SCOTUS Oil States decision may raise more challenges to IPR: lawyers
The US Supreme Court yesterday confirmed that inter partes reviews (IPRs) do not violate the US Constitution, but lawyers have told WIPR that more challenges to the IPR should be expected.
Handing down the decision in Oil States Energy Services v Greene’s Energy Group, the Supreme Court also confirmed that the Patent Trial and Appeal Board (PTAB) has authority to invalidate patents.
In the 7-2 opinion, the Supreme Court found that patents are “public” rights, not “private” in an IPR context.
And while the court affirmed the US Court of Appeals for the Federal Circuit, the majority of justices specifically emphasised that the holding has a narrow application.
Inviting challenges
“Even in rejecting Oil States’ constitutional arguments, the court went out of its way to say that patent rights are protected by other provisions of the Constitution, such as the Fifth Amendment’s due process and the takings clauses,” explained Matthew Rizzolo, IP litigation counsel at Ropes & Gray.
He added that there’s been a “myriad” of due process challenges to the PTAB over the years.
This means it’s likely that some patent owners will use this portion of the Oil States opinion to continue to raise additional constitutional challenges.
According to James Baldwin, an associate at Neal Gerber & Eisenberg, the majority opinion provided some possible clues to structural issues that may be ripe for a challenge.
“Future challenges will likely ask the court to determine whether IPRs can be retroactively applied to patents granted before the America Invents Act and whether IPRs currently provide due process to the patent owners,” he noted.
He also believes that the “energy that was being poured” into the constitutional challenge to the IPR system will be redirected to other areas, such as challenging structural issues of the IPRs and trying to persuade Congress to rein in the IPR system.
The Supreme Court was careful to delineate the limits of its opinion, added Sarah Guske, Baker Botts partner and co-chair of the firm’s PTAB litigation practice.
The justices explained that the court was not deciding whether the PTAB process was appropriate to apply to pre-AIA patents or whether the PTAB process constitutes a due process violation.
Additionally, the court explained that it was only addressing the “precise constitutional challenges” that Oil States had raised.
Guske stated: “The court’s dicta may give rise to additional attempts by patent owners to challenge the propriety of PTAB reviews on other grounds. In other words, the fight may not be over.”
Public or private?
Oil States had claimed that the IPR process violates the right to a jury in an Article III court (a federal court established under the US Constitution).
It also argued that although in certain situations non-Article III tribunals may exercise jurisdiction over disputes involving “public rights”, this doesn’t apply to IPRs because patents are private property rights.
However, the Supreme Court rejected the contention, finding that patents are “public” rights, not “private” in an IPR context.
Rizzolo explained that Justice Thomas’s opinion characterises patents as a “public franchise” that are derived from the Patent Act.
“Nonetheless, the court’s opinion clearly states that even as a ‘public franchise’, patents are property that are afforded the protection of the Fifth Amendment,” he added.
Tania Shapiro-Barr, senior attorney at Dykema, added that under the public rights doctrine, Congress has reserved the US Patent and Trademark Office’s (USPTO) authority to take “a second look at an earlier grant” of a patent (Cuozzo) without violating Article III.
A dissenting voice
Justice Gorsuch, whom Chief Justice Roberts joined, issued a dissenting opinion, claiming that the government was inviting the court to “retreat from the promise of judicial independence”.
Haynes and Boone partner Phillip Philbin believes that Gorsuch was “quite protective of the need for an independent judiciary to provide independent review”.
Interestingly, Philbin said, Gorsuch invoked the Declaration of Independence and made references to the Federalist Papers (including those authored by Alexander Hamilton), while noting that the USPTO’s director is a political appointee who “serves at the pleasure of the President”.
Philbin added: “In light of the potential for abuse from such a powerful political appointee, the dissent invokes Hamilton’s warning that the judiciary take ‘all possible care … to defend itself against’ intrusions by the other branches.”
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