A Summary of the Constitutional Issues Raised by the Petitioner in Oil States

In arguing that inter partes review (IPR) violates the U.S. Constitution, the petitioner in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC advances two theories. The first is that patents are private rights, not public rights, and therefore suits to invalidate patents must be tried before a jury under the Seventh Amendment. Second, even if the Seventh Amendment is not violated by IPRs, suits for invalidity must be tried in an Article III forum, not in an agency proceeding. The petitioner also takes issue with claim interpretation and claim amendment limitations during IPR, which are beyond the scope of this post.

The constitutional argument begins by focusing on the fact that patent “infringement cases today must be tried to a jury, as their predecessors were more than two centuries ago”, citing Markman v. Westview Instruments, Inc., 517 U.S. 370, 377 (1996) (emphasis added). At a minimum, the Constitution requires that an Article III judge adjudicate all cases in law and in equity arising under federal law. According to the petitioner, IPRs provide neither the jury nor the Article III forum guaranteed by the Constitution.

The petitioner’s brief argues that because patent infringement must be tried by a jury, invalidity defenses also must be tried by a jury. This seems unconvincing, as IPRs are not infringement suits and may be filed without any infringement allegation being levied at all. To say, as the petitioner does, that IPRs take “a patent infringement claim out of the jury’s hands and entrusts it to bureaucrats” seems odd, since infringement is not an issue in IPRs.

In any case, the petitioner then argues that patents are private rights, not public rights. The petitioner argues that even the PTO has recognized that patents are a property right, complete with the most important characteristic of private ownership – the right of exclusion. The petitioner convincingly observes that a private right exists wholly apart from the government once granted, as the Supreme Court itself observed in United States v. Am. Bell Tel. Co., 128 U.S. 315, 370 (1888) (“[The subject of the patent] has been taken from the people, from the public, and made the private property of the patentee”). That is why “[o]nce a patent is issued, the patentee must enforce the patent without aid of the USPTO.” The implication is that if patents are indeed private rights once issued, they cannot be “taken” without a jury trial under the Seventh Amendment.

The petitioner next argues that even if the IPR determination of invalidity does not violate the Seventh Amendment, it nonetheless violates Article III and Supreme Court precedent, because the Court has “long recognized that, in general, Congress may not ‘withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty’”, Stern v. Marshall, 564 U.S. 462, 484 (2011) (quoting Murray’s Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272, 284 (1855)). According to the petitioner, because patent infringement cases are traditional actions at common law tried by the courts, an Article III judicial proceeding must be held to test validity because the Court itself has held that once 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”, citing McCormick Harvesting Mach. Co. v. C. Aultman & Co., 169 U.S. 606 (1898).

The petitioner then presents arguments relating to land patents, in which the Court held in the 19th century that the only authority to set such patents aside is the courts, not the department that issued the patent. This, of course, conflates land patents with invention patents and moreover relies on law that appears to have been, at the very least, softened by contemporary Court deference to the administrative state.

The petitioner concludes by admitting that although there is a category of cases involving “public rights” that Congress could constitutionally assign to “legislative” courts for resolution, patents do not fall into that category, having been recognized for centuries as a private property right. Consequently, IPRs are a “prototypical exercise of judicial power” because a final, binding judgment is being entered on a cause of action – patent invalidation – that stems from the common law and does not depend on any agency regulatory regime as it predates the agency by centuries. For this reason, patent infringement cases – complete with invalidity defenses – are traditional actions at common law and therefore the responsibility for deciding them rests, if not with juries, then at a minimum with Article III judges in Article III courts.

CLICK HERE to READ a summary of the Constitutional arguments made by the Respondent.

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4 comments so far.

  • [Avatar for John Rogitz]
    John Rogitz
    September 26, 2017 12:31 pm

    Just to clarify, the “briefs” I discuss are indeed for the cert stage. You can find them below:

    http://www.scotusblog.com/wp-content/uploads/2017/06/16-712-petition.pdf

    http://www.scotusblog.com/wp-content/uploads/2017/06/16-712-respondents-BIO.pdf

  • [Avatar for Edward Heller]
    Edward Heller
    September 25, 2017 08:44 pm

    It is interesting how Oil States essentially copied my arguments to the Federal Circuit and Supreme Court, and then proceeded to ignore them its merits brief in a argument that is full of holes at best.

    IPR are like scire facias proceedings to revoke a patent. These common law proceedings were brought at law, tried at law (King’s Bench) and the case given to the jury. Judgment revoking the patent was entered on the jury verdict by King’s Bench. Whether validity was ever tried to a jury in an infringement action before 1791 is a constitutional irrelevancy. Ditto bill in equity for injunctions.

    Ex parte Wood (US Supreme Court, 1824) held the common law scire facias action to revoke a patent had a right to a trial by jury just as they did at common law.

    McCormick Harvesting held that the USPTO, on reexamination, could not revoke a patent claim for invalidity — that being the exclusive province of the courts.

    Where is all this argument in Oil States brief?

  • [Avatar for Eric Berend]
    Eric Berend
    September 25, 2017 12:03 pm

    Ah – the very crux of the matter. Now, all current U.S. patent practice will be informed: is the nose REAL – or is it, once again: made of ‘WAX’?

    Is not only the U.S. Constitution, but also the very bedrock basis of U.S. jurisprudence in the common law, along with its concomitant traditional distinctions between law, equity and admiralty; heretofore, so consistently cited at issue or at whim by the Justices of the Supreme Court of the United States of America: a mere charade?

  • [Avatar for PTOIndentured]
    PTOIndentured
    September 24, 2017 11:34 am

    Non-analogous Art — ‘letter of law’ isolation

    “Infringement is not an issue in IPRs” like, constitutionally: ‘A strangler’s fingers are not an issue in a pending murder trial’; like ‘A bullet is not an issue in an upcoming handgun-killing case’. Yes, if the ‘fingers’ or ‘bullet’ ISSUE taken alone, is so isolated from a common sense context, as to be void of a well-known practice and prevailing evident-destructive use, then a mere ‘letter of the law’ explaining them away ‘constitutionally’, will suffice. As in ‘IPR’ as a context-void isolated issue in the Oil States case.

    IPR’s Destruction of U.S Patent Value Has Not Occurred in a Vacuum
    (Read: AIA+PTAB+BRI+IPR…).

    IPRs under AIA-Sanctioned PTAB tribunals, kill patents, or essentially do so, 9 out of 10 times.

    CORRECTION: “Infringement is not an issue…” in each of 9 out of 10 AIA/PTAB/IPR/BRI-killed patents. As contrived, intended to do so, as IPR petitioners are aware and fully appreciate.

    Anyone care to provide a percentage stat/ratio on the number of IPRs filed where infringement is truly “no issue”? Constitutionally or not.