On October 26, 2018 the United States Supreme Court granted certiorari in Return Mail, Inc. v. United States Postal Service, 868 F.3d 1350 (United States Court of Appeals, Federal Circuit, 2017, “Return Mail v. USPS”) to determine whether the federal government can challenge patents under a provision of the U.S. patent law known as the America Invents Act (AIA). Specifically, the Court will decide whether the federal government is a “person” who may petition to institute review proceedings under the AIA.
Background
AIA Section 18(a)(1)(B), which covers Covered Business Method (CBM) patents, reads “[a] person may not file a petition for a transitional proceeding with respect to a covered business method patent unless the person or the person’s real party in interest or privy has been sued for infringement of the patent or has been charged with infringement under that patent.” (emphasis added)
Return Mail filed suit against the United States Postal Service (USPS) for patent infringement in the U.S. Court of Federal Claims (“USCFC”). The USCFC is authorized by statute to award compensation to a patent owner for the government’s unauthorized use of the invention, as the government cannot be sued for patent infringement in federal court. The USPS then petitioned the Patent Trial and Appeal Board (PTAB) of the USPTO for a CBM review of the challenged claims of Return Mail’s patent.
Before the PTAB, Return Mail challenged the USPS’ ability to petition for CBM review on the basis that the USPS was not a “person” under the statute. The PTAB’s final written opinion held that the USPS had statutory standing to challenge the claims. Return Mail appealed to the United States Court of Appeals for the Federal Circuit.
Federal Circuit Decision
In a 2 to 1 decision, Federal Circuit affirmed the PTAB’s decision, holding that the meaning of “person” in the statute “does not exclude the government.”
Under the AIA, a party to a post-grant PTAB proceeding that reaches a final decision cannot later in federal court or before the International Trade Commission challenge the validity of the same patent claims. The dissent to the majority’s decision was concerned that including the federal government in the definition of “person” would circumvent the estoppel provision as to the government because the government can challenge the patent before the USCFC.
The dissent noted that “[t]he estoppel provision applies to petitioners litigating in district court or the ITC, but is silent as to petitioners litigating in the Claims Court.” This would allow the government to petition the PTAB, and later again re-litigate the same grounds raised during the CBM review proceeding before the USCFC. Return Mail argued in its petition for certiorari before the Supreme Court that this would give the government an advantage over all other litigants of being able to challenge a patent twice on the same ground.
Conclusion
The government is a frequent participant in the patent system and USCFC’s patent infringement actions are similar to those in district court in that they allow validity to be raised as an affirmative defense. Without defining whether the government is a person or not, the government would have two bites at the apple regarding claim validity. If the government does not like how the PTAB ruled, then it still can raise the same arguments at the USCFC, which does not have to give deference to the PTAB ruling. This can result in different outcomes and increased litigation cost and time for the patent holder.