US Supreme Court Approves IPRS, But Requires Decision On All Challenged Claims
On April 25, 2018, the United States Supreme Court ruled on two cases concerning inter partes review (“IPR”) proceedings: Oil States Energy Svcs. v. Green’s Energy Grp., case no. 16-712, and SAS Inst. Inc. v. Iancu, case no. 16-969. In the first case, the Court ruled that IPRs can be a Constitutionally permissible way for the Patent Office to revoke already-issued patents, and in the second case, the Court ruled that the Patent Office is required to rule on either all or none of the patent claims challenged in a request for IPR.
IPRs are a relatively new form of proceeding. They were created by the America Invents Act of 2011, and since then have become an extremely popular way to challenge patent validity. Proponents say that IPRs provide an efficient way of invalidating bad patents, while opponents consider the Patent Office’s Patent Trial and Appeal Board (“PTAB”), which conducts the IPRs, to be a kind of death panel for patent rights.
In the Oil States case, the patent owner argued that patents are property rights that, once issued, can be revoked only by an Article III court. The Court disagreed, and found patent revocation by IPR to be a Constitutional form of administrative action. Importantly, however, the majority opinion contains a number of hedges that suggest there may be future challenges to IPRs under particular circumstances, e.g., when the patent was issued before the America Invents Act (“AIA”) had become law, when IPRs did not exist.
In the SAS case, the IPR petitioner had challenged the PTAB’s decision to decide the validity of only some of the claims the petitioner had challenged. As their name suggests, inter partes review are, at least in part, quasi-judicial proceedings between a patent owner, on the one hand, and, on the other, a party advocating for a ruling that certain patent claims are unpatentable. Very often a petitioner will challenge several patent claims in one petition, and it had been the PTAB’s practice to consider each challenged claim individually when determining whether to institute an IPR. Thus, the PTAB might sometimes (as it did in the SAS case) decide to review only some of the claims challenged in the IPR petition, leaving the remaining claims untouched—neither found unpatentable and thus invalid, nor found patentable and creating an estoppel barring the petitioner (under some circumstances) from further challenges to the claims’ validity.
The Supreme Court read the AIA to require the PTAB to either institute an IPR and issue a decision on all challenged claims, or to not institute an IPR at all. This decision will change the dynamics of IPR practice at least to some degree; for example, petitioners may have to be more selective in the claims they challenge, knowing that making a weak challenge to one claim alongside a strong challenge to another may result in a patentability finding and corresponding estoppel under the new practice, when, under the old practice, the most likely result if the Board did not find the challenge to a particular patent claim convincing would have been only a refusal to institute as to that particular claim.
The PTAB has already issued a brief memorandum explaining how pending IPRs instituted on only some of the challenged claims will proceed.