The United States Supreme Court Weighs Abolishing the Patent Trial and Appeal Court

By: Robert Tapparo

On Monday, November 27, 2017, the United States Supreme Court heard oral arguments in the Oil States Energy Services, LLC v. Greene’s Energy Group, LLC case.[1] The Court considered whether inter partes reviews (IPR) are constitutional.[2] The IPR process, statutorily created by the America Invents Act, enables “a person who is not the owner of a patent” to petition the United States Patent and Trademark Office (USPTO) to review the validity of a previously issued patent.[3]

Oil States Energy Services, LLC, an oilfield services company, has appealed a Patent Trial and Appeal Board (PTAB) decision which ruled that claims 1 and 22 of the 6,179,053 B1 patent relating “to an apparatus and method for securing a mandrel of a well tool in an operative position” during hydraulic fracking were not patentable and therefore invalid.[4] The United States Court of Appeals for the Federal Circuit subsequently affirmed the PTAB decision.[5] The Supreme Court granted certiorari on June 12, 2017 to consider whether the IPR process “violates the constitution by extinguishing private property rights through a non-Article III forum without a jury.”[6]

The core issue in this case is whether an issued patent is public or private property.[7] Oil States argues that a patent is private property are afforded the same constitutional protections as real property relying on the holding in McCormick Harvesting Mach. Co. v. C. Aultman & Co.[8] In opposition, Greene’s Energy argues that a patent is public property and therefore not afforded the same protections as other property.[9]

Several major corporations such as Apple, Facebook, Allergan, Inc., and Celgene Corp. have submitted amicus briefs either in favor or against the constitutionality of IPR proceedings at the USPTO.[10] Unsurprisingly, technology companies such as Apple and Facebook support the IPR system which helps economically eliminate the number of invalid patents that have been issued by the PTO.[11] In contrast, Allergan and Celgene oppose the IPR system and wrote briefs opposing the constitutionality of the system.[12] The basis of their argument stems from historical treatment of patents as private property.[13] Each side has their own viewpoints on how the patent affects their industries. In the pharmaceutical industry, a single patent can protect an entire product as opposed to in the technology sector where many patents are required to protect a single product.[14]

There are likely three possible outcomes of this case. First, while unlikely, the Supreme Court could rule that the IPR system is constitutional and implement zero changes, thus maintaining the status quo.[15] Second, the Court could determine that the IPR system is constitutional, but provide guidance on how to implement the statute.[16] This option could lead to more stringent evidentiary standards, loosened restrictions on evidence at PTAB proceedings, or a shift in the burden of proof from the patentee to the petitioner to show that the claims at issue are un-patentable.[17] This outcome could lead to more favorable outcomes in the PTAB for patent holders.[18] However, more advantageous results for patent holders could lead to increased infringement actions filed by patent trolls.[19] Finally, the court could rule that the IPR system is totally unconstitutional and eliminate PTAB proceedings altogether.[20] If PTAB proceedings are ultimately ruled unconstitutional, the future of patent litigation could be changed in an immense way. The cost of litigating a patent dispute would increase greatly due to the increased cost of litigation in federal court as compared to the PTAB.[21] No matter how the Supreme Court rules in this case, there will be profound and lasting changes to how patents are reviewed and infringement actions are filed, whether in administrative or federal district court.

[1] Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 137 S. Ct. 2239 (2017).

[2] See Oil States Energy Services v. Greene’s Energy Group, LLC: What You Should Know, Haug Partners (Aug. 17, 2017), http://www.haugpartners.com/article/ipr_constitutionality/.

[3] 35 U.S.C. § 311.

[4] Oil States Energy Servs., LLC v. Greene’s Energy Group, LLC, No. IPR2014-00216, (P.T.A.B. May 1, 2015).

[5] See Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 639 F. App’x 639 (Fed. Cir. 2016).

[6] Oil States Energy Servs., LLC v. Greene’s Energy Group, LLC, 2016 WL 6995217, at *i (U.S. Nov. 23, 2016).

[7] See Oil States Energy Services v. Greene’s Energy Group, LLC: What You Should Know, Haug Partners (Aug. 17, 2017), http://www.haugpartners.com/article/ipr_constitutionality/.

[8] Id. (citing McCormick, 169 U.S. 606, 608 (1898)).

[9] Id.

[10] Brief for Apple Inc. as Amicus Curiae Supporting Respondents, Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 137 S. Ct. 2239 (2017) (No. 16-712), 2017 WL 4946906; Brief for Dell Inc., et al. as Amici Curiae Supporting Respondents, Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 137 S. Ct. 2239 (2017) (No. 16-712), 2017 WL 4946908; Brief for AbbVie, Inc. et al. as Amici Curiae Supporting Petitioner, Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 137 S. Ct. 2239 (2017) (No. 16-712), 2017 WL 3888200.

[11] Brief for Apple Inc. as Amicus Curiae Supporting Respondents, Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 137 S. Ct. 2239 (2017) (No. 16-712), 2017 WL 4946906, at *4, 17.

[12] Brief for AbbVie, Inc. et al. as Amici Curiae Supporting Petitioner, Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 137 S. Ct. 2239 (2017) (No. 16-712), 2017 WL 3888200.

[13] Id. at *4 (stating that “the historical treatment of patent rights as private rights compels the conclusion that patent rights must be adjudicated in Article III courts”).

[14] Rana Foroohar, Big Tech vs Big Pharma: the battle over US patent protection, Financial Times (Oct. 16, 2017), https://www.ft.com/content/6c5b2cca-ae8b-11e7-beba-5521c713abf4.

[15] Art Monk, Oil States: Examining Scenarios, Outline Effects on Portfolio Management Strategy, IP Watchdog (Sept. 28, 2017), http://www.ipwatchdog.com/2017/09/28/oil-states-examining-effects-portfolio-management-strategy/id=88046/.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] Joe Mullin, Supreme Court Will Weigh in on Troll-Killing Patent-Review Process, ARS Technica (June 13, 2017), https://arstechnica.com/tech-policy/2017/06/supreme-court-will-weigh-in-on-troll-killing-patent-review-process/.

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