Return Mail Inc. v. U.S. Postal Service

Wednesday, June 19, 2019

Case No. 17-1594 (U.S. June 10, 2019)

On June 10, 2019, the Supreme Court ruled that the U.S. government is not a “person” for purposes of filing a petition for review of a patent under the transitional program for covered business method patents (“CBM”).  Under the AIA, a “person” who has been “sued for infringement” or “charged with infringement” of a business method patent may file a petition for CBM review under certain circumstances. AIA § 18(a)(1)(B).

The petitioner in this case, Return Mail, Inc., owns a patent covering a process for handling returned and undeliverable mail. Return Mail filed an action against the United States Postal Service (“USPS”) in the U.S. Court of Claims and the USPS then filed a petition for CBM review at the Patent Trial and Appeal Board (“PTAB”). The PTAB ruled that the challenged claims were unpatentable. The Federal Circuit affirmed in a 2-1 decision.

In a decision written by Justice Sotomayor, the Supreme Court reversed in a 6-3 decision. Justice Sotomayor ruled that since the Patent Act did not define “person,” the Court applied a “longstanding interpretive presumption that ‘person’ does not include the sovereign,” and thus excludes a federal agency like the Postal Service. Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U. S. 765, 780–781 (2000). In addition, the federal Dictionary Act, 1 U. S. C. §1, provides the definition of “person” that courts use “[i]n determining the meaning of any Act of Congress, unless the context indicates otherwise.” The Dictionary Act’s definition of “person” does not include the federal government.

The Court rejected several arguments raised by the Postal Service. First, it rejected the idea that “Congress must unequivocally express any waiver of sovereign immunity for that waiver to be effective.” Slip op. at 7-8. The Court ruled that sovereign immunity and the government’s ability to take advantage of favorable provisions of a statute were not related. “In several instances, this Court has applied the presumption against treating the Government as a statutory person when there was no question of immunity, and doing so would instead exclude the Federal Government or one of its agencies from accessing a benefit or favorable procedural device.” Slip op. at 8.

The Court also rejected the argument that  AIA § 18(a)(1)(B) includes the federal government. The Patent Act uses the word “person” in 18 different places, but sometimes the word clearly includes the government and sometimes it does not. The Postal Service relied on 35 U.S.C. § 207(a)(1), but “§207(a)(1) provides no such clue as to the interpretation of the AIA review provisions because it implies nothing about what a federal agency may or may not do following the issuance of someone else’s patent.” Slip op. at 11.

The Postal Service also relied on the argument that the federal government has long been active in the patent system, and is recognized by the USPTO as having standing to file requests for reexamination. The Court noted that, “[e]ven assuming that the Government may petition for ex parte reexamination, ex parte reexamination is a fundamentally different process than an AIA post-issuance review proceeding. . . . Thus, 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 and any subsequent appeal.” Slip op. at 14-15.

Finally, the Postal Service argued that it was unfair to expose it to liability for infringement, but not provide the remedy of a CBM review. The Court ruled that “[o]nce sued, an agency may, like any other accused infringer, argue that the patent is invalid, and the agency faces the same burden of proof as a defendant in any other infringement suit. The Postal Service lacks only the additional tool of petitioning for the initiation of an administrative proceeding before the Patent Office under the AIA, a process separate from defending an infringement suit.”