By Andrew Williams --
Last week, we provided a preview of the Supreme Court case Oil States Energy Services, LLC. v. Greene's Energy Group, LLC. that will be argued on November 27, 2017. The underlying case has received a lot of attention, so it is not surprising that the post generated a lot of interest and discussion in the comments. And while the remarks were well-reasoned (and much appreciated), it was interesting that essentially diametrically opposed views could be generated from the exact same language from the cited Supreme Court precedent. To say that the Oil States case has generated a lot of interest would be an understatement. Fifty-eight amicus briefs were filed on behalf of even more unique parties -- 21 in support of petitioner, 25 in support of the respondent, and 12 in support of neither party. In fact, at least 110 separate law professors filed or joined various amicus briefs on both sides (with more than two-thirds supporting the constitutionality of IPRs). There were several arguments asserted by Petitioner and its supporting amici as to why patents represent private property rights and, as a result, cannot be canceled by an adversarial process at the Patent Office. However, the argument as to the unconstitutionality of IPR proceedings appears to grounded in what the Supreme Court said about patent rights in the 1898 case McCormick Harvesting Machine v. Aultman, 169 U.S. 606 (1898). Therefore, we thought it useful to take a closer look at this case and whether it conclusively answers the question presented in Oil States.
McCormick Harvesting stemmed from an 1870 change to the patent laws as they related to reissue applications. Prior to that change, the reissue statute required a patent owner to surrender its patent when filing for a reissue, which the prior Supreme Court case of Peck v. Collins, 103 U.S. 660 (1881), had held "absolutely extinguished the original patent." McCormick Harvesting, 169 U.S. at 610-611. The 1870 version shifted when the surrender of the patent took effect, changing it to the issuance of the amended patent. As a result, the applicant could chose to abandon the reissue application and have the original patent returned. However, Peck and other contemporary Supreme Court cases did not consider, and therefore took no position, on what would happen if an examiner determined that an original claim in a reissue application (as opposed to a newly added claim) was invalid. Would the Patent Office have the ability to cancel such a claim if the patent owner had requested the return of the patent? This was the question decided by McCormick Harvesting.
The patent at question in McCormick Harvesting was U.S. Patent No. 159,506, issued to Marquis L. Gorham on February 9, 1875 and covered automatic twine binders for harvesting machines. The patent owner had filed a reissue application that included several original claims and many new ones. The Examiner rejected claims 3, 10, 11, 25, and 26 of the original patent for lack of novelty. This decision was not appealed, but instead the patent owner (then McCormick Harvesting) requested return of the patent. McCormick Harvesting subsequently sued C. Aultman and the Aultman-Miller Company in the U.S. District Court for the Northern District of Ohio. Subsequently, the Circuit Court of Appeals determined that claims 3, 10, and 11 of the original patent were infringed "unless it should be determined that they were invalidated by their being rejected by the examiner upon an application for a reissue of the same . . . ." Id. at 607. Therefore, the question presented to the Supreme Court was:
If the owner of a patent applies to the patent office for a reissue of it, and includes among the claims in the application the same claims as those which were included in the old patent, and the primary examiner rejects some of such claims for want of patentable novelty, by reference to prior patents, and allows others, both old and new, does the owner of the patent, by taking no appeal and by abandoning his application for reissue, hold the original patent, the return of which he procures from the patent office, invalidated as to those of its claims which were disallowed for want of patentable novelty by the primary examiner in the proceeding for reissue?
Id. at 607-08. In other words, did the Examiner have the authority to reject the original claims in a reissue application that was abandoned and returned?
The Court answered the question in the negative. In doing so, it never specifically evoked the Constitution, nor did it specifically state that Congress could never provide the Patent Office with the authority to cancel a claim in an issued patent. Nevertheless, the Court did cite to cases whose resolutions were grounded in the Constitution. Moreover, it did use language that is often associated with constitutional violations:
Had the original patent been procured by fraud or deception, it would have been the duty of the commissioner of patents to have had the matter referred to the attorney general with the recommendation that a suit be instituted to cancel the patent; but to attempt to cancel a patent upon an application for reissue when the first patent is considered invalid by the examiner would be to deprive the applicant of his property without due process of law, and would be in fact an invasion of the judicial branch of the government by the executive.
Further, the Court stated that "[t]he only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent." The difficulty, of course, is that there was no statutory authority for the Patent Office to act in such a manner at this time. In fact, before the 1870 change to the reissue process, an examiner had absolute discretion to cancel any reintroduced original claim (because the original patent had already been surrendered). Nevertheless, without that grant of authority from Congress, an examiner's cancellation of the original claims after 1870 would have certainly been a violation of due process and an invasion on the then-exclusive jurisdiction of the judicial branch by the executive. As a result, we are left with language in McCormick Harvesting that can be used to support either interpretation, whether alleging the case refines the constitutional limits of Congress with regard to issued patent rights, or whether alleging that McCormick Harvesting case rests solely on the lack of statutory authority at the time.
So how will the current Supreme Court interpret McCormick Harvesting? It's unclear. Cynically, using the above reasoning, the Court could cite to McCormick Harvesting as supporting its opinion in Oil States regardless of what the Court's conclusion turns out to be. And, somewhat unsatisfyingly, we will only truly find out what McCormick Harvesting means if and when the Court tells us when it resolves Oil States. Until then, hopefully the Court will give us some clue during the oral hearing next Monday.