On Monday, the Supreme Court heard arguments in two separate cases regarding inter partes review (IPR)—Oil States v. Greene’s Energy and SAS Institute v. Matal. In both Oil States and SAS, the Court appears to be sympathetic to the Patent Office’s arguments—and that’s good for everyone.
The Oil States case focuses on whether it’s constitutional for the Patent and Trademark Office (PTO) to review the validity of a patent after they issue it—whether the PTO can go back and double-check its own work, in other words.
Generally, the Justices (other than Justice Gorsuch, who made his position clear—but didn’t see much support for it from other Justices) seem comfortable with the PTO doing this. While a few expressed concerns about specific procedural aspects of IPR, there was little real concern about whether it was appropriate to have this kind of double-check of an agency’s own work.
Justice Gorsuch appears to feel that IPR is inappropriate, but the other Justices appear inclined to uphold it as constitutional even as they continue to signal that they want to monitor the procedure to make sure it’s being conducted fairly.
A Sovereign Immunity Sidebar
Aside from the constitutionality of IPRs, the discussion also included a topic of some interest to the ongoing debate over sovereign immunity in IPRs. As I previously noted, when the government brings action against a state or tribe, immunity does not apply. And Justice Kagan made clear that, in her eyes, the government is the actor in an IPR. As Justice Kagan states:
“[T]his is the government in a real sense. It’s the government trying to figure out whether it made a mistake by granting the patent, which the government sometimes does and knows it sometimes does, but the government wants to put in place a set of procedures that will actually increase the government’s accuracy in figuring out whether it made a mistake.”
In other words, at least based on this comment, Justice Kagan is suggesting that sovereign immunity doesn’t apply to IPRs.
In contrast to Oil States, which questioned the validity of IPR, SAS was a challenge to specific Patent Trial and Appeal Board (PTAB) procedures. In particular, the PTAB only conducts a full review (often referred to as “instituting review”) of some challenged claims, not all of them; if they don’t think there’s a reasonable likelihood that the claim is invalid, they don’t institute review on that claim. SAS objected, arguing that the PTAB should review all claims.
Justice Sotomayor noted early in the argument that SAS’s goal was to “get around” last year’s Cuozzo decision, which stated that the PTAB’s determination of whether or not to institute a review is unreviewable by courts. When your argument starts out with a Justice saying that you want to circumvent a decision they issued the previous year, you’re not in a great position.
As the SAS argument continued, the Justices clearly recognized the potential problem that ruling in favor of SAS would create. Justice Breyer even admitted that he had a hard time understanding why anyone would write a statute to operate the way SAS wants, but could easily envision a statute working the way the PTAB currently operates. SAS’s interpretation would create a system where the PTAB would give an initial ruling that the petitioner failed to show even a reasonable likelihood of invalidity of a claim—and would then be forced to conduct an IPR on that claim anyway. This doesn’t promote the kind of efficiency that IPR was intended to provide, and the Justices seemed to recognize that fact.
All in all, much like with Oil States, it seems likely that the ruling in SAS isn’t going to require the Patent Office to change much, if anything.