I. Introduction

Inter partes review (IPR) is a trial proceeding conducted before the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO). An alternative to filing in a Federal District Court, a third-party may file an IPR proceeding with the PTAB to challenge the validity of an issued patent based on select criteria. In the last eighteen months, there have been multiple developments regarding the use of IPR proceedings, including whether state sovereign immunity under the Eleventh Amendment may be invoked as a defense in an IPR proceeding, whether tribal sovereign immunity may be invoked as a defense in an IPR proceeding, and whether IPR proceedings are constitutional. This article will discuss the background behind the recent developments, initial responses to the recent developments, and possible outcomes to the recent developments.

II. A Discussion abouInter Parts Review (IPR) and Sovereign Immunity

A. Patents and inter partes review (IPR)

A patent is a type of intellectual property (IP) resulting from Congress acting upon its power provided by Article I, Section 8, Clause 8 of the Constitution to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”[1] Originally created by the Patent Act of 1790, the United States patent system has undergone several major revisions in the last 200+ years, including the Leahy-Smith America Invents Act of 2011.[2]

Patent prosecution is the process of writing and filing a patent application, and subsequent interaction with the USPTO. If patent prosecution is successful, the USPTO issues a patent. The patent term, or life, for an issued patent is generally twenty years from the filing date or claimed priority dates prior to the filing date, but this can be adjusted by a number of factors.[3] Per 35 U.S.C. § 271, an issued patent provides a patent owner the right to exclude others from making, using, offering to sell, or selling any patented invention, within the United States or importing into the United States any patented invention during the term of the patent.[4]Infringing an issued patent includes acting against the patent owner’s right to exclude others and/or actively inducing a third party to act against the patent owner’s right to exclude others.[5]

Issued patents may be challenged by third-parties as being invalid, meaning the issued patent fails to meet statutory requirements (e.g., the patent is not patentable subject matter,[6] is anticipated by prior art,[7] is obvious based on prior art,[8] does not conform to drafting and specification requirements,[9] or the like) and thus should not have been granted by the USPTO. Patent challenges are often filed by a defendant of an infringement suit filed by the patent owner or by a party to pre-emptively strike and prevent a possible infringement lawsuit, but may be filed by any third-party who is not the owner.

Patent challenges may be brought in a Federal District Court, as federal courts have original jurisdiction over state courts for any civil action relating to patents.[10] Alternatively, patents may be challenges via inter partes review (IPR) before a Patent Trial and Appeal Board (PTAB) panel of administrative law judges (ALJ). The America Invents Act of 2011 established the PTAB and its IPR proceedings to replace inter partes reexaminations, which the USPTO first instituted in 1981.[11] In an IPR proceeding, an issued patent may only be challenged as being invalid on grounds of anticipation or obviousness; in addition, the issued patent may only be challenged on the basis of only prior art consisting of patents or printed publications.[12] If, in a petition to the PTAB, the challenger can show there is a reasonable likelihood of prevailing in invalidating at least one challenged claim, a PTAB panel will institute an IPR proceeding. [13]  Any party dissatisfied with the finding by the PTAB panel during the IPR proceeding may appeal to the Court of Appeals for the Federal Circuit (CAFC).[14]

B. Sovereign Immunity

One limitation on the authority of state and federal courts is the concept of sovereign immunity, which the federal government, state governments, and tribal governments may invoke.[15] The concept of sovereign immunity in the United States derives its origins from the English common law legal maxim that “the King can do no wrong.”[16] Sovereign immunity may be invoked as a defense by a governing body in a lawsuit, unless the defense is waived by one entitled to invoke the defense, is abrogated by an Act of Congress,[17] or falls within an exception defined by the Supreme Court.[18]

1.State Sovereign Immunity and The Eleventh Amendment

State governments and state agencies[19] have sovereign immunity under the Eleventh Amendment, which states: “[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”[20] Congress passed the Eleventh Amendment in response to Chisholm v. Georgia, in which the Supreme Court upheld an estate executor’s claim against the state of Georgia for repayment of military supplies for the American Revolutionary War.[21]

The language of the Eleventh Amendment, as adopted, appeared to prohibit federal courts from hearing suits against a state only if brought by citizens of another state or a foreign country; however, in Hans v. Louisiana the Supreme Court interpreted the language of the Eleventh Amendment to include the prohibition of federal courts from hearing suits brought by citizens of the state being sued.[22] In addition, the Supreme Court held in Federal Maritime Commission v. South Carolina State Ports Authority that the defense of state sovereign immunity extends to federal administrative proceedings that have a “remarkably strong resemblance to civil litigation in federal courts.”[23]

The PTAB has twice considered the question whether state sovereign immunity could be applied to inter partes review. On January 25, 2017, the PTAB dismissed three IPR proceedings instituted against patents owned by the University of Florida Research Foundation (UFRF) on grounds of state sovereign immunity as afforded by the Eleventh Amendment.[24] Similarly, on May 23, 2017, the PTAB dismissed an IPR proceeding instituted against patents owned by the University of Maryland, Baltimore.[25] In both instances, a PTAB panel found that the universities could not be the subject of legal proceedings brought by a private party because the universities are state agencies, and allowed the universities to invoke state sovereign immunity against the respective IPR proceedings.[26]

2. Tribal Sovereign Immunity

Support for the concept of tribal sovereign immunity is not found in the Eleventh Amendment, unlike state sovereign immunity but instead extends from Article I of the Constitution and subsequent Supreme Court decisions.[27] Article I, Section 8, Clause 3 of the Constitution grants Congress the power “[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”[28] In Cherokee Nation v. Georgia, the Supreme Court interpreted the separation of “Indian Tribes” from  “foreign Nations” and “the several States” to mean tribes were “domestic dependent nations” of the United States, with a relationship like that of a “ward to its guardian.”[29] The right to a sovereign immunity defense was afforded to Indian tribes in Turner v. United States, in which the Supreme Court held that “[w]ithout authorization from Congress, the [Oklahoma Creek] Nation could not … have been sued in any court; at least without its consent.”[30]

Today, after 175 years of caselaw,[31] the United States acknowledges select Indian Tribes, Tribal Nations, and other tribal entities “to have the immunities and privileges available to federally recognized Indian Tribes by virtue of their government-to-government relationship with the United States as well as the responsibilities, powers, limitations, and obligations of such Tribes.”[32]  These “immunities and privileges” may only be abrogated by an Act of Congress or waived by an Indian Tribe, Tribal Nation, or other tribal entity.[33] In this regard, although tribal sovereign immunity is not explicitly afforded to Indian Tribes, Tribal Nations, and other tribal entities by the Constitution, it exists in a nearly-equivalent form as determined by Supreme Court precedent.

III. Invoking Tribal Sovereign Immunity
A. Why Invoke Tribal Sovereign Immunity?

Tribal sovereign immunity serves to “promote economic development and tribal self-sufficiency,”[34] making the existence of sovereign immunity important to Indian Tribes, Tribal Nations, and other tribal entities. For many Indian Tribes, Tribal Nations, or other tribal entities, promoting economic development and tribal self-sufficiency is a difficult task. Standard channels of income for a government such as property taxes are not available to Indian Tribes, Tribal Nations, or other tribal entities as Indian reservations are held in trust by the United States.[35] In addition, despite the misconception that many Indian Tribes, Tribal Nations, and other tribal entities generate income from gambling casinos and tobacco sales,[36] those actually doing so are few in number and located across the nation.[37]

The difficulty to promote economic development, combined with increased levels of unemployment and poverty,[38] has many Indian Tribes, Tribal Nations, and other tribal entities searching for new methods to generate the desired economic development and tribal self-sufficiency. These new methods include procuring business opportunities in the field of electronics, oil and gas, manufacturing, distribution, logistics, and more.[39] In addition, Indian Tribes, Tribal Nations, and other tribal entities are starting to obtain patents from patent owners, and license the obtained patents to interested parties. One recent instance of this type of transaction is the St. Regis Mohawk Tribe (the Tribe) obtaining the RESTASIS® patent portfolio from Allergan, Inc. (Allergan), and licensing the patent portfolio back to Allergan.

B. Allergan, Inc. v. Teva Pharmaceuticals and the transfer of the RESTASIS® patent portfolio to the Tribe

Allergan is a pharmaceutical company that markets health care products for a number of medical sectors.[40] The health care product RESTASIS® (Cyclosporine Ophthalmic Emulsion) 0.05% is an eye drop that helps increase the eyes’ natural ability to produce tears.[41] The patent portfolio for RESTASIS®, as listed in the Food and Drug Administration’s (FDA’s) Orange Book, includes U.S. Patent Nos. 8,629,111 (the ‘111 patent), 8,633,162 (the ‘162 patent), 8,642,556 (the ‘556 patent), 8,648,048 (the ‘048 patent), 8,685,930 (the ‘930 patent), and 9,248,191 (the ‘191 patent), all of which are set to expire in 2024.[42] The RESTASIS® patent portfolio protected improvements to a prior version of the RESTASIS® formulation protected by U.S. Patent No. 5,474,979 (the ‘979 patent), which expired in 2014.[43]

On August 24, 2015, Allergan filed patent infringement suits against Teva Pharmaceuticals (Teva), Mylan Pharmaceuticals (Mylan), and other pharmaceutical companies in the United States District Court for the Eastern District of Texas, following the filing of applications challenging the RESTASIS® patent portfolio and the announcement by Teva and Mylan of an intention to make generic versions of RESTASIS®.[44] On December 8, 2016, Mylan petitioned the PTAB to challenge the RESTASIS® patent portfolio.[45] Although the six patents in the RESTASIS® patent portfolio all stem from a common non-provisional patent application, and claim priority to a common provisional application, a PTAB panel instituted six separate inter partes review proceedings in response to Mylan’s petition.[46]  With the six IPR proceedings co-pending before the PTAB, U.S. District Judge William Bryson presided over the trial for the patent infringement suit in the District Court for the Eastern District of Texas on August 28-31, 2017.[47]

On September 8, 2017, as previously discussed by the firm, Allergan transferred the RESTASIS® patent portfolio to the St. Regis Mohawk Tribe (the Tribe), a sovereign nation crossing the border between New York State and Canada, in exchange for an exclusive license to practice the patent-protected IP.[48] In exchange for the exclusive license, the Tribe received the RESTASIS® patent portfolio and 13.75 million dollars, and will continue to receive 15 million dollars annually while the RESTASIS® patent portfolio remains enforceable (e.g., until invalidated or until 2024, when all six patents expire).[49]

During a telephone hearing held on September 11, 2016, the Tribe announced it would seek a stay of the six instituted IPR proceedings, claiming the right to tribal sovereign immunity.[50]  Richard Torczon, representing Mylan, expressed his belief that Allergan’s  sale of the RESTASIS® patent portfolio to the Tribe was only a “sham” transaction, as the Tribe did not purchase the portfolio but rather was paid to take the portfolio.[51] Michael Shore, council for the Tribe, responded to the claims of a “sham transaction” by offering forth an explanation of the benefits to both parties.[52] True to its announcement, the Tribe filed a Motion to Dismiss on September 22, 2017, and a Corrected Motion to Dismiss on October 3, 2017, in each of the six IPR proceedings.[53] In the Corrected Motion to Dismiss, the Tribe noted Supreme Court precedent regarding the existence of tribal sovereign immunity, and indicated its belief that its right to invoke tribal sovereign immunity was neither abrogated nor waived.[54]

The Tribe also explained its belief that dismissing the IPR proceedings on the grounds of tribal sovereign immunity would “not deprive [Mylan] of an adequate remedy [but] only deprives [Mylan] of multiple bites at the same apple.”[55] Notably, while the Tribe sought a stay on the six IPR proceedings, it did not similarly seek a stay on the patent infringement suit being deliberated on in the United States District Court for the Eastern District of Texas. On September 8, 2017, following the transfer of the RESTASIS® patent portfolio to the Tribe, Allergan informed U.S. District Judge William Bryson that it would add the Tribe as a co-plaintiff to the litigation pending before him.[56] After Allergan did not submit the necessary motions to join the Tribe, however, U.S. District Judge Bryson filed an Order on October 6, 2017, requiring both sides to file briefs addressing the question whether the Tribe should be joined as a co-plaintiff or whether the Court should disregard the assignment of the patents as a sham.[57]

On October 16, 2017, U.S. District Judge Bryson handed down an opinion invalidating the RESTASIS® patent portfolio.[58] In his opinion, U.S. District Judge Bryson held that, despite submitted declarations regarding the unexpected and surprising benefits of the improved RESTASIS® formulation protected by the six patents in the RESTASIS® patent portfolio,[59] the improved RESTASIS® formulation it “did not perform significantly better than other formulations known to Allergan.”[60] As a result, the Court found the RESTASIS® patent portfolio to be obvious in light of at least Allergan’s ‘979 patent.[61]

Along with his opinion invalidating the RESTASIS® patent portfolio, U.S. District Judge Bryson filed a Memorandum Opinion and Order joining the Tribe as a co-plaintiff to the patent infringement suit.[62] In the memorandum, U.S. District Judge Bryson clarified that the Tribe should be joined as a co-plaintiff to the infringement suit before the Court to prevent the “judgment entered by the Court [from being] subject to challenge on the ground that the owner of the patents was not a party to the action” should it be “later determined that the Tribe is a valid owner of the patents.” In this regard, U.S. District Judge Bryson “adopt[ed] the safer course of joining the Tribe as a coplaintiff (sic), while leaving the question of the validity of the assignment to be decided in the IPR proceedings, where it is directly presented.”[63]

Interestingly, the idea of “leaving the question of the validity of the assignment to be decided in the IPR proceedings” did not prevent U.S. District Judge Bryson from discussing Allergan’s transfer of the RESTASIS® patent portfolio to the Tribe. U.S. District Judge Bryson stated that “[t]he Court has serious concerns about the legitimacy of the tactic that Allergan and the Tribe have employed” as it appeared that “[Allergan] has paid the Tribe to allow Allergan to purchase—or perhaps more precisely, to rent—the Tribe’s sovereign immunity in order to defeat the pending IPR proceedings in the PTO.”[64]  In addition, U.S. District Judge Bryson questioned “the validity of the assignment and exclusive license transaction” and “whether the Tribe is an owner of the RESTASIS® patents within the meaning of the Patent Act,” although the issues did not bear on the District Court’s power to hear the infringement suit.”[65] Further, U.S. District Judge Bryson discussed the possible damage to IPR proceedings should similar patent portfolio transfers be allowed to occur, stating:

Allergan, which does not enjoy sovereign immunity, has invoked the benefits of the patent system and has obtained valuable patent protection for its product, Restasis. But when faced with the possibility that the PTO would determine that those patents should not have been issued, Allergan has sought to prevent the PTO from reconsidering its original issuance decision. What Allergan seeks is the right to continue to enjoy the considerable benefits of the U.S. patent system without accepting the limits that Congress has placed on those benefits through the administrative mechanism for canceling invalid patents.

If that ploy succeeds, any patentee facing IPR proceedings would presumably be able to defeat those proceedings by employing the same artifice. In short, Allergan’s tactic, if successful, could spell the end of the PTO’s IPR program, which was a central component of the America Invents Act of 2011.[66]

IV. Possible Outcome

A. Should the Tribe’s Motion to Dismiss in the six inter partes review proceedings be granted?

Although Judge Bryson discusses some salient points in regard to the transferring of patent portfolios to Indian Tribes, Tribal Nations, or other tribal entities and the subsequent invoking of tribal sovereign immunity in IPR proceedings, his discussion largely acts as dicta. Not only were the issues of the validity of the patent portfolio transfer and the invoking of tribal sovereign immunity in IPR proceedings not presented before the District Court, the District Court was not “required to decide whether the assignment of the patent rights from Allergan to the Tribe was valid.”[67] Instead, those issues are before the PTAB panel following the Tribe’s filing of its Motions to Dismiss in the six IPR proceedings. The PTAB panel will first need to consider (1) whether the contract between Allergan and the Tribe included the necessary consideration, such that the Tribe are the owners of the patent. If so, then the PTAB panel will need to consider (2) whether tribal sovereign immunity may be invoked with inter partes review. If tribal sovereign immunity is applicable, the PTAB panel will need to consider (3) whether the Tribe is prevented from invoking because (a) an Act of Congress has abrogated the right to invoke tribal sovereign immunity in the RESTASIS® patent portfolio IPR proceedings or (b) the Tribe waived the right to invoke tribal sovereign immunity in the RESTASIS® patent portfolio in IPR proceedings.

Regarding Issue (1), although Mylan may  believe the transfer of the RESTASIS® patent portfolio is a “sham transaction,” consideration validating the contractual agreement between Allergan and the Tribe appears to exist to prevent a similar finding by the PTAB panel.[68] In addition, the Tribe had obtained forty patents from the tech company SRC Labs in an August 2017 agreement prior to the transfer of the RESTASIS® patent portfolio from Allergan,[69] suggesting a commitment towards enforcing patent rights as a means of generating economic development and tribal self-sufficiency.

Regarding Issue (2), PTAB precedent allows state sovereign immunity to be invoked in response to an IPR proceeding.[70] In addition, Supreme Court precedent documents the near-equivalency between state sovereign immunity and tribal sovereign immunity.[71] As such, it is plausible that tribal sovereign immunity will be found to be applicable as a defense in an IPR proceeding.

Regarding Issue (3a), Congress has not yet passed a statute that would abrogate the right to invoke tribal sovereign immunity in the RESTASIS® patent portfolio IPR proceedings. Regarding Issue (3b), the actions by the Tribe, including at least the language in the filed Motions to Dismiss, indicates the Tribe has not waived the right to invoke tribal sovereign immunity during in the RESTASIS® patent portfolio IPR proceedings.[72]

As such, it is reasonable for the PTAB panel will find tribal sovereign immunity to be applicable as a defense to IPR proceedings and grant the Motions to Dismiss for the six IPR proceedings.

B. End Tribal Sovereign Immunity for IPR Proceedings?

While the question of invoking tribal sovereign immunity in an IPR proceeding is considered by the PTAB panel, new patent infringement suits for patents transferred to Indian Tribes, Tribal Nations, or other tribal entities are starting to show up on court dockets. In March 2017,  the Texas technology company ProWire sued Apple for royalties , claiming Apple’s iPad 4 infringed on ProWire’s U.S. Patent No. 6,137,390 (the ‘390 patent).[73] After filing the patent infringement suit, ProWire transferred the ‘390 patent to MEC Resources LLC, a wholly owned subsidiary of the Mandan, Hidatsa, and Arikara Nations (the Three Affiliated Tribes), in August 2017.[74] In October 2017, the St. Regis Mohawk Tribe and SRC Labs, as co-plaintiffs, filed patent infringement lawsuits against Amazon and Microsoft, claiming infringement of a combination of U.S. Patent Nos. 6,076,152 (the ‘152 patent), 6,247,110 (the ‘110 patent), 6,434,687 (the ‘687 patent), 7,225,324 (the ‘324 patent), 7,421,524 (the ‘524 patent), 7,620,800 (the ‘800 patent), 7,149,867 (the ‘867 patent), and 9,153,311 (the 311 patent), which SRC Labs transferred to the Tribe in August 2017.[75]

Appearing to recognize the potential increase in patent portfolio transfers and subsequent invoking of tribal sovereign immunity, Congressional members responded swiftly to the transferring of the RESTASIS® patent portfolio to the Tribe. On September 27, 2017, Senators Maggie Hassan (D-NH), Sherrod Brown (D-OH), Bob Casey (D-PA), and Richard Blumenthal (D-CT) sent a letter to Judiciary Committee Chairman Chuck Grassley (R-IA) and Ranking Member Dianne Feinstein (D-CA), calling the transferring of the RESTASIS® patent portfolio to the Tribe  “a blatantly anti-competitive attempt to shield its patents from review and keep drug prices high.”[76] On October 3, 2017, the U.S. House of Representatives Oversight and Government Reform Committee requested that Allergan provide documents about its preparation and completion of agreements with the Tribe, financial details about the RESTASIS® drug, and information about possible future deals of a similar nature, claiming concerns of the type of arrangement “impair[ing] competition across the pharmaceutical industry.”[77] On October 5, 2017, Senator McCaskill (D-MO) introduced bill S.1948 to the 115th Congress, which is designed to abrogate tribal sovereign immunity as a defense to IPR proceedings.[78] The bill,[79] which only states “ [n]otwithstanding any other provision of law, an Indian tribe may not assert sovereign immunity as a defense in a review that is conducted under chapter 31 of title 35, United States code,”[80] would serve as an act of Congress to abrogate tribal sovereign immunity in regard to IPR proceedings.[81]

Allergen, the Tribe, and other interested parties responded with equal swiftness. On October 3, 2017, Allergan responded to the claims by Senators Hassan, Brown, Casey, and Blumenthal in a letter to Senators Grassley and Feinstein, noting that the validity of the RESTASIS® patent portfolio was  also pending before the District Court of the Eastern District of Texas and criticizing the “flawed and broken IPR process.”[82] On October 12, 2017, the Tribe sent a letter to Senators Grassley and Feinstein about the current financial status of the Tribe, the Tribe’s displeasure to the double standard being applied against the invoking of tribal sovereign immunity versus the invoking of state sovereign immunity in IPR proceedings, and the perceived impact the current IPR process has on pharmaceutical patent portfolios.[83] Also on October 12, 2017, the Biotechnology Innovation Organization (BIO), representing over 1,100 medical field entities, sent a letter to Senators Grassley and Feinstein expressing the organization’s concern about the current nature of the IPR process.[84] Also on that day, the organization United Southern and Eastern Tribes adopted a resolution to take all steps necessary to oppose Congressional abrogation of tribal sovereign immunity in regard to further amendments of the AIA.[85]

Given the swiftness with which members of Congress responded to the news regarding the transfer of the RESTASIS® patent portfolio to the Tribe, one might expect legislative actions to be forthcoming in the near future. However, if a statute were enacted based on the bill as introduced by Sen. McCaskill or based on similar language, the statute may run into issues of constitutionality. The Sen. McCaskill bill does not affect state sovereign immunity, as it is protected by the Eleventh Amendment; although tribal sovereign immunity does not have protection under the Eleventh Amendment, Supreme Court precedent does provide a nearly-equivalent level of support. In addition, the bill is intended to prevent invoking tribal sovereign immunity in IPR proceedings, but is not directed to preventing the invoking tribal sovereign immunity in post grant review (PGR) proceedings and covered business method (CBM) proceedings before the PTAB, or invoking tribal sovereign immunity in Federal District Court proceedings.

C. End Inter Partes Review?

Although invoking tribal sovereign immunity for inter partes review is currently under attack, criticism has plagued the IPR process for some time. One criticism is that the IPR process heavily favors patent challengers, which places patent owners at a marked disadvantage.[86] Per data compiled for the first five years of IPR proceedings instituted between September 2012 and September 2017, 65% of the PTAB’s final written decisions invalidate all claims in a challenged patent and 81% of final written decisions invalidate at least one claim in a challenged patent.[87] In addition, it has statistically been considerably less to bring a challenge before the PTAB instead of in a Federal District Court (e.g., hundreds of thousands versus tens of millions), which allows for a larger pool of third-party challengers.[88]  Another criticism is the ability to re-contest patents through serial petitioning until the patent is completely invalidated and/or the ability to work around statute of limitations through motions for joinder with other challengers.[89] These concerns have culminated in introduced legislation to revise the IPR process and the granting of certiorari by the Supreme Court to review the constitutionality of the IPR process.

1. STRONGER Patents Act of 2017

One attempt to change revise the IPR process, as previously discussed by the firm, is via the Support Technology and Research for Our Nation’s Growth and Economic Resilience Patents Act of 2017, or the STRONGER Patents Act of 2017, introduced by Senator Chris Coons (D-AK).[90] The STRONGER Patents Act of 2017 includes a number of provisions that would redefine the IPR process, making it more patent owner-friendly. Challenged claims would be presumed valid, and the level of proof for overcoming of the presumed validity would be increased from “preponderance of the evidence” to “clear and convincing evidence.”[91] In addition, only a defendant to a patent infringement suit or an individual who is under a threat of legal action for which the individual might seek a declaratory judgment will be able to challenge a patent via an IPR proceeding.[92] Further, a particular patent could only be challenged once via an IPR proceeding, meaning multiple petitions cannot be filed (even if new prior art is found), and review by a Federal District Court precludes revisiting of the patent via an instituted IPR proceeding.[93] Further still, the patent owner is effectively entitled to amend claims or file for “expedited reexamination” with the USPTO without the patent challenger’s involvement.[94]  Under the STRONGER Patents Act, the pendulum would almost certainly swing back towards the patent owner.

2. Oil States Energy Services v. Greene’s Energy Group

Another attempt to change the IPR process includes the question presented in Oil States Energy Services v. Greene’s Energy Group (Oil States), which the Supreme Court heard during the October 2017 term. Oil States filed against Greene’s Energy Group for infringement of Oil States’ U.S. Patent No. 6,179,053 (the ‘053 patent). Greene’s filed an IPR proceeding with the PTAB, which invalidated the ‘053 patent. Oil States appealed the invalidation to the CAFC and, following the CAFC’s denial, appealed to the Supreme Court.[95]

On October 27, 2017,[96] as previously discussed by the firm, the Supreme Court heard oral arguments[97] regarding the question “whether inter partes review – an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents – violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”[98] Initial impressions from the oral arguments point to a possible decision that would allow the IPR proceedings to continue as they are, letting the USPTO correct improperly-granted patents.[99] Alternatively, an alternative holding may eliminate the IPR process, requiring that all re-examinations of patents (if a found to be a private property right) need to be done by the Judicial Branch.[100]

It seems improbable that the Supreme Court uphold IPR proceedings without providing guidance about how to adjust the IPR process; however, if this were to occur, the patent process itself may be adjusted (e.g., thorough prior art searches, narrower claim sets in drafts, and more detailed examination during individual patent and patent portfolio acquisition, or the like).[101]

It also seems improbable that the Supreme Court will completely eliminate the IPR process. Finding IPR proceedings to be unconstitutional may result in the vacating of thousands of decisions since the creation of IPR proceedings in 2012. In addition, a finding that IPR proceedings, an Executive branch administrative process, encroaches on the powers afforded to the Judicial Branch may affect how other Executive Branch agencies operate.[102]

Ultimately, it seems most plausible that the Supreme Court will allow IPR proceedings before a PTAB panel to continue, and in addition may provide guidance in regard to refining the IPR process in an attempt to prevent damaging a patent owner’s private property rights and/or encroaching on the power afforded to the Judicial branch. Even with this outcome, it is plausible that patent owners would see a swinging of the pendulum towards protecting the rights of the patent owner in some form.[103]

Guidance from the Supreme Court regarding IPR proceedings, however, may result in questions as to whether it is actually IPR proceedings that need adjustment, or instead the patent prosecution review process. Whether IPR proceedings or the patent prosecution process requires adjustment is dependent at least in part on whether the percentages provided above (65%/81%) are indicative of PTAB panel overzealousness or improper Examiner review during the patent prosecution process. For example, if the percentages have resulted from PTAB panels being too heavy-handed when utilizing the power given to them, then adjustment to IPR proceedings may be necessary. In the alternative, if the percentages have resulted from PTAB panels utilizing the power given to them in moderation and after careful review, then adjustment to the patent prosecution process and Examiner review may be necessary to reduce the number of improperly-granted patents. This would require an objective review of the data upon which the provided percentages are based, which is beyond the scope of this article.

V. Closing Remarks

For a patent owner concerned about the effect inter partes review proceedings may have on held patent portfolios, any means of protection from an IPR proceeding may look promising. The recent developments regarding the use of IPR proceedings, however, are still too unresolved to be relied upon. Transferring a patent portfolio to an Indian Tribe, Tribal Nation, or other tribal entity in exchange for an exclusive license to practice the protected invention may appear to provide some protection from third-party challenged, but Congress appears willing to abrogate the right to invoke tribal sovereign immunity in an IPR proceeding. In addition, the STRONGER Patents Act of 2017 (if it passes) and the Supreme Court’s review in Oil States of the constitutionality of the IPR process may change the IPR process, but the most plausible result is that the IPR process will not be entirely rescinded.

If anything, the uncertainty in the IPR process resulting from the recent developments illustrates not the need to find ways to remove a held patent portfolio from post-issuance review proceedings, but instead the need to ensure a patent is well-drafted and correctly prosecuted. A well-drafted, correctly prosecuted patent has been the surest method to protect one’s intellectual property rights from post-issuance challenges in the past, and will likely continue to be the surest method for the foreseeable future.

Author note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Suiter Swantz IP or the official policy or position of any agency of the U.S. government. Examples of legal analysis and determining of possible case holdings performed within this article are only examples, and are based on limited and dated open source information.

Printed (Adapted or printed in part) by permission from the author and the Nebraska State Bar Association, to be published in The Nebraska Lawyer, January/February 2018.


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