Jeffri A. Kaminski, Venable LLP
Inter Partes Review (“IPR”) lives to see another day (or challenge). On April 24, 2018, the Supreme Court issued its opinion in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, which could have wholly invalidated the IPR process used by the Patent and Trademark Office (“PTO”) to scrutinize the validity of already-issued patents. Though not the first constitutional challenge to IPR, Oil States marks the first time the Supreme Court has confronted the issue head-on since IPR came into existence five years ago.
While IPRs are a relatively new procedure, they have become incredibly popular as an expedient and cost-effective tool to reexamine claim validity without resorting to litigation. By focusing exclusively on claim validity in advance of litigation, IPR ideally lowers court costs by either avoiding an unnecessary litigation entirely or by having already construed and validated the claims at issue.
Oil States primarily challenged the constitutionality of IPR under Article III of the U.S. Constitution, arguing that patents were private property rights and thus must be adjudicated by Article III courts, not administrative judges at the PTO. A ruling favoring Oil States would have been a significant victory for patent holders who generally view IPR as a risky endeavor.
To a patent holder, IPRs at best validate their already existing patent (which is presumed valid after issuance)—at worst, an important patent is now invalid and essentially valueless. However, since the Supreme Court upheld IPR in its totality, challenges to patent claims will proceed as usual for now.
Central to the Court’s holding was the notion that patents fall within the “public rights” doctrine—meaning they qualify for a narrow exception to Article III court jurisdiction. The Court held patents are “public franchises,” as they “arise between the government and others” and are rights “derived altogether from statutes.”
Essentially, because patents are a statutorily-enabled grant from the government to an inventor of a mini-monopoly on what would otherwise belong to the public, patent rights are public rights. And because the “public” patent rights are simply being reviewed for validity by the government (i.e., the Patent Trial and Appeal Board at the PTO), the practice need not be overseen by Article III courts.
However, the vast majority of patent practitioners view patents as private property rights—not public rights. Indeed, even the Patent Act itself provides that, “patents shall have the attributes of personal property.” 35 U. S.C. § 261. The Court superficially attempts to reconcile the public and private aspects of patents in a manner entirely dissatisfactory to the dissent by Justice Gorsuch and Chief Justice Roberts who reiterate, “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 [Article III] judges.”
Notably, the Court emphasized the narrowness of its holding, specifically highlighting two legal bases Oil States did not challenge: the retroactivity of IPR and due process. While Oil States squarely pronounces IPR constitutional under Article III, the Court appears to invite subsequent challenges on at least these two grounds. Until then, the status quo at the PTO rules the day.