High Court Rules AIA Reviews Are Constitutional
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Law360 (April 24, 2018, 10:13 AM EDT) -- The U.S. Supreme Court ruled Tuesday that America Invents Act reviews do not violate the U.S. Constitution and that the Patent Trial and Appeal Board has the authority to invalidate patents, leaving intact a system that has been used to challenge thousands of patents.
The U.S. Supreme Court has rejected an argument that only federal courts can find patents invalid, upholding the authority of the Patent Trial and Appeal Board and the constitutionality of America Invents Act reviews. (Law360)
In a 7-2 opinion, the high court rejected an argument by Oil States Energy Services LLC — which had appealed an AIA inter partes review decision invalidating its hydraulic fracturing patent — that only federal courts, not executive branch tribunals like the PTAB, can find patents invalid.
AIA reviews are simply a method for the U.S. Patent and Trademark Office, of which the PTAB is a part, to review its own decision to issue a patent, and do not present any constitutional concerns, Justice Clarence Thomas wrote for the majority.
"This court has recognized, and the parties do not dispute, that the decision to grant a patent is a matter involving public rights — specifically, the grant of a public franchise," he wrote. "Inter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO's authority to conduct that reconsideration."
Oil States' patent was found invalid in an inter partes review requested by Greene's Energy Group LLC, and the decision was affirmed by the Federal Circuit.
In its Supreme Court brief, Oil States maintained that that the AIA review system “impermissibly transfers the responsibility for deciding common-law suits from Article III judges to administrative agency employees who are beholden to executive branch officials — precisely the evil the framers sought to avoid.”
The USPTO responded that the PTAB’s review of patents is permissible under the Constitution because it is no different from the office’s clearly constitutional authority to issue patents in the first place.
“Inter partes review serves to protect the public from the unwarranted burdens that erroneously issued patents impose,” the office said.
Since AIA reviews were established in 2012, they have become a key tool used by accused infringers to challenge patents.
According to PTAB statistics, the board had received nearly 8,000 petitions challenging patents in AIA reviews through the end of 2017, and had issued just over 1,900 final decisions, 81 percent of which found at least one claim of the patent invalid.
The large volume of PTAB decisions finding patents invalid sparked widespread outcry among patent owners. They argued that the board is biased in favor of invalidating patents and set their sights of having AIA reviews eliminated completely on constitutional grounds.
At oral arguments in November, Justice Ruth Bader Ginsburg signaled that the court might lean toward keeping the reviews in place.
"There must be some means by which the patent office can correct the errors that it's made," she said.
Attorneys for the parties could not immediately be reached for comment.
The patent-in-suit is U.S. Patent Number 6,179,053.
Oil States is represented by Allyson N. Ho, C. Erik Hawes and Judd D. Stone of Morgan Lewis & Bockius LLP.
Greene’s is represented by Christopher Kise, Joshua Hawkes, Pavan Agarwal, David Goroff, George E. Quillin, Lawrence Dougherty and Bradley D. Roush of Foley & Lardner LLP.
The government is represented by Noel Francisco, Chad A. Readler, Malcolm Stewart, Rachel Kovner, Mark R. Freeman and William E. Havemann of the U.S. Department of Justice, and Sarah Harris, Nathan Kelley, Thomas Krause, Farheena Rasheed and Mary Beth Walker of the U.S. Patent and Trademark Office.
The case is Oil States Energy Services LLC v. Greene’s Energy Group LLC, case number 16-712, in the Supreme Court of the United States.
--Editing by Rebecca Flanagan.
