Intellectual property

During the past year, there were several noteworthy intellectual property cases in the federal courts and boards. All of these cases shared a common theme--contractors' claims that the government improperly took their intellectual property.

Statutory Prerequisites to Claim Damages--Infringement Must Occur in the United States

Outside the context of government contracts, if a patent owner believes someone is infringing on his patent, he may sue in any district court seeking compensation and injunctive relief to prevent further use. (1) If the government or a contractor working for the government is the alleged patent infringer, however, the patent owner's sole remedies are to file an administrative claim against the agency, (2) or to sue the government in the COFC, under 28 U.S.C. [section] 1498(a). In Zoltek Corp. v. United States, (3) the COFC held that the government was only liable under 28 U.S.C. [section] 1498 for patent infringements that occurred in the United States. (4)

In Zoltek, the government contracted with Lockheed Martin Corp. to design and build F-22 fighters. Lockheed, in turn, subcontracted with Nippon Carbon Co. and Ube Industries, two Japanese firms, to provide silicon carbide fiber materials. Zoltek Corp. owned a patent for silicon carbide fiber products, and alleged that these two Japanese firms infringed on Zoltek's patent by manufacturing the materials and delivering them to Lockheed Martin. Zoltek consequently sought compensation against the United States under 28 U.S.C. [section] 1498(a). (5) The government responded that 28 U.S.C. [section] 1498(c), which states that "[this] section shall not apply to any claim arising in a foreign country," precluded recovery where at least one element of the infringement occurred outside the United States. (6)

Despite the plain meaning of the statute, Zoltek argued that Congress intended the coverage of section 1498 to be co-extensive with the liability under 35 U.S.C. [section] 271, which defines what constitutes infringement when only private parties are involved. (7) If the coverage was not co-extensive, Zoltek argued, it would be without any remedy at all because section 1498(a) would bar a claim directly against Lockheed, and section 1498(c) would bar a claim against the United States. (8) Zoltek also pointed to several occasions in which Congress expressed a desire that infringement should not depend upon the identity of the infringer. The court agreed that this was Congress's expressed intent, but noted that even this express intent could not supersede the plain meaning of section 1498(c). (9)

Although the court found that section 1498(c) barred Zoltek's claim, it ordered the parties to file supplemental briefs addressing the question of whether the patent infringement constitutes a Fifth Amendment taking, and if so, whether section 1498(c) violates the requirement to provide just compensation. (10) Because the court also held in dicta that section 1498 literally only applies to manufacture or use--as opposed to sale or importation--of a patented invention, (11) the court's decision may mean that Zoltek can file suit directly against Lockheed and obtain an injunction preventing the importation of the Japanese firms' infringing products--an unpalatable outcome for the government.

Statutory Prerequisites to Claim Damages--The Statute of Limitations

Another COFC case applied the Fifth Amendment's takings clause to the Invention Secrecy Act. (12) When the U.S. Patent and Trademark Office (PTO) issues a patent, it discloses all the details necessary to replicate the underlying invention to the general public. This disclosure can have grave implications if the invention has national security implications. The Invention Secrecy Act permits the Commissioner of Patents to place a "secrecy order" on a patent application if a government agency determines that publication or disclosure of the invention might be detrimental to the national security. If the Commissioner imposes a secrecy order, the Fro seals the patent application and prevents the issuance of a patent. (13)

The story of Hornback v. United States (14) began in August 1987, when the FrO notified Hornback that it was imposing a secrecy order on a patent application that he had filed. About a month later, the FrO issued Hornback a "Notice of Allowability," which stated that the FrO would have issued him a patent but for the secrecy order. The government did not rescind the secrecy order until April 1999, thus delaying Hornback's ability to obtain a patent on his invention. Hornback sued the government in January 1999, claiming that the government took his patent without just compensation in violation of the Fifth Amendment's Takings Clause. (15) The government contended that that COFC's six-year statute of limitations barred Hornback's claim. (16)

The government contended that Hornback's claim arose in August 1987, when the FrO initially imposed the secrecy order on Hornback's patent application. In contrast, Hornback argued that the claim did not arise until October 1993 because the government improperly classified the subject matter contained in the patent application in 1987 and did not correct that improper classification until 1993. (17) The court rejected Hornback's arguments, specifically noting that "if the government as taken property and has done so in a legally improper manner, it has committed two violations of the property owner's rights ... giving rise to two separate causes of action." (18) The court went on to reason that the government's improper classification of the subject matter contained in Hornback's patent application did not affect his ability to file a claim for just compensation. (19)