“I guess what I was hoping for was that you would have an argument from particular statutory provisions….I hear you just saying, look, this is a broad provision and we can’t think of a reason why the government shouldn’t be treated like everybody else, so the government should be treated like everybody else.” – Justice Elena Kagan
On Tuesday, February 19, the U.S. Supreme Court heard oral arguments in Return Mail Inc. v. United States Postal Service, a case that asks the nation’s highest court to determine whether the federal government constitutes a “person” for the purposes of instituting review proceedings at the Patent Trial and Appeal Board (PTAB) under the Leahy-Smith America Invents Act (AIA). Although the Supreme Court Justices appeared to be dissatisfied with arguments from counsel for either side, they arguably pushed back more against the USPS’ position. All Justices apart from Justice Clarence Thomas played an active role in questioning.
Petitioner: “Person” is Limited to Private Entities
Arguing for the petitioner, Return Mail, was Beth Brinkmann, Partner at Covington & Burling LLP. She began with the contention that there were three reasons why the term “person” did not extend to the government: first, the branches of government have relied on both the Dictionary Act—which defines “person as including “corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals—and the Court’s presumptive definition that “person” doesn’t include the government; second, estoppel provisions enacted by Congress in 35 U.S.C. § 315(e) reference district courts and the International Trade Commission, not the Court of Federal Claims, where the government’s patent litigation takes place; and third, the government still has the ability to go after bad patents through ex parte reexamination proceedings, which can be initiated sua sponte by the Director of the U.S. Patent and Trademark Office (USPTO).
In a situation like the present one, where the U.S. Postal Service was accused of patent infringement, Brinkmann noted that 35 U.S.C. § 303 doesn’t preclude communication between government agencies and the USPTO Director for purposes of requesting an ex parte reexamination. Justice Samuel Alito asked if such communication would be proper and Brinkmann added that 37 C.F.R. 1.520 contemplates such requests, although the rule states that “normally” such requests wouldn’t be considered. Justice Ruth Bader Ginsburg asked why Congress would want to exclude the government if the idea of the AIA was to weed out bad patents, but Brinkmann argued that the government already has the opportunity to challenge validity in reexams and at the Court of Federal Claims.
Roberts: Government Has Been Deemed a “Person” Before Under the Dictionary Act
Chief Justice John Roberts pushed back on Brinkmann’s reliance on the Dictionary Act, saying that it was based on “a legal fiction” because there are examples where the government has been considered a “person” under the Dictionary Act definition. Brinkmann said that, unlike Congressional statute regarding the government’s ability to own a patent (35 U.S.C. § 207) and the government’s ability to raise all defenses against patent infringement allegations (28 U.S.C. § 1498), there was no similar affirmative right in AIA statute that gives the government the ability to petition for AIA trials. Justice Neil Gorsuch noted that the respondent’s argument would be that Section 207 gives the government the ability to participate in many aspects of the patent system. Brinkmann pointed to the Court’s 1941 decision in United States v. Cooper Corp., where the Court found that “person” didn’t include the government because Congress didn’t enact any language to include the government as a person in the applicable law—in that case, the Sherman Antitrust Act.
Justice Stephen Breyer asked Brinkmann to provide examples of the term “person” not including the government from a patent law rather than an antitrust law context. Brinkmann pointed to 35 U.S.C. § 317 regarding settlements in inter partes review (IPR) proceedings, noting that federal government agencies can obtain confidential information by request, but that a “person” has to show good cause for obtaining the information. Brinkmann added that, with respect to false marking, 35 U.S.C. § 292 provides remedies for the government under subsection (a) while remedies for a person are only available under subsection (b). Further, 35 U.S.C. § 257(e) allows the USPTO Director to refer a person to the attorney general for material fraud committed on the Office.
Justice Sonia Sotomayor asked, if the Patent Act allows the government to be sued for infringement, did it make logical sense to take away a defense tool available to all alleged infringers? Brinkmann argued that actions brought against the government under Section 1498 weren’t actions for infringement but were rather actions for use without authority. Further, a petition for IPR wasn’t a defense in the sense that it could be raised in infringement litigation, but rather an affirmative action meant to invalidate a patent.
Gorsuch: Why Would Congress Allow Reexams but not IPR?
Justice Elena Kagan asked whether provisions of Section 207 regarding the government’s ability to obtain a patent and protect its rights to inventions seems to indicate that the government might be able to avail itself of IPR challenges to “clear the field in order to innovate.” Again, Brinkmann pointed to reexaminations as proof that the government already had the ability to go after bad patents. Justice Gorsuch said that, while he could understand the argument that Congress didn’t want to let the government go to its own agency to invalidate private party patents, he wondered why Congress would allow an ex parte proceeding initiated by a government agency’s request instead of “a more robust adversarial process involving the government as a party.” Brinkmann said that reexaminations were more about the agency’s reconsideration of a patent, similar to the interactions between an examiner and a patent applicant, in a way that “furthers the interests that are at the crux of the patent system in our country.”
Justice Breyer continued to ask for clarification on what remedies federal agencies like the Defense Advanced Research Projects Agency or the Federal Trade Commission can seek for avoiding infringement allegations to which a regular person has no access. Brinkmann noted that, under Congressional statute, a federal agency could use an invention without being enjoined from using it. Further, the government in the Court of Federal Claims is treated very differently from defendants in normal infringement proceedings who have to face a jury and the possibility of induced infringement findings or enhanced damages.
USPS: “General Public” Includes the Government
Arguing on behalf of respondent U.S. Postal Service was Malcolm Stewart, Deputy Solicitor General of the United States. He began by noting that the definition of “person” could include governmental bodies while being consistent with the terms of the Dictionary Act. Justice Sotomayor quickly cut in with a question:
“It does seem like the deck is stacked against a private citizen who is dragged into these proceedings. They’ve got an executive agency acting as judge with an executive director who can pick the judges, who can substitute judges, can reexamine what those judges say, and change the ruling, and you’ve got another government agency being the prosecutor at the same time. In those situations, shouldn’t you have a clear and express rule?” – Justice Sonia Sotomayor
Justice Gorsuch said that this was an important question to consider as he felt that the Court should expect clarity from Congress when an unusual arrangement would take place, such as in the event that the USPTO decided against the USPS and the Supreme Court could be asked to resolve the dispute. Justice Brett Kavanaugh joined this line of questioning, asking why the Court should decide in a manner that would allow two federal agencies to act as adversaries in federal court when the ex parte reexamination process was available. Stewart acknowledged that it was theoretically possible that a federal agency could appeal an unfavorable PTAB decision but that such a situation hadn’t yet occurred.
“Can’t the executive branch agencies always communicate with one another?” Justice Kavanaugh asked. Stewart referenced back to Alito’s earlier question to Brinkmann to argue that such communications would be problematic in the ex parte reexamination context, noting that requests for reexams would be communicated to the patent owner.
“[I]t would be peculiar to say that an executive branch agency could short-circuit those mechanisms that are designed to make the process transparent, make it a part of the official record, simply by an end run… It would also be peculiar to… kind of make up a regime in which… a federal official from one agency will call a counterpart at the PTO and say: Don’t treat this as a request for ex parte reexamination, but put it in the file, deal with it in the same ways that Congress intended requests for ex parte reexamination to be made.” – Malcolm Stewart
Stewart then returned to his point regarding the government as a party in a PTAB trial, noting that it was clear from the statute that the government could be a patent owner who could then have the patent challenged at the PTAB. In that case, the government would have a statutory right to appeal, he argued.
Kagan to Stewart: I Was Hoping for More
Justice Kagan asked Stewart to identify an affirmative statement from statutes which identified the government as a person. Stewart pointed to contextual evidence that IPR and covered business method (CBM) review is widely made available to the general public. “Isn’t that flipping the presumption?” Justice Gorsuch asked. “I mean, the presumption is that ‘person’ doesn’t include the government, and you’re suggesting, well, because ‘person’ is broad and it’s a big term, it includes the government.” Citing to the Court’s 1873 decision in Dollar Savings Bank v. United States, Stewart argued that case supported his argument because his contextual reading makes available a benefit rather than imposes a disadvantage. The fact that the benefit was widely available also distinguished this situation from the one present in the Court’s 1991 decision in Primate Protection League v. Tulane Educational Fund.
Justice Kagan was not satisfied with Stewart’s answers:
“I guess what I was hoping for was that you would have an argument from particular statutory provisions… I was trying to run an argument to Ms. Brinkmann about 207(a)(1) and (a)(3) and how those might suggest that the government was a person. But I don’t hear you saying anything like that. I hear you just saying, look, this is a broad provision and we can’t think of a reason why the government shouldn’t be treated like everybody else, so the government should be treated like everybody else.”
Stewart made a general observation that the Court’s precedent in Georgia v. Evans (1942) and Pfizer v. Government of India (1978) held that the term “person” wouldn’t necessarily include the government, “but we can’t see any reason why Congress would have wanted these units almost alone among potential plaintiffs not to be able to sue under the antitrust laws.” Further, a previous revision of Section 1498 had deleted language which expressly said that the United States had, in the Court of Federal Claims, all defenses that were available to a private party. “Isn’t there some kind of basic statutory canon interpretation that says where the reason for the rule applies, the rule applies?” Justice Kavanaugh asked. Though the PTAB offered a speedy way of resolving an infringement suit against a government party, there were reasons why such a rule wouldn’t apply, including the availability of the Court of Federal Claims. Stewart responded that a defense to a suit under Section 1498 would require overcoming the statutory presumption of a patent’s validity even though Section 1498 doesn’t explicitly say that the government has to overcome this presumption because Section 1498 suits are “conducted in basically the same way as ordinary infringement suits.” Invoking IPR or CBM review at the PTAB allows a party to overcome the clear and convincing evidence hurdle and is available to any party charged with infringement, Stewart argued.
Alito: Why Would Congress Want Different Estoppel Rules for the Government?
Justice Ginsburg asked about the petitioner’s argument that the estoppel provision gives the government “two bites of the apple” whereas other parties only get one. Stewart argued that estoppel does apply, noting that the government can’t file successive requests for IPR or CBM. While estoppel doesn’t govern proceedings in the Court of Federal Claims, Stewart said that the government would still be subject to common law estoppel, although that estoppel encompassed arguments that were actually made, whereas IPR estoppel also concerned arguments that weren’t made.
Justice Alito said that, while he didn’t think the petitioner had a strong argument as to why Congress would want to treat the government differently than private parties for the purpose of AIA trials, he asked for an explanation as to why Congress would have wanted different estoppel rules to apply to the federal government. Stewart acknowledged that Congress probably didn’t anticipate the present situation when considering estoppel under the AIA, but he pointed to Pfizer as another situation where the Court made a decision without resting on affirmative evidence of Congressional intent.
Justice Gorsuch asked if the estoppel point becomes odder still if the government, acting as plaintiff, brings an IPR proceeding to the government, acting as judge at the USPTO, but then the findings of the USPTO aren’t binding at the Court of Federal Claims. “Isn’t it a little unseemly to say that the executive branch shouldn’t be bound by its own decisions?” he asked. Stewart pointed to the Supreme Court’s 1984 decision in United States v. Mendoza to note that the government is sometimes held to different estoppel rules because “the government’s appeal calculus is different.”
Clarifying his argument on the contextual basis for allowing the government to be considered a person to petition the PTAB, Stewart argued that the Court has previously resolved ambiguity issues on clear statement rules in favor of the government. “If somebody argued that the patent laws allowed any other defendant to show patent invalidity by a preponderance of the evidence but… required a federal agency as defendant to prove it by clear and convincing evidence, I think the Court’s reaction would be that it’s conceivable, but we would need pretty clear language that Congress intended that result,” Stewart said. Further, while Congress created IPR and CBM review under the AIA with the interests of private parties in mind, one impetus for the enactment of the AIA was that ex parte reexamination hadn’t been effective in its job of weeding out bad patents.
Congress’ Silence Speaks Volumes
After Stewart’s arguments, Brinkmann returned for a short rebuttal period where she made a few quick points. First, requests for ex parte reexamination made by a person could be kept confidential under the terms of 35 U.S.C. § 301(e). Second, it would be “extraordinary” for Congress to enact statutes enabling actions between agencies by maintaining silence rather than explicitly considering the situation. Finally, she pointed out that briefs submitted by the petitioner identified more than a century of Court precedent where the government didn’t constitute a “person” even though there were benefits to persons that the government wanted.
Justice Kagan asked if the presumption that a government wasn’t a person made sense anymore. “[D]oes anybody really think Congress thinks about this as a default rule and legislates against it?” she asked. Brinkmann noted that when Congress and the President enact laws involving the government, many issues like sovereign immunity and prosecutorial authority come into play, so the presumption made sense to prevent unintended scenarios from occurring.
IPWatchdog will be publishing industry reactions to the oral arguments later this week.