Government Agencies Barred From AIA Patent Challenges, Said Supreme Court
V&E IP Insights, June 11, 2019
On June 10, 2019, the U.S. Supreme Court held that a federal agency is not a “person” able to challenge the validity of a patent post-issuance under the Leahy-Smith America Invents Act of 2011 (the “AIA”). In the absence of an express definition of the term “person” in the patent statutes, the Court applied a “longstanding interpretive presumption that ‘person’ does not include the sovereign,” and thus excluded a federal agency like the Postal Service from seeking post-issuance review on the validity of patents. Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U. S. 765, 780–781 (2000).
Return Mail, Inc., owns U.S. Patent No. 6,826,548 ("the ’548 patent"), which claims a method for processing undeliverable mail. In 2006, the Postal Service introduced an enhanced address-change service to process undeliverable mail, which Return Mail asserted infringed the ’548 patent. Return Mail sued the Postal Service in the Court of Federal Claims, seeking compensation for the unauthorized use of its invention. While that suit was pending, the Postal Service petitioned for covered business method (“CBM”) review under the AIA. The Patent Board concluded that the subject matter of Return Mail’s claims was ineligible to be patented and thus canceled the claims underlying its patent. The Federal Circuit affirmed, concluding, as relevant here, that the government is a “person” eligible to petition for CBM review.
In a 6-3 decision, the Supreme Court reversed and held that the government is not a “person” capable of instituting the three AIA review proceedings, including CBM review. The Postal Service raised a few arguments supporting its position that Congress intended to include the government as a “person,” but the majority found these arguments unpersuasive. For example, the Postal Service argued that it seemed unfair to prohibit it from challenging patents using proceedings that are available to private parties, because, like other potential infringers, it is subject to civil liability and can assert a defense of patent invalidity. The majority found the Postal Service to have overstated the “asymmetry,” since an agency can challenge a patent’s invalidity in court and will not be subject to injunctive relief or punitive damages. Justice Breyer dissented, joined by Justices Ginsberg and Kagan, writing that it was clear that Congress intended the term “person” to include the government in this context. According to Justice Breyer, government agencies can apply for and obtain patents; they can sue other parties for infringing their patents; they can be sued for infringing patents held by private parties; and they can be forced to defend their own patents when a private party invokes one of the three procedures established by the AIA. “Why, then, would Congress have declined to give federal agencies the power to invoke these same administrative procedures?"
What This Means for You
Federal governments accused of infringing patents can now only defend their cases in court; they will no longer be able to challenge the validity of the asserted patents with the Patent Board under the AIA. This could mean that federal agencies may be more likely to pay royalties when accused of patent infringement. Note that this decision only addresses the federal government, and not any foreign, state, or municipal governments.
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