The Supreme Court will hear oral arguments on Cyber-Monday 11/27 in two important patent cases:
- Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712. Asking whether inter partes review (IPR) operates unconstitutionally “by extinguishing private property rights through a non-Article III forum without a jury.”
- SAS Institute Inc. v. Matal, No. 16-969. Asking whether, in an IPR, the PTAB must issue a “final written decision as to every claim challenged by the petitioner, or whether it allows that Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner.” See 35 U.S.C. § 318(a).
Since Justice Scalia will not be there, I’ll include a punch-line quote that comes from Oil State’s Reply Brief:
But it is odd to argue that the agency makes so many mistakes in issuing patents that its special expertise is needed to resolve disputes over those errors.
My expectation is that the AIA and PTO’s approach will be upheld in both cases. At oral arguments look for any signals that conservatives will break away from Justice Thomas notion that patent rights are not “core private property” but instead are properly considered lesser franchise rights. In addition, look for consideration of whether the justices are thinking outside-of-patent-law at a bigger picture review of public rights doctrine.
For last minute reading, consider the Oil States Reply Brief [OilStatesReply]. The following is an important portion:
This Court has recognized only narrow exceptions to the rule that Congress may not authorize non-Article III tribunals to exercise the Judicial power by adjudicating disputes between individuals. One of those narrow exceptions involves disputes over public rights. But “ ‘even with respect to matters that arguably fall within the scope of the “public rights” doctrine, the presumption is in favor of Art. III courts.’ ” Stern. Respondents cannot overcome the presumption in favor of Article III, and their attempts to wedge IPR into the narrow public-rights exception only confirms that it does not fit.
a. Claims By Or Against The Government. Respondents liberally cite these paradigmatic public rights cases, e.g., Murray’s Lessee v. Hoboken Land & Improvement Co., 18 How. 272, 274-75 (1855), but in every case – like most modern-day agency enforcement adjudications – the government was a party. IPR adjudicates disputes between private parties and does not at all implicate the government’s sovereign immunity – the origin of the exception. Id. at 274-75. Indeed, the AIA does not authorize the PTO to bring an IPR. 35 U.S.C. § 311(a).
b. Claims Historically Resolved Exclusively By Another Branch. The government concedes, as it must, that “challenges to the validity of issued patents were often brought injudicial forums.” Gov’t Br. 46; see also 3 William Blackstone, Commentaries 260-61; Br. of Legal Historians 5-37; Addendum 23-31. That concession is fatal because the exception applies only to claims “historically *** determined exclusively by” another branch. Stern, 564 U.S. at 485 (emphasis added).
The government nonetheless argues (at 46) that the “authority of the Crown and Privy Council to cancel patents” renders them public rights. Not so. First, this Court has repudiated that theory’s most significant implication, instead holding that an Executive patent revocation “would be in fact an invasion of the judicial branch of the government by the executive.” McCormick Harvesting Mach. Co. v. Aultman & Co., 169 U.S. 606, 612 (1898). Second, the Privy Council ceased revoking invention patents in ordinary cases – such as those involving a patent’s novelty – in 1746. . . .
c. Claims Whose Adjudication Is Essential To An Expert Agency’s Resolution Of A Limited Regulatory Objective, Tied To A “Particular Government Action.”… [R]espondents misapprehend this narrow exception at each step. … [A]dministering the patent laws is not [a limited regulatory objective]…. IPR is not “essential” to that objective…
It will be interesting.
In SAS, the court’s response may depend upon how far the Justices have gone down the road of releasing judicial intuition in favor of a strict-grammar approach to statutory interpretation. The statutory question at issue is found within 35 U.S.C. 318, which focuses on the “decision of the board” in cases where the director has already instituted the IPR:
If an inter partes review is instituted … [the PTAB] shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner ….
The suggestion by petitioners is that the “any patent claim challenged” requires a written decision even as to claims that were challenged in the petition but not instituted for PTAB review. Here, though I see a credible grammar argument that the claims challenged claims referred to in Section 318(a) are limited only to those instituted.
The SAS challenge can also be seen as pushing against the Director’s authority under Section 314 to partially-institute an IPR (institute as to only some of the challenged claims or for only some of the reasons challenged). Of course, that issue is not appealable directly (institution decision is not ordinarily appealable) although the implementing rules could be challenged. And, SAS did not push this button.