In two decisions this month, the U.S. Supreme Court lessened the grip of patent holders slightly while also restraining the U.S. Patent and Trademark Office from proceeding too quickly.
Both cases dealt with the authority of the Patent Office, and, to some extent, the limits of administrative agency power.
Both involved the process called “interpartes review.”
Under this procedure, any individual or business can petition the Patent Office to cancel one or more claims in a patent on the grounds that the innovation was not novel, or even if novel, was an obvious development. The patent holder can then file a response. (Congress adopted interpartes review, modifying an earlier version, in 2011.)
If the Patent Office Trial and Appeal Board, after reviewing the petition and response, agrees that at least one of the challenges is likely to succeed, the Patent Office undertakes an examination of the patent’s claims, just as it did before it first approved the patent.
What this means for businesses is that Congress provided a slight less expensive way of challenging patent protection. (A patent could always be challenged in court, but the administrative proceedings are generally less formal and less costly, although, as the Supreme Court noted, interpartes review has some of the “trappings of litigation,” such as discovery, briefing, and a hearing.)
In Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, the Court affirmed the Patent Office’s authority to hear such challenges on the basis that a patent is the grant of a “public right,” not subject to the Constitutional requirement of litigating most federal actions involving personal rights in a federal court, and with respect to most claims involving property rights, before a jury. In a passionate dissent joined by Chief Justice Roberts, Justice Gorsuch characterized the interpartes review (or perhaps, by extension, administrative action generally) as a retreat from right to have disputes settled impartially. (“Can a political appointee and his administrative agents, instead of an independent judge, resolve the dispute? The Court says yes. Respectfully, I disagree.”)
On the same day that the Oil States decision was released, the Court also released its decision in SAS Institute Inc. v. Iancu, stating that, as a matter of statutory interpretation, the Patent Office had to re-evaluate all of the challenged claims in an interpartes review, not just the ones that it deemed to merit review. The decision could be significant to the extent that the Supreme Court was retreating, albeit slightly, from its long-standing Chevron doctrine of deference to administrative agency determinations. The Court held that no deference was due to an agency’s interpretation of its statutorily created powers.