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Supreme Court Corner Q2 2018

Intellectual Property and Technology News

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OIL STATES ENERGY SERVICES, LLC V. GREENE'S ENERGY GROUP, LLC
PATENT – Decided: April 25, 2018
Holding: Inter partes review does not violate Article III or the Seventh Amendment.

The America Invents Act created the inter partes review (IPR) process, whereby a third party may request review of any patent by the United States Patent and Trademark Office. If the PTO determines "there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged," the petition may be instituted, and a three-judge panel may issue a final written decision on the validity the challenged claims.

Holding: Inter partes review does not violate Article III or the Seventh Amendment.

In a 7-2 opinion authored by Justice Clarence Thomas, the Supreme Court upheld the IPR process. The Court first explained that the grant of patents was akin to the "the grant of a public franchise" by the government, which is a public right adjudicable by non-Article III courts.

The Court then reasoned that because "[i]nter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO's authority to conduct that reconsideration," the PTO can do so without violating Article III. As to the Seventh Amendment, the Court relied on precedents that "establish that, when Congress properly assigns a matter to adjudication in a non-Article III tribunal, 'the Seventh Amendment poses no independent bar to the adjudication of that action by a nonjury factfinder.'"

The majority emphasized that its holding was "narrow," and that it did not address whether the retroactive application of inter partes review to patents issued prior to the AIA is constitutional, or whether patents are not property for purposes of the Due Process Clause or the Takings Clause.

Justice Neil Gorsuch, joined by Chief Justice John Roberts, dissented, concluding that patent rights are private rights and can therefore only be revoked with the “concurrence of independent judges."

IPRs, at least for patents issued after the AIA, are constitutional. Potential challenges await for IPRs involving patents issued prior to the AIA, and for PTO actions, such as "panel stacking," which appear to have drawn concern from the Court.

SAS INSTITUTE INC. V. IANCU
PATENT
– Decided: April 25, 2018
Holding: When the Patent Office institutes an inter partes review, it must decide the patentability of all claims the petitioner has challenged.

Section 318(a) of the America Invents Act indicates that the Patent Trial and Appeal Board (PTAB) "shall issue a final written decision with respect to the patentability of any claim challenged by the petitioner and any new claim added [during the IPR.]" 35 U.S.C. §318(a). Prior to SAS Institute, the PTO had interpreted "any claim challenged … [during the IPR]" to mean instituted claims, and therefore the PTO believed it could partially institute review on only some of the challenged claims, and only address the instituted claims in the final decision. In a 5-4 decision authored by Justice Gorsuch, the Court disagreed, holding that the statute was clear, "any" patent claim meant "every," and therefore the agency must reach a final decision on all claims.

Holding: When the Patent Office institutes an inter partes review, it must decide the patentability of all claims the petitioner has challenged.

The Court did not focus on the several policy arguments made by the PTO director, stating they should be addressed to Congress rather than the Court. The Court also declined to reconsider Chevron, finding that even under Chevron, the PTO was not owed deference because the meaning of the statute was clear.

The PTAB has issued guidance based on SAS Institute for pending trials that were not instituted on all claims. The panel may issue an order supplementing the institution decision, and in in doing so may permit additional time, briefing, discovery, and/or oral argument, based on the circumstances. Petitioners and patent owners with currently pending trials should be ready to act.

For a fuller analysis of these matters, please see our alert.