Earlier this morning the United States Supreme Court requested a response from Michelle K. Lee, Director of the United States Patent and Trademark Office (USPTO), related to the petition for writ of certiorari filed by Oil States Energy Services, LLC, Petitioner, against Greene’s Energy Group, LLC, et. al.
The first and perhaps most obvious news story here relates to the fact that the United States Supreme Court believes Michelle Lee remains Director of the USPTO. Therefore, it can no longer be said that Congressman Darrell Issa (R-CA) is the only government official who has made an on the record statement suggesting that Michelle Lee was held over by President Donald J. Trump. The Supreme Court today seems to confirm Issa’s statements, and the truth that the Trump Administration has for some unknown reason refused to acknowledge. (See here and here) Still, either Michelle Lee is in violation of 18 U.S.C. 912, or she is Director of the USPTO. Lee continues to sign issued patents, she has been signing Federal Register Notices, she continues to report for work, and now the Supreme Court has invited her to respond on behalf of the USPTO. It certainly looks like Michelle Lee remains USPTO Director, and all doubt will be confirmed once the USPTO responds to this Supreme Court invitation to participate, which is not as voluntary as the politeness of the invitation from the Court suggests.
From a substantive standpoint, this dispute is between the parties to an inter partes review (IPR) proceeding conducted by the Patent Trial and Appeal Board (PTAB). There are three questions presented by Oil States in the petition for writ of certiorari were:
- 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.
- Whether the amendment process implemented by the PTO in inter partes review conflicts with Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S.Ct. 2131 (2016), and congressional direction.
- Whether the “broadest reasonable interpretation” of patent claims – upheld in Cuozzo for use in inter partes review – requires the application of traditional claim construction principles, including disclaimer by disparagement of prior art and reading claims in light of the patent’s specification.
Despite these very important questions, the Federal circuit affirmed the Patent Trial and Appeal Board (PTAB) without opinion with a Rule 36 judgment, which is simply a one-word judgment that says “Affirmed” without any explanation. See Does the Federal Circuit’s use of Rule 36 call into question the integrity of the judicial process?
It will be interesting to see the response filed by the USPTO, which is due on or before March 29, 2017, and whether the Supreme Court decides to take one or more of the questions presented. Oil States does raise some compelling questions, as does the not specifically raised question about the Federal Circuit’s abusive use of Rule 36 decisions when facing very important decisions – including decisions of Constitutional magnitude.
Oil States will be given the chance to file a reply within two weeks of the government’s response. If the March 29 deadline holds that will likely put the case in line for discussion by the Supreme Court at the April 21 or April 28 conference, says Robert Greenspoon, an appellate attorney from Chicago who specializes in patent appeals. That would mean a possible decision on the certiorari petition on either April 24 or May 1, assuming the Court does not carry the matter forward.
“If history repeats itself, the Government may seek an extension of time,” says Greenspoon. “This could delay this timeline, with a remote chance of pushing consideration of the petition into the next term. If the Government plays this card and seeks a full summer delay, expect resistance from the Petitioner, and possibly a rare opposition to an extension request.”
Substantively, on the Constitutional issue, Oil States questions whether inter partes review is contrary to Article III of the U.S. Constitution and the Seventh Amendment of the Constitution, but notes that this challenge was foreclosed during oral argument because of the Federal Circuit’s decision in MCM Portfolio LLC v. Hewlett-Packard Co.
On the issue of amendments, Oil States explains that the PTAB refused to consider the evidence it submitted in claim charts, which is hard to believe unless you are familiar with the procedural rules (or lack thereof) at the PTAB, which more closely approximate a kangaroo court. The PTAB has said (and the Federal Circuit agreed) that they do not have to consider even timely submitted evidence filed as a matter of right, which is obviously inappropriate. Oil States also argues that the burden was improperly placed on them, the patentee, and that the challenger to the patent never suggested that the showings made relative to the proposed amended claims were lacking. In other words, Oil States argues that the PTAB created the then amendment standard out of whole cloth, which of course is true and sadly common practice at the PTAB. Cf. Federal Circuit slams PTAB for using wrong CBM definition.
With respect to disparagement of the prior art, Oil States raises an important question about the importance of a specification and prosecution history with respect to interpreting claims. Obviously, under black-letter patent law both the specification and prosecution history must be consulted whenever claims are construed. See e.g. Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. (discussing intrinsic evidence); Nautilus, Inc. v. Biosig Instruments, Inc. (discussing indefiniteness); United States v. Adams, (“it is fundamental that claims are to be construed in the light of the specifications, and both are to be read with a view to ascertaining the invention”); and Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., (“the interpretation of the patent must begin with its literal claims, and the prosecution history is relevant to construing those claims.”).
Increasingly, however, examiners, courts and the PTAB are only looking at patent claims when determining whether the claims are valid or invalid. This is most dramatic and inappropriate in the case of patent eligibility determinations, but it occurs elsewhere also. Oil States argues that here the patent itself specifically and repeated disparaged the prior art, and explained how and why the instant invention was different from the prior art that was being disparaged. The district court relied on these disparagement teachings in construing the claims, as is appropriate, but the PTAB did not, and neither did the Federal Circuit in their one-word Rule 36 judgment.