Supreme Court Upholds Procedure That’s Said to Combat ‘Patent Trolls’

The Supreme Court on Tuesday upheld the constitutionality of a procedure that makes it easier to challenge questionable patents.

The procedure, created by Congress in 2011, resembles a trial in federal court, but is conducted by an executive-branch agency. Supporters say it helps combat “patent trolls,” or companies that obtain patents not to use them but to demand royalties and sue for damages.

Opponents say the procedure violates the Constitution by usurping the role of the federal courts, violating the separation of powers and denying patent holders the right to a jury trial.

By a 7-to-2 vote, the Supreme Court ruled that the procedure was a permissible way for the agency that administers patents to fix its mistakes.

Stephanie Martz, general counsel of the National Retail Federation, said the court’s ruling was “a major step toward stopping patent trolls and their attempts to commit extortion against retailers and other businesses that have done nothing wrong.”

“Making it clear that many cases can and should be resolved by fixing patents at the patent office rather than rushing to court to sue for infringement makes it much easier for our members to fight patent trolls,” Ms. Martz said in a statement.

But Adam Mossoff, a law professor at George Mason University, said in a statement that the Supreme Court had taken a wrong turn.

The decision, he said, “destabilizes the foundation that patents provide to the U.S. innovation economy, as stable and effective property rights are the necessary platform from which inventors, venture capitalists and companies create the new products and services that have made life a modern miracle.”

The case grew out of a dispute involving Oil States Energy Services, which owned a patent for protecting wellhead equipment during hydraulic fracturing while drilling for oil. A competitor, Greene’s Energy Group, successfully challenged the patent under the procedure, called “inter partes” review, which is Latin for “between the parties.”

An administrative tribunal created by the 2011 law, the Patent Trial and Appeal Board, ruled that the patent was invalid. According to a brief filed by the federal government, the tribunal had, as of July, canceled all or part of more than 1,300 patents.

Read more of this The New York Times article by Adam Liptak by clicking here.

Photo: Al Drago for The New York Times