Supreme Court decides Oil States


The United States Supreme Court recently decided  Oil States v. Greene’s Energy, which asked whether post-grant challenges to issued patents at the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) are constitutional under Article III and the Seventh Amendment of the U.S. Constitution. In a 7-2 decision, the Court found that inter partes review (IPR) challenges are constitutional.

The Trump Administration argued that patents are a government franchise, and that is, in fact, what the Supreme Court ruled. Indeed, Justice Thomas, writing for the majority, said that all inter partes review involves is “reconsideration of the Government’s decision to grant a public franchise.” Thus, patents are not property rights despite what the statute says to the contrary, and despite the fact that the Supreme Court themselves have ruled to the contrary previously.

While the Supreme Court attempted to leave open the faint possibility that they were not foreclosing the possibility that patents are no longer property rights, the truth of the matter is the Supreme Court’s decision in Oil States effectively ends the discussion. It is difficult to conceive how patents could be merely a government franchise for purpose of Article III and the Seventh Amendment, and property for purposes of the Fifth Amendment, but the Supreme Court seemed to hold out that possibility by acknowledging that they were not ruling on any Fifth Amendment issue or overruling previous FirFh Amendment cases.

In his dissent, Justice Gorsuch explained that innovators with something new can spend up to $30,000 and two years to obtain a patent. His recognition of the time and investment is honorable, but his estimates are off by orders of magnitude. For some simple inventions $20,000 to $30,000 may suffice, but even for simple inventions, two years is rather quick. For anything of substance, and certainly, anything that qualifies as a breakthrough, or disruptive, or paradigm-shifting it will take closer to a decade, usually longer to obtain patent protection. Given that patents are no longer property, it is hard to believe innovators will spend many tens of thousands, and frequently hundreds of thousands of dollars, and up to a decade fighting the Patent Office to obtain a government franchise that can be stripped at will.

While there has been much optimism due to the arrival of USPTO Director Andrei Iancu and his recent speeches signaling he understands the U.S. patent system must move along a different path, it is difficult to think that one man will be able to correct the collective mistakes and missteps of America’s patent system. And now his job just became much more difficult, and all the more important.

Thankfully for innovators, China and Europe seem ready, willing and able to pick up the slack.

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