Intellectual Property, Supreme Court

Will SCOTUS Uphold The System To Challenge Bad Patents?

Erroneously granted patents do not help anyone and certainly do not further the very purpose of the patent system as set forth by the Constitution.

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In an earlier blog post focusing on the sham patent transfer by drug company, Allergan, to a Native American tribe (in which Allergan is attempting to exploit the tribe’s sovereign immunity), I made mention of a process to invalidate patents through inter partes review. By statute, individuals can challenge patents using the inter partes review process and seek revocation of patents before the United States Patent and Trademark Office (USPTO).

Inter partes review is a critical part of a functioning patent system, allowing for challenges to patents that should never have been granted in the first place in a lower-cost forum than traditional litigation which can cost millions of dollars (though inter partes review can still cost a challenger a sum in the six figures). This system, put in place by Congress, is currently under threat and SCOTUS has agreed to hear a case, Oil States Energy Services v. Greene’s Energy Group, addressing “[w]hether 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.” Should SCOTUS hold that inter partes review violates the Constitution, it will become much more difficult to challenge bad patents, which will ultimately strengthen patent trolls, and cause harms to innovation and the general public.

In order to understand why the inter partes review system is such a critical part of the patent system today, it is important to look at the context. USPTO today is overwhelmed with patent applications and, as a result, patent examiners do not have adequate time or resources to thoroughly examine the applications. The agency receives more than 600,000 patent applications per year and patent holders are constantly pressuring for quicker deliberation in approving their applications. In trying to determine whether the invention meets the essential criteria of being new and non-obvious, an examiner needs to understand the invention and determine whether it represents something for which there is prior art in the universe or whether a person with “ordinary skill in the art” would find it obvious. Because of the high volume of applications an examiner must process, however, it has been estimated that 70 percent of examiners have less time than necessary to thoroughly complete an examination.

Erroneously granted patents do not help anyone and certainly do not further the very purpose of the patent system as set forth by the Constitution: to promote the progress of science and the useful arts. Instead, they deplete the public domain and provide wrongfully granted monopoly power, prohibiting others from using or further developing the patented product.

The USPTO, which is inundated with applications today, has been criticized for allowing the under-examination of patents. The inter partes review system provides an important safeguard, allowing the agency to correct the error of an incorrectly granted patent through revocation or cancellation. It is a remedy that serves the general public good by ensuring that patents of poor quality do not continue to enjoy a 20-year monopoly simply because the barriers of litigation — including court costs and attorneys fees — are too high. A canceled patent benefits the entire public, from allowing for generics to be made to promoting competition to lowering price to advancing innovation. Indeed, in ruling against “pay-for-delay” (a process under which pharmaceutical companies would pay to settle patent disputes that effectively blocked generic entrants into the market) in the 2013 case, FTC v. Actavis, SCOTUS noted that “the public interest in granting patent monopolies exists only to the extent that the public is given a novel a useful invention in consideration for its grant.” The inter partes review system allows for the public interest to be better served by helping ensure that patents are only granted for novel and useful inventions, rather than simply because patent examiners are overworked.

While the petitioners argue that inter partes review violates the Constitution, it seems that this system actually supports the intellectual property clause under Article I, Section 8, Clause 8. By allowing easier cancellations of patents that should never have been granted in the first place, inter partes review supports the progress of science and the useful arts. Oral arguments before SCOTUS in this case are scheduled for November 27, 2017.

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Krista L. Cox is a policy attorney who has spent her career working for non-profit organizations and associations. She has expertise in copyright, patent, and intellectual property enforcement law, as well as international trade. She currently works for a non-profit member association advocating for balanced copyright. You can reach her at kristay@gmail.com.

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