Opinion analysis: Supreme Court forecloses judicial review that could save “bad patent claims,” while dissent bemoans a “rough day” for judicial power

The chief justice described the legal issue in Thryv Inc. v. Click-to-Call Technologies LP as “small potatoes,” and with the current national lockdown, he seems even more right today than when he made the comment months ago at oral argument. The technical outcome in the case appears to bear out that description. The Supreme Court held, 7-2, that Section 314(d) of the Patent Act bars courts from reviewing a decision of the Patent Office to institute an inter partes review of an issued patent even when the agency initiated the review in violation of a statutory time limit.

Yet despite the mind-numbing technicality of that holding, Justice Neil Gorsuch, joined only in part by Justice Sonia Sotomayor, wrote a 23-page, rhetorically sharp dissent declaring that the decision marks a “rough day” that “carries us another step down the road of ceding core judicial powers to agency officials and leaving the disposition of private rights and liberties to bureaucratic mercy.” Why the pointed language? The answer is that Thryv is a tiny skirmish in a much larger war. The majority seems focused on the little skirmish and the practical considerations about how to “weed out bad patent claims efficiently.” Gorsuch is worried about issues of judicial power much more generally. Let’s look at both.

The majority’s perspective: small potatoes and the weeding out of bad patents

For everyone interested in the details of this case (patent practitioners, listen up!), the majority opinion by Justice Ruth Bader Ginsburg has a specific holding plus a somewhat broader lesson about the Supreme Court’s continuing concern about “bad patents.”

The narrow holding is that the statute barring judicial review of Patent Office decisions to institute inter partes review, 35 U.S.C. 314(d), does foreclose courts from reviewing any “ordinary dispute” concerning “an institution-related statute.” The statute limits the courts’ ability to review with this language: “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” The crucial words are “under this section.” The dispute in Thryv was over whether the statute forbids courts from reversing the Patent Office when it failed to comply with a statutory time limit found in another section of the Patent Act.

The Supreme Court’s prior decisions were not clear. In Cuozzo Speed Technologies v. Lee, a divided court held that the statute did preclude review when the Patent Office’s decision to institute review was alleged to violate another section of the Patent Act, but the Cuozzo court described the other statute as “closely tied” to the Patent Office’s institution decision under Section 314. In a subsequent case, SAS Institute Inc. v. Iancu, the court read Cuozzo narrowly and held that the courts could review and overturn the agency’s attempt to institute review on some, but not all, issues presented in a petition to institute because another statute, outside of Section 314, indicated that the agency must make all-or-nothing choices in its institution decisions.

To the extent that Thryv presented a conflict between those two earlier cases, the Cuozzo decision won, with the court reading it expansively. Thus, patent attorneys who believe that the Patent Office has unlawfully instituted an inter partes review can get a pretty clear message from Thryv—abandon all hope, or almost all. The court drops a footnote that it is not deciding whether courts can grant mandamus against the agency for unlawfully instituting a proceeding, but even if they can, that power would be limited to “extraordinary” cases.

In part III-C of its opinion (a part not joined by Justices Clarence Thomas and Samuel Alito), the majority candidly explains that one reason for its result is that the contrary rule would waste resources (because the entire administrative proceeding would need to be vacated) and operate only “to save bad patent claims” (because patent owners would seek review of institution decisions only when the agency canceled their patents). That portion of the opinion has a message for patent attorneys: A majority of justices continue to think that “bad patents” are a problem, and they are willing to cede a bit of judicial power “to weed [them] out.” Worse still, that reasoning is in a majority opinion authored by Ginsburg, who is often viewed as more favorable to intellectual property rights than many of the other justices (she and her copyright-law-professor daughter have even been inducted into one group’s IP Hall of Fame). Ginsburg’s use of anti-patent rhetoric in the opinion is a terrible sign for attorneys representing patentees.

The dissent’s view: ceding core judicial powers

For everyone interested in the big picture (constitutional and administrative law aficionados, I’m talking to you now!), Gorsuch’s dissent shows just how much passion he has about the constitutional doctrine of separation of powers in general, and in particular about the relationship between courts and administrative agencies—or rather between “the independent Judiciary” that “the Constitution promises” and “a bureaucracy in Washington” that “favors those with political clout, the powerful and the popular.” Gorsuch isn’t mincing words. He’s carrying on the tradition of his direct predecessor, Justice Antonin Scalia.

To Gorsuch, this case is not about “bad patents”—the phrase does not appear in his opinion—and it’s not really very much about patent law at all.  It’s instead about the allocation of decisional power in the government, and even in this “small potatoes” case, he’s trying to enforce some constraints on the administrative state. Two points stand out about the dissent.

First, while some of the dissent is a reiteration of complaints Gorsuch raised in his dissent two years ago in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC (in which he unsuccessfully argued that the entire administrative process for reviewing issued patents is unconstitutional), he’s got a better legal basis to dissent in Thryv. He still objects to “a politically guided agency” being able “to revoke [a] property right,” and he has catchy new rhetoric to describe the target of his wrath: “property-taking-by-bureaucracy.” But he has an additional objection here—that the court’s holding goes against the “presumption of judicial review,” which “is deeply rooted in our history and separation of powers” and helps to “guard[] against arbitrary government.” That additional legal basis for objecting in Thryv gains him the vote of Sotomayor, who joins the portion of the dissent based on the presumption of judicial review but, consistent with her vote with the majority in Oil States, does not join the portions containing Gorsuch’s broad constitutional objections to the entire administrative process for reviewing the validity of issued patents.

Yet, although Gorsuch gained a vote in Thryv, he also lost a vote he had in Oil States. Chief Justice John Roberts fully joined Gorsuch’s Oil States dissent; he’s with the majority here. Why? If anything, Gorsuch’s dissent seems stronger in this case because he has to demonstrate not that the entire structure of these administrative processes is unconstitutional, but only that the courts should retain their traditional role of policing the agency to ensure compliance with statutory law. The answer has to be in the chief justice’s “small potatoes” comment during oral argument. If this administrative process can constitutionally exist (and Oil States holds that it can), the chief justice does not seem eager to involve the courts in the procedural details of the system—especially if the task would result only in saving “bad patent claims.”

Attorneys seeking to curtail the administrative power of this or other agencies might find Gorsuch’s dissent thrilling to read, but the vote total of 7-2 (the same as in Oil States) is sobering.

Conclusion

Even though the Patent Office’s expanded administrative processes for reviewing the validity of issued patents were authorized by Congress less than 10 years ago in 2011, Thryv is already the fourth case that the Supreme Court has heard challenging the executive branch’s management of those processes. The executive branch has won three of those four (Cuozzo, Oil States and Thryv), and in the only one it lost (SAS), the court required the agency to review even more challenges to issued patents than the executive branch had wanted. While Gorsuch may consider Thryv to mark a “rough day,” it’s been a rough decade for anyone seeking to curb the Patent Office’s administrative power.