SCOTUS decision limits govt’s ability to defend itself in patent suits: lawyers
Following yesterday’s US Supreme Court decision in Return Mail v United States Postal Service, the government is now faced with restricted options to challenge patents, according to lawyers.
In the 6-3 ruling, handed down yesterday, June 10, the Supreme Court ruled that a federal government agency does not qualify as a ‘person’ who can challenge the validity of a patent under the America Invents Act (AIA).
Aziz Burgy, partner at Axinn in Washington, DC, said: “The practical effect of this ruling is that it handicaps the government’s ability to defend itself in patent cases because there are three less arrows in its invalidity quiver.”
Federal agencies accused of patent infringement will now only have two post-issuance options for invalidating the asserted patents, explained Josh Rich, partner, general counsel and chair of the trade secrets practice group at McDonnell Boehnen Hulbert & Berghoff in Chicago.
The first option, ex parte reexamination, is “generally viewed as a less favourable option because of the very limited opportunity to provide information to the US Patent and Trademark Office”, explained Rich. Federal agencies can also defend an action at the Court of Federal Claims.
Rich said: “Thus, parties negotiating with the federal government over licences will have a slightly stronger position. But there is no effect on—and no analogy to—disputes between two private parties.”
Texas-based Haynes and Boone partner David O’Brien added that although the decision is “focused on the character of US government entities as a petitioner, even state and local government petitioners may need to consider the impact of Return Mail, as they too likely fail to be ‘person[s]’ under the statute”.
However, the effect of the ruling will be limited further because covered-business-method review (CBM) will expire in September 2020, as mandated by the America Invents Act. This means that the Supreme Court’s ruling will only apply to inter partes review (IPR) and post-grant review (PGR) in the future, according to Burgy.
Nathan Speed, litigation attorney and shareholder at Wolf Greenfield, based in Boston, added that while the option of ex parte reexamination is still available to the government, the statute uses the same language (“person”), meaning that patent owners facing ex parte reexamination requests will “likely challenge such reexaminations and raise the same arguments concerning statutory construction”.
However, even the attorney for the government (Malcolm Stewart, deputy solicitor general, at the Department of Justice) acknowledged that there would only be a ‘small’ impact on the government’s litigation efforts, given that federal agencies had only filed 20 IPRs, PGRs, and CBMs combined since they became available in 2012, said Speed.
A dissenting opinion
Justice Stephen Breyer, who yesterday delivered a dissenting opinion, said that it would have made “little sense” for the word ‘person’ not to mean a government agency in the legislation.
The majority had concluded that they had to apply the interpretive presumption that ‘person’ doesn’t include the sovereign, and that there wasn’t any language to overcome this presumption in the AIA.
However, Breyer found that interpretive presumption may be overcome, where there is statutory intent to do so, said Burgy.
Matthew Rizzolo, IP litigation partner in Ropes & Gray’s Washington, DC, office, added: “In Breyer’s view, in light of the government’s participation in the patent system and the goals of the AIA, there is no reason for Congress to have excluded the government from the scope of entities able to bring these AIA post-grant petitions.”
According to Rich, Breyer reasoned from what (he believed) Congress intended to do in adopting the AIA’s post-grant proceedings.
“But the focus likely should have been what Congress actually did. In this context, it probably would have made more sense for Breyer to signal that Congress should act now to clarify what it actually intended to do,” he added.
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