Supreme Court: Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC

The Supreme Court recently agreed to decide whether inter partes review, a post-issuance proceeding introduced by the America Invents Act (“AIA”), violated the Constitution. The constitutional challenge alleged that the inter partes review process (“IPR”) violated the Constitution by extinguishing private property rights through a non-Article III federal court and in the absence of a jury.

The challenge brought two constitutional claims before the Supreme Court: (1) an asserted violation of Article III and (2) a violation of the 7th Amendment. Article III of the Constitution establishes the judicial branch of the federal government, specifically vesting the judicial power of the United States in federal courts. The 7th Amendment codifies the right to a jury trial and gives a court’s deference to a jury’s findings of fact.

The argument in front of the Court followed the logic that patents are private property rights, and, therefore, are only revocable by federal courts as established by Article III of the Constitution. Additionally, it was claimed that permitting the Patent Trial & Appeal Board (“PTAB”) to make such rulings in the absence of a jury violated the 7th Amendment’s guarantee of the right to a jury.

The Supreme Court first addressed whether patents constitute private or public property rights –- a distinction the Federal Circuit had previously refused to make. Ruling that the granting of a patent is a public franchise, the Court decided that Congress can delegate authority to a private entity –- in this case the PTAB–- to reconsider such grants. Therefore, Congress acted within its permissible scope in extending authority to the PTAB to reconsider patent grants. The Court made clear that its opinion did not contradict previous case law establishing that patents themselves are private property, but rather determined that specifically the granting and reexamination of patents are public rights.

The 7th Amendment claim likewise failed. This followed the conclusion that patent grants are public rights –- and that Congress can permissibly assign adjudication responsibilities to the PTAB. Accordingly, a jury was essentially determined unnecessary in this situation.

Like it or not, this holding will continue the recent national trends of making it easier for defendants to challenge issued patents. The PTAB is regarded as a favorable jurisdiction for defendants to challenge patents. The panels are made up of technical experts familiar with patent procedure. This can be in stark contrast to federal court, where judges and juries do not always possess specialized expertise in these realms. The “burdens of proof” to invalidate patent claims are lower than found in federal court. The IPR, along with related Post Grant Review (“PGR”) and re-examination proceedings are powerful weapons for patent defendants.

The attorneys at Buche & Associates, P.C. are litigators and patent attorneys familiar with patent litigation.

Copyright 2018. Buche & Associates, P.C. Article by Nicole Sumida, J.D. candidate, patent agent, and John Buche, J.D., patent attorney.