Supreme Court hears arguments in two cases challenging administrative patent review process
Supreme Court hears arguments in two cases challenging administrative patent review process

The US Supreme Court on Monday heard oral arguments in two patent law cases challenging the constitutionality and statutory interpretation of the patent review process.

The first case, Oil States Energy Services v. Greene’s Energy Group [transcript, PDF], challenges the constitutionality of the inter partes review process implemented in 2011 under theAmerica Invents Act [text, PDF]. In challenging the validity of an issued patent, Congress implemented the two-stage review process [SCOTUSblog report] to combat the lengthy and expensive review process offered under the judicial branch’s authority.

At the first stage, the Patent Trial and Review Board reviews a petition challenging the patent and decides whether “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” If the Board finds such likelihood, the claim will undergo further, more extensive review. The second stage is the Board’s adjudicative review of the patent, as opposed to typical litigation proceedings under a trial court’s authority. The second stage is the controversial provision of the Act that this case directly questions.

Petitioner Oil States appealed after the Patent Trial Review Board found its patent for wellhead equipment invalid as argued by Greene’s Energy, a company which received a similar patent subsequent to issuance of Oil States’s patent. At the Supreme Court, Oil States argued the inter partes review process neglected Article III of the Constitution by adjudicating the dispute within the administration, rather than leaving the conflict for the courts. It supported this argument through analysis of patent law throughout the last 400 years, the court’s role in protecting private property rights, and the importance of protecting the right to due process of law:

[I]n terms of — of matters that have been adjudicated traditionally in courts. . . over private rights, I think this Court’s cases have established a baseline where. . . Article III vests those matters in Article III courts. [T]he government has conceded that at least some constitutional rights, I believe due process, cannot be suspended as conditions or subject to, and in our view, Article III is no different. . . [W]ith respect to the colloquy about panel stacking, Article III entitles litigants not to have to worry about precisely that sort of executive influence. That is exactly what this Court — as this Court put it in Stern, as not to have decision-makers in positions of having to curry favor with the. . . executive.

Greene’s Energy argued that Congress maintains its same authority regarding patent issuance under the inter partes review process that it did under previous patent law and inter partes review does not infringe on private property rights, stating: [I]nter partes review simply reexamines the propriety of the original grant of a patent, engaging in the same type of patentability analysis entrusted by Congress to the executive since 1790. The process itself is not inherently judicial, and it does not involve the exercise of the judicial power.”

In the second case, SAS Institute v. Matal [transcript, PDF], the Court heard arguments concerning statutory interpretation of 35 U.S.C. § 318(a) [text].

Section 318 of federal patent law governs the decision of the Patent Trial and Review Board in the inter partes review process. Subsection a states: “If an inter partes review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added under section 316(d).” In this case, SAS sought review of the respondent ComplementSoft’s challenges to SAS’s 16 patent claims, but the Board only reviewed nine of the claims and dismissed the others.

SAS argues [SCOTUSblog report] the provision should be read to require the Board to review and decide on all claims brought before the board. To support its contention, SAS turns to the importance of efficiency, which is the primary purpose for the inter partes review process. SAS argues the Board must decide on all claims in a final written decision, otherwise, the undecided claims can be litigated in normal judicial proceedings, thereby undermining the purpose of the review process:

What we end up with under the. . . scheme that — that the Patent Office is following right now is a system whereby we were sued . . . in a complaint by ComplementSoft. . . And now, what we’re left with is a situation whereby we are in the Patent Office, fighting for years in the inter partes review over the patentability of nine of the 16 claims, and then we’re going to have to go back.

The respondent, ComplementSoft, argues the language of Section 318 should be read to apply only to those claims which the Board decided to not to institute proceedings on:

[The petitioner’s] argument that it should have included more claims in the final written decision, fails because the PTO or the — the Board here, as under delegated authority, validly determined not to institute on those claims. They were never part of the instituted proceeding, and there’s nothing in the statute that requires the Board to institute or to include in its final decision claims that were never part of the proceeding in the first place.

The Court’s decision in SAS Institute v. Matal may, in part, hinge on its decision in Oil States v. Greene’s Energy. If the Supreme Court invalidates the inter partes review process in accordance with Oil States’ arguments concerning administrative adjudication in patent law, statutory interpretation of Section 318 may not be necessary.