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BREAKING: Supreme Court Rules IPRs are Constitutional, Patents Fall Within Public-Rights Doctrine
April 24, 2018

By Steven M. Kellner

In a closely watched case that had the potential to upend the manner in which patent disputes can be resolved, the U.S. Supreme Court has ruled in favor of the status quo. In a 7-2 decision, the Court held that Inter Partes Reviews (IPRs) do not violate the U.S. Constitution and affirmed the authority of the Patent Trial and Appeal Board (PTAB) to invalidate patents.

Tuesday’s decision in Oil States Energy Services v Greene’s Energy Group (Oil States), Supreme Court Docket No. 16–712, argued November 27, 2017 — decided April 24, 2018, provides guidance and stability to a patent review process in which billions of dollars are at stake. Instituted by the America Invents Act (AIA), IPRs allow a petitioner to request that the United States Patent and Trademark Office (USPTO) reconsider and cancel claims of a U.S. patent under certain circumstances. Any person who is not the owner of the patent may petition for review. If review is instituted, the process entitles the petitioner and the patent owner to conduct certain discovery, to file affidavits, declarations, and written memoranda, and to receive an oral hearing before the PTAB. A final decision by the Board is subject to Federal Circuit review. Since 2012, more than 8,000 IPRs have been initiated and claims of 1,400 patents have been invalidated by the PTAB.

The central question posed in Oil States, a dispute between two energy companies arguing over equipment used in hydraulic fracturing, was whether these IPRs are constitutional. To answer this, the Court had to settle a long-running dispute of whether patents are a private right that must be adjudicated by an Article III court before a jury or a public right that may be determined by administrative agencies.

The Court held that “the decision to grant a patent is a matter involving public rights- specifically the grant of a public franchise.” Inter partes review “is simply a reconsideration of that grant, and Congress has permissibly reserved the USPTO’s authority to conduct that reconsideration.” As the Court sees it, “the primary distinction between IPR and the initial grant of a patent is that IPR occurs after the patent has issued. But that distinction does not make a difference here.”

A decision striking down IPRs would have pushed a large number of patent disputes back to federal courts, where litigation is more drawn out and expensive, and introduced uncertainty to the thousands of patents already adjudicated through the IPR process. For now, those wishing to challenge patents will still have a forum outside of federal court.