The Constitutionality of IPRs

The Constitutionality of IPRs

Last fall, we blogged that the inter partes review was celebrating its fifth anniversary and would soon be under scrutiny when the Supreme Court heard Oil States Energy Services v. Greene’s Energy Group. This month, the Court upheld the process, ruling that it doesn’t violate Article III of the U.S. Constitution or the Seventh Amendment.

IPR was established in 2011 with the passing of the America Invents Act. While it’s similar to court in that an accused infringer has to prove that a patent is invalid and the owner has to prove its worthiness, it’s a quicker (usually not lasting more than a year and a half), far more inexpensive (hundreds of thousands of dollars compared to millions) way of solving disputes. Ars Technica has called it “a potent tool against patent-holders,” also known as “patent trolls.” The process has faced growing opposition since 2012. In fact, it was in 2012 that Oil States Energy Services sued Greene’s Energy Group for patent infringement related to hydraulic fracturing.

According to the Buchanan PTAB Report, the plaintiff simultaneously argued patent invalidity in court while petitioning the Patent Trial and Appeal Board (PTAB) for inter partes review. A key issue, says the Report, was whether patent rights are public or private rights. As public rights, they’re subject to reconsideration by the United States Patent and Trademark Office (USPTO). If private rights, they’re not subject to that review.

“The Court found that IPRs fall “squarely within the public-rights doctrine” and the Constitution ‘does not prohibit the Board from resolving [patentability matters] outside of an Article III court.’”

As a Skadden summary points out, the Court arrived at this decision by first concluding that the grant of a patent is between the grantors, which are the public, and the patentee. Then, when a patent is granted, the government takes the right to practice the patent from the public and gives it to the patentee, thereby excluding others from practicing that patent.

Skadden continues that the Court concluded that the IPR process is the same as the grant of a patent; it’s a “a second look at an earlier administrative grant of a patent.”

“The fact that inter partes review occurs after the grant of a patent makes no difference because patent claims are granted subject to the qualification that the government has the authority to re-examine and cancel the patent claim in an inter partes review.”

The Buchanan PTAB Report also noted that in a separate decision on the same day, the Court struck down the USPTO’s standard practice of granting “partial institutions” in IPRs.

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