Background
Return Mail, Inc. held a patent covering a system and method for processing undeliverable mail — specifically, a method for scanning address labels on undeliverable mail items and encoding information about the intended recipient and sender so the mail piece could be automatically processed and re-routed or returned. Return Mail asserted the patent against the United States Postal Service (USPS), which used a similar system for processing undeliverable mail in its own operations.
USPS, as a federal government entity, petitioned the PTAB for covered business method (CBM) review of Return Mail’s patent. CBM review is a post-grant challenge proceeding under the America Invents Act, available to challenge “financial product or service” patents. The AIA provides that a “person” who has been sued for infringement or threatened with suit may file for CBM review. Return Mail argued that the USPS — as the federal government — was not a “person” under the AIA and therefore lacked standing to petition for CBM review. The PTAB found against Return Mail and found the patent claims invalid. Return Mail appealed.
The Court’s Holding
Judge O’Malley, writing for the Federal Circuit, affirmed the PTAB’s holding and rejected Return Mail’s argument. The court applied a well-established presumption in statutory interpretation: the word “person” in federal statutes ordinarily includes the federal government and its agencies unless Congress has affirmatively manifested an intent to exclude the government. The court found no such manifestation in the AIA; nothing in the statute’s text or legislative history suggested Congress intended to prevent federal agencies from using the CBM review process. The PTAB therefore had jurisdiction to hear USPS’s petition, and the invalidity finding stood.
The court also affirmed the PTAB’s substantive ruling that Return Mail’s claims were directed to patent-ineligible subject matter or were obvious over the prior art.
Key Takeaways
- Under the Federal Circuit’s 2017 holding, the federal government qualifies as a “person” who can petition for IPR and CBM review at the PTAB — giving the government a powerful tool to challenge patents asserted against federal agencies.
- The Supreme Court reversed in Return Mail v. USPS (2019), holding 6-3 that the government is not a “person” for purposes of AIA post-grant review proceedings, and that agencies cannot file IPR or CBM petitions.
- The 2019 Supreme Court ruling significantly limited the government’s patent litigation strategy: federal agencies sued for patent infringement must defend themselves in district court or before the Court of Federal Claims, but cannot use the PTAB post-grant review system as a defense tool.
- The case touches on a recurring issue of government accountability in patent law: can the government use administrative proceedings to invalidate patents asserted against it, or must it pay compensation under the Tucker Act?
Why It Matters
The Return Mail case has significant practical implications for patent owners who assert patents against the federal government, which is a major user of technology across defense, communications, and logistics. If the government can file IPR or CBM petitions, patent owners face the prospect of having their patents challenged in a faster, cheaper administrative proceeding rather than in district court, where procedural protections differ. The Supreme Court’s reversal restored the status quo: federal agencies must defend infringement claims through litigation rather than administrative challenge.
The case also illustrates a broader question about the scope of the AIA’s post-grant proceedings: Congress wrote the AIA primarily with private sector actors in mind, but its terms often encounter edge cases — government agencies, foreign entities, sovereign immunity — that require courts to fill gaps that Congress did not clearly address. Return Mail is one of the more prominent such gap-filling exercises.