The Supreme Court Made Decisions on Two Cases Regarding Inter Partes Review of Patents

Today, the United States Supreme Court issued decisions on two cases: SAS, Inc. v. Iancu and Oil States Energy v. Greene’s Energy Group in relation to Inter Partes Review of patents.

In SAS, Inc., v. Iancu, the Supreme Court held 5-4 (Ginsberg, Breyer, Sotomayor and Kagan dissenting) that when the Patent Trial and Appeal Board (PTAB) institutes inter partes review it must issue a decision on all claims that have been challenged and not just those on which it had decided that there was a reasonable likelihood of being unpatentable in its pre-institution review. The decision was based on the language of 35 USC 318(a) which reads:

• “If an inter partes review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added under section 316(d).”

A claim for Chevron deference to the United States Patent and Trademark Office (USPTO) rules was rejected on the grounds that even if the Chevron deference doctrine survived (a question to be decided “on another day”), this only applied if traditional rules of statutory interpretation left the law unclear. This was not the present situation.

The dissent pointed out that the reference to “challenged claims” in 35 USC 318 did not specifically state that the claims referred to were those set out in the petition. Reading the statute as a whole, in light of its intent, it was more rational to view it as applicable only to claims where review had been instituted and not require the PTAB and parties to waste time addressing issues where it had already decided that there was no reasonable likelihood of success. Note: the majority opinion is in line with Judge Newman’s concerns that unless there is a final decision on all challenged claims, it is unclear how to apply the estoppel provisions of 35 USC 315(e), but from a quick read, it does not seem that the Supreme Court addressed this issue.

Director Iancu has already said that he wishes to have the PTAB rules revised (it seems that the revision may need to be more than he contemplated).

In Oil States Energy v. Greene’s Energy, the Supreme Court held 7-2 (Roberts CJ and Gorsuch J dissenting) that inter partes review proceedings were not unconstitutional.

Inter partes review is “simply a reconsideration of [the] grant [of a patent] and Congress has permissibly reserved the PTO’s authority to conduct that reconsideration.” The Court has previously recognized that “franchises” can be qualified by making them subject to the authority of an executive agency. The same reasoning applies here. The fact that for some purposes patent are recognized as private property does not change this. The argument that only the courts should have the power to revoke patents based on English practice at the time of independence also fails because the Privy Council (an arm of the executive) had the power to revoke patents as well as the courts at that time and the Privy Council’s acting in this way was analogous to the role of the PTAB in inter partes review proceedings.

The Court did, however emphasize:

• That the holding was narrow and does “not address whether other patent matters, such as infringement actions can be based on a non-Article III forum” and that the decision addresses “ only the precise constitutional challenges that Oil States raised”, noting that no challenge had been made to the retroactive application of inter partes review proceedings, or to whether due process requirements had been met. Finally, the Court noted that nothing in the decision should be misconstrued as suggesting that patents are not property for the purposes of the Due Process Clause or the Takings Clause of the Constitution.

The dissent, after referring to the Declaration of Independence’s complaints about colonial judges and the need for an independent judiciary, noted that the last time the Privy Council had revoked a patent was thirty years before the Declaration of Independence, although conceding that there were later attempts to use this route. It was important that the people’s historic rights to have independent judges decide their disputes with the government. Inter partes review by the government eroded that right.