Supreme Court: Government Cannot Challenge Patent Validity in IPR

The Supreme Court recently determined that United States government agencies cannot challenge a U.S. patent in an administrative trial proceeding conducted before the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (USPTO).

PTAB trial proceedings, such as inter partes reviews (IPRs), are popular means for challenging the validity of issued patents. For parties desiring to invalidate a patent, PTAB trial proceedings offer advantages over U.S. District Court litigation. For example, a party seeking review at the PTAB need only prove invalidity by a preponderance of the evidence, which is a lower burden than the clear and convincing standard applied in federal courts and the International Trade Commission. An inter partes review proceeding is also typically faster and less costly than a trial in a U.S. District Court. Since 2012, over 10,000 petitions for review have been filed at the PTAB.

In Return Mail Inc. v. United States Postal Service, the Supreme Court held in a 6-3 decision that a government agency does not constitute a “person” in the context of the AIA statute. The issue in Return Mail was one of statutory interpretation. PTAB trial proceedings are governed by the Leahy-Smith America Invents Act (AIA) of 2011. The AIA statute enables a “person” other than the patent owner to seek review of a patent in a PTAB trial proceeding. The Court determined that the AIA statute does not expressly define the term “person.” In the absence of an express definition, the Court applied the “longstanding interpretive presumption that ‘person’ does not include the sovereign.” The Court therefore placed the burden on the Postal Service to point to some indication in the AIA’s text or context affirmatively showing that Congress intended to in­clude the Government as a “person.” The Postal Service was unable to prove any such legislative intent.

First, the Postal Service argued that the AIA’s reference to a “person” in the context of PTAB trial proceedings must in­clude the Government because other references to persons in the pa­tent statutes appear to do so. The Court disagreed, finding that “[s]ometimes ‘person’ plainly includes or excludes the Government, but sometimes, as here, it might be read either way.” The Court explained that since no “clear trend as to the meaning of ‘person’ is shown,” the Postal Service failed to provide the required affirmative showing of a legislative intent to include the Government as a “person.”

Second, the Court was not moved by the fact that federal agencies have the ability to obtain a patent and to seek review in ex parte reexamination proceedings. The Court reasoned that the ability to obtain a patent and seek review in a different type of administrative proceeding does not speak to whether Congress intended for the Government to have the ability to challenge a patent in a PTAB trial proceeding.

Third, the Court rejected the Postal Service’s argument that the Government should be afforded the right to challenge a patent under a lower burden of proof at the PTAB, because such reviews are available to other accused infringers. The Court noted that “[f]ederal agencies … face lower and more calculable risks than nongovernmental actors, so it is reasona­ble for Congress to have treated them differently” under the AIA. The Court also noted that “[e]xcluding federal agencies from AIA review proceedings also avoids the awkward situ­ation of having a civilian patent owner defend the patentability of her invention in an adversarial, adjudicatory proceeding initiated by one federal agency and overseen by a different federal agency.”

The Supreme Court has taken interest in statutory interpretation issues involving the AIA. The Court previously considered other provisions of the AIA in the context of PTAB trial proceedings. The Court interpreted the scope of appeal under § 314(d) and the Patent Office’s authority to establish regulations under §316(a)(4)) in Cuozzo Speed Techs. v. Lee, as well as the scope of final written decisions under § 318(a)) in SAS Institute v. Iancu. The Court’s decision in Return Mail continues this trend. Petitioners and patent owners may wish to consider the potential impact of this trend on the stance of their proceedings.