Supreme Court to Clarify Patent Invalidation Process

(CN) – The Supreme Court on Friday agreed to decide whether the Federal Circuit erred in concluding the U.S. Postal Service properly initiated an administrative review that ultimately invalidated a private company’s patent.

The case coming before the court was filed by Return Mail Inc., a small technology company based in Birmingham. Alabama, that developed a system for processing returned and undeliverable mail using optical scanners, computer databases and other mechanisms.

As recounted in the company’s writ for certiorari, the Postal Service “repeatedly expressed interest in Return Mail’s technology and met with Return Mail to discuss ways in which it could be used to automate the handling of returned and undeliverable mail.”

The company claims that by January 2006, the talks had proceeded to the point that the parties were discussing a licensing agreement for the technology. A short time later, the Postal Service announced it was rolling out its own system, called “OneCode ACS,” to process returned and undeliverable mail.

Attorneys for Return Mail Inc. said its client informed the Postal Service that the OneCode ACS system violated its patent; the agency responded by challenging the validity of the patent.

The Patent Office ultimately confirmed the patent’s validity, and Return Mail sued the Postal Service in the Court of Federal Claims, seeking compensation.

While that action was pending, the Postal Service again challenged the validity of the patent, asking for a covered business method review under the Leahy-Smith America Invests Act.

Passed by Congress in 2011, the Act allows a person who has been sued for patent infringement to challenge the patents validity through a covered business method review by the Patent Trial and Appeal Board.

A business method review looks at the validity of a patent that relates to a process rather than to a unique new technology. The process was initiated by Congress due to concerns about litigation abuse involving business method patents.

In its opposition to the petition Return Mail argued that the Patent Trial and Appeal Board lacked statutory authority to consider the government’s claims because the Act explicitly bestowed the right to appeal to a “person,” and not to a government entity.

The board rejected Return Mail’s argument, initiated the review and ultimately invalidated the company’s patent.

A divided Federal Circuit affirmed the decision. But U.S. Circuit Judge Pauline Newman dissented, saying there remained a question of whether the United States or the Postal Service legitimately fell within the definition of “person” under the Act.

“The general statutory definition is that a ‘person’ does not include the United States and its agencies unless expressly provided,” she wrote. While she conceded that “exceptions may arise,” she concluded “such exceptions warrant considered analysis, not presumptive waiver by silence.”

As is their custom, the Justices did not explain their rationale for taking up the case.

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