Return Mail, Inc. v. U.S. Postal Serv.

• Decision Date: 10 June 2019
• Docket Number: No. 17-1594,17-1594
• Citation: 139 S.Ct. 1853
• Parties: RETURN MAIL, INC., Petitioner v. UNITED STATES POSTAL SERVICE, et al.
• Court: U.S. Supreme Court

139 S.Ct. 1853

RETURN MAIL, INC., Petitioner

v.UNITED STATES POSTAL SERVICE, et al.

No. 17-1594

Supreme Court of the United States.

Argued February 19, 2019

Decided June 10, 2019

Beth S. Brinkmann, Washington, DC, for the petitioner.

Malcolm L. Stewart, for the respondents.

Richard L. Rainey, Beth S. Brinkmann, Kevin F. King, Nicholas L. Evoy, Daniel G. Randolph, Tarek J. Austin, Covington & Burling LLP, Washington, DC, for petitioner.

Noel J. Francisco, Solicitor General, Joseph H. Hunt, Assistant Attorney General, Malcolm L. Stewart, Deputy Solicitor General, Jonathan Y. Ellis, Assistant to the Solicitor General, Mark R. Freeman, Megan Barbero, Courtney L. Dixon, Attorneys, Department of Justice, Washington, DC, for respondents.

Justice SOTOMAYOR delivered the opinion of the Court.

In the Leahy-Smith America Invents Act of 2011, 35 U.S.C. § 100 et seq. , Congress created the Patent Trial and Appeal Board and established three new types of administrative proceedings before the Board that allow a "person" other than the patent owner to challenge the validity of a patent post-issuance. The question presented in this case is whether a federal agency is a "person" able to seek such review under the statute. We conclude that it is not.

I

A

The Constitution empowers Congress "[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective ... Discoveries." Art. I, § 8, cl. 8. Pursuant to that authority, Congress established the United States Patent and Trademark Office (Patent Office) and tasked it with "the granting and issuing of patents." 35 U.S.C. §§ 1, 2(a)(1).

To obtain a patent, an inventor submits an application describing the proposed patent claims to the Patent Office. See §§ 111(a)(1), 112. A patent examiner then reviews the application and prior art (the information available to the public at the time of the application) to determine whether the claims satisfy the statutory requirements for patentability, including that the claimed invention is useful, novel, nonobvious, and contains eligible subject matter. See §§ 101, 102, 103. If the Patent Office accepts the claim and issues a patent, the patent owner generally obtains exclusive rights to the patented invention throughout the United States for 20 years. §§ 154(a)(1), (2).

After a patent issues, there are several avenues by which its validity can be revisited. The first is through a defense in an infringement action. Generally, one who intrudes upon a patent without authorization "infringes the patent" and becomes subject to civil suit in the federal district courts, where the patent owner may demand a jury trial and seek monetary damages and injunctive relief. §§ 271(a), 281–284. If, however, the Federal Government is the alleged patent infringer, the patent owner must sue the Government in the United States Court of Federal Claims and may recover only "reasonable and entire compensation" for the unauthorized use. 28 U.S.C. § 1498(a).

Once sued, an accused infringer can attempt to prove by clear and convincing evidence "that the patent never should have issued in the first place." Microsoft Corp. v. i4i L. P. , 564 U. S. 91, 96–97, 131 S.Ct. 2238, 180 L.Ed.2d 131 (2011) ; see 35 U.S.C. § 282(b). If a defendant succeeds in showing that the claimed invention falls short of one or more patentability requirements, the court may deem the patent invalid and absolve the defendant of liability.

The Patent Office may also reconsider the validity of issued patents. Since 1980, the Patent Act has empowered the Patent Office "to reexamine—and perhaps cancel—a patent claim that it had previously allowed." Cuozzo Speed Technologies , LLC v. Lee , 579 U. S. ––––, ––––, 136 S.Ct. 2131, 2137, 195 L.Ed.2d 423 (2016). This procedure is known as ex parte reexamination. "Any person at any time" may cite to the Patent Office certain prior art that may "bea[r] on the patentability of any claim of a particular patent"; and the person may additionally request that the Patent Office reexamine the claim on that basis. 35 U.S.C. §§ 301(a), 302(a). If the Patent Office concludes that the prior art raises "a substantial new question of patentability," the agency may reexamine the patent and, if warranted, cancel the patent or some of its claims. §§ 303(a), 304–307. The Director of the Patent Office may also, on her "own initiative," initiate such a proceeding. § 303(a).

In 1999 and 2002, Congress added an "inter partes reexamination" procedure, which similarly invited "[a]ny person at any time" to seek reexamination of a patent on the basis of prior art and allowed the challenger to participate in the administrative proceedings and any subsequent appeal. See § 311(a) (2000 ed.); §§ 314(a), (b) (2006 ed.); Cuozzo Speed Technologies , 579 U. S. at ––––, 136 S.Ct. at 2137.

B

In 2011, Congress overhauled the patent system by enacting the America Invents Act (AIA), which created the Patent Trial and Appeal Board and phased out inter partes reexamination. See 35 U.S.C. § 6 ; H. R. Rep. No. 112–98, pt. 1, pp. 46–47. In its stead, the AIA tasked the Board with overseeing three new types of post-issuance review proceedings.

First, the "inter partes review" provision permits "a person" other than the patent owner to petition for the review and cancellation of a patent on the grounds that the invention lacks novelty or nonobviousness in light of "patents or printed publications" existing at the time of the patent application. § 311.

Second, the "post-grant review" provision permits "a person who is not the owner of a patent" to petition for review and cancellation of a patent on any ground of patentability. § 321; see §§ 282(b)(2), (b)(3). Such proceedings must be brought within nine months of the patent’s issuance. § 321.

Third, the "covered-business-method review" (CBM review) provision provides for changes to a patent that claims a method for performing data processing or other operations used in the practice or management of a financial product or service. AIA §§ 18(a)(1), (d)(1), 125 Stat. 329, note following 35 U.S.C. § 321, p. 1442. CBM review tracks the "standards and procedures of" post-grant review with two notable exceptions: CBM review is not limited to the nine months following issuance of a patent, and "[a] person" may file for CBM review only as a defense against a charge or suit for infringement. § 18(a)(1)(B), 125 Stat. 330.¹

The AIA’s three post-issuance review proceedings are adjudicatory in nature. Review is conducted by a three-member panel of the Patent Trial and Appeal Board, 35 U.S.C. § 6(c), and the patent owner and challenger may seek discovery, file affidavits and other written memoranda, and request an oral hearing, see §§ 316, 326; AIA § 18(a)(1), 125 Stat. 329; Oil States Energy Services , LLC v. Greene’s Energy Group , LLC , 584 U. S. ––––, –––– – ––––, 138 S.Ct. 1365, 1371–72, 200 L.Ed.2d 671 (2018). The petitioner has the burden of proving unpatentability by a preponderance of the evidence. §§ 282, 316(e), 326(e). The Board then either confirms the patent claims or cancels some or all of the claims. §§ 318(b), 328(b). Any party "dissatisfied" with the Board’s final decision may seek judicial review in the Court of Appeals for the Federal Circuit, §§ 319, 329; see § 141(c), and the Director of the Patent Office may intervene, § 143.

In sum, in the post-AIA world, a patent can be reexamined either in federal court during a defense to an infringement action, in an ex parte reexamination by the Patent Office, or in the suite of three post-issuance review proceedings before the Patent Trial and Appeal Board. The central question in this case is whether the Federal Government can avail itself of the three post-issuance review proceedings, including CBM review.

C

Return Mail, Inc., owns U. S. Patent No. 6,826,548 (’548 patent), which claims a method for processing mail that is undeliverable. Beginning in 2003, the United States Postal Service allegedly began exploring the possibility of licensing Return Mail’s invention for use in handling the country’s undelivered mail. But the parties never reached an agreement.

In 2006, the Postal Service introduced an enhanced address-change service to process undeliverable mail. Return Mail’s representatives asserted that the new service infringed the ’548 patent, and the company renewed its offer to license the claimed invention to the Postal Service. In response, the Postal Service petitioned for ex parte reexamination of the ’548 patent. The Patent Office canceled the original claims but issued several new ones, confirming the validity of the ’548 patent. Return Mail then sued the Postal Service in the Court of Federal Claims, seeking compensation for the Postal Service’s unauthorized use of its invention, as reissued by the Patent Office.

While the lawsuit was pending, the Postal Service again petitioned the Patent Office to review the ’548 patent, this time seeking CBM review. The Patent Board instituted review. The Board agreed with the Postal Service that Return Mail’s patent claims subject matter that was ineligible to be patented, and it canceled the claims underlying the ’548 patent. A divided panel of the Court of Appeals for the Federal Circuit affirmed. See 868 F. 3d 1350 (2017). As relevant here, the Federal Circuit held, over a dissent, that the Government is a "person" eligible to petition for CBM review. Id. , at 1366 ; see AIA § 18(a)(1)(B), 125 Stat. 330 (only a qualifying "person" may petition for CBM review). The court then affirmed the Patent Board’s decision on the merits, invalidating Return Mail’s patent claims.

We granted certiorari to determine whether a federal agency is a "person" capable of petitioning for post-issuance review under the AIA.² 586 U. S. ––––, 139 S.Ct. 397, 202 L.Ed.2d 309 (2018).

II

The AIA provides that only "a person" other than the patent owner may file with the Office a petition to institute a post-grant...