On April 24, 2018, the Supreme Court issued a decision in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, holding that the inter partes review proceeding administered by the United States Patent and Trademark Office (“USPTO”) was constitutional. The inter partes review proceeding is one of four types of administrative proceedings (i.e., post-grant review proceedings, inter partes review proceedings, covered business method proceedings and derivation proceedings) that were created by the America Invents Act in 2012. These proceedings were discussed in my Sept. 17, 2015 blog post.
An inter partes review proceeding allows a petitioner to challenge a patent either: (1) after the nine-month anniversary date of the issuance of the patent; or (2) after the post-grant review proceeding has terminated, if a post-grant review proceeding has been instituted for the patent. Inter partes review proceedings can be instituted against any type of patent, unlike covered business-method proceedings. Derivation proceedings replaced interference proceedings.
In Oil States Energy, the Supreme Court considered whether an inter partes review proceeding invalidating certain claims for a patent directed to technology for protecting wellhead equipment used in hydraulic fracturing was contrary to the U.S. Constitution.
The patent-at-issue was also the subject of concurrent litigation in a federal district court. The court in that case reached a contrary result from the inter partes review proceeding because it issued a claim construction order that precluded the particular argument that the petitioner raised in the inter partes review proceeding.
The patent owner argued before the Supreme Court that the USPTO did not have the power to invalidate a patent once it was issued because the patent owner should be entitled to have its arguments heard at trial before a jury.
The patent owner pointed to three Supreme Court decisions from the 1800s that recognized “patent rights as the ‘private property of the patentee’” to support its contention that only an Article III court could take away the private property rights of a patentee. The Supreme Court rejected that argument by pointing out that those cases involved earlier versions of the patent statute.
Then, the Supreme Court reviewed English patent practice from the 1700s and noted that patents could be revoked by the English courts or by the Privy Council. The Court reasoned that since the drafters of the Constitution must have been aware of this practice, they must have envisioned that patents could be revoked from administrative tribunals like the Privy Council. Consequently, inter partes review proceedings were constitutional because they were analogous to Privy Council decisions revoking patents.
Additionally, the Supreme Court rejected an argument by the patent owner that essentially said that inter partes review proceedings were so similar to litigation that such actions must be the exclusive purview of Article III courts.
Finally, the Supreme Court also noted that their holding in Oil States Energy was very limited. The Court noted that the patent owner did not challenge the retroactive application of such proceedings on issue patents or that the patent owner did not raise due-process issues. This suggests that the Court might consider arguments that raise these grounds.