SCOTUS: Supreme Court Takes Up Constitutionality of AIA Reviews

Authored by Grantland G. Drutchas

Today, in Oil States Energy Services v. Greene’s Energy Grp., LLC, Case No. 16-712, the Supreme Court accepted certiorari on the question of whether the IPR regime set out by Congress in the AIA is constitutional. At issue is whether, once patents are issued, the resulting patent rights are a “public right,” in which case their validity can be resolved by an agency, or a “private property right,” in which case the validity issues must be addressed by Article III courts and arguably subject to the Seventh Amendment’s right to trial by jury.

The petitioner, Oil States Energy Services, filed its petition on November 23, 2016, presenting several questions including, most notably, one directed to overturning the IPR regime on constitutional grounds:

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.

On February 27, 2017, the Supreme Court requested a response from the PTO regarding this issue. Today, June 12, 2017, the Supreme Court granted certiorari on this one question.

There have been several attempts to have the Supreme Court hear this question. As recently as November, the Supreme Court denied certiorari in the petition in J. Carl Cooper v. Square Inc. Case No. 16-76 (Nov. 14, 2016). And just last month, the Federal Circuit rejected an attempt to have that court review the issue en banc (with two judges dissenting) in Cascades Projection LLC v. Epson America Inc. et al., Case No. 2017-1517, __ F.3d __ (Fed. Cir. May 11, 2017).

For the Supreme Court, the issue, then, is what has changed since November? One possibility is the intervening appointment of Justice Gorsuch, who may have swung the balance on the certiorari decision.

Interestingly, the constitutional validity of the IPR regime was not the primary issue on appeal before the Federal Circuit in Oil States – the parties and the Federal Circuit spent most of their time addressing underlying claim construction issues, the PTAB’s strict claim amendment process in IPRs, and the PTAB’s placement of the burden of proof of patentability on patentees. Oil States (the petitioner) only dedicated 4 pages of its opening Federal Circuit appeal brief and one paragraph in its reply to the constitutional question on which the Supreme Court has now granted certiorari. And the PTO only dedicated 3 paragraphs to the question in its brief as intervenor before the Federal Circuit. For the Federal Circuit, the issues were not a close call – they affirmed the PTAB per curiam just two days after oral argument. Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 639 F. App’x 639, 640 (Fed. Cir. 2016).

The remaining Oil States petition issues – on which the Supreme Court did not grant certiorari – were as follows:

• Whether the amendment process implemented by the PTO in inter partes review conflicts with this Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016), and congressional direction.
• Whether the “broadest reasonable interpretation” of patent claims – upheld in Cuozzo for use in inter partes review – requires the application of traditional claim construction principles, including disclaimer by disparagement of prior art and reading claims in light of the patent’s specification.

Grantland G. Drutchas, an MBHB partner and Chair of the firm’s PTAB Trials Practice Group, has more than 20 years of experience in the practice of intellectual property law, with a particular emphasis on litigation, licensing, and client counseling. drutchas@mbhb.com

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