US Supreme Court to Review Constitutionality of Inter Partes Review

June 15, 2017

The US Supreme Court has agreed to assess the constitutionality of inter partes review (IPR). On June 12, the Court granted certiorari in Oil States Energy Services v. Greene’s Energy Group (2016-0712), with the petitioner asserting in part that IPRs violate the right to a jury trial under the Seventh Amendment and that the validity of patents, as private property rights, may be challenged only in an Article III court.

Petitioner Oil States Energy Services sued respondent Greene’s Energy Group in September 2012 (6:12-cv-00611), alleging the infringement of a single patent (6,179,053) generally related to a technique for hydraulic fracking in which fracking fluid is pumped into an oil or gas well through a mechanically pressure-locked tube. In December 2013, just before the close of discovery, Greene’s filed a petition for IPR against the ‘053 patent (IPR2014-00216). The Patent Trial and Appeal Board instituted trial the following June and issued a final decision in May 2015, finding that the challenged claims were invalid as anticipated by prior art. The Federal Circuit summarily affirmed that ruling on appeal in May 2016 (2015-1855), and Oil States filed its petition for certiorari with the Supreme Court in November.

In its petition, Oil States argues that the inter partes review process violates the Seventh Amendment right to a jury trial, since the Seventh Amendment applies to all actions “brought to enforce statutory rights” that derive from common-law causes of action, including patent infringement suits. The petitioner asserts that the USPTO does not have the power to invalidate patents because they are private property rights that cannot be revoked by the government, with invalidity purportedly an issue that can be determined only by a jury. Furthermore, Oil States argues that even if IPRs were found to not violate the Seventh Amendment, they are still unconstitutional, because the only proper forum for determining the validity of a patent is an Article III court. Since patents are private property rights, Oil States concludes, Congress may not assign questions of patent invalidation to “‘legislative’ courts”. (Oil States also presented two additional questions—challenging the IPR amendment process and the use of the “broadest reasonable interpretation” claim construction in such proceedings—for which the Supreme Court did not grant certiorari.)

In its brief in opposition, Greene’s asserts that Oil States “gets the inquiry backward” by arguing that IPR “violates the Seventh Amendment before reaching the Article III issue”. “Rather”, it argues, “if an administrative adjudicative scheme comports with Article III, the Seventh Amendment ‘poses no independent bar.’” Only claims that must be adjudicated in Article III courts are subject to the Seventh Amendment’s guarantee of a jury trial. As a result, “if Congress has permissibly assigned ‘the adjudication of a statutory cause of action to a non-Article III tribunal, then the Seventh Amendment poses no independent bar to the adjudication of that action by a nonjury factfinder’”, including an administrative agency such as the USPTO.

Furthermore, Greene’s argues that patents are “quintessential public rights”, noting that such rights (in contrast to private property rights) “exist only by virtue of [the] statute” under which Congress created the USPTO, under its Article I, Section 8 authority to “promote the Progress of Science and useful Arts”. Since Congress “may designate ‘public rights’ for adjudication in non-Article III tribunals”, IPR does not violate Article III. Greene’s further asserts that the IPR regime fits within both prongs of the Court’s 2011 decision in Stern v. Marshall, in which it held that “agencies may adjudicate ‘public rights’ claims between two private parties: (1) where the claim derives from a federal regulatory scheme, and (2) where resolution of the claim by an expert governmental agency is deemed essential to a limited regulatory objective within the agency’s authority”.

In an opposition brief filed in late April, the USPTO largely echoes the respondent’s arguments as to the constitutionality of IPR, also defending the notion that patents are public rights. The agency states that IPR “exemplifies the sort of mechanism that Congress may create to administer a public-right scheme”, further observing that “[t]he process ‘helps protect the public’s ‘paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope’’”.