Oil States Energy Services v. Greene’s Energy Group

Adverse decision in case supporting defendants’ right to a jury trial

Cases > Economic Liberty > Oil States Energy Services v. Greene’s Energy Group
Case Status: Lost: The Supreme Court upheld the administrative reviews, concluding that patents—unlike traditional property rights—fall within the “public rights doctrine” and, therefore, do not require a judicial determination when challenged.

In 2011, the federal America Invents Act authorized the formation of the Patent Trial and Appeal Board (PTAB), a panel of three Administrative Law Judges who review the validity of patent claims. But defendants who are accused of patent infringement are increasingly asking the PTAB to use these reviews to invalidate the patent at issue, which in turn voids infringement claims. The problem is that patents are private property rights that cannot be extinguished by an executive branch tribunal without a jury trial. Oil States Energy Services asked the Supreme Court to decide whether this administrative tribunal is constitutional and PLF’s amicus brief argued that it is not. On April 24, 2018, the Court ruled 7–2 that this tribunal review process did not violate the Constitution because patents—unlike traditional property rights—fall within the “public rights doctrine” and challenges do not require a judicial determination.

The 2011 America Invents Act (AIA) aimed to increase efficiency at the United States Patent and Trademark Office (PTO) and decrease patent litigation costs as well as the numbers of improperly granted patents. The AIA authorized the formation of the Patent Trial and Appeal Board (PTAB), in which a panel of three Administrative Law Judges reviews the validity of patent claims. During this process known as “inter partes review” (IPR), the PTAB may invalidate some or all claims of a patent that has been granted. In doing so, the PTAB was intended to be a tool for the PTO to correct its own mistakes in issuing a patent in the first place, and to address the problem of “patent trolls”—nonproducing entities who license inventions to those companies that do engage in production.

Oil States Energy owned a patent for a well tool mechanism used in fracking and sued Greene’s (a competitor) for patent infringement. As a defense strategy, Greene’s challenged the patent before the PTAB. The panel invalidated several claims of the patent and Oil States, and the Federal Circuit Court affirmed the PTAB’s ruling. The Supreme Court granted review to decide whether this procedure violates the Constitution. PLF filed an amicus brief on behalf of itself, Southeastern Legal Foundation, and National Association of Reversionary Property Owners, arguing that patent rights are private property rights and therefore the constitutional separation of powers prohibits Congress from delegating Article III judicial decisions to the non-Article III PTAB.

In a 7–2 decision handed down April 24, 2018, the Supreme Court upheld the administrative reviews, concluding that patents—unlike traditional property rights—fall within the “public rights doctrine” and, therefore, do not require a judicial determination when challenged.

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What’s at stake?

  • The inter partes review process unconstitutionally removes patent infringement claims from the province of juries and places them into the hands of potentially biased bureaucrats.
  • The Supreme Court held in this case that patents are public rights by virtue of their issuance by an executive agency, and thus patents are not subject to the requirements of the Seventh Amendment or Article III.

Case Timeline

Oil States v. Greene's Energy Documents 9-1-17

September 01, 2017 Download

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