Supreme Court Considers Patent Rights Case With Huge Implications

Challenges on both sides in Oil States oral arguments

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November 28, 2017

The Supreme Court heard oral arguments Monday morning in a case testing the legitimacy of a federal tribunal that has invalidated more than 19,000 patents during its brief existence.

That case, Oil States v. Greene's Energy Group, concerns the constitutionality of a certain kind of review by the Patent Trial and Appeal Board (PTAB), an administrative law court established by the 2011 America Innovates Act. As the Free Beacon previously reported, the PTAB was set up to review and invalidate previously issued patents in the hopes of combatting "patent trolling."

In practice, the board's structure has led to a high rate of invalidation—between 64 and 98 percent, depending on the method of review, which over 19,000 claims invalidated, according to the Patent and Trademark Office (PTO)—which critics contend has harmed America's system of intellectual property.

On Monday, counsel faced off in front of the Supreme Court's nine justices over the underlying constitutional questions in the case: does the PTAB's extra-judicial nature violate separation of powers, and does its lack of jury for the revocation of a property right violate the Seventh Amendment?

Counsel for the petitioner, Allyson N. Ho, focused primarily on the former issue, arguing that the PTAB contravened more than 400 years of established practice that made adjudicating patent rights a judicial, rather than executive, issue. Counsel for the respondent Christopher M. Kise, who was joined on behalf of the government by Deputy Solicitor General Jonathan C. Bond, contended among other things that PTAB's final appealability to federal courts meant that the executive tribunal was in the clear.

The court itself seemed divided. The court's liberal members—Justices Ginbsurg, Breyer, Sotomayor, and Kagan—pressed on a number of issues, including whether or not PTO could have any constitutional remedy for correcting bad patents, and the similarity of the PTAB to other executive branch administrative law courts.

The right of the court, spoken for by Chief Justice Roberts and Justice Gorsuch, seemed more sympathetic to the arguments against the PTAB, with Gorsuch suggesting that some of the issues of extra-court adjudication had previously been settled, and drawing analogies to rules for land rights. Justice Thomas was characteristically silent, as was Justice Alito.

That left Justice Anthony Kennedy, often the court's swing vote, who asked several questions of both sides but did not obviously signal a commitment either way.

Brian Pandya, a partner at Wiley Rein who was present at the arguments, suggested that the outcome of the case would come down to a narrow margin one way or the other.

"The interim director of the Patent Office, Joseph Matal, predicted this summer that this was going to be a 9-0 win for the Patent Office. And I don't see that happening. I think it's going to be a 5-4, 6-3 decision, one way or the other. It's gonna be close," Pandya said.

As the legal battle raged inside, two dozen or so protesters gathered on the steps of the Supreme Court to call for the striking down of the PTAB. The assembled group was associated with US Inventor, an advocacy group whose members have burned their patents in front of the PTO to protest the PTAB.

Protesters waved signs declaring that "PTABs kill American dreams" and calling on the court to "make patents great again!" According to USI founder Paul Morinville, members had come from across the country, as far away as California, to join the protest.

"It's a third-world property right system," Morinville said of the PTAB, echoing concerns by American inventors that the ease with which patents are invalidated renders their property rights effectively moot.

Among the protesters, dressed in a suit in hopes of securing one of the few public spots to hear oral arguments, was Josh Malone. Malone is an American inventor who created the "Bunch o Balloons," a system for automatically inflating water balloons en masse. Malone, who is a signatory to an amicus curiae brief backing the objections to the PTAB, wasn't sure how to feel about the case's prospect.

"I don't know if I'm hopeful. This is do or die for inventors and for our American economy," Malone told the Free Beacon.

Pandya agreed, at least as regards how significant the case's outcome could be.

"My biggest takeaway on the argument was just how engaged the Supreme Court was on a patent issue. I've been to the court multiple times in the past when intellectual property cases have been argued, and they are very difficult cases the court takes seriously, you can get a hot bench, but I thought the level of questioning was unusual for a patent case," he said.

"I think the Justices realize that this case does have implications beyond just the patent world that go to the broader of what administrative agencies can be doing and what needs to be done in an Article III court," he said.

Published under: Supreme Court