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Return Mail, Inc. v. U.S. Postal Service

Agency Has Standing to Petition for CBM Following § 1498 Suit

Return Mail, Inc. v. U.S. Postal Service, (Fed. Cir. Aug. 28, 2017) (PROST, Newman (dissenting), Wallach) (PTAB) (3 of 5 stars)

Fed Cir affirms CBM determination of subject-matter ineligibility. As an initial matter, the Board’s determination that the Postal Service had standing to file a petition for CBM review is subject to judicial review. The opinion reasons that neither Cuozzo, 136 S. Ct. 2131 (2016), nor Achates, 803 F.3d 652 (Fed. Cir. 2015), precludes judicial review, as the determination of whether a party has statutory authorization to file a petition is qualitatively different from the merits-oriented analysis in institution decisions that 35 U.S.C. § 324(e) puts beyond judicial review. As to the merits, the Board did not err in determining that the Postal Service had standing to file a petition for CBM review. Applying de novo review, there was no error in the Board’s determination that Return Mail’s § 1498(a) suit against the Postal Service in the Claims Court was a suit for “infringement” sufficient to confer standing. The opinion rejects Return Mail’s argument that AIA § 18(a)(1)(B)’s provision permitting CBM review upon an infringement suit could only be triggered by a suit under the Patent Act. “Infringement is a prerequisite to § 1498(a) liability; the government’s infringement triggers its obligation to pay just compensation.” Op. at 22. The opinion notes that this sets up a tension with the estoppel provision of AIA § 18(a)(1)(D), which by its text applies to petitioners litigating in district court or the ITC, but does not mention the Claims Court. “Although this raises certain policy concerns, Congress is better suited to address them by revising the estoppel provisions for CBM review should it see fit.” Op. at 24. As to the dissent’s argument about whether the word “person” in § 18(a)(1)(B) could include the Postal Service, the opinion notes that Return Mail had not made this argument, and in any event disagrees that the term, in this context, could not include a government agency.

On the merits, the Board properly found Return Mail’s claims patent-ineligible. Under Alice step 1, the claims were directed to the abstract idea of relaying “mailing address data” by reviewing encoded data about message addressing, and transferring certain electronic data based on whether the sender did or did not want to receive corrected addresses for the addressee in question. The opinion rejects Return Mail’s argument that the claims were directed to a particular improvement to returned-mail processing because such activities were not specific to improving technology, but were fully practicable by a human mind. Under Alice step 2, the claims lacked an inventive concept. Their references to “encoded data,” and certain uses of the data, “amount to a basic logic determination of what to do given a user’s preferences.” Op. at 32. The opinion rejects Return Mail’s argument that the claims should be found non-abstract because, as a practical matter, the claims did not preempt any commercially deployed mail processing systems. Per Ariosa, 788 F.3d 1371 (Fed. Cir. 2015), “the absence of complete preemption does not demonstrate patent eligibility.” Op. at 35.

Dissent: Judge Newman would have held that the issue of whether the Postal Service was a “person” under § 18(a)(1)(B) was a jurisdictional issue, not subject to waiver, and would have held that the term “person,” in this context, does not include the United States or its agencies.

KEYWORDS: COVERED BUSINESS METHOD; SECTION 1498; STANDING; WAIVER; SUBJECT MATTER ELIGIBILITY (NO)