Supreme Court Affirms Constitutionality of Inter Partes Review Proceedings; Requires the PTAB to Consider Patentability of All Claims Challenged by Petitioner

Supreme Court Affirms Constitutionality of Inter Partes Review; Requires the PTAB to Consider Patentability of All Claims Challenged by Petitioner

By Susan Perng Pan

In two separate decisions Oil States Energy Services LLC v. Greene's Energy Group, LLC (16-712) and SAS Institute v. Iancu (16-969), the Supreme Court conclusively affirmed the U.S. Patent Office's ability to reconsider the viability of issued patents via inter partes review (IPR) and provided definitive guidance on how it may go about doing so.

On the central issue of Constitutionality, in a 7-2 decision, the Court explained the concept of "public right," as opposed to a "private right." The latter would require a jury trial, but the former does not. The Court noted that it did not need a new formulation of the "public rights doctrine" to decide that a patent falls within the realm of "public rights." The "public rights doctrine" applies to matters "arising between the government and others, which from their nature do not require judicial determinations and yet are susceptible of it." The Court stated that an IPR involves the "reconsideration of the Government's decision to grant a public franchise." The Court indicated that its prior precedent that suggested that a patent may be a "private right" were limited to the 19th century timeframes when those cases were decided, when the Patent Act did not include a provision for post-grant administrative review. Since that time, Congress, as it is permitted to do by the Constitution, has changed the statutory scheme that allows the U.S. Patent Office to review patents post-issuance.

In Oil States, the Court further explained that the judicial-like proceedings in an IPR, which are determined by the Patent Trial and Appeal Board (PTAB) did not change the Constitutionality analysis. In particular, the use of the discovery process, motions practice, deposition, cross-examination of witnesses, introduction of evidence and objections based on the Federal Rules of Evidence, and the adversarial nature of the proceedings did not require the patentability determination to proceed before an Article III court. The Court did caution that its ruling was a narrow one, and that IPRs were still subject Due Process and the Takings Clause of the Constitution. Since the parties in Oil States did not raise those issues, the Court's ruling does not reach to those aspects of Constitutionality. In practice, the Due Process issue can be addressed by careful prosecution or handling of an IPR before the PTAB.

While Oil States affirms the PTAB's authority as a Constitutional matter, in a closer 5-4 decision, the Justices also reigned in the authority of the U.S. Patent Office in how it considers the viability of patents during an IPR. In the SAS case, the Court put an end to the PTAB's practice of not considering the patentability of all claims challenged in a Petitioner's IPR Petition. The PTAB had previously instituted IPRs on a claim-by-claim assessment of whether claims challenged in the Petition would undergo the IPR proceeding. The Court indicates that the language of 35 U.S.C. 314 does not allow the PTAB to re-fashion the Petition filed by the Petitioner. Citing to patent re-examination statutes, the Court noted that if Congress intended to grant such latitude to allow the PTAB to consider patentability on a claim-by-claim basis, then Congress could have expressly done so. Thus, the Court's reading of the Section 314 indicates "a regime where a reasonable prospect of success on a single claim justifies review of all."

The decision in Oil States maintains the status quo. However, the decision in SAS will have a ripple effect as aggrieved Petitioners or Patent Owners will likely challenge their IPR decisions based on the Court's decision. The SAS decision will also have an impact on how Petitioners craft their Petitions when challenging a patent.

For a comprehensive analysis of PTAB cases, see The Essential Case Law Guide to PTAB Trials.