After rejecting three prior requests, the Supreme Court has now granted certiorarii to decide whether inter partes review (IPR) is constitutional. In its petition filed November 23, 2016, Oil States Energy Services, LLC, asked the high court to review three questions. The Court rejected review of issues relating to the propriety of the US Patent and Trademark Office’s (USPTO) procedures for dealing with claim amendments during IPR, and whether the broadest reasonable interpretation standard requires applying traditional claim construction principles. The Court’s review will be limited to the question of whether IPR violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.ii
The case originated with a suit for patent infringement of US Patent No. 6,179,053, filed in 2012 in the Eastern District of Texas by Oil States Energy Services, LLC, against Greene’s Energy Group, LLC.iii In 2013, the Patent Trial and Appeal Board (PTAB) granted Greene’s petition for IPR, and rendered a final written decision on May 1, 2015, finding claims 1 and 22 unpatentable.iv The Federal Circuit upheld the PTAB’s determination in an unpublished, per curiam order.v The Federal Circuit denied a request for en banc review on July 26, 2016.vi
At the heart of the Supreme Court’s review is the question of the nature of patent rights. Oil States argues that patent rights are most akin to private property rights, and thus owners of these rights are entitled to a jury trial to decide whether these rights should be revoked, under Article III and the Seventh Amendment of the Constitution. The USPTO, as a respondent in the case, argues that patent rights are public rights closely intertwined with a federal regulatory program, and thus can be revoked by a federal agency. The Federal Circuit previously decided that patent rights are derived “from an extensive federal regulatory scheme,” and thus their review by the USPTO in IPR is “consistent with Article III.”vii
Since their inception in 2012, procedures created by the America Invents Act (AIA) for challenging patent validity have been widely utilized. Approximately 6,700 total petitions seeking review have been filed since the AIA was enacted. The PTAB has instituted more than 2,400 IPR trials and rendered more than 1,500 final written decisions.viii However, IPRs have drawn criticism for being skewed in favor of petitioners, to the detriment of patent owners, such as the characterization of the Patent Trial and Appeal Board as a “patent death squad” given its high rate of invalidation.ix
A finding by the Supreme Court that IPRs are unconstitutional would have enormous implications for the patent system as a whole, and would stand out as one of the most important developments in the history of the patent law. Both patent owners and potential validity challengers should undertake an immediate review of their current strategies. They should consider whether to make contingencies that factor in the potential outcomes of the Supreme Court’s review.