US: Supreme Court hears argument on constitutionality of inter partes review

by Hogan Lovells
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On November 27, 2017, the Supreme Court heard oral arguments in a case that will determine the constitutionality of inter partes review, a proceeding before the United States Patent and Trademark Office’s Patent Trial and Appeals Board that allows third parties, including alleged infringers, to challenge the validity of issued patents.  As previously reported by this blog, the Supreme Court took up the case, Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, to determine “[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.”

During oral argument, counsel for the petitioner, Oil States, attempted to draw a distinction between inter partes review proceedings and other, older, post-grant invalidity proceedings before the Patent Office, such as ex parte reexaminations. Oil States attempted to distinguish ex parte proceedings as “fundamentally examinational” proceedings, between the Patent Office and a patent owner, as opposed to the adversarial inter partes proceedings which allow continual participation by a third party.  Counsel for Oil States also addressed questions regarding the extent to which a patent was a private property right as opposed to a right possessed by the public “to promote the progress of science” (under the Constitution’s Intellectual Property Clause), and the extent to which Congress can restrict private property rights.

Counsel for respondent, Greene’s Energy, faced questions comparing the Patent Office’s post-grant invalidation of a patent to other contexts, such as public employment benefits, and addressed whether judicial review of inter partes decisions on appeal at the Federal Circuit sufficiently satisfied the Due Process Clause of the Constitution.

The Patent Office also participated in the oral argument, supporting Greene’s Energy and defending the inter partes review process.  The Patent Office’s counsel was faced with questions comparing the Office’s revocation of patents that have been in effect for years, including title transfers, with a hypothetical revocation of patents to land under the same circumstances.  Counsel for the Patent Office distinguished constitutional revocations from unconstitutional revocations by arguing that post-grant revocation of a patent is constitutional, as Congress limited the scope of that right before grant of the patent to allow revocation, and also argued that such revocations must comply with due process to be constitutional.

The Court appears to be divided following argument, with several justices asking questions suggesting they view the grant of a patent as a right that cannot be restricted by an administrative agency following the grant of a patent, and other justices indicating that they support post-grant administrative revocation of patent rights. Given the current well-established practice of alleged patent infringers pursuing inter partes review of patents asserted against them, as well as five years of inter partes review decisions which may be called into doubt by a decision finding the proceedings unconstitutional, patent practitioners and potential litigants will watch this case closely.

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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