Decision In US Inter Partes Review Case Coming But Outcome Seen As “Highly Uncertain”

The United States Supreme Court is likely to affirm the constitutionality of US Patent and Trademark Office inter partes reviews when it rules in the closely watched matter of Oil States Energy Services, LLC v. Greene’s Energy Group LLC, according to Michael Best & Friedrich intellectual property attorney Marshall Schmitt. The end result of the decision, however, is hard to predict, he said.

The high court heard oral argument in the case last November and is likely to enter judgment soon, he said at a 29 March webinar.  The case, which pits patent owner/petitioner Oil States against patent challenger [in the USPTO’s Patent Trial and Appeal Board (PTAB)]/respondent Greene’s Energy Group, raises the question of whether inter partes reviews (IPRs) violate the US Constitution by extinguishing private rights without a jury trial.

The US Patent and Trademark Office (USPTO) defines IPRs as trial proceedings brought by third parties at the PTAB seeking post-grant review of patent claims on the basis of prior art consisting of patents or printed publications. The PTAB is an administrative tribunal which differs from constitutional Article III courts in lacking jury trials, among other things, Schmitt said.

The key argument before the high court for the petitioning patent owner was that patents are private rights which are entitled to the same legal protection as other property, Schmitt said. Amicus briefs filed in the case also listed a “parade of horribles,” such as that the PTAB has “run amok” and is acting outside the scope of an administrative panel, he said. Supporters of the respondent countered, among other things, that Article III doesn’t apply to IPR, which is just a mechanism allowing the USPTO to correct errors in patents.

Supreme Court justices seemed to be divided into three camps. Schmitt said. One group, led by Justice Neil Gorsuch, took the position that privacy rights are sacred. A second group, including Justices Ruth Bader Ginsburg and Elena Kagan, signaled that the USPTO has the right to fix mistakes. The third approach, by Justice Stephen Breyer, highlighted administrative precedence for agency adjudications.

The sense among the patent bar is that the case is not a blockbuster and is unlikely to split the Supreme Court, Schmitt said. The court could abolish IPRs; do away with them for patents granted before the 2011 enactment of the America Invents Act, which created IPRs; or affirm the constitutionality of IPRs, he said. The third option is the most likely, with the majority opinion limited to the issue of patent error correction, he said.

If current law is affirmed, Congress may decide to tweak it, Schmitt said. If IPRs are abolished, lawmakers will want to replace them with something else and make panels more accountable to courts, he said. The ultimate outcome is “highly uncertain,” with feelings running high on both sides, he added.