The U.S. Supreme Court will soon hear argument in two patent cases that cut to the heart of the Patent Trial and Appeal Board’s (PTAB) authority to adjudicate patent validity through inter partes review (IPR) proceedings.

In these cases, the court could potentially abolish IPRs altogether or could substantially alter the PTAB’s procedures for deciding which challenged claims it will review.

Oil States Energy Services v. Greene’s Energy

In Oil States, the justices granted certiorari to consider whether IPRs violate the U.S. Constitution by extinguishing patent rights in a non-Article III forum without a jury. In this case, the PTAB invalidated an Oil States patent directed to hydraulic fracturing in an IPR proceeding. The U.S. Court of Appeals for the Federal Circuit affirmed the PTAB’s decision without opinion, implicitly rejecting the constitutional challenges Oil States raised.

Oil States contends that adjudication of patent validity by the PTAB, an executive branch agency, violates both the Seventh Amendment jury right and Article III’s separation of powers because patents are a private right that can only be revoked by a federal court.1

Oil States argues that SCOTUS always regarded patents as private property rights, which entitle the owner to exclude others, akin to owning a parcel of land.2 Oil States further argues that IPRs impermissibly supplant juries.3

Both Greene’s Energy Group and the US Patent and Trademark Office (USPTO) have countered that patents are a quintessential public right because they are closely tied to a public regulatory scheme. They thus argue that there is no constitutional obstacle to an executive agency, such as the PTAB, invalidating patent claims.4

Oil States thus involves a potential conflict between Congress’ policy goal of stamping out invalid patents and the Constitution’s guarantee that an Article III court hear any dispute that may extinguish private property rights. The case is significant because IPRs have become a powerful tool to challenge patent claims since the proceedings were created in 2012.

A Supreme Court ruling that IPRs are unconstitutional would cut off this avenue of attack, likely resulting in much more patent litigation in district courts. Over 30 amicus briefs have been filed so far.

SAS Institute Inc. v. Matal

The justices will consider the proper scope of the PTAB’s review in IPR proceedings when they decide whether the America Invents Act (AIA) requires the PTAB to issue a final written decision as to every claim challenged in an IPR petition or, instead, whether the PTAB may decide to finally adjudicate only some of the challenged claims.

SAS Institute filed an IPR petition challenging all 16 claims of a ComplementSoft patent directed to a system for generating computer code. The PTAB instituted proceedings on only nine of those claims and did not issue a final written decision addressing the other claims.5 The Federal Circuit, relying on its decision in Synopsys, Inc v. Mentor Graphics Corp, affirmed the PTAB’s decision over a dissent by Judge Newman.6

SAS Institute argues that the AIA requires the PTAB to issue a final written decision on all challenged claims. SAS contends that allowing the PTAB to select which claims it will finally adjudicate violates the plain language of 35 USC § 318(a), which states that, if an IPR is instituted and not dismissed, the PTAB “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” 7

Echoing Judge Newman, SAS further asserts that the Federal Circuit’s interpretation violates the AIA’s purpose of allowing post-issuance proceedings before the PTAB to serve as a substitute for litigation.8

ComplementSoft and the USPTO disagreed, asserting that neither the statute’s purpose nor its plain text requires the PTAB to issue a final written decision on challenged claims the petitioner failed to show it was reasonably likely to succeed in invalidating.

The USPTO argued its approach of partial institution “aids in the efficient operation of the [USPTO] and the ability of the [USPTO] to complete the proceeding within the one-year timeframe.“9 ComplementSoft also disagrees that IPRs were meant to be a complete alternative to district court litigation.10

As with Oil States, this case shows the tension between the AIA’s purpose of establishing alternative procedures to challenge patent validity and the rights that patent owners have in such proceedings. Further, this case could have important effects on the estoppel consequences of filing an IPR, which apply only to claims for which the PTAB issues a final written decision.11

For such claims, the AIA bars petitioners from raising subsequent PTAB or district court challenges on grounds that were raised or could have been raised in the IPR.12 A holding in this case that the PTAB must issue a final written decision as to all challenged claims in an IPR petition thus could substantially broaden the impact of these estoppel provisions.