RETURN MAIL, INC., Appellant v. UNITED STATES POSTAL SERVICE, UNITED STATES, Appellees
2016-1502
United States Court of Appeals for the Federal Circuit
Decided: August 28, 2017
Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. CBM2014-00116.
RICHARD L. RAINEY, Covington & Burling LLP, Washington, DC, argued for appellant. Also represented by MICHAEL S. SAWYER; ERIC MICHAEL ADAMS, DOUGLAS H. ELLIOTT, The Elliott Law Firm, PLLC, Bellaire, TX; LEE LANDA KAPLAN, JEFFREY POTTS, Smyser, Kaplan & Veselka, LLP, Houston, TX.
DAVID ALLEN FOLEY, JR., Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for appellees. Also represented by BENJAMIN C. MIZER, JOHN FARGO.
Before PROST, Chief Judge, NEWMAN and WALLACH, Circuit Judges.
Opinion for the court filed by Chief Judge PROST.
Dissenting opinion filed by Circuit Judge NEWMAN.
Patent assignee Return Mail, Inc. (“Return Mail“) appeals from the final written decision of the U.S. Patent and Trademark Office‘s (“PTO“) Patent Trial and Appeal Board (“Board“) in a review of a covered business method (“CBM“) patent. The Board held that the U.S. Postal Service and the United States (collectively, “the Postal Service“) were not statutorily barred from filing the underlying petition for review. On the merits, the Board determined that all of the challenged patent claims were directed to ineligible subject matter under
I. BACKGROUND
A
In 2011, Congress enacted the Leahy-Smith America Invents Act (“AIA“), Pub. L. No. 112-29, 125 Stat. 284, which created several new quasi-adjudicatory proceedings before the PTO for determining the
This appeal arises from a CBM review, which unlike IPR or PGR, is limited to CBM patents—i.e., 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,” with the exception of “technological inventions.” AIA § 18(d)(1). CBM review is also a “transitional” program, currently scheduled to sunset in September 2020. AIA § 18(a)(3). It is governed by AIA § 18 and, with certain exceptions, “employ[s] the standards and procedures of[] a [PGR] under [
CBM review proceeds in two stages. In the first stage, the PTO Director makes a threshold determination of whether to institute the proceeding, which requires a determination that “it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable” or that “the petition raises a novel or unsettled legal question that is important to other patents or patent applications.”
B
Return Mail owns U.S. Patent No. 6,826,548 (“‘548 patent“), which is the subject of the underlying CBM review as well as related litigation in the U.S. Court of Federal Claims (“Claims Court“). The ‘548 patent is directed to the processing of mail items that are undeliverable due to an inaccurate or obsolete address for the intended recipient. ‘548 patent col. 1 ll. 20–24. The patent underwent ex parte reexamination, resulting in the cancellation of all original claims and the issuance of new claims 39–63 in January 2011.2 Ex Parte Reexamination Certificate 6,826,548 C1.
According to its specification, “[t]he processing of mail that is returned to sender historically has been a time-consuming labor-intensive process for high volume mail users.” ‘548 patent col. 1 ll. 39–42. For instance, “[e]ven with the availability of address updating services to aid in researching for the correct address,” the
The claimed invention of the ‘548 patent purportedly “overcomes the historical problems with prior art manual handling” and “does so quickly, more accurately, and at substantially less cost.” Id. at col. 1 ll. 55–59. It teaches encoding useful information, such as the name and address of intended recipients, on mail items in the form of a two-dimensional barcode. Id. at col. 2 ll. 4–5, col. 2 l. 66–col. 3 l. 15. Undeliverable mail items are returned to a processing location, where the barcodes are scanned. Id. at col. 2 ll. 14–20, col. 3 ll. 15–51. The scanned information is then processed, such as by obtaining corresponding updated address data from a computer or database, and the updated information is then electronically provided to the sender to be used as the sender deems appropriate. Id. at col. 2 ll. 19–27, col. 3 l. 52–col. 4 l. 33. In other words, the claimed invention allows returned mail to be processed “virtually entirely automatically through the exchange of data files between computers.” Id. at col. 6 ll. 61–64.
C
In February 2011, after trying unsuccessfully to license the ‘548 patent to the Postal Service, Return Mail filed suit in the Claims Court against the United States. It alleged under
In April 2014, the Postal Service filed a petition with the PTO for CBM review of claims 39–44 (the “challenged claims“) of the reexamined ‘548 patent. It raised several grounds for unpatentability, including patent-ineligible subject matter under
In response, Return Mail not only raised patentability arguments but also contested the Postal Service‘s ability under the AIA to petition for CBM review. The Board held that the Postal Service had statutory “standing” and instituted review of all of the challenged claims under
Return Mail timely appealed. Section 329 of the AIA authorizes a party dissatisfied with the Board‘s final written decision to appeal to this court under
On appeal, Return Mail argues that we should vacate the Board‘s decision because the Postal Service failed to meet the statutory standing requirement to petition for CBM review. It also argues in the alternative that we should reverse the Board‘s decision that the ‘548 patent claims 42–44 are directed to
A
The “starting point” for determining whether a party is properly before an agency is “the statute that confers standing before that agency.” Ritchie v. Simpson, 170 F.3d 1092, 1095 (Fed. Cir. 1999). Because the PTO is an administrative agency, the Article III standing requirement for a “case or controversy” does not apply to matters before it. Id. at 1094; see also Koniag, Inc. v. Andrus, 580 F.2d 601, 612 (D.C. Cir. 1978) (“Congress, in its discretion, can require that any person be admitted to administrative proceedings, whether or not that person . . . has satisfied the . . . constitutional standing requirements recognized by the Supreme Court.“). Relevant to CBM review, AIA § 18(a)(1)(B) provides 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.” (Emphases added).
Here, the Board in its institution decision held that the Postal Service had standing because it had been sued for infringement within the meaning of AIA § 18. The Board reasoned that Return Mail filed its
After the Board instituted the underlying proceeding, Return Mail continued to submit that the Postal Service lacked standing to seek CBM review. The Board again rejected that contention and “incorporate[d]” its previous standing analysis into the final written decision. J.A. 12.
1
As a threshold matter, we first consider whether we have authority to review the Board‘s determination that the Postal Service had standing to petition for CBM review, a question that we have never previously answered. The AIA authorizes appeals from the Board‘s final written decision in a CBM review proceeding.
As the Supreme Court recently reiterated, there is a “‘strong presumption’ in favor of judicial review” when interpreting “statutes that may limit or preclude review.” Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2140 (2016) (quoting Mach Mining, LLC v. EEOC, 135 S. Ct. 1645, 1650–51 (2015)). As the party “seeking to overcome this strong presumption,” the Postal Service “faces a ‘heavy burden‘“—it must demonstrate a contrary legislative intent “by ‘clear and convincing’ evidence.” Versata Dev. Grp. v. SAP Am., Inc., 793 F.3d 1306, 1320 (Fed. Cir. 2015) (quoting Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 671–72 (1986)). To the extent any “doubt about congressional intent exists, the general presumption favoring judicial review of rights-changing administrative action is controlling.” Id.
Even though the Board initially determined in its institution decision that the Postal Service had standing, that fact alone does not preclude judicial review. The AIA draws a “clear and common-sense distinction” between a final written decision by the Board and an earlier decision whether to institute CBM review. GTNX, Inc. v. INTTRA, Inc., 789 F.3d 1309, 1312 (Fed. Cir. 2015). But not all issues fall neatly into that dichotomy. Some issues are not necessarily confined to one stage of CBM review or the other, and the Board may later decide, as it did here, to revisit a determination previously made at the institution phase. We have held that the availability of judicial review does not hinge on such “timing” or “[o]verlap” of issues. Versata, 793 F.3d at 1319. Thus, even if § 18(a)(1)(B) standing is best addressed at the institution stage so as to avoid unnecessary proceedings, that the Board first decided it at the institution stage in this case is not enough, by itself, to bar judicial review.
The Postal Service submits that the Supreme Court‘s decision in Cuozzo and this court‘s decision in Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015),8 confirm that the Board‘s determination that the Postal Service had standing to petition for CBM review is not reviewable. Both cases interpreted the scope of
In Cuozzo, the Supreme Court interpreted
Nor is it a “minor statutory technicality” that can be cured by a more precise or fulsome filing. Id. at 2140. The Board‘s determination of whether a party is qualified under § 18(a)(1)(B) to petition for CBM review is a condition precedent independent from a threshold analysis regarding the likelihood of success of the information contained in the petition. See City of Arlington v. FCC, 133 S. Ct. 1863, 1869 (2013) (explaining that federal agencies’ “power to act and how they are to act is authoritatively prescribed by Congress, so that when they act improperly, . . . what they do is ultra vires“).
The Postal Service‘s reliance on Achates is also unavailing. There, we held that the PTO‘s determination that a petitioner has satisfied
Achates is distinguishable based on differences in the statutory framework for IPR and CBM review. First, for IPR proceedings, any “person who is not the owner of [the challenged] patent” can petition for review of a patent.
“like other ‘[f]iling deadlines,’ . . . is merely a ‘rule[] that seek[s] to promote the orderly progress of litigation by requiring that the parties take certain procedural steps at certain specified times.‘” Achates, 803 F.3d at 658 (alterations in original) (quoting Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 435 (2011)). Unlike the IPR time bar which is simply a procedural requirement that rights be exercised in a timely manner, § 18(a)(1)(B) relates to a party‘s right to seek CBM review in the first instance.
There is no doubt that, despite the AIA‘s no-appeal provisions, judicial review remains available on questions of “whether the [Board] exceeded statutory limits on its authority to invalidate.” Versata, 793 F.3d at 1319; see also Cuozzo, 136 S. Ct. at 2141 (holding that
The legislative history of the AIA supports our conclusion that questions related to a party‘s standing touch upon the PTO‘s ultimate authority to act. Congress explained that the PTO‘s ability to conduct CBM review “is limited in certain respects” and highlighted that the PTO “cannot” grant a petition “unless the petitioner or his real party in interest has been sued for infringement of the patent or has been charged with infringement.” H.R. Rep. No. 112-98, at 80 (2011), reprinted in 2011 U.S.C.C.A.N. 67, 105. That Congress did not intend the PTO to act absent a petition filed by a party with the requisite standing confirms that § 18(a)(1)(B) provides a fundamental limitation on the PTO‘s authority.
For the foregoing reasons, we hold that
2
We turn now to the Board‘s determination that the Postal Service had
At the outset, the parties disagree on the applicable standard of review. The Postal Service argues that the Board‘s determination is subject to arbitrary-and-capricious review under the Administrative Procedure Act (“APA“), while Return Mail contends that de novo review applies. It is true that we review PTO decisions under the standards set forth in the APA, but those standards allow us to also set aside agency actions that are “not in accordance with law.”
Return Mail makes several cogent arguments why a
a
Before discussing whether being sued under
Prior to the enactment of
Section 1498(a) “is an eminent domain statute,” wherein the government “has consented thereunder only to be sued for its taking of a patent license.” Decca Ltd. v. United States, 640 F.2d 1156, 1167 (Ct. Cl. 1980); see also Leesona Corp. v. United States, 599 F.2d 958, 964 (Ct. Cl. 1979) (discussing § 1498‘s basis in eminent domain); Tektronix, Inc. v. United States, 552 F.2d 343, 346 (Ct. Cl. 1977) (“It is settled that recovery of reasonable compensation under § 1498 is premised on a theory of an eminent domain taking under the Fifth Amendment.“). The government therefore remains immune from suit under the Patent Act, which provides that “[a] patentee shall have remedy by civil action for infringement of his patent.”
Return Mail submits that because
Return Mail selectively quotes from Motorola, relying on our statement that the government “is not a putative infringer but is deemed a licensee.” Motorola, 729 F.2d at 772 (emphasis added). But Motorola says that the government is “not in the position of an ordinary infringer,” not that the government cannot infringe. Id. at 768 (emphasis added). In fact, Motorola has language tying
Return Mail separately points out that the word “infringement” is absent from the text of
Return Mail appears to argue that the government cannot infringe because infringement requires action without authority, and the government has an implied license to practice patented inventions. Appellant‘s Opening Br. 43 (arguing that the government “has ‘undoubted authority . . . to exert the power of eminent domain’ over a patented invention“). But the text of
b
We turn next to the scope of the term “sued for infringement” in § 18(a)(1)(B). Again, this subsection provides that a person may not file a petition for CBM review of a patent unless the person, or the person‘s real party in interest or privy, has been “sued for infringement of the patent” or “charged with infringement under that patent.” Section 18 does not define the term “infringement.”12
The Postal Service argues that in normal usage the word “infringement” “is used to describe a claim under a
Applying fundamental canons of statutory construction, we agree with the Postal Service that being sued under
It is well-established that when a statute does not define a term, “words will be interpreted as taking their ordinary, contemporary, common meaning” at the time that Congress enacted the statute. Perrin v. United States, 444 U.S. 37, 42 (1979). Courts may look to dictionaries in use when Congress enacted a statute to inform the ordinary meaning of a term. See Taniguchi v. Kan Pac. Saipan, Ltd., 132 S. Ct. 1997, 2002–04 (2012) (surveying relevant dictionaries to interpret a statute). Common usage of the term “infringement” in the patent law context refers to “[a]n act that interferes with one of the exclusive rights of a patent[] . . . owner.” Infringement, Black‘s Law Dictionary (9th ed. 2009). Those rights
include “the right to exclude others from making, using, offering for sale, or selling [the claimed] invention throughout the United States or importing the invention into the United States.”
But nothing in the text of
(holding that a patent “confers upon the patentee an exclusive property in the patented invention which cannot be appropriated or used by the government itself, without just compensation“); see also Crozier v. Fried Krupp Aktiengesellschaft, 224 U.S. 290, 303 (1912) (interpreting an earlier iteration of
We acknowledge Return Mail‘s argument that allowing the government, when sued under
The petitioner in a transitional proceeding that results in a final written decision under [
35 U.S.C. § 328(a) ] with respect to a claim in a [CBM] patent, or the petitioner‘s real party in interest, may not assert, either in a civil action arising in whole or in part under [28 U.S.C. § 1338 ], or in a proceeding before the International Trade Commission under [19 U.S.C. § 1337 ], that the claim is invalid on any ground that the petitioner raised during that transitional proceeding.
(Emphasis added). This estoppel provision applies to petitioners litigating in district court or the ITC, but it is silent as to petitioners litigating in the Claims Court.
Return Mail argues that the legislative history demonstrates that Congress intended estoppel to be the cornerstone of the post-grant review process, as it “recog-nize[d] the importance of quiet title to patent owners to ensure continued investment resources.” Appellant‘s Reply Br. 24–25 (alteration in original) (quoting H.R. Rep. No. 112-98, pt. 1, at 48 (2011)). Yet construing
The Postal Service does not dispute the oddity of this result and acknowledges that the government would not be subject to estoppel under this construction. Appellees’ Br. 32 & n.9. Although this raises certain policy concerns, Congress is better suited to address them by revising the estoppel provisions for CBM review should it see fit. Thus, we leave the soundness of exempting the government from the estoppel provision to Congress, as precedent
The dissent does not disagree with our interpretation of “sued for infringement” but, instead, believes that the word “person” dictates a different result. We respectfully disagree. First, neither Return Mail nor the Postal Service discusses the significance, if any, of the word “person” as used in
Second, even assuming the issue is not waivable or is important enough to address without the benefit of the parties’ briefing, we are not persuaded that the word “person” upends the applicability of
that Congress has subjected the States to liability to which they had not been subject before“).
Contrary to the dissent‘s allegation that we improperly construe this provision “in isolation” from the context of the whole Act, Dissenting Op. 8–9 n.1, we apply the “premise that [a] term should be construed, if possible, to give it a consistent meaning throughout [an] Act.” Gustafson v. Alloyd Co., 513 U.S. 561, 568 (1995). The AIA does not appear to use the term “person” to exclude the government in other provisions. For example, its provisions on intervening rights provide that “[a]ny proposed amended or new claim determined to be patentable and incorporated into a patent”
The dissent, on the other hand, places great emphasis on the “statutory balance” Congress created through the AIA‘s estoppel provisions to support its interpretation of this statute. Dissenting Op. 7–9. Yet it relies on these estoppel provisions—a policy consideration—to inform the construction of a word for which it, itself, concedes the legislative history does not directly address.16 Id. at 4. In doing so, and in the absence of briefing, the dissent engages in mere speculation that Congress intended to exclude the government from filing petitions despite the lack of a record or any indication that it intended this result. Indeed, it is not our role to speculate on these policy concerns in the absence of Congressional guidance and rely on them to justify rewriting the plain language of a statute. To do so would be the classic example of letting the tail wag the dog.17 For the reasons set forth above, we believe the better reading of “person” in
The creation of the CBM review framework stemmed from a “general concern, including within the halls of Congress, regarding litigation abuse over business method patents.” Versata, 793 F.3d at 1325. Congress therefore created CBM review as a “special review regime, over and above any other authority the [Board] might have,” for quickly reviewing such patents viewed to be especially prone to litigation abuse. Id. at 1320. This regime was so unusual that Congress placed an eight-year time limit on it. Id. It is not surprising, then, that
We therefore conclude that the Postal Service was “sued for infringement” within the meaning of
B
Next, we address whether the Board erred in holding that claims 42–44 of the ‘548 patent are directed to
Return Mail emphasizes that the claims at issue on appeal for purposes of
The parties treat claim 42 of the ‘548 patent as repre- sentative for purposes of the
42. A method for processing a plurality of undeliverable mail items, comprising:
receiving from a sender a plurality of mail items, each including i) a written addressee, and ii) encoded data indicating whether the sender wants a corrected address to be provided for the addressee;
identifying, as undeliverable mail items, mail items of the plurality of mail items that are returned subsequent to mailing as undeliverable;
decoding the encoded data incorporated in at least one of the undeliverable mail items;
creating output data that includes a customer number of the sender and at least a portion of the decoded data;
determining the sender wants a corrected address provided for intended recipients based on the decoded data;
if the sender wants a corrected address provided, electronically transferring to the sender information for the identified intended recipients that enable the sender to update the sender‘s mailing address files; and
if the sender does not want a corrected address provided, posting return mail data records on a network that is accessible to the sender to enable the sender to access the records.
Id. at col. 2 ll. 1–24 (emphases added).
1
Under Alice step 1, Return Mail contends that claims 42–44 may involve the abstract idea of “relaying mailing address data” but are not directed to such an abstract idea. Appellant‘s Opening Br. 48–50. The Supreme Court has cautioned that, “lest [the exclusionary principle] swallow all of patent law,” an invention that simply “involves” an abstract idea is not patent ineligible under
We agree with the Board that claims 42–44 are di- rected to the abstract idea of “relaying mailing address data.” J.A. 17. Claim 42 recites “receiving from a sender a plurality of mail items,” “identifying undeliverable mail items,” “decoding . . . encoded data,” “creating output data,” and “determining if the sender wants a corrected address.” Ex Parte Reexamination Certificate, ‘548 patent col. 2 ll. 1–24. These steps are analogous to the steps of “collecting data,” “recognizing certain data within the collected data set,” and “storing that recognized data in memory,” which we found to be abstract under Step 1 in Content Extraction & Transmission LLC v. Wells Fargo Bank, National Ass‘n, 776 F.3d 1343, 1347 (Fed. Cir. 2014), cert. denied, 136 S. Ct. 119 (2015). And “[t]he mere combination of data sources [similarly] . . . does not make the claims patent eligible.” FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1097 (Fed. Cir. 2016).
Return Mail‘s contention that claims 42–44 are directed to a specific improvement in the area of returned mail processing is unavailing. Appellant‘s Opening Br. 50. “[L]imit[ing] the abstract idea to a particular environment,” here a mail processing system with generic computing technology, “does not make the claims any less abstract for the step 1 analysis.” In re TLI Commc‘ns LLC Patent Litig., 823 F.3d 607, 613 (Fed. Cir. 2016). The claims at issue are not analogous to claims “directed to a specific implementation of a solution to a problem in the software arts,” which we have held not to be directed to an abstract idea. Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1339 (Fed. Cir. 2016). Encoding and decoding mail recipient information—including whether the sender wants a corrected address—are processes that can, and have been, performed in the human mind. The claims here simply recite that existing business practice with the benefit of generic computing technology. That is insufficient to make the claims any less abstract under step 1.
2
We also reject Return Mail‘s argument that claims 42–44 are patent-eligible under Alice step 2 for reciting an inventive concept that transforms the abstract idea into “something more.” Alice, 134 S. Ct. at 2354. The claims only recite routine, conventional activities such as identifying undeliverable mail items, decoding data on those mail items, and creating output data. We are also not persuaded by Return Mail‘s emphasis on the limitations reciting particular types of encoded
Return Mail contends that claims 42–44 allow the sender to take other steps, “such as deleting obsolete address from a subsequent mailing,” that do not appear in the claim language. Appellant‘s Opening Br. 15–16. In addition, Return Mail points to hardware, such “a mail sorter, optical scanner, databases, application servers, and the mail itself” to argue that claims 42–44 result in an “improvement to an existing technological process.” Id. at 54–55. However, those limitations do not appear in the subject claims; instead, the claims focus only on encoding and decoding certain information and placing that information over a network. Ex Parte Reexamination Certificate, ‘548 patent col. 2 ll. 1–24. Thus, there is no basis in the claim language to import these steps and components. Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1149 (Fed. Cir. 2016) (“The § 101 inquiry must focus on the language of the Asserted Claims themselves.“); see also Accenture Glob. Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1345 (Fed. Cir. 2013) (“[T]he important inquiry for a § 101 analysis is to look to the claim.“).
Return Mail attempts to analogize the claims before us to claims that this court has held to be patent-eligible under step 2 in BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016), and in DDR Holdings, LLC v. Hotels.com, LP, 773 F.3d 1245 (Fed. Cir. 2014). We disagree. In those cases, the claimed inventions went beyond “merely the routine or conventional use of the Internet” or computer systems. DDR, 773 F.3d at 1259; see also BASCOM, 827 F.3d at 1351 (holding that a software-based invention that “improve[s] the performance of the computer system itself” recites patent-eligible subject matter (alteration in original)). Here, in contrast, claims 42–44 do not improve the functioning of the computer or barcode system itself. Instead, they apply those functionalities in the context of processing returned mail.
We conclude that claims 42–44 of the ‘548 patent lack an inventive concept that transforms an otherwise abstract idea into patent-eligible subject matter.
3
Finally, we address Return Mail‘s request for clarification on “the role that preemption plays” in the
Certainly, preemption is the underlying “concern that drives” the
But we have consistently held that claims that are otherwise directed to patent-ineligible subject matter cannot be saved by arguing the absence of complete preemption. See, e.g., Synopsys, 839 F.3d at 1150 (holding that an argument about the absence of complete preemption “misses the mark“); FairWarning, 839 F.3d at 1098 (“But even assuming that the . . . patent does not preempt the field, its lack of preemption does not save these claims.“); Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1320–31 (Fed. Cir. 2016) (same); OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362–63 (Fed. Cir. 2015), cert. denied, 136 S. Ct. 701 (2015) (“[T]hat the claims do not preempt all price optimization or may be limited to [a particular] setting do not make them any less abstract.“). As we have explained, “questions on preemption are inherent in and resolved by the
Relatedly, we reject Return Mail‘s implication that the Board reached inconsistent results by concluding that claims 42–44 are not patent-eligible under
At bottom, claims 42–44 of the ‘548 patent recite the use of barcode functionality and computer systems to provide updated address information, which is not sufficient
III. CONCLUSION
For the foregoing reasons, we affirm the Board‘s decision.
AFFIRMED
RETURN MAIL, INC., Appellant v. UNITED STATES POSTAL SERVICE, UNITED STATES, Appellees
2016-1502
United States Court of Appeals for the Federal Circuit
NEWMAN, Circuit Judge, dissenting.
An important threshold issue before the court is whether the United States and its agency the United States Postal Service are within the definition of “person” in
My colleagues hold that the question of whether the government is a “person” subject to the AIA was waived by the parties’ failure to object. Although some issues may be waived, statutory jurisdiction is not subject to waiver. See Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006) (“Moreover, courts, including this Court, have an independent obligation to determine whether subject matter jurisdiction exists, even in the absence of a challenge from any party.“); Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583–84 (1999) (“subject-matter delineations must be policed by the courts on their own initiative even at the highest level.“); United States v. Cotton, 535 U.S. 625, 630 (2002) (“subject-matter jurisdiction . . . can never be forfeited or waived.“).
My colleagues do not impart precision to their holding (or not) of waiver; rather, they “observe” that they would probably find waiver since the issue is not clearly within the “Article III context.” Maj. Op. 25 n.15. However, considerations of subject matter jurisdiction are foundational to the tribunal‘s power. “It is well settled that no action of the parties can confer subject-matter jurisdiction on a tribunal and that the principles of estoppel do not apply to vest subject-matter jurisdiction where Congress has not done so.” Dunklebarger v. Merit Sys. Prot. Bd., 130 F.3d 1476, 1480 (Fed. Cir. 1997) (citing Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982)). The issue of whether the PTAB possesses the power to adjudicate a claim of invalidity involves subject matter jurisdiction, for the dispute must be within the limited scope granted by the Congress to the PTAB.
This court has an independent obligation to ascertain its own jurisdiction and that of the tribunal below. See Mitchell v. Maurer, 293 U.S. 237, 244 (1934) (“An appellate federal court must satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under review.“). Although the foregoing concerns a court‘s review of a lower court‘s jurisdiction, the same principle applies to review of an agency‘s jurisdiction. See, e.g., Da Cruz v. INS, 4 F.3d 721, 722 (9th Cir. 1993) (considering, sua sponte, whether the BIA lacked jurisdiction). This inquiry cannot be waived. It is a “judicial function,” and not that of an agency, to decide the limits of the agency‘s statutory powers. Social Sec. Bd. v. Nierotko, 327 U.S. 358, 369 (1946).
“An agency is but a creature of statute. Any and all authority pursuant to which an agency may act ultimately must be
The AIA states that a “person” can file a CBM petition in the PTO, and if the decision is adverse, that person is bound by the decision in any future litigation. The nature of the “person” is a factor in statutory jurisdiction. See, e.g., Caterpillar Inc. v. Lewis, 519 U.S. 61, 73, (1996) (“[T]here was in this case complete diversity, and therefore federal subject-matter jurisdiction, at the time of trial and judgment.“); United States v. Testan, 424 U.S. 392, 397, 393 (1976) (“the measure of the Court of Claims’ statutory jurisdiction” “presents a substantial issue concerning the jurisdiction of the Court of Claims and the relief available in that tribunal.“). It is our obligation to assure ourselves of the propriety of the PTAB‘s exercise of statutory authority. Such obligation cannot be waived.
The general statutory definition is that a “person” does not include the United States and its agencies unless expressly provided. It is at least as reasonable to assume that Congress, and those seeking the improvements provided by the America Invents Act, knew that “person” did not include the United States, lest additional complexities appear in the path of enactment of the America Invents Act.
The legislative record does not explore these potential complexities, but neither is there any suggestion that the standard rule of exclusion of the United States from the definition of “person” was simply legislative inadvertence, as my colleagues appear to believe. The Congress cannot be deemed innocent of knowing that the government can indeed be sued for infringement, but only in the Court of Federal Claims; yet that court is conspicuously absent from the designation of tribunals subject to the America Invents Act. See, e.g.,
The Covered Business Method statute states 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.”
In determining the meaning of any Act of Congress, unless the context indicates otherwise— . . . the word ‘person’ . . . include[s] corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.
The government is conspicuously absent from this definition, which pervades the legislative context, and from time to time receives judicial reinforcement. See, e.g., United States v. United Mine Workers of Am., 330 U.S. 258 (1947):
In common usage the term [“person“] does not include the sovereign, and statutes employing it will ordinarily not be construed to do so. Congress made express provision, []
1 U.S.C. § 1 , for the term to extend to partnerships and corporations, and in § 13 of the Act itself for it to extend to associations. The absence of any comparable provision extending the term to sovereign governments implies that Congress did not desire the term to extend to them.
Id. at 275. See also, e.g., Wilson v. Omaha Indian Tribe, 442 U.S. 653, 667 (1979) (statutes employing the usage “person” are ordinarily construed to exclude the government); Lunday-Thagard Co. v. U.S. Dep‘t of Interior, 773 F.2d 322, 324 (Temp. Emer. Ct. App. 1985) (“On several occasions it has been held that the government does not come within the definition of a ‘person.‘“) (citing United States v. Cooper Corp., 312 U.S. 600, 604 (1941) and United Mine Workers of Am., 330 U.S. at 275).
Although exceptions may arise, such exceptions warrant considered analysis, not presumptive waiver by silence. In United States v. Cooper Corp., the Court guided such analysis:
[T]here is no hard and fast rule of exclusion. The purpose, the subject matter, the context, the legislative history, and the executive interpretation of the statute are aids to construction which may indicate an intent, by the use of the term, to bring state or nation within the scope of the law.
The long-standing rule excluding the government from implicit inclusion as a statutory “person” applies to situations where the government would benefit from such inclusion, as well as situations where such inclusion would burden the government. For example, in United States v. Fox, the Court held that a devise of real estate to the Federal government was void because the New York Statute of Wills only permitted devises of land “to any person capable by law of holding real estate,” and the federal government was neither a natural nor an artificial person. 94 U.S. 315, 321 (1876). The Court stated:
The term ‘person’ as here used applies to natural persons, and also to artificial persons,—bodies politic, deriving their existence and powers from legislation,—but cannot be so extended as to include within its meaning the Federal government. It would require an express definition to that effect to give it a sense thus extended.
Id. As summarized in Corpus Juris:
A statute regulating only persons and corporations does not include the government itself unless a contrary intention is clearly expressed. Thus, the word “person” used in a statute will not be construed so as to include the sovereign, whether the United States, or a state, or a government agency, or a city or town. However, the word may include the sovereign where the legislative intent to do so is manifest or where courts recognize the exception whereby government agencies are only excluded from the operation of general statutory provisions if their inclusion would result in an infringement upon sovereign governmental powers.
82 C.J.S. Statutes § 391 (citations omitted).
The CBM statute does not mention infringement litigation in the Court of Federal Claims, while reciting the analogous actions in the district courts and the International
The estoppel provision is the backbone of the AIA, for it is through estoppel that the AIA achieves its purpose of expeditious and economical resolution of patent disputes without resort to the courts. The government so emphasized, throughout the gestation of the AIA. Then-Director of the PTO Dudas told the Congress:
[T]he estoppel needs to be quite strong . . . any issue that you raised or could have raised . . . you can bring up no place else. That second window, from the administration‘s position is intended to allow nothing–a complete alternative to litigation.
Patent Reform: The Future of American Innovation: Hearing Before the Senate Comm. on the Judiciary, 110th Cong. 13 (2007) (statement of Director Jon Dudas). When the final version of the legislation was enacted, successor Director Kappos reiterated the importance of the estoppel provision:
If I can say that in my own words also, that I believe there are significant advantages for patent-ees who successfully go through the post-grant system—in this case inter partes review—because of those estoppel provisions. Those estoppel provisions mean that your patent is largely unchallengeable by the same party.
America Invents Act: Hearing on H.R. 1249 Before the House Comm. on the Judiciary, 112th Cong. 52–53 (2011) (statement of Director David Kappos).
My colleagues would grant the United States the benefit of post-grant challenge in the PTO, but would omit the statute‘s estoppel against raising the same challenge in court. This statutory balance, of administrative challenge in exchange for finality, is the foundation of the America Invents Act. It may be that recognition of the complexity of binding the government to estoppel led to the omission of the government. We can only speculate as to the reason, but it is clear that the government is not included as a “person” subject to the AIA.1
The panel majority argues that erring on the side of prudence is “letting the tail wag the dog.” Maj. Op. 27. The majority
The panel majority errs in stating that the proper inference is that the government is a “person” under this statute, for the vast weight of statute and precedent requires the opposite inference. One might wonder why the drafters of the America Invents Act did not assure inclusion of the United States in post-grant proceedings, for the government is a participant in the patent system, and a sufficiently frequent plaintiff or defendant to be recognized.
Can my colleagues be correct in concluding that, over the lengthy and vigorous gestation of the AIA, it did not occur to anyone to consider the participation of the government? If inclusion of the United States and its agencies was indeed intended, as the majority holds, is this silence merely a matter of legislative error, subject to repair by the judiciary?
The theory that the United States was accidentally omitted as a “person” subject to the AIA is contrary to the vast body of precedent. When the government is excluded the only “rewriting of the plain language of a statute,” Maj. Op. 27, comes from the pen of the majority, who ignores the presumption of exclusion of the government from the scope of “person.”
on the face of a statute, the presumption that the legislature intended to exclude the government may only be overcome by strong evidence of intent to include. Such evidence is conspicuously lacking here.
Indeed, inclusion of the government as a “person“, assumed by the majority, requires the assumption that legislators intended to grant the government access to post-grant proceedings in the PTAB while also intending to remove the government from the estoppel provision, thereby giving the government “two bites at the apple,” in the majority‘s words. Such an irregular assumption, with no hint of support in the statute or legislative history, cannot be countenanced. “The words of the statute should be read in context, the statute‘s place in ‘the overall statutory scheme’ should be considered, and the problem Congress sought to solve should be taken into account.” PDK Labs. Inc. v. U.S. D.E.A., 362 F.3d 786, 796 (D.C. Cir. 2004) (quoting Davis v. Mich. Dep‘t of Treasury, 489 U.S. 803, 809 (1989)).
Even if waiver of a jurisdictional defect were available, the court is responsible to assure that waiver comports with the statutory purpose. See Harris Corp. v. Ericsson Inc., 417 F.3d 1241, 1251 (Fed. Cir. 2005) (we “retain[ ] case-by-case discretion over whether to apply waiver“). In addition, “[u]nder certain circumstances, we may consider issues not previously raised . . . .” Automated Merch. Sys., Inc. v. Lee, 782 F.3d 1376, 1379 (Fed. Cir. 2015). Such circumstances include whether “the issue involves a pure question of law and refusal to consider it would result in a miscarriage of justice” and whether “the issue presents significant questions of general impact or of great public concern” or “the interest of substantial justice is at stake.” Id. (citations omitted). This question requires resolution.
The statutory record contains no foundation for this court‘s departure from the explicit text of the legislation.
The government is not a “person” to whom the post-grant procedures of the AIA are available. Thus I would vacate the decision of the Board, for the proceeding is beyond the Board‘s statutory authority. See 2 Richard J. Pierce Jr., Administrative Law Treatise § 14.2, at 1185 (5th ed. 2010) (“An agency has the power to resolve a dispute or an
Notes
In doing so, the majority construes the statutory provision in isolation, declining to consider the purpose and intent of the legislature in exclusion of the Government from the estoppel provisions. See Richards v. United States, 369 U.S. 1, 11 (1962) (It is “fundamental that a section of a statute should not be read in isolation from the context of the whole Act, and that in fulfilling our responsibility in interpreting legislation, we must not be guided by a single sentence or member of a sentence, but should look to the provisions of the whole law, and to its object and policy.“) (quotations and citations omitted).
Although the PTAB may issue a final written decision in a CBM review if no petitioner remains, this does not mean that we do not have the authority to review the government‘s standing to file the petition. It is true that the PTAB “may terminate the [CBM] review or proceed to a final written decision” if “no petitioner remains in the post-grant review.”