Scott McKeown, Ropes & Gray IP litigation partner and chair of the firm’s Patent Trial and Appeal Board (PTAB) group, discusses potential impacts of pending Supreme Court PTAB cases, Oil States and SAS Institute.
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In Oil States, the question is whether or not the PTAB is constitutional, given it is a bench trial with administrative patent judges, as opposed to what happens in the district court, where the bench trial is an option and the jury trial is also an option. That option is not available at the PTAB. If the Court should decide that the PTAB, as an Article I court, cannot look at these patent disputes because these patent disputes are private rights that only a jury can weigh in on as an opinion in the district court, then presumably the PTAB could be shut down. On the other hand, what I think many are expecting is a more reasoned opinion from the Court, explaining where patents fall in the realm of public rights versus privates rights. And perhaps the interest in taking up this case, is an interest in delineating a patent into a public right bin and a private right bin, where validity may fall more on the public side and infringement more on the private side, so the PTAB, looking only at validity, is constitutional.
SAS Institute is another case that the Supreme Court has recently taken interest in, and this case deals with the mechanisms of the PTAB, itself. And the question is, if I file a petition challenging a patent for, let's say, ten claims, does the PTAB have the flexibility to pick and choose which claims it can move forward with for trial, or do the statutes require the PTAB to look at the presentation, decide one of the claims has met the threshold, and then take all of the claims and move forward into trial?
The Court has shown a lot of interest in the PTAB over the past year to 18 months. And one of the questions that comes up is, well, on the one hand, if Oil States is looking to make the PTAB go away, why would the Court take up this other case which deals with the mechanics of how it operates? Many, including myself, don't believe that the Court was interested in Oil States to do away with the PTAB, but may have been interested in it more so to clarify how a patent may be an exception to what's perceived by some on the Court as this overgrowth of the administrative state and this usurpation of what would typically be in only an exclusive judicial realm. And I think SAS falls into the same sort of analysis when you look at it from the perspective of, well, if the administrative state is out of control for taking some of these disputes out of the courts, maybe one of the reasons they're able to do that is this overreach of Chevron deference and agencies being able to interpret their statutes to give them more power than perhaps they really had. If you look at it from the Court's interest, it may be part of the same interest in that this is an opportunity for the Court to step in and clarify some of these issues, and try to rein them in, not necessarily looking to upset the PTAB system.
What I've been counseling clients is to keep a strong eye on SAS Institute, as compared to Oil States, because I think in terms of actual impact on the practice, SAS Institute is the one to watch. Once the Court hands down its decision in SAS Institute, depending upon which way it goes, if it does change PTAB practice, I think you'll see those changes immediately. The agency will have to start instituting trials on all claims, even where previously they may have kicked some of those claims out of the trial before it began. The agency would immediately jump on a rule package and start issuing rules about how the agency would operate in this respect, and guidance to filers on what, if anything, may change, or the various procedures and mechanisms. However, the agency is now operating under Trump's two-for-one rule prohibition, and that could complicate the agency's ability to react to this decision quickly, at least with respect to providing guidance to the public.