United States: High Court Scrutinizing Gov't Use Of AIA Reviews

Last Updated: March 4 2019
Article by Ethan W. Marks and Nathan R. Speed

(As published by Law360)

On Feb. 19, 2019, the U.S. Supreme Court heard oral argument in Return Mail Inc. v. U.S. Postal Service. The question before the court was whether the government is a "person" who may petition to institute post- issuance patent review proceedings under the 2011 Leahy-Smith America Invents Act. The court is expected to issue a decision by this summer.

The court's decision will impact who may initiate inter partes review, post- grant review and covered business method review proceedings. Although the outcome is unclear, during oral argument the justices appeared unpersuaded that the Postal Service had adequately rebutted the court's long-standing presumption that "person" does not include the government.

If the Postal Service is not a "person," it may not file a petition for IPR, PGR or CBM review, though it may nonetheless still contest a patent's validity in the U.S. Court of Federal Claims should it be sued in that forum. If the Postal Service is a "person," on the other hand, then not only can it file IPR, PGR and CBM petitions, but it will become the only class of petitioner not barred by the AIA's statutory estoppel provisions from relitigating the same validity issues in a different forum such as the

U.S. Court of Federal Claims.

The Issue

Under the AIA, only a "person" may file a petition. For example, 35 U.S.C. § 311(a), which governs who may file an IPR petition, says: "Subject to the provisions of this chapter, a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of the patent." The sections governing the initiation of PGR and CBM proceedings use similar language. E.g., 35 U.S.C. § 321(a).

Congress did not separately define "person" in the AIA and it is not defined in 35 U.S.C. § 100, the Patent Act's definitions section. The term is, however, defined in the Dictionary Act, 1 U.S.C. § 1, to "include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals" — but with no mention of governmental agencies. This is consistent with the Supreme Court's "longstanding interpretive presumption that 'person' does not include the sovereign."

By its own terms, the Dictionary Act definition applies "[i]n determining the meaning of any Act of Congress, unless the context indicates otherwise." However, prior to the Federal Circuit's decision in Return Mail, no court had determined whether this definition of "person" applied to the AIA's review provisions or to any other provisions of the Patent Act.


In the years since the AIA's enactment, federal agencies have filed a small number of IPR petitions, including 13 IPR petitions by the U.S. Department of Justice and, in this case, one CBM petition by the Postal Service.

Return Mail is the owner of U.S. Patent No. 6,826,548, which is directed to the processing of mail returned to the sender due to an inaccurate or expired address. In 2011, Return Mail sued the Postal Service in the U.S. Court of Federal Claims alleging a violation of 28 U.S.C. § 1498(a), which provides a cause of action against the federal government for the unlawful use of a patented invention. The Postal Service petitioned for CBM review of certain claims of the patent, the U.S. Patent and Trademark Office's Patent Trial and Appeal Board instituted review, and the board issued a final written decision holding the claims unpatentable under 35 U.S.C. § 101. The Federal Circuit affirmed.

In an opinion authored by Chief Judge Sharon Prost, the Federal Circuit acknowledged that neither party had briefed the government's status as a "person." It then held that the government is a "person" authorized to file for CBM review, reasoning that any presumption that the term "person" does not include the government "carries less weight here" because the AIA confers a benefit (i.e., the ability to file a CBM petition), not a burden.

The majority then looked to other provisions in the AIA and found that those provisions did not "appear to use the term 'person' to exclude the government." Recognizing that the AIA estoppel provisions did not apply to actions under 28 U.S.C. § 1498(a) — meaning that the Postal Service, unlike all other petitioners, would not be estopped from relitigating in the Court of Federal Claims any unsuccessful invalidity arguments it raised before the board — it concluded that "the solution ... is for Congress to 'correct' this imbalance should it see fit, rather than allow this potential inequity to drive our interpretation of the plain language of the statute."

Judge Pauline Newman dissented. Reflecting pointed questions she had directed to the Postal Service during oral argument, she characterized the estoppel provision as the "quid pro quo that underlay enactment of the AIA," and found that there was no reason to believe that Congress had intended to give the government two bites at the apple. As the quid pro quo did not apply to the government, Judge Newman reasoned that the presumption against interpreting "person" to include the government was not overcome.

The Parties' Positions

While previously unaddressed, the parties now sharply disagree whether the term "person" as used in the AIA's post-issuance patent review provisions includes the government.

Return Mail

Return Mail's argument is fairly straightforward: "Person" has a settled and long-standing meaning, and that meaning excludes the government, unless context indicates otherwise or there is an affirmative showing by Congress to the contrary. As that is not the case with respect to the AIA review provisions, Return Mail argues that the Dictionary Act definition should apply. Describing the estoppel provisions as the "backbone" of the AIA review scheme, Return Mail contends that allowing the Postal Service to file for CBM review would provide it with a "free pass" to relitigate validity challenges in the Court of Federal Claims — a result contrary to the structure and purpose of the AIA.

Postal Service

The Postal Service argues that the Dictionary Act definition does not apply to the AIA review provisions. It observes that the Patent Act permits the government to "apply for, obtain and maintain patents," and thus when Section 102 authorizes the issuance of patents to a "person" who meets certain patent eligibility requirements, "person" must include the government. The Postal Service further notes that federal agencies have historically been active participants in the patent system, including as "person[s]" who could request ex parte or inter partes re-examination of issued patents. It further contends that the rationale underlying CBM review — the elimination of invalid patents — is just as applicable to CBM proceedings initiated by federal agencies as by private parties.

As for Return Mail's estoppel concerns, the Postal Service argues that those concerns are overstated, pointing out that federal agencies are subject to statutory estoppel in future PTO proceedings following a final written CBM decision (AIA § 18(a)(1)(D)), as well as common-law estoppel in future § 1498(a) actions. The Postal Service argues that, in any event, the government and private parties are already subject to different common law estoppel rules.

Oral Argument

Return Mail, as the petitioner, argued first. The justices focused their questions on exploring what reason Congress would have to exclude the government from the AIA's patent- challenging procedures. As Justice Ruth Bader Ginsburg asked, "Why would Congress want to leave a government agency out of this second look if the idea is to weed out patents that never should be given in the first place?"

Return Mail's counsel argued that the government already had two vehicles to challenge patents — the initiation of an ex parte re-examination proceeding by the PTO director and the typical validity defenses available in a § 1498 action at the Court of Federal Claims — and thus excluding the government from having a third bite at the apple was rational.

Justice Neil Gorsuch pushed back, however, asking "why a rational Congress would allow ex parte review initiated by the government before a government agency ... but not allow a more robust adversarial process involving the government as a party?"

For its part, the government argued that the Dictionary Act's definition did not control because of the context in which "person" is used in the AIA. As the government attorney explained, "The strongest contextual evidence is that the word 'person' in the provisions that define IPR and CBM review is used to make available to the general public a procedural mechanism, an advantage. It's made available on a widespread basis." Because the AIA's procedural mechanisms are intended to be "widespread," the government argued, it made sense to permit the government to initiate these proceedings.

The justices pushed back strongly, however, with Justices Gorsuch and Brett Kavanaugh asking how that argument squared with the court's long-standing presumption that "person" did not include the government. As Justice Gorsuch asked, "Isn't that flipping the presumption? 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."

Impact of the Court's Decision

The impact of the court's decision is fairly limited, a point Justice Kavanaugh noted at oral argument when he asked, "What would the real world problems be for the government?" if it could not petition for IPR, PGR or CBM review. The government's candid response: "It's pretty small."

If the Supreme Court affirms the Federal Circuit and holds that the government is a "person" for the purpose of initiating AIA review proceedings, the government will have the unquestionable authority to file petitions for AIA review. While Return Mail concerns the initiation of a CBM proceeding, the decision the Supreme Court issues will most certainly apply equally to IPR and PGR proceedings as well. The court granted certiorari to address the broadly worded question of whether the government is a "person" who may petition to institute any of the three proceedings, and the parties' arguments are largely applicable to all three.

The most notable consequence of a finding that the government is a "person" with the ability to petition for AIA review will be the imbalance it creates in the AIA's statutory estoppel provisions. As a quid pro quo for the creation of post-issuance patent review proceedings, Congress created a robust estoppel provision intended to limit the ability of petitioners to litigate a patent's validity before both the board and the district courts. The estoppel provision applies to district court litigation and proceedings before the U.S. International Trade Commission, but it notably does not apply to § 1498(a) actions brought by a patent owner against the federal government in the Court of Federal Claims. Thus, if the government is a "person" with the ability to petition for AIA review, it will become the only "person" who can do so and not be statutorily estopped from relitigating the same validity issues in a different forum.

In amicus briefing, the Cato Institute identified another potential consequence were the court to rule in the Postal Service's favor. It argued that allowing an executive agency to initiate review before another arm of the executive branch (in this case, the PTO), which could then "rig" the proceedings in favor of the agency, would create the appearance of bias (if not actual bias) in violation of the Fifth Amendment's due process clause.

It further observed that the director of the PTO could intervene to defend the board's decision on appeal, pitting one federal agency (e.g., the Post Office) against another (i.e., the PTO) — a situation that would "undermine the uniform enforcement of the patent laws" and thereby erode the president's constitutional role as the unitary executive. Several justices raised similar concerns during the argument. Counsel for the government acknowledged that two federal agencies disagreeing in court about the executive branch's view of the law would be "unusual," but argued that that situation could arise in other ways — for example, if a federal agency were to appeal the PTO's rejection of its patent application.

If the Supreme Court reverses the Federal Circuit and holds that the government is not a "person" for the purpose of initiating AIA review proceedings, the Postal Service and other federal agencies may no longer file petitions for AIA review. If sued by private parties under § 1498(a), however, they could still contest patent validity in the Court of Federal Claims.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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