“I guess what I was hoping for was that you would have an argument from particular statutory provisions….I hear you just saying, look, this is a broad provision and we can’t think of a reason why the government shouldn’t be treated like everybody else, so the government should be treated like everybody else.” – Justice Elena Kagan
On Tuesday, February 19, the U.S. Supreme Court heard oral arguments in Return Mail Inc. v. United States Postal Service, a case that asks the nation’s highest court to determine whether the federal government constitutes a “person” for the purposes of instituting review proceedings at the Patent Trial and Appeal Board (PTAB) under the Leahy-Smith America Invents Act (AIA). Although the Supreme Court Justices appeared to be dissatisfied with arguments from counsel for either side, they arguably pushed back more against the USPS’ position. All Justices apart from Justice Clarence Thomas played an active role in questioning.
Petitioner: “Person” is Limited to Private Entities
Arguing for the petitioner, Return Mail, was Beth Brinkmann, Partner at Covington & Burling LLP. She began with the contention that there were three reasons why the term “person” did not extend to the government: first, the branches of government have relied on both the Dictionary Act—which defines “person as including “corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals—and the Court’s presumptive definition that “person” doesn’t include the government; second, estoppel provisions enacted by Congress in 35 U.S.C. § 315(e) reference district courts and the International Trade Commission, not the Court of Federal Claims, where the government’s patent litigation takes place; and third, the government still has the ability to go after bad patents through ex parte reexamination proceedings, which can be initiated sua sponte by the Director of the U.S. Patent and Trademark Office (USPTO).
In a situation like the present one, where the U.S. Postal Service was accused of patent infringement, Brinkmann noted that 35 U.S.C. § 303 doesn’t preclude communication between government agencies and the USPTO Director for purposes of requesting an ex parte reexamination. Justice Samuel Alito asked if such communication would be proper and Brinkmann added that 37 C.F.R. 1.520 contemplates such requests, although the rule states that “normally” such requests wouldn’t be considered. Justice Ruth Bader Ginsburg asked why Congress would want to exclude the government if the idea of the AIA was to weed out bad patents, but Brinkmann argued that the government already has the opportunity to challenge validity in reexams and at the Court of Federal Claims.
Roberts: Government Has Been Deemed a “Person” Before Under the Dictionary Act
Chief Justice John Roberts pushed back on Brinkmann’s reliance on the Dictionary Act, saying that it was based on “a legal fiction” because there are examples where the government has been considered a “person” under the Dictionary Act definition. Brinkmann said that, unlike Congressional statute regarding the government’s ability to own a patent (35 U.S.C. § 207) and the government’s ability to raise all defenses against patent infringement allegations (28 U.S.C. § 1498), there was no similar affirmative right in AIA statute that gives the government the ability to petition for AIA trials. Justice Neil Gorsuch noted that the respondent’s argument would be that Section 207 gives the government the ability to participate in many aspects of the patent system. Brinkmann pointed to the Court’s 1941 decision in United States v. Cooper Corp., where the Court found that “person” didn’t include the government because Congress didn’t enact any language to include the government as a person in the applicable law—in that case, the Sherman Antitrust Act.
Justice Stephen Breyer asked Brinkmann to provide examples of the term “person” not including the government from a patent law rather than an antitrust law context. Brinkmann pointed to 35 U.S.C. § 317 regarding settlements in inter partes review (IPR) proceedings, noting that federal government agencies can obtain confidential information by request, but that a “person” has to show good cause for obtaining the information. Brinkmann added that, with respect to false marking, 35 U.S.C. § 292 provides remedies for the government under subsection (a) while remedies for a person are only available under subsection (b). Further, 35 U.S.C. § 257(e) allows the USPTO Director to refer a person to the attorney general for material fraud committed on the Office.
Justice Sonia Sotomayor asked, if the Patent Act allows the government to be sued for infringement, did it make logical sense to take away a defense tool available to all alleged infringers? Brinkmann argued that actions brought against the government under Section 1498 weren’t actions for infringement but were rather actions for use without authority. Further, a petition for IPR wasn’t a defense in the sense that it could be raised in infringement litigation, but rather an affirmative action meant to invalidate a patent.
Gorsuch: Why Would Congress Allow Reexams but not IPR?
Justice Elena Kagan asked whether provisions of Section 207 regarding the government’s ability to obtain a patent and protect its rights to inventions seems to indicate that the government might be able to avail itself of IPR challenges to “clear the field in order to innovate.” Again, Brinkmann pointed to reexaminations as proof that the government already had the ability to go after bad patents. Justice Gorsuch said that, while he could understand the argument that Congress didn’t want to let the government go to its own agency to invalidate private party patents, he wondered why Congress would allow an ex parte proceeding initiated by a government agency’s request instead of “a more robust adversarial process involving the government as a party.” Brinkmann said that reexaminations were more about the agency’s reconsideration of a patent, similar to the interactions between an examiner and a patent applicant, in a way that “furthers the interests that are at the crux of the patent system in our country.”
Justice Breyer continued to ask for clarification on what remedies federal agencies like the Defense Advanced Research Projects Agency or the Federal Trade Commission can seek for avoiding infringement allegations to which a regular person has no access. Brinkmann noted that, under Congressional statute, a federal agency could use an invention without being enjoined from using it. Further, the government in the Court of Federal Claims is treated very differently from defendants in normal infringement proceedings who have to face a jury and the possibility of induced infringement findings or enhanced damages.
USPS: “General Public” Includes the Government
Arguing on behalf of respondent U.S. Postal Service was Malcolm Stewart, Deputy Solicitor General of the United States. He began by noting that the definition of “person” could include governmental bodies while being consistent with the terms of the Dictionary Act. Justice Sotomayor quickly cut in with a question:
“It does seem like the deck is stacked against a private citizen who is dragged into these proceedings. They’ve got an executive agency acting as judge with an executive director who can pick the judges, who can substitute judges, can reexamine what those judges say, and change the ruling, and you’ve got another government agency being the prosecutor at the same time. In those situations, shouldn’t you have a clear and express rule?” – Justice Sonia Sotomayor
Justice Gorsuch said that this was an important question to consider as he felt that the Court should expect clarity from Congress when an unusual arrangement would take place, such as in the event that the USPTO decided against the USPS and the Supreme Court could be asked to resolve the dispute. Justice Brett Kavanaugh joined this line of questioning, asking why the Court should decide in a manner that would allow two federal agencies to act as adversaries in federal court when the ex parte reexamination process was available. Stewart acknowledged that it was theoretically possible that a federal agency could appeal an unfavorable PTAB decision but that such a situation hadn’t yet occurred.
“Can’t the executive branch agencies always communicate with one another?” Justice Kavanaugh asked. Stewart referenced back to Alito’s earlier question to Brinkmann to argue that such communications would be problematic in the ex parte reexamination context, noting that requests for reexams would be communicated to the patent owner.
“[I]t would be peculiar to say that an executive branch agency could short-circuit those mechanisms that are designed to make the process transparent, make it a part of the official record, simply by an end run… It would also be peculiar to… kind of make up a regime in which… a federal official from one agency will call a counterpart at the PTO and say: Don’t treat this as a request for ex parte reexamination, but put it in the file, deal with it in the same ways that Congress intended requests for ex parte reexamination to be made.” – Malcolm Stewart
Stewart then returned to his point regarding the government as a party in a PTAB trial, noting that it was clear from the statute that the government could be a patent owner who could then have the patent challenged at the PTAB. In that case, the government would have a statutory right to appeal, he argued.
Kagan to Stewart: I Was Hoping for More
Justice Kagan asked Stewart to identify an affirmative statement from statutes which identified the government as a person. Stewart pointed to contextual evidence that IPR and covered business method (CBM) review is widely made available to the general public. “Isn’t that flipping the presumption?” Justice Gorsuch asked. “I mean, the presumption is that ‘person’ doesn’t include the government, and you’re suggesting, well, because ‘person’ is broad and it’s a big term, it includes the government.” Citing to the Court’s 1873 decision in Dollar Savings Bank v. United States, Stewart argued that case supported his argument because his contextual reading makes available a benefit rather than imposes a disadvantage. The fact that the benefit was widely available also distinguished this situation from the one present in the Court’s 1991 decision in Primate Protection League v. Tulane Educational Fund.
Justice Kagan was not satisfied with Stewart’s answers:
“I guess what I was hoping for was that you would have an argument from particular statutory provisions… I was trying to run an argument to Ms. Brinkmann about 207(a)(1) and (a)(3) and how those might suggest that the government was a person. But I don’t hear you saying anything like that. I hear you just saying, look, this is a broad provision and we can’t think of a reason why the government shouldn’t be treated like everybody else, so the government should be treated like everybody else.”
Stewart made a general observation that the Court’s precedent in Georgia v. Evans (1942) and Pfizer v. Government of India (1978) held that the term “person” wouldn’t necessarily include the government, “but we can’t see any reason why Congress would have wanted these units almost alone among potential plaintiffs not to be able to sue under the antitrust laws.” Further, a previous revision of Section 1498 had deleted language which expressly said that the United States had, in the Court of Federal Claims, all defenses that were available to a private party. “Isn’t there some kind of basic statutory canon interpretation that says where the reason for the rule applies, the rule applies?” Justice Kavanaugh asked. Though the PTAB offered a speedy way of resolving an infringement suit against a government party, there were reasons why such a rule wouldn’t apply, including the availability of the Court of Federal Claims. Stewart responded that a defense to a suit under Section 1498 would require overcoming the statutory presumption of a patent’s validity even though Section 1498 doesn’t explicitly say that the government has to overcome this presumption because Section 1498 suits are “conducted in basically the same way as ordinary infringement suits.” Invoking IPR or CBM review at the PTAB allows a party to overcome the clear and convincing evidence hurdle and is available to any party charged with infringement, Stewart argued.
Alito: Why Would Congress Want Different Estoppel Rules for the Government?
Justice Ginsburg asked about the petitioner’s argument that the estoppel provision gives the government “two bites of the apple” whereas other parties only get one. Stewart argued that estoppel does apply, noting that the government can’t file successive requests for IPR or CBM. While estoppel doesn’t govern proceedings in the Court of Federal Claims, Stewart said that the government would still be subject to common law estoppel, although that estoppel encompassed arguments that were actually made, whereas IPR estoppel also concerned arguments that weren’t made.
Justice Alito said that, while he didn’t think the petitioner had a strong argument as to why Congress would want to treat the government differently than private parties for the purpose of AIA trials, he asked for an explanation as to why Congress would have wanted different estoppel rules to apply to the federal government. Stewart acknowledged that Congress probably didn’t anticipate the present situation when considering estoppel under the AIA, but he pointed to Pfizer as another situation where the Court made a decision without resting on affirmative evidence of Congressional intent.
Justice Gorsuch asked if the estoppel point becomes odder still if the government, acting as plaintiff, brings an IPR proceeding to the government, acting as judge at the USPTO, but then the findings of the USPTO aren’t binding at the Court of Federal Claims. “Isn’t it a little unseemly to say that the executive branch shouldn’t be bound by its own decisions?” he asked. Stewart pointed to the Supreme Court’s 1984 decision in United States v. Mendoza to note that the government is sometimes held to different estoppel rules because “the government’s appeal calculus is different.”
Clarifying his argument on the contextual basis for allowing the government to be considered a person to petition the PTAB, Stewart argued that the Court has previously resolved ambiguity issues on clear statement rules in favor of the government. “If somebody argued that the patent laws allowed any other defendant to show patent invalidity by a preponderance of the evidence but… required a federal agency as defendant to prove it by clear and convincing evidence, I think the Court’s reaction would be that it’s conceivable, but we would need pretty clear language that Congress intended that result,” Stewart said. Further, while Congress created IPR and CBM review under the AIA with the interests of private parties in mind, one impetus for the enactment of the AIA was that ex parte reexamination hadn’t been effective in its job of weeding out bad patents.
Congress’ Silence Speaks Volumes
After Stewart’s arguments, Brinkmann returned for a short rebuttal period where she made a few quick points. First, requests for ex parte reexamination made by a person could be kept confidential under the terms of 35 U.S.C. § 301(e). Second, it would be “extraordinary” for Congress to enact statutes enabling actions between agencies by maintaining silence rather than explicitly considering the situation. Finally, she pointed out that briefs submitted by the petitioner identified more than a century of Court precedent where the government didn’t constitute a “person” even though there were benefits to persons that the government wanted.
Justice Kagan asked if the presumption that a government wasn’t a person made sense anymore. “[D]oes anybody really think Congress thinks about this as a default rule and legislates against it?” she asked. Brinkmann noted that when Congress and the President enact laws involving the government, many issues like sovereign immunity and prosecutorial authority come into play, so the presumption made sense to prevent unintended scenarios from occurring.
IPWatchdog will be publishing industry reactions to the oral arguments later this week.
Join the Discussion
18 comments so far.
AnonFebruary 26, 2019 08:12 am
And you my friend need to understand — and accept — constructive criticism.
You say my distinction is pointless when it clearly is not so.
In fact, MY point here ties in a comment of yours on another thread and breathes live to that comment (the “why” that our Sovereign would choose to obtain a comity with treaties).
You should instead be saying “thank you,” and not (again) descending to a Malcolm-like baseless insult mode.
Night WriterFebruary 26, 2019 04:36 am
Why do you post ridiculous comments like this? They are supercilious and without point.
I understand the limits of the usefulness. My point is clear that this is a major metric that can be measured and yet is not being measured. And that it is a canary in the patent mine. Your comments add no substance other than to insult me. You need to start reading what other people write more carefully.
AnonFebruary 25, 2019 12:20 pm
Your “simple point” is TOO simple – for the reasons provided.
Whatever calculating you may want to do with a “too-simple” approach, those calculations will be in error.
Night WriterFebruary 25, 2019 11:23 am
My point is very simple. That one measure of the health of the innovation system of the US and the patent system in the US is the number of patent applications where the invention was made in the US. Very simple point and from my understanding of the numbers, the number has decreased.
My prediction is that there is going to be a sharp decrease in the next downturn.
AnonFebruary 25, 2019 10:17 am
Night Writer @ 12,
Your calculus is off regarding “inventions made in the US.”
NOT because your underlying thesis is incorrect mind you. It is off because you have to account for the numbers of “inventions made in the US” that DO obtain foreign patent protection as a factor of the comity that is part and parcel of WHY the US has entered (by Treaty) any such unilateral treatment.
Secondarily (as noted on another recent thread), your thesis overplays in a very real sense the “entity” that is the original inventor, in that you too do not seem to reflect (enough) that the US patent was fully intended to be a property that in and of itself was to be fully alienable, and as such, the “who” of ownership was NOT to be a determinative factor.
I would put to you that these aspects reflect a deeper and more nuanced view of the nation-to-nation dealings that occur; but that being said, patent law was, is, remains, and ever shall be a Sovereign-Centric law, and that the minute ANY “deal” that we have does not benefit our Sovereign, that is the minute that our Sovereign needs to reassess its participation in such a law (or treaty).
Mark AnnettFebruary 24, 2019 02:21 pm
@Disebfranchiased, while I meant that in general it would typically not be in the interest of “we the people” for the government’s to prevail itself of the PTAB process, as it has in this case, I share your overall concerns about the way the PTAB does its job. (Though, not necessarily, about the salaries.)
Night WriterFebruary 24, 2019 09:31 am
@11 “300+ PTAB ALJ jobs (who are paid an average wage in excess of $150K/year) depend on them opposing patents once issued.”
If they don’t invalidate a fair number of claims from the IPRs, then the IPRs would be reduced and many would be laid off.
(I guess there are people that are all cheery and think things are going to get better with patents because the new Director. I don’t. I think we are still on the same trajectory as anti-trust law. Patents will remain, but in a much reduced state. I continually see the corporations I work for reduce their budgets and devalue patents. My guess is that in the next recession we will see massive reductions in patent budgets and R&D—if we had another 2008 I’d put the budgets going down by 80 percent.
Let’s fact it. Patents will stay around like anti-trust law does but with just in a bare bone fashion. In anti-trust law about all that remains is price fixing and it is hard to have just one company in a space.
Not sure what the bare bones for patents will be. It is evolving. But we are going to see massive reduction in the number and quality of patent applications filed. What I see is since patents have become almost worthless that corporations are slashing the budgets that they are willing to pay for a patent. I’ve seen about a 40% reduction in the budget.
There are odd counters right now in that China is trying to build a patent system so we are seeing all these applications. But I do not see proper counts for only patent applications filed in the USA for inventions made in the USA. )
Disenfranchised Patent OwnerFebruary 23, 2019 09:42 am
[email protected]: I prefer to refer to AIA as the “Anti Inventor Act” (but I also like your “Abominable Inane Act” moniker). Retroactive laws are abominable and inane.
[email protected]: You wrote: “However, it is not in the best interest of ‘we the people’ for the government to oppose patents once issued.” I agree. But, that is inherently what the PTAB does for a living! 300+ PTAB ALJ jobs (who are paid an average wage in excess of $150K/year) depend on them opposing patents once issued.
AnonFebruary 22, 2019 02:09 pm
Thank you – let me know when it would be worthwhile for me to talk with you when YOU have a basic understanding (and one founded in more than one listening to a podcast).
Further, even if “compromise,” such does not preclude the notion of limited powers that is a cornerstone here.
Mark AnnettFebruary 22, 2019 12:50 pm
Anon, you really should listen to the podcast by the Washington Post that I suggested. You will learn a lot about the founding of our country.
The resulting Constitution, was not a shared intention of limited government; it was a compromise.
The Constitution was acknowledged at the time to be a flawed document that among other things left in place the institution of slavery, which was the issue that nearly ended the convention, without a constitution.
Don’t confuse the outcome, with the intention.
I wish you would give concrete examples of your fear, rather just resorting to hyperbole. It Might be worth talking to you then.
AnonFebruary 22, 2019 11:52 am
If you cannot see how making the government to be a “super-person” disturbs the very foundation of our government being formed with constraints of limited powers, then nothing else said on the subject will help you.
Apologies for sounding brusque, but you lack the basics necessary for a meaningful discussion on this topic. I suggest that you pick up a primer on basic civics, then graduate to understanding WHY we formed the government that we have. Obviously, I reject your contentions as to basic knowledge (and the implicit view that I lack these, while you as a non-attorney somehow have a better grasp). What I have suggested is NOT drivel, and that you think it to be so, only shows that you do not grasp why I made those suggestions.
By the way, there is nothing wrong with wanting to ask the big questions, so I am not taking issue with you in that respect.
Mark AnnettFebruary 22, 2019 08:26 am
I fail to see how my suggesting recognizing that the government has a constitutional defined role as “we the people” and to act in the capacity, in anyway, disturbs the balance of power.
BTW, there was much debate over the role and scope of government and the Constitution was an imperfect compromise. If you are interested in brushing up on your history, as your statement of intentionally is not true, then I highly recommend the podcast Constitutional by the Washington Post (https://www.washingtonpost.com/podcasts/constitutional/?utm_term=.1bbd937af6eb)
This would be far more enlightening to you than any basic civics course drivel you are espousing. The constitutional convention was a “hot mess”.
I am simply suggesting that there is a constitutional principle under which it should be decided whether or not the government should have the ability to exert its rights to act in the capacity of “a person” and that is whether or not it is acting, or at least believes it is acting, in the best of “we the people.”
I believe the real problem is that we have inferred “personhood” on things like corporations, which should not have such a status, and if we are going to give it to them this status then it should decided for each particular circumstances, based upon the facts of the situation.
However, my argument is simply that in the case of the government, it’s ability to act in the capacity as a person already has a constitutional defined limit and if it is overstepping that limit then there is already a system of checks and balance in place when it is acting in the capacity as a person, because it has no more rights at that point than any other citizen.
I just don’t see how this leads to anarchy.
Should there be systems put in place to make sure that the government can make a legitimate case that it believes it is acting in the best interest of “we the people” before it acts? Absolutely, but these should be largely bureaucratic rather than legalistic issues.
It is a flawed belief that the Constitution was written with the specific intention of limiting the role of government. It was written as a compromise.
However, what we do know is that intent is expressly stated in the preamble the Constitution. The constitution was specifically written with the express intent of creating a framework and a government under which we could become “a more perfect union.”
I am simply arguing that the question of whether or not the government can act as a person an under what circumstances it can do so is, in principle, enshrined in our constitution.
The Constitution is where we should look to answer the question of personhood for the government first, instead of looking to decide this on a case by case basis.
I am just saying that if you are going to go before the Supreme Court then you might as well ask the big questions.
AnonFebruary 21, 2019 06:08 pm
A juristic person is a non-real person, and whether or not the government qualifies in any particular instance is rather fact dependent.
In certain situations, the government MAY be a juristic person – in other situations, the “answer” would be MAY NOT.
Further, as you are not an attorney, you may not understand that the structure of our government was intentionally to have a government (ACROSS all three branches) of limited power. We the people did NOT want a “too-powerful” government – and this was made abundantly clear (one need not be an attorney to recognize this, as basic civics courses should have brought home that lesson).
Mark AnnettFebruary 21, 2019 03:59 pm
So, are you saying that you agree that US government is a “juristic person”? I am asking because I am just not sure based upon what you said.
As you know, I am not an attorney, so my “supper person” concept is my own interpretation of the constitution.
I would certainly agree with you that limits on how a “juristic person” acts is likely a good thing. With respect to my “super person” concept I would suggest, as a starting point, that it if it is acting in a capacity of “a person” that it should be acting in the best interest of “we the people”.
Granted that is incredibly vague but at least is something.
I would contend that there is a constitutional basis for considering the government a “juristic person”. In contrast to a corporation, which I do not believe has a constitutional basis.
If it were up to me, I would actually abolish the concept of corporations as people and leave just the government as a super person, representing “we the people” and real people, as the only two people/entities considered persons.
My big picture conception of this particular case is that in general monopolies are not in the best interest of “we the people”, unless in exchange for being given a monopoly you have taught “we the people” something unique and non obvious.
In this particular case, I see the government as acting, it what it believes, in the interest of “we the people,” in opposing this particular patent.
However, it is not in the best interest of “we the people” for the government to oppose patents once issued.
In principle, I see nothing wrong with the action taken.
If another “juristic person” could take this action then why shouldn’t a government acting on behalf of “we the people” also take this action.
The government may need to be able to support the fact that is in fact acting in the best interest of we the people but that is a different matter.
AnonFebruary 21, 2019 10:21 am
There is a real difference between juristic persons and “real” persons, and (without diving into the details of this particular case), any opportunity to set proper limits for juristic persons is a good thing.
Mark AnnettFebruary 21, 2019 10:08 am
Isn’t there an argument to be made that the constitution itself, which begins “we the people” defines the government itself as a “super person” acting on behalf of all persons.
Therefore, if the government is acting in the role as a “super person” then shouldn’t be able to avail itself to any remedies available to individual people?
BaseballFebruary 21, 2019 09:08 am
ok great, so first corporations, immortal, and sociopathic, are considered “persons,” and now Roberts wants to extend that to government. Ironically, that’s an abtract idea; with all the nonsense about §101, it seems to lack inventive concept, “something more,” like being a living, breathing being.
EGFebruary 21, 2019 07:54 am
Return Mail is yet more evidence that the AIA (Abominable Inane Act) was horribly drafted by Congress, and I would argue in many instances, deliberately so to create “language landmines” for the unwary. Congress gets an F in my book for this piece of nonsense.