Supreme Court decisions in two cases pave way for IPR reforms

At the end of April, the Supreme Court decided two cases concerning the inter partes review (IPR) proceedings enacted as part of the 2011 America Invents Act (AIA). While distinct cases, together they have implications for the future of the IPR process.

In Oil States Energy Services v. Greene Energy Group, the Supreme Court addressed whether the U.S. Patent and Trademark Office (USPTO), rather than a federal court, could review existing patents. The Court upheld the role of the USPTO, but only on the narrow constitutional grounds raised in the case. Specifically, the Court ruled IPR does not violate 1) the constitutional provisions on the role of the courts (Article III) or 2) the constitutional guarantee of a jury trial in certain civil proceedings (the Seventh Amendment). This decision confirmed Congress may give the Patent Trial and Appeal Board (PTAB) the task of double-checking whether patents were properly granted. 

However, Oil States was narrow and did not decide 1) whether it is unconstitutional to apply the IPR process to patents granted prior to the AIA’s enactment in 2011; 2) whether IPR as implemented could violate constitutional due process protections; or 3) whether IPR is the correct tool to adjudicate patent rights. The Court stated specifically that although it referred to patent rights as being subject to the “public rights doctrine,” the case should not be misread as meaning patent rights are not property for purposes of the due process clause or the takings clause.

In SAS Institute v. Iancu, the Court ruled that when the USPTO conducts IPR proceedings, it must do so for all of the patent claims challenged by the petitioner. Prior to this ruling, the USPTO followed regulations that allowed for review of only a subset of the petitioner’s challenges at the USPTO’s discretion. The claims section of a patent is where an applicant defines the inventions they are protecting.  It is these claims petitioners point to when challenging a patent.

This decision means the USPTO will likely end up reviewing more claims, increasing the burden of IPR proceedings. However, SAS Institute’s all-or-nothing rule also means that institution of IPR proceedings could be denied outright more often than in the past. SAS Institute addressed only whether PTAB can institute and conduct proceedings on fewer than all of the claims challenged in the IPR petition. The Court did not decide whether there are other potential legal or constitutional issues with the proceedings.

Together, these cases mean that although Congress can constitutionally authorize the USPTO to review the validity of patents after they are issued, the USPTO needs to change the way it implements the statute that created the IPR process.

Oil States found only that IPR is constitutional, not that it is efficient or fair. SAS Institute makes clear there are problems with the IPR process that need to be addressed. Policymakers should take this opportunity to consider ways to address concerns raised by a number of stakeholders with the IPR process. Indeed, the USPTO has since issued a notice of proposed rule making to revise the claim construction standard used in IPR. PhRMA stands ready to engage with USPTO on additional reforms going forward.