In a 7-2 opinion written by Justice Clarence Thomas, the Supreme Court upheld the constitutionality of the Inter Partes Review (IPR) procedure created by the Leahy-Smith America Invents Act (AIA). IPRs allow anyone “who is not the owner of a patent” to challenge its validity before a quasi-judicial arm of the USPTO called the Patent Trial and Appeal Board (the PTAB). This can be done in lieu of, or in parallel with, standard patent litigation in Federal Courts.

In Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, the petitioner challenged the constitutionality of the IPR procedure under Article III (judicial separation of powers) and/or the Seventh Amendment (right to trial by jury in civil cases). The Court held that IPRs violate neither. The Court reasoned that the granting of a patent is a “public right” that can be delegated to executive agencies without violating Article III separation of powers. Since an IPR is “simply a reconsideration of that grant,” it can be delegated to an administrative quasi-judicial court, such as the Patent Trial and Appeal Board created by the AIA. The Court analogizes patents to the government’s ability to grant franchise rights; the government can grant a franchise right, while also reserving the authority to take it away without the need for Article III adjudication.

Finally, in a single paragraph, the Court dismissed Oil State’s argument that the IPR procedure violates the Seventh Amendment, stating that the issue is effectively identical to the Article III challenge in that Congress has the right to assign the adjudication of patent rights to the Patent Office.

The Court stressed the narrowness of its holding, noting that “Oil States does not challenge the retroactive application of inter partes review, even thought that procedure was not in place when its patent issued.  Nor has Oil States raised a due process challenge.” This undoubtedly leaves the door open for subsequent challenges to the IPR procedure.

Justice Gorsuch issued a dissenting opinion joined by Chief Justice Roberts. The dissent argues that a patent is a private right, and “just as with farm and flock, it was widely accepted [at the time the Constitution was drafted] that the government could divest patent owners of their rights only through proceedings before independent judges.” The dissenting opinion stresses that, contrary to the majority’s reasoning, just because the government giveth does not mean that the government can taketh away without Article III adjudication.

Click here to download the full opinion.

Meet Matt

Matt C. Acosta is an experienced intellectual property and patent litigation attorney. Matt advises clients on a variety of commercial issues, including effective management of e-discovery costs, developing practical expert witness strategies, and navigating the practices of Federal Courts. Though based in Texas, Matt has litigated intellectual property cases throughout the country and has argued before the Judicial Panel on Multi-District Litigation. He is a graduate of the University of Texas and Baylor Law School.