Inter Partes Review Proceedings on Fracking Procedures

By Babak Monajemi

Oil States Energy Services v. Greene’s Energy Group (hereinafter, Oil States) involves United States Patent No. 6,179,053, (the ’053 Patent) directed to using a mechanical lockdown mechanism in hydraulic fracturing (known as “fracking”) procedures. In 2012, the Plaintiff filed a patent infringement suit against the Defendant (Greene’s Energy Group).  Almost one year into the litigation, the Defendant petitioned the USPTO for inter partes review of the ‘053 claims. The Patent Trial and Appeal Board (PTAB or the Board) reviewed the claims of the ‘053 patent under the broadest reasonable interpretation standard and found the claims to have been anticipated by Canadian Patent Application No. 2,195,118 (the ’118 Application).  The Plaintiff moved to amend the ‘053 Patent claims according to the Inter Partes review procedures.  The Board denied Plaintiff’s proposed amendments to the claims on the ground that the proposed amendments lack support in the original specification. The Plaintiff appealed the Board’s decision to the Federal Circuit and as part of the appeal, moved to argue that inter partes review violates Article III and the Seventh Amendment to the United States Constitution.  A panel of the Federal Circuit moved to affirm, without a written opinion, the Board’s decision and denied panel rehearing and rehearing en banc. The Plaintiff filed a petition with the United States Supreme Court for a writ of certiorari and presented the following three questions for Court’s review:

1. Whether inter partes review violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury?

2. Whether the amendment process implemented by the PTO in inter partes review conflicts with Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S.Ct. 2131 (2016), and congressional direction.

3. Whether the “broadest reasonable interpretation” of patent claims – upheld in Cuozzo for use in inter partes review – requires the application of traditional claim construction principles, including disclaimer by disparagement of prior art and reading claims in light of the patent’s specification.

Upon consideration of briefs filed by the Petitioner (Oil States Energy Services), the Respondent (Greene’s Energy Group) and the Solicitor General, on June 12, 2017, the Supreme Court granted the Petitioner’s petition with respect to question 1.  The following arguments were provided by all parties for and against the granting of the writ of certiorari, with reference to question 1.

In its petition for a writ of certiorari, the Petitioner argued that because patents are a property right complete with the most important characteristic of private ownership (the right of exclusion), the Board’s inter partes review proceedings provides no jury or Article III forum guaranteed by the Constitution. The Petitioner also argued that contrary to centuries old U.S. and English common law precedent, inter partes review takes a patent infringement claim out of the jury’s hands and entrusts it to government agencies. 

In response to the Petitioner’s brief, the Respondent argued, by relying on the Federal Circuit’s decision in MCM Portfolio LLC v. Hewlett-Packard Co., that inter partes review do not violate Article III or the Seventh Amendment of the United States Constitution.  The Respondent asserts that the Federal Circuit’s decision in MCM Portfolio does not conflict with any decision of the Supreme Court or other court of appeals and should be upheld.  The Respondent also argues that the Petitioner’s argument is backward because the Petitioner argues violation of the Seventh Amendment before reaching the Article III issue, while settled law states that if an administrative adjudicative scheme comports with Article III, the Seventh Amendment poses no independent bar.  In other words, the Respondent argues that the right to a jury trial is guaranteed by the seventh amendment only where Article III compels congress to assign adjudication of particular claims to federal courts or where Congress chooses to do so. Moreover, the Respondent argues that because patents are a quintessential public right and that the congress has the power to designate “public rights” for adjudication in non-Article II tribunals, inter partes review does not violate Article III of the Constitution.

In its reply brief, the Petitioner asserts the following.  The constitutionality of inter partes review turns on whether a suit seeking to invalidate a patent involves “matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty” or merely involves “public rights.”  The petitioner asserts that because the importance of this issue is uncontested and that the present case involves issues of enormous significance to the national economy, wrongfully depriving patent owners of property worth billions of dollars, the question of constitutionality of inter partes review warrants certiorari. 

In a brief filed by the Department of Justice, the government argued that a writ of certiorari should be denied for the following reasons. First, the Supreme Court has previously denied three similar petitions pressing comparable claims (MCM Portfolio v. Hewlett-Packard, Cooper v. Lee and Cooper v. Square).  Second, the government argues that because Congress is authorized to designate public rights for adjudication in non-Article III tribunals, the petition for a writ of certiorari on question 1 should be denied. The government argues that what makes a right public rather than private is that the right is integrally related to particular Federal Government action.  Furthermore, the government argues that a dispute between private parties may implicate public rights if the claim at issue derives from a federal regulatory scheme or if resolution of the claim by an expert Government agency is deemed essential to a limited regulatory objective within the agency’s authority. 

Having reviewed all the filed briefs, on June 12, 2017, the Supreme Court granted the Petitioner’s petition for a writ of certiorari limited to question 1 presented above.

In subsequent articles, we will examine the possibility of the Court siding with the Petitioner in holding that inter partes review violates Article III and the Seventh Amendment to the United States Constitution.  We will further examine the ramifications of such decision by the Court and what it means for future of post grant reviews at the USPTO.