On April 24, 2018, the Supreme Court held that the inter partes review (IPR) process, used by the Patent Trial and Appeal Board (PTAB) to reconsider the patentability of claims in an already-issued patent, does not violate Article III or the Seventh Amendment to the Constitution. Oil States Energy Servs., LLC v. Greene’s Energy Grp., No. 16-712, slip op. (U.S. Apr. 24, 2018) (Supreme Court link).
Following an IPR, the PTAB ruled claims of an Oil States patent were unpatentable. In its appeal of the PTAB ruling, Oil States argued that IPR proceedings are unconstitutional because actions to revoke a patent must be tried in an Article III court before a jury. After the Federal Circuit summarily affirmed the PTAB’s decision, Oil States appealed to the Supreme Court, and the Supreme Court affirmed the Federal Circuit.
By a 7-2 vote, the Supreme Court held that IPR proceedings do not violate either Article III of the Constitution or the Seventh Amendment. Justice Thomas, writing for the majority, held that IPRs do not violate Article III because Congress is entitled to assign adjudication of public rights to a body, like the PTAB, outside the Article III courts. The Court stated that patents are a type of public right, a franchise, because they arise from an interaction between the government and the public. In addition, the review of a patent is simply a second look at an earlier patent grant and is a legitimate qualification on the franchise. The Court held further that its earlier cases describing patents as “private property” of the patentee were best understood as a function of the Patent Act existing at the time (the late 1800s), and did not contradict the Court’s “public franchise” conclusion. Similarly, the tradition of the common law, including old English law, in which courts typically adjudicated patent validity, did not bar Congress from changing the decision-making body. Finally, the Court held that simply because IPR trials “look like” Article III trials does not mean that the PTAB’s patent validity determinations are improperly occurring outside the courts. Id. at 15-16.
From this holding, it followed naturally that IPR proceedings do not violate the Seventh Amendment. Because Congress properly allowed the PTAB to adjudicate the patent dispute outside of an Article III court, a jury is not a necessary part of the process. Id. at 17.
Justice Gorsuch, in dissent, argued that Congress’s use of the PTAB to adjudicate inter partes reviews is “a retreat from the promise of judicial independence.” Dissent at 3. This conclusion followed comments suggesting that the PTAB is a policy-influenced body driven by a political appointee, the Director of the Patent Office. Id. at 2-3. The dissent also argued that patent challenges were a type of suit heard only by the courts in the common law tradition, reflecting the idea that patents were a “social contract” between the patentee and society. Id. at 4-6. The dissent argued that, from its earliest days, the United States followed the English tradition of courts resolving disputes over the validity of patent rights; that an administrative agency was never used suggests that the power to do so was not available. Id. at 7-9. Further, the dissent pointed to earlier decisions of the Court characterizing a patent as an earned private right that, like a land patent, could only be altered or ended in a court proceeding. Id. at 9-11. The dissent urged that patents were treated differently than franchises in the history of the country and that it would be an error to view patents so simply. Id. at 11-12. In the end, the dissent appeared to view the use of IPR proceedings as “a retreat from Article III’s guarantees,” and signaling a threat to the people’s right to be protected, by independent judges, from the government.