Federal Government Shutdown... Again?!?!?!

The Executive Branch is not the only one shutting the federal government down these days. This time, the culprit is the US Supreme Court. The jurisdiction of AIA post-grant proceedings at the US Patent & Trademark Office just became narrower. On June 10, 2019, the Court decided Return Mail v. United States Postal Service et al., Case No.: 17-1594, holding that Congress did not intend for the federal government to be considered “a person” capable of filing a petition for institution of a post-grant proceeding at the US PTO under 35 USC §§311 (on inter partes reviews), 321 (on post-grant reviews) or AIA §18(a)(1)(B)(on covered business method patent reviews).

Return Mail involves US Patent No.: 6,826,548 to methods of processing undeliverable mail. In 2006, Return Mail accused the US Post Office of infringing its patent claims in the Court of Federal Claims; in response, the Post Office petitioned for ex parte reexamination. The reexam resulted in amended claims which were asserted in the lawsuit. The Post Office then petitioned for covered business method patent review arguing that the claims were ineligible for patent under 35 USC §101. The Patent Trial and Appeal Board agreed with the Post Office and found the subject claims ineligible as did the Court of Appeals for the Federal Circuit.

In its review, the Court of Appeals majority found Post Office standing to bring a CBMPR. The panel looked at the plain language of §18(a)(1)(B), requiring that petitioners be “sued for infringement” for CBMPR jurisdiction and reasoned that a federal claims suit for recovery under §1498(a) met the plain language of §18.

The US Supreme Court reversed the Court of Appeals, holding that the AIA was not drafted to include the federal government in the definition of “a person” in §§311, 321 & AIA §18 such that federal agencies can avail themselves of IPRs, PGRs or CBMPRs at the Patent Office. at 6-18. Justice Sotomayor, writing for the 6:3 majority, reasoned that, historically, there has been a “‘longstanding interpretive presumption that “person” does not include the sovereign,’ and thus excludes a federal agency like the Postal Service.” Id. at 7. citing Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 US 765, 780-781. This presumption against sovereign statutory “personhood” is supported by the express directive of Congress enacted in the 1947 Dictionary Act, 1 USC §1. Id. (“The Act provides that the word ‘“person”… include[s] corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.’ §1. Notably absent from the list of ‘person[s]’ is the Federal Government.”). Id.

Further the Court instructed that courts tend to construe “person” more liberally when discussing a governmental obligation and narrower when discussing a benefit, like Sherman Act treble damages. at 8-9 citing US v. Cooper Corp., 312 US 600, 604-605, 614. The ability to challenge a patent in a post-grant proceeding is analogous to a benefit, supporting a narrower definition of “person.”

The Court reasoned that nothing in the America Invents Act shows congressional intent to deviate from these longstanding interpretive presumptions; rather the Code shows no clear trend towards the use of “person” to be either inclusive or exclusive of the federal government. at 9-10. “Person” is used eighteen times in the Patent Act and AIA, sometimes to the inclusion of the government – being subject to infringement suits from “any person, including any governmental or nongovernmental entity” under §296(a) – and other times to the government’s exclusion, e.g., when “charg[ing] a person with a criminal offense in connection with” fraud under §257(e). The Breyer Dissent found this argument unpersuasive, characterizing other references to “person” in the Code as either administrative (unlike the substantive infringement-challenge benefits that IPRs, PGRs and CBMPRs provide) or as one referring to a benefit the government could not possibly enjoy (again, unlike the benefits associated with challenging patents). at 2-4.

The Patent Office’s Manual of Patent Examining Procedure (§§2203 & 2212) advises that “governmental entit[ies]” may bring an ex parte reexamination. So then why, why, why cannot it bring IPRs? The Court reasoned that it was not bound by this “executive interpretation” absent congressional intent supporting it. at 13-15 citing US v. Hermanos y Compañia. The majority indicated that Congress likely still chose to distinguish ex parte reexaminations from AIA trials due to the more active role AIA petitioners have in AIA trials, AIA petitioners participating in briefing, hearings, discovery and the presentation of evidence.

Further, the simple fact that Congress has allowed the US government to hold an assignment on patents does not mean that Congress intended the government to have symmetrical patent-challenging benefits. For example, with respect to patent infringement, government claimants also hold other asymmetrical limitations as compared to claimants against private patent stakeholders. Actions against the federal government lack injunctive relief, jury trials or punitive damages. at 16. Therefore, the majority concluded that it would make sense for Congress not to intend for the government to petition for AIA post-grant proceedings.

Not to be overlooked are the estoppel arguments of the Court of Appeals Dissent by the (Insanely) Great Dissenter Judge Newman. Therein Judge Newman pointed to the “two-bites-at-the-apple” imbalance resulting from the government being considered a statutory person since AIA estoppel provisions exclude the Court of Federal Claims. at 7 (“The estoppel provision is the backbone of the AIA, for it is through estoppel that the AIA achieves its purpose of expeditious and economical resolution of patent disputes without resort to the courts.”). The SCOTUS majority similarly found Congress’ lack of listing the Court of Federal Claims in the AIA estoppel provisions of §§315(e) and 325(e) to be persuasive evidence of an intent to exclude the government from AIA petitions. at 16-17, ftn 10.

"Because infringement suits against the Government must be brought in the Court of Federal Claims—which is not named in the estoppel provisions—the Government might not be precluded by statute from relitigating claims raised before the Patent Office if it were able to institute post-issuance review under the AIA."

A lack of dispute estoppel evidently being impractical and undesirable, SCOTUS found that Congress either intended government agencies to have infinite access to AIA post-grant proceedings or none, the latter being much more prospective.