April 24, 2018

What the PTO Giveth, the PTO Can Taketh Away. Inter Partes Reviews are Constitutional. Get Back to Work.

By Bryan K. Wheelock, Principal

The Supreme Court has finally issued its opinion in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, holding that Inter Partes Review does not violate the Constitution.  The majority opinion written by Justice Thomas states that reconsideration of the Government’s decision to grant a public franchise “falls squarely within the public rights doctrine,” and Congress has “permissably reserved the the PTO’s authority to conduct that reconsideration,” and thus the PTO can do so without violating Article III of the Constitution.

The Opinion goes on to explain that the courts have long recognized that the grant of a patent is a matter involving public rights.  The Opinion notes that the determination of patentability is exercising an executive function, and need not be adjudicated in an Article III Court, and because Inter Partes Review involves the same basic matter as the grant of a patent, it too falls on the public-rights side of the line.

Justice Thomas points out that the only difference between Inter Partes Review and the initial grant of a patent is that Inter Partes Review occurs after the issuance, but said that distinction does not make a difference.

On the issue of whether patents are private property, Justice Thomas agrees that they are, and are entitled to the same protection as any other property right that consists of a franchise.  Adding that, as a franchise, the patent can confer only the rights that the statute prescribes, and that statute provides for Inter Partes Review.

Justice Thomas went on to dismiss the arguments based upon the historic role of courts in deciding patent matters, citing non-judicial validity determination by the the privy Council under English Law.  He also dismissed cases that appear to suggest that courts were the only authority to set a patent aside, noting that, under the statutes at the time, these were true statements, but they do not address Congress’ authority to establish a different scheme.

Justice Thomas rejected the the argument that Inter Partes Review was a judicial proceeding exercising judicial authority, noting that the Court has never adopted a “looks like” test, and stating that the fact that an agency uses court-like procedures does not necessarily mean that it is exercising judicial power.

Justice Thomas was careful to emphasize the narrowness of the holding.  He pointed out that Oil States did not challenge the retroactive application of Inter Partes Review, nor did it raise a due process challenge.  Finally, Justice Thomas cautioned that the decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.

In closing, Justice Thomas noted that the disposition of the Article III issue disposed of the Seventh Amendment issue, and concluded that because Inter Partes Review does not violate Article III or the Seventh Amendment, the judgment of the Court of Appeals was confirmed.

Justice Gorsuch penned an interesting dissent joined by Chief Justice Roberts, but in the end what matters is Inter Partes Review don’t violate Article III. So get back to work.