Acme Worldwide Enterprises, Inc. v. United States

In the United States Court of Federal Claims
No. 17-843C
(Filed: April 11, 2018)
*************************************
ACME WORLDWIDE ENTERPRISES, *
INC., *
* RCFC 24; Intervention as a Matter of
Plaintiff, * Right; Legally Protectable Interest;
* Permissive Intervention; Common
v. * Question of Law or Fact; Undue Delay or
* Prejudice; Scope of Intervenor’s
THE UNITED STATES, * Participation
*
Defendant. *
*************************************
John P. Moran, Washington, DC, for plaintiff.
Conrad J. DeWitte, Jr., United States Department of Justice, Washington, DC, for defendant.
Milton C. Johns, Tysons, VA, for putative defendant-intervenor.
OPINION AND ORDER
SWEENEY, Judge
In this patent infringement case, plaintiff ACME Worldwide Enterprises, Inc. (“ACME”)
alleges that the United States Army (“Army”) and the United States Air Force (“Air Force”)
procured multiple training systems that included an M240H weapon recoil system capable of
simulating the look and feel of an actual weapon (“M240H weapon recoil simulator”). ACME
contends that the M240H weapon recoil simulator infringes upon United States Patent Number
8,690,575 (the “’575 patent”). Currently before the court is a motion filed by Industrial Smoke
& Mirrors, Inc. (“ISM”) to intervene in this case as a matter of right pursuant to Rule 24(a) of the
Rules of the United States Court of Federal Claims (“RCFC”) or, alternatively, for permissive
intervention pursuant to RCFC 24(b). As explained below, ISM does not meet the standards for
intervention as a matter of right because it does not appear to have a legally protectable interest
in the subject matter of this action. Nevertheless, ISM should be permitted to intervene.
Accordingly, the court denies ISM’s motion to intervene as a matter of right and grants ISM’s
alternative motion for permissive intervention.
I. BACKGROUND
A. Factual History
The Army executed contracts with Science Applications International Corporation
(“SAIC”)—now Leidos, Inc. (“Leidos”)—and CymSTAR LLC (“CymSTAR”) on January 27,
2010, and April 30, 2014, respectively, that each included a specification for M240H weapon
recoil simulators.1 SAIC and CymSTAR, in turn, each subcontracted with ISM to manufacture
the M240H weapon recoil simulators. ISM delivered the M240H weapon recoil simulators to
SAIC and CymSTAR, which then delivered the simulators to the Army at various locations
throughout the United States. Similarly, the Air Force executed a contract with Sikorsky Aircraft
Corporation (“Sikorsky”) on June 26, 2014, that included a specification for M240H weapon
recoil simulators. As part of that effort, Sikorsky subcontracted with FlightSafety International
Simulation Systems (“FlightSafety”). FlightSafety, in turn, subcontracted with ISM to
manufacture the M240H weapon recoil simulators. The simulators were ultimately delivered to
the Air Force.
All of the prime contracts incorporated Federal Acquisition Regulation (“FAR”) 52.227-1
by reference. The SAIC and Sikorsky contracts also incorporated FAR 52.244-6 by reference.
Further, the Sikorsky contract incorporated FAR 52.227-3 by reference with respect to
“[c]ommercial items” delivered to the Air Force. In turn, Sikorsky’s subcontract with
FlightSafety also incorporated FAR 52.227-1, FAR 52.227-3 with respect to “[c]ommercial
items” delivered to the Air Force, and FAR 52.244-6. FlightSafety’s lower-tier subcontract with
ISM contained FAR 52.227-1, FAR 52.244-6, and a generic, non-FAR patent infringement
indemnity clause.
B. ACME Pursues Litigation Against ISM
On November 17, 2014, ACME filed a patent infringement suit against ISM in the United
States District Court for the District of New Mexico (“New Mexico district court”).2 On March
30, 2015, the suit was dismissed for lack of personal jurisdiction after ACME conceded the issue.
See ACME Worldwide Enters., Inc. v. Indus. Smoke & Mirrors, Inc., No. CV 14-01041, 2015
WL 11181341, at *1 (D.N.M. Mar. 30, 2015) (unreported order dismissing case). In dismissing
the case, the New Mexico district court also denied ACME’s request to transfer the case to the
United States District Court for the Middle District of Florida (“Florida district court”).3 Id. at
*1-2.
1
The facts discussed in this opinion—which are undisputed—are derived from the
complaint, the parties’ submissions, and the exhibits attached to the same, as well as matters of
which the court may take judicial notice pursuant to Rule 201 of the Federal Rules of Evidence.
2
ACME is a New Mexico corporation. Its principal place of business is located in
Albuquerque, New Mexico.
3
ISM is a Florida corporation. Its principal place of business is located in Orlando,
Florida.
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On April 21, 2015, ACME filed a patent infringement suit against ISM in the Florida
district court. ISM then asserted 28 U.S.C. § 1498(a) as an affirmative defense and moved for
summary judgment. In its motion for summary judgment, ISM explained that the issue was “not
whether ISM infringed upon any patent that ACME may have (which ISM denies), but whether
ISM is immune from liability pursuant to 28 U.S.C. § 1498(a).” Pl.’s Opp’n to ISM’s Mot.
Intervene (“ACME Opp’n”) Ex. A at 13.4 ISM contended that ACME’s sole remedy was against
the federal government in the United States Court of Federal Claims (“Court of Federal Claims”)
because the accused product was manufactured exclusively for the use and benefit of the federal
government according to the federal government’s specifications. Id. at 19. ACME consented to
ISM’s motion for summary judgment, which the Florida district court granted on January 4,
2016. See generally ACME Worldwide Enters., Inc. v. Indus. Smoke & Mirrors, Inc., No. 6:15-
cv-00637, slip op. (M.D. Fla. Jan. 4, 2016).
C. Procedural History
Plaintiff filed its complaint in the instant case on June 21, 2017. After two unopposed
requests from defendant for an extension of the due date, defendant timely filed its answer on
November 3, 2017. The same day, defendant filed an unopposed motion to notify potentially
interested parties Leidos, CymSTAR, and Sikorsky of the present action. The court granted
defendant’s unopposed motion on November 6, 2017, and stated that, upon service, each prime
contractor would be “permitted to appear in this action pursuant to RCFC 14(c) without having
to file an RCFC 24 motion to intervene.” Order 2, Nov. 6, 2017. Notices were provided that
same day. None of the prime contractors appeared in this action by filing a third-party pleading
by the deadline for doing so.
On December 21, 2017—before the deadline for any of the prime contractors to appear
by filing a third-party pleading—ISM filed the instant motion to intervene pursuant to RCFC 24.
ISM states that it is the manufacturer of the accused product and that ISM may be required to
indemnify each prime contractor against liability for patent infringement due to ISM’s sale or use
of the M240H weapon recoil simulator. ISM seeks intervention as a matter of right under RCFC
24(a)(2) or, alternatively, permissive intervention under RCFC 24(b)(1)(B).5 Defendant does not
oppose ISM’s motion. However, ACME opposes ISM’s motion. On December 28, 2017, the
court vacated the deadline for the parties to file a Joint Preliminary Status Report (“JPSR”)
“pending resolution of ISM’s motion to intervene.” Order, Dec. 28, 2017. The court then
allowed ACME to file a sur-response and ISM to file a sur-reply with respect to ISM’s motion to
intervene. The motion is now fully briefed, and the court deems oral argument unnecessary.
4
Exhibit A of ACME’s opposition to ISM’s motion to intervene is a complete copy of
ISM’s motion for summary judgment in the Florida suit.
5
ISM invokes RCFC 24(b)(2) on the second page of its motion to intervene, but subpart
2 of RCFC 24(b) is not used in the RCFC. However, ISM properly refers to RCFC 24(b)(1)(B)
on the ninth and tenth pages of its motion.
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II. INTERVENTION AS A MATTER OF RIGHT
RCFC 24(a)(2) provides for intervention as a matter of right for any party that
claims an interest relating to the property or transaction that is the
subject of the action, and is so situated that disposing of the action
may as a practical matter impair or impede the movant’s ability to
protect its interest, unless existing parties adequately represent that
interest.
The United States Court of Appeals for the Federal Circuit has articulated a four-part test for
intervention as a matter of right under RCFC 24(a)(2):
First, the motion must be timely. Second, the movant must claim
some interest in the property affected by the case. This interest
must be “legally protectable”—merely economic interest will not
suffice. Third, that interest’s relationship to the litigation must be
“of such a direct and immediate character that the intervenor will
either gain or lose by the direct legal operation and effect of the
judgment.” Fourth, . . . the movant must demonstrate that said
interest is not adequately addressed by the government’s
participation.
Wolfsen Land & Cattle Co. v. Pac. Coast Fed’n of Fishermen’s Ass’ns, 695 F.3d 1310, 1315
(Fed. Cir. 2012) (citations omitted). These requirements are to be “construed in favor of
intervention.”6 Id. A failure to establish even one element of this test is fatal to an RCFC
24(a)(2) motion. See id.
A. Timeliness
The first requirement for intervention as a matter of right is that the putative intervenor
must “timely” file its motion to intervene. Id. Determining whether a motion for intervention is
timely is a discretionary matter for the trial court based on a totality of the circumstances.
NAACP v. New York, 413 U.S. 345, 366 (1973). The timeliness requirement “is meant to
protect the rights of the existing parties to an action.” 6 James Wm. Moore, Moore’s Federal
Practice § 24.21[1] (2012).
In conducting a timeliness inquiry, there are no ironclad rules
about just how celeritously, in terms of days or months, a person
must move to protect himself after he has acquired the requisite
quantum of knowledge. The passage of time is measured in
6
Intervention as a matter of right is also available, on a timely motion, to a putative
intervenor that is “given an unconditional right to intervene by a federal statute.” RCFC
24(a)(1). ISM does not assert such a right, nor is the court aware of any as applied to ISM.
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relative, not absolute, terms. Thus, what may constitute reasonably
prompt action in one situation may be unreasonably dilatory in
another. In the last analysis, the timeliness inquiry centers on how
diligently the putative intervenor has acted once he has received
actual or constructive notice of the impending threat.
R & G Mortg. Corp. v. Fed. Home Loan Mortg. Corp., 584 F.3d 1, 8 (1st Cir. 2009) (citation
omitted). Courts may consider the following factors in deciding whether a motion to intervene is
timely:
(1) the length of time during which the would-be intervenor
actually knew or reasonably should have known of his rights,
(2) whether the prejudice to the rights of the existing parties by
allowing intervention outweighs the prejudice to the would-be
intervenor by denying intervention, and
(3) the existence of unusual circumstances militating either for or
against a determination that the application is timely.
Fairholme Funds, Inc. v. United States, 681 F. App’x 945, 949 (Fed. Cir. 2017) (unpublished
decision) (internal quotation marks and alterations omitted).
The parties do not dispute that ISM’s motion is timely. ISM emphasizes that its motion
was filed within six months of ACME’s complaint and before (1) the deadline for any of the
prime contractors to intervene, (2) any dispositive motions were filed, (3) the deadline for filing
the JPSR, and (4) the beginning of formal discovery. See supra Section I.C (discussing the
procedural history of this case). ISM also posits that “there is no claim of prejudice to the
parties, nor are there any unusual circumstances in this matter that would mitigate against
intervention.” ISM Mot. to Intervene (“ISM Mot.”) 4. Further, ISM observes that, if it is
allowed to intervene, it has already filed its RCFC 14(c) pleading. See generally ISM Mot. Ex.
2. Meanwhile, although ACME avers that “ISM has failed at steps two, three, and four,” it does
not contest the timeliness of ISM’s motion. ACME Opp’n 2. Because ISM’s motion to
intervene was filed in the nascent stages of this case and there are no allegations of prejudice or
other circumstances that would weigh in favor of denying intervention, the court agrees with the
parties that ISM’s motion to intervene is timely.
B. Legally Protectable Interest
The second requirement for intervention as a matter of right is that the putative intervenor
must claim a legally protectable interest in the property that is the subject matter of the case.
Wolfsen, 695 F.3d at 1315. A legally protectable interest is “one which the substantive law
recognizes as belonging to or being owned by the [putative intervenor],” and is “more than
merely an economic interest.” Am. Mar. Transp., Inc. v. United States, 870 F.2d 1559, 1562
(Fed. Cir. 1989) (emphasis and internal quotation marks omitted). While “many of the cases in
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which a sufficient ‘interest’ has been found under [RCFC] 24(a) involve readily identifiable
interests in land or other property, . . . other types of interests have been found to justify
intervention” as well. Klamath Irrigation Dist. v. United States, 64 Fed. Cl. 328, 331 (2005).
ISM contends that, as the “manufacturer of the accused product with possible
indemnification obligations,” ISM Mot. 5, it has a legally protectable interest in the property at
issue in this case. ACME argues that the SAIC and CymSTAR contracts do not contain
indemnification obligations, and that the Sikorsky contract’s indemnification obligation is
limited to “commercial items.” ACME Opp’n 3. Next, ACME avers that ISM’s position in the
Florida suit that ISM is “immune from liability” runs counter to ISM’s position in the instant
case that it may be subject to indemnification obligations. Id. Finally, ACME declares that ISM
has no property interest in the “designs, drawings, and specifications” of the M240H weapon
recoil simulator because, as ISM indicated in its motion for summary judgment in the Florida
suit, all “right, title[,] and interest” it may have held in those designs, drawings, and
specifications was transferred to the federal government. Id. at 3 (internal quotation marks
omitted).
As an initial matter, the court agrees with ISM that ACME’s reliance on ISM’s
disclaimer of liability before the Florida district court is inapposite. In the Florida suit, ISM
relied on 28 U.S.C. § 1498(a) for the proposition that ISM was immune from liability for patent
infringement to ACME because ACME’s sole remedy was against the federal government in the
Court of Federal Claims. The issue of ISM’s potential indemnification liability to the federal
government was not at issue. Indeed, ACME did not oppose the entry of summary judgment in
the Florida suit. ISM’s position here—that it is potentially subject to indemnification obligations
should this court find that the M240 weapon recoil simulator infringes the ’575 patent—is not
inconsistent with its position in the Florida suit.
ISM relies primarily on Uusi, LLC v. United States, 110 Fed. Cl. 604 (2013), and
Honeywell International Inc. v. United States, 71 Fed. Cl. 759 (2006), in support of its position
that potential indemnification obligations are a sufficient interest to warrant intervention as a
matter of right. In Uusi, another judge of this court explained that the putative intervenors had
“identified their clear interest in the subject matter of this litigation, namely their potential
indemnification responsibilities if the Government is found liable to Plaintiffs for patent
infringement.” 110 Fed. Cl. at 611 (emphasis added). The Uusi court observed that “[t]he
interest of the third-party indemnitor is well established” in the Court of Federal Claims. Id. In
Honeywell, another judge of this court found that the putative intervenor’s “indemnification
obligation and position as a potential defendant in a separate proceeding” where patent
infringement would be at issue “more than satisfie[d]” the requirement of a legally protectable
property interest for RCFC 24(a)(2) purposes. 71 Fed. Cl. at 765.
The court agrees with ISM that a potential indemnification obligation is a legally
protectable interest sufficient to satisfy RCFC 24(a)(2). As ISM indicates, the “potential
indemnification liability resulting from the Air Force’s use of the M240H weapon recoil
[simulator] flows from Sikorsky to FlightSafety to ISM.” ISM Reply 6. However, that is not the
end of the inquiry; the potential indemnification obligation must actually exist. In Uusi, the
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federal government (1) “confirmed” that the relevant contracts required its prime contractor to
“indemnify the Government in the event of liability for patent infringement” and
(2) “represented” that lower-tier contracts could allow its prime contractor to, in turn, seek
indemnification from its subcontractor for any such infringement. 110 Fed. Cl. at 611. The Uusi
court declared that such indemnification obligations “clearly qualif[ied]” the subcontractor to
“intervene as a matter of right.” Id. at 611-12. Similarly, the Honeywell court emphasized that
the subcontractor was “contractually obligated” to indemnify the prime contractor “for any
infringement” stemming from the subcontractor’s manufacture of the accused product. 71 Fed.
Cl. at 764. The Honeywell court was able to evaluate the extent of the subcontractor’s
indemnification obligations because the subcontractor had “provided the contracts to the court
and parties to confirm the fact and scope of the indemnification.” Id. In other words, the Uusi
and Honeywell courts’ conclusions that the subcontractors’ indemnification obligations
constituted legally protectable interests for RCFC 24(a)(2) purposes were based on whether those
indemnification obligations actually existed.
As in Honeywell, the contracts have been provided to the court. Defendant attached the
relevant prime contracts to its motion to notify interested parties. All three prime contracts
incorporate FAR 52.227-1 by reference, which provides:
The Government authorizes and consents to all use and
manufacture, in performing this contract or any subcontract at any
tier, of any invention described in and covered by a United States
patent—
(1) Embodied in the structure or composition of any article
the delivery of which is accepted by the Government
under this contract; or
(2) Used in machinery, tools, or methods whose use
necessarily results from compliance by the Contractor or a
subcontractor with (i) specifications or written provisions
forming a part of this contract or (ii) specific written
instructions given by the Contracting Officer directing the
manner of performance. The entire liability to the
Government for infringement of a United States patent
shall be determined solely by the provisions of the
indemnity clause, if any, included in this contract or any
subcontract hereunder (including any lower-tier
subcontract), and the Government assumes liability for all
other infringement to the extent of the authorization and
consent hereinabove granted.
FAR 52.227-1(a) (2010). Thus, unless a contract also contained an indemnity clause, the federal
government would be wholly liable—to the exclusion of prime contractors, subcontractors, and
lower-tier subcontractors—for any patent infringement that took place pursuant to the contract.
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However, of the three prime contracts (SAIC, CymStar, and Sikorsky), it appears that
only the Sikorsky contract contains an indemnification clause with respect to patent
infringement. The patent infringement indemnity clause in the Sikorsky contract provides:
(a) The Contractor shall indemnify the Government . . . against
liability, including costs, for infringement of any United States
patent . . . arising out of the manufacture or delivery of
supplies [or] the performance of services . . . under the
contract . . . .
....
(c) This patent indemnification shall cover the following items:
Commercial items delivered to the Government under this
contract.
FAR 52.227-3; see also Def.’s Mot. Notice Interested Parties Ex. C at 5 (incorporating FAR
52.227-3, by reference, into the Sikorsky contract). Sikorsky’s subcontract with FlightSafety
contained FAR 52.227-1 and the identical patent infringement indemnity clause. In turn,
FlightSafety’s lower-tier subcontract with ISM contained FAR 52.227-1 and the following patent
infringement indemnity clause:
[ISM] warrants that the product will not infringe any U.S.
or foreign patent and [ISM] shall hold harmless and indemnify
[FlightSafety] and [Sikorsky] from and against any liabilities,
claims, costs, losses[,] and expenses arising out of or in connection
with any claim that [ISM’s] product infringes any existing patent
. . . . [ISM] shall, upon [FlightSafety’s] request, expeditiously, at
[ISM’s] own cost and expense, defend [FlightSafety] and
[Sikorsky] against any suit or action for product infringement as
set forth herein.
ISM Reply Ex. 3 at 2.
Under the Sikorsky prime contract and its progeny, ISM can only be subject to an
indemnification obligation with respect to patent infringement to the extent of Sikorsky’s
potential indemnification liability to the federal government. In other words, it appears that ISM
is only subject to a potential indemnification obligation to the extent that “commercial items”
were delivered, which raises the question of whether the M240H weapon recoil simulator is a
“commercial item.”7
7
ISM asserts that “[t]he precise scope of Sikorsky’s potential liability is not an issue
now before this Court.” ISM Reply 7. ISM is incorrect. ISM’s potential liability, which it relies
on as a legally protectable interest to justify intervention as a matter of right, is derivative of
Sikorsky’s potential liability. However, because the court finds that ISM meets the standards for
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Since it was produced exclusively for the use and benefit of the federal government
according to government specifications, the M240H weapon recoil simulator does not appear to
meet the criteria for a commercial item. See FAR 2.101 (providing the definition of a
commercial item).8 Accordingly, ISM does not appear to be subject to a potential
indemnification obligation for patent infringement with respect to the M240H weapon recoil
simulator.
Further, ISM has failed to identify any other legally protectable interest in the subject
matter of this action. For example, ISM has no legally protectable interest in the M240H weapon
recoil simulator itself because, as required, ISM transferred all right, title, and interest it may
have held in any designs, drawings, and specifications with respect to the M240H weapon recoil
simulator to the federal government. See ACME Opp’n Ex. A at 18.
ISM’s reliance on other purported legally protectable interests is unavailing. ISM posits
that, if patent infringement is found, it will be forced to either (1) discontinue selling the M240H
weapon recoil simulator, (2) negotiate with ACME for a license to continue selling the simulator,
or (3) continue selling the simulator without a license and risk additional litigation. ISM Mot. 5;
see also ISM Reply 5 (“But for a finding of infringement, ISM has every reason to anticipate
future orders . . . .”). ISM also posits that it “continually develops and markets new products to
meet its customers’ needs” and that it could “develop new products that incorporate the same
technology Acme claims infringes the ’575 patent.” ISM Mot. 7. ISM’s arguments that these
possible outcomes constitute legally protectable interests lack merit for three reasons. First, as
ACME remarks, “speculation [concerning] future contracts” does not give rise to a protectable
interest. ACME Opp’n 6. Second, to the extent that ISM expects future sales, such an
expectation is a “merely economic” interest. See Wolfsen, 695 F.3d at 1315. Finally, to the
extent that such expectations could be considered business interests and not merely economic
interests, there is no allegation that the M240H weapon recoil simulator is the “core” of ISM’s
business model—unlike in Honeywell, where the accused product “comprise[d] the core,” 71
Fed. Cl. at 764, of the putative intervenor’s business.
In short, ISM does not appear to have a legally protectable interest in the M240H weapon
recoil simulator that is at issue in this case (or in any other matter that could be impacted by this
case’s eventual outcome). Assuming, without deciding, that ISM does not have such a legally
protectable interest, ISM cannot intervene in this case as a matter of right. However, the court
need not reach a conclusion with respect to whether there is such an interest and, ultimately,
intervention as a matter of right because, as explained below, ISM meets the standards for
permissive intervention.
permissive intervention, see infra Part III, it need not reach a conclusion with respect to the
potential liability of Sikorsky to the federal government—neither of which has weighed in on the
issue—to resolve the instant motion.
8
The Sikorsky prime contract and its progeny—Sikorsky’s subcontract with
FlightSafety and FlightSafety’s lower-tier subcontract with ISM—each incorporate FAR 52.244-
6, which refers to FAR 2.101 for the definition of a commercial item.
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III. PERMISSIVE INTERVENTION
Having determined that ISM is not entitled to intervene in this action as a matter of right,
the court turns to ISM’s alternative argument that it meets the standards for permissive
intervention. RCFC 24(b)(1) provides that “[o]n timely motion, the court may permit anyone to
intervene who . . . has a claim or defense that shares with the main action a common question of
law or fact.”9 Further, the court must “consider whether the intervention will unduly delay or
prejudice the adjudication of the original parties’ rights.” RCFC 24(b)(3). Courts have “broad
discretion in deciding whether to allow permissive intervention.” Chippewa Cree Tribe of
Rocky Boy’s Reservation v. United States, 85 Fed. Cl. 646, 660 (2009).
A. Timeliness
The first requirement for permissive intervention is that a motion to intervene must be
“timely” filed. RCFC 24(b)(1). The timeliness requirement for permissive intervention “is often
applied less strictly” in comparison to the timeliness requirement for intervention as a matter of
right. R & G Mortg. Corp., 584 F.3d at 8.
The court has already determined that ISM has satisfied the timeliness requirement for
intervention as a matter of right for the reasons stated above, which need not be repeated. See
supra Section II.A. Therefore, ISM has also satisfied the less stringent timeliness requirement
for permissive intervention.
B. Common Question of Law or Fact
The second requirement for permissive intervention is that the putative intervenor must
“share[] with the main action a common question of law or fact.” RCFC 24(b)(1)(B). ACME
asserts that ISM’s disclaimer of liability in the Florida suit demonstrates that ISM fails the
commonality requirement. ACME’s invocation of the Florida suit is unavailing for the reasons
stated above. See supra Section II.B. ACME also asserts that “[b]ecause ISM is immune from
Acme’s infringement claims [either directly or indirectly], ISM does not have any defenses . . . .”
ACME Sur-Resp. 5. For the sake of argument, the court assumes (without deciding) that ACME
is correct that ISM’s potential indemnification obligations do not exist. See supra Section II.B.
However, ACME appears to conflate the standards for intervention as a matter of right and
permissive intervention. ISM need not demonstrate that it has “a direct personal or pecuniary
interest in the subject of the litigation” to succeed on its alternative request for permissive
intervention; ISM need only show that it has “an interest sufficient to support a legal claim or
defense which is founded upon that interest and which satisfies the Rule’s commonality
requirement.” Diamond v. Charles, 476 U.S. 54, 77 (1986) (alteration and internal quotation
marks omitted).
9
ISM does not allege that it has a “conditional right to intervene [pursuant to] a federal
statute,” RCFC 24(b)(1)(A), nor is the court aware of any such right as applied to ISM.
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In the instant case, it is undisputed that ISM is the manufacturer of the accused product
and that both ISM and defendant argue noninfringement and invalidity. See, e.g., Def.’s Answer
¶¶ 39-40 (asserting noninfringement and invalidity); ISM Mot. Ex. 2 ¶¶ 39-40 (same). It is of no
moment whether ISM faces an indemnification obligation for patent infringement with respect to
its manufacture of the M240H weapon recoil simulator because ISM certainly has an interest in
demonstrating noninfringement. Without such a finding, ISM may be required to cease selling
the M240H weapon recoil simulator, purchase a license for the simulator from ACME, or defend
further lawsuits. See, e.g., infra Section III.C. Therefore, ISM has satisfied the “common
question of law or fact” requirement for permissive intervention.
C. Delay or Prejudice
The third and final requirement for permissive intervention is that such intervention must
not “unduly delay or prejudice the adjudication of the original parties’ rights.” RCFC 24(b)(3).
ISM avers that “[t]here can be no claim of prejudice” because, whether or not ISM is permitted
to intervene, ACME will have to prove that the M240H weapon recoil simulator infringes the
’575 patent and that the ’575 patent is valid. ISM Mot. 10.
The court has already observed that there are no allegations of prejudice or other
circumstances that would weigh in favor of denying intervention. See supra Section II.A.
Indeed, ACME addresses only the “common question of law or fact” requirement in opposing
ISM’s alternative motion for permissive intervention. The court agrees with ISM that ACME
will not be prejudiced should ISM be allowed to intervene. If ISM is included as a party to this
action, ACME will not have to prove any additional claims or overcome any additional defenses.
See, e.g., Sec. Ins. Co. v. Schipporeit, Inc., 69 F.3d 1377, 1381 (7th Cir. 1995) (“[Plaintiff] can
hardly be said to be prejudiced by having to prove a lawsuit it chose to initiate.”). On the other
hand, if ISM is not allowed to intervene, there is the possibility that either ACME or ISM could
seek a declaratory judgment in federal district court regarding patent infringement (or lack
thereof) with respect to the M240H weapon recoil simulator. Such an action would involve the
same facts as the instant case and would thus be unnecessarily duplicative. This possibility
weighs in favor of allowing intervention. See id. (“Perhaps the most obvious benefits of
intervention in general are the efficiency and consistency that result from resolving related issues
in a single proceeding.”).
Further, because defendant does not oppose ISM’s intervention, the court assumes
(without deciding) that defendant will not be prejudiced should ISM be allowed to intervene.
Finally, the court concludes that, due to the procedural posture of this case, allowing ISM to
intervene will not delay this case’s adjudication. Therefore, ISM has satisfied the third and final
requirement for permissive intervention.
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IV. SCOPE OF ISM’S PARTICIPATION
Having determined that ISM has satisfied all of the requirements for permissive
intervention under RCFC 24(b), the court must consider what conditions, if any, to impose upon
ISM’s participation. See Forest Cty. Potawatomi Cmty. v. United States, 317 F.R.D. 6, 15
(D.D.C. 2016) (“[C]ourts may impose appropriate conditions or restrictions upon the
intervenor’s participation in the action.”). The purpose of imposing conditions upon an
intervenor’s participation is to “ensure the fair, efficacious, and prompt resolution of the
litigation.” Id.
ACME asks the court to limit ISM’s participation to “coordinating with [defendant]
concerning the two areas identified by ISM as to which it purports to have special insight:
(1) the design and operation of the accused systems, and (2) prior art.” ACME Opp’n 9. ACME
asserts that “ISM should not be able to complicate this case by filing its own discovery requests
or motions, separate and apart from [defendant].” Id.
In order to “strike the appropriate balance between ensuring the expedient resolution of
this action while preserving a space for [ISM] to articulate [its] respective positions and
interests,” Forest Cty., 317 F.R.D. at 16, the court will require ISM to coordinate its discovery
requests and responses with defendant to determine whether ISM’s and defendant’s positions
with respect to discovery may be set forth in a consolidated manner. With respect to other
matters, ISM and defendant are encouraged to utilize consolidated filings to the extent
practicable, and need not seek leave of court before doing so. Otherwise, ISM shall be entitled to
participate fully in this case as a party for all purposes. To the extent that further restrictions are
needed to expeditiously advance this proceeding, they are already contained within the RCFC.
See Klamath, 64 Fed. Cl. at 336 (“[T]he court has adequate facility to limit the issues which may
be presented in a proceeding and, in particular, to prevent extraneous issues that might prove
disruptive from being injected . . . .”). As a further measure in the interest of judicial economy,
ACME will be permitted to utilize consolidated requests and responses (both with respect to
discovery and other matters) where appropriate.
V. CONCLUSION
The court has considered all of the parties’ arguments. To the extent not discussed
herein, they are unpersuasive, without merit, or unnecessary for resolving the issues currently
before the court.
Although ISM has timely moved to intervene in this patent infringement action, ISM
does not appear to have a legally protectable interest in the subject matter of this action because
ISM’s purported indemnification obligations appear to be nonexistent. However, as the
manufacturer of the accused product, ISM shares the defenses of noninfringement and invalidity
with defendant. Further, allowing ISM to intervene will neither delay the adjudication of this
case nor prejudice the rights of any existing parties.
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Accordingly, the court DENIES ISM’s motion to intervene as a matter of right pursuant
to RCFC 24(a) and GRANTS ISM’s alternative motion for permissive intervention pursuant to
RCFC 24(b). The clerk is directed to add ISM as an intervenor. ISM is entitled to participate
fully as a party to this case subject to the conditions outlined above. Further, all future filings in
this case shall bear the following caption:
*************************************
ACME WORLDWIDE ENTERPRISES, *
INC., *
*
Plaintiff, *
*
v. *
*
THE UNITED STATES, *
No. 17-843C
*
Judge Margaret M. Sweeney
Defendant, *
*
and *
*
INDUSTRIAL SMOKE & MIRRORS, *
INC., *
*
Defendant-Intervenor. *
*************************************
The parties shall file a JPSR no later than Wednesday, May 30, 2018.
IT IS SO ORDERED.
s/ Margaret M. Sweeney
MARGARET M. SWEENEY
Judge
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