US Supreme Court Upholds Post Grant Challenge Process to Patents

Yesterday’s decision by the United States Supreme Court (USSC) in Oil States Energy Services v. Greene’s Energy Group et al. upholds the legality of the post grant review process at the Patent Trial and Appeals Board.  The review process was initiated for the first time in US patent law history by the America Invents Act in 2011.

Procedural History:  The Appellant / Oil States had a patent relating to tech. for equipment used in hydraulic fracturing.  It sued Greene’s Energy Group for infringement at district court.  Greene’s challenged the patent’s validity in Court and also petitioned the Patent Office for inter partes review. Both proceedings progressed in parallel.  The District Court issued a claim-construction order favoring Oil States, while the PTAB issued a decision concluding that Oil States’ claims were unpatentable, i.e. the decisions were in conflict with each other.  Oil States appealed to the Federal Circuit. In addition to its patentability arguments, it challenged the constitutionality of inter partes review, arguing that actions to revoke a patent must be tried in an Article III court before a jury.   While the case was pending, the Federal Circuit issued a decision in a separate case, rejecting the same constitutional arguments raised by Oil States. The court then summarily affirmed the Board’s decision in this case.

Viewpoint: It is clear that the high technology industry will celebrate the decision and the pharmaceutical industry will continue to lament on the entire process.  Even though this case issued 7 – 2, it cements the position about post grant review in the United States patent law.  Because the AIA fundamentally changed the US law, it was vehemently opposed by industry groups and the like.  That said, the AIA recognized that the patent office could make mistakes in grant of patents and that there should be an opportunity to correct the mistakes.  This change in 2011 makes US patent law pari materia global patent law.  This judgement ensures that post grant review process as envisaged under the AIA remains.

Analysis:  The US Court started with a historical view that a decision to grant a patent can be reviewed and looked at the comparable English law precedents.  Under the English law (at the time the US constitution was framed), English law recognized that a petition could be made to the privy council to vacate the decision to grant (the patent).  Here US Courts expressly recognized that the legislature can decide matters which matters to withdraw from the scope of Article III review.  The court recognized that the legislature / Congress had specific power to assign the adjudication of public rights, like patents, to agencies other than the Article III courts.

The court equated the grant of a patent as any public right.  Inter partes review is a  reconsideration of that grant,  and Congress has permissibly reserved the PTO’s authority to conduct that reconsideration.  Granting a patent involves a matter “arising between the government and others”, and that patents were “public franchises.”  The court considered that granting patents is one of “the constitutional functions” that can be carried out by “the executive or legislative departments” without “‘judicial determination.’”

As regards, inter partes review or IPRs, the court held it involved “the same basic matter” as the grant of a patent, and that it is “a second look at an earlier . . . grant”.





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