Oil States Energy Services, LLC v. Greene's Energy Group, LLC
584 U. S. ____ (2018) (2018)
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Rule of Law:
The administrative process of inter partes review, which allows the U.S. Patent and Trademark Office to reconsider and cancel an issued patent, does not violate Article III of the Constitution. The grant of a patent is a matter of public rights, and its subsequent administrative reconsideration is a permissible exercise of executive power over that public franchise.
Facts:
- Oil States Energy Services, LLC, obtained a patent for technology used to protect wellhead equipment in hydraulic fracturing.
- Oil States sued Greene’s Energy Group, LLC, for infringing this patent.
- While the infringement lawsuit was pending, Greene's Energy challenged the patent's validity in the separate forum of the U.S. Patent and Trademark Office (PTO).
- Greene’s Energy filed a petition with the PTO for inter partes review (IPR), arguing that two of the patent's claims were invalid based on prior art.
- The Patent Trial and Appeal Board (PTAB), an adjudicatory body within the PTO, instituted the IPR process.
- The PTAB concluded that Oil States' patent claims were unpatentable and should be canceled.
Procedural Posture:
- Oil States Energy Services, LLC sued Greene’s Energy Group, LLC in U.S. District Court (a trial court) for patent infringement.
- Greene’s Energy petitioned the U.S. Patent and Trademark Office's Patent Trial and Appeal Board (PTAB) to institute inter partes review.
- The PTAB issued a final written decision concluding that Oil States' patent claims were unpatentable.
- Oil States, as appellant, appealed the PTAB's decision to the U.S. Court of Appeals for the Federal Circuit (an intermediate appellate court).
- The Federal Circuit summarily affirmed the PTAB's decision.
- The U.S. Supreme Court granted certiorari to review the Federal Circuit's decision.
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Issue:
Does the inter partes review process, which authorizes the U.S. Patent and Trademark Office to reconsider and cancel a previously issued patent, violate Article III or the Seventh Amendment of the U.S. Constitution?
Opinions:
Majority - Justice Thomas
No. The inter partes review process does not violate Article III or the Seventh Amendment because it involves the reconsideration of a public right, not a private one. The decision to grant a patent is a matter involving public rights, as it is a grant of a public franchise from the government to an individual. Inter partes review is simply a 'second look' at that initial grant. Because the initial grant is a public right that can be handled by the executive branch, its reconsideration and potential cancellation can also be handled by an administrative agency without violating Article III. The Court distinguished this from private rights disputes, which must be adjudicated by Article III courts. Since the Article III challenge fails, the Seventh Amendment challenge fails as well, as there is no independent right to a jury trial for matters properly adjudicated in a non-Article III tribunal.
Concurring - Justice Breyer
No. While agreeing that inter partes review is constitutional as a matter involving public rights, this opinion clarifies that the public-private rights distinction is not absolute. The majority's opinion should not be interpreted to mean that matters involving private rights can never be adjudicated by agencies. Precedent allows for a more flexible, case-by-case analysis rather than a rigid rule.
Dissenting - Justice Gorsuch
Yes. Inter partes review violates Article III by assigning the federal judicial power to an executive agency. An issued patent is a vested private property right, equivalent to a home or a farm, not merely a public franchise. Historically, both in England at the time of the founding and for nearly 200 years in the United States, the revocation of a patent was a matter exclusively for the courts. Allowing a politically accountable executive agency to revoke a vested property right undermines the judicial independence that Article III was designed to protect and represents a retreat from this long-standing constitutional tradition.
Analysis:
This decision solidifies the constitutional foundation of the modern administrative patent system, affirming Congress's power to create non-judicial forums for resolving patent validity disputes. It clarifies that patents are public franchises subject to ongoing administrative oversight, rather than untouchable private property rights once issued. The ruling strengthens the inter partes review process as a faster, cheaper alternative to district court litigation for challenging weak patents, thereby significantly impacting patent litigation strategies and the perceived value and security of issued patents.
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