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Supreme Court Considers Constitutional Challenge to Inter Partes Review

Posted Monday, March 26, 2018 by Kyle Straughan

Currently before the Supreme Court is a patent adjudication case that could not only have significant impact on the way post-grant patent disputes are adjudicated, but on administrative law as a whole. The challenge is against the use of a process called “Inter Partes Review,” which was created as part of the America Invents Act in 2011. In an inter partes review those opposed to the grant of a patent would file a petition with the director of the Patent and Trademark Office (PTO) requesting a review proceeding. The patent holder then has an opportunity to respond, and the PTO then has three months to determine whether to institute a proceeding. The Patent Trial and Appeal Board (PTAB) then determines whether the PTO erred in issuing the patent, and if so, has the authority to invalidate the patent subject to review by the Federal Circuit.

The case, Oil States Energy Services v. Greene’s Energy Group, where the petitioner, Oil States, challenges the constitutionality of the inter partes review process. The dispute itself involved Oil States suing Greene’s Energy for allegedly infringing patents on technology for preserving wellhead equipment, to which Greene’s Energy responded by seeking inter partes review, and the PTAB eventually concluded that the patent was invalid. Oil States then argued that Congress violated Article III and the Seventh Amendment of the Constitution by authorizing an administrative agency to invalidate the patent without giving its owner a jury trial; essentially claiming that they were having property taken without due process.

At oral argument late last year, the justices expressed concerns that reflected the practicality of the new system, with analysts concluding that none seemed to have a strong interest in invalidating the law. Justices Ginsburg and Kagan emphasized the error-correction nature of the inter partes review, as opposed to it being a removal of property, while Justice Sotomayor noted that the PTO is involved throughout the process, even if the challenger to the patent withdraws due to settlement or other reasons. Justice Kennedy noted that Congress’ power to create and define patents thereby could be argued to give Congress the authority to determine procedures for evaluating them. On the other side, Justice Roberts compared patent ownership to public employment and noted a supreme court history of not requiring that parties “take the bitter with the sweet,” in which parties given something by the government don’t necessarily have to take the bitter that it might be taken away or modified to some degree in the future. Justice Gorsuch was highly critical of the process, noting that to a functional degree the PTO Director’s decision effectively carried the force of law of an Article III judge.

While the justices have not yet handed down their decision, the results will have a tremendous impact on administrative procedure going forward.

Supreme Court Considers Constitutional Challenge to Inter Partes Review ›› Ruttler Mills PLLC