PTABWatch Takeaway: When “sued for infringement” within the meaning of 28 U.S.C. § 1498(a), the United States has standing to petition the Patent Office to institute Covered Business Method (CBM) review.  Return Mail v. U.S. Postal Service, Appeal 2016-1502 (Fed. Cir. Aug. 28, 2017)

Background

Patentee, Return Mail, Inc., filed suit in the U.S. Court of Federal Claims Court alleging that the United States, through the actions of the United States Postal Service, used without license the subject matter claimed in U.S. Pat. No. 6,826,548. That patent generally describes processing mail items that are undeliverable due to an inaccurate or obsolete address for an intended recipient. The patent claims allow “returned mail to be processed ‘virtually entirely automatically through the exchange of data files between computers.’” In filing suit, Return Mail sought “reasonable and entire compensation” under 28 U.S.C. § 1498(a), which states that if “an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same,” the patent owner may obtain a remedy by filing an “action against the United States in the [Claims Court] . . . for the recovery of his reasonable and entire compensation for such use and manufacture.”

The Postal Service filed a CBM petition to challenge the patentability (including the patent eligibility via 35 U.S.C. § 101) of certain asserted claims. In response, Return Mail argued that the United States lacked standing to petition for CBM review. The Board determined, however, that the United States had been sued for infringement within the meaning of AIA § 18, and therefore concluded that the United States had standing to petition and participate in the CBM. In its final written decision, the Board found that the challenged claims were drawn to ineligible subject matter under § 101.

On Appeal

On appeal, the Federal Circuit determined that “[b]ecause the PTO is an administrative agency, the Article III standing requirement for a ‘case or controversy’ does not apply to matters before it.”  Instead, the statutory language for CBM review (AIA § 18(a)(1)(B)) describes the relevant standing requirement such that “[a] person may not file a petition for [CBM review] unless the person or the person’s real party in interest or privy has been sued for infringement of the patent or has been charged with infringement under that patent.”  Return Mail, Slip Op. at 7 (citing AIA § 18(a)(1)(B)) (emphasis added).

Section 18 does not, however, define the term “infringement,” and the parties disputed the applicable definition. Return Mail argued that Congress defined “infringement” narrowly to restrict “infringement” to 35 U.S.C. § 271(a), i.e., when someone “without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention.”  Return Mail contended, therefore, that the Postal Service could not be “sued for infringement” because the government is immune from suit under the Patent Act, but could be sued under 28 U.S.C. § 1498(a). The Postal Service argued that the normal use of the word “infringement” simply “describe[s] a claim under a § 1498 action.”

Agreeing with the Postal Services’ argument, the Federal Circuit explained that nothing in section 18 of the AIA indicates that the term “infringement” is as limiting as Return Mail argues:

“[N]othing in the text of § 18(a)(1)(B) indicates an intent to restrict ‘infringement’ to suits that fall under the Patent Act. Congress is presumed to be ‘aware of existing law when it passes legislation.’ [citations omitted]. When Congress enacted the AIA in 2011, the law did not preclude § 1498(a) suits from being suits for infringement. Congress could have easily specified the phrase ‘sued for infringement’ to require being sued for infringement under 35 U.S.C. § 271 or otherwise excluded § 1498 suits from the definition of ‘sued for infringement,’ but it did not do so.

Return Mail, Slip. Op. at 21.

The court therefore concluded that the United States has standing in the CBM because the Postal Service was “sued for infringement” within the meaning of § 18(a)(1)(B) when Return Mail filed the Claims Court suit against the Postal Service under § 1498(a).  Continuing, the court affirmed the Board’s judgment that the challenged claims are ineligible under § 101.

In dissent, Judge Newman contended that an important issue was whether the Postal Service was a “person” within the meaning of § 18(a)(1)(B).  Judge Newman noted that “[t]he panel majority states that the appellant waived the issue because it was not raised in its opening brief, [however], matters of jurisdiction are not subject to disposition by waiver.”  Return Mail, slip op. at 1 (Newman, J., dissenting). Judge Newman concluded that the Postal Service is not a  “person” to whom the post-grant procedures of the AIA are available because the “government” was absent from the Dictionary Act (which defines “person”). Id. at 5-6, and 11.   Accordingly, Judge Newman would have vacated the PTAB’s final written decision because the proceeding was beyond the PTAB’s statutory authority.   Id. at 11.