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US: Supreme Court takes up constitutionality of inter partes review

On June 12, 2017, the Supreme Court granted certiorari to decide the constitutionality of inter partes review, a proceeding before the Patent Trial and Appeals Board (PTAB) that allows third parties, typically alleged infringers, to challenge the validity of issued patents.  The question presented in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC is “[w]hether inter partes review, an adversarial process used by the Patent and Trademark Office to analyze the validity of existing patents, violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”

Oil States’ petition contends that Supreme Court precedent historically treats issued patents as the patentee’s private property, which was adjudicated in common-law courts guaranteeing the right to a jury. In Oil States’ view, the Supreme Court’s decision in Granfinanciera, S. A. v. Nordberg, 492 U.S. 33 (1989) requires patent validity to be tried in Article III courts because actions to enforce statutory rights (such as patent infringement and validity) that are analogous to common-law causes of action are protected by the Seventh Amendment.  Oil States also argues that the “public rights” exception to Article III, which allows Congress to delegate adjudicatory authority over public rights to non-Article III courts, does not apply to private rights such as patents.  IPRs allowing patent challengers to sidestep a jury trial are, according to Oil States, an unlawful delegation of power to expropriate private property rights. 

Greene’s Energy Group and the government each responded that Congress’s delegation of the power to adjudicate patent validity to the PTAB, a non-Article-III tribunal, is constitutionally permissible. They posited that patents are not in the nature of private rights, but public rights, and that IPRs serve the public’s interest in ensuring that patent monopolies are confined to their legitimate scope.  Even if patent rights are private in nature, Greene’s and the government argued that Granfinanciera permits Congress to delegate adjudication of “seemingly private right[s]” to non-Article III administrative courts if the right to be adjudicated “is so closely integrated into a public regulatory scheme as to be a matter appropriate for agency resolution.”  Greene’s and the government also point out that whereas patent infringement actions may give rise to money damages, which thus sound in law as Oil States argues, IPRs only decide patent validity, which historically would have been tried in courts of equity that are not subject to the Seventh Amendment’s jury-right.

In addition to the constitutionality challenge, Oil States argued that it has become too difficult for patentees to amend claims during post-grant proceedings in light of the PTAB’s regulations, and that guidance is needed in applying the broadest reasonable interpretation standard approved recently in Cuozzo Speed Technologies, LLC v. Lee. The Supreme Court declined to grant certiorari regarding those additional questions.

This appeal will be closely watched by patent practitioners and invites speculation about what will become of the hundreds of invalidity decisions already entered by the PTAB.