Oil States Energy Services, LLC v. Greene’s Energy Group, LLC

JUDICIAL OR ADMINISTRATIVE NATURE OF INTER PARTES PROCEEDINGS

Oil States Energy Services (“Oil States”) asserts that inter partes review is an exercise of judicial power, noting that the procedure involves judicial elements such as motions, discovery, cross-examination of witnesses, and a final, binding judgment. Oil States adds that, beyond these procedural elements, the judges in inter partes proceedings fashion patent law through their decisions, thus establishing case law precedent. The judges then apply the case law to the parties before it, who appear in an adversarial context; according to Oil States, this embodies the idea of judicial power as it was contemplated by the founders of the Constitution Considering the fundamentally judicial nature of the proceeding, Oil States argues that an Article III court, and not an administrative tribunal, must preside over patent reexamination cases.

Greene’s Energy Group (“Greene’s Energy”) instead maintains that inter partes review is a limited agency proceeding that is not judicial in nature and, thus, does not require an Article III court. Greene’s Energy notes several distinctions between inter partes review and a judicial proceeding, including the fact that parties who bring the action need not have standing or a stake in the proceeding and that the Patent and Trademark Office (“PTO”) can continue an action even after the initiating party has settled. Greene’s Energy adds that, also unlike a private suit, a party seeking to bring an inter partes review action must ask the PTO to initiate the action and the PTO will then determine whether the claim has enough merit to justify a proceeding. Greene’s Energy also rebuts Oil Service’s comparison between the procedural aspects of inter partes review and private litigation. Greene’s Energy asserts that the discovery and witness procedures in inter partes review are much more limited. Thus, Greene’s Energy concludes, Article III courts need not preside over patent reexamination proceedings.

ORIGIN OF PATENT RIGHTS

Oil States argues that patent law rights are common law rights and, under Murray’s Lessee v. Hoboken Land & Improvement Co., Congress cannot remove patent reexamination cases from the scope of Article III courts. Oil States cites the principle from Murray’s Lessee that, under Article III, Congress may not remove from judicial scope a matter that was the subject of common law suits. Oil States traces the history of patent validity suits in the English legal system and argues that they were typically, if not always, resolved by courts, making them a subject of suits at common law. Oil States adds that the even if patent validity was occasional challenged outside courts historically, the historical analysis should be governed by where such challenges occurred most frequently—within courts.

Greene’s Energy counters that Oil States overstates the history of patent suits at common law. Greene’s Energy claims that multiple avenues apart from courts have traditionally resolved patent disputes. Greene’s Energy characterizes patent rights in the English tradition as royal privileges, granted by the Crown. To the extent that English courts considered patent validity, Greene’s Energy distinguishes between that and patentability issues, the former of which is still decided by courts today and the latter of which inter partes review concerns. Greene’s Energy then asserts that patent rights arise solely from federal statute, not common law. They claim that the Constitution, through Article I, gives Congress complete power to determine how patent rights are to be handled. Thus, Greene’s Energy argues, it is within Congress’s power to have administrative tribunals preside over patent reexaminations.

NATURE OF PATENT RIGHTS (PRIVATE V. PUBLIC)

Oil States also argues that patent rights are private rights and, therefore, do not fall within the public rights doctrine, which allows non-Article III tribunals to hear matters concerning public rights. Oil States defines matters that come under the public rights doctrine as claims by or against the government that either were not historically resolved by the judicial branch or are essential to a limited regulatory objective “integrally related” to a federal government action. Oil States then asserts that patent-validity claims do not fit into any of these categories. Oil States classifies patent rights as private property rights, owned by an individual, and compares owning a patent to owning a parcel of land. Oil States notes that inter partes proceedings are brought by private parties and not against the government and reasserts that patent cases were not historically resolved outside of the judiciary. Finally, Oil States contends that patent cases are not “integrally related” to a government action with a limited regulatory objective because 1) they fail the criterion that the cases must arise from a new statutory obligation and 2) there is no overarching federal regulatory scheme regulating the private parties in the inter partes review.

The Federal Respondent counters that patent rights are “paradigmatic” public rights. The Federal Respondent explains that the government issues patents to individuals and an individual’s right in a patent involves excluding all others from using the patented matter. The Federal Respondent asserts that this right is not against another individual, but against the rest of the world; hence hearing patent cases is not the duty of an Article III court. Greene’s Energy expands this argument, explaining that a patent right does not give the patent owner any affirmative rights (such as to sell or use the patent), but grants the right to exclude the public from the invention. Greene’s Energy then argues that patent rights are “integrally related” to a government action with a limited regulatory objective because patent rights are solely derived from federal statutes and the Patent and Trademark Office’s regulatory objective is to issue valid patents. The Federal Respondent further describes the objective as preventing private parties from having an improper monopoly over a concept and keeping the public from using it.

WHETHER INTER PARTES REVIEW VIOLATES THE SEVENTH AMENDMENT

Oil States argues that, apart from violating Article III, inter partes review also violates the Seventh Amendment by depriving litigants of their right to a jury trial. Oil States again traces patent cases to their common-law analogues, asserting that patent-validity matters, including disputed facts such as whether an invention was novel or whether the owner actually invented the patent, were routinely tried to a jury. Oil States adds that, even when patent cases in England were brought in courts of equity, such as the Court of Chancery, if the validity of the patent came into dispute, the matter was sent to a court of law to be tried to a jury. Oil States furthers that the same fact-disputes arise during inter partes review, where a party will challenge during review the novelty of the patent or obviousness of the invention, making these types of disputes ones that were typically tried by a jury at common law. Thus, Oil States contends, patent owners have a Seventh Amendment right to have their cases heard by a jury.

Greene’s Energy counters that, as inter partes review does not violate Article III, the Seventh Amendment does not require that a jury hear the cases. The Federal Respondent adds that this is because, if Congress can assign the adjudication of a matter to a non-Article III tribunal, it follows that the parties to those matters do not have a jury right. Greene’s Energy asserts, however, that even if the Court were to consider the Seventh Amendment issue separately, it would fail because patent rights are public rights. Further, patent rights were not typically tried at common law, and patent cases do not involve monetary damages; thus, actions involving patent rights lack remedies akin to those for private actions. Greene’s Energy adds that, where there is no individualized relief, such as monetary damages, and where the benefits instead go to the public, this has historically eliminated a litigant’s jury right. The Federal Respondent compares inter partes review to a declaratory-judgment action for the validity of a patent, as both involve the equitable—versus legal—remedy to cancellation of a patent. Just as a jury right does not attach for the equitable remedy provided by declaratory-judgment actions, the Federal Respondent argues, it should also not attach for inter partes review.