Patent 'trolls'given hope at Supreme Court

WASHINGTON - One side of the argument says that if the government can grant patents, surely it should be able to review its work to see if it made a mistake in doing so.

The other side says that once a patent is granted, only a court should be able to take away the right that an inventor has come to rely upon.

Both perspectives were vigorously represented by Supreme Court justices Monday, and that made it difficult to predict the outcome of a constitutional challenge to a process set up by Congress in 2011 to review the validity of some patents.

The case involves the Patent and Trade Advisory Board, which Congress established to respond to complaints about patent "trolls." Those are patent owners who don't use their patents to make products so much as to sue companies that infringe upon their rights.

But other patent holders, such as drug companies, say the process, which is overseen by administrative law judges, is not as rigorous as that supervised by courts and thus falls short of what the Constitution demands. The companies say the process makes it harder to protect their work.

"For 400 years, courts have adjudicated disputes between private parties about the validity of patents," said Allyson Ho, a Dallas lawyer representing patent holder Oil States Energy Services. "Six years ago, Congress transferred this judicial power to an executive branch tribunal."

Oil States owns a patent related to protecting equipment used in fracking. Oil States sued Greene's Energy Group for infringing the patent. Greene's Energy Group, in turn, petitioned the PTAB to review the patent. The board concluded that the challenged claims were unpatentable.

Oil States said that such reviews - called "inter partes" because of the expanded role of a third party in the challenges - intrude on a power reserved for the judiciary.

Justice Ruth Bader Ginsburg seemed convinced that Congress could set up such a review system.

"There must be some means by which the patent office can correct the errors that it's made,'' she said.

Justice Elena Kagan pushed back on Ho's contention that the dispute must be determined by a court rather than an executive tribunal because it is a dispute between two private parties. A private party complains, Kagan said, but the government is the relevant player.

"It's the government trying to figure out whether it made a mistake by granting the patent, which the government sometimes does and knows it sometimes does," she said.

And Justice Sonia Sotomayor said that decisions of the PTAB can be appealed in federal courts.

"What saves this [is] even a patent invalidity finding can be appealed to a court," she said.

Some of the conservative justices, suspicious of government bureaucracy, indicated that once any right, such as a patent, is granted, it can be canceled only after a judicial process.

"This is not a new idea, that once it's granted, it's a private right belonging to the inventor," said Justice Neil Gorsuch.

Chief Justice John Roberts disputed the notion that because a patent is granted by the government, government has more leeway in removing it.

"Haven't our cases rejected" the proposition that one has to "take the bitter with the sweet?" Roberts asked Christopher Kise, an attorney for Greene's Energy Group.

Other justices indicated they could see merit on both sides of the issue.

"I thought it's the most common thing in the world that agencies decide all kinds of matters through adjudicatory-type procedures often involving private parties," said Justice Stephen G. Breyer. "So what's special about this one?"

But later, he worried: "Suppose that the patent has been in existence without anybody reexamining it for 10 years and, moreover, the company's invested $40 billion in developing it. And then suddenly somebody comes in and says: 'Oh, oh, we - we want it reexamined, not in court but by the Patent Office.' "

Likewise, Justice Anthony Kennedy got Ho to agree that the government could reduce the lengths of patents by 10 years. "Doesn't that show that the patent owner has limited expectations as to the scope and the validity of the property right that he holds?" he asked.

But Kennedy also seemed to agree with Gorsuch's analysis that the patent was a private right to which the owner was entitled protection.

The case is Oil States Energy Services v. Greene's Energy Group.