The U.S. Supreme Court recently granted certiorari in Oil States Energy Services LLC v. Greene’s Energy Group, LLC. The question before the Court in the high-profile intellectual property case is whether inter partes review under the America Invents Act (AIA) is constitutional.

Inter Partes Review Under the AIA

The AIA established inter partes review in 2012 as an adversarial administrative proceeding in which the U.S. Patent and Trademark Office (PTO) may reconsider the patentability of the claims in an issued patent. To date, more than 6,000 inter partes review petitions have been filed, making it one of the most popular intellectual property reforms under the AIA.

Inter partes review may be used to challenge patents based only on the lack of novelty or obviousness. In general, any person may petition for inter partes review; however, the PTO may institute an inter partes review if “there is a reasonable likelihood that the petitioner would prevail” with respect to at least one of its challenges to the validity of a patent.

The Patent Trial and Appeal Board (Board) is tasked with conducting inter partes patent review proceedings, which may involve limited discovery, affidavits and declarations, hearings and written memoranda. Unless an inter partes review is dismissed, the Board “shall issue a final written decision” addressing the patentability of the claims at issue.

After any appeals are exhausted and the Board’s decision becomes final, the PTO issues a “certificate” cancelling any claims of the patent that were deemed unpatentable, confirming any claims of the patent that were deemed patentable, and “incorporating in the patent by operation of the certificate any new or amended claim determined to be patentable.”

Constitutional Challenge

In its petition, Oil States Energy Services LLC argues that inter partes review violates the Constitution because suits to invalidate patents must be tried before a jury in an Article III forum, not in an agency proceeding. In support, it cites the Supreme Court’s decision in  McCormick Harvesting Mach. Co. v. Aultman & Co., 169 U.S. 606 (1898). In that case, the Court held that once the PTO grants a patent it “is not subject to be revoked or canceled by the president, or any other officer of the Government” because “[i]t has become the property of the patentee, and as such is entitled to the same legal protection as other property.”

Meanwhile, the PTO has taken the position that that “patents are a quintessential public right closely intertwined with a federal regulatory program.” Accordingly, Congress may establish adjudicative proceedings before administrative tribunals rather than Article III federal courts.

In granting certiorari, the justices specifically agreed to consider 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.” Accordingly, the Court’s decision should end any debate over the constitutionality of inter parties review.

Of course, we will have to wait a while for the final answer. The Court will likely hear Oil States Energy Services LLC v. Greene’s Energy Group, LLC this winter, with a decision being issued June of 2018.

Do you have any questions? Would you like to discuss the matter further? If so, please contact me, David Einhorn, at 201-806-3364.