U.S. Supreme Court hears key patent case

By Thomas Franz
BridgeTower Media Newswires
DETROIT — A case that has made its way to the U.S. Supreme Court could have far-reaching implications on a patent review process that was introduced in 2011.

The case, Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, involves a pair of Texas oil companies, and the court will decide whether the Inter Partes Review (IPR) process is constitutional.

Other questions to be answered in the case are whether patent rights are private or public, and if a patent owner has a right to a jury trial when the patent is challenged.

IPRs were introduced in 2011 as part of the America Invents Act, but an unintended consequence has resulted from them.

“When this was enacted, they were thought to be merely just another procedure for the patent office to address patents that were thought to have problems,” said Jim Cleland, an IP attorney for Brinks Gilson & Lione in Ann Arbor. “What they turned into the next five to seven years was something I don’t think anyone imagined. It turned the PTAP (Patent Trial and Appeal Board) into the busiest patent court in the entire country.”

Oral arguments on the case occurred in late November, and a ruling isn’t expected until spring.

The premise of IPRs is that anyone can challenge an issued patent and claim it’s invalid. The PTAP listens to evidence and experts from both sides before giving a ­decision following a hearing. That decision is appealable to the federal circuit and ultimately to the Supreme Court, Cleland said.

A trend emerged from those hearings, however, as the patent board has canceled all or part of a patent significantly more often than not.

“A lot of the people challenging patents were being successful. Their petitions to challenge the patent were being accepted at least at a 50-percent rate, if not more, and when these petitions were accepted, the rate at which the PTAP was invalidating patents was way north of there,” Cleland said. “When you contrast that with district court litigation, where the numbers are much lower for invalidation, this was an attractive venue for people who were sued.”

Cleland said the rise of patent trolls also contributed to a spike in lawsuits when the IPRs were created.

One ramification of IPRs being ruled unconstitutional, Cleland said, would be that those same patent trolls would be emboldened to continue to file more lawsuits.

“These IPRs have become such a fundamental fixture in the IP landscape for tech, large manufacturing companies and other patent defendants, that they are their greatest weapon and ally when they get sued. If these IPRs are ruled unconstitutional, I think you’re probably going to see a rise in district court filings,” Cleland said.

In Michigan, this decision will affect automotive companies and their suppliers, who have been liberal users of the IPR process.

“They have been targets of these trolls in Texas and Delaware, away from home, and they have turned to these IPR proceedings to take these patents out before they get into very extensive protracted, costly, more expensive litigation,” Cleland said.

Cleland added that larger companies have been claiming that patent rights are public rights that can be taken away.

“On one side, you have patent owners saying my patent rights are a private right and the government can’t take these rights away from me without a district court adjudication and a trial by jury,” Cleland said. “You also have these large manufacturing and tech companies all saying yes we can take those rights away, patents are public rights created by the government, we granted these rights and we can take them away when we make a mistake.”

Cleland said that the prevailing thought among practitioners was that the Supreme Court would not overrule and find the IPR process unconstitutional. As time has passed, that thought has wavered.

“You’re seeing more conservative justices who tend to be more fundamentalists saying this looks like a private right, and liberal justices saying the government granted this right, why can’t it correct it and take it away,” Cleland said. “As the Supreme Court accepted cert and oral arguments occurred, there are a lot more people who think it could legitimately go either way.”