Inter partes review has, in a very short time, become a core part of patent litigation practice in the United States. In many cases it has replaced district-court litigation. But IPRs may soon disappear: the Supreme Court recently heard oral arguments in the highly-publicized Oil States case, in which the petitioners argued that IPRs are unconstitutional precisely because they can and do replace district-court suits. And as unlikely as it seemed before the Court granted certiorari in Oil States, the Court may agree.

Since the founding of our republic, the right to trial before an independent judge and an impartial jury has been fundamental. According to Article III of the U.S. Constitution, judicial matters are to be heard by judges having life tenure:

The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behavior, and shall, at stated Times, receive for their Services a Compensation which shall not be diminished during their Continuance in Office.

And, according to the Seventh Amendment, common law court trials bring with them the right to a jury for fact-finding:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law.

The Founding Fathers believed it essential that the judiciary not be subordinated to the political branches of government. See, e.g., Alexander Hamilton, Federalist No. 78 ("There is no liberty if the power of judging be not separated from the legislative and executive powers."). And, more recently, the Supreme Court has observed that Article III "serves a structural purpose, barring congressional attempts to transfer jurisdiction [to non-Article III tribunals] for the purpose of emasculating constitutional courts."1

In Oil States Energy Services, LLC v. Greene's Energy Group, LLC, the Supreme Court granted certiorari to determine whether the IPR procedure established by the America Invents Act of 2011 is exactly that type of congressional attempt to transfer jurisdiction away from Article III courts. In particular, the court granted certiorari on the following question:

Whether inter partes review—an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

No one disputes that there has been a slow creep of formerly judicial power handed to the PTO by Congress with respect to already-issued patents. Since 1980, Congress has provided the PTO with the tools of ex parte reexamination (1980), inter partes reexamination (1999), and now IPRs and other AIA post-grant proceedings (2011). Each successive tool provided for ever more third-party input,2 decreasing time frames,3 and/or decreased ability of the patent owner to amend its claims.4 It is no wonder then, that the procedures have become both ever more successful at killing claims and, accordingly, ever more popular.5

In 2012, patent owner Oil States filed an infringement suit against Greene's Energy in the Eastern District of Texas. The district court, applying the principles of Phillips v. AWH Corp,6 construed the asserted claims to be distinct from one of the inventor's own prior-art published applications.7 After this ruling, the defendant filed an IPR petition arguing that the published application anticipated the asserted claims under the "broadest reasonable construction" standard applied by the PTO.8 The Patent Trial and Appeal Board granted the petition, and instituted the IPR.9The PTAB, in its final written decision, denied Oil States' motion to amend the claims and found the challenged claims unpatentable.10 Oil States appealed the PTAB's decision to the United States Court of Appeals for the Federal Circuit. The court of appeals affirmed without opinion11 and denied requests for panel rehearing and rehearing en banc. The Supreme Court granted in part Oil States' petition for a writ of certiorari on June 12, 2017, limited to the question recited above.12

Footnotes

1 Wellness Int'l Network, Ltd. v. Sharif, 135 S. Ct. 1932, 1944 (2015) (internal quotation and citation omitted).

2 Compare 35 U.S.C. § 302 et seq. (1994) (limiting third-party participation in ex parte reexamination to requesting reexamination and submitting a reply to the patent owner's response to a reexamination order) with 35 U.S.C. §§ 314(b), 315(b) (2000) (permitting requester in inter partes reexamination to submit comments on any patent owner submission, to appeal an unfavorable decision, and to participate in patent owner's appeal) and 35 U.S.C. §§ 316, 319 (2012) (permitting petitioner in inter partes review to submit written comments in addition to petition, to take discovery, and to appeal and participate in patent owner's appeal).

3 Compare 35 U.S.C. § 305 (1994) and 35 U.S.C. § 314(c) (2000) (providing that ex parte reexamination and inter partes reexamination, respectively, be conducted with "special dispatch") with 35 U.S.C. § 316(a)(11) (2012) (providing that a final determination in inter partes review should issue within 1 year after institution); see also U.S. Patent & Trademark Office, Inter Partes Reexamination Filing Data – September 30, 2017 ("IPX Data"), available at https://www.uspto.gov/sites/default/files/documents/inter_parte_historical_stats_roll_up.pdf (median pendency of 39.6 months for inter partes reexamination).

4 Compare 35 U.S.C. § 305 (1994) and 35 U.S.C. § 314(a) (2000) (permitting amendments in ex parte reexamination and inter partes reexamination, respectively) with 35 U.S.C. § 316(a)(9) (2012) (permitting patent owner to move to amend, and limiting amendments to cancellation of claims or "propos[ing] a reasonable number of substitute claims").

5 Between November 29, 1999 and September 16, 2012, a total of 1,919 requests for inter partes reexamination were filed. IPX Data, supra. In these, 1,462 reexamination certificates were issued, with 6% resulting in all claims confirmed, 34% resulting in all claims canceled or disclaimed, and 60% resulting in claim changes. By contrast, between September 16, 2012 and November 30, 2017 (less than half the time frame during which inter partes reexamination was available), a total of 7,182 IPR petitions were filed. When post-grant review and covered business method patent review are included, 65% of final decisions have resulted in all claims being held unpatentable, 16% resulted in some claims being held unpatentable, and 19% resulted in no claims being held unpatentable.

6 415 F.3d 1303 (Fed. Cir. 2005) (en banc).

7 See Oil States Energy Servs., LLC. v. Trojan Wellhead Protection, Inc., No. 6:12-cv-611, 2014 WL 12360946 (E.D. Tex. June 23, 2014).

8 Petition for Inter Partes Review Under 35 U.S.C. §§ 311–319 and 37 C.F.R. § 42.100 et seq., Case No. IPR2014-00216, Paper No. 1 (P.T.A.B. Dec. 3, 2013); see 37 C.F.R. § 42.100(b).

9 Decision – Institution of Inter Partes Review – 37 C.F.R. § 42.108, Case No. IPR2014-00216, Paper No. 12 (P.T.A.B. June 10, 2014).

10 Final Written Decision – 35 U.S.C. § 318(a) and 37 C.F.R. § 42.73, Case No. IPR2014-00216, Paper No. 53 (P.T.A.B. May 1, 2015).

11 Oil States Energy Servs., LLC v. Greene's Energy Group, LLC, 639 F. App'x 639 (Fed. Cir. 2016) (per curiam).

12 See Oil States Energy Servs., LLC v. Greene's Energy Group, LLC, 137 S. Ct. 2239 (2017).

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