It is well known that the U.S. federal government’s Executive Branch administers the U.S. patent system and that it provides relief to aggrieved patent owners through its courts. However, it might surprise some people to learn that the federal government, including its agencies, can be sued for patent infringement in certain courts. More precisely, the federal government can be sued for patent infringement in the U.S. Court of Federal Claims.
These claims arise when the federal government effectively appropriates a person’s intellectual property (IP) while carrying out a government function. For example, the U.S. Post Office might obtain a machine or system for returning mail that happens to infringe another party’s patent.
When that happens, the patent owner must bring a claim in the U.S. Court of Federal Claims for compensation. Technically, the claim is not a claim for patent infringement, but, rather, it is request for compensation for the use (i.e., misappropriation) of the patented invention. The difference is not merely academic because the patent owner cannot obtain certain types of relief, such as an injunction.
Nevertheless, proceedings before the Court of Federal Claims are similar to litigation in other (i.e., Article III) federal courts. The federal government can assert various affirmative defenses in the Court of Federal Claims and can try to defeat the claim by alleging non-infringement and/or that the patent-at-issue is invalid.
It is also settled that the federal government can use certain procedures within the U.S. Patent and Trademark Office (the “USPTO”) to defeat a claim for compensation, such as patent reexamination.
In 2012, however, Congress and the President created four types of administrative proceedings (i.e., post-grant review proceedings, inter partes review proceedings, covered business-method proceedings and derivation proceedings) by passing the America Invents Act (the “AIA”).
These AIA proceedings were discussed in my Sept. 17, 2015 blog. All four proceedings can be used by accused infringers to invalidate patents and to escape liability for patent infringement.
Unfortunately, the passage of the AIA created an ambiguity in the law as to whether these new AIA proceedings could be initiated by the federal government when it was defending itself against “claims” of “patent infringement.”
On June 9, 2019, the Supreme Court held that the U.S. federal government cannot initiate at least one type of AIA proceeding. See Return Mail, Inc. v. Postal Service, 139 S. Ct. 1853 (2019). Specifically, the Supreme Court held that the federal government could not initiate a covered business-method proceeding.
In Return Mail, the Post Office was accused of infringing a patent that covered a system for returning mail. The Post Office initiated a patent reexamination in the USPTO but was unable to escape for its infringement.
Then, the Post Office attempted to escape liability by initiating a covered business-method proceeding. The Supreme Court determined that the Post Office did not fall within the scope of the statutory definition of a party.
As a result of the Return Mail decision, it is now clear that some of the advantages that the federal government enjoys while defending itself from such “patent infringement claims” are offset, somewhat, by this newly discovered disadvantage.