This week, divided opinions at the U.S. Supreme Court have left patent discrepancies up in the air. The decision was about whether a federal agency’s in-house process for challenging patents violates the constitutional rights of patent owners. The division of justices leaves the fate of a system, that has led to a high rate of patent cancellations, uncertain.
In one of the most important Supreme Court patent cases in years, the nine justices heard an hour of arguments in a dispute over the U.S. Patent and Trademark Office’s patent review proceeding, known as inter partes review (IPR). A decision to strike down the reviews could fundamentally change the way patents disputes are litigated in the United States.
Three of the court’s liberal justices appeared sympathetic toward the review process, but other justices – including conservatives John Roberts and Neil Gorsuch – raised concerns that the government might be able to revoke patents too easily.
The reviews have become a quick and cheap way for companies to try to invalidate patents owned by competitors and others, and have been especially popular with high technology firms such as such as Apple Inc (AAPL.O) and Samsung Electronics Co Ltd (005930.KS) that are common targets of patent infringement suits. On the other hand, name-brand pharmaceutical companies like AbbVie Inc (ABBV.N), Allergan plc (AGN.N) and Celgene Corp (CELG.O) call the review process a threat to innovation.
The U.S. Congress created the reviews as part of a 2011 law to deal with the perceived high number of poor-quality patents that had been issued by the patent office in prior years, which helped fuel the business model of so-called patent trolls that make money off patents rather than products.
The case in question is between two rival Houston-based oilfield services companies, Oil States International Inc (OIS.N) and Greene’s Energy Group. The dispute is over a patent protecting wellhead equipment used in the hydraulic fracturing, or fracking, of oil wells. In challenging the review process, Oil States argued that patents are private property that may be the revoked only by a federal court, and that the administrative procedures violate the U.S. Constitution’s right to be heard by a federal court and jury. The standard for canceling a patent is higher in federal courts than in the review proceedings.
Liberal Justices Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor noted that the patent office has long had the power to grant patents and invalidate wrongly issued ones after the fact.
The court is due to rule on the case by the end of June.
Original story from Reuters.