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Infringement Claim Sent to District Court with New Defendant
The Court of Federal Claims granted a motion to transfer a patent
infringement claim to federal district court because the CFC lacked jurisdiction
over the claim, the district court would have had jurisdiction at the time the
claim was originally filed, and the transfer served the interests of justice.
The dispute involved a third-party claim against the government alleging
components of the F-22 fighter plane infringed the claimant's patent. The suit
was brought under 28 USC 1498(a), which provides a remedy against the government
in the CFC for patentees whose patents are "used or manufactured" by
government contractors acting with the "authorization or consent" of
the government. After the Court of Appeals for the Federal Circuit issued a
decision finding there was no government liability under §1498(a) because part
of the patented process was performed outside the United States, and the CFC
lacked jurisdiction over the claim (442 F3d 1345), the claimant moved to
transfer the claim to district court under 28 USC 1631 and to substitute the
contractor that manufactured the aircraft as defendant. Opposing the motion, the
government argued, under the Federal Circuit's decision, that no court had
jurisdiction over the claim.
Three Elements Present
Under 28 USC 1631, a civil action may be transferred to
another forum when the transferor court lacks jurisdiction, the transferee court
would have had jurisdiction at the time the original case was filed, and
transfer would serve the interests of justice. Here, all three prongs were met.
First, the Federal Circuit already found the CFC lacked jurisdiction over the
claim. Second, although the original complaint alleged a cause of action against
the government under 28 USC 1498(a), and the district court would not have had
jurisdiction over the government, the district court could have asserted
jurisdiction if the complaint properly alleged a claim against the contractor
under the Patent Act (35 USC 271). The claimant was granted leave to amend the
complaint to change the statutory basis of the claim, and to add the contractor
as a defendant, because the factual basis for the claim remained the same and
the contractor would not be unduly prejudiced. Third, the claim could be
time-barred if transfer were denied. Moreover, the contractor was involved in
discovery in the earlier phases of the litigation, and the claimant encountered
several issues of first impression, so the interests of justice favored a
transfer.
No Contractor Immunity
The government had argued "§1498 takes away the patentee's right to bring
an infringement action against a [contractor] and substitutes an action for
compensation against the [g]overnment," citing a 1928 Supreme Court case
stating Congress enacted §1498 "to relieve the contractor entirely from
liability of every kind for the infringement of patents in manufacturing
anything for the government" (275 US 331). However, §1498(a) only
insulates contractors from suit when the government can be found liable, and §1498(c)
provides that the provisions of §1498 do not apply to claims arising in a
foreign country. Therefore, "§1498(c) must be construed to nullify the
contractor immunity provision of §1498(a)." There was no evidence in the
legislative history that the "authorization or consent" language was
intended to establish patent infringement immunity for contractors in cases
where the government cannot be held liable. Further, "[c]onstruing §1498(a)
... to incorporate all forms of liability defined in [the Patent Act] ... would
be contrary to legislative intent and would be inconsistent with the language of
§1498 as a whole." Finally, even if §1498(a) insulated contractors from
suit when §1498(c) was triggered, §1498(a) would still not prevent the
exercise of jurisdiction by the district court, because §1498(a) is an
affirmative defense, not a jurisdictional bar. (Zoltek Corp. v. U.S.,
FedCl, 53
CCF ¶79,053)
(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )
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