June 24, 2019 8:47AM

Supreme Court Returns Constitutional Patent Case to Sender

On June 10, the Supreme Court issued its latest decision involving a dispute over the meaning of America Invents Act (AIA)—a 2011 statute that radically reworked the patent system for the first time in half a century.

The case, Return Mail v. U.S. Postal Service, involved a dispute over whether the federal government is a “person” within the meaning of the AIA. The AIA permits “any person” to petition the Patent Office to conduct another round of review (in a form of a quasi-trial) on an already-issued patent. If the Court were to find that the federal government is a “person” then any government agency would be able to take advantage of these processes.

Conversely, if the government isn’t a person, it would be limited to defending itself against patent infringement in the U.S. Court of Federal Claims. While on the surface it appeared that the resolution of this question would be interesting only to patent attorneys, there were significant constitutional overtones that may be important in many subsequent cases.

The case arrived at the Supreme Court after an owner of a patent on methods of sorting and rerouting undeliverable mail attempted to license his invention to the Post Office, but was rebuffed. The patent owner then sued the Postal Service for royalties. (Because Return Mail was suing the federal government, the law limited it solely to money damages and foreclosed injunctive relief, which is a remedy available in patent suits between private parties). Instead of litigating the matter, the Postal Service turned to the Patent Office and requested that the patent be invalidated. The PTO agreed and cancelled Return Mail’s patent, which action the U.S. Court of Appeals for the Federal Circuit affirmed. In its petition to the Supreme Court, Return Mail argued that the Postal Service wasn’t authorized to seek Patent Office’s intervention because it wasn’t a “person” under the AIA. The justices ultimately agreed in a 6-3 decision by Justice Sonia Sotomayor. (Justices Stephen Breyer, joined by Justices Ruth Bader Ginsburg and Elena Kagan dissented).

Both the majority and dissent focused almost exclusively on the statutory interplay between different provisions of the AIA and the Patent Act as a whole, although the dissent gave more weight to what it perceived the “purposes” of the AIA, whereas the majority emphasized the text of the statute. Underlying the debate, however, was an important though unmentioned point of constitutional law. As Justice Sotomayor pointed out in oral argument, it is a peculiar situation where “two branches of the government or two agencies of the government are disputing one another or—or before one another” because a private litigant is faced with “an executive agency acting as judge,” while “another government agency [acts as] the prosecutor at the same time.” Although the Court had previously endorsed the constitutionality of administrative post-issuance patent review, it cautioned that they must comply with due process. Sotomayor’s question indicated a serious concern about processes where the government acts as both judge and jury.

Justice Neil Gorsuch highlighted an additional point in his questions. He was concerned that, while in most circumstances we expect “the executive branch [to] able to resolve its own disputes and speak with one voice,” permitting the government to petition for administrative post issuance review would result in “the government speak[ing] out of both sides of its mouth.”

While neither of these concerns were explicitly mentioned in the opinion, it’s not too farfetched to think that they helped drive the majority of justices toward the statutory interpretation that avoids them. And the fact that justices considered them to be important and difficult questions is in itself noteworthy.

First, the federal government has myriad agencies that investigate, prosecute, and adjudicate alleged violations of the law. Given the concern expressed by Justice Sotomayor, perhaps some members of the Court are ready to put such arrangements under heavier scrutiny because they harbor serious questions as to whether they necessarily comport with due process. Second, the government also has a number of “independent” agencies that aren’t under presidential control, with some of them having independent litigating authority. Justice Gorsuch’s questions (which were echoed by Justice Brett Kavanaugh) indicate that in future cases the Court may be more skeptical about statutory arrangements where the power of the executive branch is dissipated to agencies not subject to direct political control.

Ultimately, Return Mail is likely to be viewed as an insignificant case outside of the realm of patent law. The history of the case may offer us a glimpse of the future, however, one in which the Court is more skeptical about abridged due process protections in administrative adjudications and subjects the dispersion of executive authority with suspicion. It would be surprising if those types of cases aren’t featured on the Court’s docket in short order. 

See here for more background and to read Cato’s brief.