MEMORANDUM OPINION AND ORDER REGARDING THE SCOPE OF SOVEREIGN IMMUNITY FOR PATENT INFRINGEMENT UNDER 28 U.S.C. § 1498(a).
Braden, Judge.
In
Zoltek Corp. v. United States,
672 F.3d 1309 (2012)
(en
banc)
(“Zoltek V”),
the United States Court of Appeals for the Federal Circuit
sua sponte
revisited an earlier panel decision and held that 28 U.S.C. § 1498(a):
[Cjreates an independent cause of action for direct infringement by the Government or its contractors that is not dependent on 35 U.S.C. § 271(a). Direct infringement under § 1498(a) comes within the scope of the right to exclude granted in 35 U.S.C. § 154(a)(1). Thus, under § 1498(a)[,] the Government has waived its sovereign immunity for direct infringement, which extends[,] not only to acts previously recognized as being defined by § 271(a)[,] but also acts covered under § 271(g) due to unlawful use or manufacture____ [As such,] when the product of a patented process is used in, or imported into, the United States by or for the United States, there is direct infringement for the purposes of a § 1498[ (a) ] action.
Id.
at 1326-27.
Our appellate court, however, did not “decide the issue of indirect infringement, under
§ 271(b), (c), and (f).”
Id.
at 1327. According to The Boeing Company (“Boeing”), that issue is presented in this case. The court disagrees.
I. RELEVANT FACTS.
Sometime in 1997, William Randall McDonnell, “a member of the McDonnell family of aviation pioneers who founded McDonnell Aircraft,” “conducted research directed to effective launch and recovery of unmanned aerial vehicles (“UAVs”)” using a hook arrangement on a UAVs wing to capture a vertical arrestment line.
Am. Compl. ¶¶ 2, 3, 20. In October 1997, Mr. McDonnell’s UAV-retrieval system was tested successfully. Am. Compl. ¶ 21. In March 1999, a modified version of this retrieval system, using a single vertical arrestment line, also was tested successfully. Am. Compl. ¶ 22.
In July 1999, Mr. McDonnell filed a U.S. patent application for the above described 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”). Am. Compl. ¶ 25. Each patent had the title: “Launch and Recovery System for Unmanned Arial Vehicles.” Am. Compl. at 1. The invention described in these patents “solved a key technical challenge in the successful deployment of UAVs without use of runways.” Am. Compl. ¶ 23. Although other runway-free retrieval devices were known at that time, such as nets, there was no system that “reliably captured the UAV without damage.” Am. Compl. ¶ 23. Subsequently, Mr. McDonnell assigned all “rights, title, and interest” in these patents to Advanced Aerospace Technologies, Inc. (“AATI” or “Plaintiff’), of which Mr. McDonnell is the President and sole owner. Am. Compl. ¶¶ 2, 5.
Insita, Inc. (“Insita”) is a corporation “in the business of making ... UAVs and guidance, launch and retrieval systems” in Bin-gen, Washington. Am. Compl. ¶ 14. In 1999, after learning that a predecessor entity to Insita was “encountering difficulties in reliably retrieving [its] straight wing UAV” and after entering into a nondisclosure agreement with AATI, Mr. McDonnell suggested to Insitu’s founder and Chief Technology Officer that Insita switch to a swept
shaped wing, instead of the straight wing that was being used. Am. Compl. ¶ 26. In late 2000, Mr. McDonnell learned that Insitu “was still encountering difficulties with their hook engaging the recovery line that were so significant that they threatened the continued viability of the company.” Am. Compl. ¶ 27. “In response, Mr. McDonnell sent Insitu a copy of his then-pending patent application which disclosed the use of a special hook design for catching UAVs.” Am. Compl. ¶ 27. After reviewing Mr. McDonnell’s patent application Insitu “modified its own design to include a two part capture mechanism, and filed its own patent application for a two-part hook design, which resulted in Insitu’s U.S. Patent No. 7,059,564 (“the ’564 patent”).” Am. Compl. ¶27. In sum, Insitu did not reference the ’729 patent, 137 patent, or the ’242 patent as prior art, but instead cited the application as a “foreign reference,” without attribution to Mr. McDonnell or AATI, even after these patents issued, and miseited the published application. Am. Compl. ¶ 29. Insitu, however, proceeded to infringe AATI’s patents “in willful disregard for AATI’s legal rights.” Am. Compl. ¶ 33. And, Insitu “improperly induced” AATI to delay the enforcement of the 137 patent, ’242 patent, and ’729 patent in 2008 for a 120 day period, during which time Insitu was acquired by Boeing.
Am. Compl. ¶36. Nevertheless, AATI advised Boeing in writing of Insitu’s infringement prior to Boeing’s acquisition of Insitu. Am. Compl. ¶ 37.
In addition, the Amended Complaint alleges that Boeing and its subsidiary Insitu are parties to contracts with the United States (“Government”) to provide “intelligence gathering, surveillance, and reconnaissance ... services[,] which included no hardware deliveries of [unmanned aircraft systems] and no Government specifications or instructions
requiring
infringement of the AATI patents.” Am. Compl. ¶ 9 (emphasis added). At least six types of Insitu UAVs,
i.e.,
the Scan Eagle,
Night Eagle, Insight, GeoRanger, ScanEagle Compressed Carriage, and Integrator, are alleged to infringe AATI’s patents by using the Skyhook feature. Am. Compl. ¶ 14. AATI estimates, based on public sources, that Boeing’s annual revenues derived from the sales of AATI’s patented technology exceed $400 million. Am. Compl. ¶ 3 8.
II. PROCEDURAL HISTORY.
On February 8, 2012, AATI filed a complaint in the United States Court of Federal Claims, alleging that the Government infringed the ’729 and ’137 patents, that subsequently was amended on May 10, 2012 as a First Supplemental Complaint (“Am. Compl.”).
The Amended Complaint included six counts. Count I alleged that Insitu and Boeing’s use or manufacture of UAVs infringed the ’729 patent, “with the [authorization and [c]onsent of the United States.” Am. Compl. ¶¶ 39-49.
Count II alleged that Insitu and Boeing used or manufactured UAVs that infringed the T37 patent “with the [authorization and [c]onsent of the United States.” Am. Compl. ¶¶ 50-60.
Count III alleged that Insitu and Boeing used or manufactured UAVs that infringed the ’242 patent “with the [authorization and
[cjonsent of the United States.” Am. Compl. ¶¶ 61-70.
Count IV 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 described in and covered by the ’729 patent, by using or manufacturing Insitu UA[V]s, and all like systems and services.” Am. Compl. ¶¶ 72-75.
Count V 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 described in and covered by the T37 patent, by using or manufacturing Insitu UA[V]s, and all like systems and services.” Am. Compl. ¶¶ 76-79.
Count VI alleged that the United States “has been” and “now is using or manufacturing, without license of AATI or lawful right to use or manufacture, the invention described in and covered by the ’242 patent, by using or manufacturing Insitu UA[V]s, and all like systems and services.” Am. Compl. ¶¶ 80-83.
On April 6, 2012, the Government filed a Motion To Notify Interested Party Boeing. The court granted that motion on April 23, 2012. On April 27, 2012, that Notice was served on Boeing, in its corporate capacity and as the corporate entity that acquired Insitu in 2008. On May 1, 2012, AATI filed an unopposed Motion To Supplement Pleadings. On May 2, 2012, the court granted that motion.
On May 10, 2012, AATI filed a First Supplemental Complaint alleging, in addition to the four claims alleged in the February 8, 2012 Complaint, new claims regarding infringement of the ’242 patent, 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. Am. Compl. ¶¶ 61-71, 80-83. On June 8, 2012, the Government filed an Answer. On June 11, 2012, Insitu and Boeing filed an Answer, and each company filed a Rule 7.1 Disclosure Statement.
On July 30, 2012, the parties filed a Joint Preliminary Status Report and a Joint Motion For Protective Order. On August 1, 2012, the court issued a Protective Order. On August 8, 2012, the court issued a Scheduling Order. On September 20, 2012, the parties filed a Joint Motion For Protective Order Concerning E-Discovery. To date, the court has declined to rule on that Motion, as premature.
On October 15, 2012, Boeing filed a Motion To Dismiss, Pursuant to Rule 12(b)(1) (“TPD Mot.”). On October 17, 2012, the court held a telephone status conference, wherein the Government was asked to inform the court of its position on the jurisdictional issues presented by Boeing’s October 15, 2012 Motion To Dismiss. On October 19, 2012, the parties entered a Stipulation regarding the contracts relevant to this action.
On November 16, 2012, AATI filed an Opposition To Boeing’s October 15, 2012 Motion to Dismiss (“P1.0pp.”). On November 18, 2012, the Government filed a Motion For Leave To File a brief providing its “views” on the jurisdictional issue raised by Boeing’s October 15, 2012 Motion to Dismiss (“Gov’t Resp.”). On December 3, 2012, Boeing filed a Reply (“T-PD Reply”).
On May 22, 2013, the court convened an oral argument on Boeing’s October 15, 2012 Motion To Dismiss (5/22/13 TR at 1-81). On June 12, 2013, the Government filed a Supplemental Brief (“Gov’t Supp. Br.”). On June 26, 2013, Boeing filed a Response (“TDP Resp.”). And, on June 26, 2013 AATI also filed a Response (“AATI Resp.”).
III. DISCUSSION.
A. Whether The Third-Party Defendants Have Standing To Seek An Adjudication Of The October 15, 2012 Motion To Dismiss.
AATI asserts that Boeing does not have standing to seek an adjudication of the October 15, 2012 Motion To Dismiss, because all claims alleged in the February 8, 2012 Complaint and the May 10, 2012 Supplemental Complaint are directed against the Government. PI. Opp. at 19 (citing
United States v. Metro. St. Louis Sewer Dist.,
952
F.2d 1040, 1043 (8th Cir.1992) (“[A] party may assert a third party’s rights only if,
inter alia,
the third party is unable to assert its own rights[.]”)).
Metro. St. Louis Sewer,
however, is inapposite, as it concerned an intervenors’ standing to raise a waivable affirmative defense, not to contest the court’s jurisdiction.
Id.
More importantly, as the United States Court of Appeals for the Federal Circuit has held, “any party may challenge, or the court may raise
sua sponte,
subject matter jurisdiction at any time.”
Rick’s Mushroom Serv., Inc. v. United States,
521 F.3d 1338, 1346 (Fed.Cir.2008);
see also
RCFC 14(a)(6)(C) (providing that the “third-party defendant____may assert against the plaintiff any defense that the [Government] has to the plaintiffs claim”).
For this reason, the court has determined that Boeing has standing to seek an adjudication of the October 15, 2012 Motion To Dismiss.
B. Whether The Third-Party Defendants’ October 15, 2012 Motion To Dismiss Is Ripe.
Next, AATI argues that adjudication of Boeing’s October 15, 2012 Motion To Dismiss is premature, because the claims asserted in the May 10, 2012 Amended Complaint are dependent on discovery. PI. Opp. at 3-5. AATI advises the court that, if there is “no authorization and consent in respect to contracts where AATI asserts [35 U.S.C.] § 271(f) infringement,” the court will have no need to address jurisdiction because all such claims could be adjudicated in the “willful patent” ease which is pending, but stayed, in the United States District Court for the Eastern District of Missouri. PL Opp. at 4.
Boeing responds that dismissal is not premature, because AATI “chose to assert indirect infringement claims under section 271(f)” in the February 8, 2012 Complaint and May 10, 2012 Amended Complaint so that the court
“must
assess whether jurisdiction exists.” T-PD Reply at 1;
see also
T-PD Mot. at 11 (citing Am. Compl. at ¶¶ 43-44, 47-48, 54-55, 65-66, 69-70). As such, the October 15, 2012 Motion To Dismiss is ripe, as it raises a question of law and does not challenge any underlying factual allegations. T-PD Reply at 4 (citing
Nat’l Presto Indus., Inc. v. Dazey Corp.,
107 F.3d 1576, 1580 (Fed.Cir.1997) (holding that an appeal challenging a court’s subject matter jurisdiction presents a question of law)). Contrary to AATI’s assertion, there is no unresolved question of authorization and consent, because the Government has verified authorization and consent to the relevant contracts at issue. T-PD Reply at 5 (citing
Hughes Aircraft Co. v. United States,
534 F.2d 889, 901 (Ct.Cl.1976) (stating that
“post hoc
intervention of the Government in pending infringement litigation against individual contractors” establishes authorization and consent)).
Therefore, postponing a decision on Boeing’s October 15, 2012 Motion To Dismiss would waste judicial resources and impose unnecessary discovery-related burdens on the parties. T-PD Reply at 5.
AATI, however, does not cite a single authority, precedential or otherwise, in support of the argument that the court should defer ruling on the pending jurisdictional motion, because discovery might render the motion moot. In fact, AATI’s argument conflicts with
Steel Co. v. Citizens for a Better Environment,
523 U.S. 83, 93-95, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998), wherein the United States Supreme Court held that jurisdictional issues, even particularly difficult ones, must be decided as a threshold matter, even when a ease may be resolved easily on the merits.
For these reasons, the court has determined that Boeing’s October 15, 2012 Motion to Dismiss is ripe for the court’s adjudication.
C. Whether The Waiver Of Sovereign Immunity, Under 28 U.S.C. § 1498(a), Applies To The Types of Patent Infringement Prescribed In 35 U.S.C. § 271.
1. The Third-Party Defendants’ Argument.
First, Boeing argues that the United States Court of Appeals for the Federal Circuit “expressly connected the waiver of sovereign immunity [under § 1498(a)] to the scope of the patent grant under 35 U.S.C. § 154(a)(1).”
T-PD Mot. at 6 (citing
Zoltek V,
672 F.3d at 1323). Because section 154(a)(1) of the Patent Act incorporates language that is parallel to that found in section 271(a) and (g), violations thereof are acts of direct infringement and included in the waiver of sovereign immunity in § 1498(a). TPD Mot. at 6-7. Therefore, Boeing contends that
Zoltek V
“expressly left precedent regarding acts of
indirect
infringement undisturbed,” because “the law is settled that the Government has not waived its sovereign immunity” for such claims. T-PD Mot. at 7 (citing
Zoltek V,
672 F.3d at 1327);
see also id.
at 7 (quoting
Decca Ltd. v. United States,
640 F.2d 1156, 1167 (Ct.Cl.1980) (stating that “under section 1498, the Government has agreed to be sued only for its
direct infringement
of a patent____ Activities of the Government which fall short of direct infringement do not give rise to governmental liability, because the Government has not waived its sovereign immunity with respect to such activities.”) (emphasis and bold in TPD Mot.)). And, as
Decca
stated, the Government is “not liable for its inducing infringement by others, for its conduct contributory to infringement of others, or for what, but for section 1498, would be contributory (rather than direct) infringement of its suppliers.”
Decca,
640 F.2d at 1167. Therefore,
Zoltek V
and
Decca
require that the court grant Boeing’s October 15, 2012 Motion to Dismiss. T-PD Mot at 7.
Second, Boeing points out that section 154(a)(1) of the Patent Act
does not include any language describing the export of components of a patented invention, because that type of infringement is limited to section 271(f) of the Patent Act.
T-PD Reply at 7.
For this reason,
Zoltek V
characterized section 271(f) as a statute prohibiting “indirect infringement.” T-PD Mot. at 8 (citing
Zoltek V,
672 F.3d at 1327).
Third, Boeing asserts that
Zoltek V
stands for the proposition that § 1498(a) is applicable only to direct infringement, as described in certain sections of the Patent Act: when an entire patent combination is made, § 271(a); or, on the completion of a patented process, § 271(g). T-PD Mot. at 8. Therefore, § 1498(a) is not applicable to indirect infringement, described in section 271(f) of the Patent Act as where uneombined components of a patented combination are supplied or caused to be combined overseas “to actively induce” infringement. T-PD Mot. at 8. In addition, “language of intent” is included in section 271(f) of the Patent Act that parallels that of induced infringement under section 271(b). T-PD Mot. at 8. And, the text of section 271(f)(2) parallels that of “contributory infringement” under section 271(c). TPD Mot. at 8.
Therefore, Boeing reads
Zoltek V
to link the scope of § 1498(a) only to acts that “directly implicate the exclusive rights granted to a patentee” under section 154(a)(1). TPD Mot. at 9 (citing
Zoltek V,
672 F.3d at 1326-27). Since section 154(a)(1) of the Patent Act does not include “any exclusive rights corresponding to acts of infringement under [s]ection 271(f),” Boeing states that the “only reasonable conclusion is that conduct delineated in [section] 271(f) constitutes indirect infringement.” T-PD Mot. at 9.
Boeing reasons that the conclusion that there has been no waiver of sovereign immunity as to section 271(f) of the Patent Act is consistent with
Zoltek
P’s conclusion that immunity was waived as to 35 U.S.C. § 271(g). T-PD Mot. at 9. This is so, because in “general a party is liable for infringement under [s]ection 271(g) [of the Patent Act] if the party imports a product made by a patented process — an act that directly implicates the exclusive rights granted to a patentee by [s]eetion 154(a)(1) because Congress expanded the patent grant under [section 154(a)(1) when it added [s]eetion 271(g) to the Patent Act.” T-PD Mot. at 9 (citing
Zoltek V,
672 F.3d at 1323-25). But, when Congress added patent liability under section 271(f) of the Patent Act, the scope of the patent grant in section 154(a)(1) was not changed. T-PD Mot. at 9. Therefore, Boeing advises that Congress “intended different treatment for [s]eetions 271(f) and (g).” TPD Mot. at 9. Consequently, “well settled-principles of statutory interpretation mandate the conclusion that there has been no waiver of sovereign immunity for acts of infringement under [s]ection 271(f).” T-PD Mot. at 10. This result, according to Boeing, also “conforms to the general principle that a court must narrowly construe any waiver of the Government’s sovereign immunity.” TPD Mot. at 10.
Finally, Boeing cites
Motorola, Inc. v. United States,
729 F.2d 765, 768 (Fed.Cir. 1984) for the proposition that “[although a section 1498 action may be similar to a Title 35 action, it is nonetheless only parallel and not identical.” T-PD Mot. at 11. Consequently, it is the prerogative of Congress to waive sovereign immunity and Congress “plainly has not done so for
all
conduct that may render a private party liable for patent infringement.” T-PD Mot. at 11 (emphasis and bold in T-PD Mot.). Since Congress has not waived sovereign immunity for indirect infringement under section 271(f), the court should dismiss all of AATI’s claims based on such conduct,
i.e.,
Amend. Compl. ¶¶ 43-44, 47-48, 54-55, 58-59, 65-66, 69-70. T-PD Mot. at 11-12.
Boeing’s Response to the Government’s Supplemental Brief simply indicates that Boeing “join[s] in the Government’s arguments set for in the Supplemental Brief,” reiterating several arguments made therein. T-PD Resp. at 1. Specifically, the Response, like the Government’s Supplemental Brief, argues that claims of infringement under section 271(f) fail the “three-prong test ... in
[.Zoltek V],”
and thus remain outside the scope of the waiver of sovereign immunity under § 1498(a). T-PD Resp. at 2.
2. The Government’s Argument.
Interestingly, as the primary defendant, the Government did not initiate or immediately join Boeing’s October 15, 2012 jurisdictional motion, but waited for the court’s invitation to provide its “views” on the scope of
the congressional waiver of sovereign immunity under 28 U.S.C. § 1498(a). In a five-page initial submission, the Government simply concurred that the “United States has waived sovereign immunity only for claims of compensation based on its, or its contractor’s, direct infringement of a United States patent.” Gov’t Resp. at 2, 3-4 (citing
Decca
and
Zoltek V).
In response to the court’s request at the May 22, 2013 oral argument, the Government filed a Supplemental Brief on June 12, 2013, requesting that the court dismiss the claims alleged in the Amended Complaint at ¶¶ 43-44, 47-48, 54-55, 58-59, 65-66, and 69-70, because they state claims under 35 U.S.C. § 271(f). Gov’t Supp Br. at 1-2;
see also id.
at 3-16.
Seizing on AATI’s contention that infringement under section 271(f) is a form of direct infringement (PI. Opp. at 12), the Government contends that the “second prong of the
Zoltek [V]
analysis” precludes section 271(f) from being within the ambit of the Government’s waiver of sovereign immunity in § 1498(a). Gov’t Supp. Br. at 4.
Zoltek V
held that the scope of the Government’s waiver of immunity is determined by applying a three-prong analysis, and the second of those prongs provides that immunity is waived when an invention claimed in a U.S. patent “(2) is ‘used or manufactured by or for the United States,’ meaning each limitation is present in the accused product or process[.]” Gov’t Supp. Br. at 4 (quoting
Zoltek V,
672 F.3d at 1319). That requirement-that each limitation is present in the accused product or process- requires that the product or process accused of infringing “is complete.” Gov’t Supp. Br. at 6. Because infringement under sections 271(b), (c), and (f) is “preparatory to an infringement that has yet to be completed,” infringement under those sections is implicitly excluded from the scope of the § 1498(a)waiver. Gov’t Supp. Br. at 6.
3. The Plaintiff’s Response.
AATI responds that the court has jurisdiction over AATI’s claims as to Boeing’s infringement, because of Government authorization and consent for the conduct described in the Amended Complaint. PL Opp. at 5-6, 16;
see also
Am. Compl. at 1-2. Therefore, section 271(f) imposes liability on the supplier of components to be used to assemble or manufacture an infringing product by an entity outside of the borders of the United States. Pl. Opp. at 6-7. In contrast to section 271(c) of the Patent Act, prohibiting contributing infringement, section 271(f) does not require a predicate act of direct infringement. Pl. Opp. at 7 (citing
Wordtech Sys., Inc. v. Integrated Networks Solutions, Inc.,
609 F.3d 1308, 1317 (Fed.Cir.2010) (holding that “indirect infringement must relate directly to ... direct infringement.”)). Therefore, because section 271(f) of the Patent Act does not require proof of direct infringement, section 271(f) infringement
ipso facto
“cannot be indirect infringement.” PL Opp. at 7. AATI also adds that section 271(f) is a “twin to 35 U.S.C. § 271(g), since Congress enacted section 271(f) of the Patent Act to impose liability for patent infringement where components of an invention were made in the United States, but then exported for physical combination abroad.” PL Opp. at 6 (citing
Microsoft Corp. v. AT & T Corp.,
550 U.S. 437, 444-45, 127 S.Ct. 1746, 167 L.Ed.2d 737 (2007) (explaining that “Congress specifically intended § 271(f) as a response to the Supreme Court’s decision in
Deepsouth [Packing Co., Inc., v. Laitram Corp.,
406 U.S. 518, 92 S.Ct. 1700, 32 L.Ed.2d 273 (1972) ].... [so that § 271(f) ] expands the definition of infringement to include supplying from the United States a patented invention’s components” (internal citations omitted))).
In sum, section 271(g) was enacted to eliminate patent infringement accomplished by carrying out some or all of the steps of a patented process outside the United States and then importing the end product or offering to sell, selling, or using that product in the United States. PL Opp. at 7. In other words, section 271(g) of the Patent Act deals with imports and is the mirror opposite of section 271(f) that deals with exports. PL Opp. at 8. Both statutes “close loopholes and both address intended activity outside the patent jurisdiction of the United States that is not itself a violation of [section] 271(a).” Pl. Opp. at 8.
In addition, AATI contends that the aforementioned statutory construction is sup
ported by
Zoltek V,
since “much of the rationale for deciding that [section] 271(g) is within [section] 1498(a) lends itself equally to the conclusion that [section] 271(f) is also within [section] 1498(a).” Pl. Opp. at 8. For this reason, sections 271(f) and (g) of the Patent Act prohibit infringement that, “had it been conducted in the United States, would be infringement under [section] 271(a).” Pl. Opp. at 9. As
Zoltek V
recognized, the “limitation of [section] 1498(a) to infringement under [section] 271(a) is inconsistent with the plain language of the statute[.]” Pl. Opp. at 9 (quoting
Zoltek V,
672 F.3d at 1314-15). Moreover, limiting the scope of sovereign immunity under section 1498(a) only to section 271(a) of the Patent Act “creates the possibility that the United States’ procurement of important military matériel could be interrupted via infringement actions against government contractors — the exact result [section] 1498 was meant to avoid.” Pl. Opp. at 9 (quoting
Zoltek V, 672
F.3d at 1314-15). In other words, the Government needs to maintain the ability to authorize and consent to infringement under section 271(f) to avoid having necessary procurement interrupted by an infringement suit. Pl. Opp. at 10.
Next, AATI addresses Boeing’s argument that “(1) all acts of ‘indfreet infringement’ are outside of § 1498 and (2) infringement under § 271(f) is ‘indirect infringement’ so that (3) § 271(f) is outside § 1498.” Pl. Opp. at 10. AATI states that simply describing infringement under § 271(f) as “indirect infringement” does not address whether the acts described therein are subject to the scope of immunity under § 1498(a). Pl. Opp. at 10. And, as the United States Court of Appeals for the Federal Circuit explained, whether section 271(f) of the Patent Act is subject to the scope of sovereign immunity set forth in § 1498(a) was not at issue in
Zoltek V.
Pl. Opp. at 10-11.
Then, AATI posits that there is no basis for “limiting § 1498 to acts that violate rights set forth in § 154,” because neither the Government nor its contractors have a “license” or “lawful right” to use § 1498(a) to shield them against infringement, whether infringement occurs under section 271(f) of the Patent Act or section 271(g). Pl. Opp. at 11-12. In fact, section 271(f) of the Patent Act should not be labeled as “indirect infringement” for purposes of § 1498(a), since the United States Court of Appeals for the Federal Circuit has held that “indirect infringement” requires the establishment of a “concomitant act of direct infringement.” Pl. Opp. at 12 (citing
Wordtech,
609 F.3d at 1317 (explaining that a “defendant’s liability for indirect infringement must relate to ... identified instances of direct infringement”));
see also Lucent Techs., Inc. v. Gateway, Inc.,
580 F.3d 1301, 1317 (Fed.Cir.2009) (articulating appellant’s argument that “direct infringement [is] a necessary predicate for proving indirect infringement”). Therefore, infringement under section 271(f) of the Patent Act, as to acts occurring within the United States, is not indirect infringement, because it focuses on the act of supplying components in or from the United States for combination abroad, and does not require any separate act of direct infringement. Pl. Opp. at 12 (citing 5 Donald S. Chisum, CHI-SUM ON PATENTS, § 16.02[7] (Matthew Bender) (including infringement under § 271(f) of the Patent Act in a section entitled “Direct Infringement”)). In fact, AATI asserts that infringement under section 271(f) is direct infringement that is “covered by the § 1498(a) waiver.” AATI Resp. at 1.
AATI also challenges Boeing’s reliance on
Decca
for the proposition that indirect infringement is not subject to the scope of § 1498(a) immunity waiver. Pl. Opp. at 13-14.
Decca
was decided in 1980. Pl. Opp. at 13. Therefore,
Decca’s
holding that § 1498(a) waives the Government’s sovereign immunity for “direct infringement,” applies only to sections 271(b) and (c) of the Patent Act, since section 271(f) was not enacted until 1984. Pl. Opp. at 13. To the extent that
Decca
still has vitality after
Zoltek V,
its holding is limited only to suppliers/manufacturers of components, of a patented invention, where those components are not combined within the United States. Pl. Opp. at 14. In this ease, however, there is no dispute that Boeing manufactured both UAVs and a rig for deploying the arrestment line within the United States. Pl. Opp. at 14. And, there is no dispute that when both of these parts of
the invention are manufactured, the invention “is complete and ready to use.” Pl. Opp. at 14. Therefore, the only “combination” of the manufactured parts that occurs outside the United States is the “use” of the two parts; it is not “the manufacture of a permanent completed structure.” Pl. Opp. at 14. Specifically, Boeing supplied both parts of the patented invention — the UAVs with the structure in question, and a rig for deploying the arrestment line — an action that constitutes the supply of “all components” referenced in section 271(f) of the Patent Act. Pl. Opp. at 14. Therefore, Boeing’s supply of these components was direct infringement, because Boeing “made the invention within the meaning of [Section] 154.” Pl. Opp. at 14. Although AATI’s patented invention was “combin[ed]” overseas, in that two parts were used in conjunction with each other, the “entire manufacture” took place in the United States. Pl. Opp. at 15.
AATI concludes that the court does not need to decide “whether [section] 271(f) [of the Patent Act] describes a direct infringement in all circumstances, but only under the facts of this ease,” wherein “Boeing’s manufacture of AATI’s complete invention in the United States, for ‘combination’ only in terms of use overseas, is a direct infringement that falls within the plain meaning of § 1498(a).” Pl. Opp. at 15. In sum, as a matter of law, “[b]ecause [section] 271(g) [of the Patent Act] is within § 1498, [Section] 271(f) must be deemed to be within § 1498 as well.” Pl. Opp. at 15.
AATI also asserts that both the Government and Boeing misapply the
“Zoltek V
statement that a use or manufacture means that each limitation must be present in the accused product of process.” AATI Resp. at 10.
Zoltek V
found that each limitation of an asserted section 271(g) claim was present in the accused product or process by virtue of the importation, sale, or use in the United States of the product created by the patented process. Similarly, in the case of § 271(f) infringement, each limitation is present in the accused product or process, so as to constitute use or manufacture under § 1498(a), by the “supply of components in conjunction with the intent or understanding ... that those components will be combined overseas[.]” AATI Resp. at 10. Thus, just as a section 271(g) infringement is a “use” under § 1498(a), so also is an infringement claim brought under § 271(f). AATI Resp. at 11.
4. The Court’s Resolution.
Section 1498(a) is a congressional waiver of sovereign immunity and designation of the United States Court of Federal Claims as the exclusive forum for the adjudication of patent infringement claims against the Government:
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.
28 U.S.C. § 1498(a).
The United States Court of Appeals for the Federal Circuit
en banc
stated that: “Section 1498 makes no reference to direct infringement as it is defined in [35 U.S.C.] § 271(a). Indeed, so interpreting § 1498(a) is contrary to its plain language, interpreted in light of the meaning of that language in 1910.”
Zoltek V,
672 F.3d at 1319. Instead, our appellate court said that “§ 1498(a) comes within the scope of the right to exclude granted in 35 U.S.C. § 154(a)(1).”
Zoltek V,
672 F.3d at 1326-27. 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[.]” 35 U.S.C. § 154(a)(1). It is for this reason that our appellate court has held the Government waives sovereign immunity for claims alleging a violation of the rights protected by section 154(a)(1) of the Patent Act.
See Zoltek V,
672 F.3d at 1326-27 (explaining that because “direct infringement under § 1498(a) comes within the scope of the right to exclude granted in 35 U.S.C. § 154(a)(1)____ the Government has waived its sovereign immunity”). Any act to deny a patent holder the benefit of that right is prohibited under
§ 1498(a), whether it be “direct” or “indirect.”
In sum, all parties in this case misconstrue the scope of the waiver of sovereign immunity in § 1498(a), as the “plain language of § 1498(a) indicates that §
1198(a) operates independently from Title 85.” Zoltek V,
672 F.3d at 1321 (emphasis added);
see also id.
at 1326. Therefore, contrary to Boeing’s argument,
Zoltek V
did not consider whether Congress waived sovereign immunity for so-called indirect infringement under 28 U.S.C. § 1498(a), not because the “law is settled,” but because that issue was not presented in that case.
Compare
T-PD Mot. at 7 (“As for claims of indirect infringement, the law is settled that the Government has not waived its sovereign immunity.”),
with Zoltek V,
672 F.3d at 1327 (“We do not decide the issue of indirect infringement, under § 271(b), (c), and (f),
which is not before us.”
(emphasis added)). Likewise, although Boeing argues that
Decca
prohibits the court from ruling that the waiver of sovereign immunity under 28 U.S.C. § 1498(a) extends to indirect infringement, the issue before the Court of Claims in that case did not concern liability, but “the quantum of recovery.”
See Decca,
640 F.2d at 1162. Therefore, that court’s observation that the “[activities of the Government which fall short of direct infringement” are exempt from the scope of the immunity waiver under § 1498(a) is
dicta. Id.
at 1167.
And, contrary to AATI’s argument, neither section 271(f) of the Patent Act, nor any other section thereof, is “within” § 1498(a). PL Opp at 8;
see also
Pl. Resp. at 8-9.
The text of § 1498(a) does not describe the type of patent infringement for which Congress has waived sovereign immunity by using the adjectives “direct” or “indirect.”
See
28 U.S.C. § 1498(a). What § 1498(a) does state is that sovereign immunity is waived where: an “invention described in and covered by a patent;” is
“us[ed] or manufactured]”
by
or for the
Government; “without [a] license of the [patent] owner” or “lawful right” to do so.
Id.
(emphasis added). In the context of Section 1498(a), “use” of a patent means that
“each
limitation of the claims must be present in the accused product[.]”
Zoltek V,
672 F.3d at 1318;
see also id.
at 1319.
As to the ’729, ’137, and ’242 patents in this case, the Amended Complaint alleges that the Government “has entered into certain contracts with Insita and BoeingU pursuant to which those companies use or manufacture the invention described in and covered [by AATI’s patents]
for the United States, with the authorization and consent of the United States for that use or manufacture.”
Am. Compl. ¶ 49 (same re: ’729 patent) (emphasis added);
see also id.
¶60 (same re: ’137 patent);
see also id.
¶71 (same re: ’242 patent). In addition, the Amended Complaint alleges that the Government “has been, and now is using or manufacturing, without license of AATI or lawful right to use or manufacture, the invention described in and covered by the ’729 patent, by using or manufacturing Insita UA[Vs], and all like systems and services.” Am. Compl. ¶ 74;
see also id.
¶77 (same re: ’137 patent);
see also id.
¶82 (same re: ’242 patent).
As the United States Court of Appeals for the Federal Circuit has stated, to “use an invention, each limitation of the claims must be present in the accused product[.]”
Zoltek V,
672 F.3d at 1318 (internal quotation omitted);
see also id.
at 1320 (“the language in § 1498(a) ... is limited to inventions that are ‘used or manufactured by or for the
United States.’ ”).
“Use,” however, is not defined by
where
the alleged infringing conduct takes place, but by the
effect
of the conduct. The contracts at issue in this case authorized the act of infringement. That conduct arose in the United States
and is consistent with
Decca’s
description of direct infringement as
“use or manufacture ...
either through authorized actions of governmental employees or
through actions by contractors specifically authorized by the Government to engage in the actions for the Government.”
640 F.2d at 1167 n. 15 (emphasis added). Therefore, the court construes the aforementioned paragraphs of the Amended Complaint to allege that the inventions described in the ’729, T37, and ’242 patents were
used by or for the Government,
“without [a] license” or “lawful right” to do so.
See
28 U.S.C. § 1498(a).
The Amended Complaint, however, also alleges that Insitu and Boeing have 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 uneombined 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.” Am. Compl. ¶43;
see also id.
¶¶ 44; ¶¶ 47-48 (same re: Boeing’s actions re: ’729 patent);
see also id.
¶¶ 54-55 (same re: Insitu’s actions re: T37 patent);
see also id.
¶¶ 58-59 (same re: Boeing’s actions re: ’137 patent);
see also id.
¶¶ 65-66 (same re: Insitu’s actions re: ’242 patent);
see also id.
¶¶ 69-70 (same re: Boeing’s actions re: ’242 patent). But,
Zoltek V
requires “use[ ] or manufaeture[ ] by or for the United States.” 672 F.3d at 1319. The mere allegation of exportation, without an allegation of use by the Government, does not implicate this court’s jurisdiction under 28 U.S.C. § 1498(a). As such, the Amended Complaint does not allege either use or manufacture by or for the Government and the court does not have jurisdiction under 28 U.S.C. § 1498(a) to adjudicate claims of patent infringement between private parties.
Therefore, ¶¶ 43-44, 47-A8, 54-55, 58-59, 65-66, and 69-70 of the Amended Complaint as to Insitu and Boeing are dismissed, and Boeing is dismissed as a T-PD.
Boeing, in its own capacity and as the parent of the wholly-owned subsidiary Insitu, however, may elect to intervene in this ease. If it decides to do so, any such motion must be filed for the court’s consideration on or before November 15, 2013. The court will convene a status conference with the parties on November 25, 2013, to set up a briefing schedule for claim construction.
IV. CONCLUSION.
For these reasons, the October 15, 2012 Motion to Dismiss by Third-Party Defendant The Boeing Company is granted and paragraphs 43-44, 47-48, 54-55, 58-59, 65-66, and 69-70 of the May 10, 2012 Amended Complaint are dismissed, insofar as they allege a claim for patent infringement under Title 35. Plaintiff, however, is granted leave to further amend to include factual aspects of these allegations as background information.
IT IS SO ORDERED.