Oil States Q&A: While the Supreme Court Upheld IPRs Under Article III and the Seventh Amendment, Did the Court Leave Open the Possibility for Other Constitutional Challenges?

While the Supreme Court upheld IPRs under Article III and the Seventh Amendment, did the Court leave open the possibility for other constitutional challenges?

Yes, it expressly left open several future challenges. The first is the retroactive application of inter partes review proceedings to patents that came before the AIA. Some have argued that, when an inventor or others have relied on the pre-AIA patent system to invest in a technology that is later patented, the patent should not be subject to the AIA and its inter partes review process.

During oral argument, Justice Breyer voiced a related concern for patented technologies that have received significant investments in reliance on the patent. He posed the hypothetical that a “patent has been in existence without anybody reexamining it for 10 years and, moreover, the company’s invested $40 billion in developing it. And then suddenly somebody comes in and says:  Oh, oh, we – we want it reexamined, not in court but by the Patent Office. Now, that seems perhaps that it would be a problem or not?”¹  He later stated that he might leave open the constitutionality question “if there has been a huge investment.”²  We now know that he has signed on to the majority opinion in Oil States, but his sentiment may be viewed as being consistent with not applying inter partes review retroactively to patents that came before the AIA. Along these lines, the Court distinguished precedent decided under a version of the Patent Act that did not include any provision for post-grant administrative review.³

The Court also left open due process and takings challenges. Although the final opinion says little about these issues, some of the Justices expressed concerns about these issues at oral argument. Chief Justice Roberts, for example, asked whether it was wrong for the government to require a patentee to “take the bitter with the sweet,” and to require that “if you want the sweet of having a patent, you’ve got to take the bitter that the government might reevaluate it at some subsequent point.”⁴  Rhetorically, however, he then asked, “haven’t our cases rejected that proposition?  . . . We’ve said you – you cannot put someone in that position.”⁵

Justice Gorsuch made similar comments about the executive conditioning patents on not having takings rights or receiving the patent “subject to whatever conditions in terms of its withdrawal that we wish to impose.”⁶  But he went one step further, criticizing the PTAB’s limited practice of expanding its panels to overturn some of its original institution decisions. He referred to this as “the condition that we will stack the deck with judges whom we like – administrative judges we like.”⁷

Chief Justice Roberts was even more direct on this issue:

Chief Justice Roberts:  “Does it comport with due process to change the composition of the adjudicatory body halfway through the proceeding?”

Mr. Stewart:  “This has been done on three occasions. It’s been done at the institution stage.”

Chief Justice Roberts:  “So I’ll rephrase the question. Was it illegal under those three occasions?”⁸

We now know that Chief Justice Roberts and Justice Gorsuch are in the minority in Oil States, but it remains to be seen whether a different type of constitutional challenge that more directly implicates their concerns could meet with a different outcome.

^[1] Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712, Oral Hearing Tr. at 29:10-18 (Nov. 27, 2017).

^[2] Id. at 55:5-9.

^[3] Slip op. at 11.

^[4] Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712, Oral Hearing Tr. at 32:1-16 (Nov. 27, 2017).

^[5] Id.

^[6] Id. at 41:20-42:6.

^[7] Id.

^[8] Id. at 45:15-24.