Earlier today, the U.S. Supreme Court granted certiorari in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, which questions whether inter partes review (IPR), an adversarial process used by the United States Patent and Trademark Office (USPTO) to revoke the validity of existing patents, violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury. A link to Oil States’s petition for certiorari is here.
The grant comes after the Supreme Court denied two similar petitions last year questioning the constitutionality of IPR proceedings (MCM Portfolio LLC v. Hewlett-Packard Co., No. 15-1330, and Cooper v. Lee, No. 15-955).
The USPTO has taken the position that, like ex parte reexaminations (held constitutional by the Federal Circuit in Patlex Corp. v. Mossinghoff, 758 F.2d 594, 604 (Fed. Cir.1985)), the USPTO (an administrative agency, and not an Article III court) has the ability under the Constitution to revoke issued patents because they “are a quintessential public right closely intertwined with a federal regulatory program,” and are therefore outside the protection of the Seventh Amendment’s right to a jury.
This holding conflicts with abundant prior Supreme Court precedent that patents are private property rights. Specifically, the petition argues that the Supreme Court’s decision in McCormick Harvesting Mach. Co. v. C. Aultman & Co., 169 U.S. 606, 609 (1898) is dispositive, and stands for the proposition that Article III courts alone can invalidate patents (as property). Notably, this is the same decision relied on by two current Federal Circuit judges in their dissent against denial of en banc review in another recent case raising the constitutional question.
Potential Impact of Adverse Decision
Finding that IPR proceedings violate the Seventh Amendment would significantly impact the ability of patent challengers to invalidate patents under the lower standards of proof used in the USPTO. Challengers would instead have to initiate civil actions in U.S. district courts to invalidate patents, just as before enactment of the AIA. An adverse decision on the constitutionality of IPRs would likely be applied to Post-Grant proceedings as well, and possibly even to ex parte reexaminations initiated by petitions from third party challengers.