Can the Government Challenge Patents via AIA Proceedings? — Return Mail Gets Cert.

Return Mail, Inc. has persuaded the Supreme Court to grant cert. to decide whether the government is a “person” who may petition to institute AIA proceedings.  The government had done just that by naming both itself and the post office as petitioners in CBM2014-00116, captioned The United States Postal Service (USPS) and The United States of America v. Return Mail, Inc.

Return Mail owns U.S. Patent No. 6,826,548 for a system and method of processing returned mail.  The claims challenged in the CBM were obtained during an ex parte reexamination of the ’548 patent requested by the USPS.  After trying unsuccessfully to license the patent to the USPS, Return Mail filed suit in the U.S. Court of Federal Claims.  Three years later, the government filed a petition in the PTO for a Covered Business Method (CBM) review of the challenged claims.  Unlike a petition for an inter partes review (IPR) which must be filed within one year, there is no deadline to seek CBM review after being served with a complaint for infringement.

The government prevailed at the PTAB and at the Federal Circuit.  Judge Newman dissented, relying on a point of statutory construction neither party had argued: although the AIA says the petitioner can be any person who is not the patent owner, “The government is not a ‘person’ to whom the post-grant procedures of the AIA re available.”  868 F.3d 1350, 1375.

Taking its cue from Judge Newman’s dissent, Return Mail petitioned for certiorari, framing the question presented as:

“Whether the government is a ‘person’ who may petition to institute review proceedings under the AIA.”

Following Judge Newman’s lead, Return Mail argued that construing the term person to include the government violates a “longstanding interpretive presumption.”  Vermont Agency of National Resources v. United States ex rel. Stevens, 529 U.S. 765, 780-81 (2000).

In its opposition brief, the government countered that, in the patent statute, the term does include the government.  The patent statute uses the word, among other places, in § 102 (“A person shall be entitled to a patent. . . .”) and in § 118 (“person to whom an inventor has assigned” an invention may apply for a patent).  Congress has authorized “[e]ach Federal agency” to “apply, obtain, and maintain patents,” 35 U.S.C. § 207(a)(1), and the government has amassed an extensive patent portfolio.

Nonetheless, it is possible that the Supreme Court was persuaded by Return Mail’s pair of arguments about limitations on power.  First, Return Mail argued that “the case is but the latest example of patent-law exceptionalism by the Federal Circuit.  In recent years, this Court has repeatedly reversed the Federal Circuit’s rulings for failure to heed the rule that “patent law is governed by the same common-law principles, methods of statutory interpretation, and procedural rules as other areas of civil litigation.  SCA Hygiene Products, 137 S.Ct. at 964.”  Brf at 23.  Second, Return Mail also argued that the Federal Circuit’s ruling “expands the Board’s authority to invalidate issued patents—property protected by the Due Process and Takings Clauses, see Oil States, 138 S. Ct. at 1378-79—and thus further jeopardizes billions of dollars in investments in every sector of the economy.”  Id. at 27.   Echoing Judge Newman’s dissent, Return Mail argued that the question is important because “it concerns the scope of the Board’s delegated authority and the structure of administrative-review mechanisms that have become a central feature of the U.S. patent system.”  Id.