Return Mail, Inc. v. USPS
868 F.3d 1350 (Fed. Cir. 2017)
Authored by Karla Dittmann
Statement of Facts: Appellant Return Mail, Inc. owns Patent No. 6,826,548 (“the ’548 patent”), a covered business method (“CBM”) patent for an invention that automated processing undeliverable mail caused by insufficient addressing. The invention subject to the ’548 patent was intended to ameliorate the historically labor-intensive process of handling returned mail. The invention did so by translating name and address information for mail into barcodes placed on mail items, allowing computers to read and process the information on the mail items. In January 2011, the ’548 patent underwent ex parte reexamination. The reexaminer cancelled all original claims and new claims 39–63 were issued.
Return Mail attempted but was unsuccessful in licensing the ’548 patent to the United States Postal Service (“Postal Service”). In February 2011, Return Mail filed suit against the United States in the Court of Federal Claims under 28 U.S.C. § 1498(a), alleging that the United States via the Postal Service “engage[d] in the unlicensed and unlawful use and infringement of the invention claimed in the ’548 patent.” 868 F.3d at 1355. In that suit, Return Mail’s prayer for relief called for “reasonable and entire compensation.” Id.
The Postal Service invoked its right to CBM review per the Leahy-Smith American Invents Act (“AIA”) in April 2011 and filed a petition with the USPTO for review of claims 39–44 (“the challenged claims”) of the ’548 patent. The Postal Service challenged the invention’s patentability by challenging the eligibility of the subject matter to be patented under § 101, anticipation under § 102, and obviousness under § 103. Return Mail responded, questioning (1) the merits of the Postal Service’s patentability challenge and (2) the Postal Service’s standing to bring a petition for CBM review under the AIA.
Procedural History: Return Mail filed a petition for CBM review with the PTAB. The PTAB determined that Postal Service had statutory standing and held all the challenged patent claims were directed to ineligible subject matter under 35 U.S.C. § 101. Return Mail appealed to the Federal Circuit.
Questions Presented: The first issue is whether the PTAB’s decision should be vacated because the Postal Service failed to meet the statutory standing requirement to petition for CBM review. The second issue is, if the Postal Service did have standing, whether the PTAB erred in its decision on the merits of subject matter ineligibility under § 101.
Holding: The Federal Circuit affirmed the PTAB, holding that (1) Return Mail’s § 1498(a) suit against the Postal Service in the Court of Federal Claims qualified as a “suit for infringement” under § 18(a)(1)(B) and (2) that the challenged claims were abstract and thus directed to patent-ineligible subject matter.
Reasoning: On the first issue of whether the Postal Service had statutory standing to bring the petition before the PTAB, the court interpreted whether Return Mail’s § 1498(a) suit qualified as a “suit for infringement” under AIA § 18(a)(1)(B). Section 18(a)(1)(B) allows a person to file a petition for CBM review if the person has been sued for infringement of a patent or if the person has been charged with infringement under a patent. The court first looked to whether § 1498(a) suits qualify as a suit for infringement. The Federal Circuit rejected Return Mail’s assertion that government-related parties sued under § 1498(a) are excluded from petitioning for CBM review. The court further rejected Return Mail’s submission that § 1498(a)’s root in eminent domain as a jurisdictional basis to penetrate sovereign immunity for patent-related torts disqualifies it as the basis of a patent infringement suit. Additionally, where Return Mail argued that because the word infringement is absent from the text of the statute but is present in surrounding provisions, suits under § 1498(a) are not for infringement, the court highlighted the legislative history to determine that the provision was intended to broaden the Court of Federal Claims’s jurisdiction to include infringement actions against the government.
The court then turned to the scope of ‘infringement’ in § 18(a)(1)(B). The Postal Service argued that infringement is a general term to describe any situation in which “the accused activity meets all the limitations of a patent claim” 868 F.3d at 1362. Return Mail argued that infringement is a precise occurrence in the Patent Act, under which the government is immune. The Federal Circuit held that § 1498(a) suits fall within the scope of infringement in § 18(a)(1)(B) standing for petitions. For its statutory interpretation, the court looked to the plain meaning of the provision and determined that Return Mail’s narrow construction imposed additional conditions on the provision not present in the text because the text did not include any language limiting infringement to Patent Act actions.
The majority disagreed with the dissent’s conclusion that exclusion of governmental parties is derived from the word “person” in the language of § 18(a)(1)(B). While the dissent asserted that person explicitly excludes sovereigns, the majority concluded that the word person is not exclusive or presumptive in subject matter. The court, however, hinged its conclusion on neither Return Mail nor the Postal Service invoking this argument.
On the second issue of whether the PTAB erred in holding that claims 42–44 were directed to § 101 patent-eligible subject matter, the court used claim 42 as representative of the ream of claims. Because patent eligible subject matter under Patent Act § 101 entails “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof,” the court engaged the two-part test in Alice Corp. v. CLS Bank International (Alice) to determine whether claims qualify under § 101. 134 S. Ct. 2347 (2014).
Under Alice step 1, the claims surrounded automating the processing of mailing address data by encoding data of message addressing, and transferring certain electronic data if the sender did or did not want to receive corrected addresses for the addressee in question. The court rejected Return Mail’s assertion that because claims 42–44 handled data, a precedential abstraction, they merely involved an abstract idea without being directed to an abstract idea. Additionally, the court determined that the encoding and decoding mail technology did not detract from its abstractness because it was an existing business practice assisted by “generic computing technology.” 868 F.3d at 1368.
Under Alice step 2, the claims lacked an inventive concept. References to encoded data, and certain uses of the data provided new options for users but “amount to a basic logic determination of what to do given a user’s preferences” and did not transform the abstract idea into “something more,” i.e. an invention. Id. at 1369.
Dissenting Opinion: Judge Newman dissented, finding that the United States did not qualify as a “person” under § 18(a)(1)(B) based on the prevailing statutory use of person. Judge Newman asserted that governmental agencies are created by statutes and act only under the authority of Congress. Further, Judge Newman found that subject matter jurisdiction issues are within the tribunal’s jurisdiction and are not automatically waived. The decision of the PTAB should have been vacated because the proceeding was beyond the PTAB’s statutory authority.