Future of Patent Litigation Hangs in the Balance: What to Watch For at Oil States Arguments
On Monday morning, the U.S. Supreme Court will consider two cases that could upend or significantly reshape inter partes review.
November 22, 2017 at 01:09 PM
5 minute read
On Monday morning, the U.S. Supreme Court will consider two cases that could upend or significantly reshape inter partes review, the popular administrative process for determining patent validity.
The first case, Oil States v. Greene's Energy, is the colossus, a constitutional challenge to IPRs that also has immense commercial implications as evidenced in the dozens of amicus briefs filed on both sides. Pharmaceutical, agricultural and industrial heavyweights such as Abbvie Inc., Allergan Inc., Johnson & Johnson, Monsanto Co. and 3M Co. are calling for an end to IPRs. Meanwhile, technology companies including Facebook, Dell, Apple, Twitter, Google, Xerox have come out in support of the process as a cost-efficient and fair method for resolving validity.
Morgan, Lewis & Bockius partner Allyson Ho is arguing for Oil States. Partner Christopher Kise of Foley & Lardner is representing Greene's Energy. The U.S. Patent and Trademark Office will be represented by Deputy Solicitor General Malcolm Stewart. (In the related case, SAS Institute v. Matal, Jones Day partner Gregory Castanias, head of the firm's Federal Circuit team, is arguing for SAS Institute.)
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Here's a guide to what to watch for on Monday:
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1. The individual justice scorecard:
If the Oil States challenge is to succeed and knock out IPRs, it must start with the votes of Justices Neil Gorsuch (crusader against administrative state) and Samuel Alito (dissenting opinion in only Supreme Court IPR case, Cuozzo v. Lee). If they come out barking, that doesn't mean too much by itself.
Chief Justice John Roberts seems like the next most likely domino—he was hostile to the PTO during Cuozzo arguments, but signed the majority opinion. Then we have Justice Clarence Thomas—whose opinions White House counsel Don McGahn recently called the “driving intellectual force of the Trump administration” on the administrative state. But Thomas has also said very clearly that patents are public rights or at least quasi-private rights, which would cut against Article III protection. If this is one of the rare arguments where Thomas speaks—and it's too walk back some of those public rights comments—then put him in the petitioner column.
Assuming Oil States can reel in those four, who provides the decisive fifth vote? Justice Anthony Kennedy has signed on to most of the Supreme Court decisions of recent years cracking down on non-practicing entities—the group most likely to profit from the death of IPRs. But as Jan Wolfe points out at Reuters, conservative critiques of patent law are starting to tilt away from NPEs and more toward the tech industry. The most likely member of the court's liberal wing to cross over would be Justice Sonia Sotomayor. She signed Alito's dissent in Cuozzo, which warned about PTAB “shenanigans” being shielded from judicial scrutiny.
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2. How many questions will there be about said shenanigans?
Oil States and its amici have complained about PTAB practices such as stacking panels with extra judges—which the PTAB says it does only to secure uniformity—clashing with federal court decisions (like the water balloons case), and resisting motions to amend. These issues have little to do with the constitutional arguments, but the justices could point to them as pitfalls of non-Article III adjudication. It also could be a way for the court to encourage changes at the PTAB short of killing IPRs altogether. (If one of the justices does ask about stacked panels, I hope an attorney for Greene's Energy or the government will point out that we have that in federal appellate courts too. It's called en banc review.)
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3. Will the government stand firm?
So far the Trump administration has been staunchly supportive of the PTAB and IPRs. But if there's one thing we know about the president, he's prone to changing his mind. I doubt that would bleed down to the solicitor general's office in a patent case, but I'll be listening for any backtracking.
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4. The more talk there is …
The more talk there is about 18th century England and the writ of scire facias, the better for Oil States. The more talk about Article I of the Constitution and Congress' power to secure patents for “limited times,” the better for Greene's Energy and IPRs. The more talk there is favoring pharma patents, which are getting targeted more and more often in IPRs, the better for Oil States. The more talk about non-practicing entities, the better for Greene's Energy and IPRs. If Justice Gorsuch follows in his predecessor's footsteps and uses the pejorative “patent trolls,” it's game over for Oil States.
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5. Will the justices ask what happens to previously invalidated patents if Oil States wins?
This subject could take up the entire 60 minutes. If more than a couple of justices drill into it, then look out.
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6. Lastly, how engaged are the justices in the next argument, SAS Institute v. Matal.
If they're quiet and desultory, that too is good news for Oil States. If they seem genuinely interested in whether the PTAB must adjudicate IPRs claim by claim, then the PTAB apocalypse probably has been averted.
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