Supreme Court to decide constitutionality of patent office's "death squad"
Blog Post
On Monday, June 12, 2017, the Supreme Court granted certiorari in Oil States vs. Greene’s Energy Group, et al.1 One major issue that the high court agreed to decide is whether inter partes review (IPR) is constitutional. The outcome of this case could have major implications for the patent office and industry alike.
IPR is a proceeding Congress introduced through the America Invents Act (AIA). This proceeding allows a panel of administrative judges at the U.S. Patent Office – an Article I tribunal – to determine whether to cancel a patent or uphold it as “not invalid.” IPR was designed as a cost effective way to challenge the validity of patents. Since its conception, IPR has been notorious for killing patents, leading some to call it a “death squad.” This has made IPR a very popular tool for defendants seeking to cancel a plaintiff’s patent.
The debate is straightforward. Patents are a form of property. According to the petitioner in Oil States, Article I tribunals do not have the authority to decide whether to invalidated those property rights. That power rests with juries of an Article III court. The solicitor general’s office, on the other hand, argues that patents are a public right. Thus, Congress had full authority to enact the AIA and give the patent office the power to review patents.
If the Supreme Court finds IPR to be unconstitutional, defendants will lose a valuable tool. In contrast, patent owners could see the value of their patents increase. While it is very early to know the outcome there are two factors that may give some insight to the outcome of this case.
1 https://www.supremecourt.gov/orders/courtorders/061217zor_o7kq.pdf
2 https://www.supremecourt.gov/opinions/14pdf/13-352_c0n2.pdf
IPR is a proceeding Congress introduced through the America Invents Act (AIA). This proceeding allows a panel of administrative judges at the U.S. Patent Office – an Article I tribunal – to determine whether to cancel a patent or uphold it as “not invalid.” IPR was designed as a cost effective way to challenge the validity of patents. Since its conception, IPR has been notorious for killing patents, leading some to call it a “death squad.” This has made IPR a very popular tool for defendants seeking to cancel a plaintiff’s patent.
The debate is straightforward. Patents are a form of property. According to the petitioner in Oil States, Article I tribunals do not have the authority to decide whether to invalidated those property rights. That power rests with juries of an Article III court. The solicitor general’s office, on the other hand, argues that patents are a public right. Thus, Congress had full authority to enact the AIA and give the patent office the power to review patents.
If the Supreme Court finds IPR to be unconstitutional, defendants will lose a valuable tool. In contrast, patent owners could see the value of their patents increase. While it is very early to know the outcome there are two factors that may give some insight to the outcome of this case.
- The Supreme Court granted certiorari on another IPR related case - SAS Institute v. Lee. Some commentators speculate that the Supreme Court would not have granted cert on SAS Institute if it was leaning towards holding IPR unconstitutional.
- The Supreme Court has held trademarks to be a quasi public right.2 Some link this to patent rights – which would lean towards constitutionality.
2 https://www.supremecourt.gov/opinions/14pdf/13-352_c0n2.pdf