Supreme Court considers the constitutionality of the IPR statute

PTAB + IPR

The Supreme Court today considered the constitutionality of the IPR statute in a lively hour-long oral argument before a packed courtroom.  The case, Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, asks whether the invalidation of patents in an IPR by the non-Article III judges of the Patent Trial and Appeal Board violates the separation of powers or the Seventh Amendment.  While the questioning was intense, some Justices asked only a few questions or none at all, so the outcome was difficult to predict.

Counsel for Oil States, Allyson Ho, conceded in her response to the first question that ex parte reexamination is constitutional, and that inter partes reexamination might be as well.  (Justice Ginsburg observed that petitioner’s position on that point had not been clear from the briefs.)  Counsel for the respondents tried to capitalize on that concession, arguing that the dispute concerns only what procedures can be used to cancel an issued patent, not whether it can be canceled.  But the respondents faced skeptical questioning from some Justices, including the Chief Justice and Justice Gorsuch, about whether a private property right could be taken away by an administrative agency under any circumstances.  Justice Gorsuch asked Deputy Solicitor General Malcolm Stewart, arguing for the federal government, whether the government’s theory would allow a land patent to be taken away after a family had occupied the land for four generations, and when the government lawyer would not say that such a rescission would be invalid, Justice Gorsuch responded, “Exactly.  Exactly.”  The government lawyer preferred to analogize to a different context, government employment:  while a tenure-protected government position might be property in some sense (like a patent), Executive Branch officials can fire people from such positions without violating the separation of powers, as long as the termination complies with due process.

Justice Kennedy, whose vote may be significant to the outcome, asked counsel for Oil States several questions about whether Congress could condition the issuance of a patent on the patentee’s acceptance of the PTO’s ability to review and cancel the patent.  Counsel’s answer was no, citing the unconstitutional conditions doctrine; Justice Kennedy suggested that several of the cases she cited were not quite on point.

Several Justices, including Justice Kennedy, asked about the PTAB’s occasional practice of adding judges to the three-judge panel that decides a case, and then changing the decision.  Justice Gorsuch called it “packing” and “stack[ing] the deck”; Justice Ginsburg, whose questioning was otherwise generally skeptical of Oil States’ position, asked, “Wouldn’t that be an obvious due process flaw?”  The government lawyer contended that the practice is both rare and lawful, akin to rehearing en banc in a court of appeals, any problems with that practice should be addressed in one of the (rare) cases in which it occurs.  Counsel for Oil States emphasized the point in rebuttal, saying that “Article III entitles litigants not to have to worry about precisely that sort of executive influence.”

One colloquy that drew laughter from the audience occurred after government counsel referred to the chief judge of the PTAB.  The Chief Justice asked, “You’re talking about the executive employee?” and added, “When we say ‘judge,’ we usually mean something else.”

The Supreme Court also heard oral argument in another IPR-related case today.  SAS Institute Inc. v. Matal presents the question whether the Patent Trial and Appeal Board in an inter partes review must issue a final written decision as to every claim challenged by the petitioner, or whether it may permissibly limit its final written decision to a subset of the patent claims challenged by the petitioner.

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