- Is the government a person? Sometimes, but not for AIA post-grant patent proceedings
- June 11, 2019 | Authors: James Duncan; Anna C. Halsey; Ann G. Fort
- Law Firms: Eversheds Sutherland (US) LLP - Atlanta Office; Eversheds Sutherland (US) LLP - Atlanta Office
On June 10, the US Supreme Court ruled 6-31 that the Federal Government is not a “person” entitled to institute post-grant proceedings—inter partes review, post-grant review, or covered business method review (CBM review)—before the Patent Trial and Appeal Board (PTAB) to invalidate a patent under the America Invents Act (AIA). Post-grant proceedings provide petitioners an advantageous venue to invalidate patents because the proceedings apply the preponderance of the evidence standard rather than the higher clear and convincing standard applied in district court litigation. The AIA provisions that created the post-grant proceedings—35 USC §§ 311, 321, and AIA §18(a)(1)(b)—are accessible only to a “person”: “a person” other than the patent owner may seek an inter partes review; “a person who is not the owner of a patent” may petition for post-grant review of that patent; and “a person” may seek CBM review as a defense to a charge of infringement. In Return Mail Inc. v. Postal Service,2 the Court held that the AIA was controlled by the long-standing presumption that “person” does not include the Government, and that the legislative history failed to show an intent by Congress to include the Government as a “person” under the statute.
Background on the Dispute Between Return Mail and the Postal Service
Return Mail, Inc. (Return Mail) developed a method for processing undeliverable mail and obtained US Patent 6,826,548 (the ’548 Patent) covering its technology. After obtaining its patent, Return Mail explored licensing its technology to the US Postal Service (the Postal Service), but the parties never reached a deal. In 2006, the Postal Service introduced a new system to process undeliverable mail, and Return Mail again offered it a license to the ’548 Patent. In view of this new offer to license, the Postal Service petitioned for ex parte reexamination of the ’548 Patent. The original claims were cancelled during reexamination, but validity was confirmed and the ’548 Patent reissued with new claims. Return Mail then sued the Postal Service for infringement of the reissued patent in the Court of Federal Claims and the Postal Service instituted a CBM review before the PTAB. The PTAB invalidated the patent on the basis that it claimed ineligible subject matter—over Return Mail’s objection that the Postal Service was not a “person” and therefore was not able to petition for CBM review. The Federal Circuit affirmed the PTAB’s decision and held that the Government is a “person” eligible for CBM review.
Question Presented and Legal Framework
The question presented to the Court was whether a federal agency is a “person” able to access the PTAB’s three new types of administrative proceedings for challenging issued patents. Because the patent statutes do not define “person,” the Postal Service had to present an “affirmative showing” that Congress meant for “person” to include the Government, and in doing so, overcome the Dictionary Act’s direction that the term does not include the Government. There also is a presumption of statutory interpretation that “person” does not include the Government.
The Majority: No Affirmative Showing the Government Is a Person Under the AIA
Writing for the majority,3 Justice Sotomayor found the Postal Service’s first argument—that the patent statutes consistently used “person” to include the Government—unpersuasive because the context in which the patent statutes use “person” was not uniform or consistent. While Congress typically uses the same word to mean the same thing throughout a statute, context prevails. There are 18 different uses of “person” in the patent statute: some plainly included the Government, others excluded the Government, and the remainder may be read either way. The AIA provision fell in the last of these three buckets and the Court did not find uses including the Government—like the ability to file for patents—analogous to what a federal agency can do following the issuance of someone else’s patent. In other words, the ability to file for patents did not inform whether “person” should mean the same thing for cancellation of a patent under the AIA, because the two rights arise under unrelated parts of the patent statute.
The Court identified the multiple conflicting uses of “person” in the patent statute as the fatal flaw in the Postal Service’s consistent-use argument, thus precluding the Court from narrowing “person” to a set of specific uses and determining what the consistent usage included. Essentially, the Postal Service asked the Court to ignore all uses of “person” excluding the Government and to focus only on uses including the Government when determining consistent use of the term.
The second argument raised by the Postal Service focused on the Government’s many different long-standing uses of the patent system as a “person.” For example, it is well established that the United States Patent and Trademark Office (USPTO) treats the Government as a “person” that can cite prior art to the USPTO or request reexamination of a patent. The Court did not find the USPTO’s interpretation of “person” in the Manual of Patent Examining Procedures (MPEP)—in the context of an ex parte reexamination proceeding—analogous or relevant to AIA review because the two systems of review are meaningfully different. Ex parte reexamination is an internal USPTO process and is initiated only after the USPTO determines it has received information bearing on a patent’s validity. In contrast, AIA post-issuance review proceedings are adversarial and involve briefing, discovery, hearings, and the presentation of evidence. The losing party also has appeal rights in an AIA proceeding. What is more, the Government is a unique infringer. Patent owners can sue the Government only in the Court of Federal Claims and are limited to monetary damages; jury trials and injunctive relief are not available. The Court also noted an absence of legislative history suggesting Congress intended the Government to have access to AIA review proceedings. In sum, the Postal Service failed to present any evidence that Congress had a settled meaning for “person” as it applies to AIA proceedings.
Third, the Court found it was not anomalous for Congress to restrict the Government’s access to the de novo review of AIA proceedings and force district court review of invalidity arguments under a clear and convincing standard. The Postal Service posited that the Government’s susceptibility to civil liability for patent infringement enables it to assert all invalidity defenses. But, exclusion from AIA proceedings does not prevent the Government from defending against infringement: the Government can still assert invalidity, just not in an administrative proceeding. Availability of AIA proceedings to non-governmental actors is supported by public policy because the proceedings are expedient and non-governmental actors face greater risks: injunctive relief, trial by jury, and punitive damages. The Court concluded it was reasonable for Congress to exclude Government access because it faces lower risks for infringing conduct. Also, excluding the Government from AIA proceedings avoids a stacked-deck situation where patent owners must defend their rights against a federal agency in a proceeding overseen by another federal agency. The Court further noted that if the Government were a “person” under the AIA, then it may not be estopped from relitigating arguments because the AIA’s estoppel provisions precluded reraising arguments only in proceedings before the district courts, the International Trade Commission, and the USPTO—not the Court of Federal Claims.
The Dissent: The Presumption That the Government Is Not a Person Is Not Hard and Fast
Justice Breyer’s dissent—joined by Justices Ginsburg and Kagan—latched onto the uses of “person” in the application for patent rights and intervening rights to support the conclusion that the Government is a “person” under the AIA. Much criticism was levied against the majority for its focus on uses of “person” that could not logically include the Government. In other words, pointing to uses that excluded the Government—when those uses logically excluded the Government—did not show inconsistent use, and the instances where the Government was included as a person—obtaining rights and infringement defenses—were more aligned with use in the AIA. The dissent also argued that the AIA’s legislative goals, like improving the quality of patents and making the patent system more efficient, supported characterizing the Government as a “person.” Little credence was afforded to the majority’s concern that a federal agency would evaluate a claim brought against a patent owner by another federal agency—noting how a private party could institute an AIA proceeding against a patent owned by the Government and necessarily require one agency to adjudicate a claim against another agency. Similarly, the dissent did not view the lack of injunctive relief as a reason for Congress to exclude the Government as a “person,” and instead cited to the potential for large damages awards and quick resolution as justification for governmental access to AIA proceedings.
The Government has not been particularly active in post-grant proceedings—only 20 were filed since the AIA was enacted—so, before this decision, the threat of the Government initiating an AIA proceeding was relatively low. Now, that threat is nonexistent. The ball is now in Congress’s court, as only Congress can elect to clarify whether it intended a “person” under the AIA to include the Government, and by extension, whether Congress meant for the Government to access AIA proceedings.
1 Justice Sotomayor delivered the opinion of the Court, joined by Justices Roberts, Thomas, Alito, Gorsuch, and Kavanaugh. Justice Breyer filed a dissenting opinion, which was joined by Justices Ginsburg and Kagan.
2 Return Mail, Inc. v. United States Postal Service, No. 17-1594, 2019 WL 2412904 (US June 10, 2019).
3 Justices Roberts, Thomas, Alito, Gorsuch, and Kavanaugh joined in the majority opinion.