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Oil States Energy Services, LLC v. Greene’s Energy Group, LLC

No Article III or 7th Amendment Bar to Inter Partes Review

Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, __ U.S. __, 2018 WL 1914662 (Apr. 24, 2018) (Opinion by THOMAS, J. (joined by Kennedy, Ginsburg, Breyer, Alito, Sotomayor, Kagan, JJ.); concurrence by Breyer, J. (joined by Ginsburg, Sotomayor, JJ.); dissent by Gorsuch, J. (joined by Roberts, C.J.)) (Fed. Cir. (639 F. App’x 639): Per curiam (Moore, O’Malley, Hughes)) (PTAB) (5 of 5 stars)

Supreme Court affirms Fed Cir. The PTO’s inter partes review (IPR) procedure violates neither Article III nor the Seventh Amendment of the Constitution. As to Article III, “Inter partes review falls squarely within the public rights doctrine.” Op. at 6. The decision to grant a patent is one involving public rights; “[i]nter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO’s authority to conduct that reconsideration.” Id. at 7. That IPR occurs after the patent has already issued is immaterial. Past cases recognizing patent rights as patentees’ private property—e.g., American Bell Telephone Co., 128 U.S. 370 (1888); McCormick Harvesting Machine Co., 169 U.S. 606 (1898); Brown, 19 How. 183 (1857)—are not contradictory. Patents convey a public franchise, subject to regulation. The recitation in McCormick that patents may only be set aside by the judiciary was limited to the specific version of the Patent Act then under review. The opinion also discusses, and rejects, the dissent’s reasoning that patent validity is intrinsically an issue decidable only by courts. Discussing historical texts, the opinion “disagree[s] with the dissent’s assumption that, because courts have traditionally adjudicated patent validity in this country, courts must forever continue to do so.” Op. at 14. The opinion also rejects Oil States’ argument that the PTO’s assumption of court-like features (e.g., hearings, trials, judges) in in the IPR process means that the PTO is exercising judicial power. The opinion emphasizes narrowness, and does not address whether other patent matters such as infringement might be adjudicated outside an Article III forum, nor whether IPR would be constitutional if it lacked any judicial intervention whatsoever.

The opinion also rejects Oil States’ Seventh Amendment argument. Per Granfinanciera, 492 U.S. 33 (1989), if a matter is properly assigned by Congress to a non-Article III tribunal, the Seventh Amendment right to jury trial is no independent bar to adjudication in that forum.

Concurrence: Justice Breyer emphasizes, “the Court’s opinion should not be read to say that matters involving private rights may never be adjudicated other than by Article III courts, say, sometimes by agencies.” Concur. at 1.

Dissent: Citing historical example, Justice Gorsuch analogizes a patent to a “personal right—no less than a home or a farm,” that he would have held revocable “only with the concurrence of independent judges.” Dissent at 2. He cites concerns that a bureaucratic regime is subject to capture in such a manner that “the losers will often prove the unpopular and vulnerable.” Id. at 3. He reasons that “only courts could hear patent challenges in England at the time of the founding,” id. at 4, and would therefore have held that the character of patents is such that, once issued, they may be revoked only by Article III courts.

KEYWORDS: INTER PARTES REVIEW; CONSTITUTIONAL LAW; ARTICLE III; SEVENTH AMENDMENT