Supreme Court Turns Guns on Patent Office's Post-Grant Proceedings

The U.S. Supreme Court is putting inter partes review on trial.

The high court agreed to decide Monday whether post-grant proceedings at the Patent Trial and Appeal Board are unconstitutional. The proceedings were established in 2012 by the America Invents Act and have proved to be a hugely popular, relatively inexpensive avenue to cancel weak patent claims. It's become known by some as “a death squad” for patent rights.

But a small, vocal group of academics and practitioners have complained that once the Patent and Trademark Office issues a valid patent, it becomes a private property right that only Article III courts may take away.

The PTAB's supporters, on the other hand, have argued that patents are public rights, and that the courts have repeatedly blessed previous versions of re-examination proceedings. 

Morgan, Lewis & Bockius partner Allyson Ho is counsel of record for Oil States Energy Services, the petitioner who won the cert grant Monday. The company lost in an inter partes review for its patent on an improved tool for hydraulic fracking. “Inter partes review violates the Constitution,” Ho wrote in her cert petition. “Suits to invalidate patents must be tried before a jury in an Article III forum, not in an agency proceeding.”

The case is likely to be argued next fall. The court also recently took up a case that proposes to overhaul the PTO's approach to the handling of intellectual property rights and other post-grant trials.

“It’s certainly gratifying to see the Supreme Court take up review of the broken AIA system,” said Flachsbart & Greenspoon partner Robert Greenspoon, who’s raised two similar constitutional challenges. “The ramifications could spread far beyond the insular patent world, since the principles in play may apply equally to faulty SEC tribunals and overreaching military tribunals.”

Greenspoon had asked for immediate en banc review at the Federal Circuit earlier this year in Cascades Projection v. Epson America. The Federal Circuit refused, but two judges issued separate dissents. “The Supreme Court has warned that allowing Congress to confer judicial authority outside Article III 'compromise[s] the integrity of the system of separated powers and the role of the judiciary in that system,'” Judge Kathleen O'Malley wrote, citing a 2011 case. “Because these issues are complex and could have far reaching consequences, they deserve the attention of the full court.”

Oblon partner Scott McKeown made the case last month that constitutional challenges to the PTAB are “a dead end.” The Supreme Court just two years ago declared trademark registrations a “quasi-public right,” McKeown noted, and the justices stated “no one disputes that the [Trademark Trial and Appeal Board] may constitutionally adjudicate a registration claim.”

“To the extent the Supreme Court or [Federal Circuit] ever take up this debate again,” McKeown wrote at the time, “it will be to clarify this principle, not to unravel a half century or more of Article I adjudication practices.” 

Jonathan Stroud, chief patent counsel at Unified Patents, echoed that sentiment in an emailed statement. "Given the immense practical value of the USPTO’s procedures to America’s business community," he wrote, "we trust the Supreme Court will end up on the right side of this issue."

Scott Graham writes about intellectual property and the U.S. Court of Appeals for the Federal Circuit. Contact him at sgraham@alm.com. On Twitter: @scottkgraham.

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Contributing Author

Scott Graham

Scott Graham is a journalist who writes for The Recorder and The National Law Journal.

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