*Updated on 4/26/18 with additional Commentation
Earlier today the United States Supreme Court issued its decision in Oil States v. Green Energy, finding that inter partes review is constitutional both under Article III and the Seventh Amendment to the United States Constitution. In a 7-2 decision, the Court determined that patents are a government franchise that are subject to review by the Patent Office even after granting, and can be revoked at any time. For my analysis see SCOTUS says Patents are a Government Franchise, Not a Vested Property Right.
We’ve already published several articles on this very important decision today, one including the instant reactions of Todd Dickinson, former Director of the United States Patent and Trademark Office, and Russ Slifer, former Deputy Director of the United States Patent and Trademark Office. Both men signaled the importance the initiative of Director Iancu will play as this debate continues.
“I would expect PTO Director Iancu’s recently-announced intention to review and likely change PTAB processes… to be where the focus of the debate shifts even more than it has,” Dickinson explained.
While the decisions are much as he explained, “the holdings of these two cases highlight the critical importance of Director Iancu’s recent statements that the USPTO needs to make changes to how the PTAB conducts and institutes post-grant reviews,” Slifer explained.
In order to get a diverse array of views, we held open comments through early evening for this instant reaction piece. We will have much more to write in the coming days and weeks. Nevertheless, what follows is reaction to the Supreme Court Oil States decision from a distinguished panel of industry experts.
Chief Judge Paul Michel
Chief Judge, US Court of Appeals for the Federal Circuit (ret.)
In Oil States, disturbing that the Court characterizes patent as “public franchises.” That may apply comfortably to broadcast licenses issued by the FCC because the airwaves belong to the public, but not to Edison’s inventions even after the PTO grants him patents. After all, the statute which the Court seems to treat lightly whenever it protects the patentee says “patents shall have the attributes of personal property.” To my eye, franchises are fundamentally different because they are rights that do not partake of property.
One redeeming feature however, was the caveat that patents are still protected by the Due Process and Takings clauses of the Fifth Amendment. I see that supporting future cases in the high court that may, for once, help patent owners.
Partner, Drinker Biddle and Former Commissioner for Patents for the USPTO
In a totally unsurprising holding, at least to me, the Supreme Court found today by 7-2 that IPR does not violate the Constitution and the IPR is a permissible review on the patents. Justice Thomas, writing for the majority, states that IPR is simply a reconsideration of the patent grant and Congress was acting within its authority to authorize the PTO to conduct that reconsideration.
I applaud the outcome because to rule otherwise would wreak havoc on the US patent system with the possible resurrection of zombie patents that were already invalidated. Reversing would also raise parallel questions about other non-article III courts that arguably take property and further unsettle the judicial ecosystem. But the logic employed by the majority does seem a bit tortured in the discussion of a public right and that IPR is merely a permissible reconsideration of the original grant.
Now is the time for Director Iancu to provide revised rules to level the playing field in all of the post-grant processes and help make the patent system better.
Partner, Shook, Hardy & Bacon, LLP
Today, the Supreme Court added both certainty and uncertainty to inter partes review proceedings. In Oil States, the Court settled the overarching question that IPR proceedings do not violate Article III or the Seventh Amendment of the Constitution. The decision leaves some room for further constitutional challenges, e.g., for retroactive application to pre-AIA issued patents, due process challenges, and other potential constitutional challenges. However, the Court made clear that the overall scheme for administrative trial proceedings created by Congress under the America Invents Act remains alive and well.
President, Foresight Valuation Group
This case makes clear the power of Congress to provide the USPTO with broad post-issuance authority. In other words, the status quo remains. From a patent valuation perspective, IPRs have already impacted the value of patents due the uncertainty coupled to these proceedings. This decision reinforces the constitutionality of IPR proceedings and may further complicate the processes by which patent owners monetize their assets and would add Oil States to the list of cases such as Alice and Mayo that reinforce the uncertainty in the market regarding the patentability of cutting edge inventions.
While the Supreme Court’s Oil States decision has been largely anticipated by the IP community, one should review it in conjunction with Andrei Iancu’s recent public statements, which might arguably be the more interesting development this week. Director Iancu’s statement that “human-made algorithms that are cooked up, invented as a result of human ingenuity are different from discoveries and mathematical representations of those discoveries” might signal an effort by the Director to push for changes in validity considerations that would include these algorithms that can be distinguished from mathematical representations of discoveries. This statement may signal the emergence of a market for patents claiming algorithms, a market that currently resides behind NDAs and trade secret protection.
Partner, Foley & Lardner (on Behalf of Green Energy)
This is truly great news for American business and industry. Actual innovators and productive businesses such as Greene’s Energy can now rest assured this important facet of our system will be retained, and the burden imposed by non-practicing entities will be minimized.
Partner, Oblon, McClelland, Maier & Neustadt, L.L.P.
I am not surprised by the 7-2 decision of the Supreme Court upholding the Constitutionality of AIA administrative trials as well within the authority of the USPTO to correct patents that it had issued. Many prognosticators had predicted such an outcome, some even were so bold to predict that it would be a 9-0 decision. The long history of patent correction mechanisms at the USPTO that have survived challenge including interferences were the losing party had been issued a patent that was revoked as well as ex parte and inter partes reexamination proceedings resulting in issuance of reexamination certificates canceling claims seem to presage the Court’s decision to leave it to Congress’ discretion to enact patent legislation to permit the USPTO to reevaluate its decision to grant patents based on information not previously considered by the Office.
The seventh amendment right to jury trial and the patents as private rights v. public rights arguments did not prevail. If such arguments had prevailed I wonder what would have been the fate of ITC Section 337 investigations, albeit in rem proceedings, where the ITC can invalidate granted patents in a bench trial. Perhaps there is a distinction because the complainant is the patent owner who sought institution of the ITC investigation.
Raymond Van Dyke
Intellectual Property Attorney
In a narrow but still huge decision today, Oil States Energy Services v. Greene’s Energy Group, the U.S. Supreme Court today relegated patents and challenges to them as more a public, as opposed to a private, right. Justice Thomas wrote the opinion of the Court that under the “public-rights doctrine” great latitude is accorded in allowing the adjudication of “public rights” by non-Article III adjudicators, e.g., political appointees. The Court held that Article III federal judges are not needed in Inter Partes Review patent challenge proceedings at the USPTO, where a private challenger can seek the invalidation of a patent under the auspices of the USPTO, where the “judges” are subject to the Director and other political appointees that “adjudicate” the patent right. This particular point was made manifest when former Director Michele Lee sought to overturn Patent Board decisions not to her liking by appointing more judges to skew the result.
Justice Thomas sought to narrow the conclusion of the Court today to just the constitutionality of these IPR proceedings, and not extend this viewpoint to other contexts of patents, leaving the “private property” notion for some patent rights hanging. In his dissent, Justice Gorsuch lucidly contested the majority’s viewpoints and the holding, considering it as dispensing “with constitutionally prescribed procedures” for expediency and a “retreat” from constitutional guarantees for citizens. Indeed, the majority seemed to interpret the jurisprudence and the historical context quite differently than Justice Gorsuch.
As a practical matter, the Justices as a whole were perhaps loathed to invalidate IPR and the thousands of decisions made so far, and thus stretched the Administrative State to now include IPR patent rights, forfeiting the parties’ private rights. With only two Justices viewing patents as private instruments, Gorsuch and Roberts, this does not bode well for the future. Congress needs to act to fix this. However, with the insidious influence of the tech lobbyists to squelch private innovation and future technology challenges by any means, it is doubtful that Congress will step up. Thus, in due course, when the next challenge accrues encroaching on patent rights, we will again be faced with a majority of the Justices deeming patents as another administrative right to be curtailed, instead of the special instruments they are for the private citizen to contribute to Society as a whole, as our Founders intended, by getting a short-term incentive to innovate. Liberal IPR proceedings over the last few years, invalidating many valuable patents, have significantly undermined the importance and value of patents, the consequences for which are being felt by entrepreneurs, inventors and investors for future technologies. With the value of patents being diminished, and today’s decision is a further diminishment, innovation in America is suffering, the next cures for diseases are compromised, the next valuable app is being thwarted, and the American spirit of invention quelled. All because a majority of our Justices deem the patent system as something not deserving of constitutional protections, which is in direct conflict with history and policy.
Brian P. O’Shaughnessy
Partner, Dinsmore & Shohl
In keeping with its recent history of eroding patent property rights, the Supreme Court has ruled that IPRs are within the constitutional ambit of Congress. The Court focused on the public rights argument, concluding that “Patents convey only a specific form of property right – a public franchise.” As such, the right is properly circumscribed by statute. The majority held, and the dissent contested (Gorsuch, Roberts), that, as a public right, the revocation of the right is not of a nature solely suited to an Article III court, but may, by operation of statute, be conferred on the legislative or executive branches.
In a somewhat encouraging turn, the Court emphasized the narrowness of its holding. It restricted it to IPRs, noted the protections afforded by Federal Circuit review, and cautioned that its “decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.” Enter Senators Coons and Cotton, and Representatives Stivers and Foster, who have introduced in their respective houses, the STRONGER Patents Act. Due consideration of this legislation will open a worthy, and now much needed, dialogue as to the nature and extent of those protections, and whether they are properly balanced to maximize innovation and public benefit. IPRs have proven prejudicial to meritorious inventors, and have diminished the public’s confidence in our patent system. The terms under which they are conducted are unduly discretionary and yield unpredictable outcomes, often inconsistent with those of Article III courts. If IPRs are to remain, Congress must act to shore them up, and ensure they afford all the constitutional protections that Oil States demands.
IP Partner, Kirkland & Ellis
Justice Thomas’s opinion for the majority focuses specifically on the public-rights aspect of patent law, and the fact that IPRs simply involve “reconsideration of the Government’s decision to grant a public franchise.” Although it is perhaps surprising to see him and Justice Gorsuch disagree so directly, Justice Thomas’s willingness to have an Executive Branch agency resolve a dispute that otherwise naturally could be adjudicated by a court is consistent with the views he described in Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015) (Thomas, J., dissenting).
Managing Partner, Canady + Lortz, LLP
Because patent challengers and the courts went slightly mad in the aftermath of Mayo, Myriad, and Alice, and found just about everything under the sun to be not patentable subject matter, it is somewhat heartening to see that the Supreme Court took the time to unambiguously emphasize the narrowness of their holding as being limited to the constitutionality of inter partes review by non-Article III forums. As such, Oil States has no bearing on the constitutionality of non-Article III forums deciding other patent matters such as infringement actions, the constitutionality of the retroactive application of inter partes reviews, or any other issue that was not explicitly presented and considered by the Court.
Charles R. Macedo
Amster Rothstein & Ebenstein LLP
In Oil States, the seven member majority of the Supreme Court confirmed (at least for now) the constitutionality of inter partes review proceedings, as set up by Congress in the American Invents Act of 2011. The Court reaffirmed that the Patent Trial and Appeals Board — an adjudicatory body within the PTO created to conduct inter partes reviews, has authority to examine the validity of a patent which was previously issued by the PTO. The Court found “Inter partes review falls squarely within the public-right doctrine”, as it “is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO’s authority to conduct that reconsideration. Thus, the PTO can do so without violating Article III.” The Court’s emphasis of the “narrowness of our holding” does leave the door opened a crack to consider other constitutional challenges that don’t turn on a public right vs. private right distinction. At least as of today, Oil States leaves intact inter partes reviews, and other post-issuance proceedings before the USPTO.
Founding Member, Flachsbart & Greespoon
The decision rests on an unfortunate mistake, used to distinguish the Court’s prior 19th Century holdings. It states that the Patent Act of 1870 “did not include any provision for post-issuance administrative review.” It is difficult to understand this belief. The 1870 Act at Section 53 permitted “reissue” proceedings by its express terms, and reissue statutory provisions (Sections 41, 46) permitted the cancellation of original patent claims. Against this statutory backdrop, the McCormick Court forbade cancellation of original patent claims on constitutional grounds.
Principal at Tinnus Enterprises and Inventor of Bunch O Balloons
This past year I have aggressively advocated for recovering our American patent system. I have funded events, protests, travel, and amicus efforts for US Inventor to the tune of tens of thousands of dollars. I have made dozens of trips to Washington D.C. and the USPTO to advocate for inventors. I have undertaken extensive original research on the laws and individual cases. I have searched court filings to identify and then organized dozens of inventors who have been abused by the corporate take over of the patent system. I have sacrificed my time, my family, and my finances. Others have given more for sure – Paul Morinville, Randy Landreneau, Adrian Pelkus, and others have given more for longer. For months now I have been committing to my colleagues to fight the fight until the Supreme Court settled the issue. Now it is settled. Patents are just like toll bridges. If you have millions of dollars you can have one. The fight is over. The big corporations, the lawyers, the bureaucrats got what they wanted.
Americans don’t understand where innovation comes from. They don’t understand our history. Even Justices Alito and Thomas don’t understand. It is settled – we don’t need patent rights in America. Google, Apple, and Elon Musk will take care of us.
My advice to aspiring inventors? The U.S. patent system is not for you. You cannot afford it. It will not help you. If you can encrypt your invention then go for it. If your invention is hardware then patent it in China. Keep your day job and join the maker movement in your spare time. Don’t sign up for multi-level marketing scams and don’t apply for a U.S. Patent.
Professor of Law, University of Richmond, School of Law
While I am disappointed with the Supreme Court’s ruling in the Oil States case, I am not terribly surprised. The majority opinion, and the many others who are cheering the constitutionality of inter partes review, fall back on the trite horror story of “bad patents” without considering the real effects on innovation. To the extent “bad patents” exist, and by that phrase I mean patents that should not have been granted in the first place, it seems that the creation of a monstrous bureaucracy to attack these patents is the real horror story. If we have so many “bad patents,” and to look at the record of the PTAB in invalidating patents, we must have an awful lot of them…wouldn’t a more apt answer be to fix the solution on the front end, before a patent is granted? By setting up one administrative process on the back end to fix errors that are caused by a separate administrative process on the front end, Congress has created additional layers of uncertainty for companies and investors, as well as opportunities for harassing inventors and innovators, that are more likely to hinder innovation than the presence of any “bad patent” might.
Although I’m disappointed with the outcome of Oil States, I still think there could be a happy ending to this story. Given recent remarks by Director Iancu, where he has repeated his focus on changing the narrative to pro-innovation and pro-intellectual property and increasing the reliability of a patent grant, I hope he will take the opportunity provided by Oil States to actually fix the patent system by looking at the initial examination process, so we don’t have so many “bad patents” to start with, and curtailing the zealousness with which the PTAB has approached the inter partes review system, returning more value and certainty in the property right of issued patents.
Counsel, Ropes & Gray
In the U.S. Supreme Court case Oil States Energy Services LLC v. Greene’s Energy Group LLC, petitioner Oil States Energy argued that the America Invents Act inter partes review (IPR) procedures violate the U.S. Constitution’s separation of powers, alleging that IPRs are an improper exercise of “judicial power” by an executive branch agency—the Patent Trial and Appeal Board (PTAB). Oil States, which had its hydraulic fracturing patent invalidated in an IPR requested by Greene’s Energy, had argued that patents can only be ruled invalid by a jury in a federal district court, not by a panel of administrative patent judges in the PTAB.
Today, the Supreme Court affirmed the Federal Circuit’s prior ruling that these IPR proceedings do not violate the Constitution. Ropes & Gray intellectual property litigation attorneys expected that the Court would uphold the constitutionality of these AIA trial proceedings, given the history of reexamination of validity at the Patent Office, the availability of judicial review of such proceedings by the Federal Circuit, and the fact that patent rights flow from a statutory framework that can be adjusted by Congress. The Court noted that narrowness of its holding to the precise constitutional challenges raised by Oil States, and explained that the decision should not be misconstrued as suggesting that patents are not property for the purposes of the 5th Amendment.
If the Supreme Court had found IPR proceedings to be unconstitutional, patent challengers would have lost an important cost-control mechanism, forcing most issues of patent validity to be decided in district court litigation. Such a change would likely have reinvigorated so-called “patent trolls” and increased nuisance lawsuits and costs on patent defendants.
Justice Neil Gorsuch dissented from the Court’s ruling (joined by Chief Justice Roberts), expressing his view that patent rights were not the type of rights that historically could be adjudicated outside of the independent district courts.
Partner, Morrison Foerster
The PTAB is still in business. By upholding the constitutionality of inter partes review procedures, the Court has left intact this powerful tool that can be used to challenge patents. The Court rejected the argument that patent validity disputes have to be adjudicated by a federal court. Instead, the Court ruled that these disputes can be heard by administrative patent judges who work for the patent office.
PTAB challenges have become a crucial part of patent litigation. Frequently, after a patent infringement lawsuit is filed the case is stayed while a PTAB challenge is resolved. This has resulted in a lower cost way for those accused of infringing a patent to win the case or drive it to an early settlement. By rejecting the constitutional challenge in Oil States, the Supreme Court kept this important option open for accused infringers.
Co-Founder and Executive Director, Initiative for Medicines, Access & Knowledge
The Supreme Court’s ruling marks a victory to ensure the American patent system works responsibly and reasonably to get true inventions into the hands of consumers, patients and families.
When it comes to deciding which patents are merited and which are not, the Patent Trial and Appeal Board plays a critical quality control function. And affirmed by the Court’s ruling, we’re on the right path to removing unmerited patents that drive up drug prices and block too many people from getting the treatment they need. Healthy competition in our marketplace won today.
Partner, Dorsey & Whitney
Companies targeted with patent infringement suits can take comfort in knowing that they will not simply be a punching bag; they can punch back. The Court’s 7-2 decision is a resounding affirmation of inter partes review proceedings, which are widely used and have proven to be effective at weeding out weak patents. The Court’s decision will discourage patent holders from pursuing haphazard patent enforcement measures. Patent holders would be well-advised to conduct a serious analysis of the validity of their patents in view of prior art before launching enforcement measures. Companies subject to a seemingly never-ending stream of patent infringement suits should be encouraged by the Court’s decision because it solidifies the leverage that inter partes review proceedings can provide to alleged infringers.
While Oil States was closely watched for its potential of eliminating IPR proceedings altogether, the Supreme Court’s decision affirming the constitutionality of IPR proceedings is ultimately a non-event that effectively maintains the status quo. If it had come down the other way, the Oil States decision would have had an existential impact on IPR proceedings. As decided, Oil States should not have a meaningful impact on practice before the PTAB.
The Supreme Court’s SAS Institute decision, however, will have a multitude of impacts on both practice and strategy before the PTAB. Initially, we would expect to see both Patent Owners and Petitioners attempting to have the PTAB modify recent institution decisions to comport with the Supreme Court’s new guidance, which requires the PTAB to institute IPR proceedings on all challenged claims if the Board decides to institute on any one challenged claim. From a practice standpoint, it will be interesting to see how the PTAB adjusts its practices to SAS. One possibility is that the PTAB will only address one (or select) claims in institution decisions. This would reduce workload on the PTAB in many cases, but it would also leave the parties with no guidance on how the PTAB is initially viewing the remainder of the challenged claims that now need not be addressed at institution.
From a strategic standpoint, Petitioners will need to be more cautious about which claims to challenge in an IPR. After SAS, even claims that could potentially have weak prior art reads will now be subject to institution if other claims are subject to art that passes the institution threshold. The long-term result is that those weaker prior art reads will now proceed through a Final Written Decision giving rise to estoppel effects as to those claims. From the Patent Owner side, a possible strategic shift that may evolve is the option of statutorily disclaiming broader claims that are more likely to invoke an IPR institution. Such a strategy could effectively remove the low hanging fruit that would otherwise result in an institution decision as to all challenged claims
Executive Director, Conservatives for Property Rights
We are disappointed that the Supreme Court ruled that the Patent Trial and Appeal Board (PTAB) is constitutional in another move that further weakens our patent system and continues the Court’s trend of harming our once great patent system. While we are pleased that the majority opinion emphasized that this ruling is a narrow one and should not suggest that patents are not property, we still fear that this ruling will continue to erode the constitutional protection of property rights and degrade our patent system. This decision makes clear that it’s time for Congress to step in and take action to eliminate or seriously reform the PTAB system through legislation such as the STRONGER Patents Act.
Partner, Richardson Oliver Law Group
In today’s 7-2 decision upholding IPR, the US Supreme Court maintained the AIA regime which allows parties to challenge patents they view as having dubious validity. This is the outcome I predicted and while I believe further court challenges to IPR as such are unlikely to be successful in the short term, the majority opinion took pains to emphasize the narrowness of the holding. In fact, two areas were called out as unresolved: (1) retroactive application of IPR to pre-AIA patents and (2) a broader due process challenge to the IPR process.
Nonetheless, those opposed to IPRs might do better to focus their efforts on reforming a process they view as unfair at the USPTO. They will likely find Director Iancu to offer a more favorable ear than the Supreme Court. Iancu has emphasized his interest in strengthening patent rights and the recent Federal Register notice and new examiner guidelines on § 101 align with a more pro-patent rights stance.
The decision here also reinforces the opportunity to enhance your company’s patent prosecution practices. If your business depends on having assertion-ready patents, then this ruling is a further incentive to implement prosecution practices aligned with increased patent value such as conducting a pre-filing search, submitting more prior art, filing more claims of more varied scopes, and having a robust continuation practice.
Member, Dykema Cox Smith
Much of the commentary and argument associated with Oil States focused on the idea that because patents have the attributes of private property, they must be “private rights” protected by the constitution. The majority opinion in Oil States says otherwise, that a patent is a “public right” that only arises out of government action. This firmly entrenches the idea that inter partes reviews are just “a second look at an earlier grant.”
The other takeaway from Oil States is that this is really a maintenance of the status quo. To decide that inter partes reviews were not constitutional would have led to major disruptions. Although some parts of the patent community wanted IPRs to go away, Oil States was always a long shot.
Partner, Wiley Rein
Today’s decision is a clear victory for PTAB supporters. The Supreme Court’s reasoning in Oil States was simple and crystal clear: if the PTO can grant a patent, it can take it away (under certain circumstances). But, the PTAB as we’ve known it since 2012 is changing. Examples of changes include: today’s surprise decision in SAS that all petitioned claims must be reviewed, leaving open the dreaded possibility (for petitioners) of an IPR being instituted on the basis of the challenge to one claim but other claims later being confirmed as patentable on the backend, thus creating a bulletproof patent; the many internal changes to PTAB practice and procedures such as claim amendments and follow-on petitions, with even more changes promised by Director Iancu; and, the majority in Oil States leaving open the possibility of narrower constitutional challenges to the PTAB, such as due process challenges in cases involving alleged ‘panel stacking’ or challenges to the application of inter partes review to patents granted before 2012 before the expectation of IPRs.
Patterson Thuente IP
The Supreme Court and IPRs – a Mixed and Messy Bag of Results. In the Oil States decision handed down today, Justice Thomas authored the 7-2 majority decision affirming the constitutionality of IPR proceedings over challenges based on Article III separation of powers and the 7th Amendment Right to Trial by Jury. Depending upon which camp you are in, this will be seen as either generally favorable (petitioners) or generally unfavorable (patent owners).
Member, Bass, Berry & Sims
Today’s decisions add yet another layer of complexity to the already uncertain world of patent law.
The Oil States decision confirms that as long as new prior art exists, patent prosecution never really ends until the patent expires. What the Patent Office gives, it may also take away without the procedural protections independent review through the Article III court system. Assuming an applicant successfully obtains a patent, he must live with the uncertainty of further review under the USPTO’s “broadest reasonable interpretation” and “preponderance of the evidence” standards should he ever decide to enforce his “public rights.”
It remains to be seen whether Congress (with different versions of patent legislation currently pending before the House and the Senate) will take up the policy questions implicated in these decisions.
IP Partner, Michael Best
The decision, its rationale, and the alignment of the Justices are unsurprising based on the questions asked at oral argument and the applicable precedent. The PTAB bar will breathe a sigh of relief although few were holding their breath given how the case unfolded.
Partner, Alston & Bird
There has been much press about the strength of the U.S. patent system and the uncertainty that a patent holder has about the validity of its patents. The practical outcome of the IPR procedure being found constitution is that this uncertainty will remain. It is expected that petitioners will celebrate this victory while patent owners will focus their attention on USPTO rulemaking and/or legislative action.
Partner, DLA Piper
This went pretty much as most people had expected, for the reasons that were expected. It was interesting that Thomas’ opinion cabined in the extent of the opinion and left open the possibility of other challenges, including due process and retroactive application. Thus, we might see still other constitutional challenges
Associate, Neal Gerber Eisenberg
Today’s decision is interesting, but not surprising. Eliminating Inter Partes Reviews would have been a major disruption to one of the most significant changes to patent law in recent history. However, the Court was not entirely unsympathetic to patent owner’s concerns, and telegraphed that the Justices may be open to other challenges. For example, Justice Thomas specifically noted that the Court did not decide whether the patent owner is getting due process and whether Inter Partes Reviews can appropriately be applied to patents granted before the America Invents Act (AIA). The decision finally puts the question of IPR constitutionality to rest, but it seems the fight will continue and move on to issues regarding the structure of the Inter Partes Review process.
The precision of the Oil States’ dissent sharply contrasts with Justice Thomas’ convoluted majority opinion, moving the distinction between public and private property further into the fog of today’s patent uncertainty. His latest opinion now joins his 2006 eBay decision to create a double deterrent to investment in US patented invention. I cannot usefully add clarity to the words of Justice Gorsuch except to repeat an early excerpt and cogent foot note.
“Today, the government invites us to retreat from the promise of judicial independence. Until recently, most everyone considered an issued patent a personal right—no less than a home or farm—that the federal government could revoke only with the concurrence of independent judges. But in the statute before us Congress has tapped an executive agency, the Patent Trial and Appeal Board, for the job. Supporters say this is a good thing because the Patent Office issues too many low quality patents; allowing a subdivision of that office to clean up problems after the fact, they assure us, promises an efficient solution. And, no doubt, dispensing with constitutionally prescribed procedures is often expedient. Whether it is the guarantee of a warrant before a search, a jury trial before a conviction—or, yes, a judicial hearing before a property interest is stripped away—the Constitution’s constraints can slow things down. But economy supplies no license for ignoring these—often vitally inefficient— protection.”
“Color me skeptical. The very point of our written Constitution was to prevent the government from “depart[ing]” from its protections for the people and their liberty just because someone later happens to think the costs outweigh the benefits.”( foot note)
Director, Center for Intellectual Property Research at Indiana University’s Maurer School of Law
The decision this morning is a good outcome for the patent system. It’s the culmination of decades of debate over whether to have a meaningful post-grant administrative review process in U.S. patent law,” said Janis, who proposed such a system in an article published in 1997. “I wondered about the constitutional question back in 1997; it’s good to see the constitutionality of the process vindicated today.
I hope that the decision marks an important inflection point in the policy debate over post-grant review proceedings. Momentous questions about the nature of the proceedings can now be set aside. The pragmatic work of refining the implementation details can proceed. USPTO Director Iancu seems to have an appetite for that work, and I hope that the result will be a set of procedures that better balances patent owner and challenger interests. Justice Gorsuch’s dissent provides much food for thought and may signal the emergences of a new and forceful voice on patent matters.
President, US Inventor
This is a dark day for America. Within the DNA of the great American experiment has been the concept that any person from any walk of life who comes up with something patentable can own it and benefit fully from that ownership. This has been a key part of the “American Dream.” Patents have been property rights for 200 years. Now, the degree to which you own your patented invention will depend on politics – who is President, what multinational corporations supported the campaign, what key person of their viewpoint gets appointed as head of the Patent Office, and how can the system be skewed to fit that viewpoint. The result is the death of the kinds of disruptive American innovation that have served this country and mankind so well.
Every great idea in the mind of an independent inventor is absolutely his or her own property until it is disclosed. If the eventual patent is not the private property of the inventor and can be invalidated as easily as now, what is the incentive to disclose the idea? Without legislation that eliminates the PTAB and requires an Article III Court with a jury to invalidate a patent, America will never again lead the world in innovation.
Executive Partner, White & Case
The Supreme Court’s decision today will guide the future actions of the PTAB, which has become a popular forum for parties to resolve disputes. We expect to see an even greater number of cases being brought to the PTAB because, since 2012, there have been 12,000 proceedings filed at the board. We are going to continue to advise our clients, as we always have, that they should invest in robust patent portfolios, and that they should be constantly evaluating their best practices on how to monetize, leverage and/or approach others about cross-licensing them.
The PTAB system is but one of many options for companies to turn to for resolving their patent disputes. The district court and the International Trade Commission are other alternatives. There are several advantages that the PTAB provides its users. First, the process is quick; second, it saves companies money because it limits the amount of discovery; and third, it gives the parties insight into their oppositions’ positions early on in the matter. Moreover, there is nothing that prohibits concurrent proceedings in the district court and PTAB to resolve disputes.
Partner, Lewis Baach Kaufmann Middlemiss
Oil States is as widely expected. One collateral effect of the decision is that it further strengthens the “public law” aspect of patents, which could make a difference in cases that require consideration of the public interest, such a forum disputes and injunctions. Oil States would have been monumental had it gone the other way, but it was not expected to, and did not. There is also potentially a retroactivity question on Oil States. Most patents in current IPRs were issued prior to the law establishing IPRs. Today’s Oil States ruling leaves that issue open – though one might doubt it would come out any differently.
Partner, Fitzpatrick, Cella, Harper & Scinto
The majority’s reasoning essentially is that, because the executive arm of the U.S. government has been given the constitutional power to grant a patent, it also has the constitutional power to take it away. The majority rejected Oil States’s argument that patents are entitled to special status after they issue; the majority explained that patents are issued subject to the qualification that they subsequently can be reexamined or canceled by the PTO. While the majority disagreed with the dissent over the import of historical practice to this case, the majority nevertheless found a historical analogue to IPRs in the practice of the Privy Council, an 18th century arm of the English Crown that until 1753 had the exclusive authority to revoke patents. In upholding the constitutionality of IPRs, the Supreme Court avoided a number of subsidiary issues that would have arisen had it ruled the other way, including what to do about patents previously invalidated in IPRs. The Supreme Court left open a door for future litigants to argue that IPRs might be subject to constitutional challenge under the Due Process Clause or Takings Clause.
Chair of the Patent Office Trials Group, Robins Kaplan LLP
To state the obvious, this decision just preserves the status quo. It’s business as usual at the PTAB. The decision expressly did not resolve the retroactive applicability of IPRs. That issue had the attention of several Justices at oral argument, and further challenges on this issue are sure to follow. If you filed for a patent without knowing that IPRs would later take it away, maybe you would have kept it a trade secret. The underlying question the decision leaves unresolved is whether or not IPRs are a good idea. The dissent by Justice Gorsuch, and joined by Chief Justice Roberts, provides the argument that they are not. In essence, Gorsuch argues that in England before the Constitution, and for nearly 200 years in America, it was clear that patent rights deserved the protections provided by an Article III Court. Now, it is up to Congress to make that choice, and they have said the Executive Branch giveth, and the Executive Branch can taketh away. IPRs won’t be going anywhere anytime soon.