from the United States Patent and Trademark Office, Patent
Trial and Appeal Board in No. CBM2014-00116.
Richard L. Rainey, Covington & Burling LLP, Washington,
DC, argued for appellant. Also represented by Michael S.
Sawyer; Eric Michael Adams, Douglas H. Elliott, The Elliott
Law Firm, PLLC, Bellaire, TX; Lee Landa Kaplan, Jeffrey
Potts, Smyser, Kaplan & Vesel-ka, LLP, Houston, TX.
Allen Foley, Jr., Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washington,
DC, argued for appellees. Also represented by Benjamin C.
Mizer, John Fargo.
Prost, Chief Judge, Newman and Wallach, Circuit Judges.
assignee Return Mail, Inc. ("Return Mail") appeals
from the final written decision of the U.S. Patent and
Trademark Office's ("PTO") Patent Trial and
Appeal Board ("Board") in a review of a covered
business method ("CBM") patent. The Board held that
the U.S. Postal Service and the United States (collectively,
"the Postal Service") were not statutorily barred
from filing the underlying petition for review. On the
merits, the Board determined that all of the challenged
patent claims were directed to ineligible subject matter
under 35 U.S.C. § 101. We affirm.
2011, Congress enacted the LeahySmith America Invents Act
("AIA"), Pub. L. No. 112-29, 125 Stat. 284, which
created several new quasi-adjudicatory proceedings before the
PTO for determining the patentability of issued patent
claims. These proceedings include inter partes review
("IPR"), post-grant review ("PGR"), and
review of CBM patents ("CBM review"). See
35 U.S.C. §§ 311-319 (IPR); id.
§§ 321-329 (PGR); AIA § 18, Pub. L. No.
112-29, 125 Stat. 284, 329-31 (2011) (CBM review).
appeal arises from a CBM review, which unlike IPR or PGR, is
limited to CBM patents-i.e., patents "that claim a
method or corresponding apparatus for performing data
processing or other operations used in the practice,
administration, or management of a financial product or
service, " with the exception of "technological
inventions." AIA § 18(d)(1). CBM review is also a
"transitional" program, currently scheduled to
sunset in September 2020. AIA § 18(a)(3). It is governed
by AIA § 18 and, with certain exceptions,
"employ[s] the standards and procedures of a [PGR]
under [35 U.S.C. §§ 321- 329]." AIA §
review proceeds in two stages. In the first stage, the PTO
Director makes a threshold determination of whether to
institute the proceeding, which requires a determination that
"it is more likely than not that at least 1 of the
claims challenged in the petition is unpatentable" or
that "the petition raises a novel or unsettled legal
question that is important to other patents or patent
applications." 35 U.S.C. § 324(a), (b). This task
has been delegated to the Board by regulation. 37 C.F.R.
§§ 42.4(a), 42.300(a). If review is instituted, the
parties then proceed to the second stage, which involves
discovery, the submission of additional information, and the
opportunity for an oral hearing. See, e.g., 35
U.S.C. § 326(a)(3), (5), (8), (10), (12). Absent
dismissal, the proceeding culminates with the Board's
issuance of a "final written decision" regarding
the patentability of "any patent claim challenged by the
petitioner, " as well as of "any new claim
added" during the proceeding. Id. §
328(a). The Board must issue its final written decision
within one year after the institution of CBM review, except
in narrow circumstances. Id. § 326(a)(11).
Ultimately, Congress intended CBM review, like the programs
for IPR and PGR, "to provide [a] 'quick and cost
effective alternative' to litigation in the
courts." PPC Broadband, Inc. v. Corning
Optical Commc'ns RF, LLC, 815 F.3d 734, 741 (Fed.
Cir. 2016) (quoting H.R. Rep. No. 112-98, pt. 1, at 48
(2011), reprinted in 2011 U.S.C.C.A.N. 67, 78).
Mail owns U.S. Patent No. 6, 826, 548 ("'548
patent"), which is the subject of the underlying CBM
review as well as related litigation in the U.S. Court of
Federal Claims ("Claims Court"). The '548
patent is directed to the processing of mail items that are
undeliverable due to an inaccurate or obsolete address for
the intended recipient. '548 patent col. 1 ll. 20-24. The
patent underwent ex parte reexamination, resulting in the
cancellation of all original claims and the issuance of new
claims 39-63 in January 2011. Ex Parte Reexamination
Certificate 6, 826, 548 C1.
to its specification, "[t]he processing of mail that is
returned to sender historically has been a time-consuming
labor-intensive process for high volume mail users."
'548 patent col. 1 ll. 39-42. For instance, "[e]ven
with the availability of address updating services to aid in
researching for the correct address, " the process of
handling returned mail "[wa]s substantially a manual one
subject to human error and delays." Id. at col.
1 ll. 39-51.
claimed invention of the '548 patent purportedly
"overcomes the historical problems with prior art manual
handling" and "does so quickly, more accurately,
and at substantially less cost." Id. at col. 1
ll. 55-59. It teaches encoding useful information, such as
the name and address of intended recipients, on mail items in
the form of a two-dimensional barcode. Id. at col. 2
ll. 4-5, col. 2 l. 66- col. 3 l. 15. Undeliverable mail items
are returned to a processing location, where the barcodes are
scanned. Id. at col. 2 ll. 14-20, col. 3 ll. 15-51.
The scanned information is then processed, such as by
obtaining corresponding updated address data from a computer
or database, and the updated information is then
electronically provided to the sender to be used as the
sender deems appropriate. Id. at col. 2 ll. 19-27,
col. 3 l. 52-col. 4 l. 33. In other words, the claimed
invention allows returned mail to be processed
"virtually entirely automatically through the exchange
of data files between computers." Id. at col. 6
February 2011, after trying unsuccessfully to license the
'548 patent to the Postal Service, Return Mail filed suit
in the Claims Court against the United States. It alleged
under 28 U.S.C. § 1498(a) that the United States,
through the Postal Service's actions, had
"en-gage[d] in the unlicensed and unlawful use and
infringement of the invention claimed in the '548
patent." J.A. 3302. Return Mail sought relief in
the form of "reasonable and entire compensation."
April 2014, the Postal Service filed a petition with the PTO
for CBM review of claims 39-44 (the "challenged
claims") of the reexamined '548 patent. It raised
several grounds for unpatentability, including
patent-ineligible subject matter under § 101,
anticipation under § 102, and obviousness under §
response, Return Mail not only raised patentability arguments
but also contested the Postal Service's ability under the
AIA to petition for CBM review. The Board held that the
Postal Service had statutory "standing" and
instituted review of all of the challenged claims under
§ 101 for ineligible subject matter. In its final
written decision, the Board later reiterated its standing
determination and held that the challenged claims were drawn
to ineligible subject matter under § 101.
Mail timely appealed. Section 329 of the AIA authorizes a
party dissatisfied with the Board's final written
decision to appeal to this court under 35 U.S.C. §
141(c). We have jurisdiction under 28 U.S.C. §
appeal, Return Mail argues that we should vacate the
Board's decision because the Postal Service failed to
meet the statutory standing requirement to petition for CBM
review. It also argues in the alternative that we should
reverse the Board's decision that the '548 patent
claims 42-44 are directed to § 101 ineligible subject
matter. Return Mail does not challenge any other
aspects of the CBM review proceeding.
"starting point" for determining whether a party is
properly before an agency is "the statute that confers
standing before that agency." Ritchie v.
Simpson, 170 F.3d 1092, 1095 (Fed. Cir. 1999). Because
the PTO is an administrative agency, the Article III standing
requirement for a "case or controversy" does not
apply to matters before it. Id. at 1094; see
also Koniag, Inc. v. Andrus, 580 F.2d 601, 612 (D.C.
Cir. 1978) ("Congress, in its discretion, can require
that any person be admitted to administrative proceedings,
whether or not that person . . . has satisfied the . . .
constitutional standing requirements recognized by the
Supreme Court."). Relevant to CBM review, AIA §
18(a)(1)(B) provides that "[a] person may not file a
petition for [CBM review] unless the person or the
person's real party in interest or privy has been
sued for infringement of the patent or has been
charged with infringement under that patent."
the Board in its institution decision held that the Postal
Service had standing because it had been sued for
infringement within the meaning of AIA § 18. The Board
reasoned that Return Mail filed its § 1498(a) action to
hold the Postal Service "liable for its use or
manufacture of a patented invention without license or lawful
right, which falls within the definition of patent
infringement." J.A. 50. It further held that the PTO,
through regulation regarding the meaning of "charged
with infringement, " has made it "clear that it is
the ability to seek relief in Federal court that is
important to the standing inquiry." J.A. 51.
the Board instituted the underlying proceeding, Return Mail
continued to submit that the Postal Service lacked standing
to seek CBM review. The Board again rejected that contention
and "incorporate[d]" its previous standing analysis
into the final written decision. J.A. 12.
threshold matter, we first consider whether we have authority
to review the Board's determination that the Postal
Service had standing to petition for CBM review, a question
that we have never previously answered. The AIA authorizes
appeals from the Board's final written decision in a CBM
review proceeding. 35 U.S.C. § 329. But the statute also
includes a "No Appeal" provision, 35 U.S.C. §
324(e), stating that "[t]he determination by the
Director whether to institute . . . review under this
section" is "final and nonappealable."
(Emphasis added). The Postal Service argues that §
324(e) bars this court from revisiting whether "the
Board erred in instituting the proceeding in the first place,
" based in part on the determination that the Postal
Service had § 18(a)(1)(B) standing. Appellees' Br.
Supreme Court recently reiterated, there is a
"'strong presumption' in favor of judicial
review" when interpreting "statutes that may limit
or preclude review." Cuozzo Speed Techs., LLC v.
Lee, 136 S.Ct. 2131, 2140 (2016) (quoting Mach
Mining, LLC v. EEOC, 135 S.Ct. 1645, 1650-51 (2015)). As
the party "seeking to overcome this strong presumption,
" the Postal Service "faces a 'heavy
burden'"-it must demonstrate a contrary legislative
intent "by 'clear and convincing'
evidence." Versata Dev. Grp. v. SAP Am., Inc.,
793 F.3d 1306, 1320 (Fed. Cir. 2015) (quoting Bowen v.
Mich. Acad. of Family Physicians, 476 U.S. 667, 671-72
(1986)). To the extent any "doubt about congressional
intent exists, the general presumption favoring judicial
review of rights-changing administrative action is
though the Board initially determined in its institution
decision that the Postal Service had standing, that fact
alone does not preclude judicial review. The AIA draws a
"clear and common-sense distinction" between a
final written decision by the Board and an earlier decision
whether to institute CBM review. GTNX, Inc. v. INTTRA,
Inc., 789 F.3d 1309, 1312 (Fed. Cir. 2015). But not all
issues fall neatly into that dichotomy. Some issues are not
necessarily confined to one stage of CBM review or the other,
and the Board may later decide, as it did here, to revisit a
determination previously made at the institution phase. We
have held that the availability of judicial review does not
hinge on such "timing" or "[o]verlap" of
issues. Versata, 793 F.3d at 1319. Thus, even if
§ 18(a)(1)(B) standing is best addressed at the
institution stage so as to avoid unnecessary proceedings,
that the Board first decided it at the institution stage in
this case is not enough, by itself, to bar judicial review.
Postal Service submits that the Supreme Court's decision
in Cuozzo and this court's decision in
Achates Reference Publishing, Inc. v. Apple Inc.,
803 F.3d 652 (Fed. Cir. 2015),  confirm that the Board's
determination that the Postal Service had standing to
petition for CBM review is not reviewable. Both cases
interpreted the scope of 35 U.S.C. § 314(d), an
analogous no-appeal provision for the IPR program. Because
the pertinent language of § 314(d) is identical to that
of § 324(e), case law interpreting the scope of §
314(d) bears on the scope of § 324(e). See CBOCS W.,
Inc. v. Humphries, 553 U.S. 442, 457 (2008)
("[C]onsiderations of stare decisis strongly support our
adherence to [precedent] and the long line of related cases
where we interpret [related statutory provisions]
similarly."). Nevertheless, we conclude that
Cuozzo and Achates are distinguishable and
do not dictate the availability of judicial review in this
Cuozzo, the Supreme Court interpreted § 314(d)
to bar judicial review of determinations under 35 U.S.C.
§ 314(a) regarding the "reasonable likelihood"
of success of an IPR petition, as well as challenges grounded
"in a statute closely related to that decision to
institute [IPR]." 136 S.Ct. at 2142 (internal quotation
marks omitted). The Court held that the dispute at
issue-whether the petitioner met a statutory requirement to
set forth grounds for an IPR petition with particularity-was
barred by § 314(d) from judicial review because it
merely amounted to an "ordinary dispute" about the
PTO's decision to institute and was grounded in "a
statute closely related to th[e] decision to institute."
Id. at 2139, 2142. Here, in contrast, whether a
party is statutorily allowed to petition for CBM review does
not amount to "little more than a challenge to the
[PTO's] conclusion" about the petition's
likelihood of success on the merits. Id. at 2142. Nor is
it a "minor statutory technicality" that can be
cured by a more precise or fulsome filing. Id. at
2140. The Board's determination of whether a party is
qualified under § 18(a)(1)(B) to petition for CBM review
is a condition precedent independent from a threshold
analysis regarding the likelihood of success of the
information contained in the petition. See City of
Arlington v. FCC, 133 S.Ct. 1863, 1869 (2013)
(explaining that federal agencies' "power to act and
how they are to act is authoritatively prescribed by
Congress, so that when they act improperly, . . . what they
do is ultra vires").
Postal Service's reliance on Achates is also
unavailing. There, we held that the PTO's determination
that a petitioner has satisfied 35 U.S.C. § 315(b)'s
statutory time bar to petition for IPR is unreviewable
because that requirement "does not impact the
Board's authority to invalidate a patent claim-it only
bars particular petitioners from challenging the claim."
Achates, 803 F.3d at 657. The Postal Service argues
that § 18(a)(1)(B) similarly affects only who
can file a petition-i.e., as long as a proper petitioner
requests CBM review of a patent, the Board's authority to
cancel that patent is unaffected. We disagree.
is distinguishable based on differences in the statutory
framework for IPR and CBM review. First, for IPR proceedings,
any "person who is not the owner of [the challenged]
patent" can petition for review of a patent. 35 U.S.C.
§ 311(a). Put another way, "[p]arties that initiate
the [IPR] proceeding need not have a concrete stake in the
outcome." Cuozzo, 136 S.Ct. at 2143. In
contrast, by requiring a petitioner for CBM review to have
been sued for or charged with infringement of the underlying
patent, § 18(a)(1)(B) ensures that CBM review is limited
to parties who have some stake in the outcome. If a party is
barred by § 18(a)(1)(B) from petitioning for CBM review
of a patent, it cannot be assumed that the same patent could
be challenged by an unrelated third party. To treat
these distinct grants of authority as coterminous would
require us to ignore the plain terms of the respective
statutes. We may not do so. See Dep't of Homeland
Sec. v. MacLean, 135 S.Ct. 913, 919 (2015)
("Congress generally acts intentionally when it uses
particular language in one section of a statute but omits it
another." (citation omitted)); see also Conn.
Nat'l Bank v. Germain, 503 U.S. 249, 253-54 (1992)
("[C]ourts must presume that a legislature says in a
statute what it means and means in a statute what it says
there."). Second, the IPR time bar, "like other
'[f]iling deadlines, ' . . . is merely a 'rule
that seek[s] to promote the orderly progress of litigation by
requiring that the parties take certain procedural steps at
certain specified times.'" Achates, 803
F.3d at 658 (alterations in original) (quoting Henderson
ex rel. Henderson v. Shinseki, 562 U.S. 428, 435
(2011)). Unlike the IPR time bar which is simply a procedural
requirement that rights be exercised in a timely manner,
§ 18(a)(1)(B) relates to a party's right to seek CBM
review in the first instance.
is no doubt that, despite the AIA's no-appeal provisions,
judicial review remains available on questions of
"whether the [Board] exceeded statutory limits on its
authority to invalidate." Versata, 793 F.3d at
1319; see also Cuozzo, 136 S.Ct. at 2141 (holding
that § 314(d) does not preclude judicial review when the
PTO "act[s] outside its statutory limits"). As we
have explained, to hold otherwise would "run
counter" to both the language of the no-appeal
provisions (restricted to determinations of whether to
institute) and "our long tradition of judicial review of
government actions that alter the legal rights of an affected
person." Versata, 793 F.3d at 1319. For
example, in Versata we held that this court could
review the Board's determination of whether a patent is a
CBM patent under AIA § 18(a)(1)(E) because that
statutory provision limits the Board's authority to
invalidate a patent. Id. at 1320. The §
18(a)(1)(B) standing requirement at issue here appears in the
same subsection and similarly limits the Board's
authority to invalidate a patent through CBM review. Even
though it is not phrased in terms of what the Director can or
cannot do, Congress placed an express limitation on the reach
of the CBM review program, a "special review
regime" that is only available for an eight-year
transitional period. Id. Where determinations are
"fundamental or 'jurisdiction-al, ' in the sense
that their existence is a condition precedent to the
operation of the statutory scheme[, ] [such] fundamental
requirements are . . . indispensable to the application of
the statute . . . because the Congress has so provided
explicitly." Crowell v. Benson, 285 U.S. 22,
54- 55 (1932) (footnote omitted).
legislative history of the AIA supports our conclusion that
questions related to a party's standing touch upon the
PTO's ultimate authority to act. Congress explained that
the PTO's ability to conduct CBM review "is limited
in certain respects" and highlighted that the PTO
"cannot" grant a petition "unless the
petitioner or his real party in interest has been sued for
infringement of the patent or has been charged with
infringement." H.R. Rep. No. 112-98, at 80 (2011),
reprinted in 2011 U.S.C.C.A.N. 67, 105. That
Congress did not intend the PTO to act absent a petition
filed by a party with the requisite standing confirms that
§ 18(a)(1)(B) provides a fundamental limitation on the
foregoing reasons, we hold that § 324(e) does not bar
judicial review of the Board's decision that a party
satisfies § 18(a)(1)(B)'s requirements to petition
for CBM review.
now to the Board's determination that the Postal Service
had standing to petition for CBM review because it had been
"sued for infringement" of the '548 patent
within the meaning of § 18(a)(1)(B).
outset, the parties disagree on the applicable standard of
review. The Postal Service argues that the Board's
determination is subject to arbitrary-and-capricious review
under the Administrative Procedure Act ("APA"),
while Return Mail contends that de novo review applies. It is
true that we review PTO decisions under the standards set
forth in the APA, but those standards allow us to also set
aside agency actions that are "not in accordance with
law." 5 U.S.C. § 706(2); see Pride Mobility
Prods. Corp. v. Permobil, Inc., 818 F.3d 1307, 1313
(Fed. Cir. 2016) (reciting APA standards). Accordingly,
where, as here, the parties' arguments raise a purely
legal question of statutory interpretation, we apply de novo
re-view. In re Affinity Labs of Tex.,
LLC, 856 F.3d 883, 889 (Fed. Cir. 2017); Secure
Axcess, LLC v. PNC Bank Nat'l Ass'n, 848 F.3d
1370, 1377 (2017).
Mail makes several cogent arguments why a § 1498(a)
suit, in some sense, is not one for "infringement."
But while we recognize there are important differences
between § 1498(a) suits against the government and suits
for infringement against private parties, these differences,
along with Return Mail's other arguments, are
insufficient to compel a conclusion that Congress intended to
exclude a government-related party sued under § 1498(a)
from being able to petition for CBM review.
discussing whether being sued under § 1498(a)
constitutes being "sued for infringement" under
§ 18(a)(1)(B), we provide an overview of the nature of a
§ 1498(a) suit.
to the enactment of § 1498(a), the Supreme Court held
that the government had not waived sovereign immunity for
patent infringement actions sounding in tort. Schillinger
v. United States, 155 U.S. 163, 170 (1894); see also
United States v. Berdan Fire-Arms Mfg. Co., 156 U.S.
552, 565-66 (1895) ("Even if there were findings
sufficient to show that the government had in any manner
infringed upon this patent, . . . a mere infringement, which
is only a tort, creates no cause of action cognizable in the
court of claims."). In other words, absent a contractual
relationship with the government, "a patent holder
lacked a remedy for infringement by the United States."
Zoltek Corp. v. United States, 672 F.3d 1309, 1315
(Fed. Cir. 2012) (en banc in relevant part). Congress
responded in 1910 by enacting the precursor to §
1498(a), under which the government assumes liability for the
"use or manufacture" of a claimed invention
"by or for the United States without license of the
owner thereof or lawful right to use or manufacture the
same." 28 U.S.C. § 1498(a).
1498(a) "is an eminent domain statute, " wherein
the government "has consented thereunder only to be sued
for its taking of a patent license." Decca Ltd. v.
United States, 640 F.2d 1156, 1167 (Ct. Cl. 1980);
see also Leesona Corp. v. United States, 599 F.2d
958, 964 (Ct. Cl. 1979) (discussing § 1498's basis
in eminent domain); Tektronix, Inc. v. United
States, 552 F.2d 343, 346 (Ct. Cl. 1977) ("It is
settled that recovery of reasonable compensation under §
1498 is premised on a theory of an eminent domain taking
under the Fifth Amendment."). The government therefore
remains immune from suit under the Patent Act, which provides
that "[a] patentee shall have remedy by civil action for
infringement of his patent." 35 U.S.C. § 281.
Mail submits that because § 1498(a) is grounded in
eminent domain, it cannot be a suit for
"infringement." We disagree. It is true that this
provision "creates its own independent cause of action,
" which is "'only parallel and not
identical'" to an infringement action under the
Patent Act. Zoltek, 672 F.3d at 1321 (quoting
Motorola, Inc. v. United States, 729 F.2d 765, 768
(Fed. Cir. 1984)). We have held that certain relief otherwise
available to a patentee under the Patent Act is unavailable
in § 1498(a) actions, such as § 283 injunctive
relief, § 284 treble damages, § 285 exceptional
case attorney fees, and § 287 damages limitations based
on a failure to mark. Motorola, 729 F.2d at 768 n.3,
772. None of those distinctions, however, relates to the
underlying basis of liability in a § 1498(a) suit.
Mail selectively quotes from Motorola, relying on
our statement that the government "is not a putative
infringer but is deemed a licensee."
Motorola, 729 F.2d at 772 (emphasis added). But
Motorola says that the government is "not in
the position of an ordinary infringer, " not
that the government cannot infringe. 729 F.2d at 768
(emphasis added). In fact, Motorola has language
tying § 1498(a) to infringement, stating that "the
Government can only be sued for any direct
infringement of a patent." Id. at 768 n.3
(emphasis added). And, to be sure, we and our predecessor
court have often described § 1498(a) suits as alleging
"infringement." See, e.g.,
Zoltek, 672 F.3d at 1327 ("[Section] 1498(a)
creates a . . . cause of action for direct infringement by
the Government or its contractors. . . . [U]nder §
1498(a) the Government has waived its sovereign immunity for
direct infringement ...