Oil States Energy Services, LLC v. Greene's Energy Group, LLC

Oil States Energy Services v. Greene's Energy Group, decided April 24th, 2018. Justice Thomas, writing for a seven-to-two Court, held that inter partes review does not violate Article III or the Seventh Amendment. The grant of a patent is a matter of public rights, and inter partes review is simply the Executive reconsidering that grant — so Congress could assign it to the Patent Trial and Appeal Board, and no jury is required. The Federal Circuit was affirmed. Here's the brief.

Oil States Energy Services owned a patent relating to technology for protecting wellhead equipment used in hydraulic fracturing. It sued Greene's Energy Group in federal district court for infringement. Greene's Energy challenged the patent's validity in that suit — and, in parallel, petitioned the Patent and Trademark Office for inter partes review of the same claims.

The two proceedings ran side by side, and they diverged. The district court issued a claim-construction order favoring Oil States. But the Board reached the opposite result, concluding that Oil States' claims were unpatentable.

Oil States appealed to the Federal Circuit. Alongside its patentability arguments, it raised a constitutional challenge: it argued that an action to revoke a patent must be tried in an Article III court, before a jury. While the appeal was pending, the Federal Circuit rejected that same argument in a separate case. The court then summarily affirmed the Board's decision here, and the Supreme Court granted cert to decide the constitutional question.

The question was whether inter partes review violates Article III or the Seventh Amendment. Article III vests the judicial power in the courts, and Congress cannot confer that power on entities outside Article III. But the Court's precedents draw a line between public rights and private rights.

Matters of public rights may be assigned to a non-Article III body — the Court has described them as matters arising between the government and others that, by their nature, do not require judicial determination. That doctrine supplied the framework: if canceling a patent falls on the public-rights side of the line, Congress may commit it to the Executive. And the Seventh Amendment claim rose or fell with the Article III claim — when a matter is properly assigned to a non-Article III tribunal, the jury right poses no independent bar.

The Court held that inter partes review falls squarely within the public-rights doctrine, and its reasoning proceeded in two steps.

First, the grant of a patent is itself a matter of public rights. A patent is a public franchise — the government takes rights from the public and bestows them on the inventor. Granting patents is a constitutional function historically committed to the Executive, and when the PTO decides patentability, it exercises executive power.

Second, inter partes review is nothing more than a second look at that grant.

Because the reconsideration involves the same basic matter as the original grant, it stays on the public-rights side of the line. History did not compel a different result: though patent validity was often litigated in eighteenth-century English courts, another mechanism — a petition to the Privy Council to cancel a patent — closely resembled inter partes review.

The Court was careful about its limits.

It did not decide whether other patent matters, such as infringement, could go to a non-Article III forum, and it did not reach due process, retroactivity, or the Takings Clause. Justice Gorsuch, joined by the Chief Justice, dissented, arguing that adjudicating a patent's validity is a judicial act that should remain with the courts.

Oil States settled the constitutionality of inter partes review against the two challenges pressed here, and the America Invents Act's central mechanism for reconsidering issued patents stood. The rule is that patents are public franchises, and their reconsideration by the Executive is a permissible exercise outside Article III. Just as important is what the Court reserved — by expressly leaving open due process, retroactivity, and takings, the decision marked the boundaries of its own holding. Read it alongside the 2021 decision in United States v. Arthrex, which took up how the Board's judges are supervised.

Oil States Energy Services, LLC v. Greene's Energy Group, LLC, 584 U.S. 325, decided April 24th, 2018. I'm John Goodhue. Thanks for watching.