United States: Justices To Consider If AIA Reviews Are Unconstitutional

On June 12, 2017, the U.S. Supreme Court granted certiorari in Oil States Energy Services, LLC v. Greene's Energy Group, LLC, 16-712, to consider "[w]hether inter partes review—an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury." Petition at i. The Supreme Court's decision to hear this issue comes on the heels of the Federal Circuit's recent denial of en banc review in Cascades Projection LLC v. Epson America, Inc., Nos. 2017-1517, 2017-1518, 2017 WL 1946963 (Fed. Cir. May 11, 2017), which raised the same constitutional challenge. Both Judge O'Malley and Judge Reyna dissented from that denial.

The constitutionality of post-grant PTO proceedings has been raised to the Federal Circuit several times since the inception of such proceedings. In 1981, Congress authorized the PTO to conduct ex parte reexaminations, providing an alternative to district courts for challenging the validity of patents previously issued by the agency. See Bayh-Dole Act, Pub. L. No. 96-517, 94 Stat. 3015 (1980) (amending Title 35 to include reexamination proceedings). A few years later in Patlex Corp. v. Mossinghoff, 758 F.2d 594, modified on rehearing, 771 F.2d 480 (Fed. Cir. 1985), the Federal Circuit held that PTO ex-parte reexamination proceedings do not violate the Seventh Amendment or Article III of the Constitution. The constitutionality of ex parte reexamination was again challenged in Joy Technologies, Inc. v. Manbeck, 959 F.2d 226 (Fed. Cir. 1992), cert. denied, 506 U.S. 829 (1992), other grounds superseded by statute, 35 U.S.C. § 145, as recognized in In re Teles AG Informationstechnologien, 747 F.3d 1357 (Fed. Cir. 2014). There, patentee Joy Technologies argued that the Supreme Court's decision in Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989), "raise[d] serious doubt about the present vitality of Patlex." Joy Techs., 959 F.2d at 228. But the Federal Circuit disagreed, holding that Granfinanciera affirmed rather than undermined "the basic underpinning of Patlex, viz., that cases involving 'public rights' may constitutionally be adjudicated by legislative courts and administrative agencies without implicating the Seventh Amendment right to jury trial." Id.

For nearly three decades, Patlex and Joy Technologies settled the question of whether the PTO can adjudicate the validity of issued patents. Similar arguments, however, have resurfaced in recent constitutional challenges to post-grant proceedings under the AIA. For example, in MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284, 1292 (Fed. Cir. 2015), the Federal Circuit held that inter partes review does not violate constitutional protections, holding that "patent rights are public rights," thereby subject to cancellation at the Board without a jury. Id. at 1293. The opinion reasoned that inter partes review does not run afoul of Article III because "[t]he patent right 'derives from an extensive federal regulatory scheme' and is created by federal law." Id. at 1290 (quoting Stern v. Marshall, 564 U.S. 462, 490 (2011)). The MCM decision was never reviewed en banc, and certiorari was denied. MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284 (Fed. Cir. 2015), cert. denied 137 S. Ct. 292, 196 L. Ed. 2d 212 (2016).

Oil States represents another of these challenges to the constitutionality of post-grant proceedings. Oil States arrives at the Supreme Court after the patent owner, Oil States Energy Services, argued before the Federal Circuit that IPR proceedings violate Article III or the Seventh Amendment of the Constitution. A Federal Circuit panel rejected the constitutional argument, summarily affirming Oil States using its Rule 36 procedure. See  Oil States Energy Servs., LLC v. Greene's Energy Grp., LLC, 639 F. App'x 639 (Fed. Cir. 2016). Oil States Energy Services petitioned for panel rehearing and en banc rehearing, which were both denied.

In seeking certiorari before the Supreme Court, Oil States Energy Services (now Petitioner) argued, inter alia, that patents create constitutionally protected property rights. Pet. at 11-19. Oil States noted that previous Supreme Court decisions looking at AIA-related issues, such as the use of the broadest reasonable interpretation standard in Board claim constructions, see Cuozzo, 136 S. Ct. at 2136, had not directly addressed the constitutionality of the proceedings themselves. Id. at 3.

The petition relies on the Supreme Court's decision in McCormick Harvesting Machine Co. v. Aultman, 169 U.S. 606 (1898), which held that:

[i]t has been settled by repeated decisions of this court that when a patent has received the signature of the Secretary of the Interior, countersigned by the Commissioner of Patents, and has had affixed to it the seal of the Patent Office, it has passed beyond the control and jurisdiction of that office, and is not subject to be revoked or cancelled by the President, or any other officer of the Government. It has become the property of the patentee, and as such is entitled to the same legal protection as other property.

The only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent.

Id. at 608-09 (citations omitted). The petition further argued that, since historically "suits to invalidate patents would have been tried before a jury in a court of law," then the Constitution "provides patent owners with the right to a jury and an Article III forum. Inter partes review violates these rights." Pet. Br. at 3, 12-19. Oil States addressed the Stern precedent relied on in MCM, stating that "patents do not fall into that category" of rights that may be decided by an agency, because "[t]he power sought to be exercised by the board in inter partes review is a 'prototypical exercise of judicial power.'" Pet. Br. at 18 (quoting Stern, 564 U.S. at 494).

In opposing certiorari, Respondent, Greene's Energy Group argued that "only where Article III compels Congress to assign adjudication of particular claims to federal courts, or where Congress chooses to do so, does the Seventh Amendment guarantee the parties 'a right to a jury trial whenever the cause of action is legal in nature." Respt's Br. in Opp'n at 3 (citing Granfinanciera, 492 U.S. at 53). Greene's Energy Group further stated that "Patents are quintessential public rights," and "confer rights that 'exist only by virtue of statute.'" Respt's Br. in Opp'n at 7 (citing Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 229 n.5 (1964)). According to Greene's Energy Group, "The inter partes review procedure is the sort of mechanism that Congress may permissibly create to administer a public-right scheme," noting that the "PTO is responsible in the first instance for allocating patent rights." Id. at 7-8. Greene's Energy Group continued, "post-grant proceedings, such as inter partes review, are essential to the limited regulatory objective within the PTO's authority: to ensure that only proper patents are issued and to correct mistakes made in wrongly issuing patents." Id. at 10-11.

Greene's Energy Group further noted that there is no dispute among the lower courts about the constitutionality of inter partes review. Id. at 12. "Petitioner's argument—taken to its logical conclusion—would deprive the PTO of any power to reexamine an issued patent without the patentee's consent, not even on the PTO's own initiative in a proceeding to which only the government and the patentee are parties." Id. at 14. Therefore, according to Greene's Energy Group, "the PTO can review patent validity without violating Article III or the Seventh Amendment once Congress confers the necessary statutory authority, as it has here." Id. The United States also submitted a brief recommending that the Court deny certiorari, similarly arguing that patents are public rights that Congress can appropriately designate for adjudication in non-Article III tribunals.

Oil States's opening brief is due in late July 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
26 Sep 2018, Webinar, Washington, DC, United States

This latest series of webinars will explore emerging trends in the changing intellectual property (IP) legal environment in Europe and the United States.

26 Sep 2018, Webinar, Washington, DC, United States

This latest series of webinars will explore emerging trends in the changing intellectual property (IP) legal environment in Europe and the United States.

1 Oct 2018, Seminar, New York, United States

Finnegan partner Doug Rettew will consider recent Internet Corporation for Assigned Names and Numbers (ICANN) developments during Practicing Law Institute’s Intellectual Property Institute.

Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions