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Supreme Court Issues Dual Opinions On Inter Partes Review Proceedings

04/26/2018

The U.S. Supreme Court issued two opinions (i.e., Oil States Energy Services, LLC v. Greene’s Energy Group, LLC et al., 584 U.S. ___ (2018) and SAS Institute Inc. v. Iancu et al., 584 U.S. ___ (2018) this week relating to Inter Partes Review (“IPR”) proceedings. The IPR procedure was newly created by the America Invents Act of 2011 (“AIA”) and gave the U.S. Patent and Trademark Office’s (“PTO”) Patent Trial and Appeal Board (“PTAB”) the power to decide whether claims of U.S. patents were patentable over prior art patents and printed publications. Since the enactment of the AIA, IPRs have had a major impact on patent litigation in the U.S., resulting in many PTO rulings that U.S. patents were unpatentable. The Supreme Court’s latest decisions insure the continued viability of IPRs while precluding the PTAB’s ability to decide the patentability of less than all the claims being challenged in an IPR petition.

In Oil States v. Greene’s Energy, a 7-2 majority held that Congress had the latitude to permit adjudication of patent rights outside the courts. As a result, the Court decided that IPRs do not violate the U.S. Constitution. Thus, the PTAB has (and has had) the authority to decide the patentability of U.S. patents in IPRs, avoiding the prospect of having the outcomes of the many past IPR rulings called into question.

In reaching this decision, the Supreme Court held that an IPR was simply a reconsideration of the PTO’s original grant of patent rights that Congress had the right to reserve to the PTO. The majority emphasized the narrowness of this holding, specifically noting that this case is not addressing a number of issues, including whether other patent matters, such as infringement actions, can be heard in a non-Article III forum like the PTAB. The Oil States opinion provides those who use the U.S. patent system with the assurance or concern (as the case may be) that U.S. patents remain susceptible to being challenged in IPRs.

In SAS Institute Inc. v. Iancu, decided by a 5-4 majority, the Supreme Court held that when an IPR is instituted and not dismissed, the PTAB must address the patentability of every claim challenged in the IPR petition; the PTAB cannot select a subset of the challenged claims and only rule on the subset. The SAS Institute case arose when an IPR petition was filed challenging claims 1-16 of the subject patent. The PTAB instituted the IPR for only claims 1 and 3-10 while denying review of the rest of the claims and issuing a final decision that claims 1, 3, and 5-10 were unpatentable, upholding claim 4, and not addressing the remaining claims. Under the Supreme Court’s ruling, once the PTAB decided to institute the IPR, it should have done so with respect to all of the claims challenged in the IPR petition. Thus, the patent challenger should have received a ruling on all the claims it challenged, avoiding any need to later attack claims the PTAB did not address in its final written decision (i.e., claims 2 and 11-16).

Even if the PTAB had complied with the SAS Institute holding and reached a result that was substantively similar (i.e., claims 1, 3, and 5-10 were unpatentable and the remaining claims were patentable), that result would have had a significantly different impact, because the patent challenger would then have been estopped from subsequently challenging any of the patent claims in another forum as opposed to only those whose patentability was addressed in the final written decision. See 35 U.S.C. § 318(a). As a result, the Supreme Court’s decision will require more complete rulings on issues raised in instituted IPR proceedings and may reduce the number of challenges a party can bring against a particular patent.

Oil States v. Greene’s Energy and SAS Institute Inc. v. Iancu were two long-awaited decisions in the patent world. They will undoubtedly not be the last Supreme Court decisions relating to AIA procedures for challenging U.S. patents as these relatively new creations of Congress continue to be utilized in the PTO and their impact tested in the courts.

LeClairRyan’s Intellectual Property attorneys have experience in challenging U.S. patents with IPRs and in defending U.S. patents against such challenges. In the former, we are skilled in analyzing the advantages and disadvantages of IPRs over other procedures in the PTO and district court proceedings.

We will continue to monitor the developing precedent in this area and will advise you about any further updates.