GOVERNMENT CAN’T HAVE ITS CAKE AND EAT IT TOO

GOVERNMENT CAN’T HAVE ITS CAKE AND EAT IT TOO: WHY GOVERNMENT SHOULD NOT INITIATE A CBM REVIEW AND ESCAPE AIA ESTOPPEL PROVISION

By: Seung Sub Kim, Volume 103 Staff Member

What is a person? Although it is often used as a synonym for “a human being,”[1] courts have expanded the term to include a corporation[2] while ruling that a monkey is not a person.[3] The Supreme Court will now consider whether a government is a person under the Leahy-Smith America Invents Act (the “AIA”).

I. BACKGROUND

In 2011, Congress enacted the AIA to provide greater certainty for patent rights and to expedite and reduce the cost of patent validity disputes.[4] To further these goals, the AIA created the Patent Trial and Appeal Board, which could review and invalidate issued patents through different proceedings, one of which is the covered business method (“CBM”) review.[5] These AIA review proceedings “allow[] private parties to challenge previously issued patent claims in an adversarial process before the Patent Office that mimics civil litigation”[6]and can be initiated by a “person” filing a “petition” with the Board challenging one or more patent claims.[7]However, CBM review can only be instituted with respect to patents that claim “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.”[8] Not all “person[s]” can seek a CBM review; only “the person or the person’s real party in interest or privy” who have “been sued for infringement of the [challenged] patent” or have “been charged with infringement under that patent” may petition.[9]

If the Board institutes the requested review, the Board “issue[s] a final written decision with respect to the patentability of any patent claim challenged by the petitioner.”[10] By challenging patent validity, the petitioner is estopped from later asserting the same patent claims on any ground that the petitioner raised during the review in federal courts and the International Trade Commission (ITC), immunizing patent owners from the same and subsequent invalidity challenges.[11] Congress recognized and balanced the scope of the Board’s authority to institute post-grant proceedings with the extent of the estoppel provision.[12]

For centuries, the federal government has been deemed not to have waived sovereign immunity for the tort of patent infringement.[13] Through an Act to Provide Additional Protection for Owners of Patents of the United States (“the 1910 Act”), Congress created a cause of action to compensate patent owners for this perceived unfair government misappropriation of patented invention.[14] The Supreme Court distinguished the claims brought under the 1910 Act from patent infringement claims, reasoning that the 1910 Act sounds in “eminent domain” rather than tortious patent infringement.[15] The 1910 Act “provides for the appropriation of a license to use the inventions, . . . sanctioned by the means of compensation for which the statute provides.”[16] The 1910 Act was subsequently codified in 27 U.S.C. § 1498(a), which waives sovereign immunity and confers exclusive jurisdiction on the Court of Federal Claims.[17]

In Return Mail, Inc. v. United States Postal Service, the Petitioner developed and was issued a patent (“the ‘548 patent”) for a cost-saving system for processing returned mail after a failed delivery system.[18] The United States Postal Service discussed possible licensing option of Return Mail’s technology but ultimately decided to offer its own system to process returned and undeliverable mail.[19] Return Mail soon found that the Postal Service’s system was covered by the ‘548 patent and filed a § 1498(a) suit in the Court of Federal Claims demanding compensation for the government’s unlicensed use.[20] During the pendency of the § 1498(a) action, the Postal Service petitioned for a validity challenge through a CBM review.[21] Return Mail opposed the petition, contending that the Board lacks statutory authority to adjudicate validity claims presented by the government under AIA § 18.[22] The Board held that the Postal Service had statutory standing and ultimately invalidated the ‘548 patent.[23]

On appeal, the Federal Circuit affirmed the Board’s position in a divided 2-1 decision.[24] The majority held that the government is a “person” under the AIA, concluding that “[t]he AIA does not appear to use the term ‘person’ to exclude the government.”[25] Judge Newman in her dissent contended that “[t]he general statutory definition is that a ‘person’ does not include the United States and its agencies unless expressly provided.”[26] She reasoned that while “exceptions may arise, such exceptions warrant considered analysis, not presumptive waiver by silence.”[27] She continued on to criticize the majority for “declining to consider the purpose and intent of the legislature in exclusion of the Government from the estoppel provisions,” which is “the foundation of the America Invents Act.”[28] Because there lacks any conspicuously “strong evidence of intent to include” the government as a “person” subject to the AIA, Judge Newman concluded that she would vacate the Board’s decision.[29]

II. ANALYSIS

Maintaining the uniformity of case law and a century of precedent and preserving the balanced framework of the AIA, the Supreme Court should hold that the Patent Trial and Appeal Board lacks authority to adjudicate a CBM review filed by the government because the government is not a “person” under the AIA.

A. The Plain Language and Controlling Case Laws Dictate that the Government is Not a “Person”

The threshold requirement to initiate a CBM review is outlined in the AIA: “A person may not file a petition [for a CBM review] unless the person or the person’s real party in interest or privy has been sued for” or “charged with” patent infringement.[30] However, neither the Act nor the Patent Office, through its rulemaking authority, has clarified the definition of the term “person.”

The Federal Circuit majority heavily based its ruling on a view that “[t]here does not appear to be any reason . . . to curtail the ability of the government to initiate a CBM proceeding when . . . it has interests at stake with respect to the patent it has been accused of infringing.”[31] The majority reasoned that since there lacks any evidence that Congress intended to restrict the government’s petitioning of AIA Review proceedings, the government is a “person.”

But case laws indicate the contrary: when a statute uses the term “person,” it is presumed that the legislature purposefully intended to exclude the government.[32] Congress made an express provision in the Dictionary Act to define the term “person,”[33] and “[t]he absence of any comparable provision extending the term to sovereign governments implies that Congress did not desire the term to extend to them.”[34] Without any “affirmative showing of statutory intent to the contrary,” the “longstanding interpretive presumption” dictates against reading “person” to include the government.[35] The Ninth Circuit in Naruto v. Slater followed a similar rule of statutory interpretation, understanding congressional silence as a sign of legislative disapproval.[36] If Congress intended to take the step to authorize the government to initiate a CBM review, they should have plainly and explicitly done so. Moreover, the Supreme Court has weighed in on this issue before and has been reluctant to read “person” to include the sovereign where such a reading is “decidedly awkward.”[37] Disregarding the Court’s awkward interpretive framework, the Federal Circuit, paradoxically, sought evidence that “Congress intended to exclude a government-related party sued under § 1498(a) from being able to petition for CBM review” and interpreted the legislative silence to grant the government from pursuing a CBM review.[38]

B. Through its Estoppel Provision, the AIA was Carefully Crafted to Exclude the Government from Pursuing Review Petitions

The structure of the estoppel provision within the AIA further suggests that the government cannot be classified as a “person.” The estoppel provision limits petitioners from raising the same invalidity challenges before the ITC or the federal court.[39] However, the exclusive jurisdiction for a cause of action against the federal government for the tort of patent infringement is the Court of Federal Claims.[40] By allowing the government to pursue a CBM review, the Federal Circuit authorized the government to circumvent the estoppel provision.

The congressional intent for CBM review is clear: the petitioner cannot assert “that the claim is invalid on any ground that the petitioner raised during [the CBM review] proceeding” in federal courts and the ITC.[41] While the estoppel provision for CBM review is narrower than that for other post-grant proceedings,[42] it nevertheless prevents the petitioner from unreasonably harassing the patent owner with repeated challenges to the validity of a patent.[43] Moreover, since the petitioner initiated the proceeding, it would be unreasonable to allow him any subsequent challenge to the claims and not be bound by the Board’s final decision. Congress explicitly prescribed jurisdiction for subsequent civil actions and excluded the Court of Federal Claims. This signals that Congress did not envision that government agencies would be authorized to pursue a CBM review before the Board.

The Federal Circuit justified its decision by concluding that such a “concern is for Congress to ‘correct’ this imbalance should it see fit.”[44] However, the Court’s case laws and the congressional intent behind the estoppel provision evince the exclusion of the government from the term “person.” It would be “decidedly awkward” to allow the government to file a CBM review petition.[45] In enacting the AIA, Congress did not accidentally omit the government as a “person” as the majority in the Federal Circuit suggests, but rather Congress created new patent rights only to those specifically conferred by the AIA.[46]

This is a clear example of judicial disrespect for the clear language of the federal statute. The rule is that the plain language of a statute will control. The legislative intent appears in clear terms in the statute: to exclude the government from initiating a CBM review. By interpreting the AIA beyond the plain meaning of the statute, the Federal Circuit has extended beyond its scope of judicial review. The judicial encroachment on legislative authority must be stopped.

III. CONCLUSION

The United States Postal Service wants to have its cake and eat it too. It wants the benefit of challenging patent invalidity before the Board with none of the estoppel limitations. But the congressional intent to exclude the federal government from initiating a CBM review is evident in the controlling precedents and the estoppel provision. Allowing federal government agencies to initiate AIA reviews would disrupt the uniform enforcement and application of the patent laws and violate the policy of reducing abusive serial invalidity challenges underlying the AIA.

  1. Person, Black’s Law Dictionary (10th ed. 2014). 
  2. See Soc’y for Propagation of Gospel in Foreign Parts v. Town of Pawlet, 29 U.S. 480 (1830). 
  3. See Naruto v. Slater, 888 F.3d 418 (9th Cir. 2018) (holding that because it was a non-human, a monkey lacked statutory standing under Copyright Act). 
  4. See 157 Cong. Rec. S1089 (daily ed. Mar. 2, 2011) (statement of Sen. Leahy); id. at S1097 (daily ed. Mar. 2, 2011) (statement of Sen. Hatch). 
  5. Leahy-Smith America Invents Act [hereinafter AIA] § 18, Pub. L. 112-29, 125 Stat. 284 (2011); see 35 U.S.C. §§ 311–29. 
  6. SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348, 1352 (2018). 
  7. AIA § 18(a)(1)(B); see 35 U.S.C. §§ 311(a), 312(a), 321(a), 322(a). 
  8. AIA § 18(d)(1). 
  9. AIA § 18(a)(1)(B). 
  10. 35 U.S.C. § 328(a). 
  11. AIA § 18(a)(1)(D). 
  12. See H.R Rep. No. 112-98, pt. 1, at 48 (2011) (recognizing “the importance of quiet title to patent owners to ensure continued investment resources” and ensuring that “a final decision in a post-grant review process will prevent the petitioner . . . from challenging any patent claim on a ground that was raised in the post-grant review process”). 
  13. See Schillinger v. United States, 155 U.S. 163, 167–69 (1894). 
  14. Pub. L. No. 61-305, 36 Stat. 851–52 (1910). 
  15. Crozier v. Fried Krupp Aktiengesell-schaft, 224 U.S. 290, 305 (1912). 
  16. Id. 
  17. See Advanced Software Design Co. v. Fed. Reserve Bank of St. Louis, 583 F.3d 1371, 1374–76 (Fed. Cir. 2009). 
  18. Return Mail, Inc. v. United States Postal Service, 868 F.3d 1350, 1354 (Fed. Cir. 2017); U.S. Patent No. 6,826,548 (filed Jan. 24, 2001). 
  19. Return Mail, Inc. v. United States, No. 11–130 C, 2013 WL 5569433, at *1 (Fed. Cl. October 4, 2013). 
  20. Return Mail, 868 F.3d at 1355. 
  21. Id. 
  22. Id. 
  23. Id. 
  24. Id. at 1371. 
  25. Id. at 1365. 
  26. Id. at 1372 (Newman, J., dissenting) (emphasis added). 
  27. Id. at 1373 (Newman, J., dissenting). 
  28. Id. at 1374 n.1, 1374 (Newman, J., dissenting). 
  29. Id. at 1375 (Newman, J., dissenting). 
  30. AIA § 18(a)(1)(B). 
  31. Return Mail, 868 F.3d at 1366. 
  32. Vt. Agency of Nat. Res. V. United States ex rel. Stevens, 529 U.S. 765, 780 (2000) (announcing the court’s “longstanding interpretive presumption that ‘person’ does not include the sovereign”). 
  33. 1 U.S.C. § 1. 
  34. United States v. United Mine Workers of Am., 330 U.S. 258, 275 (1947). 
  35. Vt. Agency, 529 U.S. at 780–81. 
  36. Naruto v. Slater, 888 F.3d 418, 425–26 (9th Cir. 2018). 
  37. Will v. Michigan Dept. of State Police, 491 U.S. 58, 82 (1989); see also Primate Protection League v. Tulane Educ. Fund, 500 U.S. 72, 83 (1991). 
  38. Return Mail, 868 F.3d at 1360. 
  39. See AIA § 18(a)(1)(D); H.R Rep. No. 112-98, pt. 1, at 80 (2011). 
  40. 27 U.S.C. § 1498(a). 
  41. AIA § 18(a)(1)(D). 
  42. Compare AIA § 18(a)(1)(D) (“The petitioner in a transitional proceeding . . . may not assert . . . that the claim is invalid on any ground that the petitioner raised during that transitional proceeding.”), with 35 U.S.C § 315(e)(1)-(2) (“The petitioner in an inter partes review . . . may not assert . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”) (emphasis added), and35 U.S.C § 325(e)(1)-(2) (“The petitioner in a post-grant review. . . may not assert . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that post-grant review.”) (emphasis added). 
  43. See H.R Rep. No. 112-98, pt. 1, at 48 (2011). 
  44. Return Mail, 868 F.3d at 1366 n.17. 
  45. See Will v. Michigan Dept. of State Police, 491 U.S. 58, 82 (1989). 
  46. See United States Postal Service v. Flamingo Industries (USA) Ltd., 540 U.S. 736 (2004).