On April 24, 2018, the Supreme Court announced opinions in two cases involving patent rights—Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, and SAS Institute, Inc. v. Iancu. The long-awaited Oil States opinion decided on the legality of inter partes reviews (IPRs); similarly, the SAS Institute case decided procedural limits on the Patent Trial and Appeal Board (PTAB) at the United Stated Patent and Trademark Office (USPTO).
In Oil States, the Supreme Court heard arguments about whether IPRs are constitutional. Article III of the US Constitution provides that Congress can establish judiciaries, and the Supreme Court has previously afforded Congress with leeway to establish courts to rule on public rights. Public rights, according to the Court, include matters that arise between the government and third-parties.
In Oil States, the Court categorized the grant of a patent as a “public franchise,” a government-awarded right. In other words, the government grants the patent owner with “the right to exclude others from making, using, offering for sale, or selling the [patented] invention throughout the United States.” 35 U.S.C. § 154(a)(1). Per the Court, because the patent is a public franchise, it logically follows that the government can revoke that franchise. Moreover, the Court explained that the US patent system is based on the 18th century English patent system, which included a proceeding similar to an IPR—a petition to the Privy Council for a post-grant review of a patent, which was akin to filing an IPR petition to the PTAB. Accordingly, in a 7-2 decision, the Supreme Court upheld the legality of IPRs, allowing third-parties to challenge patent validity through a USPTO proceeding.
The SAS Institute case analyzed a different IPR issue—whether the PTAB must decide the patentability of every claim in an IPR petition. In an IPR petition, a challenging party chooses which claims to be analyzed in an IPR proceeding—often, the petitioner seeks review of each claim of an issued patent. The PTAB then decides whether the IPR should be instituted, based on if there is a reasonable likelihood that at least one of the challenged claims would be invalidated.
In SAS Institute, the PTAB instituted review on only some claims challenged in an IPR petition, denying review on the rest of the claims. Ultimately, the PTAB invalidated all but one of the claims that it reviewed. SAS Institute appealed to the Federal Circuit, and next to the Supreme Court, seeking review of all of the claims mentioned in the petition. The Court, in an opinion written by Justice Gorsuch, held in a 5-4 decision that the PTAB must analyze and review each claim in an instituted IPR petition. Even though it may be more efficient to analyze only some of the claims challenged in a petition, Congress’s drafting of the statute governing IPRs dictates that the PTAB must analyze challenged claims with an all-or-none approach—partial institutions are no longer valid.
The impacts from each of these decisions will be felt across patent law. An IPR remains a valid legal proceeding to challenge patent validity based on prior art references that predate a patent’s priority date. In addition, the PTAB must now analyze and determine the validity of each claim challenged in an instituted IPR proceeding. No longer can the PTAB pick and choose claims to analyze—an IPR is either instituted, or it is not.