Q&A WITH MICK MCCARTHY
Supreme Court weighs in: A patent is a public right
Q: Last week in Oil States v. Greene’s Energy, the Supreme Court upheld the constitutionality of inter partes review proceedings in the U.S. Patent and Trademark Office. What’s this case about?
A: Until the late 20th century, a challenge to the validity of a granted patent was decided exclusively by a federal court. Beginning in 1980, Congress began modern efforts to evolve administrative agency solutions. That trend was bolstered by the 2011 America Invents Act, which provided for inter partes reviews as a parallel track to federal courts for contesting the validity of a patent. Since inception in 2012, nearly 8,000 such petitions have been filed. Of those petitions that proceeded to final written decisions, 81 percent have found at least some patent claims invalid. In this case, Oil States Energy Services sued Greene’s Energy for infringing its patent relating to oil field technology. Greene’s Energy filed an inter partes review in the Patent and Trademark Office to invalidate the patent. The federal court interpreted the patent favorably for Oil States, but the office ruled it was invalid. Oil States appealed on grounds that Congress cannot confer the government’s judicial power to an executive agency to void a patent grant. The appeal made it to the Supreme Court, which held that inter partes reviews are constitutional.
Q: Isn’t invalidating my patent by inter partes review a taking of my private property without a jury trial?
A: No, at least for now. This ruling is narrowly tailored, it does not address the question of whether patents are private property for purposes of the Due Process Clause or the Takings Clause. For now, it means a patent is a “public right,” one that only arises by the government’s action over persons subject to its authority. Specifically, the court likened a patent grant to that of a “public franchise,” analogizing to Congress granting a franchise permitting a company to erect a toll bridge, but qualifying the grant by reserving its authority to revoke or amend the franchise.
Q: What’s the significance of this ruling?
A: It depends on who you are. To big business, this is a win because inter partes reviews offer many advantages to companies who are continually hit with patent litigation. They are quick, less expensive due to limited discovery, and the procedure gives them insight into their oppositions’ positions early on in the matter. To the patent owner, however, this sounds the death knell to any existential return to the past, in favor of a corporate takeover of the patent system. Defending the validity of their patents on two fronts is prohibitively expensive, and inter partes reviews have created additional layers of uncertainty that hinder innovation. To them this settles it, patents are just like toll bridges. If you have millions of dollars, you can have one.