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The Supreme Court Upholds the Constitutionality of Patent Challenges at the Patent & Trademark Office Under the American Invents Act

On April 24, 2018, in a widely anticipated decision, the United States Supreme Court held in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., [Docket # 16-712], that the inter partes review process instituted under the 2011 America Invents Act – whereby private parties can challenge issued patent claims in an adversarial process before the Patent Office that mimics civil litigation – is constitutional. 

The challenge to the inter partes review process arose in a case where plaintiff (“Oil States Energy”) asserted a patent related to technology for protecting wellhead equipment used in hydraulic fracturing (commonly known as fracking), against Greene’s Energy Group, LLC (“Greene’s Energy”), in Federal District Court.  Greene’s Energy challenged the validity of the patent in the District Court action, and also filed a petition with the Patent Office for inter partes review of the patent claims.  Both proceedings progressed, and while the District Court issued a claim construction order favoring Oil States Energy, the Patent Trial and Appeal Board (“PTAB”) held that the claims were unpatentable. 

Oil States Energy appealed the PTAB decision to the Federal Circuit, and also challenged the constitutionality of the inter partes review process, arguing that “actions to revoke a patent must be tried in an Article III court before a jury.”  The Federal Circuit rejected the constitutional arguments in a separate case (MCM Portfolio LLC v. Hewlett-Packard Co.), and affirmed the PTAB’s decision that the claims were unpatentable.  Oil States Energy then filed a petition for certiorari with the Supreme Court.

In upholding the constitutionality of the inter partes process, the Court held that inter partes review does not violate Article III, because the “decision to grant a patent is a matter involving public rights,” and “Congress has significant latitude to assign adjudication of public rights to entities other than Article III courts.”  The Court further held that inter partes review, as a second look at a granted patent, involves the same public right as patent issuance.  The Court also held that granting patents is a “constitutional function” that can be carried out by “the executive or legislative departments” without “judicial determination.” 

The Court further held that inter partes review does not violate the Seventh Amendment right to trial by jury, because “[w]hen Congress properly assigns a matter to adjudication in a non-Article III tribunal, ‘the Seventh Amendment poses no independent bar to the adjudication of that action by a non-jury factfinder.’”

The Supreme Court’s decision was 7-2, effectively confirming the inter partes process as a key feature of United States patent practice.

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