Supreme Court Holds That the U.S. Government Does Not Have Standing to Bring Post-Grant Patent Challenges Under the AIA

In a six-three opinion, in Return Mail, Inc. v. U.S. Postal Service, the Supreme Court held that the U.S. government is not a “person” for purposes of the America Invents Act and thus does not have standing to bring post-grant challenges. Slip Op. at 1. In Citizens United v. FEC, 558 U.S. 310 (2010), the Supreme Court held that corporations, like individuals, have First Amendment Rights. In Naruto v. Slater, 888 F.3d 418 (9th Cir. 2017), the Ninth Circuit held that a monkey, and other animals, were not eligible to receive copyright protections for their works (i.e. monkey selfies are not copyrightable). Thus, to paraphrase Professor Lemley, the Supreme Court has now confirmed that the U.S. government—for purposes of post-grant challenges under the AIA—is more like a monkey than a corporation.

A.          Statutory Background

Under the America Invents Act (AIA), adopted by Congress in 2011, a person can bring three types of post-grant challenges before the Patent Trials and Appeal Board: inter partes review (IPRs), post-grant review (PGRs), and challenges to cover business method patents (CBMs). Slip Op. at 3-4. In each case, the relevant statute restricts those that can bring such challenges to “a person” other than the patent owner. Id. In this decision, the Supreme Court addressed whether the U.S. government qualifies as a “person” under the AIA and thus has standing to bring post-grant challenges under the AIA.

B.          Factual Background

Return Mail, Inc. owns U.S. Patent No. 6,826,548, which is directed to processing mail that is undeliverable. Slip Op. at 5. In 2003, the U.S. Postal Service and Return Mail began licensing discussions. In 2006, without a license to the ’548 patent, the USPS introduced a service that Return Mail alleged infringed the ’548 patent. Id. In response, the USPS sought ex parte reexamination of the patent. The PTO canceled the original claims, but issued several new claims. After the reexamination was concluded, Return Mail sued the USPS. Id.

During pendency of the lawsuit, the USPS sought CBM review of the ’548 patent. The PTAB granted review and canceled the claims of the ’548 patent as being directed to patent-ineligible subject matter. A divided panel of the Federal Circuit held that the U.S. government is a “person” eligible to petition for CBM review. Slip Op. at 5-6.

C.          Analysis

In a decision authored by Justice Sotomayor, and joined by Chief Justice Roberts, and Justices Thomas, Alito, Gorsuch, and Kavanaugh, the Court held that governmental agencies are not “persons” for purposes of the post-grant review contemplated by the AIA.

The patent statutes do no define a “person.” “In the absence of an express statutory definition, the Court applie[d] a ‘longstanding interpretive presumption that “person” does not include the sovereign,’ and thus excludes a federal agency like the Postal Service” because the presumption reflects “common usage.” Slip Op. at 7 (quoting Vermont Agency of Natural Resources v. Stevens, 529 U.S. 765 (2000)).

In reaching its decision, the majority rejected the USPS’s argument that the presumption is strongest when treating a governmental agency like a person would impose liability on the agency, and weakest when treating the agency as a person would benefit the government, finding that argument contrary to precedent. Slip Op. at 7-9.

In light of the presumption, the USPS bore the burden of showing—not necessarily with an “express contrary definition”—that the AIA intended to include governmental agencies within its definition of a “person.” Slip Op. at 9. The majority considered, and rejected, three arguments by the USPS supporting its argument that the AIA intended to include governmental agencies in its definition of “person.” Id.

First, the majority rejected the USPS’s argument that “the AIA’s reference to a ‘person’ in the context of post-issuance review proceedings must include the Government because other references to persons in the patent statutes appear to do so.” Slip Op. at 9-10. This argument failed, because the AIA uses the term “person” in different ways: “Sometimes ‘person’ plainly includes the Government, sometimes it plainly excludes the Government, and sometimes—as here—it might be read either way.” Slip Op. at 10. Because of the inconsistent, as it applies to the government, use of the term “person” in the AIA, the fact that other sections of the Patent Act include the government in their use of the term “person” was not enough to carry the day. Id. at 12.

The USPS’s next argument relied on the lengthy history of the U.S. Government interacting with the patent system, including applying for and being granted patents since 1883. Slip Op. at 13. The majority found this argument unavailing because the AIA was enacted only eight years ago. More compelling was the argument that the PTO has treated federal agencies as “persons” for purposes of filing reexaminations. Id. “Even 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.” Id. at 14. Because neither party had challenged the right of governmental agencies to file reexamination proceedings or to bring prior art to the PTO’s attention, the Court did not reach that issue. 

The majority saw a significant distinction between ex parte reexaminations and the AIA’s post-grant challenges in the fact that in an ex parte reexamination “the challenger is not permitted to participate in the Patent Office’s process,” whereas in post-grant challenges “are adversarial, adjudicatory proceedings between the ‘person’ who petitioned for review and the patent owner.” Slip Op. at 14.

Finally, the majority rejected the USPS’s third argument that government agencies must be “persons” for purposes of post-grant challenges because they are subject to civil liability and can assert a defense of patent invalidity. Slip Op. at 15. The USPS relied on the asymmetry of being restricted only to the “clear and convincing” standard of challenges in civil trials, while being subject to the same standard of proof for infringement claims as other defendants. The majority found this asymmetry acceptable because governmental agencies are not subject to the same penalties in patent lawsuits as non-governmental defendants. Id. at 16 (discussing restrictions on recovery under 35 U.S.C. § 1498). “Because federal agencies face lower risks, it is reasonable for Congress to have treated them differently.” Id.

In reaching its decision, the majority appears to have also been influenced by a desire to avoid “the awkward situation that might result from forcing a civilian patent owner (such as Return Mail) to defend the patentability of her invention in an adversarial, adjudicatory proceeding initiated by one federal agency (such as the Postal Service) and overseen by a different federal agency (the Patent Office).” Slip Op. at 17.

In a dissent joined by Justices Ginsburg and Kagan, Justice Breyer found many of the USPS’s arguments compelling. Additionally, he found that including governmental agencies within the definition of “person” would better serve Congress’s purpose in enacting the AIA, namely (a) “to ‘improve the quality of patents’ and ‘make the patent system more efficient’ by making it easier to challenge ‘questionable patents,’” and (b) allowing a patent holder to protect its patents by challenging related patents owned by another. Dissent at 5.

D.         Conclusion and Takeaways

Unlike many of the Supreme Court’s decisions related to patent law, it is probably fair to say that this decision is of interest mostly to patent law cognoscenti and those that practice in the narrow field of bringing (or defending) patent infringement actions against the U.S. government; a practice with its own peculiar rules and requirements. This decision is worthwhile, however, because it does not include any wide pronouncements about the patent system—unlike the discussion of “franchises” in Oil States Energy Services, LLC v. Greene's Energy Group, LLC, 584 U.S. ___ (2018)—and continues to show a trend at the Supreme Court towards providing more protections for patent owners.