By Thomas Long, J.D.
Justices question whether Congress meant to allow the government to be sued for infringement, while making it unable to use the important defense tool of seeking post-grant review to invalidate patents asserted against it.
The U.S. Supreme Court heard oral arguments today in Return Mail, Inc. v. United States Postal Service, a case raising the question of whether the federal government is a "person" that may institute patent review proceedings under the Leahy-Smith America Invents Act (AIA). Return Mail, Inc.—the assignee of U.S. Patent No. 6,826,548 ("the ’548 patent"), which is directed to the processing of mail that is undeliverable due to an inaccurate or obsolete address for the intended recipient—asked the Court to review a decision of the U.S. Court of Appeals for the Federal Circuit, affirming the Patent Trial and Appeal Board’s conclusion in a covered business method (CBM) patent review proceeding that challenged claims of the ’548 patent were invalid as directed to ineligible subject matter under Section 101 of the Patent Act.
According to the specification of the ’548 patent, the processing of mail that was returned to sender was substantially a manual one, and the claimed invention overcame historical issues with prior art manual handling. The patent taught encoding useful information, such as the name and address of the intended recipient, on mail items in the form of a two-dimensional barcode. After unsuccessfully trying to license the ’548 patent to the U.S. Postal Service (USPS), Return Mail filed suit under 28 U.S.C. §1498(a), alleging that the USPS had engaged in the unlawful, unlicensed use of the claimed invention. In April 2014, the USPS filed a petition with the USPTO, seeking a CBM review of certain claims of the ’548 patent and raising several grounds for unpatentability. The Board held that the Postal Service was not statutorily barred from filing the underlying petition for review. On the merits, the Board determined that all of the challenged claims were directed to ineligible subject matter.
Return Mail appealed to the Federal Circuit. A panel majority determined that the USPS had standing to petition for CBM review because it had been "sued for infringement" of the ’548 patent within the meaning of Section 18 of the AIA, which governs CBM review. The court rejected Return Mail’s argument that its suit against the government under Section 1498(a) was not a suit for infringement. According to the Federal Circuit, although there were differences between Section 1498(a) suits against the government and suits for infringement against private parties, those differences were insufficient to compel a conclusion that Congress intended to exclude a government-related party sued under Section 1498(a) from being able to petition for CBM review.
Circuit Judge Pauline Newman dissented, opining that the threshold issue was whether the USPS was within the definition of a "person" under Section 18 and therefore entitled to proceed under the AIA. The majority had determined that Return Mail waived the issue by not raising it in its brief. However, statutory jurisdiction was not subject to waiver, Judge Newman said. In Judge Newman’s view, the general statutory definition of "person" did not include the United States unless expressly provided, and it was reasonable to assume that Congress was aware that "person" as defined in the AIA did not include the United States.
Return mail’s petition for certiorari presented two questions:
- Whether the government is a "person" who may petition to institute review proceedings under the AIA.
- Whether a § 1498(a) action for the eminent domain taking of a patent license by the government is a suit for patent "infringement" under the AIA.
The Supreme Court granted review only with respect to the first question, regarding the status of the government as a "person" under Section 18 of the AIA.
Petitioner’s arguments.Arguing for petitioner Return Mail, Inc., Beth S. Brinkmann of Covington & Burling LLP, opined that the term "person" does not extend to the government for three reasons. First, the Dictionary Act’s definition of "person" in 1 U.S.C. §1 did not include the government. Second, the estoppel provision in AIA §18(a)(1)(D) refers to petitioners litigating in district court or the International Trade Commission, but it is silent as to petitioners litigating in the Court of Federal Claims, where patent litigation against the government takes place. Third, the government has other tools to go after bad patents, such as the USPTO Director’s authority to sua sponte initiate ex parte reexaminations. Justice Sotomayor asked whether the government or the USPS would be able to initiate ex parte reexamination. Brinkmann replied that a government agency would be able to bring a matter to the attention of the Director. Justice Alito asked whether this type of sua sponte contact would be appropriate; Brinkmann said the Patent Act did not prohibit it. However, Brinkmann pointed out, in this scenario, the government would not be a litigant in the proceeding.
Justice Gorsuch stated that "the other side" was likely to argue that Section 207 of the Patent Act (governing domestic and foreign protection of federally owned inventions) allows the government to participate in many aspects of the patent system affirmatively, so it would be natural to extend the government’s standing to inter partes review as well. Brinkmann responded by pointing out that the case of United States v. Cooper Corp., 312 U.S. 600, 604 (1941)—in which the Court held that the government did not fit the definition of "person" for purposes of an action for damages under Section 7 of the Sherman Act—the Court’s decision hinged on the fact that the government had other tools available to seek redress for antitrust violations. Brinkmann also explained that when Congress amended the Sherman Act in 1955 to give the government the ability to bring civil actions, Congress didn’t change the definition of "person," but instead created a new provision, which did not include a treble damages remedy.
Justice Breyer, changing the topic from antitrust law back to patent law, said that there were "quite a few or several provisions in the patent law where the word ‘person’ seems to include the government." He asked Brinkmann to supply examples in which it was "pretty clear" that "person" excluded the government. Brinkmann stated that 35 U.S.C. §317 provides that the government can obtain information from the USPTO about settlements simply by making a request, but "persons" must make more of a showing to get it. Brinkmann cited other sections of the Patent Act that treat the government and "persons" differently, such as the false patent marking provision, Section 292, which provides for a penalty for the government to obtain, while allowing "persons" to seek damages. According to Brinkmann, the statutory scheme revealed that Congress intended for the term "person" to exclude the government unless it expressly stated otherwise in the text.
Justice Sotomayor asked whether it was logical to allow the government to be sued for infringement but to deprive the government of the ability to seek a post-grant review, which was an important defense tool for defendants in infringement suits. Brinkmann responded by saying that review was not a defense in litigation but instead was an action affirmatively taken to seek invalidation of a patent. The government continued to be able to assert all affirmative defenses against liability for infringement in a suit brought against it in the Claims Court, Brinkmann said.
Respondent’s arguments. Malcolm L. Stewart, Deputy Solicitor General, argued on behalf of the USPS. According to Stewart, precedent holding that the term "person" did not ordinarily include governmental bodies also made it clear that this was not a hard-and-fast rule, and that even the Dictionary Act meaning depended on context. Justice Sotomayor suggested that the situation presented by this case posed the risk that the deck would be stacked against a private citizen who was "dragged into" review proceedings brought by a government agency, since the proceedings would have "an executive agency acting as judge with an executive director who can pick the judges, who can substitute judges, can reexamine what those judges say, and change the ruling, and you've got another government agency being the prosecutor at the same time." Under these circumstances, Justice Sotomayor asked whether a clear and express rule were required. Stewart replied that, regardless of how this case comes out, there already were circumstances in which the government could become involved in Patent Trial and Appeal Board proceedings, including situations in which the government is the patent owner under Section 207.
Justice Gorsuch expressed concern that different parts of the executive branch would be at odds—in this case, the USPTO Director resolving a case against the USPS—which went against the usual thinking that the executive branch would be able to resolve its own disputes and speak with one voice. Stewart responded by stating that Congress did clearly contemplate that, under some circumstances, the government could wind up in Board proceedings. Justice Kavanaugh also expressed that it would be "not unprecedented, but unusual" to have "agency versus agency" proceedings. In Stewart’s view, the CBM proceeding here allowed the executive branch to resolve the validity of the ’548 patent within itself, rather than requiring the Court of Federal Claims to adjudicate the question. Pressed by Justice Gorsuch to address the concern he initially raised, Stewart acknowledged that there could be cases in which a government agency appealed an adverse Board decision, creating an "agency versus agency" dispute in federal court. He suggested, however, that it would be "peculiar" to establish a regime in which agency officials informally communicate with the USPTO regarding the validity of a patent, without having those officials’ concerns and arguments made of the record.
This case is No. 17-1594.
Attorneys: Beth S. Brinkmann (Covington and Burling LLP) for Return Mail, Inc. Malcolm L. Stewart, U.S. Department of Justice, for the United States Postal Service.
Companies: Return Mail, Inc.; United States Postal Service
MainStory: TopStory Patent
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