This week’s Supreme Court ruling in Oil States v. Greene’s Energy was an important victory for technology companies and innovators who face threats of patent litigation from entities that abuse the patent system by seeking to extract value from innovators and companies that create jobs.
In Oil States, the Court ruled against a constitutional challenge to the administrative process at the U.S. Patent and Trademark Office (PTO) for disputing the validity of previously-granted, but questionable, patents—the type that are most used by so-called patent trolls. This process called inter partes review (IPR), has become an important tool for combating frivolous infringement assertions based on likely invalid patents in a way that is much less expensive than testing those patents in federal court.
Congress created the IPR process with the America Invents Act of 2011 (AIA) in order to clean up what Congress saw as an abundance of improperly granted patents, which are used by patent trolls to extract money from innovators. Since the process was implemented in 2012, more than 7,000 petitions have been filed, primarily to review dubious patents in the computer and high-tech field, and more than 1,300 claims have been ruled invalid.
In the 7-2 majority opinion, Justice Thomas stated that “[t]he decision to grant a patent is a matter involving public rights. Inter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the USPTO’s authority to conduct that reconsideration,” holding that the IPR process does not violate a patent owner’s constitutional right to have a case adjudicated by a federal court (where the standard for cancelling a patent is higher and litigation costs are significantly more expensive).
As with any entity developing, selling, or implementing a complex technology, successful companies developing or implementing open source are an attractive target for litigation threats by patent trolls, so confirming the constitutionality of this process not only improves the quality of the patent system, but also retains a tool to protect open source technology against attacks from those that seek to game the system.
The PTO plans to review the implementation of the IPR process, which could affect its effectiveness as a defense tool. But those of us in the technology industry will continue to educate policymakers on the need to preserve the benefits of the reforms contained in the AIA in order to protect innovation and discourage patent abuses.