Jun 13, 2017Legal
Supreme Court Will Decide Whether IPRs Are Unconstitutional

Written by Jeffrey C. Wu, Ph.D. and Ben J. Everton

The Supreme Court granted a petition for writ of certiorari to address whether inter partes review – an adversarial process used by the Patent Office to determine the validity of existing patents – is unconstitutional in Oil States Energy Services, LLC. v. Greene's Energy Group, LLC, Case 16-712 (U.S. June 12, 2017).

Greene’s filed a petition for inter partes review in response to Oil States’ patent infringement suit in the Eastern District of Texas. The petition challenged Claims 1 and 22 of U.S. Patent No. 6,179,053 as being anticipated and/or obvious over the prior art. The PTAB issued a Final Written Decision holding that the challenged claims were anticipated by the prior art, and further rejected Oil States’ motion to amend, finding that there was insufficient written description support for each of the proposed substitute claims.

Oil States appealed the PTAB’s final written decision and the Federal Circuit affirmed the PTAB’s decision without comment under Rule 36. Oil States filed a petition for a writ of certiorari, asserting that IPRs are unconstitutional because actions brought to invalidate patents must be tried before a jury in an Article III forum, not in an agency proceeding.

In its petition, Oil States argued that “[p]atents create property rights, protected by the Constitution.” Oil States cited the Supreme Court’s decision in McCormick Harvesting Mach. Co. v. Aultman, 169 U.S. 606, 608-09 (1898) as supporting its proposition that “[o]nce a patent is granted, it ‘is not subject to be revoked or canceled by the president, or any other officer of the Government’ because ‘[i]t has become the property of the patentee, and as such is entitled to the same legal protection as other property.’” According to Oil States, the private property rights of patents are subject to Article III and the Seventh Amendment, which require that patent validity determinations be made by a jury in an Article III forum.

In its opposition brief, Greene’s argued that patent rights are public rights not requiring adjudication by an Article III court. Greene’s cited Federal Circuit decisions upholding the constitutional validity of patent reexaminations generally. Greene’s also cited Stern v. Marshall, 564 U.S. at 490-491 which stated that “what makes a right ‘public’ rather than private is that the right is integrally related to particular federal government action.” Greene further argued that, even if patent rights are private, Congress may delegate such rights to non-Article III courts if the right is so closely integrated into a public regulatory scheme as to be a matter appropriate for agency resolution. 

The USPTO filed a brief defending the constitutionality of inter partes review. Its arguments were similar to Greene’s and focused on the position that patent rights were public rights as opposed to private property rights.

The U.S. Supreme Court will hear argument on this case during the October 2017 term. The outcome of the Supreme Court’s opinion in this case may have far reaching ramifications with respect to the future of inter partes review and patent litigation generally.

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