Supreme Court Rules Inter Partes Review is Constitutional

The Supreme Court today delivered its ruling in the case of Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, holding 7-2 that inter partes review (IPR) is constitutional and does not violate Article III nor the Seventh Amendment.

(See the KEI statement on the opinion below)

Justice Thomas delivered the majority opinion, succinctly finding that the IPR “falls squarely in the public rights doctrine,” with patents as public franchises that may constitutionally be granted by executive or legislative departments without judicial determination. Because IPR “involves the same basic matter as the grant of a patent” and is “a second look at an earlier … grant,” IPR can rightly be reviewed outside of an Article III court. And following on that, the determination of the Article III issue resolved the argument regarding the Seventh Amendment right to a jury trial.

The opinion is clear in that it is to be viewed as a narrow holding, and explicitly avoids the question of whether patents are or are not property for the purposes of the Due Process Clause or the Takings Clause.

Justice Breyer, joined by Justices Ginsburg and Sotomayor, wrote a concurring opinion joining the majority in full, but adding as a point of clarification that, “the Court’s opinion should not be read to say that matters involving private rights may never be adjudicated other than by Article III courts, say, sometimes by agencies.”

Justice Gorsuch, joined by Chief Justice Roberts, wrote the lone dissent that begins with this telling paragraph:

After much hard work and no little investment you devise something you think truly novel. Then you endure the further cost and effort of applying for a patent, devoting maybe $30,000 and two years to that process alone. At the end of it all, the Patent Office agrees your invention is novel and issues a patent. The patent affords you exclusive rights to the fruits of your labor for two decades. But what happens if someone later emerges from the woodwork, arguing that it was all a mistake and your patent should be canceled? Can a political appointee and his administrative agents, instead of an independent judge, resolve the dispute? The Court says yes. Respectfully, I disagree.

Justice Gorsuch’s opinion delves into the history of courts and patents, but fails to at all consider the high rates of mistakes made by USPTO, or the burden that a finding of unconstitutionality might foist onto an already overwhelmed court system. Instead, he analogizes patents to a gift that cannot be reclaimed. (“Just because you give a gift doesn’t mean you forever enjoy the right to reclaim it.”)

The retention of the inter partes review system is a major victory for the ability to efficiently knock out bad patents without further exhausting the judiciary.

KEI had submitted an amicus brief in this case, which can be read here:

KEI’s statement on the opinion:

“It was quite important that the inter parte review (IPR) was held to be constitutional. The USPTO makes a lot of mistakes when it grants patents, and the IPR makes it cheaper and faster to eliminate the errors that encroach on the public domain. KEI’s brief in the case called attention to the many non-patent instruments that can be used to protect investments and induce innovation. The patent system can and should play an important role in promoting innovation, but it has many obvious flaws and limitations. For hundreds of years, the harm to society from overly broad patents or patents that lack an actual inventive step have been discussed, and the IPR is one mechanism that is needed to improve the patent system. Where patents are a poor mechanism to protect investments or promote innovation, policy makers have many alternatives that in the right context, will work better.”
James Love, Director, KEI