High Court Takes Up Fracking-Patent Dispute

WASHINGTON (CN) – The U.S. Supreme Court took up a case Monday that casts the Patent and Trademark Office’s adversarial process known as inter partes review as unconstitutional.

Oil States Energy Services brought the underlying petition for certiorari after losing challenges both before the Federal Circuit and the Patent Trial and Appeal Board.

“Inter partes review commences when a party — often an alleged patent infringer — asks the board to reconsider the PTO’s issuance of an existing patent and invalidate it on the ground that it was anticipated by prior art or obvious,” the petition states.

“Historically, though, suits to invalidate patents would have been tried before a jury in a court of law,” the petition continues. “The Constitution thus provides patent owners with a right to a jury and an Article III forum. Inter partes review violates these rights. Without ruling on the constitutionality of inter partes review, this court recently affirmed that such review may consider patent claims under their ‘broadest reasonable construction.’”

The justices reached the underlying decision in June 2016 with the case Cuozzo Speed Techologies LLC v. Lee.

Oil States Energy Services says “the PTO’s treatment of potential amendments to patents in inter partes review directly conflicts with that standard.”

“As the patent office itself has noted,” the petition for certiorari continues, “the broadest reasonable interpretation standard only makes sense when a patent holder (or potential patent holder) has the ability to engage in the back-and-forth process for amending the patent. Yet in inter partes review, there is no practical ability to amend and no ability to rebut arguments offered sua sponte by the board. Even if patent owners have no right to an Article III forum, they must receive a fair opportunity to be heard.” (Parentheses in original)

Oil States Energy Services calls it unclear whether “traditional principles of claim construction — disparagement of prior art and reading claims in light of the specification — apply under a patent’s broadest reasonable interpretation.”

“After Cuozzo,” the petition says, “proper application of claim construction standards — vital in the context of extremely valuable patents — requires guidance from this court, and this question presents an issue of importance warranting this court’s attention.”

Formerly known as Stinger Wellhead Protection, Oil States Energy says the patent dispute at issue stems from the attempts by a former employee to deal with the fluid used in the hydraulic fracturing procedures.

After the company accused Greene’s Energy Group in 2012 of infringing the patent, Greene’s petition for inter partes review.

To date, Oil States Energy has been unsuccessful at appealing the patent board’s determinations.

“Doubtless Congress and the PTO believe that inter partes review is more efficient,” the petition states. “But the Seventh Amendment enshrines the right to jury in the Constitution precisely because of the possibility that a future legislature would find juries to be inefficient or inconvenient. Inter parties review is inconsistent with this guarantee. This court’s review is needed to resolve the conflict on this exceptionally important issue and enforce the Constitution’s jury-trial right.”

Per its custom, the Supreme Court did not issue any comment in taking up the case Monday. Oil States Energy’s case is the only one granted certiorari this morning in a list of dozens of denied cases.

Oil States Energy Services is represented by Allyson Ho with the Dallas firm Morgan, Lewis & Bockius.

Greene’s Energy Group is represented by George Quillin with the Washington firm Foley & Lardner.

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