The Supreme Court Goes Greene by Upholding the Inter Partes Review

Last week, the United States Supreme Court delivered a victory for patent holders of all sizes. The Supreme Court’s decision in the Oil States Energy Services v. Greene’s Energy Group case found the U.S. Patent and Trademark Office’s (PTO’s) inter partes review (IPR) process to be an appropriate legal avenue to assess a product’s patentability after it receives its initial grant. This case is extremely important for the patent system because IPR provides a cost-efficient process for app developers and other intellectual property holders to maintain the integrity of their patent rights and protect against dubious infringement cases from patent holders that may have obtained a patent grant from the PTO that was either overbroad or ran afoul in its entirety to either sections 102 or 103 of the Patent Act.

This case explored whether a patent right is considered a public or private right after a licensor receives a patent grant from the PTO. This is an important distinction because it ultimately decides the venues where challenges of patentability post grant can be heard. In this case, the Court held that a patent right is a public right at every stage. In our amicus curiae brief submitted to the Supreme Court, ACT | The App Association considered the very questions raised in this case and the impact they have on small app developers, and we are glad the Supreme Court ruled in our favor.

In their ruling, the Supreme Court confirmed the constitutionality of the PTO’s inter partes review—a process that analyzes the validity of existing patents—under the public rights doctrine. The public rights doctrine says that the Constitution permits administrative agencies, in this case, the PTO, to resolve matters involving public rights. However, if the Court ruled that a patent right was a private right, it would have been more difficult to ascertain whether the Constitution allows the PTO to adjudicate this matter because issues involving private rights are usually reserved for and resolved by courts of law. By confirming that patents are public rights, the Supreme Court enabled Congress to delegate the IPR process to the PTO. This decision secures an affordable and accessible venue for all patent holders, particularly small businesses, to challenge “bad” or overbroad patents in the market, and it allows the PTO to correct its initial decision to grant “bad” patents.

As a little background on IPRs, it is helpful to note that following the passage of the America Invents Act (AIA) in 2011, Congress saw the need to create a more efficient and simplified alternative to the resource-draining patent litigation process. Shortly thereafter, the IPR was born. The PTO’s Patent Trial and Appeal Board (PTAB) uses the IPR process to analyze the patentability of existing patents to challenge and/or nullify patents that should not have been awarded, and this process has proven valuable to many small businesses.

The App Association’s membership is largely comprised of small businesses that own patents or use patented technologies within their products and innovations. In a recent survey of our members, we found that 60 percent of respondents owned a patent, and one third licensed their patents to others. In some instances, our members licensed patent rights from other patent holders. Intellectual property rights remain the lifeblood for most technological innovations and a key driver of revenues. It’s no surprise that the American Intellectual Property Law Association (AIPLA) found that law firms managing a portfolio with more than 75 percent of cases dedicated to intellectual property rights billed a median of $3.5 billion[1] per year. Many businesses have the means to spend an astounding amount of money to defend the intellectual property rights upon which so many app developers and small businesses depend.  But when facing a patent violation, a bogus intellectual property claim, or an aggressive patent troll, years of unbearably expensive patent litigation should not be the only solution.

Thankfully, the PTO and its IPR process established a more cost-effective alternative. In fact, economists estimate that in the PTAB’s short existence, it has saved companies more than $2 billion in legal fees which we view as a tremendous economic success.[2] Of the 7,429 petitions filed under the AIA, 92 percent were settled through the IPR process.[3] The IPR process allows small businesses to effectively defend themselves and protect their patent rights without incurring the exorbitant attorney and court fees that often come with patent infringement cases. What’s more, patent litigation can be burdensome and time-consuming, considering the average time-to-trial has reached two and a half years.[4] When put into perspective, that’s at least two and a half years of paying attorney fees that run upwards of $375/hour.[5] While many corporations hold permanent attorneys and maintain necessary resources to handle these legal battles, the average small business does not. Without a reasonable, cost-sensitive alternative like the IPR process, many small businesses are left to hire expensive attorneys, face long legal battles, perform economic downsizing to pay fees, or worse, go out of business.

The benefits of the IPR process to small businesses cannot be overstated. Nimble, innovative small businesses need an accessible platform to hear and challenge patent infringement cases – one that does not require the time, money, and resource drain of patent litigation. The Supreme Court’s decision in the Oil States vs. Greene Energy Group case serves as a huge victory for the app economy and the entities that own or depend on patents more generally. With this ruling, the PTO has the full force of the law to evaluate prior patent grants that were unintendedly overbroad or not patentable. This decision further strengthens the integrity of the U.S. patent system, and we applaud the justices for making the right call.

 

[1] Report of the Economic Survey, AIPLA (2017)

[2] https://www.patentprogress.org/2017/09/14/inter-partes-review-saves-over-2-billion/

[3] https://www.uspto.gov/sites/default/files/documents/AIA%20Statistics_March2017.pdf

[4] https://www.pwc.com/us/en/forensic-services/publications/assets/2016-pwc-patent-litigation-study.pdf

[5] AIPLA (p. 69)

By |2018-09-20T16:28:16+00:00April 30th, 2018|Blog, Courts|