ANALYSIS/OPINION:
If the oral arguments in Oil States Energy Services v. Greene’s Energy Group are any indication, the most ardent defender of property rights on the Supreme Court now may well be its newest member, Justice Neil Gorsuch.
At the center of the Oil States case is the America Invents Act - the 2011 law that created a new executive branch tribunal within the Patent and Trade Office to review the validity of existing patents. The tribunal, the Patent Trial and Appeal Board (PTAB), has broad authority to re-examine patents already in existence and render them null and void with potentially devastating consequence.
The Oil States case presents a clear example of the dangerous implications of PTAB’s overreach. Oil States Energy Services attempted to sue a rival company for infringing on its patent, but with the newly established PTAB, the rival company turned the tables on Oil States and simply argued to the Patent Office that Oil States never should have received a patent in the first place. PTAB agreed with the rival company and revoked Oil States’ patent.
Oil States is now suing, making the important argument that the entire PTAB process of revoking patents based on third-party lawsuits is unconstitutional because it bypasses the federal court system with juries, and instead transfers the review of patents to an unaccountable bureaucracy.
And, it is worth noting here, this out-of-control bureaucratic tribunal revokes somewhere between 62 percent and 92 percent of all patent challenges, depending on the sector. In the high-tech sector, the patent invalidation rate for PTAB is an astonishing 90 percent. PTAB former Chief Judge Rader aptly called the tribunal a “patent death squad.”
PTAB sets up a dangerous review process that forces patent-holders to assume a permanent defensive posture - always on the lookout for new patent challenges. If this logic were extended to physical property, homeowners and other property-owners would constantly be on guard against legally sanctioned theft and the revocation of their deeds to land and property.
While it seems clear that Congress in 2011 thought it was establishing a more efficient way to curb “patent trolling,” PTAB has, in typical Washington fashion, quickly grown to be an out-of-control bureaucracy with its own dangerous agenda, unchecked by the U.S. Constitution.
The United States’ history of protecting intellectual property rights is as old as our nation itself. The Founding Fathers studied the British tradition of conferring patents, and chose to establish a completely different system. Whereas the British system restricted patents to those wealthy enough to pay exorbitant fees (approximately 11 times the average per capita income) and those who would manufacture their own ideas, our nation’s founders wanted a more free-market approach to patents. The entire system they created - as enshrined by the Constitution - rested on the foundation that intellectual property is a form of property, and that the average person should be able to invent and reap the exclusive benefits of those creations of his own mind.
James Madison, in particular, supported the related ideas that intellectual property is a form of property, that all forms of property are deserving of protection and, furthermore, that “government is instituted to protect property of every sort.” It is telling of the importance property played in our founders’ minds that they believed one of government’s main purposes was to serve as the enforcer and protector of private property.
Justice Gorsuch during oral arguments made clear his Madisonian perspective on intellectual property, and stressed the fundamental point that property rights must continue in perpetuity until the judicial process intervenes - not after an arbitrary review board evaluates it.
At one point, Justice Gorsuch weighed in on the basic point that patents, once granted, are the full possession of the inventor. His perspective recalls the Founding Fathers’ perspective. Indeed, as Justice Gorsuch drove home: “This is not a new idea, that once it’s granted, it’s a private right belonging to the inventor.”
Throughout oral arguments, Justice Gorsuch repeatedly pointed out that intellectual property is as deserving of legal protections (and legal certainty) as physical property, and he reiterated the slippery slope for all property rights if intellectual property rights are routinely abused because of PTAB’s agenda.
Justice Gorsuch appeared, at times, to win over other justices with his persuasive and straightforward point that intellectual property is a fundamental property right.
But, regardless of the outcome of Oil States, the case is a win for conservatives. Even if the Supreme Court ultimately rules against Oil States (and thus, against intellectual property rights), Justice Gorsuch has staked an important position that will be difficult for the court to ignore in the future. In the long run, his explanation of why the United States must continue to defend intellectual property rights to the same extent that we defend physical property will reverberate far beyond the Oil States case.
For conservatives who worked tirelessly in 2016 to make sure the late Justice Antonin Scalia’s seat was left vacant until after the election, Justice Gorsuch’s questions and comments during Oil States are cause to celebrate.
In Neil Gorsuch, we have a justice who is as singularly focused on the plain text of the Constitution and individual rights as Scalia was.
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