Richard Lloyd

As the patent community in the US continues to come to terms with the implications of the Supreme Court’s decision in TC Heartland, the next term at the country’s highest court is already shaping up to be at least as consequential for IP stakeholders.

Yesterday, SCOTUS granted cert in Oil States Energy Services v Greene’s Energy Group - a case that focuses on the constitutionality of inter partes reviews (IPRs). The issue identified by the nine justices is this: “Whether IPR, an adversarial process used by the PTO to analyse the validity of existing patents, violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”

Before we get onto how the court might rule, it’s fair to say that the cert grant has created quite a stir. Until yesterday, SCOTUS has ducked constitutional challenges to post-issuance reviews, denying cert in at least three different cases, so several people I spoke to expressed surprise that they had now opted to take a look. IPRs have left such an imprint on the psyche of patent owners, re-shaped patent litigation and impacted patent monetisation to such an extent that any suggestion that they might be undone is enough to quicken the pulse of anyone who knows their IPR from their CBM.

But what are the chances of SCOTUS bringing the whole thing crashing down? Among members of the PTAB bar there’s definitely a high degree of scepticism that the system is suddenly about to disappear.

“The question posed in Oil States has been denied by the court previously, even within the last year,” Scott McKeown of Oblon pointed out. “The decision to take cert now, as was the case in i4i and even Cuozzo, is the court recognising an oft debated/petitioned issue unlikely to go away absent high court intervention.” 

John Christopher (JC) Rozendaal, of Sterne, Kessler, Goldstein & Fox, expressed some surprise that the court had granted cert in the case, but agreed with McKeown that the it might be looking to address a lingering issue. “Although it is often said that the court doesn’t grant cert in order to affirm, this may be the rare case in which that is what the court has in mind,” he wrote in an email. “That is, even if the court thinks that the Federal Circuit has the right answer, the court may believe that it is a significant constitutional question that should be settled once and for all. I think that most people are betting that the IPR process will survive.”

Unified Patents’ Jonathan Stroud also predicted that the Supreme Court is unlikely to overrule the CAFC. “Given that the Federal Circuit denied en banc review in this case 10-2 and the Supreme Court has repeatedly denied petitions on the same issue, see MCM Portfolio v. Hewlett-Packard; Cooper v. Lee; and Cooper v. Square, we are encouraged that the Supreme Court granted certiorari here to help clarify that the longstanding practice of post-grant review, such as reexamination and reissue practice, is a valid and important exercise of administrative authority.”

Given that IPRs’ popularity has given rise to a cottage industry supporting a new bar association and businesses like Unified’s, and is widely supported in large parts of Silicon Valley, it seems safe to assume that SCOTUS is going to be deluged with amicus briefs in support of the respondent. But what gives this case an added edged is that there are some equally strong feelings on the part of those who subscribe to the “death squad” theory when it comes to the PTAB.

Among those who will no doubt throw their support behind the petitioner are the pharma and biotech sectors, as well as those in the IP monetisation business. To get that side of the story I asked the team at Dominion Harbor for their thoughts. Dominion was behind one of the biggest patent deals of the year so far when it picked up around 4,000 former Kodak patents from Intellectual Ventures, so it’s not exactly a fan of a process that has been used to invalidate large numbers of grants. Here’s what the firm had to say:  

The SCOTUS grant of cert is a significant reason for optimism for those seeking a stronger patent system (the environment cannot get much worse for patent rights). The constitutional principles involved here are considerable and we should not forget that this is a conservative court that has consistently backed property rights over government overreaching. It will be incredibly interesting to watch how the newest member of the SCOTUS, Justice Gorsuch, comes down on this matter (especially since he has traditionally been a strong proponent of property rights). 

On balance it seems unlikely that the Supreme Court is suddenly about to dismantle a mechanism created by Congress as part of the America Invents Act (AIA) that has become such a fixture of the patent system. But in the briefs submitted to the court and in the oral arguments it seems that we’re set for a fascinating debate about the nature of patent rights in the US. That alone makes this case well worth following.