Zoltek Corp. v. United States , 464 F.3d 1335 ( 2006 )

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United States Court of Appeals for the Federal Circuit
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ZOLTEK CORPORATION,
Plaintiff-Cross Appellant,
v.
UNITED STATES,
Defendant-Appellant.
Dean A. Monco, Wood, Phillips, Katz, Clark & Mortimer, of Chicago, Illinois,
argued for plaintiff-cross appellant. With him on the brief was John S. Mortimer. Of
counsel on the brief were James F. Davis and Pamela S. Kane, Howrey, Simon, Arnold
& White, of Washington, DC.
Anne Murphy, Attorney, Appellate Staff, Civil Division, United States Department
of Justice, of Washington, DC. With her on the brief were Peter D. Keisler, Assistant
Attorney General, Scott R. McIntosh, Attorney, and Gary L. Hausken, Attorney.
Appealed from: United States Court of Federal Claims
Chief Judge Edward J. Damich
United States Court of Appeals for the Federal Circuit
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ZOLTEK CORPORATION,
Plaintiff-Cross Appellant,
v.
UNITED STATES,
Defendant-Appellant.
_______________________
DECIDED: March 31, 2006
_______________________
Before GAJARSA, Circuit Judge, PLAGER, Senior Circuit Judge, and DYK, Circuit
Judge.
PER CURIAM. Concurring opinion filed by Circuit Judge GAJARSA. Separate
concurring opinion filed by Circuit Judge DYK. Dissenting opinion filed by Senior Circuit
Judge PLAGER.
The United States appeals the order of the Court of Federal Claims holding that it
could assert jurisdiction over Zoltek Corporation’s (“Zoltek”)’s patent infringement
allegations by treating the action as a Fifth Amendment taking under the Tucker Act.
Zoltek cross-appeals the trial court’s ruling that 28 U.S.C. § 1498(c) bars this action as
arising in a foreign country. The Court of Federal Claims certified the rulings under 28
U.S.C. § 1292(d)(2), and this court accepted jurisdiction. See Zoltek Corp v. United
States, No. 96-166 C (Fed. Cl. Feb. 20, 2004) (certification); see generally Zoltek Corp.
v. United States, 58 Fed. Cl. 688 (2003), Zoltek Corp. v. United States, 51 Fed. Cl. 829(2002).
We conclude that under § 1498, the United States is liable for the use of a
method patent only when it practices every step of the claimed method in the United
States. The court therefore affirms the trial court’s conclusion that § 1498 bars Zoltek’s
claims. However, we reverse the trial court’s determination that it had jurisdiction under
the Tucker Act based on a violation of the Fifth Amendment.
I.
Zoltek Corporation (“Zoltek”) is the assignee of United States Reissue Patent No.
34,162 (reissued Jan. 19, 1993) to a “Controlled Surface Electrical Resistance Carbon
Fiber Sheet Product” (“the Re ’162 patent”). The Re ’162 patent claims certain methods
of manufacturing carbon fiber sheets with controlled surface electrical resistivity.1
Independent claim 1 is representative. After reissue, it reads:
1. A method of manufacturing a plurality of different value controlled
resistivity carbon fiber sheet products employing a carbonizable fiber
starting material; said method comprising
selectively partially carbonizing previously oxidized and stabilized fiber
starting material
for a predetermined time period in an oxygen free atmosphere within a
furnace at selected temperature values within a temperature range from
370 degrees Centigrade to about 1300 degrees Centigrade
by soaking the stabilized fiber starting material at the selected temperature
for the predetermined period of time
1
Although the Re ’162 patent also includes various product-by-process and
product claims, only the method claims are at issue here. In a March 5, 2001 motion for
leave to file a first amended complaint, Zoltek abandoned its allegations that the
government had infringed the product claims. See Zoltek, 58 Fed. Cl. at 689 n.3.
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to provide a preselected known volume electrical resistivity to the partially
carbonized fibers corresponding to that volume electrical resistivity value
required to provide the preselected desired surface resistance value for
the finished sheet products,
and thereafter processing the partially carbonized fibers into
homogeneous carbon fiber sheet products having the preselected desired
surface electrical resistances.
Re ’162 patent, col. 8, ll. 42-66.
The method thus takes a “carbonizable fiber starting material” and requires
“partially carbonizing” it. “Carbonization” as used in the Re ’162 patent means “a
process which involves heat treatment in an inert atmosphere which eliminates or
removes all elements other than carbon.” Zoltek, 48 Fed. Cl. 290, 293 (2000). “Partial
carbonization” refers to carbonization sufficient to achieve a desired surface resistance
in a sheet woven from the resulting fibers. Id. at 295.
Independent claim 11 describes a representative method for making such fibers
and weaving them into a fiber sheet. After reissue, it reads:
11. A method of manufacturing a plurality of different value controlled
resistivity carbon fiber sheet products employing carbonizable, previously
oxidized and stabilized fiber starting material; said method comprising
forming an oxidized and stabilized tow, stretching and breaking the
stabilized tow,
forming the stabilized stretched and broken fiber filaments into sliver
comprised of,
large bundles of discontinuous filaments in an untwisted condition,
converting the sliver into roving, spinning the roving into a spun yarn,
plying or twisting the spun yarn, weaving or knitting the plied and twisted
spun yarn into fabric,
and selectively partially carbonizing the fabric thus formed at preselected
elevated temperature values for a predetermined time period in an oxygen
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free atmosphere within a furnace having a continuously increasing
temperature profile within the range from about 370 degrees Centigrade to
about 1300 degrees Centigrade to provide a known preselected electrical
volume resistivity to the partially carbonized fiber filament in the fabric
corresponding to that value of electrical volume resistivity required to
provide the preselected desired surface resistance for the finished fabric.
Re ’162 patent, col. 9, l. 65 – col. 10, l. 24.
Independent claim 15 describes a method for making and processing the fibers
into paper-like sheet products. Id. at col. 10, l. 35 – col. 11, l. 8. In short, the steps of
the claimed methods are directed to “partially carbonizing” fibers, and weaving or
processing them into controlled resistivity carbon fiber mats or sheets.
The relevant facts are undisputed. The United States contracted with Lockheed
Martin Corporation (“Lockheed”) to design and build the F-22 fighter. Zoltek, 51 Fed. Cl.
at 831. Lockheed subcontracted for two types of silicide fiber products that it uses in
the aircraft. The first is a pre-impregnated material made from Nicalon silicon carbide
fibers. These fibers are partially carbonized and manufactured into sheets in Japan,
which are then imported into the United States. The second is a silicide fiber mat made
from Tyranno fibers. The Tyranno fibers are manufactured exclusively in Japan, but
they are processed into mats in the United States. Zoltek, 58 Fed. Cl. at 690.
Zoltek brought suit in the Court of Federal Claims under § 1498(a), alleging that
the United States and Lockheed used the methods claimed in the Re ’162 patent when
Lockheed’s subcontractors made the two silicide fiber products used in the F-22. Zoltek
alleges that the mats and sheets were made, for the United States, using the claimed
methods.
The government moved for partial summary judgment that Zoltek’s § 1498(a)
claims were barred by § 1498(c) because they arose in Japan. The trial court denied
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the motion. Although it agreed that § 1498(c) barred Zoltek’s claims under § 1498(a),
the trial court directed Zoltek to amend its complaint to allege a taking under the Fifth
Amendment. Id. at 707. The trial court concluded that Zoltek could assert the
infringement claims under 28 U.S.C. § 1491(a)(1) as a taking in violation of the Fifth
Amendment. Id. at 690-91 & 695-706. The trial court certified its § 1498 analysis and
its holding that Zoltek’s patent infringement claims sounded in the Fifth Amendment,
under § 1292(d)(2). Both parties timely sought permission to appeal. This court
accepted the interlocutory appeals and has jurisdiction under 28 U.S.C. §§ 1292(c)(1)
and 1295(a)(3).
The issues before the court are purely questions of law. This court reviews the
trial court’s statutory and constitutional analysis without deference. See Shoshone
Indian Tribe of Wind River Reservation v. United States, 364 F.3d 1339, 1345 (Fed. Cir.
2004).
II.
The federal government is immune from any legal action by its sovereign
immunity. See United States v. Sherwood, 312 U.S. 584, 586 (1941) (stating that “[t]he
United States, as sovereign, is immune from suit save as it consents to be sued”). The
waiver of immunity can be limited and conditioned by the Congress. See United States
v. Nordic Village Inc., 503 U.S. 30, 34 (1992) (stating that the government’s consent to
be sued must be strictly construed in favor of the sovereign and not enlarged beyond
what the language requires). A patentee’s judicial recourse against the federal
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government, or its contractors, for patent infringement, is set forth and limited by the
terms of 28 U.S.C. § 1498.2 Section 1498(a) provides, in pertinent part:
Whenever an invention described in and covered by a patent of the United
States is used . . . by or for the United States without license of the owner
thereof or lawful right to use or manufacture the same, the owner's remedy
shall be by action against the United States in the United States Court of
Federal Claims for the recovery of his reasonable and entire
compensation for such use and manufacture.
Id. (emphasis added).
This court has held that “direct infringement under section 271(a) is a necessary
predicate for government liability under section 1498.” NTP, Inc. v. Research in Motion,
Ltd., 418 F.3d 1282, 1316 (Fed. Cir. 2005) (citing Motorola, Inc. v. United States, 729
F.2d 765, 768 n.3 (Fed. Cir. 1984)). We have further held that “a process cannot be
used ‘within’ the United States as required by section 271(a) unless each of the steps is
performed within this country.” Id. at 1318. Consequently, where, as here, not all steps
of a patented process have been performed in the United States, government liability
does not exist pursuant to section 1498(a). We affirm the trial court’s conclusion that §
1498(a) bars Zoltek’s claims.
2
As the Supreme Court recognized at least as long ago as 1881, the
patentee’s recourse for infringement by the government is limited by the scope of the
waiver of sovereign immunity established by the Congressional consent to be sued. “If
the jurisdiction of the Court of Claims should not be finally sustained [to hear an
infringement action against the government], the only remedy against the United States,
unless Congress enlarges the jurisdiction of that court, would be to apply to Congress
itself.” James v. Campbell, 104 U.S. 356, 359 (1881). In short, the power to limit a
Congressional abuse of sovereign immunity lies in the political process rather than the
judicial branch.
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III.
We turn to the trial court’s takings analysis. The Court of Federal Claims held
that Zoltek could bring its action against the government under the Tucker Act, by
alleging that the infringement was a taking of private property for public use under the
Fifth Amendment. See Zoltek, 58 Fed. Cl. at 707. We reverse.
In Schillinger v. United States, 155 U.S. 163 (1894), the Supreme Court rejected
an argument that a patentee could sue the government for patent infringement as a
Fifth Amendment taking under the Tucker Act. Id. at 169. Schillinger remains the law.
The trial court determined that the Supreme Court “effectively overruled
Schillinger sub silentio” in Crozier v. Fried. Krupp Aktiengesellschaft, 224 U.S. 290(1912). Zoltek, 58 Fed. Cl. at 702. We disagree. The Court of Federal Claims, like this
court, is bound by Schillinger, and the trial court rulings to the contrary are not viable.
Crozier involved Army weapons manufacture. Fried. Krupp was a German
corporation holding patents relating to improvements in guns and gun carriages.
William Crozier was the Army Chief of Ordnance and directed the manufacture of field
guns and carriages for the Army. In 1907, Fried. Krupp sued Crozier in the supreme
court of the District of Columbia. The company alleged that the Army’s weapons
manufacture was infringing Fried. Krupp patents. Although the complaint originally
sought preliminary and permanent injunction, and an accounting, the company later
dropped the prayer for preliminary injunction and waived the prayer for accounting.
Crozier, 224 U.S. at 297-99. Crozier demurred, arguing that the real party in interest
was the United States, and that the trial court lacked jurisdiction. Id. at 300. The trial
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court sustained the demurrer and dismissed. Id. In 1908, the Court of Appeals
reversed. Id.Before the Supreme Court heard argument, Congress enacted the Patent Act of
1910. See Pub. L. No. 61-305, 36 Stat. 851 (1910) (later codified as amended at
§ 1498). When it eventually heard the case, the Supreme Court reversed and
remanded with instructions to dismiss so that the company could refile and proceed in
the Court of Claims under the 1910 Act. Crozier, 224 U.S. at 309.
The contention that Crozier somehow overruled Schillinger, and recognized
patent infringement as a Fifth Amendment taking, is flawed. The only question before
the Supreme Court was whether the trial court had jurisdiction to enjoin the government
from alleged patent infringement. Because Congress, in adopting the 1910 Act,
precluded injunctive relief against the government for patent infringement, the Crozier
court concluded that the trial court lacked the power to grant Fried. Krupp the injunctive
relief it was seeking. Id. at 308. None of the relevant Schillinger issues were joined:
Crozier was not filed in the Court of Claims, had nothing to do with the Tucker Act, did
not allege a taking, and was solely in equity. Moreover, discussing the state of the law
before the 1910 Act, the Crozier court expressly noted that no patent infringement
action could be brought against the government unless in the Court of Claims under a
contract or implied contract theory. See id. at 304. Far from “overruling” Schillinger,
this acknowledges and endorses the rule that Schillinger established. The Court thus
recognized that by enacting the 1910 Act, Congress “add[ed] the right to sue the United
States in the court of claims” for patent infringement. Id. If the right already existed
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under the Fifth Amendment, as the trial court here suggests, then this analysis in
Crozier would be flawed.
Indeed, the Supreme Court repeated this characterization of the 1910 Act just
eight years later. See Cramp & Sons Ship & Engine Bldg. Co. v. Int’l Curtis Marine
Turbine Co., 246 U.S. 28, 41 (1918) (citing Schillinger and explaining that the 1910 Act
“was intended alone to provide for the discrepancy resulting from the right in one case
to sue on the implied contract and the non-existence of a right to sue” for infringement).
In Crozier and Cramp, the Supreme Court therefore acknowledged Congressional
recognition that the Court of Claims lacked Tucker Act jurisdiction over infringement
under a takings theory. The legislative history of the 1910 Act confirms that the statute
augmented the Court of Claims’ Tucker Act jurisdiction by providing jurisdiction over the
tort of patent infringement. See H.R. Rep. No. 61-1288 at 3 (1910).
The Court of Federal Claims reasoned that because Crozier discussed the 1910
Act in terms of eminent domain, the Supreme Court must have reconsidered its analysis
in Schillinger. This reasoning is misplaced. It is true that Crozier, and several cases
applying the 1910 Act (in its original form and as amended and recodified at § 1498),
analyze the statute in terms of takings and protecting property rights. Under this case
law, patent infringement by the government is analogized to “taking” a “compulsory
license.” The view is consistent with the text of the 1910 Act, which provided for
reasonable compensation for patent infringement, 36 Stat. 851, and with the legislative
history, which provided that the purpose of the bill was “to enlarge the jurisdiction of the
Court of Claims so that said court may entertain suits against the United States for the
infringement or unauthorized use of a patented invention, in certain cases, and award
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reasonable compensation to the owner of the patent.” H.R. Rep. No. 61-1288, at 1
(1910).
But when interpreting the Constitution “[i]t is emphatically the province and duty
of the judicial department to say what the law is.” Marbury v. Madison, 5 U.S. 137,
177 (1803). That Congress may adopt a limited waiver of sovereign immunity and
confer rights on patentees for money damages against the government, whatever the
rationale, cannot disturb the Supreme Court’s analysis of the Fifth Amendment in
Schillinger. Neither the wording nor rationale of the 1910 Act, nor the Supreme Court’s
discussion of it in Crozier, affects the rule in Schillinger. Of course, the 1910 Act was
not even before the Crozier court, as the action was filed three years before the Act was
enacted. Even the plain language of the 1910 Act—entitled “An Act To Provide
Additional Protection For Owners of Patents of the United States”—belies the trial
court’s analysis here, as it legislates against the background of the Schillinger legal
framework.
In sum, the trial court’s conclusion that Crozier “effectively overruled Schillinger
sub silentio” has no merit. The trial court’s remaining conjectures on takings
jurisprudence do not require consideration. We simply note that to reach its conclusion
the Court of Federal Claims had to read an entire statute, § 1498, out of existence—a
result that betrays the error in the trial court’s analysis. As the Supreme Court has
clearly recognized when considering Fifth Amendment taking allegations, “property
interests . . . are not created by the Constitution. Rather, they are created and their
dimensions are defined by existing rules or understandings that stem from an
independent source such as state law.” Ruckelshaus v. Monsanto Co., 467 U.S. 986,
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1001 (1984) (citations omitted).3 Here, the patent rights are a creature of federal law.
In response to Schillinger, Congress provided a specific sovereign immunity waiver for a
patentee to recover for infringement by the government. Had Congress intended to
clarify the dimensions of the patent rights as property interests under the Fifth
Amendment, there would have been no need for the new and limited sovereign
immunity waiver. The manner in which Congress responded to Schillinger is significant.
“The life of the law has not been logic; it has been experience.”4 Neither the Court of
Federal Claims nor this court can ignore the path of the patent law as it has evolved
under § 1498.
The dissent argues that we are wrong to conclude that Schillinger remains good
law. Both inverse condemnation claims and regulatory takings claims, it asserts, are
currently viewed as claims founded upon the Fifth Amendment of the Constitution for
purposes of the Tucker Act, and these claims are not barred for having arisen in tort. If,
as the dissent argues is suggested by Crozier, a patent is a type of property that comes
within the ambit of Fifth Amendment Takings Clause protection, why should we not
likewise permit claims for patent infringement to arise under the Tucker Act?
The answer is simple. Unlike regulatory takings and the inverse condemnation of
real property, the “taking” of a license to use a patent creates a cause of action under
§ 1498. The dissent fails to appreciate that this destroys whatever force its argument by
3
In Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1003-04 (1984), the Court
concluded that government interference with interests “cognizable as trade-secret
property right[s]” could constitute a taking depending on the circumstances. But
Monsanto did not overrule Schillinger, and we must follow Schillinger until it is overruled
by the Supreme Court, whether or not Schillinger is viewed as inconsistent with
Monsanto. See Indep. Ink, Inc. v. Ill. Tool Works, Inc., 396 F.3d 1342, 1351 (Fed. Cir.
2005), cert. granted, 1215 S. Ct 2937 (2005).
4
Oliver W. Holmes, The Common Law 5 (M. Howe ed. 1963) (1881).
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analogy may otherwise have had. Indeed, if we were to interpret § 1491 as the dissent
would have us, it would render superfluous § 1498—the remedy that Congress
fashioned specifically to compensate patentees for the use of their patents by the
federal government. Moreover, even if we shared the dissent’s belief that the Supreme
Court would overrule Schillinger, we are nevertheless bound by its holding. It is not our
place to overrule sub silentio the Supreme Court. See Rodriguez de Quijas v.
Shearson/American Express, Inc., 490 U.S. 477, 484 (1989) (“If a precedent of this
Court has direct application in a case, yet appears to rest on reasons rejected in some
other line of decisions, the Court of Appeals should follow the case which directly
controls, leaving to this Court the prerogative of overruling its own decisions.”). In sum,
the trial court erred in finding that Zoltek could allege patent infringement as a Fifth
Amendment taking under the Tucker Act, and we reverse.
IV.
For the reasons set forth herein, we affirm the trial court’s conclusion that the
infringement allegations at bar are precluded by § 1498(a). We reverse the trial court’s
ruling that Zoltek can allege patent infringement as a Fifth Amendment taking under the
Tucker Act. We remand for further proceedings consistent with this opinion.
AFFIRMED IN PART, REVERSED IN PART, and REMANDED.
Each side will bear its own costs.
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United States Court of Appeals for the Federal Circuit
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ZOLTEK CORPORATION,
Plaintiff-Cross Appellant,
v.
UNITED STATES,
Defendant-Appellant.
GAJARSA, Circuit Judge, concurring.
I agree that we are bound by our panel decision in NTP, Inc. v. Research in
Motion, Ltd., in which we held that “direct infringement under section 271(a) is a
necessary predicate for government liability under section 1498.” 418 F.3d 1282, 1316
(Fed. Cir. 2005) (citing Motorola, Inc. v. United States, 729 F.2d 765, 768 n.3 (Fed. Cir.
1984)). However, the NTP proposition is, in my view, the result of an unchecked
propagation of error in our case law, and its viability may eventually be challenged.
Consequently, I write separately to emphasize that our decision today does not depend
for its validity on NTP, as it is also supported by an independent line of reasoning.
I.
Before discussing this additional basis for today’s decision, I shall briefly address
the ignoble history of the NTP proposition. An examination of the case law reveals that
the proposition has its roots in Decca v. United States, in which we held that the United
States could be liable under 28 U.S.C. § 1498 only for direct infringement and not for
indirect infringement:
Section 1498 expressly waives the Government’s sovereign immunity only
with respect to governmental direct infringement of a patent. Nowhere in
the section is active inducement of infringement or contributory
infringement mentioned, either directly or by cross-reference to 35 U.S.C.
§§ 271(b) and (c). A waiver of sovereign immunity must be strictly
construed. Stated differently, the Government is not to be regarded as
having waived its sovereign immunity by implication.
225 Ct. Cl. 326, 340 (Ct. Cl. 1980). Thus, after Decca, a patentee who sought to
establish a § 1498(a) claim had to prove “direct” infringement by the United States. I
have no problem with this formulation of the rule, as it was the product of the Decca
court’s thoughtful analysis.
It is important to note, however, the relationship between the phrases “direct
infringement,” as used in Decca, id., and the phrase “direct infringement under § 271(a)”
as used in NTP, 418 F.3d at 1316. That relationship is one of set to subset:
infringement under 35 U.S.C. § 271(a) is a specific kind of “direct infringement.” Thus,
while “direct infringement” is one of the requirements of an action against a private party
under § 271(a), it is not the only requirement, with § 271(a) also requiring, inter alia, that
the infringing activity occur “within the United States.”
Decca, of course, did not require that a § 1498(a) plaintiff satisfy all of the
requirements of § 271(a). Indeed, Decca did not even mention § 271(a). Instead, it
required only that the accused use constitute a direct, rather than an indirect,
infringement. NTP, in contrast, states as a blanket proposition that all of the
requirements of 35 U.S.C. § 271(a) must be satisfied in order to prove a 28 U.S.C.
§ 1498 claim against the government. See NTP, 418 F.3d at 1316.
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How did such a sweeping generalization evolve from Decca? The answer,
unfortunately, is that its evolution owes to this court’s imprecise recharaterization of the
Decca holding in our decision in Motorola. See 729 F.2d 765, 768 n.3. In Motorola, this
court cited Decca at the end of a footnote as one of a number of cases supporting the
very general proposition that the patent statutes are often inapplicable to actions arising
under section 1498. Id. It stated that “the Government can only be sued for any direct
infringement of a patent (35 U.S.C. § 271(a)), and not for inducing infringement by
another (section 271(b)) or for contributory infringement (section 271(c)).” Id. (emphasis
added) (citing Decca, 640 F.2d at 1167).
By equating the specific statutory provision “35 U.S.C. § 271(a)” with the more
general concept of “direct infringement,” the Motorola court carelessly extended the
Decca holding, thus laying the groundwork for the NTP proposition. There is distinct
irony in the Motorola court’s being responsible for the creation of an inadvertent link
between 35 U.S.C. § 271(a) and 28 U.S.C. § 1498(a), given that the entire point of the
Motorola footnote was to support the proposition that it is erroneous to simply assume
the existence of relationships between these two statutory sections. See id. at 768(explaining that “[a]lthough a section 1498 action may be similar to a Title 35 action, it is
nonetheless only parallel and not identical”).
Although in Motorola the relationship between sections 271(a) and 1498(a)
constituted mere dicta, in NTP the relationship, as slightly recast, became the binding
precedent of this court. In my view, such a sweeping rule of binding precedent ought
not to be created by mere inadvertence. In turn, the resolution of the important issue
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before this court today—the scope of the government’s waiver of sovereign immunity as
embodied in § 1498—ought not to be based solely on the basis of NTP.
In his concurring opinion, Judge Dyk attempts to find support for the NTP
proposition. Citing certain legislative materials which state that the sole purpose of
enacting § 1498(a) was to create jurisdiction (rather than additional liability), he argues
that § 1498(a), even when viewed apart from 1498(c), cannot result in “the
government’s liability [being] broader than that of private parties.” Id. In other words,
according to his concurrence the limits of government liability under § 1498(a) are
circumscribed by the hypothetical liability of a private actor under § 271(a), and we can
entirely ignore § 1498(c) in the analysis.
His reliance on legislative history is misplaced, however, given that the plain
language of the text demands a contrary and unambiguous interpretation. As is
explained below, the plain language of the statute reveals that 28 U.S.C. § 1498 is not a
mere waiver of sovereign immunity with respect to the previously-existing remedy,
which was provided by 35 U.S.C.§ 281 for transgressions denominated by § 271 as
“infringing” the exclusionary rights granted by § 154(a).
There can be little doubt that § 1498 is more than a mere waiver of sovereign
immunity. The plain language of the statute speaks of the provision of a “remedy,” and
the fourth paragraph of subsection (a) indicates that “remedy” means “right of action.”
See id. (“[This section shall not convey a right of action on any patentee . . . with respect
to any invention discovered . . . while in the employment . . . of the United States . . . .”)
(emphasis added). Section 1498 is by no means a mere jurisdictional statute, and to
the extent that materials in the legislative history may appear to suggest otherwise, they
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serve principally to illustrate why courts should often view legislative history with
skepticism and rely on it only when the statute itself is ambiguous. If the NTP
proposition can be sustained, it cannot be sustained on this ground.
Granted, in creating a new remedy, § 1498(a) inherently creates new rights.
However, there is nothing about the text of § 1498(a) that either suggests or requires
the existence of any substantive or conceptual link between these rights and remedies
and those provided by the patent laws (pursuant to 35 U.S.C. §§ 154(a) and 281,
respectively). The independence of these two sets of rights and remedies results from
§ 1498(a) conditioning the availability of a remedy (and the inherent creation of a
corresponding right) only on the “invention [being] described in and covered by a patent”
(emphasis added) and the invention’s being “used or manufactured by or for the United
States without license of the owner thereof or lawful right . . . .” (emphasis added). The
“coverage” provided by a patent is, of course, defined by the scope of its claims. See,
e.g., Johnson & Johnston Assocs. v. R.E. Serv. Co., 285 F.3d 1046, 1052 (Fed. Cir.
2002) (expounding on the “fundamental principle that claims define the scope of patent
protection”); see also Sri Int'l v. Matsushita Elec. Corp., 775 F.2d 1107, 1121 (Fed. Cir.
1985) (“It is the claims that measure the invention.” (citing Aro Mfg. Co., Inc. v.
Convertible Top Replacement Co., Inc., 365 U.S. 336, 339 (1961))). Accordingly, a
§ 1498 right and remedy exist whenever an accused embodiment, used or
manufactured by or for the government, falls within the scope of the patent claims as
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properly construed.1 The “coverage” inquiry is independent of the nature and identity of
the Title 35 rights that might have been available against a private infringer under the
same circumstances.
Indeed, prior to the passage of § 1498(c), the remedy created by § 1498(a) was
broader than that available against private parties in some instances. Again, the plain
text of subsection (a) makes this clear. Whereas § 271(a) contains a territoriality
restriction, § 1498(a) contains none. Indeed, if § 1498(a) had not created a cause of
action against the government that was broader, with respect to overseas infringement,
than that available against a private infringer, then it is difficult to understand the
purpose of § 1498(c)—a subsection specifically barring § 1498 claims that “aris[e] in a
foreign country.”
In summary, patentees have the following rights and remedies: (1) a 35 U.S.C.
§ 281/271 remedy (for which neither 28 U.S.C. § 1498(a) nor any other statute provides
a waiver of sovereign immunity) for transgression of rights granted by 35 U.S.C. § 154,
and (2) a 28 U.S.C. § 1498 remedy (assertable against the federal government) for
transgressions of an inherently-defined right to be compensated for government
manufacture or use of inventions covered by patents. Because § 1498(a) created new
and independent rights and remedies, rather than merely waiving sovereign immunity
1
In a § 1498 case, determining the scope of the claims proceeds via the
same two-step analysis that occurs in a § 271(a) action, namely claim construction,
followed by a determination of whether the claims—as construed—read on the accused
device. See Lemelson v. United States, 752 F.2d 1538, 1548 (Fed. Cir. 1985)
(“Although this court has noted that a section 1498 action and a title 35 action are only
parallel and not identical, the principles of claim construction and reading claims on
accused devices and methods are the same for either type of action.”) (citations
omitted). Of course, the rights triggered when embodiments fall within the claims may
differ under § 1498 and § 271.
04-5100, -5102
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with respect to an old remedy (i.e. § 281), one cannot argue that § 1498(a) a priori
requires § 271(a) as an underlying and predicate cause of action.
In fact, not even NTP posited a relationship specifically between § 271(a) and
§ 1498, subsection (a). Rather the articulated relationship—the so-called “NTP
proposition”—is between § 271(a) and § 1498 as a whole. See NTP, 418 F.3d at 1316(holding that “direct infringement under section 271(a) is a necessary predicate for
government liability under section 1498”). Not even NTP requires us to ignore the
importance of § 1498, subsection (c), as Judge Dyk urges us to do in his concurrence.
I should explain that the per curiam opinion—which I join—does indeed state that
the government’s “liability does not exist pursuant to § 1498(a)” and that “1498(a) bars
Zoltek’s claims.” (emphasis added). However, this usage simply reflects the fact that
subsection (a) creates the cause of action. Consequently, liability—if not precluded by
subsection (c)—must arise pursuant to subsection (a). The court’s opinion today in no
way endorses the view that subsection (c) is irrelevant, although we clearly do
acknowledge the precedential effect of the NTP proposition, as articulated by the NTP
court.
Judge Dyk’s concurrence advances a second argument in support of the NTP
proposition, namely that § 1498(a) was intended to be the “exact equivalent” of
§ 271(a), citing for support Richmond Screw Anchor Co. v. United States, 275 U.S. 331,
343 (1927). A careful reading of that case reveals, however, that the Court made no
such pronouncement. Richmond Screw was a case about the assignability of patent
claims. The backdrop was Rev. Stat. § 3477, which forbade inter alia the assignment of
patent infringement claims against the United States that had not been reduced to
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judgment. Thus, under § 1498(a), as it existed prior to amendment in 1918, when a
government contractor infringed a patent, the patent owner had both an assignable right
of action against the contractor under § 271(a) and a claim against the government
pursuant to § 1498(a), with the latter being non-assignable pursuant to Rev. Stat.
§ 3477.
The 1918 amendments to § 1498 eliminated the remedy against the contractor
pursuant to § 271(a), confining the patentee to a suit against the government for his
entire compensation. See Pub. L. No. 65-182, 40 Stat. 704, 705 (1918). The salient
question was what would become of assigned claims against the contractor. Did Rev.
Stat. § 3477, which barred the assignment of claims against the United States, prevent
the assignee of a § 271(a) claim against a government contractor from pursuing a
1498(a) claim against the government pursuant to the 1918 Amendment? Troubled by
the possibility of the 1918 Act effecting an uncompensated taking under the Fifth
Amendment, the Court held that § 3477 did not apply “to the assignment of a claim
against the United States which is created by the Act of 1918 in so far as the Act
deprives the owner of the patent of a remedy against the infringing private contractor for
infringements thereof and makes the Government indemnitor for its . . . infringements.”
Richmond Screw, 275 U.S. at 346.
Contrary to Judge Dyk’s reading, the Court did not assert a blanket proposition
that § 1498(a) must be viewed as being coextensive in all respects with § 271(a). It is
true that the Court said, as quoted in his concurrence, that “[w]e must presume that
Congress in the passage of the Act of 1918 intended to secure to the owner of the
patent the exact equivalent of what it was taking away from him.” (emphasis added).
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The concurring opinion appears to assume—incorrectly—that “what it is taking away”
refers to § 271(a) as a whole, leading Judge Dyk to conclude that the Act of 1918
(constituting § 1498, as amended) is “the exact equivalent” of § 271(a). However, the
Court tells us what it was referring to by the words “what it was taking away,” and it was
not referring to § 271(a) rights globally. Rather, it was referring—narrowly—to the
assignability of rights pursuant to § 271(a). The next two sentences of the quoted
passage, which the concurrence omits, make this point clear.
We must presume that Congress in the passage of the Act of 1918
intended to secure to the owner of the patent the exact equivalent of what
it was taking away from him. It was taking away his assignable claims
against the contractor for the latter's infringement of his patent. The
assignability of such claims was an important element in their value and a
matter to be taken into account in providing for their just equivalent.
Id. at 345 (emphasis added). In its careful—and restrictive—analysis the Supreme
Court actually declined the opportunity to articulate a broad, sweeping relation between
§ 271(a) and § 1498.
The NTP court should not have articulated such a relationship, especially not
through reliance on logically flawed dicta, and I can see neither the need nor the clear
basis for us—at least in this case—to attempt to support through logic, post hoc, what
the NTP court has wrought through folly. Perhaps the NTP proposition will in the future
gain recognition as a useful expedient against the backdrop of a more thoroughly
interpreted § 1498. For now, however, I view the proposition as being no more than an
inadvertent leap of faith from the specific to the general. Accordingly, while I join the
court’s opinion—recognizing that NTP binds us—my confidence that we are reaching
the just and logical outcome stems not from it, but from the following analysis.
04-5100, -5102
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II.
I believe that this case poses two substantial questions of statutory interpretation.
First, when is a patented method “used” under § 1498(a)? Second, does an
infringement action “arise[ ] in a foreign country” under § 1498(c) if some steps of a
claimed method are practiced abroad?
I conclude that a party “uses” a method claim within § 1498(a) only when it
practices every step of the claimed method. Furthermore, an action for an infringing
use of a patented method “arises in a foreign country” under § 1498(c) whenever any
claimed step is practiced abroad. I would therefore have affirmed the trial court’s
conclusion that § 1498 bars Zoltek’s claims, even if we were not compelled to recognize
NTP as precedent.
Section 1498 provides, in relevant part:
Whenever an invention described in and covered by a patent of the United
States is used . . . by or for the United States without license of the owner
thereof or lawful right to use or manufacture the same, the owner's remedy
shall be by action against the United States in the United States Court of
Federal Claims for the recovery of his reasonable and entire
compensation for such use and manufacture. . . . For the purposes of this
section, the use . . . of an invention described in and covered by a patent
of the United States by a contractor, a subcontractor, or any person, firm,
or corporation for the Government and with the authorization or consent of
the Government, shall be construed as use . . . for the United States.
28 U.S.C. § 1498(a) (2000) (emphases added). At § 1498(c), Congress further limited
the scope of claims under § 1498(a) with a foreign country exception. That limitation
provides:
The provisions of this section shall not apply to any claim arising in a
foreign country.
28 U.S.C. § 1498(c) (2000).
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Both sections require interpretation. First, the court must determine the meaning
of a “use,” as applied to a method claim, in § 1498(a). Second, the court must
determine when a claim “arises” in a foreign country under § 1498(c). The trial court
complicated this analysis by collapsing the two steps together.2 Although the two
sections must be construed in harmony to preserve the integrity of the statutory
scheme, in the first instance the questions of “use” and “arising” are separable. I
address each issue in turn.
A.
The court’s statutory analysis must give effect to Congress’s intent when
enacting the statute. See Nat’l Labor Relations Bd. v. Lion Oil Co., 352 U.S. 282, 297
(1957) (observing that the court bears “a judicial responsibility to find that interpretation
which can most fairly be said to be embedded in the statute, in the sense of being most
harmonious with its scheme and with the general purposes that Congress manifested”);
Doyon, Ltd. v. United States, 214 F.3d 1309, 1314 (Fed. Cir. 2000). The analysis
begins with the text of the statute. Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997);
White v. Dep’t of Justice, 328 F.3d 1361, 1374 (Fed. Cir. 2003). To fully understand the
meaning of a statute, however, the court looks “not only to the particular statutory
language, but to the design of the statute as a whole and to its object and policy.”
Crandon v. United States, 494 U.S. 152, 158 (1990); accord Dunn v. Commodity
Futures Trading Comm’n, 519 U.S. 465, 478 (1997).
2
The Court of Federal Claims ultimately concluded that § 1498(c)
precluded any claim for a “use” of a patented process unless every step of the claimed
process took place “within the United States.” Zoltek, 51 Fed. Cl. at 836.
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In this case the text of § 1498(a) is silent on the test for “use” of a patented
method. The specific problem is a question of degree. In particular, one must decide
whether “use” means practicing some steps of a claimed method, or instead requires
practicing every claimed step.
At the outset I note that it is well-settled, as a matter of patent law, that an
infringing use of a patented method requires practicing every step claimed in the
method.3 See Smith & Nephew, Inc. v. Ethicon, Inc., 276 F.3d 1304, 1311 (Fed. Cir.
2001) (“Infringement arises when all of the steps of a claimed method are
performed[.]”); see also NTP, 418 F.3d at 1318 (“[A] process cannot be used ‘within’ the
United States as required by section 271(a) unless each of the steps is performed within
this country.”);4 accord Deepsouth Packing Co., Inc. v. Laitram Corp., 406 U.S. 518, 528
(1972) (“[A] combination patent [asserted under § 271(a)] protects only against the
operable assembly of the whole and not the manufacture of its parts.”). The rule applies
the long-settled principle, more commonly phrased in terms of products and the
elements of device claims, that infringement requires practicing each and every
limitation of the asserted patent claim. See V-Formation, Inc. v. Benetton Group SpA,
401 F.3d 1307, 1312 (Fed. Cir. 2005) (recognizing the black-letter law that an accused
product infringes a patent claim only if each and every limitation in the claim appears in
the accused product); Becton Dickinson & Co. v. C.R. Bard, Inc., 922 F.2d 792, 796
3
See 35 U.S.C. § 271(a)(2000) (“Except as otherwise provided in this title,
whoever without authority makes, uses, offers to sell, or sells any patented invention,
within the United States or imports into the United States any patented invention during
the term of the patent therefor, infringes the patent.”).
4
Although NTP merges the question of conduct (the use) and location
(within the United States) in this explanation of § 271(a), the court plainly adopts the
proposition that an infringing use requires practicing every step of a claimed method.
04-5100, -5102
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(Fed. Cir. 1990) (“To establish infringement of a patent, every limitation set forth in a
claim must be found in an accused product or process exactly or by a substantial
equivalent.”). “[A]ll [specified elements in a patent claim] must be regarded as material,
leaving open only the question whether an omitted part is supplied by an equivalent
device or instrumentality.” William W. Hubbell v. United States, 179 U.S. 77, 82 (1900).
Nothing in the text of § 1498 warrants a contrary interpretation of an infringing use here.
Indeed, the result is consistent with the narrow reading that a court must assign § 1498.
Because § 1498(a) waives sovereign immunity for infringement actions against
the government, a court must give the statute a strict construction. See Lane v. Pena,
518 U.S. 187, 192 (1996); United States v. Sherwood, 312 U.S. 584, 590 (1941) (citing
Schillinger v. United States, 155 U.S. 163 (1894)); Shoshone Indian Tribe v. United
States, 364 F.3d 1339, 1346 (Fed. Cir. 2004); RHI Holdings, Inc. v. United States, 142
F.3d 1459, 1461 (Fed. Cir. 1998). The waiver “must be unequivocally expressed in
statutory text” and the courts will not imply exceptions. Lane, 518 U.S. at 192 (citing
United States v. Nordic Village, Inc., 503 U.S. 30, 33-34, 37 (1992) and Irwin v. Dep’t of
Veterans Affairs, 498 U.S. 89, 95 (1990)). Consistent with these principles a court must
resolve any ambiguity in the statute “in favor of immunity.” See United States v.
Williams, 514 U.S. 527, 531 (1995). Applying these principles to § 1498(a) makes the
narrowest interpretation of an infringing “use” presumptively correct. Because I must
narrowly construe the breadth of the statutory language, the sovereign immunity
analysis confirms that the “use” of a claimed method under § 1498(a) requires practicing
every step in the claim.
04-5100, -5102
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B.
Assuming Zoltek alleges an infringing use, the question becomes where the
§ 1498(a) claim arises. Under § 1498(c), Congress curtailed its sovereign immunity
waiver to preclude § 1498(a) claims “arising in a foreign country.” The question here is
the extent of this curtailment when the government practices a patented process having
multiple steps.
In addressing this question, it is useful to imagine four factual scenarios. The
first and easiest scenario is where all of the steps of the process were performed in this
country—a situation in which there is no question that a claim, if any, must arise in the
United States. The second scenario is where all of the steps were performed abroad,
as is true in this case with the alleged infringement of the Nicalon fiber claims. (I
address these claims in the next section.) Later in the opinion, I will address the
meaning of 1498(c) in the context of the third and fourth scenarios, in which some, but
not all steps were performed abroad; in the third scenario, the last step of the process is
practiced abroad, and in the fourth scenario (as with the Tyranno fiber claims), the last
step is practiced in the United States.
1.
I shall start with the Nicalon fiber claims, in which all of the infringing steps were
performed abroad. Clearly the infringing activity is entirely outside the United States
from a geographical perspective. Therefore, it does not occur “within” the United States
as required by § 271(a), as the law has long recognized that patent infringement claims
arise where the infringing activity is consummated. See, e.g., Deepsouth, 406 U.S. at
527 (holding that final assembly abroad of a patented device cannot be an infringing
04-5100, -5102
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manufacture within the meaning of § 271(a)). But this is not a § 271(a) action, and
there is therefore no a priori reason why this court must interpret the “arising in a foreign
country” language of § 1498(c) as being antonymous with the phrase “within the United
States,” as used in § 271(a). However, based on a review of the legislative history and
a broad construction of § 1498(c)—a construction necessary to limit the scope of
Congress’ waiver of sovereign immunity under § 1498(a)—I would hold that § 1498(c)
precludes at a minimum those actions premised on infringing activity in which all steps
of the infringing process are performed abroad.
Congress enacted § 1498(c) in 1960 as part of its amendments providing an
action against the government for copyright infringement. See Pub. L. No. 86-726, 74
Stat. 855 (1960). While Congress considered various drafts, the State Department
suggested the language eventually codified at § 1498(c).5 The discussion
accompanying the suggestion indicates that the Department specifically intended the
language of subsection (c) to remedy concerns that the proposed bill would allow suit
for actions abroad, by the United States, which infringed copyrights. See H. Rep. No.
86-624, at 6-7 (1959) (reprinting June 5, 1958 letter from William B. Macomber, Jr.,
Assistant Secretary of State, to James O. Eastland, Chairman of the Senate Judiciary
Committee). Recognizing that the patent provisions of § 1498(a) had the same
ambiguity “with respect to infringements occurring abroad,” the State Department
suggested making the foreign country exception applicable to both patent and copyright
infringement. Id. at 7. The Commerce Department agreed that there was ambiguity
5
The State Department comments were directed to H.R. 8419, a
predecessor bill to H.R. 4059. H.R. 4059 was enacted on September 8, 1960. See
Pub. L. No. 86-726, 74 Stat. 855 (1960) (codified at 28 U.S.C. § 1498).
04-5100, -5102
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concerning “an act of infringement in a foreign country,” and endorsed the State
Department suggestion. See id. at 5-6 (reprinting Feb. 27, 1959 letter from Frederick
H. Mueller, Under Secretary of Commerce, to Emanuel Celler, Chairman of the House
Judiciary Committee). The foreign country exception at § 1498(c) adopts the State
Department suggestion without change. See Pub. L. No. 86-726, 74 Stat. 855 (1960)
(codified in relevant part at § 1498(c)). In short, the legislative history confirms that
Congress intended §1498(c) to foreclose actions on § 1498(a) violations taking place in,
or arising in, a foreign country.
In construing statutory language, it is prudent to be cognizant of constructions
that courts have accorded to identical language, where it occurs in other statutes. Here
I recognize that Congress took the language of § 1498(c) from identical language found
at 28 U.S.C. § 2680(k), adopted twelve years earlier.6 Normally, where Congress
borrows language from one statute in enacting another, the meaning accorded terms in
the source statute can be taken as probative of the meaning in the borrowing statute.
See Lorillard v. Pons, 434 U.S. 575, 580-81 (1978); id. at 581 (“[W]here . . . Congress
adopts a new law incorporating sections of a prior law, Congress normally can be
presumed to have had knowledge of the interpretation given to the incorporated law, at
least insofar as it affects the new statute[.]”).
6
The Federal Tort Claims Act (“FTCA”) waives sovereign immunity for
certain tort claims against the United States. See 28 U.S.C. § 1346(b). The statute
contains a foreign country exception that precludes § 1346(b) liability for “[a]ny claim
arising in a foreign country.” 28 U.S.C. § 2680(k). Congress enacted this provision in
1948. See 62 Stat. 984, 985 (1948). Twelve years later, Congress used the same
language when enacting § 1498(c). See Pub. L. No. 86-726, 74 Stat. 855 (1960)
(codified at § 1498(c)).
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Plainly, many determinants of the borrowed statute canon are satisfied here.
The statutes serve similar purposes. Both provisions limit the potential government
liability occurring abroad by curtailing Congress’s sovereign immunity waiver for tort
liability. Moreover, during Senate sub-committee hearings, the testimony made clear
that § 1498(c) was intended to provide an exclusion analogous to § 2680(k).7 In this
case, however, the meaning of § 2680(k) has limited value for interpreting § 1498(c).
This is true because the borrowed statute canon is not absolute, and it does not justify
results either inconsistent with the statutory scheme at bar, or leading to functional
absurdity in application. Consequently, for the reasons given below, I conclude that the
borrowed statute canon does not compel us to interpret §1498(c) in light of § 2680(k).
In Sosa v. Alvarez-Machain, 124 S. Ct. 2739 (2004), the Supreme Court held that
a “claim arising in a foreign country,” under § 2680(k), referred to where tortious injury is
suffered. “[T]he FTCA’s foreign country exception bars all claims based on any injury
suffered in a foreign country, regardless of where the tortious act or omission occurred.”
Id. at 2754. A patent infringement claim, however, is different in kind from the tortious
injuries contemplated by § 2680(k).
Though patent infringement claims may be viewed as species of tort claims, they
are subject to a territoriality restriction unknown in general tort law. Determining the
7
See Infringement of Copyrights: Hearings on H.R. 4059 Before the Senate
Subcommittee On Patents, Trademarks, and Copyrights of the Senate Committee on
the Judiciary, 86th Cong. 12-13 (1960) (statement of Arthur Fisher, U.S. Registrant of
Copyrights) (“[I]t was originally felt that [§ 1498(c)] was unnecessary, that a tort
committed abroad would not be subject to suit under the act. . . . [I]t is quite clear that
whatever is the situation with respect to infringements committed abroad, this act leaves
the situation in status quo; it does not affect it. [§ 1498(c)] simply says that this [section]
shall not apply to torts committed abroad[.] . . . [O]ther agencies have not felt safe in
operating under the Government Tort Claims Act, and . . . we should simply follow along
with a substantially parallel position to the patent law.”).
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liabilities of the United States for patent infringement under 28 U.S.C. § 1498(a)
requires the application of only United States law, because section 1498 conditions the
government’s liability on the existence of patent rights granted by the United States. In
contrast, the FTCA requires application of local law to determine the liability of the
United States, and under governing choice of law principles, the local law to be applied
is typically the law of the place where the injury occurred. 28 U.S.C. § 1346(b)(1)
(2000).
Allowing recovery for foreign injury where the causative acts occurred in the
United States thus raised the specter that the liability of the United States would be
governed by foreign law. No similar problem exists under the patent laws because
United States law will apply to the infringing acts occurring in the United States. Under
these circumstances, construing the “arising in” language of section 1498(c) to look to
the place of the infringing act rather than the place of the injury is perfectly consistent
with the Congressional objectives.8
Although Zoltek urges the court to read § 1498(c) as limited to claims arising
under foreign patent laws, neither Zoltek’s suggestion nor the Supreme Court’s rationale
in Sosa sensibly applies here. First, § 1498(a) plainly provides for actions concerning
“invention[s] described in and covered by a patent of the United States[.]” 28 U.S.C.
8
Our cases concerning personal jurisdiction in patent cases, which look to
“the location . . . at which the infringing activity directly impacts on the interests of the
patentee,” Beverly Hills Fan Co. v. Sovereign Corp., 21 F.3d 1558, 1571 (Fed. Cir.
1994), address where suit may be brought to enforce an existing substantive claim, but
those cases do not define the substantive claim itself. The question of whether a patent
infringement claim can be maintained at all (controlled by sections 1498(a) and 1498(c)
where the alleged infringer is the government) is analytically distinct from the personal
jurisdiction issue. Any uncertainty as to the scope of the patent law must be determined
before addressing personal jurisdiction over the claim.
04-5100, -5102
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§ 1498(a). Zoltek’s analysis would read this provision, in view of § 1498(c), as waiving
sovereign immunity to allow infringement actions under a foreign patent if the asserted
claim coincided with protections under an issued U.S. patent. I find that reading stylized
and unpersuasive. If Congress intended to allow suit against the government for
infringing a foreign patent, it would have so stated, and not limited the possible actions
by reference to parallel U.S. patents. Moreover, Zoltek’s suggestion is inconsistent with
the plain language of § 1498(c) and the structure of § 1498. It would make little sense
for Congress to curtail the sovereign immunity waiver at § 1498(c) if the underlying
action in § 1498(a) allowed suit “under foreign law.” In short, § 1498 is consistent with a
provision to vindicate a U.S. patent right, not a foreign patent right. Second, for similar
reasons, unlike § 2680(k), § 1498(a) does not require a choice of law analysis and the
Sosa consideration of place of injury is simply inapplicable here. In sum, the § 1498(a)
claim arises where the infringing activity is consummated.
This analysis precludes Zoltek’s Nicalon fiber allegations. Where all the steps of
a process patent are performed abroad, the claim “arises in a foreign country,” and the
action is barred by § 1498(c). The record evidences that the accused Nicalon fiber
products were made entirely in Japan. Zoltek’s contention that the government violated
§ 1498(a) when Lockheed’s Japanese subcontractors “used” Zoltek’s method claims to
make the Nicalon products, therefore, fits squarely within our interpretation of § 1498(c).
The same holds for the Tyranno fiber allegations, insofar as the fibers were made in
Japan. The Court of Federal Claims correctly determined that it lacked jurisdiction to
decide those allegations.
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2.
The infringement allegations concerning the Tyranno fiber products, however,
cannot be tethered to any single location. This presents the difficult question. Although
the fibers were made overseas, the record shows that the final products were made in
the United States. According to Zoltek’s infringement allegations, some of the claimed
method steps were practiced in Japan, and some in the United States. The allegedly
infringing conduct, in short, was not confined within national boundaries.
Does such conduct “arise in a foreign country” within the meaning of § 1498(c)?
As explained herein I conclude that it does, with the effect of barring Zoltek’s Tyranno
fiber product allegations. Put differently, I read “claims arising abroad” expansively, as
capturing any claim that does not arise entirely through domestic infringing conduct. In
doing so, I reject any contention that the analysis depends on where any individual step
of the claimed method was practiced.
Two longstanding interpretative principles support the conclusion that the
language at § 1498(c), limiting the sovereign immunity waiver at § 1498(a), includes
within its proscription the conduct disputed in this action. First, the courts generally
disfavor extraterritorial application of United States law. See EEOC v. Arabian Am. Oil
Co., 499 U.S. 244, 248 (1991) (“It is a long-standing principle of American law that
legislation of Congress, unless a contrary intent appears, is meant to apply only within
the territorial jurisdiction of the United States.”). The principle rests on sound policy,
including a concern to avoid conflict with other national laws, regard for international
comity, choice of law analysis, and separation of powers. Thus, in Deepsouth, the
Supreme Court expressly refused to extend the scope of § 271(a) to capture an extra-
04-5100, -5102
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territorial manufacture of an infringing device absent express guidance from Congress.
“Our patent system makes no claim to extraterritorial effect . . . and we correspondingly
reject the claims of others to such control over our markets.” 406 U.S. at 531 (citing
Brown v. Duchesne, 60 U.S. (19 How.) 183, 195 (1856) and Boesch v. Graff, 133 U.S.
697, 703 (1890)). In narrowing the reach of actions under § 1498(a), § 1498(c)
manifests a Congressional intent to limit infringement actions where conduct by or for
the government sounded abroad. Reading § 1498(c) to foreclose the action at bar is
consistent with a strict view of the extra-territoriality principle.9
Second, this view comports with the narrow construction that a court must afford
sovereign immunity waivers. A court must resolve textual ambiguity in a statutory
waiver in favor of immunity. As noted above, the waiver must be clear, and ambiguities
resolved in favor of immunity. Since the waiver must be construed narrowly, the
§ 1498(c) exclusion—serving to narrow the waiver at § 1498(a)—must be construed
broadly. Cf. Shoshone Indian, 364 F.3d at 1346. Given an expansive reading, these
principles indicate that a claim “arises in a foreign country” under § 1498(c) if, as with
the Tyranno product allegations, some steps of a claimed method are practiced
abroad.10
Although this court has never decided how § 1498(c) applies to transnational
conduct in practicing a patented method, on one occasion our predecessor court was
9
The dissent suggests that we have ignored the Fifth Amendment in
determining the proper jurisdictional scope provided by § 1498.
10
While not a basis for my interpretation of § 1498, I note that any rule that
allowed sovereign immunity, and liability, to turn on where a defendant practiced any
given step of a claimed method would simply invite strategic manipulation and prove
unworkable. Potential infringers would simply move their conduct offshore—if only for
the last step of the process—in order to avoid the specter of § 1498(a) liability.
04-5100, -5102
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confronted with allegations of infringing use of a transnational device. In Decca Ltd. v.
United States, 544 F.2d 1070 (Ct. Cl. 1976), as in this case, the government argued that
§ 1498(c) was a dispositive bar to jurisdiction. The Court of Claims, however, neither
expressly interpreted nor applied the statute.11 Instead, as explained below, it crafted a
test for determining an effective “location” of the accused, internationally disposed,
device. The Decca court then determined that if such a device could be said to be
located “within the United States,” the § 1498(a) claim for infringing use would arise
where the device was “located.” For several reasons I conclude that no comparable
test should apply to the facts in this case.
To understand why, it bears reviewing the case in detail. Decca involved the
Omega long range radio navigation system. Certain components of the system—
broadcast stations—were located overseas. The plaintiff, Decca, owned U.S. Patent
No. 2,844,816, which claimed radio navigation systems.12 It alleged that the Omega
system infringed certain device claims in the ’816 patent and that the government
violated § 1498(a) by using the Omega system. The government sought dismissal,
arguing that because some broadcast towers were located in Norway and other
overseas locations, the action arose in a foreign country and was barred by § 1498(c).
11
Indeed, although the United States briefed the issue in conjunction with a
motion to dismiss, the trial division of the Court of Claims specifically noted in its pretrial
order that “[j]urisdiction is not disputed and is hereby determined to be present.” Decca,
No. 299-70, Pre-Trial Order ¶ 1 (Ct. Cl. Mar. 20, 1975).
12
The trial court found the government liable for an infringing use of claim
11, which claimed a hyperbolic radio navigation system. See ’816 patent, col. 12, l. 63
– col. 13, l. 34 (claim 11); Decca, 544 F.2d at 1083. With minor changes in the factual
findings, the three judge panel adopted the trial court’s analysis. Decca, 544 F.2d at
1072.
04-5100, -5102
- 22 -
The court disagreed. The Court of Claims defined the “location” of the Omega
system to be “in United States territory,” implicitly reasoning that an infringing use
“within the United States,” a fortiori, does not give rise to an infringement claim “arising
in a foreign country” under § 1498(c). In sum, Decca stands for the narrow, and
collateral, proposition that under § 1498(a) the infringing use of a claimed device
“arises” where an accused device is “located.”
There are, however, no “use of device” claims at issue in this action, and Decca
is therefore inapposite. In Decca, the elements of a patented device were assembled,
one by one and in different countries, and the device was therefore made. Likewise, in
this case, the steps of a patented process were practiced, one by one and in different
countries, and the process was therefore performed. However, these cases are not
analogous, because the concept of the “use” of a device is fundamentally different from
the use of a process. Whereas utility can be extracted from a device only after it has
been “made,” utility is extracted from a process concurrent with its being “practiced.”
See NTP, 418 F.3d at 1318 (“Because a process is nothing more than the sequence of
actions of which it is comprised, the use of a process necessarily involves doing or
performing each of the steps recited. This is unlike use of a system as a whole, in which
the components are used collectively, not individually.”). As a consequence of this
failure in the analogy, Decca is neither on point nor particularly instructive.
Consequently, I would decline any invitation to extend Decca’s rationale beyond
its intended context of device claims to practicing the steps of a claimed method. In
particular, the Decca rationale for characterizing the accused Omega radio navigation
system as “located . . . within the United States” threatens to swallow the § 1498(c)
04-5100, -5102
- 23 -
limitation if applied to the process claim at bar. Decca’s infringement analysis placed
“particular emphasis on the ownership of the equipment by the United States, the
control of the equipment from the United States and on the actual beneficial use of the
system within the United States.” 544 F.2d at 1083. Relying on these observations,
both the trial court and the appellate panel concluded that the “location of the
infringement is within United States territory.” Id. at 1074. The panel relied, in
particular, on the fact that the infringing broadcast equipment “is designed and built by
the United States Government,” and that the “location of the whole . . . is where the
‘master’ station or stations are, which is in the United States of America, and where all
the stations are monitored, presently in Washington, D.C.” Id.
Were a court to extend Decca’s reasoning here, it could conclude that where the
government, or a contractor acting at the government’s direction, commissions or
directs the conduct later accused of infringing a method patent, the resulting claim for
infringing use under § 1498(a) “arises” within the United States, and not abroad, under
§ 1498(c). Applying the Decca reasoning out of its intended context of device claims,
however, would effectively read the plain language of § 1498(c) out of existence. The
statute concerns allegations of infringement against the government, and it is difficult to
imagine circumstances where such conduct would not be traceable back to the federal
government, thus completely avoiding the narrowing effect of § 1498(c) on Congress’s
waiver of sovereign immunity. In short, if the accused conduct is always traceable to
decision making in the United States, proximately causing otherwise “infringing” conduct
abroad, then such claims will never be restricted by the prohibition at § 1498(c).
04-5100, -5102
- 24 -
III.
In sum, the infringing use of a patented method under § 1498(a) consists of
practicing all steps in the claimed method. Because the injury from infringement is
intangible and not amenable to geographical reference, the cause of action cannot be
said to arise where injury is suffered, and the § 2680(k) cases are of limited value in
interpreting § 1498(c). I would thus look to where the infringing conduct occurred to
ascertain where the claim arises. In the first analysis, no particular step has primacy.
But since a court must give the sovereign immunity waiver at § 1498 narrow
construction, I must view the exclusion at § 1498(c) broadly and resolve ambiguity in
favor of immunity. For that reason, § 1498(c) precludes an action premised on
infringing use of a method claim if some steps of the method are practiced abroad.
Since Zoltek’s Tyranno product claims falls within this construction, they are barred.
Thus, the trial court properly concluded that it lacked jurisdiction over those infringement
allegations.
The dissent argues that I must be careful to construe § 1498 in a manner that
does not somehow run afoul of the Fifth Amendment. Its concern is fundamentally
misguided, however, even if one assumes, for sake of argument, that a patent is a type
of property to which Fifth Amendment protections apply. Section 1498 is a waiver of
sovereign immunity, the scope of which is completely within the discretion of
04-5100, -5102
- 25 -
Congress.13 In fact, there is no Fifth Amendment requirement that § 1498 exist at all; it
is the responsibility of Congress, and of Congress alone to decide whether, and to what
extent, it will permit the courts to help it fulfill its Constitutional obligations under the
Takings Clause.14 A court need not concern itself with whether § 1498, construed
narrowly in recognition of Congress’ sole power to waive sovereign immunity, provides
a compensation scheme that is compliant with the requirements of the Takings Clause.
It is not our place to interpret sovereign immunity waivers with an eye toward their
Takings Clause sufficiency vel non, because the Constitution does not require Congress
13
See Lynch v. United States, 292 U.S. 571, 582 (1934) (“The sovereign’s
immunity from suit exists whatever the character of the proceeding or the source of the
right sought to be enforced. . . . [including] those arising from some violation of rights
conferred upon the citizen by the Constitution . . . .” (citing Schillinger v. United States,
155 U.S. at 166, 168 (“The United States cannot be sued in their courts without their
consent, and in granting such consent Congress has an absolute discretion to specify
the cases and contingencies in which the liability of the Government is submitted to the
courts for judicial determination. Beyond the letter of such consent the courts may not
go, no matter how beneficial they may deem, or in fact might be, their possession of a
larger jurisdiction over the liabilities of the Government.”))).
14
Indeed, before the passage of the Tucker Act, ch. 359, § 1, 24 Stat. 505(1887) (codified as amended at 28 U.S.C. § 1491), Congress had sole responsibility for
paying takings claims. No judicial relief was available. See, e.g., Langford v. United
States, 101 U.S. 341, 343 (1879) (holding that notwithstanding the obligation of the
United States to pay just compensation, there existed no remedy in the courts because
“Congress has made no provision by any general law for ascertaining and paying this
just compensation”). In Lynch v. United States, the Supreme Court reaffirmed the
discretion of Congress to reserve to itself the payment of just compensation for Fifth
Amendment takings. 292 U.S. 571. In that case, the Court started by recognizing that
“[r]ights against the United States arising out of a contract with it are protected by the
Fifth Amendment.” Id. at 579. It held, however, that Congress may elect to retain the
sole power to remediate alleged “takings” of these contractual rights. See id. at 582(“When the United States creates rights in individuals against itself, it is under no
obligation to provide a remedy through the courts. It may limit the Individual to
administrative remedies. And withdrawal of all remedy, administrative as well as legal,
would not necessarily imply repudiation. So long as the contractual obligation is
recognized, Congress may direct its fulfillment without the interposition of either a court
or an administrative tribunal.” (emphasis added) (citing United States v. Babcock, 250
U.S. 328, 331 (1919) and Tutun v. United States, 270 U.S. 568, 576 (1926))).
04-5100, -5102
- 26 -
to create remedies in the courts at all. If Congress did not create a statutory scheme for
compensation as provided under § 1498, it would follow that without such a provision,
compensation would need to be obtained through legislative action.
IV.
For the aforegoing reasons, I believe that there exists an additional, and
independent, basis for reaching the decision of the court today that § 1498(a) liability for
the use of process claims requires all the steps to have been practiced in the United
States. In my view, therefore, our decision today could have been reached without
relying on NTP.
04-5100, -5102
- 27 -
United States Court of Appeals for the Federal Circuit
04-5100, -5102
ZOLTEK CORPORATION,
Plaintiff-Cross Appellant,
v.
UNITED STATES,
Defendant-Appellant.
DYK, Circuit Judge, concurring.
I join the court’s per curiam opinion but write separately to express my view that
the court correctly held in NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1316
(Fed. Cir. 2005), that the government can only be liable for infringement under section
1498(a) if the same conduct would render a private party liable for infringement under
section 271(a).1
I
Section 1498(a) provides, in pertinent part:
Whenever an invention described in and covered by a patent of the United
States is used or manufactured by or for the United States without license
of the owner thereof or lawful right to use or manufacture the same, the
owner’s remedy shall be by action against the United States in the United
States Court of Federal Claims for the recovery of his reasonable and
entire compensation for such use and manufacture.
1
Under 28 U.S.C. § 1292 (d)(2), “the nature and scope of our review are
not limited to the certified question but [rather] we are free to consider all questions
material to the trial court’s order . . . .” United States v. Connolly, 716 F.2d 882, 885
(Fed. Cir. 1983).
In my view, the purpose of section 1498(a) was to make the United States and its
contractors liable for “use” of a patented invention that would in similar circumstances
constitute direct infringement by a private party.
Patent rights are nothing more than the rights to exclude others. See 35 U.S.C.
§ 154(a) (2000) (defining the patent grant in terms of its exclusionary powers). In the
case of private parties that right is cabined to infringement occurring within the United
States. Congress could not have intended to confer broader rights against the United
States than against private parties.
The omission of the “within the United States” language (appearing in section
271(a)) from section 1498(a) does not suggest that the government’s liability for
infringement is broader than that of private parties. Section 271(a) broadly defines the
rights of patent holders against all persons who utilize the patented invention; the
language of the section is broad enough to cover the United States. Section 271(a)
does not, however, waive the government’s sovereign immunity. That was the purpose
of the original section 1498, which was designed to provide a remedy against the
government for the infringement described in section 271(a). In other words, unlike
section 271(a), section 1498(a) was not designed to define what constitutes
infringement (terminology that does not appear in section 1498(a)). Rather, it was
intended to define the “owner’s remedy” against the United States, when the United
States did not have a license or the “lawful right to use” the patented invention. The
question whether the United States had a lawful right to use the invention turned on
whether a private party would have had such a right, as the history of section 1498
confirms. The additional purpose of section 1498, as amended in 1918, was to
04-5100, -5102 2
substitute a remedy against the United States for a remedy against private parties
working for the government.
Legislation in 1910 first conferred the right to sue the United States for
infringement. Pub. L. No. 61-305, 36 Stat. 851 (1910). That legislation was simply
designed to waive the sovereign immunity of the United States for preexisting causes of
action conferred by the patent statute (what is now section 271(a)).2 As the House
committee explained, “Our only purpose is to extend the jurisdiction of [the Court of
Claims] so that it may entertain suits and award compensation to the owners of patents
in cases where the use of the invention by the United States is unauthorized and
unlawful . . . .” H.R. Rep. No. 61-1288, at 3 (1910). In considering the 1910 legislation,
Congressman Crumpacker stated that the bill “simply gives consent of the Government
to these parties to sue in the Court of Claims for this class of liabilities that it would be
liable to suit for if it were not for its sovereignty.” Congressman Currier, who introduced
the bill, agreed, explaining that the bill “does not create any liability; it simply gives a
remedy upon an existing liability.” 45 Cong. Rec. 8755, 8756 (1910).
The 1918 amendments, Pub. L. No. 65-182, 40 Stat. 704, 705 (1918), similarly
confirm that the purpose of the statute was simply to obligate the United States to the
same extent as private parties. Congress was concerned that when patented
inventions were used or manufactured by others for the United States, suit was being
2
The 1910 enactment provided: “That whenever an invention described in
and covered by a patent of the United States shall hereafter be used by the United
States without license of the owner thereof or lawful right to use the same, such owner
may recover reasonable compensation for such use by suit in the Court of Claims.”
Pub. L. No. 61-305, 36 Stat. 851.
04-5100, -5102 3
brought against government employees or contractors individually. Thus in 1918,
Congress changed the language of the 1910 statute to read:
That whenever an invention described in and covered by a patent of the
United States shall hereafter be used or manufactured by or for the United
States without license of the owner thereof or lawful right to use or
manufacture the same, such owner’s remedy shall be by suit against the
United States in the Court of Claims for the recovery of his reasonable and
entire compensation for such use and manufacture.
Id. (emphasis added).
Congress intended the 1918 amendment “to relieve the contractor entirely from
liability of every kind for the infringement of patents in manufacturing anything for the
government, and to limit the owner of the patent . . . to suit against the United States in
the Court of Claims for the recovery of his reasonable and entire compensation . . . .”3
Richmond Screw Anchor Co. v. United States, 275 U.S. 330, 343 (1928). Congress in
taking this action could hardly have intended that the substituted rights against the
United States would be broader than the original rights against the employee or
contractor. Indeed, in construing the 1910 legislation (as amended in 1918) to resolve
the question whether infringement claims against the government were assignable, the
Supreme Court expressly held that the statute
is an attempt to take away from a private citizen his lawful claim for
damage to his property by another private person which but for this act he
would have against the private wrongdoer. . . . We must presume that
Congress in the passage of the act of 1918 intended to secure to the
owner of the patent the exact equivalent of what it was taking away from
him.
3
What is now the second paragraph of section 1498(a), originally part of 35
U.S.C. § 94, was added in 1942 to further clarify that actions against United States
employees or contractors were barred and replaced by an action against the United
States. See Pub. L. No. 77-768, § 6, 56 Stat. 1013, 1014 (1942); S. Rep. No. 77-1640,
at 5 (1942).
04-5100, -5102 4
Id. at 345 (emphasis added). See also Coakwell v. United States, 372 F.2d 508, 511
(Ct. Cl. 1967) (“[Section 1498] was not intended to change the basic incidents to which
liability would attach for the purposes of seeking comprehensive compensation for the
unlicensed use of a patented invention.”).
The “exact equivalent” of section 271(a) limits liability to infringement occurring
“within the United States.”4 Accordingly, the government cannot be responsible for an
infringing “use” under section 1498(a) unless the act constitutes a directly infringing “use
within the United States” under section 271(a), as Research in Motion correctly held.
There is no need to decide the scope of section 1498(c) in this case.
II
Finally, I note that Judge Plager’s interesting discourse on takings jurisprudence
completely fails to explain how taking of a property right could possibly have occurred
here. Patent rights are creatures of federal statute.5 They do not exist in the abstract.
If, as I urge, the patent holder’s right to sue the government for infringement under
1498(a) is no broader than the rights of the patent holder against private parties under
section 271(a), then there can be no taking resulting from the refusal to recognize a
greater right against the government. And if, on the other hand, section 1498 is
construed to give the patent holder greater rights against the government than against
private parties, that right is necessarily defined by both sections 1498(a) and 1498(c)
taken together. It makes no sense to say that section 1498(a) confers rights that are
“taken” by section 1498(c). Under these circumstances there can be no taking by the
4
There is no occasion here to determine whether claims for infringement
liability under 271(f) and 271(g) may be brought in suits against the government.
5
Unlike the situation in Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984),
we deal here with a property right created by federal law.
04-5100, -5102 5
government under any interpretation of section 1498, quite apart from the barrier posed
by the Supreme Court’s decision in Schillinger v. United States, 155 U.S. 163 (1894).
There is thus no basis for a Fifth Amendment takings claim in this case even if
Schillinger were overruled.
04-5100, -5102 6
United States Court of Appeals for the Federal Circuit
04-5100, -5102
ZOLTEK CORPORATION,
Plaintiff-Cross Appellant,
v.
UNITED STATES,
Defendant-Appellant.
PLAGER, Senior Circuit Judge, dissenting.
There are two separate though related issues in this case, both matters of first
impression. One is of major significance to our understanding of the constitutional
obligations of the United States (“United States” or “Government”); both relate as well to
important rights of patent owners.1 The first issue is, may an owner of a United States
patent bring a cause of action under the Fifth Amendment to the Constitution2 against
the United States for a ‘taking’ as all other owners of property rights may; or is a patent
right somehow less of a property interest, not worthy of such constitutional protection?
Until this case, this issue has never been addressed directly by this or any other court.
The second issue, dealing with a cause of action for infringement of a United
States patent, is raised in the context of a method or process patent claim involving
1
The term “patent owner” as used throughout this opinion includes
assignees of a patent.
2
“[N]or shall private property be taken for public use, without just
compensation.” U.S. Const. amend. V.
multiple steps. When an owner of such a patent sues the United States for infringement
under the provisions of 28 U.S.C. § 1498, the statute that authorizes such suits against
the Government, does the fact that some or all of the steps are performed in a foreign
country preclude recovery? If so, is this because of some inherent limitation in
§ 1498(a), or is it because of the express statutory exception in § 1498(c) for a claim
“arising in a foreign country”? (The relevant statutory language is set out in the footnote
below.3) This is not only a new question of statutory interpretation, but because of the
way the Supreme Court and this court have understood § 1498, there are significant
constitutional overtones as well.
I. Introduction
Plaintiff invented and patented a process for manufacturing a carbon fiber sheet
product, a product that is used in making military aircraft with a low radar signature, the
so-called ‘stealth’ aircraft. Defendant, the United States, so plaintiff alleges, caused the
use of plaintiff’s patented invention in the course of having a new fighter plane, the F22,
built, and, according to plaintiff, did it without permission and in violation of plaintiff’s
rights. For this plaintiff seeks damages.
3
The relevant portion of 28 U.S.C. § 1498(a) reads:
Whenever an invention described in and covered by a patent of the United
States is used or manufactured by or for the United States without license
of the owner thereof or lawful right to use or manufacture the same, the
owner’s remedy shall be by action against the United States in the United
States Court of Federal Claims for the recovery of his reasonable and
entire compensation for such use and manufacture.
Section 1498(c) reads in its entirety: “The provisions of this section shall not apply to
any claim arising in a foreign country.”
04-5100, -5102 2
In the trial court, the United States argued that, on the undisputed facts, plaintiff
did not have a cause of action against the Government under either the statutes of the
United States or under the Constitution. The argument before the trial court, and again
on appeal, largely focused on 28 U.S.C. § 1498. That statute grants an owner of a
United States patent the right to damages if the patented invention is used or
manufactured by or for the United States without license or lawful right, and, if it applies,
it is understood that the statute both waives the sovereign’s immunity and gives the
Court of Federal Claims jurisdiction to hear the cause.
The trial court concluded that, because of the limitations imposed by § 1498(c),
plaintiff on the facts of this case could not state a claim for relief for patent infringement,
and so granted the Government partial summary judgment on that issue. On the other
hand, the trial court concluded that plaintiff does have a cause of action under the Fifth
Amendment to the Constitution for a ‘taking’ of its patent rights by the Government, a
cause of action separate and distinct from the infringement claim.4 The trial court
denied the Government summary judgment on that issue. We accepted interlocutory
appeal on both rulings.
4
The trial court and the majority opinion both treat the problem of the taking
claim as one of establishing jurisdiction in the Court of Federal Claims. This is incorrect,
since a well-pleaded complaint establishes jurisdiction; the legal issue is whether
plaintiff has stated a claim for which relief can be granted. Further, with regard to the
infringement issue, as the trial court explained, the Government’s defense under
§ 1498(c) is an affirmative defense, and the pleadings clearly establish a well-pleaded
complaint. Again, a more accurate description of the issue is whether plaintiff has
stated a claim for which relief can be granted. See Palmer v. United States, 168 F.3d
1310, 1313 (Fed. Cir. 1999) (“[A] court’s general power to adjudicate in specific areas of
substantive law . . . is a question of a court’s subject matter jurisdiction,” whereas “the
question of whether in a specific case a court is able to exercise its general power with
regard to the facts peculiar to the specific claim . . . is properly addressed as a question
of whether the plaintiff has stated a claim upon which relief can be granted.”).
04-5100, -5102 3
Although my panel colleagues cannot agree why, they do agree that (1) an
owner of a United States patent can be denied the basic protections of the Constitution,
and that (2) if any one step of a multi-step patented process occurs outside the United
States, the Government is immune from liability under § 1498 for its infringement of the
patent. They are wrong on both propositions. I would uphold the trial court’s conclusion
that the taking claim states a cause of action entitling plaintiff to a full trial of the issue,
and reverse the trial court’s erroneous conclusion regarding § 1498. Since this is the
exact opposite of what my colleagues are ruling, I respectfully dissent.
II. Overview
As there are three other opinions in this case, I begin by summarizing the
problems I have with my colleagues’ collective and separate views. First, in their per
curiam opinion, my colleagues’ analysis of the § 1498 liability issue consists of one brief
paragraph that concludes, “where, as here, not all steps of a patented process have
been performed in the United States, government liability does not exist pursuant to
section 1498(a).” Per curiam op. at 6. They base this conclusion on the erroneous
assumption that a cause of action for infringement of a patent by the United States
under § 1498 is governed by the limitations of 35 U.S.C. § 271(a), the statute that
defines infringement among private litigants, and not by the express terms of 28 U.S.C.
§ 1498(a), the exclusive statute that defines the Government’s liability in similar
circumstances.
In his concurring opinion, Judge Gajarsa acknowledges the problem with trying to
incorporate the terms of § 271(a) into § 1498(a), but he has been persuaded that we are
04-5100, -5102 4
bound by brief language on the subject found in this court’s NTP opinion, decided last
year, suggesting that incorporation is established law. Though he believes NTP is
wrong on this point, Judge Gajarsa nevertheless feels bound. Judge Dyk, on the other
hand, in his concurring opinion argues that the comment in NTP is or should be
controlling law.
Because of the way the majority in their per curiam opinion resolve the issues in
this case, applying the magical incorporation doctrine to § 1498(a), the trial court’s
decision that plaintiff’s infringement claim is barred by the express terms of subsection
(c) dealing with causes that “arise in a foreign country”—the issue that was certified to
us—is not addressed at all in the per curiam opinion, nor by Judge Dyk in his
concurrence. Judge Gajarsa, however, does address it in his concurring opinion, see
Gajarsa concurring op. at 14-24, even though, on his view of the statute as stated in the
per curiam opinion, subsection (c) has no bearing on the outcome.
Since I do not dispose of plaintiff’s infringement claim by rewriting § 1498(a) as
the majority chooses to do, I must address the subsection (c) exception. In part IV of
this opinion I will explain both why the majority’s incorporation assumption has no basis
in law, and why the assumed ‘binding effect’ of the NTP precedent is neither binding nor
precedent. I will then explain that, at least with regard to the Tyranno process, the
subsection (c) exception does not apply here. And finally I will comment on why the
majority’s view of the limitations imposed by § 1498 raises significant constitutional
concerns.
Second, regarding the takings issue, the per curiam opinion does provide
somewhat more analysis, but the analysis is on the wrong subject. According to the per
04-5100, -5102 5
curiam opinion, the takings issue in this case turns on the meaning of an 1894 Supreme
Court case, Schillinger v. United States, 155 U.S. 163 (1894). The meaning of
Schillinger is then stated in the opinion in one summary sentence, without reference to
the facts of the case or the Supreme Court’s actual holding. The remainder of the per
curiam takings discussion goes off into a lengthy discourse about why other cases
decided some years later did not sub silentio overrule Schillinger. Interesting, but
irrelevant. The key is Schillinger. As I shall explain next, Schillinger does not stand for
what the per curiam opinion tells us it does, and thus the majority’s conclusion based on
their reading of it is wrong. (The concurrences add little to the takings discussion, but
where relevant will be addressed below.)
III. The Fifth Amendment Taking Issue
The Fifth Amendment to the Constitution provides a series of protections for the
individual against governmental abuses, and concludes: “nor shall private property be
taken for public use, without just compensation.” This provision has a long and noble
history of protecting and preserving property rights against unfettered Governmental
seizure, and in so doing of protecting individual freedom and personal integrity from
undue government authority.5
5
[T]he only dependable foundation of personal liberty is the personal
economic security of private property. . . . There is no surer way to give
men the courage to be free than to insure them a competence upon which
they can rely. Men cannot be made free by laws unless they are in fact
free because no man can buy and no man can coerce them. That is why
the Englishman’s belief that his home is his castle and that the king cannot
enter it . . . [is] the very essence of the free man’s way of life.
Walter Lippmann, The Method of Freedom 101-02 (1934).
04-5100, -5102 6
It is well understood that this constitutional provision does not preclude the
Government from taking private property for public use. Rather, the Constitution
guarantees that the citizen will be fully compensated for such a taking. By requiring just
compensation the Constitution makes the property owner whole, and it also places a
constraint on government action by imposing the cost of such action on the
Government’s fisc, thus subjecting administrative action to the discipline of public
decision-making and legislative authorization. In recent years the Supreme Court has
extended the salutary protection of the Fifth Amendment to excessive governmental
regulation—the ‘regulatory taking’ issue6—in addition to the traditional takings area in
which the government actually acquires private property interests for its own use—the
‘physical taking’ issue.
In the case before us, the matter falls into the traditional acquisition area.
Plaintiff alleges that the Government took its property—its government-granted patent
right—when the Government’s subcontractors used the patented method in the
production of certain products employed in the F-22 production.7 On its face, the claim
seems straightforward. Property rights are created by law. In the ordinary course, the
law is state law. In the case of patents, the law is federal, and the patent statute
6
See, e.g., Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992).
7
Section 1498 expressly makes the United States liable for the actions of
its contractors and subcontractors:
For the purposes of this section, the use or manufacture of an invention
described in and covered by a patent of the United States by a contractor,
a subcontractor, or any person, firm, or corporation for the Government
and with the authorization or consent of the Government, shall be
construed as use or manufacture for the United States.
28 U.S.C. § 1498(a).
04-5100, -5102 7
expressly declares that the rights in an issued patent are property. 35 U.S.C. § 261(“[P]atents shall have the attributes of personal property.”); see also Consol. Fruit-Jar
Co. v. Wright, 94 U.S. 92, 96 (1876) (“A patent for an invention is as much property as a
patent for land.”).
One of the property attributes of a patent grant is the right to exclude all others,
including the Government, from “making, using, offering for sale, or selling” the patented
invention without the patentee’s consent. 35 U.S.C. § 154(a)(1); see Carl Schenck,
A.G. v. Nortron Corp., 713 F.2d 782, 786 n.3 (Fed. Cir. 1983) (“The patent right is but
the right to exclude others, the very definition of ‘property.’”). When a private party uses
without authority an invention subject to patent rights, the wrongful use is the tort of
infringement. The patentee’s judicial remedy is a suit for infringement in accordance
with Title 35, United States Code. See 35 U.S.C. §§ 271, 281. However, when the
wrongful use is committed by the United States Government (or its agents), such suit is
not brought under Title 35 but under Title 28, section 1498. (The judicial remedy
provided by 28 U.S.C. § 1498 will be discussed in Part IV, below.)
Nevertheless, when the Government chooses to acquire a patent right without
prior permission of the owner, there is a way, unrelated to infringement law and unique
to the Government, through which a patentee’s right to exclude others may be obtained.
The Government can exercise its power of eminent domain and simply seize or, as we
say, ‘take’ the property it needs for a public use. In effect, the Government forcibly
acquires a license to use the invention. However, because of the Constitution, the
Government may do this only if it pays the just compensation demanded by the Fifth
Amendment. The trial court examined the question of whether there could be such a
04-5100, -5102 8
taking independent of the terms of § 1498. The court concluded, correctly, that the
answer is yes, and that the Court of Federal Claims has jurisdiction under the Tucker
Act to entertain that claim. The Government’s challenge to that conclusion is the first
question certified to this court. See Zoltek Corp. v. United States, No. 96-166 C (Fed.
Cl. Feb. 20, 2004) (order).
On appeal, the panel majority in its per curiam opinion disagrees with the trial
court. The opinion relies on its understanding of the Schillinger case, in which,
according to the per curiam opinion, “the Supreme Court rejected an argument that a
patentee could sue the government for patent infringement as a Fifth Amendment taking
under the Tucker Act,” per curiam op. at 7, and, we are told, Schillinger remains good
law. That statement is essentially the entire explanation offered for the opinion’s slavish
reliance on Schillinger.
The problem with the majority’s statement of Schillinger is that it misconstrues
the holding in Schillinger, and equates the taking claim with an infringement action,
when as a matter of law these are two separate legal claims founded on separate legal
bases. The tort of patent infringement is statutorily based and defined, and exists at the
discretion of Congress; the right to just compensation for a taking is constitutional, it is
not a tort, and it requires no legislative blessing. Furthermore, Schillinger, on which the
majority bases its result, was not a taking case at all.
Schillinger filed a petition in the Court of Claims for damages for alleged
unauthorized use of his patent by the Government. At the time (1894), it was
understood that the jurisdiction of the Court of Claims for suits against the United States
lay in contract, but not in tort. The Court of Claims held that since Schillinger’s suit did
04-5100, -5102 9
not involve a contract, either expressed or implied, on the part of the Government for
the use of the patent, the petition was outside of the jurisdiction of that court. The
Supreme Court agreed.
The Supreme Court said “[t]hat this action is one sounding in tort is clear.” 155
U.S. at 169. The Court opined that the Court of Claims has no jurisdiction of claims
against the Government for mere torts. “Some element of contractual liability must lie at
the foundation of every action.” Id. at 167. The Court restated “the frequent ruling of
this court that cases sounding in tort are not cognizable in the court of claims.” Id. at
169. Since the cause of action was for tort, and not contract, the Court affirmed the trial
court’s dismissal of the suit.
In dissent, Justice Harlan first asked the question, “Can a suit be maintained
against the United States in the court of claims, as upon contract, for the reasonable
value of such use of the patentee’s improvement?” Id. at 173 (Harlan, J., dissenting).
He argued that the constitutional provision for just compensation placed an implied
contractual duty on the Government to pay for what it used, and that plaintiff could
waive the tort and sue on the contract.
He further noted that “[t]here is another view of the case which is independent of
mere contract.” Id. at 179 (Harlan, J., dissenting). The newly enacted Tucker Act of
1887 for the first time gave the Court of Claims jurisdiction to hear and determine “all
claims founded upon the constitution of the United States.”8 Justice Harlan observed
that “[i]f the claim here made to be compensated for the use of a patented invention is
not founded upon the constitution of the United States, it would be difficult to imagine
8
Act of March 3, 1887, 24 Stat. 505.
04-5100, -5102 10
one that would be of that character.” Id. (Harlan, J., dissenting). But the Court majority
gave scant attention to this argument; it dismissed it with the back of its hand, stating
summarily that such a broad reading could be applied to every other provision of the
Constitution as well as to every law of Congress.
What is critical to appreciate is that when Schillinger was decided in 1894, the
judicial treatment of the then-new Tucker Act provision cited by Justice Harlan was still
in its early stages of development. It was not until some years later, and the Supreme
Court’s decision in Jacobs v. United States, 290 U.S. 13 (1933), that the identity of a
separate, non-statutory, constitutional basis for takings remedies under the Fifth
Amendment emerged. Along with that understanding came the understanding that the
opening clause of the Tucker Act provides the Court of Claims (now the Court of
Federal Claims) with a separate jurisdictional basis for such actions, separate from its
other bases.
In Jacobs the Supreme Court left no doubt that a constitutional ‘taking’ claim was
not simply another version of the typical Tucker Act suit against the Government. The
narrow issue before the Court was whether plaintiff, whose Fifth Amendment taking
claim against the Government for flooding of its land had already been adjudicated in its
favor, was entitled to interest on its award. If the taking suit against the Government
was limited to traditional statutory remedies, the answer was no, as no statutory
provision for interest had been provided. The Court of Appeals had so held. The
Supreme Court reversed, and awarded interest, stating that claims for just
compensation are grounded in the Constitution itself:
The suits were based on the right to recover just compensation for
property taken by the United States for public use in the exercise of its
04-5100, -5102 11
power of eminent domain. That right was guaranteed by the Constitution.
The fact that condemnation proceedings were not instituted and that the
right was asserted in suits by the owners did not change the essential
nature of the claim. The form of the remedy did not qualify the right. It
rested upon the Fifth Amendment. Statutory recognition was not
necessary. A promise to pay was not necessary. Such a promise was
implied because of the duty to pay imposed by the amendment. The suits
were thus founded upon the Constitution of the United States.
Id. at 16 (emphasis added).
That has been the law at least since 1933. Today a cause of action under the
Fifth Amendment’s taking clause is understood to be neither a tort claim nor a contract
claim, but a separate cause arising out of the self-executing language of the Fifth
Amendment. As the Supreme Court recently explained in First English Evangelical
Lutheran Church of Glendale v. County of Los Angeles:
[G]overnment action that works a taking of property rights necessarily
implicates the “constitutional obligation to pay just compensation.” We
have recognized that a landowner is entitled to bring an action in inverse
condemnation as a result of “‘the self-executing character of the
constitutional provision with respect to compensation.’” . . . Jacobs,
moreover, does not stand alone, for the Court has frequently repeated the
view that, in the event of a taking, the compensation remedy is required by
the Constitution.
482 U.S. 304, 315-16 (1987) (citations omitted) (emphasis added).
Furthermore, there is no longer any question that the opening clause of the
amended Tucker Act covering “all claims founded upon the constitution of the United
States” provides the Court of Federal Claims with jurisdiction over such claims. How
else could Fifth Amendment actions be brought today in the Court of Federal Claims for
inverse condemnation, see, e.g., Hendler v. United States, 952 F.2d 1364 (Fed. Cir.
1991), or for regulatory takings, see, e.g., Fla. Rock Indus., Inc. v. United States, 18
F.3d 1560 (Fed. Cir. 1994)?
04-5100, -5102 12
In the case of inverse condemnation takings, such as is the case here, the
Government has not used its eminent domain power affirmatively, but is alleged by a
plaintiff to have committed by Government action a taking of private property without the
just compensation required by the Fifth Amendment. If these cases are considered to
be based on tort, the Court of Federal Claims would be without jurisdiction as it remains
well established that that court has no general tort jurisdiction. And, as in regulatory
takings cases as well, there is no element of contractual or consensual understanding
between the owner whose property is taken and the Government that takes it. If
traditional contract-based jurisdiction were required under the Tucker Act, the Court of
Federal Claims would be without jurisdiction because there is no contract.
Nevertheless, for the reasons explained by the Supreme Court in First English, the
Court of Federal Claims today under the Tucker Act hears and decides both inverse
condemnation and regulatory takings cases, and we review them on appeal. Whatever
relevance the argument in Schillinger may have had to constitutional takings back in
1894 regarding contract and tort jurisdiction in the Court of Claims, it has none now.9
In the case before us, in response to the trial court’s instructions plaintiff
amended its pleading to make clear that its Fifth Amendment takings claim was
separate and distinct from the statutory infringement claim. It is established law that the
Constitution creates its own remedy, and the Tucker Act expressly gives jurisdiction
over such constitutional claims to the Court of Federal Claims. Plaintiff has alleged a
9
Since Schillinger is not relevant to the question of whether plaintiff has a
taking claim, the per curiam’s discourse regarding whether Crozier v. Fried. Krupp
Aktiengesellschaft, 224 U.S. 290 (1912), decided eighteen years after Schillinger,
“effectively overruled Schillinger sub silentio,” per curiam op. at 7, is equally irrelevant to
the question of whether a separate cause of action exists for a constitutional taking of a
patent right.
04-5100, -5102 13
property interest in its patent, and a taking of that interest by the United States. As the
trial court correctly concluded, plaintiff’s non-frivolous allegation of a constitutional
taking claim comes within the jurisdiction of the Court of Federal Claims and entitles
plaintiff to a trial on the merits. Summary judgment in favor of the Government as the
majority dictates is wrong as a matter of law, and is a denial of plaintiff’s constitutional
rights.
In response to this explanation of established law, the per curiam opinion simply
repeats its confusion over statutory remedy and constitutional right. The answer to the
takings issue, we are told, “is simple. Unlike regulatory takings and the inverse
condemnation of real property, the ‘taking’ of a license to use a patent creates a cause
of action under § 1498.” Per curiam op. at 11. Consequently, since in the majority’s
view there is no remedy on these facts under § 1498, there is no constitutional right
either. The notion that the constitutional right to just compensation is defined by the
terms of a statute—§ 1498 in this case—is elaborated in Judge Gajarsa’s concurring
opinion, in which he opines that “it is the responsibility of Congress, and of Congress
alone to decide whether, and to what extent, it will permit the courts to help it fulfill its
Constitutional obligations under the Takings Clause.” Gajarsa concurring op. at 26.
This is a remarkable view of the Constitution. Can it be that Congress, by a
stroke of the legislative pen, may withhold the remedies and revoke the protections
given to the citizenry by the Fifth Amendment, not to mention the other Articles of the
Bill of Rights to the Constitution? Fortunately no authority exists for such a radical
doctrine of legislative preemption over constitutional right. Wisely, Congress has never
attempted to establish one, and in fact Congress in the Tucker Act expressly provides
04-5100, -5102 14
for the courts’ jurisdiction over these takings claims. To argue that Congress in
enacting § 1498 successfully cabined the Constitution is the reverse of the
understanding that the Constitution trumps legislation; it hardly seems appropriate for
this court to be the first to announce such a contrary view of constitutional doctrine.
Judge Dyk in his concurring opinion concludes that, since under his view of the
case the Government’s conduct was non-infringing (i.e., § 1498(a) was not violated
because § 271(a) was not), there was no wrong and thus no basis for a takings claim.
Dyk concurring op. at 5. As a result, we do not know Judge Dyk’s view of the takings
issue directly, though by joining the per curiam opinion he presumably shares Judge
Gajarsa’s view of § 1498, whatever it is understood to be, as the sole remedy for a
taking of a patent right.
In my view, the existence of a proper takings claim is an issue wholly
independent of whether under § 1498 there is a valid claim that triggers a remedy under
that statute. The latter is a question of statutory right granted by Congress under its
legislative authority pursuant to the Constitution; the former is a matter of constitutional
principle the vindication of which Congress has properly provided for by remedy in the
Court of Federal Claims pursuant to the provisions of the Tucker Act. The mixing and
merging of these two separate legal concepts in the manner the majority has done is
incorrect as a matter of law, and leads them to an erroneous conclusion.
IV. The Section 1498 Infringement issue
The second issue before us is whether plaintiff has stated a separate cause of
action under 28 U.S.C. § 1498(a) for damages based on a claim of unauthorized use by
04-5100, -5102 15
the Government. The answer is yes. The per curiam opinion’s decision to the contrary
is based on the proposition that there can be no Government liability under § 1498(a)
unless the same conduct, if done by a private party, would constitute infringement under
35 U.S.C. § 271(a). However, that statement, blending the two disparate sections of the
statutes into one, has no basis in the statutory language, nor is there binding precedent
of this court in support of such a proposition.
In his concurring opinion, Judge Gajarsa acknowledges the problem with the
incorporation theory, and therefore he presents an alternative argument that reaches
the same result based on an interpretation of § 1498(c). For the reasons I shall explain,
that interpretation of subsection (c) is not correct. Finally, I conclude this section with a
comment about the constitutional concerns raised by the majority’s interpretation of
§ 1498.
1.
The per curiam opinion concludes that, for the Government to be liable under
§ 1498(a) for the unauthorized use of a patented process, each claimed step must be
performed in the United States. Nothing in § 1498(a) speaks about performance in the
United States; that notion is come to only by incorporating into § 1498(a) the
requirement for infringement by a private party under 35 U.S.C. § 271(a): “whoever
without authority . . . uses . . . any patented invention, within the United States . . . ,
infringes the patent.” (Emphasis added.) Contrast that with the actual language of
§ 1498(a): “Whenever a [patented] invention is used . . . by or for the United States . . .
without lawful right . . . , the owner’s remedy shall be by action against the United
States.” Section 1498(a) simply does not contain the same territorial limitation on
04-5100, -5102 16
infringement as § 271(a). Congress obviously knew how to write limiting language
when it wanted to; its absence means that there is nothing in subsection (a) of § 1498
that requires that the infringing activity, or any part of it, take place in the United States;
that is the role played by subsection (c), discussed below.
I do agree with one premise relied on by the majority—that under either
§ 1498(a) or § 271(a) the use of a method claim in order to infringe requires that each
and every step of the claimed process be performed. There is no basis, however, for
reading into § 1498(a) the requirement that each step be performed in the United
States.
28 U.S.C. § 1498(a) makes no reference to 35 U.S.C. § 271(a), nor does
anything in § 1498 suggest any link between actions brought under Title 28 and those
brought under the authority of Title 35. Indeed, though there may be similarities
between the two, our cases make it clear that the statutes in Title 35 dealing with
infringement litigation between private parties have no direct application to infringement
litigation against the United States under 28 U.S.C. § 1498. See Motorola, Inc. v.
United States, 729 F.2d 765, 768 (Fed. Cir. 1984) (“Although a section 1498 action may
be similar to a Title 35 action, it is nonetheless only parallel and not identical.”); see also
Leesona Corp. v. United States, 599 F.2d 958, 968-69 (Ct. Cl. 1979).
The per curiam opinion, rather than interpreting the relevant statutes, relies on
what Judge Gajarsa refers to in his concurring opinion as the “NTP proposition,” to the
effect that infringement under § 271(a) is necessary for government liability under
§ 1498. See NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1316 (Fed. Cir.
2005). Judge Gajarsa points out that the evolution of this broad statement began with
04-5100, -5102 17
our predecessor court’s holding in Decca Ltd. v. United States, 640 F.2d 1156 (Ct. Cl.
1980). Decca involved a suit against the Government under § 1498, and stated that
under that section the Government can be liable only for direct infringement and not
inducement of infringement or contributory infringement. Id. at 1167. Judge Gajarsa
correctly describes how this court mischaracterized that holding in a footnote in
Motorola. See Motorola, 729 F.2d at 768 n.3. In that case, a Claims Court decision had
purported to incorporate 35 U.S.C. § 287—the patent marking statute—into § 1498 as
an additional government defense. The Federal Circuit reversed, holding that
incorporation was incorrect. The Motorola footnote, intended to support the no-
incorporation principle by illustrating the various situations in which § 1498 differs from
Title 35, at the end of the lengthy footnote managed to confuse the two in a somewhat
incoherent sentence, a sentence that is at best mere dictum.
Where I part company with Judge Gajarsa is in the next evolutionary step, in
which he concludes that the relationship between § 271(a) and § 1498(a) suddenly
became binding precedent of this court in NTP. The parties in NTP were NTP, a U.S.
corporation, the patent owner, and Research in Motion, a Canadian corporation, the
accused infringer. The suit was under Title 35. The United States was not a party to
the suit, and 28 U.S.C. § 1498 was not at issue.
In NTP, the accused system consisted of many components, one of which was a
relay component located in Canada. In determining whether the accused infringer used
the system “within the United States,” as required for infringement under § 271(a), this
04-5100, -5102 18
court looked for guidance to Decca Ltd. v. United States, 544 F.2d 1070 (Ct. Cl. 1976),
the facts of which were not unlike those of NTP.10
In Decca, the accused infringer was the Government, and the suit was under
§ 1498. The question was whether § 1498(c)—the subsection exempting claims arising
in a foreign country—precluded Government liability when some parts of the Omega
positioning system were used worldwide. The Court of Claims determined that the
Government was nevertheless liable for the alleged infringing use because control and
beneficial use of the system were not foreign-based. Decca, 544 F.2d at 1083. NTP
simply applied the same reasoning to conclude that the presence of RIM’s relay
component in Canada did not preclude a jury from finding that use of the accused
system took place in the United States, as required under § 271(a).
It is not surprising that the NTP panel found the Decca decision “instructive”
because of the similarity in fact patterns. The result in NTP could have been justified
without any formal ‘linking’ of the Decca statute and the NTP statute. The precise
‘linking’ statement in NTP is: “Although Decca was decided within the context of section
1498, which raises questions of use by the United States, the question of use within the
United States also was implicated because direct infringement under section 271(a) is a
necessary predicate for government liability under section 1498.” NTP, 418 F.3d at1316 (citing Motorola, 729 F.2d at 768 n.3). Since government liability under § 1498
was not at issue in NTP, the statement is not in any sense necessary to the holding in
NTP, and it is at best a passing comment about a statute not before the court. The
10
Note that there are two Decca decisions, one in 1976 addressing the
liability phase of the case, 544 F.2d 1070, and one in 1980 addressing the damages
phase, 640 F.2d 1156.
04-5100, -5102 19
discussion that precedes and follows the comment makes clear that the NTP court
understood this. There exists no binding precedent of this court mandating that
§ 271(a) be incorporated into § 1498(a).
Judge Dyk in his concurring opinion argues for making the dictum in NTP
controlling law. He supports his ipse dixit by piecing together bits of language from
legislative history found in the Congressional Record, language from cases on different
matters, and broad conclusions about what Congress could not have meant by what it
did not say. His position has no basis in the statutory language and, as Judge Gajarsa
cogently points out, ignores the role of § 1498(c), which is the only provision addressing
the § 1498 extraterritoriality issue. If § 1498(a) incorporates a “within the United States”
territoriality requirement, so that the Government is liable only when its infringing act
occurs in the United States, what is the purpose of § 1498(c), the 1960 amendment to
§ 1498 that exempted Government liability for claims arising in a foreign country? If the
Government’s infringing act must take place in the United States in order for the
Government to be liable under § 1498(a), then exempting Government actions that
arise in a foreign country under § 1498(c) is unnecessary. It is a court’s obligation to
make every part of a statute have meaning. The position advocated by Judge Dyk
renders § 1498(c) meaningless.
2.
Because § 1498(a), properly understood, does not incorporate the “within the
United States” requirement of § 271(a), I agree with Judge Gajarsa’s alternative view
that we must look to § 1498(c) to determine how and when the Government’s liability
under § 1498(a) is subject to geographical constraints. Section 1498(c) reads in its
04-5100, -5102 20
entirety: “The provisions of this section shall not apply to any claim arising in a foreign
country.” At the outset it is well to remember that the word “claim” in § 1498(c) means
the same as ‘claim’ in a pleading, i.e., a ‘cause of action.’ Thus we are looking for the
earmarks of a cause of action, and where it arises.
As noted above, I agree with Judge Gajarsa’s answer to the first question he
poses in Part II of his concurring opinion: a patented method is used within the meaning
of § 1498(a) only if all steps of the claimed process are performed. Gajarsa concurring
op. at 10-13. That proposition seems clear enough, and correct. It follows that in order
for a cause of action to arise under § 1498(a) for use of a method patent all steps of the
method must have been practiced by the alleged infringer.
The next question then is how does subsection (c) of § 1498 relate to patent
infringement under subsection (a), i.e., when and how does a cause of action for patent
infringement against the United States arise in a foreign country? The language of
subsection (c) does not answer the question, nor is there anything in its legislative
history that is particularly helpful. To resolve the issue before us we need not answer
the question in its broad terms—the issue before us is a narrow one. When the use of a
method patent is alleged, and we have concluded that all of the steps of the method
must be performed in order for an infringement of the patent to have occurred, what are
the requirements, with particular regard to territorial location, for the performance of
these steps? Where must the steps be performed in order for the cause of action to
arise “in a foreign country”?
Looking across the range of choices, there are three. The first and easiest case
is when each and all of the steps are completed within the United States. Here there is
04-5100, -5102 21
no foreign entanglement whatsoever, so subsection (c) has no application and the
Government is subject to the requirements of § 1498(a). That case is not before us, but
it is useful to have it in mind as we pursue the remainder of the analysis. The second
and next easiest case is when each and all of the steps are completed in a foreign
country. If the prohibition in subsection (c) is to have meaning in the context of using a
method patent, it must apply here. In the case before us, the Nicalon silicon carbide
fibers were manufactured into sheets in Japan, the record indicating that all of the steps
of the patented invention were performed there. Even though those sheets were
imported into the United States and used in the Government’s fighter aircraft, summary
judgment for the Government under § 1498 would be appropriate because this would
constitute a “claim arising in a foreign country,” and subsection (c) affords the
Government a complete defense.
The interpretive problem becomes more difficult in the third case, in which some
of the steps of the method patent are practiced abroad, and some in the United States.
That is the situation with the silicide fiber mats made from Tyranno fibers, since the
Tyranno fibers are manufactured in Japan and then processed into mats in the United
States, allegedly requiring use of one or more of the steps of the patented method in
both places. In dealing with this fact pattern, Judge Gajarsa in his concurring opinion
tells us that each, i.e., all, of the steps must be performed within the United States in
order for a cause of action to avoid the arising-in-a-foreign-country exception. Put
another way, if any one step occurs outside the United States, it is a cause of action
that arises in a foreign country, and thus is barred by § 1498(c).
04-5100, -5102 22
That cannot be the law. A cause of action does not ‘arise’ in a place just
because any one step of a multi-step process patent occurs there. Beyond that, Judge
Gajarsa’s position cannot be reconciled with the proposition that all steps must be
completed before a compensable use, i.e., infringement of a method patent, occurs
under § 1498(a).
I understand my colleague’s dilemma—there is no guidance in the statute, in the
legislative history, or in prior cases as to what to make of this provision when the steps
of a method patent have been performed both in and out of the country. But that is no
reason to abandon logical analysis in preference for a policy-rooted and result-driven
conclusion. The logic of the statute and what seems to me to be the basic policy
underlying § 1498 is that when the Government has allegedly benefited from infringing
conduct by its contractors or subcontractors, and when fairness decrees that the
Government be held responsible for its wrongs—the fundamental principle underlying
§ 1498(a)—then the fact that one or another step of a process occurred outside the
United States should not alone immunize the Government from liability.
This case involves patent claims utilizing numerous steps in the manufacture of a
specialized high-technology material of unique interest to the Government. There is no
basis in law or policy for absolving the Government from liability, now and forever, for
the wrongful conduct of its agents just because any one step of a multi-step patented
method can be found to have occurred outside the United States—that is an invitation to
strategic conduct if ever there was one. I conclude that the Government is liable under
§ 1498(a) for an unauthorized use of a method patent unless all steps of the method are
04-5100, -5102 23
practiced abroad, thus causing the claim to be one “arising in a foreign country.” See
§ 1498(c).
3.
Finally, because the per curiam opinion and at least one of the concurring
opinions devotes so much time to the cases construing § 1498, I cannot, even in the
interest of brevity, ignore the offered analyses. The forerunner of § 1498, enacted in
1910, was a straightforward piece of legislation. The 1910 statute was entitled “An Act
to Provide Additional Protection for Owners of Patents of the United States, and for
Other Purposes,” and provided that “whenever an invention described in and covered
by a patent of the United States shall hereafter be used by the United States without
license of the owner thereof or lawful right to use the same, such owner may recover
reasonable compensation for such use by suit in the court of claims.”11 A
straightforward reading of the statute would be that this is a waiver by Congress of the
Government’s sovereign immunity from the tort of patent infringement, and authority to
sue the Government for the tort in the Court of Claims.
That, however, was not the way the Supreme Court initially viewed the statute
when it came before the Court two years later in the case of Crozier v. Fried. Krupp
Aktiengesellschaft, 224 U.S. 290 (1912). Plaintiff Fried. Krupp, the patentee, sought a
permanent injunction against Wm. Crozier, the Chief of Ordnance of the United States
Army, for unauthorized use of its patented invention regarding guns and gun carriages.
The Government demurred on the grounds that the Court of Claims lacked jurisdiction
over the suit.
11
Act of June 25, 1910, ch. 423, 36 Stat. 851.
04-5100, -5102 24
The Supreme Court, after reviewing the history of infringement suits against the
Government up to and including Schillinger, turned to the new statute:
In substance, therefore, in this case, in view of the public nature of the
subjects with which the patents in question are concerned and the
undoubted authority of the United States as to such subjects to exert the
power of eminent domain, the statute, looking at the substance of things,
provides for the appropriation of a license to use the inventions, the
appropriation thus made being sanctioned by the means of compensation
for which the statute provides.
224 U.S. at 305.
Working through the prolix language, it seems that the Court chose not to read
the new statute as a simple authorization for suits for the tort of patent infringement
against the Government, but instead read the statute as an illustration of the
Government’s obligations under the Fifth Amendment. Why the Court thought the
statute was the one and not the other is not explained. Perhaps it was the long-
standing rule, which the Court had only recently reiterated in Schillinger, that the Court
of Claims did not have jurisdiction over torts. Perhaps it was discomfort with the
permanent injunction being sought against the Army’s efforts to modernize its guns—
after all Fried. Krupp was a German corporation and the drums of war, though still
distant, were beating. Perhaps it was a bow to Justice Harlan’s dissent in Schillinger
arguing for using the Fifth Amendment to allow a recovery, though if the statute
authorized a tort action, a power Congress clearly has,12 there would be no need for a
constitutional justification. Whatever the explanation, the Court in Crozier was clear:
“[W]e think there is no room for doubt that the statute makes full and adequate provision
12
See Federal Tort Claims Act, 28 U.S.C. § 1346(b).
04-5100, -5102 25
for the exercise of the power of eminent domain for which, considered in its final
analysis, it was the purpose of the statute to provide.” Id. at 307.
Does it matter which of these underlying theories—tort or constitution—supports
a plaintiff’s suit under § 1498? In some cases, it would not seem to matter. However,
despite the fact that in light of modern cases our adherence to the Crozier theory has
been called “at best anachronistic and at worst misleading,”13 in other cases the
underlying theory has had an effect on the outcome; such cases continue to recite the
taking theory. See, e.g., Hughes Aircraft Co. v. United States, 86 F.3d 1566, 1571
(Fed. Cir. 1996) (“The government’s unlicensed use of a patented invention is properly
viewed as a taking of property under the Fifth Amendment through the government’s
exercise of its power of eminent domain and the patent holder’s remedy for such use is
prescribed by 28 U.S.C. § 1498(a).”); Leesona, 599 F.2d at 964 (“When the government
has infringed, it is deemed to have ‘taken’ the patent license under an eminent domain
theory, and compensation is the just compensation required by the fifth amendment.”).
If either the majority’s incorporation theory or Judge Gajarsa’s alternative theory
prevails, it will certainly matter. To the extent § 1498 is understood to incorporate into
its provisions the entitlements provided by the Fifth Amendment’s ‘taking’ clause, any
statutory limitation providing less than just compensation would be unconstitutional.
Reading § 1498 to provide that any one step in a method, no matter how strategically
13
Thomas F. Cotter, Do Federal Uses of Intellectual Property Implicate the
Fifth Amendment?, 50 Fla. L. Rev. 529, 555 (1998) (“[T]he habit, in which both the
Federal Circuit and the Court of Federal Claims continue to indulge, of invoking the
takings mantra when discussing section 1498 claims is at best anachronistic and at
worst misleading.”).
04-5100, -5102 26
planned, will insulate the Government from its own wrongdoing is hardly consonant with
the purposes of the Fifth Amendment.
Judge Gajarsa responds to my concerns about the takings issue, and his merger
of the constitutional requirement for just compensation with § 1498, by arguing that
there is no constitutional requirement for a judicial remedy for a taking. See Gajarsa
concurring op. at 25-27 & nn.13-14. He points out that Congress could choose to
provide the remedy directly by legislation. Perhaps; at least so long as the
constitutionally required remedy is provided, that may be true.14 But Congress, since
the creation of the Court of Claims, prefers not to spend its time writing special bills;
instead, it has provided a judicial remedy for takings claims through the Tucker Act and
that remedy meets the requirements of the Constitution. If the judicial remedy is limited
to the provisions of § 1498, as my colleagues argue, then that section must also meet
the requirements of the Constitution. The argument that Congress could satisfy the
14
Lynch v. United States, 292 U.S. 571 (1934), from which Judge Gajarsa
seeks support (and which in turn relied for support on the now-overtaken Schillinger
opinion), stands on a quite different footing than an inverse condemnation case. Lynch
was an insurance contract case, in which the plaintiff’s decedent, by choosing to
contract with the Government presumably for his own benefit, had chosen to place his
rights in the hands of a sovereign who asserts that it can determine contractual rights as
it wants. Whether viewed as a contract remedy or, as Lynch tried to do, as some sort of
a taking, the plaintiff’s decedent had for good or ill put himself at risk of the
Government’s claim that it is free to change its policy. In Lynch, the case turned on
whether Congress, in revoking the insurance program, had withdrawn its consent to be
sued under existing contracts—the Court held it had not. 292 U.S. at 583. Whether the
Fifth Amendment is available as a remedy in cases involving mutual rights under
Government contracts is not at issue here. The issue here is whether the Fifth
Amendment protects the individual from the unilateral acts of the sovereign, when
inverse condemnation is called for, and it makes no constitutional sense to say that
persons who did not choose in the first instance to deal with the Government are
nevertheless at the mercy of the Government’s willingness to pay.
04-5100, -5102 27
Constitution by doing it all itself on an individual basis is academically interesting, but
hardly relevant.
*******************************************
In sum, plaintiff alleges inter alia that the Government has infringed its United
States patent under the terms of United States patent law; on appeal, the issue is
whether plaintiff has stated a cause of action under § 1498 for which relief could be
granted. I would hold plaintiff has done that, at least with regard to the silicide fiber
mats made from Tyranno fibers, and would remand the matter to the trial court for
further proceedings on this issue, as well as on the constitutional taking claim.
04-5100, -5102 28