Supreme Court Grants Certiorari to Cases Challenging the Patent Trial and Appeal Board’s Power

Takeaway: The Supreme Court is questioning the power of the U.S. Patent Office to take away patent rights once granted. The court will hear one case on whether the Patent Trial and Appeal Board (PTAB) must address every issue in the final written decision and another on whether or not the PTAB’s inter parte review violates the 7th Amendment against an unlawful taking.

On May 22, the Supreme Court granted certiorari to SAS Institute Inc. v. Lee to determine whether the Patent Trial and Appeal Board (PTAB) has the right to issue a final written decision on the patentability of all patent claims challenged by the petitioner during an inter partes review or if it only has to do so in regards to some patent claims. SAS Institute is arguing that the PTAB has the responsibility to address all the claims challenged by a petitioner in an inter partes review.

The Federal Circuit in both SAS Institute and February 2016 case Synopsys, Inc. v. Mentor Graphics Corp. found that the PTAB did not have to address every claim made as long as the claim did not become a part of the trial instituted by the PTAB later on. In other words, in order for the issue to be heard, the petitioner must have a reasonable likelihood of prevailing; otherwise, the PTAB does not have to hear that particular issue. The brief filed on behalf of then USPTO Director Lee cites Synopsys as precedent and emphasizes that review of the case is unwarranted because the Federal Circuit had heard the case en banc. If the PTAB has to issue a final written decision on every issue that is brought, then every issue becomes appealable. It is predicted that the Supreme Court will favor SAS Institute, as it seems unlikely that they would have granted certiorari otherwise.

On June 12, the Supreme Court granted certiorari to Oil States v. Greene’s Energy, a case involving two oil and gas fracking companies. The U.S. Patent and Trademark Office (USPTO) used inter partes review to analyze the validity of existing patents. The challenge is brought by Oil States Energy Services, LLC on the grounds that inter partes review is unconstitutional in that it extinguishes private property rights through a non-Article III forum without a jury.

Oil States’ argument is that patents create constitutionally protected patent rights that cannot be revoked by the Government without legal process. Under the 7th Amendment, common law suits involving more than twenty dollars (i.e. patents) have a right of trial by jury. In 2011, Congress passed the America Invents Act in an attempt to fix inefficiencies in the patent system. The Act gives the USPTO’s Patent and Trial Board the ability to review and extinguish existing patent rights in its inter partes review. Typically, an alleged patent infringer asks the Board to look into an existing patent and invalidate it if it is anticipated by prior art or is considered to be obvious. If the Board can invalidate the patent based on this process, Oil States argues that the patent holder’s constitutional rights are being violated because they should have a right to trial by jury.

Both grants of certiorari come on the heels of TC Heartland LLC v. Kraft Foods Group Brands LLC, when the Court held in a unanimous decision written by Justice Thomas that 28 U.S.C. 1400(b) is the only applicable patent venue statute. This typically requires patent owners to sue patent infringers in a district court where the infringer is incorporated. It is more of note that the Supreme Court has granted certiorari to Oil States and SAS Institute, both representing additional challenges to the PTAB’s power. We will have to wait and see how the litigation proceeds.