On Nov. 27, 2017, the U.S. Supreme Court heard oral argument regarding whether administrative trials held by the U.S. Patent Office violate patent owners’ constitutional rights.
In Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, the Supreme Court will decide whether “inter partes review” – an adversarial administrative process used by the U.S. Patent Office to decide the validity of issued patents – violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.
When the Supreme Court announced it would decide the case, the Patent Office initially predicted that inter partes review would be unanimously affirmed by the court. Based on oral argument, however, it appears the Patent Office overestimated the court’s support for inter partes review, at least with one justice – recent President Trump appointee Justice Neil Gorsuch. Justice Gorsuch’s questions and comments at oral argument raised concerns about the constitutionality of canceling an issued patent through an administrative proceeding.
Created by the 2011 America Invents Act, inter partes review was supposed to give patent owners and challengers a quick and inexpensive alternative to district court litigation. The act established that the Patent Trial and Appeal Board (PTAB), a division of the Patent Office, would consider petitions by third parties challenging the validity of issued patents.
If the PTAB institutes review, it then conducts a “trial” regarding the validity of the challenged patent. Instead of a jury, validity is decided by a three-member panel of administrative patent judges, executive branch employees of the Patent Office who are typically patent lawyers with some litigation experience. Instead of live witnesses, testimony is received by written statements, subject to cross-examination by deposition. The trial is essentially an oral argument of about 90 minutes in length.
Following enactment, accused infringers flocked to inter partes review in order to overturn patents that federal district court judges and juries would likely find infringed and not invalid. By June 2015, the PTAB had invalidated at least some claims of 86 percent of the patents it reviewed. The PTAB received the nickname “patent death squads.” The efficacy in reducing litigation remains to be seen; the vast majority of inter partes review proceedings are in addition to, not a replacement for, district court litigation.
Oil States’ patent related to fracking technology was canceled by an inter partes review initiated by a competitor, Greene’s Energy. A Federal Circuit panel summarily affirmed. Read more.