IP Law Daily, PATENT—Fed. Cir.: Mandamus denied to companies seeking dismissal of third-party defendants, (Nov 25, 2013)

By Mark Engstrom, J.D.

Uusi LLC (“Uusi”) and OLDNAR Corp. (“OLDNAR”) were not entitled to a writ of mandamus requiring the U.S. Court of Federal Claims to dismiss third-party defendants Grand Haven Stamped Products (“GHSP”) and AM General from a patent infringement lawsuit that the petitioners had asserted against the U.S. government, the U.S. Court of Appeals for the Federal Circuit has ruled (In re Uusi, LLC, November 22, 2013, Reyna, J.). Because the Court of Federal Claims had lawfully denied the petitioners’ motion to dismiss the third-party defendants, the request for mandamus was denied.

Background. Uusi and OLDNAR sued the U.S. government under 28 U.S.C. §1498(a), which granted the Court of Federal Claims exclusive jurisdiction over all patent infringement actions against the U.S. government. The plaintiffs alleged that the government purchased starter devices for High Mobility Multipurpose Wheeled Vehicles (“Humvees”) from GHSP and AM General. The starter devices allegedly infringed Uusi’s patents.

The government filed a motion under Rule 14(b) of the Rules of the United States Court of Federal Claims to notify GHSP and AM General of their interest in the case. The government noted that GHSP and AM General had an interest in the lawsuit because they: (1) manufactured the accused products and (2) contractually agreed to indemnify the government against liability for patent infringement. After the Court of Federal Claims granted the government’s request to notify GHSP and AM General, the third-party defendants filed answers. In their answers, they asserted that Uusi had licensed the patents to them. They also asserted that the doctrines of waiver, laches, equitable estoppel, and judicial estoppel barred Uusi from bringing suit. The petitioners filed a motion to dismiss AM General and GHSP for lack of subject-matter jurisdiction.

In denying that motion, the Court of Federal Claims found that: (1) AM General and GHSP had a sufficient interest in the case and (2) the court possessed the authority to allow the third-party defendants to enter an appearance and file pleadings under Court of Federal Claims Rule 14(b), which specified, in pertinent part, that the court could “notify any person with the legal capacity to sue or to be sued who is alleged to have an interest in the subject matter of the suit,” and upon issuance of notice, that person could “file an appropriate pleading setting forth the person’s interest in the subject matter of the litigation.”

Appeal. The plaintiffs’ primary argument on appeal was that the Court of Federal Claims had exceeded its jurisdiction in allowing GHSP and AM General to participate in the case—because the Contract Settlement Act of 1944, upon which Rule 14 was originally modeled, had been repealed in 2011. The Federal Circuit rejected that argument, as the trial court had.

The Federal Circuit’s reasoning was simple: the Court of Federal Claims would not enter judgment against AM General or GHSP. When no claim was directed at a third party, and the judgment on appeal did not determine the third party’s obligation to indemnify the government, the third party that participated under Rule 14 was “at most a nominal defendant.” Further, the grant of third-party status under Rule 14 did not affect the jurisdiction of the Court of Federal Claims.

Uusi and OLDNAR argued that, absent a statute like the Contract Settlement Act, the government and the claimant were the only parties that could appear before the Court of Federal Claims. That argument went too far, in the court’s view. Federal Circuit cases recognized “at least some third-party participation based on the Court of Federal Claims’ own rulemaking authority,” the court observed, “which itself [wa]s supported by statute.

The third parties in this case voluntarily appeared to offer additional evidence on their own behalf and to advance legal contentions that they deemed appropriate for the protection of their interests. Neither GHSP nor AM General asserted claims against Uusi and OLDNAR, and the case did not have any “impleader-type claims” that had to be independently supported by subject-matter jurisdiction. For those reasons, the pleadings did not raise claims that exceeded the jurisdiction of the Court of Federal Claims.

Uusi argued in the alternative that the answers of GHSP and AM General were insufficient to establish their interest in the suit. According to Uusi, the third-party defendants failed to: (1) identify any contracts under which the accused products were sold or (2) admit to any indemnification obligation with respect to government liability. Nevertheless, that argument failed to consider the fact that the government’s Rule 14 motion had already demonstrated the contractual obligations of the third-party defendants. Because the Federal Circuit could not say that the trial court had clearly abused its discretion in finding that the answers of the third-party defendants were sufficient to demonstrate their interest in the case, Uusi’s argument in the alternative was unavailing.

The case is No. 2013-155.

Attorneys: Timothy F. Noelker (Thompson Coburn LLP) for UUSI, LLC and Oldnar Corp. William Carl Bergmann (Baker & Hostetler LLP) for GHSP, Inc. Robert K. Huffman (Akin, Gump, Strauss, Hauer & Feld, LLP) for AM General, LLC. Conrad Joseph DeWitte Jr. for the U.S. government.

Companies: Uusi, LLC; OLDNAR Corp.; GHSP, Inc.; AM General, LLC

Cases: Patent FedCir