Recent Decisions on Rights and Immunities of State and Federal Entities Before the PTAB
The Supreme Court and Federal Circuit recently clarified the rights and immunities of government entities in post-issuance review proceedings before the Patent Trial and Appeal Board (PTAB). Their decisions will have immediate and potentially lasting implications for state universities, federal agencies, and other state and federal entities involved in patent disputes.
The U.S. Government Cannot Seek PTAB Post-Issuance Review
In Return Mail, Inc. v. United States Postal Service, 139 S. Ct. 1853 (2019), the Supreme Court addressed the question of whether the federal government may petition the PTAB for inter partes review (IPR), covered business method review (CBM), or post-grant review (PGR) under the Leahy-Smith America Invents Act (“AIA”). By statute, any “person” other than the patent owner may file a petition for post-issuance review. 35 U.S.C. §§ 311, 322, AIA § 18. Here, the U.S. Postal Service filed a CBM petition against a patent assigned to Return Mail directed to processing undeliverable mail. The PTAB instituted review, and found the patent invalid. The Federal Circuit affirmed the result, and the Supreme granted review.
In a 6-3 opinion authored by Justice Sotomayor, the Supreme Court reversed the Federal Circuit, holding that the USPS failed to overcome the “longstanding interpretive presumption” that the statutory term “person” does not include the federal government. The Court observed this presumption reflects both “common usage,” and the express statutory directive from Congress in view of the Dictionary Act (1 U.S.C. § 1) (which defines a “person” as including “corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals,” but omits the federal government).
The Court rejected USPS’s efforts to overcome this presumption, noting that USPS failed to persuade the Court that “person,” as used in Section 311 and 322, includes the government because the Patent Act elsewhere authorizes federal agencies to apply for patents and refers to them as “persons.” The Court instead found “no clear trend” across 18 references to “person” in the Patent Act and America Invents Act, and found multiple instances excluding government agencies as the referenced “person.” Nor was the Court persuaded by USPS’s argument that it had long participated in challenging patents in ex parte reexaminations before the Patent Office, as well as in obtaining patents. It found these traditions shed no light on federal agency’s rights under the recently enacted AIA.
Finally, the Court found any concern over the apparent inconsistency between the federal government not being able to file for post-issuance review even while it could be sued for patent infringement to be “overstate[d] because the government is not subject to injunctive relief, punitive damages, or a jury trial in a judicial challenge, and, therefore, faces a lower risk than nongovernmental actors.” Further, the Court observed that denying federal agencies access to post-issuance review proceedings “avoids the awkward situation” of a private party defending their invention against a government entity (e.g., USPS) before another government entity (the Patent Office).
States Do Not Have Sovereign Immunity from Inter Partes Review
In Regents of the University of Minnesota v. LSI Corp. and Avago Techs. U.S. Inc., 926 F.3d 1327 (Fed. Cir. 2019), the Federal Circuit addressed whether the principle of state sovereign immunity shields state-owned patents from IPR proceedings. The Eleventh Amendment to the U.S. Constitution provides that the federal judicial power does not extend to “any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State.” The University of Minnesota (UMN) sought to invoke state immunity to terminate IPR proceedings initiated by LSI and Ericsson on separate sets of patents assigned to UMN. The PTAB concluded UMN waived any sovereign immunity by filing infringement actions in district court against petitioners on these patents, and it denied UMN’s motions to dismiss. The Federal Circuit affirmed this result on the basis that “state sovereign immunity does not apply to IPR proceedings,” and concluded it need not reach the issue of waiver. The Federal Circuit held an IPR is more properly understood not as a private suit, but as the federal government’s “reconsideration of a previous patent grant aided by information supplied by a third party.”
The Federal Circuit drew heavily in reaching this result on Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc., 896 F.3d 1322 (Fed. Cir. 2018), where it previously held tribal sovereign immunity does not bar IPR proceedings. There, the Court reasoned the PTAB acts as a “superior sovereign” in an IPR to protect the public interest by reconsidering a prior patent grant. In finding an IPR is more akin to an agency enforcement action than a private civil dispute, the Court found persuasive both that the USPTO director (not a private party) decides whether to institute an IPR, and that the PTAB can choose to continue an IPR even if the petitioner decides later not to participate.
The Federal Circuit concluded in Regents of the University of Minnesota that the same reasoning applies to state sovereign immunity. The Court reiterated that an IPR is a federal agency action, not a private action, and observed that “[s]uits brought by the US have long been recognized as not being impeded by either tribal or state sovereign immunity.” The Court discounted UMN’s attempts to distinguish tribal from state immunity. It found no support for UMN’s argument that Congress intended to abrogate tribal sovereign immunity for IPRs but not state immunity, and rejected UMN’s argument that there is any heightened presumption of state sovereign immunity for federal agency actions.