An Interview with Kent L. Richland
| Author | Susan Perng Pan |
| Position | Susan Perng Pan is a partner with Sughrue Mion, PLLC in Washington, D.C. She may be reached at span@sughrue.com. |
| Pages | 7-65 |
Published in Landslide® magazine, Volume 10, Number 5, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
PROFILES IN IP LAW
On April 24, 2018, in Oil States Energy Services, LLC v.
Greene’s Energy Group, LLC (No. 16-712), the Supreme Court
held that the U.S. Patent and Trademark Ofce’s (USPTO’s)
provisions for inter partes review (IPR) of patents does not
violate the Constitution by having a non–Article III tribunal
determine patent validity. During oral argument, Justice
Kennedy asked the patent owner’s counsel which of the Court’s
precedents best supported its position that the IPR statute
violates Article III. In response, the patent owner’s counsel
posited Northern Pipeline or one of the bankruptcy cases.
Kent Richland argued before the Supreme Court in Stern v.
Marshall, the most recent bankruptcy case, in which a 5–4
majority of the Court held that because bankruptcy courts were
not Article III courts, it was unconstitutional for them to issue
nal judgments in common law disputes between private par-
ties. Based on his experiences and insights from the Stern case,
Kent shared his thoughts and predictions on how the Article III
issues could play out in Oil States. A transcript of that discus-
sion, which has been edited for length, follows.
For the benet of those who may not be as familiar with Stern v.
Marshall, please provide a brief background of how the Article
III issues arose there and in the bankruptcy courts in general.
The Stern v. Marshall case involved a rather infamous fact
situation. Anna Nicole Smith, who was my client, had married
a man who was signicantly older and signicantly wealth-
ier than she was, and his family was unhappy with that (to
put it mildly). Her husband lived for only about a year after
they married. His will left nothing to her, and all of his assets
had been placed into a trust. The question was whether Anna
Nicole was entitled to any of those funds.
Her claim was that her husband had actually attempted to
have his lawyers draft an inter vivos trust for her benet but
that his son Pierce Marshall had interfered with that effort.
The way that the bankruptcy courts became involved was
that Pierce Marshall made sure that Anna Nicole could not
have any access to any of her late husband’s assets. Not hav-
ing the funds to pay her debts, she declared bankruptcy. Of
course, one of the fundamental things that bankruptcy courts
do is gather all of the assets of the debtor, in this case Anna
Nicole, so that they can be fairly divided among the creditors.
One of her assets was her legal claim against Pierce Marshall,
that he had interfered with her husband’s efforts to set up a
trust for her; that’s a common law tort claim called interfer-
ence with the expectancy of a gift. For efciency reasons, the
bankruptcy court itself will typically try a legal claim that is
an asset of the debtor, and so the bankruptcy court in our case
proceeded to do that. It found that Pierce Marshall had inter-
fered with his father’s efforts to set up a trust for Anna Nicole
that was to hold half the increase in his assets during his mar-
riage to her—a total judgment of about $180 million.
But a bankruptcy court is not an Article III court; its
judges do not have life tenure and, unlike Article III judges,
their salaries can be changed during their tenure. Pierce
argued that because the bankruptcy court was not an Arti-
cle III court, the bankruptcy court could not constitutionally
enter a nal judgment against him in a common law tort
action. By a 5–4 vote, the U.S. Supreme Court ultimately
agreed with Pierce and held that an Article III court was nec-
essary and therefore that the bankruptcy judge’s decision was
not an enforceable nal judgment.
Having argued the Article III issue before the Supreme
Court, what are the main sources of difculty for the
Supreme Court in deciding this kind of issue?
There are really three basic reasons why the Court has had
so much trouble with these cases. First, there is a tremen-
dous amount at stake for purposes of the way our government
works. Article III provides that only the judicial branch of the
government—the Article III courts—can exercise the judicial
power of the United States, so it embodies one of the most
fundamental structural principles of our system—the separa-
tion of powers. The idea is that federal judges are supposed
to be independent of the political branches of the govern-
ment, the executive and the legislative; that’s the reason
they are appointed for life and their compensation can’t be
changed. But at the same time, there are only a limited num-
ber of Article III judges and litigation before them is very
expensive; and there are some types of situations (bankruptcy
is one of them) where, for reasons of efciency, it makes
sense to have specialized, non–Article III courts dealing with
the specialized law and disputes that arise in that situation.
Thus, typically, the tension in these cases is between Arti-
cle III values (really fundamental values, most importantly
the separation of powers) and the need for a cost-effective
way to handle certain kinds of disputes. If every decision that
the government makes had to go to an Article III court, the
Article III courts would be overwhelmed. For example, the
number of bankruptcy cases is many multiples of the number
An Interview with Kent L. Richland
Founding Partner, Greines,
Martin, Stein & Richland LLP
By Susan Perng Pan
Susan Perng Pan is a partner with Sughrue Mion, PLLC in
Washington, D.C. She may be reached at span@sughrue.com.
Published in Landslide® magazine, Volume 10, Number 5 , a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
of regular Article III civil cases that are tried in the courts. If
every case that was in bankruptcy had to be tried in Article
III courts, the system would not be able to operate, so these
cases present very real practical difculties that have signi-
cant real-world impact on our very system of government.
Another reason these cases are so difcult is that Arti-
cle III itself provides essentially no guidance on what “the
judicial power of the United States” is. All it says is that the
judicial power of the United States is vested in one Supreme
Court and in such courts as Congress may from time to time
ordain and establish. So, since the beginning of our nation,
the Supreme Court has struggled with this question: “What
constitutes the judicial power of the United States?”
Third, because of the abstract nature of this question and
the absence of guidance in the Constitution itself, the Court has
come up with a signicant number of different tests to make
this determination, and in modern times it has analyzed these
issues in two fundamentally different ways. In Stern v. Mar-
shall, the majority employed a very formal analysis to hold that
the bankruptcy courts could not decide common law disputes
between private parties. Looking at its past cases, the major-
ity noted that the Court had held that categories of courts were
traditionally permitted to decide cases even though they were
not Article III courts—for example, military courts and ter-
ritorial courts. By contrast, the bankruptcy courts were not
among those that had historically been empowered to decide
common law disputes. The Stern v. Marshall dissent adopted
a very different approach to the issue; it employed a balanc-
ing test. That test asks, “To what extent does a non–Article III
court’s ability to decide common law cases undermine the pur-
poses behind Article III, and does the cost of such intrusion
outweigh the need for and advantages gained by having these
disputes decided in a non–Article III forum?” Perhaps not sur-
prisingly, the more formalistic approach tends to result in cases
being determined to require Article III courts, while the balanc-
ing test often results in a decision that, for pragmatic reasons, a
limited intrusion into Article III values is an acceptable price to
pay for more efcient dispute resolution.
In Oil States, there’s a very similar kind of dilemma as
was faced by the Court in Stern v. Marshall. The Patent Trial
and Appeal Board (PTAB) is doing something that looks very
much like what an Article III court normally does—decid-
ing an inter partes dispute between two private parties—but
it’s an efcient way of resolving questions concerning the
validity of a patent that would be a real burden on the court
system if they were required to go to Article III courts. At the
same time, there are legitimate concerns that Article III val-
ues, including separation of powers, are being diluted by the
fact that the dispute is being decided by what is effectively an
agency, as opposed to a court.
What are the important similarities and differences between
what you faced in Stern v. Marshall versus what Oil States
presents in terms of the Article III question?
Most importantly, both cases are dealing with private par-
ties who are engaged in a dispute over an issue in which both
have an interest in the outcome. In the case of an IPR, the
patent owner has what she claims is a property interest in
the patent that the other side is attempting to invalidate. The
second thing that is very similar is that you’ve got a system
that looks very much like the regular litigation system that
we have in our federal and state courts. There are advocates
on each side who engage in discovery and then present evi-
dence. They do so before a trier of fact, and that trier of fact
then reaches a decision at the end. That looks very much like
an exercise of judicial power. Those are the two most sig-
nicant ways in which the bankruptcy and IPR situations are
very similar. One of the main arguments that Oil States’ law-
yer made in its brieng and at the argument was that very
similarity between these systems—that there is something
peculiarly “litigational” about what parties are doing in front
of the PTAB and that the decision made by such a system is
by denition an exercise of judicial power.
Now, how is the bankruptcy situation different from that
presented in the Oil States case? Signicantly. Perhaps the
most profound difference is that bankruptcy courts can essen-
tially entertain virtually any kind of civil case that might result
in an increase in the assets of the bankruptcy estate. In Stern v.
Marshall, it happened to be interference with an expectation
of inheritance—a tort. But you could have an automobile acci-
dent case, a contract case, or essentially the entire gamut of the
civil law that might be litigated in the bankruptcy courts. The
PTAB situation is quite different. There, you’ve got a very lim-
ited issue that is being litigated, and it’s an issue with which
the government is intimately involved. That involvement, of
course, is that it is the government that issues the patent and
it’s the government that is then deciding, in these inter partes
review cases, whether or not there was a mistake in issuing the
patent. So that is a pretty narrow and relatively government-
centric kind of decision that’s being made, in contrast to the
wide-ranging nature of the essentially private disputes that are
decided in bankruptcy courts.
The other thing that is very different is that bankruptcy
cases invariably involve monetary recovery because the ques-
tion there is invariably whether a bankruptcy estate will or
will not be increased. Of course, that’s not what is at issue in
the inter partes review cases. Of course, there will very likely
be monetary effects from what may result, but the decision
of the PTAB does not result in award of damages from one
party to another or any other kind of explicit monetary award.
In fact, one of the most important arguments, if not the most
important argument, that the U.S. government made at the
oral argument in Oil States was that typically civil cases that
are decided by Article III courts have to do with an explicit
dispute over a monetary sum. PTAB cases are explicitly ghts
over rights. Ultimately, of course, there are economic conse-
quences, but this is a difference that I think is quite signicant
in this context.
How do these similarities and differences weigh in the con-
stitutionality question raised in Oil States?
Rather signicantly. In one sense, it is easy to see that the
Stern v. Marshall majority was ultimately convinced that the
bankruptcy system violated Article III because bankruptcy
courts were deciding exactly the same kinds of disputes—and
essentially the very same range of disputes—that have been
Published in Landslide® magazine, Volume 10, Number 5, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
and are the traditional bailiwick of Article III courts. One of
the things that the chief justice’s majority opinion in Stern v.
Marshall picks up from earlier decisions is that the essence of
what Article III courts do is decide issues that were the “stuff
of the common law” in 1789, when the Constitution was
adopted. And, of course, most state causes of action between
private parties—common law causes of action, civil causes
of action—generally nd their genesis in the common law as
it existed in 1789. The majority in Stern v. Marshall said that
that’s really the essence of what Article III courts do, and it’s
therefore what non–Article III courts can’t do. By contrast,
in Oil States, the issue before the PTAB is this narrow ques-
tion of whether a patent was mistakenly issued in the rst
instance. Because it is a function of government to issue pat-
ents, the issue before the PTAB ultimately sounds an awful
lot more like an exercise of government power, and par-
ticularly that of the executive branch of the government, as
opposed to something that the Court does.
What about the debate on the public versus private rights issue?
To some degree, that’s pretty much what I’ve just been
talking about. The formal approach to Article III analysis
employed by the Stern v. Marshall majority recognizes that
a traditional exception to the requirement of an Article III
decision maker is whether the matter at issue is a “public”
right versus a “private” right. Private rights are those kinds
of rights that were and are litigated under the common law
as originally understood in 1789, including as the common
law has developed since then. It is a little more difcult to
dene public rights with any precision—as originally con-
ceptualized by the U.S. Supreme Court, as rights over which
the government itself has the control and that, as a matter of
public interest, we expect the government to control. One of
the major arguments in Oil States is what’s really at stake
when there is inter partes review: Are we talking about a pub-
lic right, which is the right of the government to issue and
to decide that it has improperly issued a patent? Or are we
talking about a private right, in that you have two parties liti-
gating over the patent issue because one of the parties would
like to be able to take advantage of and develop the technol-
ogy that is currently protected by a patent that was issued to
that party’s opponent?
On the public versus private rights issue, some of the jus-
tices posed many questions on the investment in the patent
right. Even though the government may have issued that
right in the rst instance, can something that looks like a
public right be converted to something that looks more like
a private right by the fact that a party invests a lot of time
and money into the right granted by the government?
Justice Breyer expressed particular concern about that at
the Oil States argument. He posed the scenario of a patent
holder who has had the patent for many years and, relying
on the patent, spends billions of dollars building factories
to manufacture the patented product. Then, all of a sudden,
someone comes along and says that granting the patent was
a mistake in the rst place—that it’s a shame that it cost the
patent holder billions of dollars, but the patent should never
have been issued. Justice Breyer wondered whether there
might very well be some kind of a transformation of what,
in the rst instance, might be deemed just a public right, into
something, simply by virtue of the detriment caused by rea-
sonable reliance on the patent, became a private right. It’s
going to be extremely interesting to see if he writes one of
the opinions of this case because if he does so, there is a pos-
sibility that he might adopt a very creative approach to the
problem presented in these cases along the lines that he spoke
about at oral argument.
It seems that question might fall under a different constitution-
ality issue, but maybe not one presented in the Oil States case.
That’s exactly right. Some of the justices asked questions
and talked about whether ultimately there might be a due pro-
cess issue or a takings question presented in the Oil States
situation. It may well be that one of those other provisions of
the Constitution would guard against the kind of injustice that
might occur where there has been very signicant reliance on
the grant of a patent.
Do you have a prediction of how Oil States is going to be
decided?
Yes, I do. I’ve studied the argument carefully. As is his
usual practice, Justice Thomas did not ask any questions,
so there are no clues from the oral argument about how he
might decide this case. But in the Court’s previous Arti-
cle III cases, he has reliably voted for the “formal” analytic
approach that has resulted in the invalidation of non–Article
III decision-making practices. Justice Alito asked the few-
est of the other justices, and his questions seemed to indicate
that he is inclined to conclude that the inter partes review
system presents substantial Article III problems. Justice Gor-
such seemed even more hostile to the defenders of the PTAB;
moreover, he decided Article III cases before joining the
Supreme Court, and in those cases he was a strong defender
of Article III. And the chief justice is a strong Article III pro-
ponent; Chief Justice Roberts’s opinion in Stern v. Marshall
talks about courts’ Article III powers and responsibilities in
almost spiritual terms, and he sees the function of judges as
being decidedly different from that of agencies. In fact, at
one point in the Oil States argument, one of the advocates
referred to the PTAB adjudicator as a “judge”; Chief Justice
Roberts stated, in no uncertain terms, that someone sitting on
the PTAB was not what he thought of as a judge, so I suspect
that you’re going to have four clear votes nding that the inter
partes PTAB procedure presents a problem under Article III.
On the other side, Justices Breyer, Kagan, Ginsburg, and
Sotomayor—I think they all made it pretty clear from their
questions that they are inclined to conclude that there is no
right to an Article III court here. I think that Justice Kennedy,
as usual, may well be the swing vote. Just reading between
the lines of the questions he asked—such as whether Con-
gress could condition the award of a patent on having to
agree to the inter partes procedures—he seemed to be mak-
ing the point that a patent is, by its nature, a limited right. In
essence, the point seemed to be that when one gets a patent,
Continued on page 63
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