SCOTUS takes IPR constitutionality challenge in Oil States

To the surprise of many, the United States Supreme Court has granted certiorari in Oil States vs. Greene’s Energy Group, et al. From a substantive standpoint, this dispute is between the parties to an inter partes review (IPR) proceeding conducted by the Patent Trial and Appeal Board (PTAB). By taking this case, the Supreme Court will address the constitutionality of having an Article I tribunal extinguish patent rights under the post grant proceedings created by the America Invents Act (AIA).

The Supreme Court granted certiorari only on the first question presented: “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.”

The grant of certiorari in this case is particularly noteworthy given that the United States was asked by the Supreme Court for its views and opined in its brief that the petition should be denied.

The argument that inter partes review is unconstitutional can be traced back all the way to 1898 when the Supreme Court issued its decision in McCormick Harvesting Mach. Co. v. Aultman & Co., 169 U.S. 606 (1898). In that case, the Supreme Court held that once a patent is granted, it “is not subject to be revoked or canceled by the president, or any other officer of the Government” because “[i]t has become the property of the patentee, and as such is entitled to the same legal protection as other property.”

The phrasing of the question taken by the Supreme Court could be quite telling. Over the last several years, 8 of the 9 Supreme Court Justices have signed on to an opinion that has recognized that a patent confers either an exclusive or valuable property right. Thus, it would hardly seem a stretch to suggest that the Court, or at least the required four Justices necessary to take a case, have some reason to suspect that the extinguishing of a exclusive, valuable property through a non-Article III forum without a jury violates the Constitution.

While many will undoubtedly have varied opinions as to the importance of this decision by the Court to take this case, the truth is that any decision by the Supreme Court in Oil States simply cannot make things any worse for patent owners. The PTO already considers patents to be a public right, and post grant challenges, particularly inter partes review and covered business method review, are killing patent claims at exceptionally high rates.

This case will be argued during the October 2017 term, with a decision by the end of June 2018. In the coming months there will be much more analysis as the party briefs and amici are filed. Stay tuned.

For instant industry reaction please see: Industry Reaction to SCOTUS Granting Cert. in Oil States.

Supreme Court reverses 25 years of Federal Circuit patent venue law

On May 22, 2017, the United States Supreme Court issued its much-anticipated decision in TC Heartland LLC v. Kraft Food Group Brands LLC. In a unanimous decision of the Court delivered by Justice Thomas (minus Justice Gorsuch who did not participate in consideration of the case), the Supreme Court reversed the Federal Circuit and ruled that 28 U.S.C. 1400(b) is the only applicable venue statute in patent infringement cases, and that 28 U.S.C. 1391(c) did not modify or amend 1400(b) or the Court’s 1957 ruling in Fourco Glass Co. v. Transmirra Products Corp.

Pursuant to § 1400(b), a “patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” Under § 1391(c), a corporation is deemed to be a resident of “any judicial district in which such defendant is subject to the court’s personal jurisdiction….”

In Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), the Supreme Court held that § 1400(b) is not to be supplemented by § 1391(c) and that “§ 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions….” While that might seem to have ended the inquiry on its face, the Federal Circuit in 1990 decided VE Holding Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (1990), which announced its view that the Judicial Improvements and Access to Justice Act of 1988 made 1391(c) applicable to patent infringement actions.

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Will the Supreme Court ruling on venue really matter?

Almost two months ago, the United States Supreme Court heard oral arguments in TC Heartland LLC v. Kraft Food Group Brands LLC. In deciding to hear this patent venue case, the Supreme Court agreed to decide whether 28 U.S.C. § 1400(b) is the sole and exclusive provision governing venue in patent infringement actions. Pursuant to § 1400(b), a “patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”

This specific, if not somewhat archaic, issue has tremendous ramifications for the future of how patent litigation will be handled in America. Or so the conventional thinking goes. It is also believed that the Supreme Court resolution of the issue has great significance for patent reform. But Senator Orrin Hatch (R-UT) has also said that, regardless of what the Supreme Court does, Congress will take up the issue of venue reform. What that reform will look like will depend greatly on how the Supreme Court resolves the venue question surrounding § 1400(b).

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Laches no defense to patent infringement during statute of limitations

The United States Supreme Court recently issued its decision in SCA Hygiene Products Aktiebolag et al. v. First Quality Baby Products, LLC, et al. The issue before the Supreme Court was whether the defense of laches remained a viable defense to patent infringement actions brought during the exceptionally long six-year statute of limitations. The Supreme Court ruled that the defense of laches is inappropriate for claims brought within the statute of limitations, hardly a shocking ruling given that the Court reached the same ruling only several years ago with respect to laches as a defense in copyright infringement claims. See Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. ___ (2014).

Unlike most patent decisions, the decision in SCA Hygiene Products was not unanimous. The majority opinion was delivered by Justice Alito, who was joined by the Chief Justice, as well as Justices Kennedy, Thomas, Ginsburg, Sotomayor, and Kagan. A dissent was filed by Justice Breyer, who would have affirmed the Federal Circuit ruling finding that 35 U.S.C. 282 codified a laches defense without using the term “laches.” It was Justice Breyer’s belief that the codified defense of unenforceability allowed for a laches defense to patent infringement actions, explaining that in very old cases interpreting the common law, laches was at times equated to unenforceability.

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SCOTUS asks Director Lee to respond to SCOTUS cert petition

At the end of February, the United States Supreme Court requested a response from Michelle K. Lee, Director of the United States Patent and Trademark Office (USPTO), related to the petition for writ of certiorari filed by Oil States Energy Services, LLC, Petitioner, against Greene’s Energy Group, LLC, et. al. The dispute is between the parties to an inter partes review (IPR) proceeding conducted by the Patent Trial and Appeal Board (PTAB).

There are three questions presented by Oil States in the petition for writ of certiorari:

  1. 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.
  2. Whether the amendment process implemented by the PTO in inter partes review conflicts with the Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S.Ct. 2131 (2016), and congressional direction.
  3. Whether the “broadest reasonable interpretation” of patent claims – upheld in Cuozzo for use in inter partes review – requires the application of traditional claim construction principles, including disclaimer by disparagement of prior art and reading claims in light of the patent’s specification.

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