IP Law Daily, PATENT—Fed. Cl.: Boeing dismissed as third-party defendant in patent infringement suit against U.S., (Nov 5, 2013)

By Cheryl Beise, J.D.

In a patent infringement suit brought against the United States government by the owner of three patents relating to an unmanned aircraft retrieval system, the U.S. Court of Federal Claims lacked jurisdiction to adjudicate the patent owner’s infringement claims against The Boeing Company and a subsidiary corporation (Advanced Aerospace Technologies, Inc. v. United States, October 31, 2013, Braden, S.).

In July 1999, William Randall McDonnell, filed a patent application for an unmanned aerial vehicle (“UAV”) retrieval system that resulted in the issuance of three patents: U.S. Patent Nos. 6,874,729 (the '729 patent); 7,097,137 (the '137 patent); and 8,167,242 (the '242 patent). Each patent is titled “Launch and Recovery System for Unmanned Arial Vehicles” and describes use of a hook arrangement on a UAV’s wing to capture a vertical arrestment line (the “Skyhook” feature). McDonnell subsequently assigned the patents to his solely-owned company, Advanced Aerospace Technologies, Inc. (“AATI”).

Bingen, Washington -based Insitu, Inc. (“Insitu”) makes UAVs and guidance, launch, and retrieval systems. In 2000, McDonnell claimed that he sent Insitu a copy of his then- pending patent application. Insitu allegedly modified AATI’s design and filed its own patent application for a two- part hook design, without referencing any of the AATI patents as prior art. Insitu was issued U.S. Patent No. 7,059,564 (the '564 patent).

AATI alleged that at least east six types of Insitu UAVs (Scan Eagle, Night Eagle, Insight, GeoRanger, ScanEagle Compressed Carriage, and Integrator) infringe AATI’s patents by using the Skyhook feature. In 2008, Insitu was acquired by Boeing. AATI estimates that Boeing’s annual revenues derived from the sales of AATI’s patented technology exceed $400 million.

In February 2012, AATI filed a complaint against the Government, alleging that Insitu and Boeing are parties to contracts with the United States (“Government”) to provide intelligence gathering, surveillance, and reconnaissance services using UAVs that infringe AATI’s patents. AATI also alleged that the Government “has been” and “now is using or manufacturing, without license of AATI or lawful right to use or manufacture, the invention covered by the patents-in-suit, by using or manufacturing Insitu UA[V]s, and all like systems and services.” On May 10, 2012, AATI filed a First Supplemental Complaint additionally alleging new infringement claims because of the Government, Boeing, and Insitu’s use or manufacture of certain of AATI’s patented systems for and with the authorization and consent of the Government.

Boeing and Initsu (henceforth together referred to as “Boeing”) were permitted to appear in the action as third-party defendants. Before the court was Boeing’s motion to dismiss for lack of jurisdiction.

Standing. AATI first argued that Boeing did not have standing to seek an adjudication of its motion to dismiss because all of its claims were directed against the Government. However, the U.S. Court of Appeals for the Federal Circuit has held that “any party may challenge, or the court may raise sua sponte, subject matter jurisdiction at any time. Moreover, U.S. Court of Federal Claims Rule 14(a)(6)(C)—which was in effect at the time Boeing filed its motion—provided that a “third-party defendant …. may assert against the plaintiff any defense that the [Government] has to the plaintiff’s claim.” Therefore, Boeing had standing to seek an adjudication of its motion to dismiss, the court determined.

Ripeness. AATI next argued that adjudication of Boeing’s motion to dismiss was premature because the claims asserted by AATI were dependent on discovery. AATI also advised the court that its claims against Boeing could be adjudicated in the “willful patent” case which is pending, but stayed, in the United States District Court for the Eastern District of Missouri. AATI, however, failed to cite any authority to support the argument that the court should defer ruling on the pending jurisdictional motion, because discovery might render the motion moot. Rather, the U.S. Supreme Court has held that jurisdictional issues must be decided as a threshold matter, even when a case may be resolved easily on the merits. Therefore, Boeing’s motion to dismiss was ripe for adjudication, the court decided.

Waiver of sovereign immunity. 28 U.S.C. § 1498(a) waives the U.S. government’s right to sovereign immunity and designates the U.S. Court of Federal Claims as the exclusive forum for the adjudicating patent infringement claims against the Government. Section 1498(a) provides:

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.

Boeing argued that the Government’s waiver of sovereign immunity for claims of patent infringement did not extend to claims of indirect infringement. The court disagreed.

In Zoltek Corp. v. U.S., 672 F.3d 1309 (2012) (en banc) (“Zoltek V”), the U.S. Court of Appeals for the Federal Circuit stated that: “Section 1498 makes no reference to direct infringement as it is defined in § 271(a). Indeed, so interpreting § 1498(a) is contrary to its plain language….” Instead, the Federal Circuit explained that “§ 1498(a) comes within the scope of the right to exclude granted in 35 U.S.C. § 154(a)(1). Section 154(a)(1) of the Patent Act describes a patent as “the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States.” The plain language of § 1498(a) indicates that § 1498(a) operates independently from Title 35, the court said. Thus, any act to deny a patent holder the benefit of its right to exclude is prohibited under § 1498(a), whether it be “direct” or “indirect,” the court reasoned. contrary to Boeing’s assertion, the issue of indirect infringement was not before the Federal Circuit in Zoltek V.

AATI’s Amended Complaint adequately alleged that the inventions described in the patents-in-suit were used by or for the Government, “without [a] license” or “lawful right” to do so. Therefore, the Government’s waiver of sovereign immunity extended to all of AATI’s infringement claims, the court held.

Jurisdiction over private claims. AATI alleged that Insitu and Boeing directly infringed AATI’s patents by “supplying or causing to be supplied in or from the United States all or a substantial portion of … the components of the invention claimed in the '729 patent, where such components are uncombined in whole or in part, in such a manner as to actively and intentionally induce the combination of such components outside of the United States in a manner that it knew or knows would infringe the '729 patent[,] if such combination occurred within the United States.”

AATI argued that the court had jurisdiction over AATI’s claims as to Boeing’s infringement, because the Government had authorized and consented to Boeing’s infringing conduct. ATI posited that there was no basis for limiting § 1498 to acts that violate rights set forth in § 154, because neither the Government nor its contractors had a “license” or “lawful right” to use § 1498(a) to shield them against infringement.

However, the mere allegation of exportation, without an allegation of use by the Government, did not implicate jurisdiction under 28 U.S.C. § 1498(a), according to the court. AATI’s Amended Complaint did not allege either use or manufacture by or for the Government and the court did not have jurisdiction under 28 U.S.C. § 1498(a) to adjudicate claims of patent infringement between private parties.

Therefore, paragraphs 43-44, 47-48, 54-55, 58-59, 65-66, and 69-70 of AATI’s Amended Complaint as to Insitu and Boeing were dismissed insofar as they alleged a claim for patent infringement under Title 35, and Boeing was dismissed as a third-party defendant. The court noted that Boeing, in its own capacity and as the parent of the wholly-owned subsidiary Insitu, however, could elect to intervene in the case.

The case is No. 12-85.

Attorneys: Craig S. King (Arent Fox LLP) for Advanced Aerospace Technologies, Inc. Benjamin Speake Richards (United States Department of Justice, Civil Division) for the United States. Scott Michael McCaleb (Wiley Rein, LLP) for The Boeing Company and Insitu, Inc.

Companies: Advanced Aerospace Technologies, Inc.; The Boeing Company; Insitu, Inc.

Cases: Patent