Exchange Currency

Supreme Court Upholds New Process for Challenging Patents

WASHINGTON—The U. S. Supreme Court on Tuesday upheld a new government process for challenging the validity of patents, cementing a method that technology companies have used to knock out patent protections for more than a thousand claimed inventions.

The court, in a 7-2 ruling written by Justice Clarence Thomas, affirmed the constitutionality of the new process, created by Congress in 2011 to offer a quicker and cheaper process for challenging patents before the U. S. Patent and Trademark Office, instead of going to court.

Lawmakers created the new challenge system, called inter partes review, in part as a response to concerns that the Patent Office had granted too many weak patents, leading to abusive patent-infringement litigation, including by so-called patent trolls.

Patent owners have criticized the process, saying it’s unfair that an inventor or company can see their valuable patent rights canceled by a government agency without their getting a day in court.

Justice Thomas, writing for the court, said the Patent Office makes the decision to grant a patent in the first place, and there’s nothing unconstitutional about Congress giving the agency the authority to reconsider that decision later on.

Tech companies, including Apple Inc, Google, Intel Corp. and Samsung Electronics Co. supported the new process, as did retailers. Both groups have been subject to frequent patent-infringement lawsuits.

As the technology industry has grown in recent decades, tech leaders have complained of a simultaneous growth in companies they say exist mostly to file frivolous patent challenges. Fighting those challenges was timely and expensive, pressuring many companies to settle with them instead.

While tech giants cheered Tuesday’s decision, the patent landscape is complex, and the ruling is also a blow for leading pharmaceutical and biotechnology companies. They rely on strong patent protections and are wary of rivals who may seek to challenge their lucrative innovations.

More than 1,300 patents have been canceled in whole or in part under the new process, according to court papers. Critics say the Patent Office is invalidating patents at higher rates under the new system than when patent challenges are considered by a federal court.

Justice Neil Gorsuch, joined by Chief Justice John Roberts, dissented.

“Until recently, most everyone considered an issued patent a personal right—no less than a home or farm—that the federal government could revoke only with the concurrence of independent judges, ” Justice Gorsuch wrote.

The case before the court centered on an invention for protecting oil wellhead equipment during the hydraulic fracturing process. A Patent Office board in 2015 invalidated a patent on the procedure held by Oil States International Inc, an oil-services firm.

Write to Brent Kendall at brent. kendall@wsj. com


Business news