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    U.S. Supreme Court to review Constitutionality of Inter Partes Review (IPR)

    6/14/2017

    On June 12, 2017, the Supreme Court granted certiorari to review whether the America Invents Act's provisions on inter partes review (IPR) violate the Seventh Amendment right to jury by extinguishing patent claims through a non-Article III court. Oil States Energy Services LLC v. Greene's Energy Group LLC.1 The USPTO's authority to decide IPRs does not stem from Article III of the Constitution. Rather, this authority is firmly rooted in Article I. Article I gives Congress the authority "To promote the Progress of Science and useful Arts, by securing for limited Times to Writers and Inventors the exclusive Right to their respective Writings and Discoveries." In other words, Article I grants Congress the power to make patent laws. The IPR provision comprises a major part of Congress' most recent patent legislation, the America Invents Act.

    In a short time, the USPTO, via its Patent Trial and Appeal Board (PTAB) has reviewed thousands of IPR petitions and has effectively invalidated several thousand patent claims. Given the importance of patent rights, aggrieved Patent Owners have already raised this constitutionality challenge --- without success.

    In 2015, the Federal Circuit issued a detailed decision indicating that IPRs do not violate the Seventh Amendment right to jury trial. MCM Portfolio v. Hewlett Packard.2 There, the aggrieved Patent Owner also sought Supreme Court review of the constitutionality question. However, the Supreme Court declined.

    Notably, in MCM Portfolio, the Federal Circuit explained the public rights doctrine and its applicability to patents and IPR administrative proceedings, and the inapplicability of the Seventh Amendment in such situations. The Federal Circuit noted:

    We followed Supreme Court precedent that affirmed the "constitutionality of legislative courts and administrative agencies created by Congress to adjudicate cases involving "public right." [ ] We found that "the grant of a patent is primarily a public concern. Validity is often brought into question in disputes between private parties, but the threshold question usually is whether the PTO, under the authority assigned to it by Congress, properly granted the patent."

    . . . .

    The Supreme Court has stated that "the Seventh Amendment is generally inapplicable in administrative proceedings, where jury trials would be incompatible with the whole concept of administrative adjudication and would substantially interfere with [the agency's] role in the statutory scheme.

    In the current case, Patent Owner Oil States spends a significant amount of its briefing explaining the "common law," or in equity origins of patent law, as opposed to legislative basis of IPRs. Patent Owner must adopt this position to have its case fit the Seventh Amendment criteria for a mandatory jury trial.

    Not surprisingly, Respondent Greene's Energy Group relies on the Federal Circuit decision and rationale of MCM Portfolio.

    The Supreme Court will likely render its opinion in Spring 2018.

    As an additional note, Patent Owner Oil States also requested the higher court to review multiple questions on the PTAB's conduct of proceedings in the underlying case. These procedural issues include 1) the PTAB's requirements on Patent Owners for amending patent claims during an IPR and 2) the application of the correct claim construction under "broadest reasonable interpretation." Given that the Federal Circuit simply affirmed the PTAB decision without a written opinion, it seemed unlikely that the Supreme Court would take up review of these detailed administrative issues, and it did not do so.

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    1 (Docket 16-712)
    2 812 F. 3d 1284 (Fed. Cir. 2015) cert. denied (Docket 15-1330).