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Oil States a Shaker but Not a Demolisher

It's been quite a day in patent world. It feels like we just had a 5.0 earthquake on theOil States fault, followed by an aftershock centered on nearby SASville. Not enough to do lasting damage but enough to knock some settled expectations off the shelves while people look around anxiously and say, “Is that it?”

Here's what didn't make it into my news article. First and foremost, felicitations to the PTAB judges and litigators who still have jobs and practices. Condolences to the patent owners who sincerely believe the IPR process is unfair and this was their best shot at blocking it. There are some silver linings for you, which I'll get to below.

And lots of luck to the PTAB practitioners who are midway through an IPR where the board has instituted on some but not all claims. The Supreme Court has said PTAB can't do that. “'What's going to happen to the pending cases?' is what everyone's asking,” said Knobbe Martens partner Brent Babcock.

Here's another question: Is Neil Gorsuch making a play to become the court's new Patent Justice? Gorsuch penned the dissent arguing that IPRs are not constitutional, then turned around and wrote the 5-4 majority opinion in SAS saying that now that they are constitutional, here's how you adjudicate them. Sounds like a justice who's pretty interested in patent law, right? Of course, he's also the junior justice, so it may just be that nobody else volunteered for those chores. What do you all think?

For now, Justice Clarence Thomas seems to occupy the perch. With six months elapsing since arguments, I was expecting a brokered, caveat-heavy, on-the-one-hand-this/on-the-other-hand-that sort of opinion. But Justice Thomas, whose recent credits also include TC Heartland and Alice, was unequivocal that IPRs are constitutional—at least until he got to the last few paragraphs.

Here's how Orrick Supreme Court and IP partner Mark Davies summarized it: “Patents must claim real inventions. Unfortunately, many patents do not. Today, the Supreme Court rejected a challenge to a critical method that the Patent Office is using with increasing frequency to eliminate patents that should never have issued in the first place.”

As I mentioned, there is a big caveat. At the end of his opinion, Thomas notes, “We address only the precise constitutional challenges that Oil States raised here. Oil States does not challenge the retroactive application of inter partes review, even though that procedure was not in place when its patent issued.” His opinion “should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.”

Some smart people jumped on that language immediately.

“The Supreme Court did not shut the door entirely on constitutional challenges to the AIA,” says Knobbe's Babcock. “It would take a pretty bold patent owner to take another challenge all the way up, and it would certainly be an uphill battle. But, you know, never say never.”

Ropes & Gray counsel Matt Rizzolo seemed to see it the same way. Owners of pre-AIA patents could reasonably argue that if they'd known about IPRs, they might have elected to protect their inventions via trade secrets, for example. But, he says, petitioners could counter that before the AIA, patent owners faced the same risks via reexamination.

But this is all future prognosticating. Today belongs to Greene's Energy counsel Christopher Kise of Foley & Lardner, who had the foresight to raise several of Justice Thomas' dissents on public rights in his briefing. Has he been feeling the weight of the patent world on his shoulders the last six months? Nope, he said, only his client's. “You have to separate yourself from the significant systemic consequences,” he said.

One additional shout-out to Stanford law professor Mark Lemley. Thomas cited his scholarship three times in his majority opinion. (OK, still one more: George Mason'sAdam Mossoff got repeated mentions in Gorsuch's dissent.)

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SAS Takes Center Stage

OK, now on to the really important Supreme Court decision from Tuesday. Section 318(a) of the America Invents Act says that when the PTAB institutes IPR proceedings, the board “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.”

The PTO squinted real hard and interpreted this as allowing the board to pick and choose a handful of the weakest claims from a petition that might challenge 20, 30 or more. While that might save the board a lot of unnecessary work, it ain't the law, Gorsuch wrote Tuesday in SAS Institute.

Latham & Watkins partner Bob Steinberg says this will raise “all kinds of strategic questions” for petitioners. Petitioners will have to be more careful about which claims they challenge. In the past, if the PTAB didn't institute proceedings on a claim, it was no-harm-no-foul. Now petitioners will face a higher risk of final written decisions finding challenged claims valid, leaving petitioners estopped from fighting them in district court. “The PTAB is going to be the place where patentability challenges get decided,” Steinberg says.

SAS counsel Greg Castanias said some accused infringers might opt for district court. But “the claims are likely to be litigated in a single stop, rather than in a piecemeal fashion” across the two jurisdictions, says the Jones Day partner.

In the meantime, there's the issue of pending cases. Babcock estimates there are hundreds of partial institution cases wending their way through the PTAB. He thinks one option might be starting over while extending the proceedings by six months (which the board can do for good cause). He also suggests that the board could find claims that weren't worthy of institution are patentable, though I think petitioners would raise a major stink.

A PTO spokesman said the agency is “carefully considering” both Supreme Court decisions and determining their impact.

Other interesting points: Weil Gotshal & Manges partner Ed Reines points out that the PTAB also tends to pick and choose among petitioners' prior art references. The Supreme Court didn't expressly rule on this, but Gorsuch seemed to throw some shade. His opinion observed that the ex parte reexamination statute lets the PTAB review patents both claim-by-claim and ground-by-ground, while adding that “Congress didn't choose to pursue that known and readily available approach here.”

Ropes' Rizzolo notes that Gorsuch drew frequent parallels between IPRs and district court proceedings, saying IPR “mimics civil litigation” and “looks a good deal more like civil litigation.” That sounds to Rizzolo like the Supreme Court's rationale for applying Native American tribal immunity to proceedings before the Federal Maritime Commission in a 2002 opinion. He expects Allergan and the Saint Regis Mohawk Tribe to make the same argument about the PTAB. (By the way, the author of that 2002 decision? Clarence Thomas.)

Finally, let's pause a moment to acknowledge class and civility. Shortly after reading that he'd won the SAS decision by a 5-4 margin, Castanias says, he received a brief email from his opponent, Assistant Solicitor General Jonathan Bond, congratulating him on the win. That, says Castanias, made a good day even better.

Who's Arguing?

Next week is a calendar week at the Federal Circuit. Here are a few cases I'll have an eye on:

➤ University of California v. The Broad Institute: Billions will be at stake when the University of California squares off with Harvard and MIT over revolutionary CRISPR-Cas9 gene editing technology. After UC filed for a patent in 2012, the Broad Institute patented the use of CRISPR to modify DNA in eukaryotic (plant and animal) cells. UC argues that use was covered by its own more general patent, but the Patent Trial and Appeal Board disagreed, noting public statements from UC researchers at the time that such a step was “an exciting possibility” but far from certain. Former Solicitor General Donald Verrilli, now a partner at Munger, Tolles & Olson, will argue for UC and the other petitioners. Quinn Emanuel Urquhart & Sullivan partner Raymond Nimrod will represent The Broad Institute, Harvard and MIT. The case will be argued April 30.

➤ Teva Pharmaceuticals v. Sandoz and Yeda Research and Development v. Mylan Pharmaceuticals: A slew of pharma companies are challenging dosing patents on Teva Pharmaceuticals' $3 billion-a-year multiple sclerosis drug Copaxone. They want to market a competing 40 mg version that's injected three times a week, which causes fewer side effects than the original 20 mg daily regime. U.S. District Judge Gregory Sleet ruled Teva's 40 mg patent obvious, as did the Patent Trial and Appeal Board. Kirkland & Ellis partner John O'Quinn will argue that Sleet was guilty of hindsight bias because increasing the dose of a highly unpredictable drug was counterintuitive. Likewise, Goodwin Proctor partner Willy Jay will argue that it took 10 years of trial and error to find the right combination of dosage and intervals. Morrison & Foerster partner Deanne Maynard and Perkins Coie partner Shannon Bloodworth will defend Sleet's judgment on behalf of Sandoz, Momenta, Pfizer, Synthon, Amneal and Dr. Reddy's. Perkins partner David Anstaett will seek affirmance of the parallel PTAB judgment.

➤ Click to Call Technologies v. Oracle: Now that the Federal Circuit's Wi-Fi Onedecision has cracked open the door to reviewing PTAB institution decisions, lots of quirky issues are percolating up to the court. In this case the PTAB let online consulting company Ingenio LLC petition for IPR against NPE Click-to-Call Technologies, even though Click-to-Call had sued Ingenio's predecessor for infringing the same patent 10 years earlier. The PTAB ruled in a precedential decision that the one-year statute of limitations didn't run because Click-to-Call voluntarily dismissed its complaint. Peter Ayers of the Law Office of Peter J. Ayers will urge the Federal Circuit not to extend Chevron deference to this reading of the America Invents Act. PTO Associate Solicitor Molly Silfen will argue that tolling is “a reasonable reading of this statutory gap.” DLA Piper partner Stan Panikowski will argue for Oracle Corp., which litigated and won the IPR alongside Ingenio.

IP On the Move

Hackensack, N.J.-based Cole Schotz has been making some noise on the IP front. The firm has hired two IP lawyers from Greenberg Traurig this year. William Stroever joined as co-chair of the firm's IP practice in March and now Marcella Bodner has joined as special counsel this month.

Bodner's practice has included reexaminations and AIA proceedings at the USPTO, as well as the defense of third-party oppositions at the European Patent Office. “Her broad science and technology background and experience in prosecuting patent applications inside and outside the United States will enhance our ability to assist clients with developing effective intellectual property strategies,” IP co-chair David Kohane said in a written statement.

My ALM colleague Michael Booth wrote recently about how Cole Schotz is positioning itself for the legalization of cannabis in New Jersey. IP is one of the many disciplines the firm expects to be part of that effort.

In closing, I am wishing that we now can enjoy a brief period of calm and tranquility in patent land … until the Supreme Court upends patent damages law in the WesternGeco case.