In a somewhat surprising decision, the U.S. Supreme Court granted certiorari on June 12, 2017 to hear a challenge to the legality of inter partes review (IPR) proceedings implemented by the Leahy-Smith America Invents Act in 2012. The Court will hear argument on whether the IPR process violates a patent owner’s constitutional rights to have property rights adjudicated by an Article III federal court and to a jury trial. Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712 (U.S. June 12, 2017).
The petition in the case was filed by Oil States Energy Services, LLC, which owns U.S. Patent No. 6,179,053, covering an apparatus and method used in hydraulic fracturing during petroleum drilling. Oil States sued the respondent, Greene’s Energy Group, LLC, for infringement of the ‘053 patent and Greene’s responded by filing an IPR proceeding challenging the patentability of two claims of the ‘053 patent as anticipated by prior art. During the IPR proceeding, the Patent Trial and Appeal Board (PTAB) denied Oil States’ motion to amend the challenged claims. The PTAB issued a final written decision determining that both challenged claims were unpatentable. Oil States appealed to the Federal Circuit, which affirmed in an unpublished decision.
In its appeal to the Supreme Court, Oil States relies on McCormick Harvesting Machine Co. v. Aultman, 169 U.S. 606 (1898). In that case, the Court held: “The only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent.” Id. at 609. Oil States also argues that since the eighteenth century, actions challenging the validity of issued patents have been decided by courts of law, and thus the patent owner’s right to a jury trial is preserved under the Seventh Amendment.
The respondent, Greene’s Energy, argues that the McCormick case pre-dates the creation of an extensive administrative apparatus relating to patents, including Congress’ establishment of reexamination proceedings in 1980. Greene’s Energy argues that McCormick and similar cases are limited to “private” rights, but patents are “quintessential public rights” and thus are subject to modification and revocation by administrative tribunals. The U.S. Solicitor General filed a brief on behalf of the government supporting the respondent.
The Supreme Court’s decision to grant certiorari is surprising because it previously denied cert in three other cases challenging the constitutionality of AIA trials. The Court granted review on the following question:
Whether inter partes review, an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents, violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.
The Court declined to grant review on two other questions, challenging the PTAB’s failure to grant Oil States’ motion to amend its claims and whether the PTAB properly applied the “broadest reasonable interpretation” claim construction standard embraced in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016).
The Oil States case will be watched closely because AIA post grant proceedings, particularly IPRs, have had an important impact on patent litigation. Nearly 7,000 post grant petitions have been filed as of May 31, 2017. A decision undermining the validity of the proceedings could create an enormous disruption in the current patent litigation landscape. The case likely will be argued in the fall, with a decision issued by June 2018.
