Two days before World IP Day, on April 24, the Supreme Court of the United States relinquished significant judicial authority for patents to the executive branch in Oil States Energy v. Greene’s Energy.
This decision upheld the constitutionality of the Patent Trial and Review Board. The Wall Street Journal stated in a thoughtful and uncharacteristically nuanced commentary, “This process [the inter partes review] was intended to discourage frivolous patent litigation, but is susceptible to political bias.”
Oil States overturns 200 years of judicial precedent and allows the federal government to revoke patents. Dissenting were Justice Gorsuch, President Trump’s appointee, and Chief Justice John Roberts.
” …the purpose of patents, which is to encourage innovation and reward investment, will be undermined if they can be nullified without due process and hearing before an Article III judge,” the WSJ concluded.
The WSJ’s editorial page got it right, even if SCOTUS did not.
Sin of Omission
James Carmichael and Brad Close writing in IP Watchdog, “Despite Oil States, IPRs May Still be Unconstitutional,” reminds patent holders that the Court, by its own admission (or should that be “omission”?), ruled on a very narrow area of law and may have left the door open to further decisions that will strengthen patents.
“What was unfortunately never addressed in Oil States, and which the court specifically left the door open for, was that patents rights are still property rights for the purpose of Due Process–the inference being that IPRs may fail under the Due Process or Takings Clause. Indeed the court seemed to lament that Oil States did not challenge the retroactive application of IPRs and their constitutional sufficiency on a broader basis.”
Carmichael and Close cite the justices tone in their written decision:
We emphasize the narrowness of our holding. We address the constitutionality of inter partes review only… our decision should not be misconstrued as suggesting that patents are not property for the purpose of the Due Process Clause or the Takings Clause.
Justice Gorsuch wrote that until recently, most everyone considered an issued patent a personal right—no less than a home or farm—that the federal government could revoke only with the concurrence of independent judges.
Oil States did not go well for patent holders, but that was no surprise. What was somewhat unexpected was a strong stance from the US’ leading business periodical, the Wall Street Journal, about the shortsightedness of the Court’s decision, and that the Chief Justice and another member of SCOTUS also were not in favor of constitutionality for PTAB reviews.
Further judicial review of patents and patentability, if not the PTAB and IPRs, is order. If nothing else, Oil States puts a greater burden on USPTO Director Iancu to step-up and de-politicize PTAB administrative procedures and judges.
Despite the obvious loss, Oil States may prove to be the best reason for patent holders to dig in.
Image source: yahoo.com; law.com
I think it’s Fifth Amendment due process in the context of the government’s right to extinguish patent “franchise” rights in exchange for just compensation.
eBay brought us compulsory licensing – Oil States gives us IP eminent domain.