Oil States Energy Servs., LLC v. Greene's Energy Grp., LLC, 584 U.S. 325 (2018)

Facts

  • Oil States Energy Services, LLC owned a patent covering technology to protect wellhead equipment used in hydraulic fracturing.
  • Oil States sued Greene’s Energy Group, LLC for patent infringement in federal district court.
  • While the infringement case was pending, Greene’s petitioned the U.S. Patent and Trademark Office for inter partes review (IPR) under 35 U.S.C. §§ 311–319 and also challenged validity in court.
  • The district court issued a claim-construction order favorable to Oil States.
  • The Patent Trial and Appeal Board (PTAB) nevertheless found several challenged patent claims unpatentable in light of prior art and cancelled them.
  • The Federal Circuit affirmed the PTAB and rejected Oil States’ constitutional challenges to IPR.
  • The Supreme Court granted certiorari limited to whether IPR violates Article III and the Seventh Amendment.

Issues

  1. Whether inter partes review, allowing the PTAB to cancel issued patent claims, violates Article III by assigning adjudication of private rights to a non-Article III tribunal.
  2. Whether inter partes review violates the Seventh Amendment by extinguishing patent rights without a jury trial.

Decision

  • The Supreme Court affirmed, holding 7–2 that inter partes review does not violate Article III or the Seventh Amendment.
  • The Court characterized issued patents, for these purposes, as public franchises whose grant and reconsideration may be entrusted to the political branches and their agencies.
  • Because IPR is a public-rights proceeding, Congress may assign it to the PTO without requiring adjudication by an Article III court.
  • The Seventh Amendment did not require a jury because, when Congress permissibly assigns a matter to a non-Article III tribunal, the Seventh Amendment does not independently bar decision by a nonjury factfinder.
  • The Court emphasized the narrowness of the holding and stated it was not deciding whether patents are property for Due Process or Takings Clause purposes, nor other distinct constitutional questions.

Legal Principles

  • Patents may be treated as public franchises for Article III and Seventh Amendment analysis, permitting administrative reconsideration of patentability after issuance.
  • The public-rights doctrine allows Congress to assign certain matters—closely tied to a federal regulatory scheme and the government’s grant of a franchise—to non-Article III adjudication.
  • Procedural similarities between an administrative proceeding and civil litigation do not, by themselves, require Article III adjudication.
  • If a matter is properly assigned to a non-Article III tribunal, the Seventh Amendment imposes no independent requirement of a jury trial in that proceeding.
  • The constitutionality of IPR was upheld as a reconsideration of the government’s decision to grant a patent, with Article III review available on appeal.

Conclusion

The Court held that inter partes review is a constitutional mechanism for the PTO to reexamine and cancel issued patent claims as a reconsideration of a public franchise, and that conducting this process in an agency forum without a jury does not violate Article III or the Seventh Amendment.