The U.S. Supreme Court on Tuesday gave its stamp of approval to a government review process prized by high technology companies as an easy and cheap way to combat “patent trolls” and others that bring patent infringement lawsuits.
The justices ruled 7-2 that a type of in-house patent review at the U.S. Patent and Trademark Office does not violate a defendant’s right under the U.S. Constitution to have a case adjudicated by a federal court and jury. The court ruled against Oil States International, a Houston-based oilfield services company that had challenged the legality of the process, called inter partes review (IPR).
Justices John Roberts and Neil Gorsuch dissented from the decision authored by fellow conservative Justice Clarence Thomas to uphold the reviews.
While the ruling gave Silicon Valley reason to celebrate, it was sure to displease name-brand drugmakers, which had called the IPR process a threat to innovation. Firms dubbed “patent trolls” have a Business model based on suing other companies over patents rather than actually making products.
The U.S. Congress created the reviews as part of a 2011 law to deal with the perceived high number of flimsy patents that had been issued by the patent office in prior years. Since then, the patent office’s Patent Trial and Appeal Board has canceled all or part of a patent in about 80 percent of its final decisions. In 2015, it canceled an Oil States patent on protecting wellhead equipment after an IPR proceeding.
These reviews have been especially popular with companies like Apple and Samsung Electronics that are frequent targets of patent infringement suits. On the other hand, pharmaceutical companies like AbbVie, Allergan and Celgene called for the IPR system to be scrapped.
In challenging the review process, Oil States argued that patents are private property that may be the revoked only by a federal court. The standard for canceling a patent is higher in federal courts than in the review proceedings.
Thomas, writing for the court, called the IPR process an extension of the Patent and Trademark Office’s decision to grant a patent.
“Inter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO’s authority to conduct that reconsideration,” Thomas wrote.
Though it upheld the IPR process, the Supreme Court issued a ruling in a separate case on Tuesday that faulted one aspect of how the reviews are carried out. The justices said that when several parts of a patent are challenged, the patent office does not have the discretion to review only some of them. That ruling split the court along ideological lines, with its five conservatives in the majority and four liberals dissenting.
Source : CNBC