Oil States Versus The Administrative State

The Supreme Court has now heard from the petitioner in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC. At issue is not only the fate of inter partes review of patents by the Patent Trial and Appeal Board, but possibly the ability of administrative agencies to review and retract their own erroneous decisions.

The question presented to the Supreme Court is: Whether inter partes review—an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

Oil States frames the issue as one of overreaching by the PTO into the proper province of the federal courts. It is not, they argue, that the PTO cannot invalidate patents it has issued; it just can’t do so through a trial–like procedure between a challenger of the patent and the patent–owner. That argument runs into several potential problems, both from a legal and from a policy perspective, some of which include: First, the Federal Circuit has held that a patent grant is a public right, not a private right. Second, the other reexamination procedure, ex parte reexamination, does not allow a challenger to participate after initially filing the petition. That means that, just as in patent prosecution, the only parties to the reexamination are the patent–owner and the patent examiner. This kind of proceeding can tend to lead to patentee–friendly results. Third, a ruling in favor of Oil States could have broader implications for federal administrative agencies by foreclosing an agency’s ability to review and correct its own mistakes when those are pointed out to them. A legal regime in which expensive federal court litigation is the only path for a party to obtain relief from unlawful agency action would shut down legitimate challenges to agency action before they could even be articulated.

Suffice it to say, this case bears watching.

[H/T to PatentlyO for posting a copy of the brief, which has a link to the brief here and a discussion of it here.]