U.S. Supreme Court upholds legality of the Inter partes review process

To the chagrin of patent trolls and big pharma, in a ruling with widespread implications for high technology companies, including Apple and Samsung, U.S. Supreme Court justices in a 7-2 ruling upheld the IPR system.

In a development with significant implications for tech companies, on Tuesday the U.S. Supreme Court approved of a government review process that is prized by tech companies as an easy and cheap way to combat “patent trolls” and others that bring patent infringement lawsuits.

Significantly, the Supreme court justices ruled 7-2 that the inter-partes review (IPR) by the U.S. Patent and Trademark Office does not violate a defendant’s right under the U.S. Constitution to have a case adjudicated by a federal court and jury.

Houston-based oilfield services company, Oil States International Inc, had challenged the legality of the IPR process.

Justices Neil Gorsuch and John Roberts dissented from the decision authored by fellow conservative Justice Clarence Thomas.

The ruling has brought cheers to many Silicon Valley companies and has brought displeasure to name-brand drugmakers, which had called the IPR process a threat to innovation. Firms dubbed as “patent trolls” have a business model that is based on suing other companies over patents rather than actually making products.

The IPR process has been especially popular with tech companies, including Apple and Samsung Electronics Co Ltd which have been the frequent target of patent trolls. However big pharma, which includes companies such as Allergan plc, AbbVie Inc and Celgene Corp have called for scrapping the IPR process.

Writing for the court, Thomas called the IPR process an extension of the Patent and Trademark Office’s decision to grant a patent.

“Inter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO’s authority to conduct that reconsideration,” wrote Thomas.

While upholding the process, the court, in a separate 5-4 ruling on Tuesday, faulted one aspect of the manner in which the reviews were carried out.

The Supreme Court justices ruled that when several parts of a patent are challenged, the patent office does not have the discretion to review only some of them.

Paul Fucito, the Patent Office’s spokesman stated the agency is “carefully considering” Tuesday’s rulings and is evaluating their impact on proceedings before its administrative tribunal that conducts the reviews.

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