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Supreme Court Holds that IPR Proceedings do not Violate Article III or the Seventh Amendment in Oil States v. Greene’s Energy

April 24, 2018 (snippets Alert)

Authored by Andrew Williams, Ph.D.

In a 7-2 decision, the Supreme Court today in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC held that inter partes review (IPR) proceedings do not violate Article III or the Seventh Amendment of the Constitution. Writing for the majority, Justice Thomas explained that a grant of a patent is a matter involving a public right. Moreover, because IPR proceedings involve the same basic matter as the grant of a patent, they also fall within the public rights doctrine. As a result, the Constitution does not prohibit the Patent Office from resolving issues of validity after grant outside of an Article III court. Important to the analysis was the lack of distinction between IPR proceedings and the initial grant of the patent because “[p]atent claims are granted subject to the qualification that the PTO has ‘the authority to reexamine – and perhaps cancel – a patent claim’ in an inter partes review.”

The Court did stress, however, that its holding was limited to the question of the constitutionality of IPRs only. For example, the Court pointed out that “Oil States [did] not challenge the retroactive application of inter partes review, even though that procedure was not in place when its patent issued.” This will almost certainly lead to continued constitutional challenges for patents that issued prior to the enactment of the AIA. In addition, the Court noted that it was not determining whether IPR proceedings raise due process concerns, which is interesting in view of the questioning about expanded panels during oral argument. Finally, the Court stressed that the holding should not be misconstrued to suggest that other constitutional challenges could not be made, for example challenges related to the Due Process Clause or the Takings Clause. These limitations virtually ensure that there will be continued challenges to particular IPR practices adopted by the PTAB.

Justice Breyer wrote a concurrence that was joined by Justices Ginsberg and Sotomayor. Even though he joined the Court’s opinion in full, he wanted to stress that the decision should not be read as stating that matters involving private rights could never be adjudicated outside of Article III courts.

Justice Gorsuch dissented, and was joined by the Chief Justice. In so doing, Justice Gorsuch pointed out how the history of the patent system and the prior case law related to patents requires the finding that patents are private rights, and therefore must be adjudicated in Article III courts. In addition, the dissent highlighted the policy reason for this conclusion, specifically that a political appointee should not be able to cancel a patent right after the substantial time and cost involved in obtaining a patent and the subsequent reliance on that right by the patent holder. Instead, according to the dissent, such challenges to the validity of a patent should be adjudicated by an independent judge.

Decided April 24, 2018

The opinion can be found at https://www.supremecourt.gov/opinions/17pdf/16-712_87ad.pdf.

Andrew W. Williams, Ph.D., an MBHB partner, serves as Chair of the firm’s PTAB Trials Practice Group. Dr. Williams has over sixteen years of experience in all areas of intellectual property law, with particular emphasis on patent litigation, client counseling, and patent procurement in the areas of biochemistry, pharmaceuticals, and molecular diagnostics. williams@mbhb.com

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