Supreme Court Upholds IPR Patent Challenges

In a much-anticipated decision, the U.S. Supreme Court held Tuesday in Oil States Energy Services v. Greene’s Energy Group, that inter partes review does not violate Article III or the Seventh Amendment. Justice Clarence Thomas wrote for the seven-justice majority, and Justice Stephen Breyer wrote a concurrence, joined by Justices Ruth Bader Ginsburg and Sonia Sotomayor. Justice Neil Gorsuch penned the dissent, in which he was joined by Chief Justice John Roberts, whose dissent was unsurprising for anyone who listened in on the oral arguments in the case.

In writing for the majority, Justice Thomas addressed three key arguments raised by Oil States:

  • Whether patent rights are private property rights
  • Whether history requires that patent validity must be determined by a court of law
  • Whether the fact that an IPR “looks like” adversarial litigation indicates adjudication is improper outside of an Article III court

Public vs. Private Rights

The Court relied heavily on Cuozzo in its decision, characterizing inter partes review as a reconsideration of the government’s decision to grant the public franchise of a patent in response to the first argument, and thus falling squarely within the public-rights doctrine. Slip op. at 6-8.

The Court was not convinced by three cases cited by Oil States discussing patent rights as private property rights, because “Patents convey only a specific form of property right—a public franchise” (Slip op. at 10.), and those cases were decided under the Patent Act of 1870, which did not have a post-issuance review provision. Slip op. at 11.

Patent Act

The Court also cited the language of the Patent Act itself, noting that by its terms patents have the attributes of personal property “[s]ubject to the provisions of this [Patent Act] title.” Slip op. at 11 (emphasis added). Under the Court’s rationale, Congress may set out conditions for patentability, and “inter partes review is one of those conditions.” Slip op. at 14.

English System

In rejecting Oil States’ second argument based on historical English court precedent, the Court held that just “because courts have traditionally adjudicated patent validity in this country, [does not mean that] courts must forever continue to do so,” and noted that the English system, which serves as the backdrop for the Patent Clause of the Constitution, included a process by which a party could petition to revoke a patent. Slip op. at 13-14. As to the third argument, the Court also found that there is no “looks like” test to determine whether an adjudication has improperly occurred outside of an Article III court, such that similarities to litigation in the IPR process are not determinative. Slip op. at 15-16.

Future Challenges

The decision was largely unsurprising as it maintains the status quo, and fortunate in view of the potential impact a contrary decision could have had on the thousands of patents invalidated to date via IPRs. However, critics have focused on the Court’s characterization of patents as a “public franchise” rather than a private property right. The Court did, however, note the narrowness of the case to the facts presented, and left open the door to future challenges to IPRs based on retroactive application, or to patents as property under the Due Process Clause or Takings Clause. Slip op. at 17.