Summary: On Tuesday April 24, 2018, the U.S. Supreme Court ("SCOTUS") found the American Invents Act ("AIA") inter partes patent review system was constitutional, and there was no requirement that actions seeking to revoke a patent be tried in an Article III court before a jury.
The Supreme Court granted certiorari in Oil States Energy Servs., LLC v. Greene's Energy Grp., LLC to determine whether inter partes review - which authorizes the United States Patent and Trademark Office (“PTO”) to reconsider and cancel an already-issued patent claim - violates Article III and/or the Seventh Amendment of the United States Constitution since the administrative patent judges of the Patent Trial and Appeal Board are agents of a political appointee (viz. the Director of the PTO) and not independent judges. In a 7-2 decision, delivered by Justice Thomas, SCOTUS held that inter partes review does not violate either Article III or the Seventh Amendment. Justice Breyer filed a concurring opinion, in which Justices Ginsburg and Sotomayor joined. Justice Gorsuch filed a dissenting opinion, in which Chief Justice Roberts joined.
Inter partes review is an administrative procedure for challenging patents that was established in 2012 by the Leahy-Smith American Invents Act. The AIA was, ostensibly, designed to bring the U.S. patent scheme in line with that found in the rest of the world and included shifting patent rights from a "first to invent" standard to a "first to file" standard as well as introducing a post-grant opposition proceeding, whereby third parties could challenge the patentability of one or more claims in an issued patent. With these changes came the introduction of the Patent Trial and Appeal Board ("PTAB"), a group of three administrative patent judges tasked with handling, among other things, inter partes review of the patentability challenges raised by third parties. Prior to the AIA’s creation of the PTAB and the inter partes review system, issued patents could only be challenged via traditional litigation in federal court.
The High Court found that granting a patent, or reviewing the correctness of such a grant, involves “the Government’s decision to grant a public franchise” and so inter partes review fell squarely within the public-rights doctrine. Consequently, Congress could assign patent challenges (i.e. matters involving public rights) to an administrative body such as the PTAB without violating Article III. Patents do, however, still remain private property for purposes of the Due Process Clause and the Takings Clause.
Finding that Congress properly assigned patent challenges to the PTAB, the Court necessarily found no violation of the Seventh Amendment where Supreme Court precedent already establishes, “the Seventh Amendment poses no independent bar to the adjudication of [public rights] by a nonjury factfinder.” Granfinanciera, S. A. v. Nordberg, 492 U. S. 33, 53–54 (1989); accord, Atlas Roofing Co. v. Occupational Safety and Health Review Comm’n, 430 U. S. 442, 450-455 (1977).
Thus, the Supreme Court has solidified the continued existence of the controversial inter partes review system for challenging patents. No matter which side of the fence you fall on, there is no doubting the popularity of these administrative proceedings, which offer a relatively inexpensive and far quicker route for canceling patent claims as compared to federal litigation.