Dismantling Inter Partes Review

by Dennis Crouch

The America Invents Act of 2011 brought about sweeping changes to the US Patent System — most dramatic of these was the creation of the administrative trials: especially Inter Parties Review (IPR) and Covered Business Method Review (CBM).

But if initiation of the AIA Trial system has been dramatic, the potential outcome of Oil States Energy Servs., LLC v. Greene’s Energy Group, LLC (Supreme Court 2017) is even more so.  Oil States is asking the Supreme Court to find the IPR system unconstitutional and thus order the system dismantled.

Earlier in 2017, the Supreme Court agreed to hear the Oil States case on the following question:

Whether 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.

Oil States has now filed its very well written opening merits brief.  Briefing will continue over the next few months, and I expect substantial amicus filing on both sides of the case, as well as input from President Trump’s Department of Justice.

The patent at issue in the case is U.S. Patent No. 6,179,053 that covers a lockdown mechanism for well tools. After being sued for infringement, Green filed the IPR petition with the USPTO and the agency eventually found the challenged claims unpatentable on a broad claim construction (after first rejecting the district court’s claim construction).   The Federal Circuit then affirmed the case without opinion (R.36).  The implication here: Oil States believes its patent is valid when properly construed.

The argument in this case begins with a focuses on history — for centuries, patent infringement and validity disputes have been decided in courts. “Article III promises a court to these litigants, and the Seventh Amendment promises a jury.”  The America Invents Act (AIA) shifts the approach – to having an administrative agency handle the “trial proceedings.”

With this background, Oil States argument is straightforward:

As this Court has long held, “Congress may not ‘withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty.’ ” Stern v. Marshall, 564 U.S. 462 (2011) (quoting Murray’s Lessee v. Hoboken Land & Improvement Co., 18 How. 272 (1855)). That is just what Congress has done with inter partes review, which wrests patent-validity cases from federal courts and entrusts them to administrative-agency employees, who decide questions of law that Article III reserves to judges and questions of fact that the Seventh Amendment reserves to juries. Neither Article III nor the Seventh Amendment tolerates this circumvention. . . . “When a suit is made of ‘the stuff of the traditional actions at common law tried by the courts at Westminster in 1789,’ * * * the responsibility for deciding that suit rests with Article III judges in Article III courts.”  Stern (quoting N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 90 (1982)).

The brief does an excellent job of demarcating a justiciable line for the Court.  According to the briefs, the problem with IPR isn’t really that the PTO is invalidating patents, but instead that the IPR regime is set-up as a full-on adversarial judicial proceeding to invalidate patents that is designed to promote a different outcome and without the Article III protections of district courts.  That wholesale replacement of the Article III court and Jury rights is simply not allowed.

One way that the court could rule against Oil States is by ruling that the IPR cancellation process involves “public rights” rather than private property rights.  To do so, however, would come in fairly directly conflict with the court’s recent statements in Stern.

More to come on this interseting ! Top-side amici briefs are due in 7-days.

Read the BriefOil States Energy Services 082417 AS FILED

The Federal Circuit rejected many of these arguments in MCM. Read the court’s decision here.

 

 

123 thoughts on “Dismantling Inter Partes Review

  1. No Article III judge would construe mechanical lockdown to include hydraulic, when the inventor was perfectly clear that the invention was an improvement on the old hydraulic device.

    Yet Cuozzo says it is okay to misconstrue the term in the PTAB in order to read on the prior art.

    This is utter chaos. There cannot be dual interpretations of the metes and bounds of the grant.

    Multiple interpretations and corresponding conflicting findings of validity requires that one branch acquiesce to the other, right?

    1. Invention rights, I totally agree with this – that the use of BRI is unconstitutional. But BRI is only in a rule. We have to remember that.

      Also recall that Judge Michel argued that BRI and court construction were essentially the same in the end. Why did he make that argument but to preserve BRI?

      1. BRI and the taking of the stick in the bundle of property rights of the clear and convincing level of presumption of validity occur at a very particular (and independent subsequent examination/trial back in the executive agency Article I forum.

        Do you at least recognize that, Ned?

      2. I am not saying BRI is unconstitutional. Cuozzo settled that. I am saying the PTAB is permitted to misconstrue the metes and bounds of the patent. They can say that mechanical lockdown includes hydraulic. That is not the correct construction, as Oil States unequivocally disclaimed hydraulic sealing. This scenario is a significant contributor to conflict between the branches. That conflict must be resolved by the Supreme Court. Either the Constitution permits the Article III courts to be overruled by the PTAB, or the PTAB is unconstitutional.

        1. Your “either -or” itself raises Constitutional infirmities, IR.

  2. What does Oil States mean by “the Board is not supervised by an Article III court in any way?” Why is the Board not “supervised” by the Federal Circuit?

    1. The Board is supervised by the Director of the administrative agency of the United States patent office.

      1. They are talking about the district courts having zero oversight or power over the PTAB.

        1. I know that – I merely answered PiKa’s question by giving him the answer as to WHO does have supervisory power over the Board.

          (it is a rather important point to keep in mind nowadays)

            1. Anony, please help me here. When the only action at common law to revoke a patent for invalidity was between the government and the patent owner, and when Oil States argues that when the action is between the Government and the patent owner that there is no constitutional violation, how is this brief dynamite?

              1. Ned government as a party is different from government as a participant.

                It’s sovereign immunity, and what waiver of sovereign immunity means for Article III.

                1. Good start, anony. The rejoinder then is that when the government is suing, it is acting as a private party.

                2. Trying to follow along, anony, but what do you mean by:

                  It’s not sovereign immunity that triggers Article I.

                  I am not seeing a “trigger” for Article I that is dispositive to any issues here.

                  Why the focus switch then from Article III back to Article I?

                  (further, this appears to circle back to the previous discussion concerning the impropriety of Congress attempting to create a pass into Article III land with a law that has the two forums of Article I and Article III – I am not sure that is where you are leading, and hesitate to apply that understanding to your words – can you clarify?)

                3. …and the “let’s not have a dialogue trigger has been reached, so
                  Please Pardon the Potential (re)Post

                  Trying to follow along, anony, but what do you mean by:

                  It’s not sovereign immunity that triggers Article I.

                  I am not seeing a “trigger” for Article I that is dispositive to any issues here.

                  Why the focus switch then from Article III back to Article I?

                  (further, this appears to circle back to the previous discussion concerning the impropriety of Congress attempting to create a pass into Article III land with a law that has the two forums of Article I and Article III – I am not sure that is where you are leading, and hesitate to apply that understanding to your words – can you clarify?)

                4. I think that was a typo. Waiver of sovereign immunity triggers Article I.

                  Someone who understands can explain why.

                5. Anony,

                  Typo or otherwise – I am still not seeing the point that you are trying to make.

                  Why are you even bringing up Article I at all?

            2. Also, anony, despite Oil State’s argument, a defense of invalidity is not an “action.”

              Moreover, the defense of invaldity is a right of the accused infringer, not a right of the patent owner otherwise a patent owner would have a DJ action against an infringer of patent validity. Think Magna Carta. Due process, a trial by jury, is accorded those who life, liberty or property are at stake. If the accused infringer instead chooses to litigate that right in the PTO, he is entitled to — he can waive his right to a trial by jury.

              What is different today from before 1791 in England is collateral estoppel. This puts the patent at risk in infringement cases, thereby giving the patent owner a clear jury trial right today. But not so before 1791.

              There was only one “action” that could revoke a patent for invalidity, scire facias. As provided by the Magna Carta, the patent owner had a due process right to a trial by jury.

              But, again, the action was by the government, and never by the private party. So, how are IPRs like scire facias?

              It all gets a bit confused if you exclude government actions from the mix. IPR are exactly like scire facias actions — the action is initiated on petition just like scire facias is initiated by the petition to the Attorney General. Note also, that the government has a right to intervene in the IPR (on appeal) making the government a party to the action.

              By confusing these issues and making no distinctions between actions, defenses, and the role of the government, Oil States has created a mess.

              1. Ned again government as a party isn’t a factor here. Did the writ invalidate a government patent or the patent of a private party? If the former, sovereign immunity applies which means Article I claims. If the latter, did juries resolve questions of disputed fact? Was the ultimate legal question at law or in equity?

                The meta details aren’t important here.

                It’s a dynamite brief.

                1. anony, do you concede that Oil States has conceded that the government may cancel claims from an issued patent without allowing the patent owner a day in court?

                  That is what reexams do.

                  That is what IPR do as well.

                  Your turn.

                2. I will concede this:

                  There is a conflict in their argument. They argue the public rights cases brilliantly, but then argue that the USPTO can invalidate patent claims during reexamination because the process is “interactive.”

                  This concession, plus Cuozzo, puts them in checkmate. Dennis was all over it, and expect the USPTO to follow suit.

                  Though less clear, they also seem to argue that the USPTO can cancel patent claims during interference because an appeal to district court is possible. They drop the enforcement requirement however.

                  Patent owners need to come to terms with the fact that reexamination is constitutionally flawed just like IPR is.

    2. Pika, the degree of independence from the political branches is an important factor. Look at Breyer’s dissent in Stern.

      1. Thanks Ned.
        I see the Board as making factual findings (in place of the jury, and there, I can see a problem) and making conclusions of law, reviewed de novo by an Article III court (the CAFC) anytime the patent owner wishes to do so. I still have issues adopting this article III argument of unconstitionality as my own, because the IPR system ensure that, unless the patent owner decides not to appeal, the legal conclusions will be made by an article III court.

        1. Pika, it is also critically important who decides the facts all the way along a case, including jurisdictional facts, and facts on the merits. The trier of fact must be independent and that is why we have an independent court system. It is not just the right to a jury trial.

          The facts found by the PTAB are binding on the Federal Circuit to the same degree as facts found by a jury. So the real control over the result in any case is by the PTAB in substantially unreviewable form.

          1. Facts are just facts.

            Focusing on facts misses the important dynamic of the level of the presumption of validity that inures with the transition from mere inchoate right to full legal (property) right at the time of grant.

            It is that context that differs between the first time that “just facts” are being applied and the second time that “just facts” are being applied.

            If you have the wrong focus, if you pay no heed to the context, you will miss the taking that occurs at the legally distinct point of the initiation decision point.

            Whether or not a secondary (and second) examination of the “just facts” is appealable, and the treatment at that later point of the “just facts” is just that: secondary.

            Focus on the primary – and the issue of taking that occurs at that distinct legal point. What is occurring at that initial initiation decision point is very much a change in context within which those “just facts” are being viewed.

  3. Greg, an idea.

    1. Provide no presumption of validity until the patent has been tested in court. After that, C&C.

    2. Allow parties that otherwise have standing to join in the first case using some sort of special appearance that prevents counterclaims. All will, however, be bound by the outcome on validity.

    3. Try validity first — stay discovery on infringement and damages.

    4. Require special juries composed of people who have the ordinary skills identified for the relevant art, but no more. Locate trials where such jurors might be found, but who otherwise would have no connection to the parties. Allow patent examiners to be such jurors.

    1. Interesting idea – but not workable int he details lacking.

      Who would pay for such a patent, having no presumption of validity? Or are you also suggesting that payment be eliminated in kind (you know, in a quid pro quo manner?). What then do you have but a registration system (or even better asked, why would not a registration system, costing pennies on the dollar not be a better way to implement your idea?)

      1. anon, then make the first trial the last trial on validity.

        1. Does not address my questionNed.

          Who would pay for a patent that remains in effect worthless until a later court says it is valid?

          How much would anyone pay for such?

          These are drivers to what would be – in effect, if not in practice – a registration system.

          Quid Pro Quo remains (justly) the driver here, and your tinkering just does not account for it.

            1. anon, yes

              Not helpful Ned – is that a “yes” to my statement that you have nto addressed my question?

              Such a statement does nothing.

              I would much rather see you take the time and address what I have put in front of you.

              What possible reason do you have for not doing so?

  4. DC: One way that the court could rule against Oil States is by ruling that the IPR cancellation process involves “public rights” rather than private property rights. To do so, however, would come in fairly directly conflict with the court’s recent statements in Stern.

    Refresh my memory, please. Where did Stern say that “patent rights” are “private property rights”?

    More specifically, where does Stern say that mistakenly granted “patent rights” — i.e., claims that describe the prior art — are “private property rights”?

    It’s a baffling, to say the least, that the Constitution permits a Federal agency to take public property and put it into private hands but, at the same time, it doesn’t permit the agency to undo its error when its error is pointed out to it. What’s the rationale behind that? Patents are just that incredibly awesome? That doesn’t seem consistent with what is indisputably written in the Constitution about Congress’ power when it comes to “promoting progress.”

    1. MM – You are correct that Stern does not particularly address patent rights.

      Regarding eminent domain – Although gov’t has power to take, the case goes to court.

      1. Regarding eminent domain – Although gov’t has power to take, the case goes to court.

        I’m not sure that taking property that belongs to the public and giving it to a private individual for their exclusive use qualifies as “eminent domain.”

        This highlights a big part “problem” that pops up immediately if the public is denied the ability to petition the granting agency after grant. We’ve discussed this before but the Federal courts have created standing requirements — allegedly based on the Constitution — that greatly benefit patentees who, in many cases (nearly all cases in certain art units), have already benefitted from lopsided agency rules and systemic agency error.

        *If* the Constitution mandates that private parties who have mistakenly been handed a right that belongs to the public must be taken to Federal court to reverse that error, how can it be the case that I (as a member of the public) have to prove that I’m being threatened with a lawsuit before I can ask that same Federal court to fix the agency’s mistake? It’s ridiculous. My right was taken away by the agency and given to someone else for their exclusive use. If I can show that, why do I have to show more (other than possibly a statement that I’d like to practice the patent)? What Constitutional principle justifies that restriction?

        1. What part of presumption of validity (and that, to a clear and convincing standard) are you not understanding?

        2. MM

          How does Kyle Bass have standing to challenge pharma and biotech patents? Is that just because he is short the stocks?

          I can cite a number of cases where rights were created because they were “allegedly” based on the constitution. That’s what federal courts do.

          1. Do we need to recycle the whole “two different forums are involved in the single law that is the AIA” dialogue again?

        3. >>I’m not sure that taking property that belongs to the public and giving it to a private individual for their exclusive use qualifies as “eminent domain.”

          Rader always responded to this point by saying that the invention is new. It wasn’t there before it was invented.

          1. Night Writer,

            Malcolm continues to post in known fallacy mode even after he is appraised of his errors.

            He makes it a premise of his view that the taking of property is perfectly alright because that property “belongs to the public,” but he merely ASSumes this to be the case and gives no weight at all to the legal fact of the matter that upon grant, the level of presumption in the exact opposite direction is clear and convincing.

            It remains the point to be proven that he wants to ASSume as his starting point.

            What other person, avowed to be in the profession of obtaining and protecting rights for patentees, behaves in such a consistent anti-patent mode?

            That he makes his liberal left feelings known abounds (even as such posts with zero connection to patent law are expunged time and again).

            Clearly, cognitive dissonance reverberates within Malcolm, to a point that he cannot control himself. For all of his “Accuse Others” meme and spin, for all of his “grown -up” talk, he acts least grown up of all.

            And has acted in this very same manner for more than 11 years now.

            Also quite clearly – for the larger conversation here – the impact point (legally) is the act of the grant.

            It is AT the act of grant that an inchoate right is made into a full legal right.

            Once that happens, other Constitutional protections inure.

            ALL discussions on the matter simply must take this legal point into consideration.

    2. On the difference between the grant of a patent and the grant of a land patent, you might want to consider the Supreme Courts views as set forth in US v. Am. Bell (1897). In the one case, property of the government, the public, is taken and given to one. In the other, the property of of the one is given to the public but with a short delay.

      1. Semi-recent electromagnetic spectrum sales comes to mind…

        😉

    3. MM, where does it say in Stern that an invalid grant of public lands is not a private property dispute?

      There are disputes between private property owners, between one owner and the next about this or that, and all that falls under common law litigation. But there are disputes about the original grants as well. Historically, the Supreme Court has said that these must be resolved in court. The Supreme Court has also said that the same must be done with respect to patents of invention because they too are property just as much as are land patents.

      So, given the above history, do you think Stern v. Marshall was only talking about common law disputes?

  5. I’m waiting for MM to file his amicus brief. Surely it will be the BEST. Oil States might as well just quit now.

    1. Bluejay,

      A mild reproach (saved from the “do not have dialogues filter”):

      August 26, 2017 at 9:48 am
      I disdain calls for “0ut1ng,” even of Malcolm.

      Anonymous and pseudonymous posting has a long and hallowed tradition in this country.

      Let’s focus differently please.

  6. I suppose it is ill advised of me to offer thoughts on a subject after reading only one side’s brief, but when have I ever let considerations of what is wise constrain me in this forum: I find Oil States’ VII amendment arguments as week as Ned finds them, but I find their Art. III arguments surprisingly convincing.

    I think that I have been wrong to say that patent validity questions can fit into a public rights framing. Certainly Oil States addresses all of the points that I have raised in favor of the public rights framing in ways that I find convincing and hard to rebut. I concede that I have been mistaken.

    Of course, if this is the case, then the logical conclusion is that IPRs are unconstitutional. That is regrettable as a matter of public policy, but sometimes the ends cannot justify the means. One cannot tear down the Art. I/III separation of powers simply because it might be convenient in one limited circumstance for one limited purpose.

    If this is the case, then it seems to me that the next question that one should ask is “how can one achieve the same purpose as IPRs are meant to serve, but do so in a constitutionally sustainable manner?” Based on what I have just read, I see two ways forward on that score:

    (1) Congress could create a special section of Art. III district courts with the exclusive jurisdiction to hear §102/§103 issues. That is to say, if §102/§103 issues are raised in an infringement suit, the infringement district court would have to refer those issues to the specialty court for hearing there. This court should have a statutory mandate to appoint only science-trained judges. Just as in IPRs, the specialized invalidity court could be statutorily mandated to reach a final decision in one year (18 months for good cause shown). The FRCP could be amended to simplify discovery in these particular courts, to help along that one year limit. Congress would do well to specify (1) the standard of proof (I really do not care whether it is preponderance or clear-&-convincing, although the fact that Congress chose preponderance in IPRs suggests that they would choose preponderance here as well) and (2) claim construction standard (I can see no real justification in this circumstance for BRI, but it is not a point I really care about anyway, so long as Congress is clear, so that there is no room to complain about/litigate this point). This Art. III court would, because of its short duration and limited discovery, achieve much of the cost/time savings that IPRs were mean to accomplish, but because it is an Art. III court, there could be no question of a separation of powers problem. Naturally, this court would also have Art. III standing requirements.

    (2) The Congress could, after the IPR scheme is struck down, re-enact the exact same scheme, but with the requirement that the IPR scheme would only have jurisdiction over patents that are filed after the new IPR scheme comes into force. In the same statutory amendment, Congress could require that language be inserted into all patent applications, whereby the applicant acknowledges and agrees that any patent granted on this application be amenable to post-grant challenge in the PTAB. That is to say, it seems to me from Oil States brief that there is no problem if the patentee consents to PTO adjudication, so one could simply make consent to such adjudication as prerequisite to patent applications, and the whole problem is cleared up.

    As between the two, I have a slight preference for #2 (it is easier), but I suppose that #1 is the more constitutionally ironclad (#2 might run up against the unconstitutional conditions doctrine).

    1. Something has to be done and Congress has to do it. They did it before with bankruptcy law. At least the bankruptcy judges are employed by the Judiciary and not the Executive.

    2. Oil States addresses all of the points that I have raised in favor of the public rights framing in ways that I find convincing and hard to rebut. I

      LOL I’m glad you’re not my attorney. Wow.

      Congress could, [if] the IPR scheme is struck down, re-enact the exact same scheme, but with the requirement that the IPR scheme would only have jurisdiction over patents that are filed after the new IPR scheme comes into force

      For what it’s worth, Oil States distinguish between IPR and the pre-existing inter partes re-exam, because there isn’t any distinction to be made.

      Congress could require that language be inserted into all patent applications, whereby the applicant acknowledges and agrees that any patent granted on this application be amenable to post-grant challenge in the PTAB

      The statute already defines the “patent right” as a conditional “right” subject to recovation by the granting agency and it has done so for many many years (before the AIA). This language adds nothing and the idea that the Constitution (LOL) mandates such langage appear on the printed document because “patent” is beyond silly.

      All that said aside, the main point of your comment stands: if the existing IPR system falls because the Supreme Court blows this case, what happens next is going to be despised by the patent maximalists just as much as they despise IPRs. I laughed out loud when I read DC’s comment (“According to the briefs, the problem with IPR isn’t really that the PTO is invalidating patents” <— LOLOLOLOLOLOLOLOLOL As if).

      I mean, what's the alternative? The PTO has been running white hot and churning out junk like there's no tomorrow for decades. That’s why the IPR proceedings were created in the first place. There’s no returning to “the status quo” because the status quo wasn’t acceptable.

      1. Ooops, self-edit here: Oil States doesn’t distinguish between IPR and the pre-existing inter partes re-exam, because there isn’t any distinction to be made.

      2. I’m glad you’re not my attorney.

        So am I.

        Oil States distinguish [sic between IPR and the pre-existing inter partes re-exam, because there isn’t any distinction to be made.

        Not true. A party dissatisfied with the outcome in an inter partes reexam could appeal to the ED Va, and have a do-over of the whole process in an Art. III district court. This meant that the inter partes reexam was never going to arrive a different outcome than one might get in district court, because if ever it did arrive at such an outcome, one could always just transfer the proceeding to a district court. Not so for the AIA’s IPR scheme.

        There’s no returning to “the status quo” because the status quo wasn’t acceptable.

        Here is the part where you and I agree. The fact that Congress was motivated to take steps to create the IPR system tells me that they are not satisfied with the way things were working pre-AIA. If the current IPR system is tanked, I have to expect that its replacement will be coming down the pike in short order.

        1. This meant that the inter partes reexam was never going to arrive a different outcome than one might get in district court

          “Different outcomes” is not the problem with IPRs. There is no evidence that IPRs are systematically invalidating patents that shouldn’t be invalidated. None at all.

          have a do-over of the whole process in an Art. III district court.

          The “whole process”? No estoppel? I don’t think so. Also, applicants may already appeal every aspect of the PTAB’s decision-making process to the CAFC — an Art. III district court. So what’s the problem?

          If the current IPR system is tanked, I have to expect that its replacement will be coming down the pike in short order.

          The same people complainng about “oh-so-unfair” IPRs will fight tooth and nail to prevent anything from “coming down the pike” that will make it easier to invalidate junk patents. You can bet your life on that

          But they’re all about “patent quality.” Sure they are! After all, they told us so. And they’re very serious people. The most important people ever! The world revolves around them and the public just needs to step aside and let them “monetize” their junk because that’s the way the Founders wanted it.

          1. “Different outcomes” is not the problem with IPRs. There is no evidence that IPRs are systematically invalidating patents that shouldn’t be invalidated. None at all.

            Sure. I do not disagree. Still and all, there is a substantive procedural difference between pre-AIA reexams and the new AIA IPRs. I agree that in practice the two come to the same outcome, but when the whole lawsuit is about procedural protections for patentee rights, you cannot just ignore that the patentee had rights under the pre-AIA scheme that the patentee does not have under the AIA scheme.

            No estoppel? I don’t think so.

            Correct, no estoppel. The district court in appeals from the PTO was not estopped by findings or holdings of the PTO. The district court was allowed to find new or contradictory facts opposed to those found by the BPAI.

            Also, applicants may already appeal every aspect of the PTAB’s decision-making process to the CAFC — an Art. III district court.

            Not to put too fine a point on it, but the CAFC is not a district court. It is a circuit court of appeals. The CAFC can review conclusions of law de novo, but it can only review findings of fact for clear error. By contrast, the district court is allowed to review both law and fact de novo. This is a meaningful difference.

            The same people complainng about “oh-so-unfair” IPRs will fight tooth and nail to prevent anything from “coming down the pike” that will make it easier to invalidate junk patents. You can bet your life on that

            Once again, on this we agree. Many of the voices cheering on Oil States do not really care a fig about the separation of powers or the right to a jury trial. They just want to see the hated IPR system destroyed, and any lance that can kill that dragon is good enough as far as they are concerned. They will be sorely disappointed when they see that a SCotUS reversal is not the last word on this subject.

            1. The district court in appeals from the PTO was not estopped by findings or holdings of the PTO.

              That’s not the “estoppel” I was referring to.

              And the CAFC is also not estopped from finding that the PTAB made an error in its “findings” or “holdings.”

              the whole lawsuit is about procedural protections for patentee rights

              There are no “procedures” that are absent from IPRs or inter partes re-exams that result in any unfairness to the patentees. That’s the point. If there’s been unfairness, the patentee can appeal.

              The argument by the patentee here is not about “procedural protections”. It’s about whether the entire system needs to be biased in a facially absurd fashion towards the patentee even when the administrative agency (which, according to the patentee’s own arguments, is surely also “unconstitutional”) totally messed up.

              Again, if we assume the positions adopted by the patentee, if a patent is property than a mistakenly granted patent is stolen property. It’s property stolen from me by the agency and handed to the patentee. And somehow I don’t have a Constitutional right to have that property returned to me? I have to first wait to be sued or threatened with a lawsuit? That’s ridiculous.

              You need to look at this situation through the lens of the possible, not through the microscopic pinhole of this tinfoil hatted “Google stole my idea” charlatans and wealthy entitled whiners. Look at what the PTO managed to do under Kappos. Imagine the damage that could be done by the agency.

          2. <>

            Umm…. Judge Newman has provided at least three CAFC dissents in the past year where the PTAB has reached a final decision that a claim is invalid in exact opposition to a previous district court opinion that the claim was “not invalid” on the same prior art. (I think it was the same party in 2 of the 3 cases but I might be mistaken.) The majority CAFC opinion justified the inopposite decisions based on the differing claim construction standards and burden of proof…but that is exactly the systematic process which was deliberately set up at the PTO.

            In one case they decided that even though the district court patent validity decision was sufficiently final (fully appealed and upheld though the CAFC)…a continued unresolved controversy over remanded damages (which had NO further relation to the validity decision) was sufficient to prevent estoppel at the PTAB….an issue that arisen in several cases with differing CAFC panels reaching different decisions for one reason or another.

            (Just because the PTAB and district court claims constructions aren’t ALWAYS reach different decisions…doesn’t mean it isn’t systematic. It’s the system (different claim constructions, burdens of proof) that has been created which ALLOWS it to happen.)

            Former CAFC Chief Judge Mitchel said it best in his article last year when he said that the BRI claim construction utilized by the PTAB for an issued patent effectively “morphs” into the same as the district court (plain & ordinary to an ORDINARY skilled practitioner of the art)….since post-issuance, the boundaries of the patent cannot be considered to be unspecific, thus, there is only ONE REASONABLE interpretation of a claim term…i.e. the plain & ordinary one used by the district court system.

        2. “So am I.”

          Truer words have never been spoken.

      3. MM, something has to be done about both the PTO and the Federal Circuit. From 10,000 feet POV, we really didn’t have a problem about a flood of junk patents until those two got together. (Might want to extend this back just a bit to Judge Rich’s tenure on the CCPA.)

        Surely, if 80-90% of the patents were rock solid as issued, having claims that were limited to the disclosed invention, were clear and definite and did not read on the prior art, I am confident that you would support providing some presumption of validity and that would allow the patent owner to step into court to enforce without undergoing any further PTO examination.

        1. Ned, I agree that if (1) we got rid of logic patents and (2) put a few more reasonable restrictions on how and by whom they are accumulated and asserted then most of the worst problems in the system immediately disappear and the need for IPRs would be greatly diminished.

          1. MM the Google Paid blogger telling us what is good for Google and the infringement lobby !

        2. [W]e really didn’t have a problem about a flood of junk patents until… Judge Rich’s tenure on the CCPA.

          This does not seem like a supportable assertion. Justice Jackson was complaining back in 1949 that “[i]t would not be difficult to cite many instances of patents that have been granted, improperly I think, and without adequate tests of invention by the Patent Office.” Jungerson v. Ostby & Barton Co., 335 U.S. 560, 572 (1949). Judge Rich did not join the CCPA until 1956. Clearly people have been complaining about a plethora of low quality patents long before Judge Rich came on the scene.

          Might I suggest that the problem of poor quality examination is structural, and is not going to be solved either (1) by the Court creating tighter standards of “invention” or (2) by some extra measure of training of the Examiner corps. The PTO needs fees to keep the lights on, and the fees are paid by people who want patents. If the PTO gets a reputation for being strict in its standards for granting, fee payers will decide that it is not worth their while to pay the fees. Therefore, the PTO’s incentive is to be lax. The PTO’s incentive will always be toward lax examination, no matter how tough the SCotUS makes its pronouncements about patentability, and no matter how loudly this or that interest group or Congressional investigation panel pounds the table and demands “better quality.”

          Given this structural predisposition toward laxity in examination built into the PTO’s existing incentive structure, there are really only two ways to solve this problem: (1) you can either undo the incentives toward laxity on the front end (e.g., by making the PTO refund fees if a patent is later found invalid); or (2) create some after grant incentive toward stricter standards in assessment of validity (e.g., IPRs, where the fee payers are the folks who want to see a patent tanked, instead of granted). Naturally, these options are not mutually exclusive, so you could do both.

          Supposing that getting rid of the CAFC would have any significant effect, however, strikes me as wishful thinking. The fact that Justice Jackson was complaining of poor quality examination back in 1949 tells me that the regional circuits were no better at incentivizing PTO quality than is the CAFC today.

      4. MM the Google Paid blogger telling us what is good for Google and the infringement lobby !

    3. Greg, how would such forced consent work to “clear up” the “problem”?

      Can the governments role to protect individual rights under the constitution come with “conditions” which essentially abrogate those very rights? Assuming the Art III requirements are not matters only of superficial “form” but of pith and substance, how could forcing individuals to agree to give up aspects of protections/rights in order to secure them (what is left of them) be defendable?

      Let us assume the constitution protects inalienable rights of persons rather than permissions granted by the state or king. If one assumes that once an inventor has created an invention to which he/she has a constitutionally protected rights therein: i.e. a property right arises by virtue of the creation of the work, not later by edict of the state. Of course afterward there is a process of the rights being recognized and validated by grant of a patent (and thereafter enforced) all of which could reasonably fall under the meaning of “secure”. I can only assume by tacking on “conditions” to the securing of the rights.. i.e. requiring the inventor to agree to give up something of the fundamental nature of the rights he is attempting to secure … that that somehow would run afoul of the same constitutional principles.

      I may be way off base here… please enlighten me.

      1. Think “inchoate” versus vested property right…

      2. anony If one assumes that once an inventor has created an invention to which he/she has a constitutionally protected rights therein: i.e. a property right arises by virtue of the creation of the work

        Oh good grief. There is absolutely nothing in the Constitution that suggests you have some sort of Constitutional “right” to an idea, i.e., that somehow the Constitution (?!) recognizes that because you thought up something first that somebody else can’t think of — and use — the identical solution afterwards without violating your imaginary “right”.

        There is some language in the Constitution expressly suggesting the exact opposite, however.

        1. Inalienable rights are not recognized by the Constitution? You’re a real piece of work.

          1. Inalienable rights are not recognized by the Constitution?

            Nice try. Better tr 0lls please.

            1. MM the Google Paid blogger telling us what is good for Google and the infringement lobby !

      3. anony the fundamental nature of the rights

        ROTFLMAO

        Okay, kids, put down the pipe.

      4. Greg, how would such forced consent work to “clear up” the “problem”?

        To be very clear, Anon2, maybe forced consent does not work. As I said above, the constitutionally ironclad way to clear up the problem is to create a special set of Art. III courts. That way, there can be no possibility of a separation of powers problem, because the judicial power remains unambiguously in the judicial branch.

        Still and all, the Oil States brief acknowledges that the PTAB exercises judicial powers in a variety of other circumstances (interferences, ex parte appeals from adverse examination, etc.), and no one thinks that these processes pose a separation of powers problem. Part of the reason for this is that these other procedures have (or at least historically used to have) a right of appeal to a district court. The other reason why they are o.k., however, is because the parties consent.

        So, what if we make the parties consent to IPRs, in the same way that parties have historically been obliged to consent to interferences? Presumably that should solve the problem. That is the intuition behind my suggestion, at any rate. If folks see a problem with this suggestion, I welcome correction.

        1. Thanks Greg.

          I certainly do not have the constitutional law answers…

          I do have another question. Do you think it constitutional if (just hypothetically) congress tried to legislate “agreement” from the applicant to:

          a) give up all constitutional protections to the private rights in the invention once a patent is granted?

          or

          b) give up all private rights to an invention, i.e. cede it to the government so that they essentially become public “rights”?

          And what would be the relevant difference at law between these and your suggestion of the applicant agreeing the rights to be subject to IPRs?

          1. Those conditions seem like the would run afoul of the Constitutional authorization to “secure” rights to the inventor. Requiring that one agree to arbitrate invalidity in front of the PTAB, however, seems (to me, at any rate) a great deal less clearly a trespass against “securing” the inventor’s legitimate rights.

            1. “Less clearly a trespass”, is an interesting choice of words.

              I think the stacking of the PTAB, the unlimited time period and the unlimited number of challenges to validity, i.e. the inchoateness of the property rights in perpetuity, stand against the argument of actual “less trespass”.

              As to the question of the “clarity” of that trespass (irrespective of the amount)… I suppose that, in the final analysis, is in the eye (or the politics) of the one charged with ascertaining the presence or absence of individual property rights at issue…

              I suppose they could just make sure the PTAB members swear to uphold the constitution… regardless of their politics. That should work?

              Thank you for the discussion Greg.

              1. Thank you for the discussion Greg.

                And likewise yourself.

          2. all constitutional protections to the private rights in the invention

            LOL

            What on earth does that even mean?

            There are no “constitutional protections” for rights that you aren’t entitled to.

            1. LOL — If only MM knew how to laugh at his own stu pi dity

        2. what if we make the parties consent to IPRs

          You “consent” to an inter partes review of any patent that you end up with when you apply for your patent.

          That’s because the patent is defined as a conditional “right” that is subject to revocation by the agency.

          1. You “consent” to an inter partes review of any patent that you end up with when you apply for your patent.

            That’s because the patent is defined as a conditional “right” that is subject to revocation by the agency.

            As you know, MM, I think that IPRs are a salutary addition to the patent system. If the Supreme Court were to use this reasoning to resolve the separation of powers problem, I would be perfectly delighted, because it would mean that IPRs stay part of the system.

            Candidly, however, this seems too heavy handed a response for me to believe that the SCotUS would credit it. I can see how we can meaningful impute implicit consent in the case of AIA patents. Those people applied with the understanding up-front that IPRs are part of the system. Most patents challenged in IPRs to date, however, have been pre-AIA patents, and it seems difficult to my mind to say that a patentee consented—not only to the mechanisms of review in place at the time that s/he filed—but to any future mechanisms of review that the Congress might subsequently contrive. That is just not what people mean by the word “consent.”

          2. MM is guess “consent” was taught in school when you went there .. everything was conditional ….

          3. Malcolm,

            You continue to misrepresent that “angle” of conditional right as even Congress does not have ANY right to abrogate other Constitutional protections.

            Your continued ploying of this line of “reason,” after it has been shown to be false is unethical.

        3. Not to be too harsh ( as at least Greg is exploring some interesting options), but the response here to the forced consent issue is conflating a second issue that is a separate problem.

          To wit, “maybe forced consent does not work. As I said above, the constitutionally ironclad way to clear up the problem is to create a special set of Art. III courts. That way, there can be no possibility of a separation of powers problem, because the judicial power remains unambiguously in the judicial branch.” talks of separation of powers – forced consent is not a separation of powers issue. Forced consent is purely within the single branch of the legislature, and the point raised is that forced consent simply goes against the rubric of our Constitution. No other branches are involved in the infirmity of the Legislature attempting to include a forced consent in the act of securing.

          1. “Forced consent” as such is indeed a vacuous concept out of context… and in a vacuum is a non issue entirely. Forced consent as a floating concept cannot be a constitutional issue, or any issue… it the “what” that the person is forced to consent to that is important, and gives rise to an issue.

            Assuming the separation of powers ultimately is for the benefit of individuals, i.e. it is not merely some academic exercise of form and no substance, and is not something “for” the state or the ruler, or the insensate cosmos, i.e. assuming that it is part of the system meant to protect individuals’ rights from the threat of the concentration of power leading to an arbitrary and a rights violating exercise of government power, assuming also that the existing/traditional governmental framework invokes or incorporates an element of the separation of powers, which functions as a protection to some rights of an individual, I would submit that forcing an individual to consent to something which specifically removes or hampers, otherwise abrogates that separation of powers as regards to those rights, is forcing them to give up constitutional protections that otherwise would be present.

            The issue is not that the legislature would be attempting to obtain forced consent, the issue is “what” the legislature is attempting to get forced consent for.

          2. [F]orced consent is not a separation of powers issue.

            Just to be clear, no one is saying that “forced consent”* (not my term) presents a separation of powers problem. My point is that there are (at least) two possible ways that I can see to accomplish the same good that IPRs accomplish, if IPRs are held unconstitutional.

            One of them involves requiring patent applicants to consent to arbitration of validity in front of the PTAB as a prerequisite to applying for a patent. This solution does not necessarily create a separation of powers problem. As I noted earlier, however, it potentially implicates the unconstitutional conditions doctrine.

            Another solution requires setting up a special set of Art. III courts. This solution should not implicate the unconstitutional conditions doctrine. It should also resolve the separation of powers problem that the Oil States brief has shown to exist vis-à-vis the current IPR system.

            In other words, the separation of powers problem and the so-called “forced consent” problem are separate issues. It was never my intent to conflate the two. My apologies if unclarity on these points has given rise to confusion.

            * I think it strange to call this “forced” consent, because it is no more “forced” than any other condition that the government might choose to attach to a patent (do we speak of “forced” 20-years-from-filing terms or “forced” maintenance fees?).

    4. Who is this Greg…?

      😉

  7. IPRs are not OK, but the ITC is (both adjudicate validity) and it has nothing to do with the remedy sought, but only because there is no collateral estoppel with the ITC. This argument demonstrates that it is all about the remedy because collateral estoppel would make the ITC decision an effective revocation.

    So, even though it really is all about the remedy, reexams are OK but IPRs are not because IPRs are between two private parties and reexaminations are between the government and the patent owner?

    What kind of thinking is this? Does Oil States not know that scire facias was between the government and the patent owner?

    Now we get to the trappings of litigation as the reason IPRs are unconstitutional?

    Are you kidding me?

    Does Oil States not know that McCormick Harvesting, a case they rely on, was effectively a reexamination, examiner vs. patent owner? Ruled unconstitutional.

    I would love to be on the other side with this kind of advocacy.

    1. And, I am willing to bet that Oil States does not know that infringement litigation in England prior to 1791 had no concept of collateral estoppel. The patent owner was not out his patent if he lost on validity in an infringement case. He could come back later with better evidence and try again. Arkwright is a case in point.

      Today, that is different of course, which makes a loss in an infringement case like a loss in an IPR. But if it is the effective revocation that is important, historical infringement cases are an inapt analogy. The apt analogy are scire facias. But, by Oil States argument, because the government is a party, they provide no basis for arguing that IPR are unconstitutional because IPR are between private litigants.

      Meh!

      1. Does a decent job of defining that star-chamber of the PTAB and does a good job showing in the scheme of the art I ‘courts’ this one is a bridge way to far. Considering the audience, it is sufficiently direct like a 2×4 to the head for SCOTUS. Recall, that J. Breyer thinks patents are like ‘tickets to a merry-go-round’ whatever that means. When it comes to patent law, SCOTUS is like a box of rocks.

        1. iwasthere, to be sure, when arguing the essentials of due process, or rebutting the arguments of the government that patent rights are public rights, the brief was on firmer ground.

    2. ITC is advisory with no legal effect other than an exclusion order.

      Hence no collateral estoppel. No errors here Ned.

      As far as I can tell, the primary gaffe was reexamination, which Dennis capitalized on.

      It’s also a point that doesn’t square with the remaining 98% of the brief. Let’s not blow this out of proportion. It’s a toehold for the other side, nothing more.

  8. From pages 48-49 (emphasis added):

    Congress is free to change the rules of decisions
    applied by federal courts (within the constraints imposed
    by other constitutional provisions, of course
    ).
    But Congress cannot withdraw matters traditionally
    adjudicated in courts of law from Article III courts so
    that an administrative agency can adjudicate those
    matters in “trials” that lack Article III’s most fundamental
    guarantees. Such a purpose is flatly inconsistent
    with the separation-of-powers principles inherent in
    Article III.

    Some sAme ones though will want to pretend that this direct and simple statement (written in English) is somehow incomprehensible or otherwise does not apply because their feelings (read: ego) places their desired Ends above any scrutiny of the Means to those Ends.

  9. I’m puzzled by: “..the agency eventually found the challenged claims unpatentable on a broad claim construction (after first rejecting the district court’s claim construction). … The implication here: Oil States believes its patent is valid when properly construed.”
    Does that raise any questions of how just getting a jury trial would accomplish that result given the Sup. Ct. Cuozzo and Markman decisions on claim construction? The jury would not be doing claim construction anyway. I gather there has not been a Fed. Cir. affirmance of this district court’s claim construction, only that of the PTAB in the IPR, using BRI, which Cuozzo sustained?

    1. The thrust is not claim construction per se – it is more that the recognized forum of Article III is being usurped by the Article I forum.

      It is pointing out that not only does an Article I forum result violate the separation of powers, it ALSO places that conflated power in a political court (and the point of how political could have been better emphasized) that overturns any Article III adjudications.

      The focus then on “how just [_] accomplish [a different] result” is not at point.

      1. Of course, but actually winning the patent suit, not just this appeal, is the point of all the money being spent by the patent owner, which [as I was questioning] would apparently still not be decided even if this appeal is successful.

        1. Not so.

          Winning this appeal abrogates the negative result of the PTAB, necessarily restoring the successful Article III version.

          1. Yes, it is true that winning this appeal cures a problem for Oil States. Still and all, there appear to be prudential standing issues here. If Oil States concedes (as it appears to have possibly conceded) that it has no right to a jury trial in any event, does that not make it oddly situated to defend a right to a jury trial?

          2. As noted, there is no final Article III proceeding if the D.C. decision has not been reviewed by the Fed. Cir.

      2. Agreed, it also makes it clear there is no comity or ‘full faith and credit’ given by PTAB to the Art III department. All other Art I courts, apply the so-called ‘administrative estoppel’ doctrine to act in harmony with the Art III department. No so with PTAB.

  10. “According to the briefs, the problem with IPR isn’t really that the PTO is invalidating patents”

    Are you kidding? Did you read the brief? McCormick and American Bell are cited and quoted throughout.

    It is terrifying that these people are training the next generation of lawyers.

    1. D – The brief distinguishes IPR from ex parte reexam and interferences as well as actions by CFC and USITC.

      Unlike interference proceedings, inter partes review provides no recourse to a federal district court for a full Article III trial. And unlike traditional ex parte reexamination—which is an interactive proceeding between the agency and the patent owner—inter partes review is an adversarial proceeding with all the trappings of litigation.
      Each of these other tribunals or proceedings stops short of exercising Article III judicial power over private rights. Inter partes review does not. This Court would therefore call no other tribunal or proceeding into question by prohibiting this clear intrusion into Article III.

      1. Odd language. I concede the point.

      2. And, Dennis, with that kind of talk and argument, Oil States is going to lose. It is deeply unfortunate that the Supreme court did not take MCM Portfolio.

        1. Ned,

          I doubt that you would have made a proper “champion,’ given that you still to this day have not grasped the nuances of property law (vis a vis the sticks in the bundle of property rights aspect).

          1. anon, the real problem with the Oil States litigation team is that they do not know what they are talking about, and it is as clear as day.

            1. The point Ned, is that you too did not know what you were talking about.

              Sure, you knew a portion of what you were talking about.

              I am not saying that the portion you know is not known, that you “don’t know what you are talking about” when you are talking about that portion. But “that portion” is simply not enough, and does not provide the entire and necessary context of the situation.

              You may grasp an important historical fact; however, a different portion is simply not being grasped by you – even after extensive attempts across the blogosphere to have you grasp basics of property law, basics of takings law, you STILL do not grasp elements that you SHOULD be talking about.

              1. Let us both put it the way it really is: neither I nor anyone else know what you are talking about.

                1. Not so, Ned – those who understand the basics of property law and understand the use of “sticks in the bundle of property rights” full well understands what I am talking about.

        2. Ned., it’s not to late to cut and paste your prior unsuccessful cert petition arguments into an amicus brief for this case. I wish you would. Likewise for anyone else’s constitutionality blog arguments.

          1. How about your own anti-constitutionality blog arguments, Mr. Morgan…?

            Oh wait – you don’t have any actual arguments of such, seeing as you merely snipe from the sidelines and all.

            1. Right, because I have not self-anointed myself as a constitutional law expert, or joined in with those who have been wrong so many times before. Nor having the chutzpah to think that Congress or the Supreme Court actually cares about anything not even presented in a brief or proper legal article, much mere personal venting. My interest is purely curiosity in seeing supported and substantive legal arguments and facts.
              As for non-substantive personal “sniping” on this blog, I would be happy to nominate you and your doppelganger for any championship contest. Votes anyone?

        3. Ned,

          Maybe the client wanted it this way, or the lawyers wanted to give the Court the option of addressing reexamination and interferences in separate disputes.

          Either way, they left the door open, and expect the USPTO to drive a semi truck through it as Dennis just did.

          I have confidence that the Justices will get this one right. If they don’t, this might be the body blow that finally buckles the knees of the patent system.

      3. “Unlike interference proceedings, inter partes review provides no recourse to a federal district court for a full Article III trial.”

        That is a false representation as to all post-AIA interferences. Even as to pending pre-AIA interferences. Biogen MA, Inc. v. Japanese Foundation for Cancer Research (Fed. Cir. 2015).

        1. [U.S.C. 146 was changed by the AIA to apply to derivation proceedings, not interferences.]

          1. Drawing to a difference driven by the same (badly written) AIA is not the saving grace that you may think it to be, Paul.

            1. Good point. Perhaps this just proves that modern (i.e., post-AIA) interferences are as constitutionally insupportable as IPRs.

            2. I would appreciate less of your baseless false speculations as to what I “may think.”
              What I really think is that clearly incorrect legal statements in Supreme Court briefs, which should be of the highest quality, are rather shocking, and detract from credibility when pointed out by an opponent.

              1. A completely unsubstantiated “wah” from you Paul – given as YOU have no such item as we are discussing here.

        2. Granting that it is technically false, I think you can agree that it is accurate enough for Oil States purposes. Oil States does not have to explain why current interferences are constitutionally o.k. They just have to explain why the last few centuries of interferences were o.k. Their explanation does that in a way that meaningfully distinguishes historical interferences from modern IPRs.

      4. If the CFC finds a claim invalid, does it have preclusive effect on others?

  11. >>The Federal Circuit then affirmed the case without opinion (R.36).

    Perhaps the Scotus will take a shot at the CAFC over the R. 36.

    Might be interesting.

Leave a Reply

Your email address will not be published. Required fields are marked *

 Notify me of followup comments via e-mail.

You can click here to Subscribe without commenting