Fildes & Outland, P.C.

U.S. Supreme Court Update

The U.S. Supreme Court will hear oral arguments this February in Return Mail, Inc. v. United States Postal Service (Supreme Court Docket No. 17-1594).  The Court will consider whether the U.S. government is a “person” who may petition to institute an AIA trial proceeding (inter partes review, post-grant review, or covered business method review) in the Patent Trial and Appeal Board of the United States Patent and Trademark Office, and whether a Section 1498(a) action against the U.S. government constitutes being “sued for infringement.”

Petitioner Return Mail is the owner of U.S. Patent No. 6,826,548 (“the ‘548 patent”), which is directed to a method, system, and program for processing returned mail.  Around January 2006, Return Mail and the United States Postal Service discussed licensing of the ‘548 patent and a proposed pilot program for the Postal Service to test the use of the invention covered by the ‘548 patent.  Subsequently, however, the Postal Service implemented its own system for processing returned and undeliverable mail.  Return Mail notified the Postal Service that this system was covered by the claims of the ‘548 patent.  Instead of taking a license for the ‘548 patent, the Postal Service filed a petition for ex parte reexamination with the USPTO to challenge the validity of the ‘548 patent.  The USPTO upheld the validity of the ‘548 patent in the reexamination, and thereafter Return Mail filed a Section 1498(a) action against the Postal Service in the United States Court of Federal Claims seeking compensation for the Postal Service’s use of Return Mail’s invention.  During the pendency of the 1498(a) action (and after passage of the America Invents Act which implemented AIA trials before the PTAB), the Postal Service filed a petition for covered business method (CBM) review of certain method claims of the ‘548 patent.  The PTAB ultimately issued a final written decision invalidating the challenged claims of the ‘548 patent.  Return Mail appealed the PTAB’s decision to the United States Court of Appeals for the Federal Circuit (Federal Circuit Docket No. 2016-1502), in part contesting the PTAB’s determination that the Postal Service had statutory standing to file the petition for CBM review.  The Federal Circuit issued a decision on August 28, 2017 affirming the Postal Service’s standing before the PTAB and also affirming the invalidity of the challenged claims of the ‘548 patent.  Return Mail, Inc. v. United States Postal Service, 868 F.3d 1350 (Fed Cir. 2017).  On appeal to the Supreme Court, Return Mail contests whether the Postal Service in fact had standing to file the CBM review.

In order to file a petition for CBM review of a patent, the petitioner must be a “person” that has been “sued for infringement of the patent” or “charged with infringement under that patent.”  (Inter partes review and post-grant review proceedings similarly must be initiated by a “person”).  In its petition for certiorari filed with the Supreme Court, Return Mail argues that the Postal Service is not a “person” within the meaning of the term as used in the AIA.  (As a side note, this specific issue was not raised below by either party but instead was first raised by Judge Newman in the dissenting opinion of the Federal Circuit.  Since the Supreme Court has granted cert, it appears that the Supreme Court does not consider this issue to have been previously waived by the petitioner.)  Return Mail takes the position that longstanding precedent dictates the definition of “person” does not include a sovereign.  Also, Return Mail contends that nothing in the AIA or the legislative history indicates Congress intended to depart from this presumption and to affirmatively include the government in the definition of “person.”  Return Mail also argues that a Section 1498(a) action is not a suit for “infringement” and therefore the Postal Service has not been sued for or charged with infringement as required to petition for CBM review.  Return Mail takes the position that longstanding precedent holds that Section 1498(a) actions are not suits for infringement but instead are claims for compensation arising from a governmental taking by eminent domain.  (As a matter of background, the government has sovereign immunity and cannot be sued for the tort of patent infringement.  Thus, Congress enacted a cause of action for patent owners to obtain compensation for the misappropriation of patented inventions by or for the United States, which was codified in 28 U.S.C. 1498(a).  It was for this reason that Return Mail brought a Section 1498(a) action against the Postal Service.)  Return Mail also notes that allowing the Postal Service or other government entity to be a party to an AIA trial would unfairly permit the government to avoid the estoppel provisions of the AIA that prevent a party from relitigating issues that were presented before the PTAB.  In this regard, the estoppel provisions of the AIA prevent petitioners from subsequently litigating the issues raised in an AIA trial in later civil actions in federal district court as well as in proceedings before the International Trade Commission.  The estoppel provisions do not prevent subsequent litigation of the issues before the Court of Federal Claims, which is the only venue that may hear Section 1498(a) actions.

The scope of the Supreme Court’s forthcoming decision in this matter may be fairly limited, as it will essentially just determine whether a sovereign government entity may challenge the validity of a patent in an AIA trial proceeding.  However, should the Supreme Court side with Return Mail, it would be another instance of the Supreme Court reversing a Federal Circuit decision in the area of patent law.

A copy of the Federal Circuit decision in Return Mail may be accessed at http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/16-1502.Opinion.8-23-2017.1.PDF, and a copy of Return Mail’s petition for certiorari may be accessed at https://www.supremecourt.gov/DocketPDF/17/17-1594/46651/20180514120931346_RMI%20v.%20USPS%20-%20Petition.pdf.

 

 

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