The U.S. Supreme Court has blocked federal agencies from challenging patents at the Patent and Trademark Office, in a decision that attorneys say will have a far-reaching impact.

The justices overturned a U.S. Court of Appeals for the Federal Circuit decision that the U.S. Postal Service could challenge a patent at the agency. The ruling sets a precedent by clarifying that the government isn’t a “person” eligible to use administrative patent challenge proceedings under the America Invents Act (AIA).

The 6-3 decision in Return Mail Inc. v. United States Postal Service “prevents any government agency from trying to go to the PTO to invalidate a patent they may not like,” Beth Brinkmann, a Covington & Burling LLP partner who argued before the high court for Return Mail, said.

The Department of Health and Human Services or the Food and Drug Administration can’t challenge a pharmaceutical patent at the patent office, for example, under the decision, Matt Rizzolo, an intellectual property litigation partner at Ropes & Gray LLP, said.

The ruling also applies to state governments and their agencies that may want to file the most common administrative challenge, an inter partes review, Rizzolo said.

“We’ve seen a lot of attorney generals from various states make drug pricing a major issue,” Rizzolo said. “If a state attorney general potentially wanted to bring an IPR or threaten to bring an IPR in an attempt to force the prices of drugs down, this would foreclose that, at least in so far as the IPR was filed by the state itself.”

The U.S. Postal Service challenged Return Mail’s patent in a covered business method review, a special procedure to challenge patented business processes or e-commerce technologies. Rizzolo said the justices broadly weighed whether the government could file any administrative challenge.

Richard Rainey, a Covington & Burling LLP partner who co-led the Supreme Court team with Brinkmann and handled the case before the Federal Circuit, said in a statement that the court’s opinion, by Justice Sonia Sotomayor, would benefit “all technology companies and patent holders that may find themselves in the government’s crosshairs.”

“By excluding federal agencies from AIA review proceedings, the Court’s decision limits the government’s ability to bring duplicative challenges to the validity of privately-owned patents,” Rainey said.

‘Common Usage’

Return Mail Inc., an automated mail service provider, had sued the Postal Service for infringing its patent related to processing undeliverable mail. The Postal Service then challenged the patent’s validity at the Patent and Trademark Office’s Patent Trial and Appeal Board.

Patent statutes don’t define the term “person.” The high court applied a “longstanding interpretive presumption that ‘person’ does not include the sovereign,” in the absence of a statutory definition. The presumption that person excludes federal agencies, including the postal service reflects “common usage,” Sotomayor wrote.

“It is also an express directive from Congress: The Dictionary Act has since 1947 provided the definition of “‘person’ ” that courts use “[i]n determining the meaning of any Act of Congress, unless the context indicates otherwise,” she wrote.

The Postal Service argued that the law’s reference to a “person,” as it refers to review procedures, must include the government because other references to persons in the patent statutes do so.

“The Patent Act and the AIA refer to “person[s]” in at least 18 different places, and there is no clear trend: Sometimes “person” plainly includes the Government, sometimes it plainly excludes the Government, and sometimes—as here—it might be read either way,” Sotomayor wrote.

Justice Stephen G. Breyer, in a dissenting opinion joined by Justices Ruth Bader Ginsburg and Elena Kagan, said that Congress has used the word “person” to refer to federal agencies in AIA provisions related to obtaining patents or certain infringement defenses. Congress hasn’t used “person” in other parts of the law to mean federal agencies when that’s not logically possible or where contextual language specifically excludes the government, he said.

“The provisions at issue here, which establish administrative procedures for the benefit of parties accused of infringement, are much closer to the former category than the latter.” Breyer said. “It therefore makes little sense to presume that the word “person” excludes the Government, for the surrounding provisions point to the opposite conclusion.”

The case is Return Mail, Inc., Petitioner vs. United States Postal Service, et al., U.S., No. 17-1594, 6/10/19.