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Oil States Energy Services v. Greene's Energy Group

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Supreme Court of the United States
Oil States Energy Services v. Greene's Energy Group
Term: 2017
Important Dates
Argument: November 27, 2017
Decided: April 24, 2018
Outcome
Federal Circuit affirmed
Vote
7 - 2
Majority
Clarence Thomas •Ruth Bader Ginsburg •Stephen Breyer •Samuel Alito •Sonia Sotomayor •Elena Kagan •Anthony Kennedy
Concurring
Stephen Breyer •Ruth Bader Ginsburg •Sonia Sotomayor
Dissenting
Chief Justice John G. Roberts •Neil Gorsuch


Oil States Energy Services v. Greene's Energy Group is aUnited States Supreme Court case that upheld the constitutionality of certain administrativeadjudication proceedings performed by the U.S. Patent and Trademark Office's Patent Trial and Appeal Board (PTAB). Oil States Energy Services argued that the board functioned as an unconstitutional administrative tribunal—rather than a court established under Article III of the U.S. Constitution—with the authority to invalidate existing patents through a process known asinter partes review. The court disagreed, holding that Congress had legislatively authorized the PTAB to perform and decide certain patent reviews.

HIGHLIGHTS
  • The case: Greene's Energy Group petitioned the PTAB to invalidate a patent held by Oil States Energy Services through a process known asinter partes review. The PTAB invalidated Oil States' patent, and that decision was upheld by theUnited States Court of Appeals for the Federal Circuit. Oil States challenged the constitutionality ofinter partes review as a means of invalidating existing patents outside of a constitutionally-authorized judicial forum under Article III of the U.S. Constitution.
  • The issue: Can Congress, by general legislation, create a tribunal with the authority to invalidate established patent rights outside of either a jury trial or another legal proceeding in a court authorized under Article III of the U.S. Constitution?
  • The outcome: The Supreme Court affirmed the ruling of the Federal Circuit.


    • Why it matters: The case affirmed the constitutionality of administrativeadjudication proceedings performed by the PTAB outside of an Article III court.

    You can review thelower court's opinionhere.[1]

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    The case concerned the constitutionality of a procedure used by the U.S. Patent and Trademark Office to address challenges to the validity of existing patents. Congress instituted the process, known asinter partes review (IPR), in 2011 under the Leahy-Smith America Invents Act (AIA). The AIA calls for an administrative tribunal within the Patent and Trademark Office known as the Patent Trial and Appeal Board (PTAB) to hear reviews requested by interested parties regarding the validity of a patent. Though the PTAB is not an Article III court, its decisions can be appealed to theUnited States Court of Appeals for the Federal Circuit. These reviews are conducted under a special set of procedural rules with no right to a trial by jury and no presumption of the patent's validity.[2]

    Oil States Energy Services held a patent for a mechanical lockdown mechanism used in hydraulic fracturing ('053 patent). The group had previously filed an application for a different, failed design ('118 patent), but was denied. In 2012, Oil States filed a lawsuit in federal district court against Greene's Energy Group asserting infringement of the '053 patent.[3][4] The district court found the '053 patent to be sufficiently distinct from the '118 application in holding that Greene's infringed on Oil States' patent.[5]

    Having been found by the district court to have infringed on Oil States' '053 patent, Greene's Energy Group filed for an IPR review before the PTAB. Greene's petitioned the PTAB to review the decision of the Patent and Trademark Office to issue the '053 patent to Oil States. Greene's also asked the PTAB to invalidate the '053 patent on the ground that the patented design was anticipated either by previous, similar designs or the design was so obvious in the marketplace that patent protection was not warranted. In 2015, the PTAB invalidated Oil States' '053 patent. In 2016, theUnited States Court of Appeals for the Federal Circuit upheld the PTAB's decision.[4][1]

    Oil States challenged the holding of theFederal Circuit, arguing that a patent is a private right and, as such, the PTAB's authority to revoke private rights outside of a jury trial or an Article III court violated the Constitution's protection of private property.[4]

    TheUnited States Supreme Court granted certiorari on June 12, 2017.

    Question presented

    Question presented:

    "Whetherinter 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."[6]

    Oral argument

    Oral argument was held on November 27, 2017.

    Audio

    Audio of oral argument:[7]
    Your browser doesn't support the audio tag.

    Transcript

    Outcome

    On a 7-2 vote, theUnited States Supreme Court affirmed the Federal Circuit's ruling.

    Opinions

    Opinion of the court

    JusticeClarence Thomas authored the decision for the seven-justice majority. JusticeStephen Breyer joined the majority opinion and also wrote a concurring opinion, in which JusticesRuth Bader Ginsburg andSonia Sotomayor joined. JusticeNeil Gorsuch dissented, joined by Chief JusticeJohn Roberts.[9]

    Thomas wrote that IPR did not violate Article III because it was part and parcel of the right to grant patents:

    “Inter partes review falls squarely within the public rights doctrine. This Court has recognized, and the parties do not dispute, that the decision to grant a patent is a matter involving public rights—specifically, the grant of a public franchise. Inter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO’s authority to conduct that reconsideration. Thus, the PTO can do so without violating Article III.[9][10]”


    Thomas emphasized that the court's holding was narrow, writing, "We do not address whether other patent matters, such as infringement actions, can be heard in a non-Article III forum." Thomas also rejected Oil States' argument that the Seventh Amendment barred inter partes review. He wrote, "When Congress properly assigns a matter to adjudication in a non-Article III tribunal, 'the Seventh Amendment poses no independent bar to the adjudicationof that action by a nonjury factfinder.'"[9] Therefore, he concluded, "our rejection of Oil States’ Article III challenge also resolves its Seventh Amendment challenge."Cite error: Invalid<ref> tag; invalid names, e.g. too many The court affirmed the Federal Circuit's ruling.

    Concurring opinions

    Justice Stephen Breyer

    JusticeStephen Breyer concurred in the court's opinion but also wrote separately, joined by JusticesRuth Bader Ginsburg andSonia Sotomayor. Breyer wrote:

    “I join the Court’s opinion in full. The conclusion that inter partes review is a matter involving public rights is sufficient to show that it violates neither Article III nor the Seventh Amendment. But the Court’s opinion should not be read to say that matters involving private rights may never be adjudicated other than by Article III courts, say, sometimes by agencies.[9][10]”


    Dissenting opinions

    Justice Neil Gorsuch

    JusticeNeil Gorsuch dissented, joined by Chief JusticeJohn Roberts. Reviewing the history of independent judicial review, Gorsuch would have ruled that inter partes review violated Article III. He wrote:

    “Today’s decision may not represent a rout but it at least signals a retreat from Article III’s guarantees. Ceding to the political branches ground they wish to take in the name of efficient government may seem like an act of judicial restraint. But enforcing Article III isn’t about protecting judicial authority for its own sake. It’s about ensuring the people today and tomorrow enjoy no fewer rights against governmental intrusion than those who came before. And the loss of the right to an independent judge is never a small thing.[9][10]”

    Text of the opinion

    Commentary about the case

    See also:Federal administrative adjudicators

    Writing atSCOTUSblog, law professor Ronald Mann compared JusticeClarence Thomas' majority opinion to opinions in earlier, related cases, and then discussed JusticeNeil Gorsuch's dissenting opinion:[11]

    “

    It is remarkable that Thomas managed to secure seven votes for his entire opinion. Sharp divisions marked previous cases in the area, several of which were decided without any single majority opinion. The strong majority here could go a long way to establishing the public-right/private-right distinction – however incoherent it seems to the outsider – as a firm boundary delineating areas plainly within congressional control. ...

    The most notable writing, though, is on the other side of the matter — a powerful dissent from Gorsuch, joined by Roberts. For Gorsuch, the 'efficient scheme' that Congress has designed, however 'well intended,' is an unacceptable 'retreat from the promise of judicial independence.' Although the opening paragraphs of his opinion mention in passing some of the administrative abuses that have plagued inter partes review (such as the decision by the director to 'pack' panels with favorable judges), he rests the weight of his analysis on his reading of the English history. ...

    Paired with his concurrence last week inSessions v. Dimaya (to say nothing of his majority opinion in SAS also issued yesterday), Gorsuch’s dissent begins to reveal his deep-seated skepticism about the propriety and utility of theadministrative state.[10]

    		”
    —Ronald Mann, "Opinion analysis: Justices rebuff constitutional attack on administrative re-examination of patents"[11]


    Writing forThe Regulatory Review, law professors Christopher J. Walker and Melissa F. Wasserman discussed the case's possible implications for theadministrative adjudicators employed by many federal agencies:[12]

    “

    To borrow from Dan Farber and Anne Joseph O’Connell, JusticeKagan’s reference [during oral arguments] toadministrative law judges (ALJs) indicates the 'lost world' of agency adjudication—the formaladjudication set forth in theAdministrative Procedure Act (APA) that then-Professor Kagan no doubt taught in her administrative law classes. Today, however, most formal-like agency adjudication occurs outside of the APA’s provisions for formal adjudication—not before ALJs but under the auspices of a variety of other administrative judges, hearing officers, and other agency personnel. This is the new world of agency adjudication. ...

    Under the current statutory and regulatory scheme, the administrative patent judges, not the Senate-confirmed Patent Office Director, have final decision-making authority. [Law professor Gary]Lawson understands this scheme to mean thatadministrative patent judges are principal officers under the Appointments Clause and must be appointed by the President with advice and consent of the Senate.

    On the other hand, Justice Neil Gorsuch's dissent in Oil States, joined by Chief Justice Roberts, argues that any type of agency-head influence over the outcomes in adjudication is constitutionally problematic, at least in the context of patent adjudication. He argues that, under Article III of the Constitution, it should not be the case that 'a political appointee and his administrative agents, instead of an independent judge, resolve the dispute.' For Justice Gorsuch, the lack of judicial independence poses a problem because 'when an independent Judiciary gives ground to bureaucrats in the adjudication of cases, the losers will often prove the unpopular and vulnerable.'[10]

    		”
    —Christopher J. Walker and Melissa F. Wasserman, "Headless Agency Adjudication at the Patent Office"

    See also

    Footnotes

    1. ↑1.01.1U.S. Court of Appeals for the Federal Circuit,Oil States Energy Services LLC v. Greene's Energy Group, LLC, May 4, 2016
    2. ↑Slate.com, "Should the Patent and Trademark Office be allowed to change its mind?" June 21, 2017
    3. ↑Oil States filed the '118 application for a patent, but was denied.
    4. ↑4.04.14.2Harvard Law School, "Jolt: Oil States Energy Services v. Greene’s Energy Group: SCOTUS to Determine the Constitutionality of Inter Partes Review," June 29, 2017
    5. ↑Oyez.org, "Oil States Energy Services v. Greene's Energy Group," accessed September 14, 2017
    6. ↑Supreme Court of the United States,Oil States Energy Services v. Greene's Energy Group, June 12, 2017
    7. ↑Supreme Court of the United States,Oil States Energy Services, LLC v. Greene's Energy Group, LLC, argued November 27, 2017
    8. ↑Supreme Court of the United States,Oil States Energy Services v. Greene's Energy Group, argued November 27, 2017
    9. ↑9.09.19.29.39.4United States Supreme Court, "Oil States Energy Services v. Greene's Energy Group Opinion," April 24, 2018
    10. ↑10.010.110.210.310.4Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    11. ↑11.011.1SCOTUSblog, "Opinion analysis: Justices rebuff constitutional attack on administrative re-examination of patents," April 24, 2018
    12. ↑The Regulatory Review, "Headless Agency Adjudication at the Patent Office," May 1, 2018
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