The United States Supreme Court will hear oral arguments in Oil States v. Greene’s Energy Group on Monday, November 27, 2017. This case will give the Supreme Court its first opportunity to address the constitutionality of the inter partes review procedures created by the America Invents Act (AIA). The issue specifically taken by the Supreme Court is as follows:
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.
In advance of this much anticipated hearing, I reached out to a number of industry insiders with a simple question: What are you thoughts and predictions on Oil States in advance of Supreme Court oral arguments? Their answers follow.
As for my thoughts — as I’ve said at various speaking engagements, I’ve made a career out of correctly predicting chaos when it comes to Supreme Court decisions. That means I’m going to go out on a limb this time with my prediction that the Supreme Court will find IPRs unconstitutional. We all know the Supreme Court does not ordinarily take Federal Circuit cases to affirm, although it does happen from time to time. With this particular issue there seems to be no reason to take the case, and they’ve refused to take the same issue several times. So what has changed? Justice Gorsuch is now on the Court. I believe the patent community is too myopically focusing on this case as a patent case. I believe this case may well be treated as an administrative case giving the conservatives on the Court an opportunity to say something profound about the growth of the Administrative State, which if true would inure to the benefit of those wanting a strong patent system and a dismissal of the Patent Trial and Appeal Board from the post grant challenge business.
In any event, once oral arguments are complete we will circle back with further articles and prognostications in advance of what should be a momentous decision by the Supreme Court.
Partner, Drinker Biddle
I think that Oil States is one of those rare cases that the Supreme Court takes up to affirm the Court of Appeals for the Federal Circuit. The Supremes feel that they need to have some cases to balance all of the reversals they hand down and this is one of them. The chaos that could result from a reversal will drive the decision. If the Supreme Court decided that Article III judges are needed to invalidate patents what would happen with all of the cases already decided? What about the earlier Inter Partes Review decisions? What about third party reexamination? What about other administrative courts in other agencies handling other property-related issues? I also believe that the Supreme Court will deem patents to be a “quasi-public” right to explain its decision. The right would neither be fully private nor fully public, but a hybrid. This is how they will justify a decision that is necessitated by the trouble that would result from a reversal.
Robert L. Stoll has more than 40 years of experience in intellectual property prosecution. Bob retired from the USPTO as Commissioner for Patents at the end of 2011 after a distinguished 34-year government career.
Partner, Oblon, McClelland, Maier & Neustadt, L.L.P.
I predict that the Supreme Court will not strike down AIA trials as being unconstitutional. With that said the Supreme Court may focus more on the language of Article 1, section 8, clause 8 of the Constitution on the scope of Congressional authority and discretion in enacting patent laws rather than on lightning rod issues of the right to jury trial and public v. private property aspect of patent grants. On the other hand, it would not surprise me if the Supreme Court in dicta criticizes how the AIA statutes have been implemented and urges that Congress and the Executive Branch to take action to make reforms to better balance the proceedings to make them more flexible.
Stephen Kunin serves as an expert witness and consultant on patent policy, practice and procedure. Mr. Kunin served three decades at the USPTO, including 10 years as Deputy Commissioner for Patent Examination Policy.
Of Counsel, Buchanan Ingersoll & Rooney, PC
I doubt that the Supreme Court will find IPRs unconstitutional. Joe Matal predicted at the AIPLA annual meeting that the constitutionality of IPR proceedings would be upheld by the Court without dissent. In support of this prediction is the fact that the Federal Circuit denied en banc review in this case 10-2 and the Supreme Court has repeatedly denied petitions on the same issue, see MCM Portfolio v. Hewlett-Packard; Cooper v. Lee; and Cooper v. Square. It is also interesting to note that the Supreme Court will hear SAS Institute v. Lee, another IPR related case that asks whether the PTAB must issue a final written decision on all claims challenged, at the same time as Oil States. If IPRs are unconstitutional, then there is little need to determine whether a final written decision must address all claims challenged. Like Joe Matal, consumers of the proceedings do not seem to be worried. The number of IPR petitions filed after Oil States was granted cert is comparable to historical rates. This reflects continued confidence in the IPR system. Should the unlikely happen, I predict that we will simply move forward to rectify the timing of the challenges to occur prior to the grant of a patent right.
Marc Adler is an intellectual property attorney and strategist with Buchanan Ingersoll & Rooney, PC. Prior to joining the firm Marc spent more than 25 years at Rohm & Haas, a Fortune 100 company, serving as the company as assistant general counsel and chief IP counsel.
Partner, Richardson Oliver Law Group
One might be excused for thinking IPR is in trouble, many of the amicus briefs in support of neither party seem to tilt heavily against IPR. In contrast, the FantasySCOTUS crowd wisdom as of late October leans heavily the other way (estimating that IPR will be found constitutional unanimously). My own prediction: IPRs will be upheld. My primary rationale rests on (1) a generally anti-patent owner trend in outcomes across several decades of Supreme Court decisions and (2) the fact that the unanimous Supreme Court outcome in Cuozzo from 2016 lacks any dicta in the concurring-in-part opinions that would suggest concern about Article III issues. As to the second point, while it is true that the Supreme Court is not required (nor does it regularly) raise issues sua sponte, it just strikes me as too odd for them have upheld details of the IPR process with some concurrences and not even generated any dicta about the validity of the proceeding itself.
With an ever greater proportion of products in the market necessarily incorporating and practicing hundreds of thousands of innovations (and thus patents), a more robust mechanism for challenging weak patents was needed. Congress recognized this and created IPRs. IPRs delivered by shifting the cost curve for a patent challenge from one-million plus dollars to on the order of one-hundred thousand dollars. This shift has changed the landscape in a positive way for many industries. Particularly, helping clear the NPE landscape. For industries where there are fewer patents per product, the patent-value/protection cheese has moved; however, the answer is not to blame IPRs (or the PTAB). But to recognize that the IPR process affords opportunities to more cost effectively challenge weaker patents and deliver products into markets that your company had previously avoided due to the high cost of patent challenges.
Mr. Oliver counsels clients on a variety of patent and business matters, including licensing, buying, selling, valuation, prosecution and business processes. Prior to founding the ROL Group, Mr. Oliver was a Vice President at ThinkFire Services USA, Ltd’s Silicon Valley office.
Partner, VLP Law Group
The Federal Circuit’s 2015 holding that patents are “public property rights” in MCM Portfolio v. HP underlies the dispute in this case. Neither the brief by Petitioner (Oil States Energy’s Services) brief, arguing for private property rights, nor the briefs by the two Respondents (Greene’s Energy Group and the U.S. Solicitor General), arguing for public property rights, seem convincing. Indeed, the Respondents’ argument that Congress intends the Inter Partes Review (IPR) to be a vehicle by which the U.S. Patent and Trademark Office (USPTO) corrects its own mistakes seem especially contrived, given that the petitioner of an IPR certainly plays a much bigger role than merely bringing to the USPTO’s attention that it has made a mistake in granting the patent. The Solicitor General’s Brief opens strongly in arguing that patents are not “natural rights” but a creature of “positive law,” but inexplicably fails to follow through to a compelling result. The Court may find a more reliable footing in the amicus brief by “27 Law Professors,” which argues from the historical viewpoint that patents — at least in American jurisprudence of the 19th and 20th centuries — were consistently seen as private property rights.
I think it is likely that the Court will resolve the issue in favor of private property rights, overruling MCM, but it is not clear to me that such a ruling would mandate the Court to require a jury trial under the Seventh Amendment. Again, neither Petitioner’s brief nor Respondent’s brief address that issue convincingly. I think the Court will struggle to save the USPTO’s IPR jurisdiction. One possibility would be to treat an IPR invalidation like an invalidation at the U.S. International Trade Commission (USITC), i.e., the invalidation is not binding, unless affirmed by a judicial appeal. That result, of course, would also necessarily strike down the statutory estoppel provisions in the IPR statute. Would the Court risk further confusion by so holding? That seems unlikely. Perhaps, the Court does not have a choice but to find the IPR unconstitutional in its entirety.
Edward Kwok is a partner with VLP Law Group. His practice focuses on patent prosecution and Inter Partes adverse proceedings before the U.S. Patent and Trademark Office, and intellectual property litigations in state and federal courts.
There is no question that, since its introduction just over five years ago, the inter partes review process has had a dramatic impact on U.S. patent litigation as well as the U.S. patent system as a whole, though of course there is some debate about whether, on the whole, this impact has been positive or negative. A ruling in favor of Oil States striking down the IPR process would have similarly massive consequences, even if the full extent of those consequences (particularly on patents that have already been invalidated by the PTAB) might not become immediately clear. Given the Federal Circuit’s recent track record at the Supreme Court, it might be tempting to see the fact that the justices have agreed to hear this case in the first place as an indication that they are getting ready to hand down another reversal. But in contrast to past cases, the question presented here goes far beyond challenging the validity of the Federal Circuit’s interpretation of a statute, and instead invites the Supreme Court to strike down the IPR statute in its entirety as an unconstitutional exercise of Congress’s legislative powers—which, needless to say, is an altogether different proposition.
On balance, the legal and policy arguments in favor of upholding the IPR statute appear to be stronger. One thing that will be interesting to watch is whether, in the event the statute is upheld (as seems probable), the Court will nonetheless seek to provide patent owners with a measure of relief. The Court may well decide to signal to the PTO that the agency has pursued the congressional mandate to invalidate weak patents too zealously, and that it should strive (through its rulemaking authority or otherwise) to make the IPR process more friendly to patent owners, for example by making it easier to amend claims. Similarly, the Court might signal to the Federal Circuit that it needs to take on a more active role in policing the PTO’s implementation of the statute.
Josh Lorentz is chair of Dinsmore & Shohl LLP’s Intellectual Property Department and practice group chair of the firm’s IP Litigation and Licensing Practice, where he manages IP litigation, as well as trademark, copyright, privacy and social media matters. Oleg Khariton is a member of Dinmore’s Intellectual Property Department, focusing his practice on patent litigation.