Sunday, December 3, 2017

At High Court, Party Labels Matter in Patent Case

      The Supreme Court was simultaneously at its best but also its worst during oral arguments last week [Nov. 27] in a closely watched, high-stakes patent case. The question presented in Oil States Energy Services, LLC v. Greene's Energy Group, LLC was whether Congress had created a rights-violating, fast-track procedure for the U.S. Patent and Trademark Office (PTO) to invalidate a previously issued patent as part of an omnibus reform bill six years ago.
      Congress approved the new administrative procedure in 2011 as part of the America Invents Act in response to widespread concern in the intellectual property world that the PTO was impeding instead of promoting innovation by issuing too many patents of dubious validity. The bill, cosponsored by Vermont's Democratic senator Patrick Leahy and Texas's veteran Republican congressman Lamar Smith, was approved by substantial bipartisan majorities in both the House and the Senate.
       Despite that record of bipartisan support, the justices appeared to divide mostly along party lines in either supporting or opposing the new procedure with their questions from the bench during the hour-long arguments. Republican-appointed justices seemed inclined to rule the law unconstitutional while three of the four Democratic-appointed justices clearly signaled they were ready to uphold it.
      The issue in the case is one of those legal questions with no evidently correct answer based either on precedent or constitutional logic. Yet the justices split predictably along party lines, defying efforts by Chief Justice John G. Roberts Jr. among others to portray judges as  something other than politicians in black robes.
      The case pitted two companies in the oilfield services business, one with a patent that the other challenged under the new procedure. Oil States was awarded a patent for apparatuses and methods of protecting wellhead equipment during hydraulic fracturing, according to the summary of the case in the American Bar Association's publication Preview.
      Oil States accused Greene's of infringing the patent, but Greene's responded by successfully challenging the patent as invalid before the newly created Patent Trial and Appeal Board (PTAB) and prevailing in Oil States' appeal of that decision to the U.S. Court of Appeals for the Federal Circuit. In taking the case to the Supreme Court, Oil States argued that the new administrative procedure violated the protections in the Constitution's Article III and the Seventh Amendment for trials before judge and jury in "suits at common law," such as patent disputes.
      The new procedure, known as inter partes re-examination, expanded the PTO's previous procedure known as ex parte re-examination by allowing an outside party to initiate reconsideration of a patent. Liberal justices saw the logic of the new procedure. "There must be some means by which the patent office can correct the errors that it's made," Justice Ruth Bader Ginsburg said as soon as Dallas lawyer Allyson Ho had finished listing five reasons why the procedure violated Oil States' rights.
      Liberal justices Elena Kagan and Sonia Sotomayor echoed Ginsburg's view. Kagan was incredulous that the government could be challenged for creating "a set of procedures that will actually increase the government's accuracy in figuring out whether it made a mistake." For her part, Sotomayor countered Ho's concerns by noting that a PTAB ruling invalidating a patent could be appealed, just as Oil States did, to a federal appeals court.
      Roberts and the court's newest Republican-appointed justice Neil Gorsuch were clearest of the conservative bloc in questioning what the three liberals depicted as eminently sensible. Both raised unrealistic hypotheticals to test the arguments defending the new procedure from Greene's attorney, Tallahassee lawyer Christopher Kise, and deputy solicitor general Malcolm Stewart arguing for the government.
      With Kise at the lectern, Gorsuch asked whether the government could re-examine a land patent — legal jargon for a land grant — "at any time, even hundreds of years" after the land had been farmed, sold, and developed. With dripping disdain, Gorsuch asked whether the hypothetical land grant could be "revoked by the government by bureaucracy in, I suppose, the Department of the Interior" — referencing one of the least popular federal agencies in Gorsuch's native Colorado.
      Gorsuch tied up the analogy by citing precedents and the Constitution as describing patents as a property right. "[O]nce it's granted," Gorsuch concluded, "it's a right belonging to the inventor." Gorsuch renewed the point when Stewart stepped to the lectern by returning to a question about investments and reliance interests that Justice Stephen G. Breyer had raised earlier. Stewart stood his ground. "It has always been part of the scheme that a patent could be re-examined," the veteran government lawyer said.
      Stewart also turned aside a hypothetical that Roberts had posed to Kise to allow the government to fire an employee based on a coin toss instead of a formal adjudication. No, Stewart said in returning to Roberts' question, "the procedures still have to be fair." Roberts, a stickler for judicial powers with a record of throwing barbs at administrative agencies, was evidently unpersuaded.
      By the hour's end, the pivotal vote seemed likely to lie with Justice Anthony M. Kennedy, the only one of the nine who regularly crosses the court's ideological fault line. His questions seemed to indicate an open mind on the case. But conservative justice Clarence Thomas, silent as usual, and fellow conservative Samuel A. Alito Jr. seemed likely to stick with their Republican-appointed colleagues Roberts and Gorsuch.
      Gorsuch quotably rejected party labels when up for confirmation this spring. "There's no such thing as a Republican judge or a Democratic judge," he told the Senate Judiciary Committee. But with Gorsuch on the bench, the Roberts Court remains as neatly divided along party lines in close cases as it has been ever since the retirements of two line-crossing Republican-appointed justices, John Paul Stevens and David H. Souter. Judicial purists may resist this description, but in this case and many others party labels matter very much at One First Street even if the justices wear black robes on the job.

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