Oil States Oral Argument: Justices Grapple with Constitutionality of IPR
The Supreme Court held oral argument Monday, November 27, in the case of Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al. to address the question of whether inter partes review (IPR) proceedings before the Patent Trial and Appeal Board (PTAB) violate the Constitution. Justice Ginsburg lead the discussion by observing “there must be some means by which the Patent Office can correct the errors that it’s made, like missing prior art that would be preclusive.” In response, counsel for Petitioner pointed to ex parte reexamination as “fundamentally examinational and not adjudicational in nature” and “perfectly consistent with Article III.” Subsequent questions from Chief Justice Roberts and Justices Kagan and Sotomayor sought clarity as to what particular aspects of IPR proceedings were sufficient to make IPRs so adjudicatory as to run afoul of the Constitution, as Petitioner contended. Petitioner replied that “hearing and deciding a cause between two private parties that results…in a final binding judgment” was the fundamental difference between IPR and reexamination.
Counsel for the Respondent was questioned as to whether patent owners held a vested interest as a result of investment and reliance on a validly issued patent, and the due process concerns associated with a subsequent determination of invalidity by the PTAB. Throughout oral argument, several of the justices appeared to imply that the real determinative question before the Court was whether patents are private property rights. However, Justice Ginsburg observed that Petitioner had conceded certain proceedings like ex parte reexamination were constitutional, and “the problem here is [inter partes review] looks too much like a court proceeding.” The Respondent replied that Petitioner ultimately took issue with the process, since Petitioner conceded the executive branch had a valid power to revoke issued patents through reexamination.
There was no clear consensus from the Court as to whether IPR proceedings were constitutional, but several themes emerged from the bench. Whether patents are defined as a private property right, the availability of judicial review for IPR decisions, and the similarities and differences between IPR and traditional Article III adjudications between private parties will all likely play a role in the Supreme Court’s analysis.