INTER PARTES REVIEWS ARE CONSTITUTIONAL – Issued Patents Can Be Cancelled By The Patent Office

On April 24, 2018, the Supreme Court issued the much anticipated decision in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC (https://www.supremecourt.gov/opinions/17pdf/16-712_87ad.pdf). The Court held Constitutional the provisions of the America Invents Act authorizing the U.S. Patent and Trademark Office (“PTO”) to conduct an Inter Partes Review (IPR) in which the PTO reconsiders and can cancel an already issued patent claim. In an IPR the Patent Trial and Appeal Board can reconsider and cancel already issued patent claims based upon prior art patents and printed publications. The Court rejected the position that only Article III courts have jurisdiction to hear post grant validity challenges, and held that an administrative body may have jurisdiction as well. The Court further held that an IPR does not violate the Seventh Amendment right to trial by jury because it is not a judicial proceeding. Justice Gorsuch filed a dissenting opinion in which Chief Justice Roberts joined arguing that after a patent is granted, an Article III judicial proceeding is required.

The majority decision relied on the principle that an IPR falls within the “public-rights doctrine”, which permits non-judicial determinations, in this instance by the Executive Branch, because the granting of a patent involves a matter “arising between the Government and others.”  Congress is, therefore, able to grant authority to the Executive Branch to determine whether to grant a patent in the first instance, and importantly, to review and reverse the grant after issuance.

The majority acknowledged that in the past patent validity was an issue determined by the judicial branch, but held that it does not follow that the judicial branch is forever to be the sole arbiter of a patent’s validity.

While the two dissenting justices strongly argued that the majority misinterpreted historical precedent and that once granted, the loss of a patent right should only be determined by the independent judicial branch, the majority did not agree. It is worthy to note that the decision specifically stated that the holding is narrow and should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.

Although not addressed in the decision, there are other post-grant proceedings such as a Post Grant Review (PGR) which, unlike an IPR, permits challenges broader than those based on prior art. In view of the majority’s observation that IPRs only consider issues of prior art, it may be possible to distinguish PGRs from IPRs.  Nevertheless, there are sufficient parallels between IPR and PGR proceedings to render a constitutional challenge to PGRs problematic.

Jeffrey A. Schwab

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