infringement.
The Patent Office — which falls under the jurisdiction of the Department of Commerce, and thus the executive branch of government — granted Greene’s Energy Group’s petition and invalidated Oil States’ patent in light of an older Canadian patent that Oil States itself had obtained and published. The Federal Circuit Court of Appeals affirmed the Patent Office’s ruling, and Oil States successfully petitioned the Supreme Court to entertain the issue, specifically:
Whether inter partes review — an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents — violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.
Let’s unpack this statement for a moment. First, a patent is a form of property, often known as intellectual property. As the IP Watchdog blog points out (4), eight of the nine current Supreme Court justices have tacitly or explicitly recognized that patents qualify as private property.
Second, because they are private property, Oil States argued, patents cannot be revoked without a jury trial conducted by an Article III judge — i.e., a federal jurist duly confirmed by the Senate.
In its petition, Oil States presented a lengthy line of cases holding that American courts for centuries have insisted on this Seventh Amendment jury right for patent cases, largely on the basis of English common-law tradition.
For their part, Greene’s and the solicitor general, who submitted a brief on behalf of the Patent Office in this case, argued that patents are no ordinary public property and instead constitute “a quintessential public right closely intertwined with a federal regulatory program.”
But Oil States, while recognizing the public importance of patents, nevertheless reasserted the private nature of that right, namely (and crucially) the ability to exclude others from using them. Thus, they contended, Congress’ “attempt to ‘streamline’ patent litigation by permitting [Patent Office trials] to resolve invalidity defenses thus impermissibly supplants the jury trial and creates a conflict with this Court’s jurisprudence.”
In other words, Oil States argued, the provision of the America Invents Act that created inter partes review was itself unconstitutional, as Congress improperly arrogated to itself the right to strip the judicial branch of certain powers and to reallocate those powers to the executive.
The case will be considered by the Supreme Court in its October term, and a decision isn’t expected until June 2018. But in the meantime, many expect a cloud to hover over Patent Office trials, and patent owners may feel at least temporarily more emboldened than before.