Gov’t Defends Constitutionality of Patent Challenge at PTO

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By Tony Dutra

Patent rights exist only by a statutory grant, and a statute can authorize the Patent and Trademark Office to take them away as well, a government brief filed at the U.S. Supreme Court said ( Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC , U.S., No. 16-712, response in opposition 4/28/17 ).

The Department of Justice’s Office of the Solicitor General responded April 28 for the third time in a challenge to the constitutionality of proceedings enabled by the America Invents Act of 2011. Oil States Energy Services LLC lost rights in a patent on an improvement in fracking equipment in a PTO administrative proceeding known as inter partes review (IPR), where a petitioner questions the validity of a patent based on prior art materials the original examiner either didn’t consider or inadequately analyzed.

The successful patent challenger, Greene’s Energy Group LLC, had filed an earlier response, but the government initially waived its right to oppose. The solicitor general had responded to the first two petitions, and the Supreme Court denied them. However, the high court still asked the government to weigh in on Oil States’ petition as well.

New Administration Restates Opinion

Despite the change in the administration since the prior government responses, the Justice Department’s position did not change. Acting Solicitor General Jeffrey B. Wall reiterated the government’s arguments—often word-for-word—made by his predecessor, in Cooper v. Lee, No. 15-955 (2016) and MCM Portfolio LLC v. Hewlett-Packard Co., No. 15-1330 (2016).

He first addressed whether the constitution gives only Article III courts—and not administrative bodies like the PTO’s Patent Trial and Appeal Board—the right to take away a private property right. The government countered by saying that the Patent Act can only create public, not private, rights. Since patent rights are public rights then administrative bodies like the PTAB can cancel those rights, according to the brief.

Wall also addressed whether patent owners deserve a trial by jury, rather than have to face PTAB’s administrative patent judges. He contended that the Seventh Amendment question only arises after one has already determined that an Article III court should handle a dispute. Also, he said that a jury trial is available only where there is a right to monetary damages, not when the case is about canceling patent claims.

Oil States also asked the high court to review the PTAB’s strict rules that work against patent owners who submit substitute claims for ones they expect will be canceled. The government acknowledged that the U.S. Court of Appeals for the Federal Circuit is currently looking at the issue as a full court. In re Aqua Products, Inc., No. 15-1177. Wall suggested in a footnote that the Supreme Court might hold onto the petition until the appeals court makes its decision.

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

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