Earthquake Coming? Supreme Court to Weigh Constitutionality of IPRs

[We have two submissions on this potentially seismic development]

On June 12, the Supreme Court took certiorari on probably the biggest IPR case possible: a case challenging the constitutionality of IPRs on separation-of-powers and seventh amendment grounds. This comes just a few weeks after the Supreme Court took certiorari on SAS Inst. v. Lee. The patent owner in Oil States v. Lee has asked the court to consider whether it violates the separation of powers to have an administrative tribunal (the PTAB) making decisions about patent validity—an issue traditionally entrusted to the Article III courts. The patent owner also wants the Court to consider whether a patentee has a right to a jury trial when issues of validity are at stake. The Court has agreed to consider both questions.

The Court of Appeals for the Federal Circuit (CAFC) faced these same questions in MCM Portfolio v. Hewlett-Packard Co., 812 F.3d 1284 (Fed. Cir. 2015). The CAFC held that it was not problematic to have an administrative tribunal like the PTAB decide issues that are also decided by courts and juries because patents involve “public rights” created by Congress. The logic is that because Congress created patent rights in the first place, Congress can create an agency to decide validity questions. MCM sought certiorari and was denied. Similarly, the patentee in Cooper v. Square sought certiorari after the CAFC summarily dismissed an appeal without opinion. The Court denied certiorari on that case as well. Finally, Oil States Energy Services proved that the third time really is a charm by making many of the same arguments as MCM and Cooper, but this time certiorari was granted.

Suffice it to say, the outcome in this case could be huge. If the Court reverses the CAFC (and the Court usually reverses the CAFC when it takes certiorari), then the entire IPR system could be dismantled at a stroke. On the other hand, if the CAFC were reversed in this case, then SAS Inst. v. Lee would be rather pointless. If one wants to sift tea leaves, then, the fact that the Court also took certiorari in SAS Inst. might suggest that the Court does not have in mind to disassemble the IPR system totally. In any event, HDP will be following this case closely, and keeping readers of this blog up to date with subsequent developments in both cases.