SCOTUS to Decide If Government Agencies Can Challenge Patents Under AIA

The U.S. Supreme Court is poised to decide whether federal agencies can challenge patents under the America Invents Act (“AIA”). The case, Return Mail Inc. v. United States Postal Service, centers on whether the government qualifies as a “person” who may petition to institute review proceedings under the AIA. SCOTUS to Decide If the Government Can Challenge Patents

Legal Background

Government agencies are treated differently with respect to patent rights. Under 28 U.S.C. § 1498(a),the government’s unlawful use or manufacture of patented articles is considered a Fifth Amendment taking of a license, rather than patent infringement. The statute provides government contractor immunity from patent infringement litigation and limits the available remedies to monetary damages. The statute states, in relevant part:

Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture. . . . For the purposes of this section, the use or manufacture of an invention described in and covered by a patent of the United States by a contractor, a subcontractor, or any person, firm, or corporation for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States.

Additionally, the AIA establishes a transitional post-grant review program that authorizes the United States Patent and Trademark Office (“USPTO”) to review the validity of certain covered-business-method (“CBM”) patents. Specifically, the USPTO may institute a CBM review upon the petition of “[a] person” who “has been sued for infringement of the patent or has been charged with infringement under that patent.”  The Supreme Court’s review of Return Mail, Inc. v. USPS will center on the term “person,” as used in the AIA, and whether it excludes governmental entities.

Facts of Return Mail Inc. v. United States Postal Service

Return Mail Inc. (“Return Mail”) owns U.S. Patent No. 6,826,548 (the ’548 patent), which claims a method for processing undeliverable mail.  In February 2011, after trying unsuccessfully to license the ’548 patent to the Postal Service, Return Mail filed suit in the Court of Federal Claims against the United States Postal Service (“USPS”).  It alleged, under 28 U.S.C. § 1498(a), that USPS “engage[d] in the unlicensed and unlawful use and infringement of the invention claimed in the ’548 patent.”

In April 2014, the USPS filed a petition with the USPTO for CBM review of claims 39–44 of the reexamined ’548 patent, raising several grounds for unpatentability, including patent-ineligible subject matter under § 101.  In response, Return Mail argued that the USPS lacked “standing” to seek CBM review because it had not been “sued for infringement” within the meaning of Section 18 of the AIA.  According to Return Mail, a suit under Section 1498(a) does not raise an infringement issue providing damages in tort, as it is “an eminent domain statute” that provides a patent owner reasonable compensation for the federal government’s taking of a patent license.

The Board rejected Return Mail’s argument, holding that USPS’s alleged “use or manufacture of a patented invention without license or lawful right” was “infringement” within the meaning of the Patent Act. After conducting the CBM-review proceedings, the Board issued a final written decision on patentability, concluding that the relevant claims of the ’548 patent were drawn to patent-ineligible subject matter.

The Federal Circuit Court of Appeals affirmed.  It held that, because a patent owner filing suit under Section 1498(a) must establish that the federal government “interfered with its rights by manufacturing or using the patented invention” without prior authorization, a suit under Section 1498(a) is an action for “infringement” as that term is commonly understood.

Although the parties did not brief the issue, Judge Pauline Newman opined sua spontein her Dissent that the government is not a “person” authorized to seek CBM review.  The Majority addressed this point raised in Judge Newman’s Dissent, reasoning that the issue was likely waived by the parties as neither party discussed the significance of the word “person.”  Additionally, the Majority examined the entirety of the AIA and determined that it does not use the term “person” to exclude the government.

Issue Before the Supreme Court

On October 26, 2018, the justices agreed to consider “[w]hether the government is a ‘person’ who may petition to institute review proceedings under the AIA.”

Return Mail argues that only a “person” may file a petition to challenge a patent under the AIA.  In support, it maintains that the definition of a “person” generally does not include governmental entities and that the AIA does not suggest a legislative intent to deviate from the norm.

In an amicus brief, 15 law professors further argue that the USPS is essentially trying to have it both ways by asserting the inherent power of eminent domain and claiming to also be immune from liability for infringement.

The Court has yet to schedule oral arguments in Return Mail Inc. v. United States Postal Service, however, a decision is expected before the end of June 2019.

For more information about the legislation or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

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