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Why your US colleagues are looking so relieved: SCOTUS issues its long awaited decision in Oil States

16/05/2018
A sigh of relief could be heard from across the pond recently as the Supreme Court of the United States confirmed that inter partes review proceedings before the Patent Trial and Appeal Board are not unconstitutional.

A sigh of relief could be heard from across the pond recently as the Supreme Court of the United States (a.k.a SCOTUS) confirmed that inter partes review proceedings before the Patent Trial and Appeal Board (“PTAB”) are not unconstitutional.  In a case where oral arguments were heard last November, the US (and indeed global) patent community waited patiently until 24 April 2018 for confirmation that the status quo in US patent proceedings would be maintained.

What are IPRs?

Much like post-grant opposition proceedings before the EPO in Europe, inter partes review  ("IPR") proceedings in the US review the patentability of claims already granted by the USPTO.  IPRs are heard by the PTAB, a body created by statute which includes statutory members and administrative patent judges. In Oil States the PTAB held that the asserted patent claims were invalid.

The escalation to SCOTUS

Appealing the invalidity decision of the PTAB, Oil States appealed to the Federal Circuit and ultimately the US Supreme Court, arguing that IPR proceedings before PTAB are contrary to the U.S. Constitution.  Specifically, Oil States argued that Article III, which vests judicial power in the courts, prohibits a non-Article III forum – such as the PTAB - from extinguishing private property rights in proceedings such as an IPR.  Oil States also argued that the Seventh Amendment required issues of patentability to be determined by jury trial, rather than in the PTAB forum (typically a three-judge panel).  

Article III – clear!  Seventh Amendment – clear!

Oil States' appeal was unsuccessful.  Here's why:

  • Patents are a “public franchise” and as such Congress can assign adjudication of them to a non-Article III tribunal.  
  • As a patent may be granted by a non-Article III tribunal, so can the review of one.
  • Patent claims are granted by the USPTO subject to the qualification that the USPTO has authority to re-examine (and revoke) the claims later in an IPR.
  • Just because patent validity had historically been an issue for the courts, it does not have to remain that way.

Comment

The IPR process has therefore now been confirmed as constitutional in that it is compatible with Article III and is not a violation of the right to a jury trial under the Seventh Amendment. However, the court expressly stated that it had only addressed the 'precise constitutional challenges that Oil States raised'. Back to your stations, then…at least for now.

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