Supreme Court Rules in Oil States v. Greene Energy

June 14, 2018

The Supreme Court ruled in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., deciding that inter partes review, which authorizes the United States Patent and Trademark Office to reconsider and cancel an already-issued patent claim, under 35 U. S. C. §§ 311–319, does not violate Article III or the Seventh Amendment of the Constitution. The Court considers patents to be a “public right” and, consequently, reviewing and/or revoking patents by way of administrative courts in the inter partes review system is a valid exercise of Congressional authority.

The opinion by Justice Thomas issued on April 24, 2018.  Justice Breyer filed a concurring opinion, in which Justices Ginsburg and Sotomayor joined. Justice Gorsuch filed a dissenting opinion, in which Chief Justice Roberts joined.

Previously, the Court heard oral arguments November 27, 2017, in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC. (See “Are Patents Public or Private Rights?”) The Court considered whether the Patent Trial and Appeal Board (PTAB) can constitutionally invalidate patents through its inter partes review proceeding. Oil States sued Greene’s Energy in 2012 for patent infringement; Greene’s Energy initiated an inter partes review with PTAB, which determined that the claims in Oil States’s U.S. Patent No. 6,179,053 were anticipated and, therefore, unpatentable. Oil States appealed the PTAB decision to the U.S. Court of Appeals for the Federal Circuit, which affirmed the decision. Oil States appealed to the Supreme Court, which agreed to hear the case.

The question brought before the Court was whether PTAB, an administrative governance, may revoke patent rights in an inter partes proceeding or is the patent owner, in this case, Oil States, entitled to a jury trial in an Article III (federal) court? Further, are patent rights a public right or private property? Oil States argued that inter partes review is unconstitutional because patents are private property rights historically reviewed by courts, and argues patent rights can only be eliminated in federal court with a right-to-trial jury. Conversely, Greene’s Energy contends patents are public rights and Congress may assign an administrative body without a jury—in this instance, PTAB—to decide patent disputes.

In summary, the Court determined that inter partes review does not violate Article III. Under the Court’s precedents, the justices argued Congress has significant latitude to assign adjudication of public rights to entities other than Article III courts. Inter partes review falls squarely within the public-rights doctrine. The decision to grant a patent is a matter involving public rights. Inter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO’s authority to conduct that reconsideration. 584 U.S. ___, 3 (2018).

Additionally, the Court held that grant of a patent falls within the public-rights doctrine.Granting a patent involves a matter arising between the government and others, and that patents are “public franchises.” Additionally, granting patents is a constitutional function that can be carried out by executive or legislative departments without judicial determination. Id.

The Court opinion addresses only the constitutionality of inter partes review and the precise constitutional challenges that Oil States raised. The decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause. Id.

Inter partes review does not violate the Seventh Amendment. When 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 nonjury factfinder. Id.

In his dissent, joined by Chief Justice Roberts, Judge Gorsuch argued the decision is a retreat from judicial independence:

“After much hard work and no little investment you devise something you think truly novel. Then you endure the further cost and effort of applying for a patent, devoting maybe $30,000 and two years to that process alone. At the end of it all, the Patent Office agrees your invention is novel and issues a patent. The patent affords you exclusive rights to the fruits of your labor for two decades. But what happens if someone later emerges from the woodwork, arguing that it was all a mistake and your patent should be canceled? Can a political appointee and his administrative agents, instead of an independent judge, resolve the dispute? The Court says yes. Respectfully, I disagree…. 584 U.S.____, 1 (2018).

“Today’s decision may not represent a rout but it at least signals a retreat from Article III’s guarantees. Ceding to the political branches ground they wish to take in the name of efficient government may seem like an act of judicial restraint. But enforcing Article III isn’t about protecting judicial authority for its own sake. It’s about ensuring the people today and tomorrow enjoy no fewer rights against governmental intrusion than those who came before. And the loss of the right to an independent judge is never a small thing. It’s for that reason Hamilton warned the judiciary to take ‘all possible care . . . to defend itself against’ intrusions by the other branches. The Federalist No. 78, at 466. It’s for that reason I respectfully dissent.” 584 U.S.____, 12 (2018).