Justices divided over challenge to patent reviews

The Supreme Court on Monday wrestled with whether Congress has the authority to shift how patent challenges are reviewed from the courts to a government board.

Oil States Energy Co., a Houston-based oilfield services company, is challenging the U.S. Patent and Trademark Office review process for patent disputes.

The process was created by Congress in the 2011 American Invents Act (AIA) and is known as an ‘inter partes review,” with the office’s Patent Trial and Appeal Board hearing any challenges to existing patents.

The case stems from a dispute Oil States had with another oilfield services company Greene’s Energy Services LLC over a patent for wellheads used in hydraulic fracturing.

Allyson Ho, who argued on behalf of Oil States Energy, said the process Congress created violates the separation of powers because the government itself — through the patent office — is acting as the adjudicator between two private parties.

But Justice Stephen Breyer said agencies decide all kinds of matters through adjudicatory-type procedures often involving private parties.

“So what’s special about this one, or do you want to say it isn’t special and all the agency proceedings are unlawful?” he asked.

Christopher Kise, who argued on behalf of the other company, Greene’s Energy Group, said adjudications are not inherently judicial and businesses that accept patents do so knowing they are subject to these reviews.

Chief Justice John Roberts, though, asked Kise if his position is simply that “you’ve got to take the bitter with the sweet” meaning “if you want the sweet of having a patent, you’ve got to take the bitter that the government might reevaluate it at some subsequent point.”

When Kise agreed, Roberts argued that the court has repeatedly rejected that idea. 

“I’m thinking of the public employment cases, the welfare benefits cases,” Roberts said. “We’ve said you cannot put someone in that position. You cannot say, if you take public employment, we can terminate you in a way that’s inconsistent with due process.”

Justice Anthony Kennedy appeared to suggest that if Congress can limit the life of a patent it can also require that reviews be done by an agency review board instead of a court.

“Doesn’t that show that the patent owner has limited expectations as to the scope and the validity of the property right that he holds?” he asked.

Congress passed the AIA to improve patent quality and limit unnecessary and counterproductive litigation costs in response to concerns that questionable patents were too easy to obtain and too difficult to challenge in court, the government argued in its briefs.

Justice Ruth Bader Ginsburg defended the patent review process created by Congress.

“There must be some means by which the patent office can correct the errors its made,” she argued.

The more liberal justices argued that decisions following an inter partes review can be appealed to a federal appeals court.

“I mean, for me, what saves this [is] even a patent invalidity finding can be appealed to a court,” Justice Sonia Sotomayor said.

Many of the justices, however, seemed to create more questions for themselves during the hour-long argument.

The court’s newest member, Justice Neil Gorsuch, appeared bothered by how far the government could go in putting conditions on patents. He asked if the government could even stack the agency review board with judges it likes.