In late November this past year, the Supreme Court heard oral argument in Oil States Energy Services v. Greene’s Energy Group, a case whose outcome may affect both the core of the patent system and the administrative state, writ large. The Court granted certiorari to answer the following question: “May the Patent Trial and Appeal Board (the “Board”), an administrative law body, extinguish patent rights in an inter parties review proceeding, or is the patent owner entitled to a jury trial before an Article III court?” The petitioner-patent owner, Oil States, argues that the system of inter parties review by the Board violates Article III of the Constitution by vesting the authority to adjudicate claims involving private rights in a non-Article III court. On the other hand, Greene’s Energy argues that administrative scheme is perfectly constitutional, as the adjudication of patent rights in front the Board is an example of a “paradigmatic public right.”
The Justices’ questions revealed much about their positions on the issue, as well as the lens through which each views the dispute. Justice Ginsburg remarked that “there must be some means by which the Patent Office can correct the errors that it’s made,” and proceeded to press the petitioner on why adjudication in front of the Board would be unconstitutional. Justice Sotomayor’s questioning followed a similar tact, asking whether the adjudication of patent rights in front of the Board is just a “public issue that is being litigated or discussed or adjudicated.” If so, the dispute would fall within the public right exception to the requirements of Article III and the scheme could be upheld. The issue is not clear-cut, however, as the Court had repeatedly held that patent rights are, in fact, private property rights.
Justice Kennedy pointed out that patent rights are themselves a creation of Congress such that Congress may determine where disputes like the one at issue are ultimately heard. On this point, Chief Justice Roberts was particularly skeptical, saying that it evoked “the bitter and the sweet” theory that the court already overruled long before in Cleveland Board of Education v. Loudermill.
Justice Breyer mounted the strongest defense of the adjudicatory scheme, and the administrative state as a whole, saying, “I thought it’s the most common thing in the world that agencies decide all kinds of matters through adjudicatory-type procedures often involving private parties. So what’s special about this one[?]” Justice Gorsuch, on the other hand, was skeptical about the Board’s constitutional status, questioning whether the Board was a true “adjunct” of Article III courts. In this effort, Gorsuch distinguished the Board from other administrative adjudicatory regimes that the Court has previously upheld, implying that he may feel the scheme at issue to be constitutionally prohibited.
Gene Quinn, “Supreme Court to Decide if Inter Partes Review is Unconstitutional,” IPWatchdog (Jun 12, 2017), http://www.ipwatchdog.com/2017/06/12/supreme-court-inter-partes-review-unconstitutional/id=84430/
Ronald Mann, “Argument Analysis: Justices Hesitant to Invalidate Congressional S heme for Re-examination of patents by Patent and Trademark Office,” SCOTUSblog (Nov 28, 2017), http://www.scotusblog.com/2017/11/argument-analysis-justices-hesitant-invalidate-congressional-scheme-re-examination-patents-patent-trademark-office/
Simon Bord, Jonathan J. Kim, et al., “Oil States Energy Services, LLC v. Greene’s Energy Group, LLC,” LII Supreme Court Bulletin, https://www.law.cornell.edu/supct/cert/16-712