Supreme Court Confirms Inter Partes Review Is Constitutional

by Snell & Wilmer
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In Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, the United States Supreme Court held today, in a 7-2 decision, that the inter partes review process under the America Invents Act (AIA), 35 U.S.C. § 100 et seq. (2011), does not violate Article III or the Seventh Amendment of the U.S. Constitution.

As we noted previously, inter partes review is a popular administrative proceeding where the Patent Trial and Appeal Board (PTAB; part of the United States Patent and Trademark Office) decides whether challenged patents are valid.  As of March 31, 2018 (the most recently reported period), over 7,600 inter partes review petitions had been filed since the AIA was enacted, resulting in approximately 2,000 final written decisions.  About 80% of those decisions invalidated at least some challenged claims.

Oil States Energy Services sued its competitor, Greene’s Energy Group, for patent infringement. Greene’s Energy challenged the patent’s validity, but the district court denied the challenge.  In a parallel inter partes review proceeding, the PTAB later concluded the patent claims were invalid, disagreeing with the judicial decision of the district court.  Oil States appealed, arguing that, under Article III of the Constitution, Congress is not authorized to remove the determination of patent rights from the judicial branch and give it to the executive branch through an administrative proceeding.  Oil States also argued that the administrative process took away its right to a jury trial under the Seventh Amendment.

The Court disagreed and held that granting patents (and determining a patent’s validity) is a “matter involving public rights,” because “patents are ‘public franchises’ that the Government grants” to inventors. Because patent grants are “public rights,” (as opposed to “private” or “personal rights”), the Court held that inter partes review does not violate Article III.  Justice Gorsuch dissented, joined by Chief Justice Roberts, arguing that patents have been and should continue to be considered “personal rights,” and that the majority’s opinion “represents a retreat from the promise of judicial independence.”

Secondarily, relying on the King’s Privy Council’s 18th-century practice of vacating patents outside of the English court system, the Court held that patent validity was not “from its nature . . . the subject of a suit at the common law.” Otherwise, Congress may have lacked power to “withdraw” patent suits from “judicial cognizance.”

Finally, because a non-Article III tribunal is appropriate for hearing patent validity challenges, the Court held that, under its precedent, there is no Seventh Amendment right to a trial by jury to resolve these rights.

This decision leaves in place the thousands of inter partes reviews decided under the AIA and enables the popular alternative to federal litigation to continue into the foreseeable future.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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