“[Section 207] implies nothing about what a federal agency may or may not do following the issuance of someone else’s patent.” – Justice Sonia Sotomayor
This morning, the U.S. Supreme Court issued its decision in Return Mail, Inc. v. United States Postal Service in which the 6-3 majority held that the U.S. government doesn’t qualify as a “person” for the purposes of petitioning the Patent Trial and Appeal Board (PTAB) to institute patent validity proceedings under the Leahy-Smith America Invents Act (AIA). The majority opinion, penned by Justice Sonia Sotomayor and joined by Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito, Neil Gorsuch and Brett Kavanaugh, followed Court precedent supporting the presumption that the government isn’t a “person,” while finding the Postal Service’s arguments to the contrary to be unpersuasive. Justice Stephen Breyer penned a dissent, joined by Justices Ruth Bader Ginsburg and Elena Kagan, in which he found that Congress intended to include the government as a “person” when passing the AIA.
“Person” Under the Dictionary Act
The present case was appealed from the Court of Appeals for the Federal Circuit, which issued a decision in August 2017 upholding the PTAB’s decision to invalidate all challenged claims of a patent owned by Return Mail and challenged by the Postal Service in a covered business method (CBM) review proceeding. Both the PTAB and the Federal Circuit found that the Postal Service, an agency of the U.S. federal government, had standing to bring the CBM review challenge and thus was a “person” under the statutory language of the AIA. Last October, the Supreme Court granted certiorari to take up Return Mail’s appeal from the Federal Circuit and determine whether Congress intended to include the government as a “person” for purposes of petitioning for AIA trials.
In ruling that the government was not a “person,” Justice Sotomayor’s opinion notes that the relevant patent statutes do not define the term “person,” thus weighing in favor of a long-standing presumption against including the sovereign within that term in a way that reflects the term’s common usage. This presumption is found in several Court decisions dating back more than a century, including Vermont Agency of Natural Resources v. United States ex rel. Stevens (2000), United States v. United Mine Workers (1947) and United States v. Fox (1877). Since 1947, the courts have used the definition of “person” which is laid out by the Dictionary Act, unless the context indicates otherwise, and that definition of “person” includes many entities but not the federal government. While the exclusion does have exceptions, the Court in Stevens held that the exception can only be disregarded with an affirmative showing of statutory intent. In reaching this finding, the Supreme Court majority dismissed the Postal Service’s contention under FAA v. Cooper (2012) that Congress must unequivocally express waiver of sovereign immunity for that waiver to be effective.
Weighing the Government’s Arguments
Justice Sotomayor then moved on to address the Postal Service’s three arguments that the context of the AIA itself indicates intent to include the government as a “person.” First, the Postal Service argued that “person” within the AIA must include the government because references to “person” in other relevant patent statutes appear to include the government. While the majority opinion noted that words used by Congress in one part of a statute often have the same meaning elsewhere in the same statute, there was no such consistency in the 18 references to “person” throughout the AIA and the Patent Act. Some of those references include the government, some expressly exclude the government and others, including the “person” who can petition for AIA trials, could be read either way.
The Postal Service also cited to 35 U.S.C. § 207(a)(1), which authorizes federal agencies to obtain patents, as a sufficient contextual clue that “person” as is referred to within the statute governing the patent application process must include federal agencies. However, Justice Sotomayor wrote that Section 207 “implies nothing about what a federal agency may or may not do following the issuance of someone else’s patent.” The Postal Service also pointed to “intervening rights” provisions offering protections for “any person” lawfully using an invention prior to modification of the claims by the Patent Office that deems the previously lawful use to be infringement; in this case, the Postal Service had previously applied for ex parte reexamination of the Return Mail patent and the Patent Office upheld validity after cancelling previous claims and issuing new ones. Regardless of these provisions, the Supreme Court held that this argument overlooked the multiple conflicting definitions of “person” within the patent statute.
Second, the Postal Service cited to the USPTO’s Manual of Patent Examining Procedure (MPEP) which, since 1981, has considered federal agencies to be “persons” capable of requesting ex parte reexamination at the office. While this may have impacted the definition of “person” to include the government if this case were about reexaminations, the Supreme Court majority held that it has no direct relevance on this case as an ex parte reexamination, a proceeding handled internally within the USPTO, and AIA validity trials, which are adversarial, adjudicatory proceedings handled between parties, are meaningfully different. Given the unique position that federal agencies have to defend themselves against infringement suits in the Court of Federal Claims, “there are good reasons Congress might have authorized the Government to initiate a hands-off ex parte reexamination but not to become a party to a full-blown adversarial proceeding before the Patent Office”
Finally, the Postal Service argued that it would be anomalous to deny it the benefits of AIA review proceedings given to other alleged infringers who, like the federal agency, would be subject to civil liability and can assert invalidity as a defense. However, “the Postal Service overstates the asymmetry,” Justice Sotomayor wrote. Non-governmental actors might face injunctions, a jury trial or punitive damages for their infringement while government agencies only have to provide “reasonable and entire compensation.” “Because federal agencies face lower risks, it is reasonable for Congress to have treated them differently,” the majority found. Further, excluding federal agencies from AIA review avoids the “awkward situation” that would follow if a civilian patent owner had to face a validity challenge from a federal agency in a proceeding overseen by a different federal agency.
In his dissent, Justice Breyer found that the factors regarding Congressional intent on the definition of “person” weighed against the Court’s traditional presumption excluding the sovereign from that definition. In reaching this determination, Justice Breyer agreed with the Postal Service that Section 207(a)(1)’s authorization of federal agencies to obtain patents led to “no dispute” that the word “person” in the patent-eligibility provisions must include the government.
Addressing the majority’s discussion on references to “person” in the patent statute that exclude the government, Justice Breyer found that those provisions involve details of administration that, “almost by definition, could not involve an entity such as the Government.” For example, although the statute governing administrative patent judges (APJs) indicates that APJs must be “persons of competent legal knowledge and scientific ability,” the government isn’t a human being with such knowledge or ability and thus couldn’t be considered a person in that context. “The fact that the word ‘person’ does not apply to the Government where that application is close to logically impossible proves nothing at all about the word’s application here,” Justice Breyer wrote.
Justice Breyer’s dissent also found that legislative history and executive interpretation made it even more clear that Congress intended “person” to include the government. Breyer found that the MPEP definition of “person” for purposes of ex parte reexaminations, which didn’t sway the majority, indicated that the government was capable of petitioning for the newer AIA trials given Congressional intent to challenge bad patents and increase the efficiency of the patent system. Breyer also pushed back against the majority’s insistence that allowing the government to petition for AIA trials would create an awkward situation:
“[W]hy is that ‘awkward’? In the field of patent law, a Government agency facing a possible infringement suit has long been thought legally capable of invoking other forms of administrative review… Moreover, the statutes before us presumably would permit a private party to invoke any of the three new procedures to challenge a Government patent. In such cases, one Government agency, the Patent Office, would be asked to adjudicate the patent rights of another. Thus, the situation the majority attempts to avoid is already baked into the cake.” – Justice Stephen Breyer
Breyer further noted that, just because the government does not face injunctions or punitive damages for infringement, “infringement suits against the Government still threaten to impose large damages awards.” In Hughes Aircraft Co. v. United States, 31 Fed. Cl. 481, 488 (1994), for instance, the alleged value of the infringing technologies developed by the Government exceeded $3.5 billion, said Breyer, and damages ultimately exceeded $100 million. Breyer also provided numerous examples in which such lawsuits have impeded projects aimed at improving national security or consumer safety. He continued: “I express no view on the merits of these actions. I simply point out that infringement suits against the Government can threaten to injure Government interests even absent the threat of injunctive relief. That fact runs counter to the majority’s efforts to find an explanation for why Congress would have wanted to deny Government agencies the ability to invoke the speedier administrative procedures established by the America Invents Act.”
When this case was argued in front of the Supreme Court this February, it appeared that both sides were facing significant pushback from the Justices of the Court based upon the arguments they were presenting. Still, today’s 6-3 decision isn’t too surprising given industry reaction following oral arguments, which narrowly expected a decision in Return Mail’s favor.