Is the government a “person” who can petition the United States Patent and Trademark Office to review patent validity under the Leahy-Smith America Invents Act?
The Supreme Court will determine whether the government is a “person” for the purposes of post-issuance review proceedings under the Leahy-Smith America Invents Act (“AIA”). Return Mail, Inc. (“Return Mail”), the owner of a patent for processing undeliverable mail items, argues that Congress intended the AIA to incorporate a specific meaning of the term “person,” supported by statute and judicial precedent, that excluded the government, and would thus prohibit government agencies from initiating AIA review proceedings. The United States Postal Service (“Postal Service”) counters that the statutory context, as supported by historical evidence and statements made by the Supreme Court, reveals Congress’s intent to include government agencies in the term “person” for the purposes of the AIA. The United States Court of Appeals for the Federal Circuit ruled that the term “person” in the AIA did not exclude the government, and that the government could petition for patent review under the AIA. Return Mail is now appealing that decision in a case that will have implications for patent litigation, the estoppel doctrine, and executive agencies.
Questions as Framed for the Court by the Parties
Whether the government is a “person” who may petition to institute review proceedings under the Leahy-Smith America Invents Act.
In this case, the United States Postal Service (“Postal Service”) has challenged the validity of Return Mail, Inc.’s (“Return Mail”) patent for processing undeliverable mail items. Return Mail, Inc. v. United States Postal Serv., 868 F.3d 1350, 1353 (Fed. Cir. 2017). Return Mail’s patent is a covered business method (“CBM”) patent, which is a patent that protects, among other things, data processing methods. Id. at 1354. The patent at issue in this case helps with processing mail items that cannot be delivered because the address on the mail is incorrect or outdated. Id. at 1354–55. Processing this mail has historically been a time-intensive process, but the patent at issue uses scannable barcodes that input data into computers to make the process more automatic and efficient. Id. Return Mail owns this CBM patent, now subject to the Supreme Court’s review. Id. at 1354.
Specifically, in 2011, Return Mail sued the United States in the Court of Federal Claims under 28 U.S.C. § 1498(a) because the Postal Service was allegedly using Return Mail's patented product without providing fair compensation for its use. Id. at 1355. In April 2014, the Postal Service filed a petition with the United States Patent and Trademark Office to challenge the validity of Return Mail's patent by using a process known as CBM review. Id. The Postal Service argued that Return Mail’s processing system was not patentable because it involved an ineligible subject matter under 35 U.S.C. § 101 (“Section 101”), was anticipated under 35 U.S.C. § 102, and was obvious under 35 U.S.C. § 103. Id.
Return Mail responded that the Postal Service did not have standing to petition for CBM review according to the standing provision of the Leahy Smith America Invents Act (“AIA”), which provides that a person cannot file a petition for CBM review “unless the person or the person's real party in interest or privy has been sued for infringement of the patent or has been charged with infringement under that patent.” Id at 1355–56; 35 U.S.C. § 321 note. Return Mail argued that because 28 U.S.C. § 1498 (“Section 1498”) is grounded in the United States’ eminent domain power, their suit from 2011 did not qualify as a suit for infringement as required by the AIA. Id. at 1361. The Patent Trial and Appeal Board (“the Board”) decided that the Postal Service could petition for CBM review and held that the patent was invalid because it covered “ineligible subject matter” under Section 101. Id. 1355.
Return Mail appealed the Board’s decision to the Court of Appeals for the Federal Circuit, arguing again that the Postal Service lacked standing to petition for CBM review. Id. The Federal Circuit affirmed the Board’s findings, with one judge dissenting. Id. at 1371. The Federal Circuit held that the Section 1498 suit qualified as an infringement suit because nothing in the AIA excluded Section 1498 suits from qualifying as infringement suits and the United States must infringe upon a patent for a Section 1498 suit to go forward. See id. at 1363–64. The Federal Circuit also determined that the word “person,” as used in the AIA’s standing provision, did not exclude the government from seeking review before the Board. Id. at 1365. The court explained that there is no existing rule that excludes the government from the definition of “person,” and that because including the government within the scope of the AIA's use of the word “person” would benefit the government, any presumption to exclude the government from the definition of “person” is less persuasive. See id. The court held, therefore, that the statute's use of the word “person” did not stop the government from being able to petition for patent review under the AIA. Id. at 1366.
THE TEXT, STRUCTURE, AND PURPOSE OF THE AIA
Return Mail argues that when Congress enacted the AIA, it did so against the backdrop of a specific, well-rooted definition of the term “person.” Brief for Petitioner, Return Mail, Inc. at 19. Return Mail claims that this definition, established by statute and judicial precedent, has been understood for over a hundred years to exclude the government. Id. Return Mail contends that though the review provisions of the AIA do not explicitly define the term “person,” the Dictionary Act, which is “generally applicable to any act of Congress,” does define the term, and it does not include the government in its definition. Id. at 20–21. Return Mail notes that the express purpose of the Dictionary Act is to stipulate controlling definitions for terms in acts of Congress that may not necessarily be defined in the acts themselves. Id. at 21–22. Return Mail also asserts that the Trademark Act—which includes firms, corporations, and other organizations capable of suing or being sued as “juristic persons”—provides no guidance here, as no comparable language is found in the AIA itself. Id. at 32–33.
Return Mail further argues that the Supreme Court has long echoed the common presumption that a sovereign is not a person, and has stated in a number of cases that this presumption may not be overcome absent “some affirmative showing of statutory intent to the contrary.” Id. at 24–26. Return Mail contends that no such showing has been made in the present case, as neither Congress nor the President has given any indication that they intended to depart from this definition in drafting and signing the AIA. Id. at 19–20. According to Return Mail, in separate instances where Congress has intended to broaden the definition of “person” to include certain governmental entities, Congress has made this intention explicit. Id. at 29–30. In these instances, Return Mail asserts, Congress included statutory language that unambiguously lists the government among entities that may be considered persons in some specific context—language that is distinctly absent from the review provisions of the AIA. Id. at 30–31.
The Postal Service counters that the legislative context and certain pieces of historical evidence demonstrate that Congress intended the term “person” in the review provisions of the AIA to include federal agencies. Brief for Respondents, United States Postal Service, et al. at 20. The Postal Service points to Congress’s authorization in other Patent Act provisions—as codified in several sections of Title 35—concerning federal agencies applying for and obtaining patents. Id. at 20–21. The provisions, including 35 U.S.C. § 118, according to the Postal Service, direct federal agencies to do so by meeting the requirements for “person[s] other than inventors.” Id. at 21. The Postal Service contends that government agencies should likewise be included in the definition of the term “person” in the review provisions of the AIA, pointing to the Supreme Court’s statement that “[i]dentical words used in different parts of the same statute are generally presumed to have the same meaning.” Id. at 21. Addressing the Dictionary Act, the Postal Service notes that the Dictionary Act lists various entities that the term “person” includes, and argues that this use of the term “includes” signals that this list was intended not to be exhaustive, but merely illustrative. Id. at 22. The Postal Service also claims that definitions stipulated by the Dictionary Act do not apply when “the context indicates otherwise,” which the Postal Service maintains is the case here. Id. at 22–23.
Moreover, the Postal Service asserts that the Supreme Court—rather than having adopted some “hard and fast” rule that the definition of “person” necessarily excludes sovereigns—has instead stated that this definition can shift depending on the context, legislative history, and subject matter at hand. Id. at 32. The Postal Service points to several cases in which this Court held that a state was a “person” for the purposes of the Sherman Act and that a foreign government was a “person” under the Clayton Act. Id. at 34. The Postal Service also contends that Congress has historically intended for the government to participate in the patent system—a system that from the first Patent Act has described entities who could apply for, obtain, and maintain a patent as “persons.” Id. at 25, 29. The Postal Service notes that the federal government has long participated in this system, and federal agencies have regularly invoked forms of review that Congress had made available to “[a]ny person.” Id. at 28–29.
THE ROLE OF THE AIA’S ESTOPPEL PROVISIONS
Return Mail argues that the foundation of the AIA is the balance that Congress sought to strike between improving patent quality and preventing repetitive, unnecessary litigation. Brief for Petitioner at 35–36. And according to Return Mail, this balance is effectuated by the estoppel provisions of the AIA, which bar petitioners from seeking cancellation of a patent by challenging that patent’s validity on any ground that the petitioner had already raised during the Board’s review proceedings. Id. at 35. Return Mail notes, however, that the sole forum where a petitioner may sue the government for unlawful use or manufacture of a patented invention is the Court of Federal Claims, where petitioners are not precluded from litigating issues that had already been subject to AIA review. Id. at 38. As such, Return Mail claims that if the government were to be considered a “person” under the AIA—and thus an eligible petitioner—it would be able to pursue duplicative patent challenges unabated, giving it a unique advantage over private patent owners. Id. at 38. Return Mail argues that because Congress’s intent in implementing the estoppel provisions was to limit precisely this kind of repetitive litigation, such a framework could not have been what Congress had contemplated in passing the AIA. Id. at 35, 38. Return Mail further points to this Court’s statements that Congress “does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions,” and that in defining the scope of federal power, it must be “certain that Congress has conferred authority” on the relevant agency. Id. at 39. Return Mail asserts that the review provisions of the AIA offer none of the requisite clarity or certainty on this point. Id.
Lastly, Return Mail claims that because the AIA’s estoppel provisions are statutory rather than equitable, the Postal Service’s invocation of the principle that “equitable estoppel will not lie against the Government as it lies against private litigants” is misplaced. Id. at 40. Return Mail asserts that the doctrine of equitable estoppel—that is, estoppel with a basis in considerations of fairness rather than legal rules—does not inform the scope of statutory estoppel provisions. Id. at 42. Rather, according to Return Mail, equitable estoppel becomes irrelevant where prohibitions or privileges enshrined in statute begin. Id. Return Mail further argues that the equitable estoppel doctrine is doubly irrelevant here because of Congress’s invocation of mutual collateral estoppel—a form of estoppel where parties are prohibited from relitigating an issue decided in a prior action in which both of the parties had participated—in crafting the AIA’s estoppel provisions. Id. at 40, 43. Return Mail notes that this type of estoppel is a form of res judicata that does apply against the government. Id. at 40.
By contrast, the Postal Service contends that Return Mail overstates the importance of the AIA’s estoppel provisions. Brief for Respondents at 29. Postal Service claims that rather than specifically intending to bar repetitive litigation, Congress’s main priorities in enacting the review provisions were to establish a scheme for eliminating low-quality patents and to preclude the need for certain unnecessarily expensive patent infringement claims. Id. at 40. The Postal Service argues that these interests are fully implicated when the party petitioning for review under the AIA is a federal agency. Id. at 31. The Postal Service posits that this is because such agencies are highly experienced with the patent system, and are unlikely to bring low-quality or frivolous patent claims. Id. The Postal Service further asserts that the inapplicability of the estoppel provisions to federal agencies does not give the government the ability to litigate the same patent challenges over and over, as mutual collateral estoppel would prevent the government from relitigating an issue where the parties to the current suit and the former suit are the same. Id. at 41.
The Postal Service, countering Return Mail’s assertion that equitable estoppel does not inform the scope of statutory estoppel provisions, states that the dispute in the present case is not about the scope of the estoppel provisions. Id. at 43. The estoppel provisions simply do not apply here at all, according to the Postal Service. Id. The Postal Service notes that though mutual collateral estoppel does apply against the government, collateral estoppel generally only applies to issues that were “actually litigated and determined.” Id. at 42. The Postal Service contrasts this doctrine with the AIA’s more expansive estoppel provisions, which preclude litigating any grounds for a patent’s invalidity that a petitioner “raised or reasonably could have raised” in the prior action. Id. The Postal Service points to the Supreme Court’s statement that due to the government’s more restrained approach to pursuing appeals, as compared to private litigants, “courts should be careful when they seek to apply expanding rules of collateral estoppel to Government litigation.” Id.
IMPACT OF THE DEFINITION OF “PERSON” ON PATENT LITIGATION
The Chamber of Commerce of the United States of America (“Chamber of Commerce”), in support of Return Mail, argues that if the Court upholds the Federal Circuit’s holding and interprets “person” to include the federal government, the government will get the privilege of being able to petition for AIA review without being subject to the estoppel limitations for ordinary people. Brief of Amicus Curiae Chamber of Commerce of the United States of America (“Chamber of Commerce”), in Support of Petitioner at 13–14. Moreover, the Chamber of Commerce asserts that the Court should reverse the Federal Circuit’s decision because the Postal Service’s interpretation of the AIA would result in more litigation and force patent holders to defend their claims before both the Board and the Court of Federal Claims. Id. at 14. This result is likely, according to the Chamber of Commerce, because the AIA does not prevent the government from petitioning for patent review in a second forum. Id. The Chamber of Commerce also contends that affirming the Federal Circuit’s decision will allow the government to bring cases in multiple forums, resulting in continuous litigation over the same patents and a decrease in the value of patents. Id. at 15. Also in support of Return Mail, Pharmaceutical Research and Manufacturers of America (“PhRMA”) similarly asserts that affirming the Federal Circuit’s decision—thereby allowing the government to challenge a patent’s validity before the Board and the Court of Federal Claims—would upset Congress’s goals of efficiency and finality in patent rulings. Brief of Amicus Curiae Pharmaceutical Research and Manufacturers of America (“PhRMA”), in Support of Petitioner at 7–8.
The Electronic Frontier Foundation (“EFF”), in support of the Postal Service, responds that affirming the Federal Circuit’s decision would not increase the amount of patent litigation because traditional principles of res judicata still apply in the Court of Federal Claims, meaning the government could not ask the Court of Federal Claims to decide an issue that another court has previously decided. Brief of Amicus Curiae Electronic Frontier Foundation (“EFF”), in Support of Respondents at 11. Furthermore, EFF asserts that affirming the Federal Circuit’s decision would not upset Congress’s efficiency and finality goals because the AIA’s estoppel provision is designed to keep private litigants from continually harassing patent holders in expensive litigation, whereas publicly funded agencies do not need this additional deterrence to avoid wasting resources. Id. at 13. EFF also contends that allowing the government to challenge a patent’s validity before the Board, despite the AIA’s estoppel provisions, would not upset Congressional goals because prohibiting the government from challenging patents’ validity would increase licensing costs that the government, and its taxpayers, would have to fund. Id. at 13. EFF finally argues that deciding that the government is a person who can challenge a patent’s validity before the Board allows more third parties—federal agencies—to participate in the AIA’s patent review process, which helps to both improve patent quality and reduce the costs of litigating patent validity. Id. at 7.
Executive Agency Issues
PhRMA argues that the Court should reverse the Federal Circuit’s decision because the Federal Circuit’s interpretation of the AIA would allow federal agencies to participate in the adjudications of another federal agency—the United States Patent and Trademark Office—which contradicts Congress’s intent to give the United States Patent and Trademark Office primary responsibility for making decisions about administrative patentability. Brief of PhRMA at 15. Also supporting Return Mail, the CATO Institute and Professor Gregory Dolin assert that affirming the Federal Circuit’s decision will let agencies challenge the United States Patent and Trademark Office’s—and therefore the President’s—execution of patent law in court, which is inconsistent with the idea of a Unitary Executive because doing so will set executive agencies against one another even though the agencies are all vested under the President. Brief of Amici Curiae The CATO Institute and Professor Gregory Dolin, in Support of Petitioner at 9. The CATO Institute and Professor Gregory Dolin also contend that affirming the Federal Circuit Court’s decision—thereby allowing executive agencies to challenge the U.S. Patent and Trademark Office in court—would undermine the President’s executive power because one of the agencies could take a position at odds with the President’s understanding of the law. Id. at 8.
In support of the Postal Service, Professor Tejas N. Narechania, responds that affirming the Federal Circuit’s decision would weaken the Executive Branch because it would limit agencies’ ability to challenge the validity of patents. Brief of Amicus Curiae Professor Tejas N. Narechania, in Support of Respondents at 5. Furthermore, Professor Narechania asserts that reversing the Federal Circuit’s decision could impede the Executive’s ability to carry out regulatory objectives because agencies would be unable to challenge potentially invalid patents that make it either more challenging or more expensive for agencies to access technology or products that could help them achieve regulatory goals. Id. at 8–11. Professor Narechania also contends that the Court should affirm the Federal Circuit’s decision because the AIA’s review procedures offer agencies an efficient and inexpensive mechanism to challenge potentially invalid patents and save enormous royalty costs that the public would have to bear. Id. at 12–14.
- Rick Bisenius: Supreme Court Grants Return Mail’s Petition for Certiorari in Return Mail, Inc. v. United States Postal Serv., Fish & Richardson Post-Grant Report (Oct. 31, 2018).
- Judy K. He, Defining “Person” in the AIA: SCOTUS Grants Cert in Return Mail, Inc. v. United States Postal Service, et al., The National Law Review (Nov. 12, 2018).
- Steve Brachmann, Supreme Court to Determine if Federal Government Is a ‘Person’ Eligible to Petition the PTAB, IP Watchdog (Oct. 31, 2018).