Yesterday the United States Supreme Court sent a shockwave through the patent community, not as the result of a new opinion but instead as the result of a decision to grant certiorari in Oil States vs. Greene’s Energy Group, et al. This dispute is between the parties to an inter partes review (IPR) proceeding conducted by the Patent Trial and Appeal Board (PTAB). The issue the Supreme Court will decide is whether it is Constitutional to have an Article I tribunal extinguish patent rights. See Supreme Court to decide if IPR is Constitutional.
Depending upon whether you are a technology user or a technology innovator your opinion of what the Supreme Court should do with respect to Oil States will vary greatly. In order to get instant perspective on this matter we reached out to a panel of industry insiders for their take on the Supreme Court’s decision to grant cert. in Oil States. The perspective of our insiders follows.
As for my take, while I am normally quite skeptical of the Supreme Court getting involved in patent matters, the truth is any decision by the Supreme Court in Oil States simply cannot make things any worse for patent owners than they already are. Patents rights are currently be extinguished by an Article I tribunal that fundamentally refuses to provide even a modicum of due process. The PTAB refuses to consider evidence timely submitted, they refuse to allow amendments despite the statute saying there is a right to amend, they refuse to issue final decisions on all the claims challenged, they make up their own standards rather than follow statutory tests, there are no judicial rules of ethical conduct for PTAB judges, PTAB judges decide issues where there are serious conflicts of interest, and much more. Therefore, things could hardly get any worse, yet Oil States presents the very real possibility that the Supreme Court will rule that post grant proceedings at the USPTO violate the Constitution. The lingering question I do have, however, is why would the Supreme Court accept Oil States and SAS Institute v. Lee, another IPR related case that asks whether the PTAB must issue a final written decision on all claims challenged, if the Court were leaning toward finding IPRs unconstitutional?
In any event, here is the take from our expert panel.
Former Deputy Director of the USPTO
Clearly the Supreme Court is not done with its intellectual property obsession. By granting certiorari in Oil States vs. Greene’s Energy Group, et al. the Court has agreed to address the questions of constitutionality of post grant reviews, the amendment process implemented by the USPTO, and how the USPTO applies the broadest reasonable interpretation to claims. Some commentators believe that this is a good sign for patent owners and the end of IPR’s. I don’t anticipate, however, that the Court will shift in a pro-patent direction and gut a cornerstone of the AIA. This will most likely be one of the rare cases where the Supreme Court substantially affirms the CAFC.
The Petitioner has based much of its constitutionality position on McCormick Harvesting Mach. Co. v. Aultman & Co., 169 U.S. 606 (1898) where the Court said in 1898 that “the Patent Office had no power to revoke, cancel, or annul” an issued patent. The Court may, most likely, limit McCormick to the narrow facts of the then reissue procedure. The USPTO did not have a revocation power at that time to rely upon, but does now. It is more probable that the Court will not extend McCormick to the broader proposition that Congress cannot grant the USPTO jurisdiction over an issued patent (particularly to post-AIA issued patents).
I hope that the USPTO does not wait for the Supreme Court decision to move forward with needed changes to the IPR proceedings. My recent article on IPWatchdog provides a starting point for IPR changes that will preserve the integrity of the patent system.
Russell Slifer served as Deputy Director of the United States Patent and Trademark Office during the Obama Administration. Prior to that he was Chief Patent Counsel for Micron. He has also served as a Board Member to the Intellectual Property Owners Association and as a President of the Association of Corporate Patent Counsel.
Patent Policy & Litigation Consultant
Once again, the Supreme Court is taking on a case with a potentially massive impact. Oil States petitioned based on the Seventh Amendment right to a jury trial; it argued that patents are a private right, and therefore the Seventh Amendment applies to all validity challenges. If Oil States wins, it’s hard to see any reexamination or post-issuance review procedure surviving. Besides making it incredibly difficult and expensive to challenge patents, what would that mean for patents that have already been invalidated by those procedures? Do they spring back to life? It’s like Pet Sematary, but for patents. The chaos would be incredible.
The Supreme Court, however, hasn’t given any signs recently that it’s sympathetic to the private rights position. It treated Cuozzo as a fairly straightforward administrative law case, and Lexmark has some language in the opinion that seems to suggest that patents are not property rights in the usual sense. I’m inclined to think that the Court has no interest in setting fire to post-issuance review procedures. But who knows?
I’d love to know why the Court granted this question. If I had to guess, I’d say that it presents a really interesting Constitutional question in a fairly clean way. Or maybe it offers the chance to deal with the never-ending challenges to the AIA reviews once and for all.
Regardless, this case will make for an exciting autumn!
Matt Levy is the former Patent Counsel at the Computer and Communications Industry Association (CCIA). He is now a consultant on patent policy issues and patent litigation.
Charles R. Macedo
Amster, Rothstein & Ebenstein LLP
There is little doubt that the creation of Inter Partes Review (IPR) proceedings as part of the American Invents Act (AIA) — and to a lesser degree Post Grant Reviews (PGR) and Covered Business Method Reviews (CBM) — have had a profound impact on U.S. Patents. In these proceedings, an Article I administrative tribunal, the Patent Trial and Appeal Board (PTAB), has become the de facto arbitrator of whether a previously issued patent claim survives or dies.
In the next Term, the Supreme Court will hear two important cases revolving around these new proceedings: SAS, where the Court will likely cut back or eliminate Chevron deference to an administrative agency; and Oil States, where the Court will address the fundamental question of whether a patent, once issued, is a “private right” or a “public right.” If the Federal Circuit maintains its zero batting average of recent times at the Supreme Court, it is forseeable that the Court will reverse in both instances, finding that the PTAB needs to finish completely whatever it starts, but in any event shouldn’t be the entity that gets to hear the dispute.
Charles Macedo is a partner with Amster Rothstein & Ebenstein LLP. He litigates in all areas of intellectual property law, including patent, trademark and copyright law, with a special emphasis in complex litigation and appellate work.
Partner, Holwell Shuster & Goldberg LLP
While it is certainly surprising that the Supreme Court granted certiorari in this case, I expect the Court will conclude that a patent is a “public right” not a “private right,” and affirm the Federal Circuit’s prior decisions holding that Congress had the authority to establish Inter Partes Review before the Patent Trial and Appeal Board. If the Court rules for the petitioner—Oil States International—patent law and procedure will fundamentally change, and most likely not for the better.
John DiMatteo tries patent matters before federal courts and the International Trade Commission. He also handles Inter Partes Reviews (IPRs) and related complex U.S. Patent Office proceedings.
Robins Kaplan LLP
After denying several other petitions on this issue, the Supreme Court finally granted cert. on the constitutionality of AIA trials by the PTAB. While the merits of the issue will be hotly debated, parties, courts and the PTAB will all have to decide what to do now while the case is pending.
Patent owners may want to consider making the same argument in order to ensure it is preserved, although companies with ongoing matters on both sides of the issue may be in a quandary. As patent owners, they will want to save their patents from invalidation at the PTAB if the Supreme Court strikes down the system. But, they may not want to say publicly that IPRs are unconstitutional, especially if their defense matters are more critical to the company.
This is an issue the Supreme Court needed to resolve, but it creates even more uncertainty for litigants in the meantime.
Mr. Morton is a trial attorney whose complex litigation practice has included an emphasis on patent litigation since 1998. Mr. Morton is also the Chair of the Patent Office Trials Group at Robins Kaplan LLP.