Oil States Energy Services, LLC v. Greene’s Energy Group, LLC - the end of IPR process?

January 26, 2018

In 2011, the method for challenging the validity of patents was transformed with the Leahy-Smith America Invents Act (“AIA”). Called Inter Partes Review (“IPR”), it allows the Patent and Trademark Office to essentially take second looks at previously granted patents. This new approach hoped to reduce the amount of cases going to federal court while making the whole procedure faster and less costly with specialist judges at the PTO taking over the job traditionally relegated to juries. This new system is now in the crosshairs with a recent case, Oil States Energy Services, LLC v. Green’s Energy Group, LLC, challenging the approach as unconstitutional.

 

Brought to the United States Supreme Court late last year, Oil States is the product of perceived wrongful invalidation of a patent held by Oil States Energy Services. Here, Oil States Energy Services attempted to bring suit against a rival, and the rival countered with an invalidation argument of the original patent under IPR, and it was granted. Now, Oil States Energy Services is arguing that patents should be treated as the type of property that cannot be taken without compensation, and invalidation cases deserves to be heard by juries in federal court.

 

Part of the motivation for the introduction of IPR in 2011 was to stem the increasing strain on judicial resources due to the inundation of patent troll suits. These suits were the product of shell companies who make it their business to engage in patent lawsuits. Many companies have seen tangible benefits from the IPR process, with the only recourse for patent troll cases prior to 2011 being settlement--even if the targeted patent holder believed the challenging shell company had no basis for action.

 

Oil States has surfaced a number of legal questions about how patents should be handled-- should they be like the real property rights of landowners, or should the PTO wield more power in determining where the rights truly stand? The reaction to Oil States has been somewhat one-sided, with IPR support from coalitions covering the automotive industry and big tech (representatives of Google and Facebook), and individual companies such as Apple, GE, and more. There have been nearly 60 “friend-of-court” briefs filed (see them at the SCOTUSblog), including one from AIA veteran and professor of law and co-director of the Duke Law Center for Innovation Policy, Arti Rai, joined by 71 other law professors with a brief in support of IPR.

 

Currently, the proceedings are at a standstill with further action being marked as TBD, but with such staunch support from many of the biggest industries in the nation coming out in support of IPR, the current AIA approach seem unlikely to be on the chopping block.

 

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