The United States Supreme Court ruled 7-to-2 in Oil States Energy Services LLC v. Greene’s Energy Group LLC,
finding that the inter partes review (IPR) process at the U.S. Patent and Trademark Office (USPTO)— where the Patent Trial and Appeal Board (PTAB) decides the validity of granted patents— is constitutional, both under Article III and the Seventh Amendment. Oil States argued that the validity of granted patents should only be tried in a federal court. AUTM signed on to an amicus brief in support of the patent owner, Oil States.
The majority decision in Oil States,
which was handed down on April 24, emphasized that its ruling was “narrow” and left open challenges to the constitutionality of IPRs involving the retroactive application of IPRs to patents granted before IPRs existed, as well as violations of “due process” or the “takings clause” under the 5th
Amendment. It also cited the Florida Prepaid
case, which relates to the 11th
Amendment sovereign immunity of the states and particularly state institutions as it relates to patent rights owned by such institutions.
That citation has direct implications in the University of Minnesota’s appeal to the Federal Circuit of PTAB’s ruling in the Ericsson
decision, which says that state universities waive their 11th
Amendment sovereign immunity in IPRs if they have brought a separate patent infringement suit in federal district court.
In practical terms, the current ruling permits the IPR process to continue at the USPTO as a parallel track for determining the validity of patents already issued. Proponents of the IPR process – which was created under the America Invents Act in 2011 – believe this allows for a less expensive way to challenge patents outside the courts. Opponents believe that because the standard for invalidity is much lower in the IPR process, too many patents are being invalidated. And they argue that those who challenge patents use IPRs as an add-on, not as a replacement for court action, raising the cost of defending patents.
Following the court’s decision, it is up to the USPTO or Congress to see if any modifications to the IPR process are in order. USPTO Director Andrei Iancu, who was recently appointed to the post, has stated on several occasions that he is open to making improvements to the IPR process and the guidelines given to the administrative law judges who administer it.
AUTM will continue to work with other associations and allies to support improvements to the IPR process.