Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_03-cv-01468/USCOURTS-azd-2_03-cv-01468-0/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Astaris, LLC, 

Plaintiff, 

vs.

Fire-Trol Holdings, LLC, 

Defendant. 

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No. CIV 03-1468-PHX-ROS

OPINION and AMENDED ORDER

In an Order filed on March 31, 2005, this Court issued its rulings on Defendant FireTrol Holdings, LLC's ("Fire-Trol's") Renewed Motion for Summary Judgment (Doc. #49),

Astaris' Motion for Preliminary Injunction (Doc. #70), Defendant Fire-Trol's Motion for Stay

of Astaris' Motion for Preliminary Injunction and Fire-Trol's Agreement to be Bound by

Temporary Restraining Order (Doc. #75), and Astaris' Motion to Strike New Matters (Doc.

#84). The Order stated that a written opinion would follow. This is that opinion.

I. JURISDICTION

Astaris' claims arise under federal patent laws, thus the Court has subject matter

jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338(a).

II. BACKGROUND

A. Facts

Astaris and Fire-Trol are the sole manufacturers and suppliers of aerial fire retardant

to the United States, largely used by the U.S. Forest Service (Department of Agriculture) and

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Dimercaptothiadiazole.

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the Bureau of Land Management (Department of the Interior) to combat wild fires. [Doc.

#51 (Defendant's Statement of Facts ("DSOF")) ¶ 1.] Astaris owns U.S. Patent No.

4,606,831 (hereafter '831) for a fire retardant containing a ("DMTD")1

 chemical. [Doc. #1

(Compl.) ¶¶ 7, 12.] The patent was issued in August 1986 (Id. ¶ 7) and will expire in June

2005 (DSOF ¶ 4).

From time to time, the USFS publishes "Solicitations" in which it requests the

submission of sealed bid offers for the purchase of fire retardant. [DSOF ¶ 7.] From 1997

on, the USFS' Solicitations have required that all products submitted for bidding must have

been qualification tested (demonstration burn tested) by the USFS as a prerequisite for

contracting. [Id. ¶ 9.] The USFS Solicitations and purchase contracts during the relevant

period included a standard authorization clause (Federal Acquisition Regulation ("FAR")

52.227-1 (C.F.R. §52.227-1) by reference, under which the United States may assume

liability for patent infringement relating to the product solicited or purchased. [Id. ¶¶ 10, 12.]

Qualification testing of a fire retardant by the USFS takes approximately three years, (Id. ¶

13) and is conducted pursuant to the terms of Collection Agreements, which are contracts

between the USFS and the provider of the materials being tested (Id. ¶ 15). The Collection

Agreements do not include an authorization clause either expressly or by reference. [Doc.

#79 (Plaintiff's Statement of Facts ("PSOF")) ¶2 .] 

The allegedly infringing products were submitted by Fire-Trol for qualification testing

under Collection Agreements in August 2000 and September 2001. [DSOF ¶ 18.] However,

the USFS has not accepted delivery of Fire-Trol's allegedly infringing retardants under any

type of purchase agreement. [Id. ¶ 3.]

Astaris' Complaint alleges patent infringement and requests, among other relief, an

injunction enjoining Fire-Trol from further infringing the '831 patent. [Compl. pp. 4-5.]

 

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B. Procedural history

On January 5, 2004, Fire-Trol filed a Motion for Summary Judgment (Doc. # 20)

arguing that 28 U.S.C. §1498(a) applies to bar the Complaint in District Court, and

requesting that the Complaint be dismissed. In a hearing on February 20, 2004, the Court

ruled from the bench denying Fire-Trol's pending motions for sanctions. [Doc. #44.] At the

same time, the Court unintentionally stated that Fire-Trol's summary judgment motion was

denied. On March 12, 2004, Fire-Trol filed a Renewed Motion for Summary Judgment.

[Doc. #49.] At a May 21, 2004 hearing, the Court clarified that its statement regarding

summary judgment had been unintentional, permitted limited additional discovery and set

deadlines for response and reply to Fire-Trol's renewed summary judgment motion. [Doc.

# 66.] Astaris filed its Response to the renewed motion on July 21, 2004 (Doc. # 78),

followed by Fire-Trol's Reply (Doc. # 80), filed on August 9, 2004.

III. DISCUSSION

A. Astaris' Motion to Strike New Matters (Doc. #84)

On August 23, 2004, Astaris filed a motion requesting the Court to strike the affidavits

of Robert Crouch and Joseph Grigel filed with Fire-Trol's Reply regarding its summary

judgment motion, and also strike copies of appellate briefs attached to Fire-Trol's Reply that

had been filed with the Federal Circuit in W.L. Gore & Assocs., Inc. v. Garlock, Inc., 842

F.2d 1275, 1282-83 (Fed. Cir. 1988). Regarding the affidavits, Astaris complains they were

new matters improperly filed in a reply brief. With regard to the Garlock briefs, Astaris

asserts that they are not relevant to this Court's analysis because Fire-Trol invites the Court

to draw inferences from the briefs about the Federal Circuit's decision that the Federal Circuit

did not mention or make clear in its written opinion.

1. Crouch's initial declaration 

Fire-Trol attached a declaration of Robert Crouch, Ph.D (Doc. #50) to support its

Renewed Motion for Summary Judgment. In that affidavit, Mr. Crouch stated that "Fire-Trol

has never sold, or offered for sale any [of the products being tested by the USFS] to

anyone[,]" that "Fire-Trol has never sold, or offered for sale a product containing DMTD to

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anyone[,]" and that "Fire-Trol has not designed, developed, manufactured, used, sold, or

offered for sale, directly or through another, any composition containing DMTD other than

for testing by the USFS." [Doc. #50 ¶¶ 22, 23, 25.]

In Astaris' Response to Fire-Trol's renewed summary judgment motion it stated

without record citation that "Fire-Trol will offer to sell its fire retardants to customers other

than the U.S. Government, such as the States of California, Alaska and Minnesota." [Doc.

#78, p. 3.] Additionally, Astaris contended that California and other states might purchase

Fire-Trol's allegedly infringing products if the USFS qualifies those products after

demonstration testing, so that it is possible that Fire-Trol's submission for testing of such

products "will result in either no sales to anyone or in sales to only the state governments.

None of that activity will have been for the U.S. Government, and none of it will be for the

U.S. Government unless and until the Forest Service buys Fire-Trol's DMTD products."

[Doc. #78, p. 7.]

2. Crouch's deposition testimony

Prior to filing its Response to Fire-Trol's renewed summary judgment motion, Astaris

deposed Mr. Crouch. [Doc. #79 (Astaris' Statement of Undisputed Facts), Ex. A (Crouch

Depo.)] In its Statement of Undisputed Facts filed with its Response, Astaris states that Mr.

Crouch conceded at his deposition that he had not expressly verified with Fire-Trol sales

personnel his statement that Fire-Trol had never sold the allegedly infringing products or

offered them for sale. [Id., p. 3.] Additionally, Astaris states that while "Fire-Trol has not

contracted to sell any DMTD products to the Forest Service[,]" (Doc. 79 ¶ 4), "Fire-Trol sold

fire retardants to the State of California under prior Forest Service contracts[]" (Id. ¶ 13), and

"[i]f Fire-Trol's DMTD fire-retardants are placed on the [USFS Qualified Products List],

Fire-Trol can sell them to California, Minnesota and Alaska." [Id. ¶ 14.]

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Fire-Trol attached to its Reply filed on August 9, 2004 the disputed additional

declarations by Mr. Crouch and by Joseph Grigel, Fire-Trol's general manager whom Crouch

mentioned at his June 24, 2004 deposition was the Fire-Trol official would have been in

charge of any attempts to sell products to entities that were not current Fire-Trol customers.

3. Crouch's supplemental declaration

The relevant portion of Mr. Crouch's supplemental declaration is his statement: "I

have verified that Fire-Trol has never sold, or offered for sale any products containing

DMTD ("FDP products") to anyone by discussing the matter with all persons having

knowledge concerning the FDP products, including Joseph Grigel, General Manager in

charge of sales for Fire-Trol." [Doc. #82 ¶ 8.]

4. Grigel's declaration

The salient statement in Mr. Grigel's declaration is: 

It is my understanding that Astaris has argued that Fire-Trol will sell its FDP

products to the State of California once they are placed on the USFS' Qualified

Products List ("QPL"). Contrary to Astaris' contention, Fire-Trol does not

intend to sell any FDP products to California even if such products are placed

on the USFS' QPL. In addition, Fire-Trol intends to refuse to sell FDP

products to California during the life of Astaris' patent even if California

specifically requests to purchase products containing DMTD. Fire-Trol has

made the decision to not sell products containing DMTD to California or any

other customer, other than the USFS, in order to avoid any potential liability

for patent infringement.

[Doc. #83 (Grigel Decl.) ¶ 7.]

5. Analysis

Astaris argues that if the declarations of Crouch and Grigel "offer anything new" then

they are "inappropriate" and should be stricken. Astaris contends that the declarations placed

them at a disadvantage because they only had reason to depose Crouch because his was the

only declaration attached to Fire-Trol's renewed summary judgment motion. Astaris states

that it had no reason to depose Grigel because his declaration was offered after the

opportunity for disclosure had closed. [Doc. #86, p. 2.] 

Rule 56(e) provides that the court "may permit affidavits to be supplemented."

Moreover, it would be illogical to conclude that "reply briefs are allowed but that a party is

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proscribed from backing up its arguments in reply with the necessary evidentiary material."

Baugh v. City of Milwaukee, 823 F. Supp. 1452, 1456-57 (E.D. Wis. 1993), aff'd, 41 F.3d

1510 (7th Cir. 1994). If an affidavit submitted in reply "merely responds to matters placed

in issue by the opposition brief and does not spring upon the opposing party new reasons for

the entry of summary judgment, reply papers – both briefs and affidavits – may properly

address those issues." Beck v. Univ. of Wisconsin Bd. of Regents, 75 F.3d 1130, 1134 (7th

Cir. 1996) (quoting Baugh, 823 F. Supp. at 1457).

As noted, Astaris contends that Mr. Crouch's declaration attached to Fire-Trol's

summary judgment motion is not reliable because his statement that Fire-Trol had never sold

or offered for sale any of the allegedly infringing retardant was not based on personal

knowledge, in that he had not verified his belief with Fire-Trol's sales personnel. [Doc. #79,

p. 3.] Mr. Crouch's June 24, 2004 deposition included the following exchange:

Q. How is it that you know that Fire-Trol has never offered for sale a fire

retardant containing DMTD to anyone?

A. Because I had responsibility for approving the products at the time that we

were actively submitting those products to the Forest Service for testing. And

they would not have been approved for sale other than with my knowledge.

Q. Is it possible that someone from Fire-Trol offered the product for sale subject

to testing without your knowledge?

A. Anything is possible. I have no knowledge that any product containing

DMTD was sold to anyone.

Q. Have you – can you say for sure that no product containing DMTD was

offered for sale to any potential customer of Fire-Trol?

A. You know, anything is possible. But I just don't believe that ever happened.

. . . . .

Q. Well, are there any other state governments [in addition to California] who buy

fire retardant?

A. Yes. The state of Minnesota, to my knowledge, and the state of Alaska.

Q. Has Fire-Trol ever attempted to sell fire retardants to those two states?

A. Yes. To my knowledge, yes.

Q. Have you – were you ever involved in those attempts?

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A. No.

Q. Who at Fire-Trol is in charge of making those attempts to sell products to

people who are not currently customers of Fire-Trol?

A. That would be Joe Grigel, the general manager.

Q. Do you know whether Mr. Grigel has talked with either the state of Alaska or

the state of Minnesota about the possibility that Fire-Trol will be making

available for sale DMTD fire retardants?

A. I have no knowledge of that.

Q. You don't know either way?

A. I don't know either way.

[Doc. #79, Ex. A (Crouch Aff.), pp. 16-18.]

The subsequent declaration of Robert Crouch and portions of Joseph Grigel's

declaration are proper and were not stricken because they supplement information that

directly supports Robert Crouch's initial statement that use of the infringing products has

been strictly limited to demonstration testing by the USFS and that it has not offered the

products for sale to anyone other than the USFS.

Mr. Grigel's affidavit, however, contains additional statements that veer into the realm

of new evidence; that is, his explanation why Fire-Trol had decided to refuse to sell any

infringing products to anyone other than the USFS. In his initial declaration, Mr. Crouch did

not explain the reasons why Fire-Trol had not developed, manufactured, offered for sale or

sold any infringing retardant other than that provided to the USFS for testing. The portions

of Mr. Grigel's declaration that refer to Fire-Trol's infringement avoidance decision are in the

nature of new evidence and were stricken. Further, those statements were not considered by

the Court in deciding Fire-Trol's summary judgment motion.

Additionally, the Court agrees with Astaris that it would improper for this Court to

draw inferences about the Federal Circuit's opinion in Garlock based on its review of the

appellate briefs proffered by Fire-Trol. The Court restricted its analysis of Garlock opinion

to the actual opinion and did not venture outside the opinion to divine its meaning.

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For the foregoing reasons, Astaris' Motion to Strike New Matters was granted in part,

striking the portions of Mr. Grigel's declaration that addressed the reasons behind Fire-Trol's

decision to restrict its use of infringing retardant to USFS testing and further striking the

appellate briefs in Garlock, and denied in part, declining to strike portions of the declarations

of Mr. Crouch and Mr. Grigel supporting the statements Mr. Crouch made in his initial

declaration that Fire-Trol's use of the infringing products has been strictly limited to

demonstration testing by the USFS.

B. Fire-Trol's Renewed Motion for Summary Judgment based on 28 U.S.C. §1498

(Doc. #49)

 Fire-Trol requests summary judgment, arguing there are no material factual issues and

that as a matter of law its manufacture and submission for testing of the allegedly infringing

retardant was done by and for the United States Government with the Government's implied

authorization and consent in accordance with 28 U.S.C. §1498(a). Fire-Trol contends that

the case must accordingly be dismissed.

Title 28 U.S.C. §1498 "relieves a federal contractor of liability where the contractor

uses or manufactures an infringing invention for the United States." Toxgon Corp. v. BNFL,

Inc., 312 F.3d 1379, 1381 (Fed. Cir. 2002). Section 1498 "acts as a waiver of sovereign

immunity and consent to liability by the United States." Madey v. Duke Univ., 307 F.3d

1351, 1359 (Fed. Cir. 2002). The purpose of this waiver of liability is to enable the United

States Government "to purchase goods for the performance of its functions without the threat

of having the supplier enjoined from selling patented goods to the Government." Coakwell

v. United States, 372 F.2d 508, 511 (Cl. Ct. 1967). When the United States chooses to make

unlicensed use of a patented product, the United States must pay "just compensation" for

such use, generally in the form of a fair royalty. Robishaw Engineering, Inc. v. United

States, 891 F. Supp. 1134, 1139 (E.D. Va. 1995). 

Section 1498 provides in pertinent part:

(a) 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

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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 . . . . 

. . . .

For the purposes of this section, the use or manufacture of an invention

described in and covered by a patent of the United States by a contractor, a

subcontractor, or any person, firm, or corporation for the Government and with

the authorization or consent of the Government, shall be construed as use or

manufacture for the United States.

In actions in which the United States is not a party, §1498(a) provides an affirmative defense

rather than a jurisdictional bar. Crater Corp. v. Lucent Techs., 255 F.3d 1361, 1364 (Fed.

Cir. 2001). 

Fire-Trol explains that the Government contract under which it provides fire retardant

includes an "Authorization and Consent Clause," incorporating by reference FAR 52.227-1.

FAR 52.227-1(a) (found at 48 C.F.R. §52.227-1(a)) provides:

(a) The Government authorizes and consents to all use and manufacture, in

performing this contract or any subcontract at any tier, of any invention

described in and covered by a United States patent (1) embodied in the

structure or composition of any article the delivery of which is accepted by the

Government under this contract or (2) used in machinery, tools, or methods

whose use necessarily results from compliance by the Contractor or a

subcontractor with (i) specifications or written provisions forming a part of

this contract or (ii) specific written instructions given by the Contracting

Officer directing the manner of performance. The entire liability to the

Government for infringement of a patent of the United States shall be

determined solely by the provisions of the indemnity clause, if any, included

in this contract or any subcontract hereunder (including any lower-tier

subcontract), and the Government assumes liability for all other infringement

to the extent of the authorization and consent hereinunder granted.

(Emphasis added). Under this clause, the United States agrees to the use and manufacture

of infringing products and assumes liability for such infringement.

The parties' application of §1498 to the issues here frames the question central to this

dispute: whether the Government has given its authorization and consent to Fire-Trol for the

allegedly infringing fire retardant Fire-Trol submitted to the USFS for demonstration burn

testing, thus triggering the provisions of §1498. 

Fire-Trol argues that its manufacture and testing of the allegedly infringing fire

retardant falls within the ambit of 28 U.S.C. §1498, such that Astaris' action must be against

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the United States in the Federal Court of Claims, and that this case must be dismissed. FireTrol asserts that §1498 applies because the testing of its retardant is being conducted by the

USFS as a condition for eligibility for solicitation made by the USFS, and because the

solicitation includes an express authorization and consent. 

In contrast, Astaris contends that summary judgment is not warranted under 28 U.S.C.

§1498 because: (1) the United States cannot be liable for infringement by Fire-Trol in

making and testing the DTMD products prior to submitting such products to the USFS for

testing; (2) § 1498 would not apply to Fire-Trol's sales of DTMD products to the State of

California; (3) because the United States expressly waived its immunity in the Solicitations

and Contracts it uses to procure fire retardant, but such express waiver is not found in the

Collection Agreements it uses for mandatory testing of fire retardant, no waiver of immunity

for testing should be implied; and (4) infringement by Fire-Trol is not "necessary" because

Fire-trol sells other fire retardant products to the USFS that do not infringe the Patent. [Doc.

#78 (Pl.'s Resp.), pp. 1-2.]

Fire-Trol's Motion was granted for the reasons set forth below. Each of Astaris'

arguments against the granting of summary judgment is addressed in turn.

1. Liability for pre-testing activities

Astaris contends that §1498 immunity cannot apply to any of Fire-Trol's activities in

developing the DTMD products prior to submitting the products to the USFS for testing.

Astaris argues that because the United States could not have been aware of Fire-Trol's

activities to develop the DTMD products prior to submission to the USFS for testing, it could

not be held liable for those activities. Astaris concludes, "[a] potential government contractor

cannot excuse its patent infringement on the ground that the U.S. Government might, at some

unknown future date, decide to buy a product which resulted from the infringement." [Doc.

#78, p. 6.] 

While Astaris' argument is facially reasonable, Astaris provides no case law support.

In fact, courts have rejected the argument. In Raymond Engineering, Inc. v. Miltope Corp.,

231 U.S.P.Q. 575 (1986), the Southern District of New York considered whether an alleged

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infringer's pre-contractual activities fell within the protection of §1498. The infringer

designed, developed and manufactured a small quantity of the infringing product prior to

obtaining purchase orders from government contractors. Id. at 577. The patent holder

argued, as Astaris argues here, that the infringer did not "take these preliminary steps 'by and

for' the United States and section 1498 therefore does not apply." Id. The court rejected the

patent holder's argument, reasoning that "it is inconsistent with the purposes underlying

section 1498. . . . Requiring a government contractor to receive a purchase order with the

necessary authorization and consent clauses before even beginning the initial design and

development work would impair the efficiency and quality of the current contracting

system." Id. The court noted that the purpose of §1498 is to allow the government to

procure goods and services needed to conduct its functions without worrying about obstacles

arising from patent infringement claims regarding those goods and services. Id. at 577-78.

The court concluded that the infringer's "initial manufacture of the prototype was an essential

step in the contracting process . . . [and fell] within the scope of section 1498." Id. at 578.

In Robishaw Engineering, Inc. v. United States, 891 F. Supp. 1134, 1139 (E.D. Va.

1995), the court stated that a "contractor's immunity under §1498 generally begins before

§1498 relief against the government becomes available in the Court of Federal Claims.

While the patentee generally must wait to sue the government under §1498 until after the

government accepts delivery of the disputed item, the government's contractors are immune

from suit as soon as they engage in manufacture or even bid to supply products to the

government." 891 F. Supp. at 1141 (citing the Federal Circuit opinions in Trojan, Inc. v.

Shat-R-Shield, Inc., 885 F.2d 854, 856-57 (Fed. Cir. 1989); W.L. Gore & Assocs., Inc. v.

Garlock, Inc., 842 F.2d 1275, 1282-83 (Fed. Cir. 1988); TVI Energy Corp. v. Blane, 806

F.2d 1057, 1059-61 (Fed. Cir. 1986); and Stelma, Inc. v. Bridge Elecs. Co., 287 F.2d 163,

164 (3rd Cir. 1961)). Viewed in light of the purpose underlying §1498 to allow the

government to procure materials needed to operate without the fear of patent infringement

claims, a potential government contractor such as Fire-Trol is properly protected under §1498

from liability for patent infringement even during the time it develops and manufactures a

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small quantity of infringing product for testing when the product is later subject to bidding

to supply the United States with the product.

2. Absence of waiver of immunity in collection agreement

Astaris notes that the United States expressly waived sovereign immunity in the

Solicitation forms and Contracts, but no such waiver is included in the Collection

Agreements between USFS and Fire-Trol applicable to the testing of Fire-Trol's infringing

products. Astaris argues that the United States cannot be deemed to have waived its

sovereign immunity simply by testing Fire-Trol's DTMD products because there is no

authorization and consent language in the Collection Agreements. Astaris reasons that where

the United States incorporated the authorization and consent provisions of 48 C.F.R.

§52.227-1 in both the Solicitation agreement and the Contract, the absence of express

authorization and consent clause in the Collection Agreements signals the United States'

intent not to waive immunity. From this, Astaris concludes that the United States must have

affirmatively decided not to waive immunity in connection with its agreement to test FireTrol's DMTD products. [Doc. #78, pp. 7-8.]

Under Astaris' reasoning, because a Solicitation is merely an invitation to bid, and a

Collection Agreement is limited by its terms to the USFS's agreement to test products to

determine whether they qualify for listing on the qualifying products list, the waiver included

within the Solicitation should not be considered to extend to the testing of materials. Astaris

urges that it would be improper to imply a waiver where no waiver was intended. Further,

Astaris argues that the Federal Circuit's decision recognizing an implied waiver in TVI

Energy Corp. v. Blane, 806 F.2d 1057 (Fed. Cir. 1986), on which Fire-Trol's arguments

substantially rely, flies in the face of case law holding generally that a waiver of sovereign

immunity must be expressed and cannot be implied. [Id., p. 9.]

As Astaris impliedly concedes, its argument does not square with the Federal Circuit's

analysis in TVI. In TVI, the Government invited public bids to supply the military with

disposable thermal targets. 806 F.3d at 1059. The Government's bid solicitation mandated

that bidders submit specimen thermal targets for live testing demonstrations. Id. TVI filed

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an action in the Eastern District of Virginia alleging patent infringement against Blane

Enterprises, Inc. after an official for TVI noticed that Blane had demonstrated a product that

TVI determined infringed its patent. The District court held that Blane was immune from

suit in federal district court under §1498. On appeal, the Federal Circuit framed the issue as:

whether a private party which infringes another's patent during Government

bidding activities such as those present here is immune under 28 U.S.C. §1498

from a District Court infringement action for that test demonstration. In other

words, was Blane acting "by or for" the United States "with its authorization

or consent" when it demonstrated the allegedly infringing targets at Fort Knox

for the sole purpose of responding to the Government's demand for a "Product

Demonstration," with the objective of acquiring a Government contract?

Id .

The Federal Circuit found §1498 immunity existed for Blane, rejecting TVI's

argument that immunity was not available because Blane was a mere "competitor" for a

Government contract and was "not yet an approved Government source." Id. at 1060. In

finding that required submission of an infringing product to Government testing represented

an activity "for the United States" "with its approval," the court concluded that "[t]he

significant point is that the [alleged infringer] was required to demonstrate the allegedly

infringing [product] as part of the Government's bidding procedure." Id. The court further

noted that the alleged infringer's "only purpose in demonstrating the [products] was to

comply with the Government's bidding requirements." Id.

The court also rejected the patent holder's argument that the alleged infringer did not

act with the authorization and consent of the Government because the Government had not

executed an authorization and consent letter. Id. Noting that the Government's authorization

and consent may be implied under proper circumstances, the court held that "Government

authorization was expressed by the specific requirement that [the alleged infringer]

demonstrate, under the guidelines of the bidding procedure, the allegedly infringing

[products.]" Id.

TVI is squarely on point. Here, as was the infringer in TVI, Fire-Trol was required

to submit its products for testing by the USFS before it could qualify for a contract to supply

those products. Specifically, the USFS' Solicitation Form used for soliciting bids for

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 The Federal Circuit noted in TVI that the "'demonstration-infringement' was

minimal at best. The total value of the targets was only $500, and [the infringer] received

no commercial profit from the use of the [infringing products]; they were used solely for the

purposes of [demonstration testing.]" 806 F.2d at 1061.

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products includes "Qualification Requirements," defined as 'a Government requirement for

testing or other quality assurance demonstration that must be completed before award."

[Doc. #49, Ex. 2, p. 52 ¶ I-4(a).] The requirements include that the product offeror have

demonstrated that the product "meets the standards prescribed for qualification before award

of this contract. . . . Offerors should contact the agency . . . to obtain all requirements that

they . . . must satisfy to become qualified and to arrange for an opportunity to demonstrate

their abilities to meet the standards specified for qualification." [Id. ¶ I-4(b).]

Astaris urges that this similarity does not dispose of the question because here there

is a Collection Agreement governing product testing that did not include or incorporate a

consent and authorization clause: "[t]he notion that the U.S. Government waived its

sovereign immunity in one contract because it waived that immunity in another contract

makes no sense." [Doc. #78, p. 7.] 

The view most consistent with the "broad" coverage provided by §1498 is that the

Solicitations, which require demonstration testing of products and which include an express

authorization and consent clause for tested products obtained under a contract, anticipate that

the authorization and consent will extend to the very limited use of an infringing product in

pre-contractual testing by the Government.2

 This view is consistent with the approach

adopted by the Federal Circuit in TVI, 806 F.2d at 1060 and Garlock, 842 F.2d at 1282. See

also Parker Beach Restoration, Inc. v. United States, 58 Fed. Cl. 126, 133 (Fed. Cl. 2003)

(noting "broad" construction of §1498 in TVI, and distinguishing TVI because TVI only

decided that §1498 immunity applied to the infringer and did not decide whether TVI had

a cause of action against the United States for patent facts).

3. Necessary infringement

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Astaris contends that Fire-Trol's provision to the USFS of infringing products for

testing does not qualify under the USFS's authorization and consent pursuant to FAR

§52.227-1(a) because the USFS did not expressly require Fire-Trol to infringe Astaris' patent

in order to meet USFS specifications. Astaris further argues that Fire-Trol currently sells fire

retardants to the USFS which meet the specifications and do not infringe Astaris' patent and

concludes this establishes that it was not "necessary" for Fire-Trol to submit an infringing

product for testing.

This argument was refuted by the Federal Circuit in TVI. After recognizing that the

Government had impliedly expressed its authorization and consent by specifically requiring

a demonstration of the infringing product, the court concluded: 

The mere fact that the Government specifications for the [infringing product]

did not absolutely require Blane to infringe TVI's patent at that demonstration

does not extinguish the Government's consent. To limit the scope of §1498

only to instances where the Government requires by specification that a

supplier infringe another's patent would defeat the Congressional intent to

allow the Government to procure whatever it wished regardless of possible

patent infringement.

806 F.2d at 1060. TVI addressed the very issue presented here, where demonstration testing

was required prior to the submission of bids for product sales, and the solicitation did not

include specifications that would require patent infringement. TVI is persuasive authority

and disposes of Astaris' "necessary infringement" argument.

4. Fire-Trol's sales of DTMD products to the State of California

Immunity from liability pursuant to §1498 extends only to sales to the United States.

In that Fire-Trol has in the past sold non-infringing fire retardant to the State of California,

Astaris contends that California and other states may in the future purchase Fire-Trol's

infringing products once the products are listed on the Qualified Product List. Astaris

asserts:

It is therefore possible (and this Court must assume for purposes of this

motion) that all of Fire-Trol's testing and development of DMTD products, as

well as the Forest Service's qualification testing of the products, will result in

either no sales to anyone or in sales to only the state governments. None of

that activity will have been for the U.S. Government, and none of it will be for

the U.S. Government unless and until the Forest Service buys Fire-Trol's

DMTD products.

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[Doc. #78, p. 7.] Astaris concludes that under such a scenario, Fire-Trol's manufacture and

testing of DMTD products would not have been "by and for" the United States as is required

to trigger §1498 immunity. 

Astaris in essence invites the Court to decide Fire-Trol's motion based on speculation

that because Fire-Trol has at some time sold non-infringing retardant to the State of

California, it may sell infringing products to California or another state in the future, such

that the manufacture and testing of the retardant would not be entirely by and for the United

States. The Court declines Astaris' invitation. "[M]ere allegation and speculation do not

create a factual dispute for purposes of summary judgment." Nelson v. Pima Comty. Coll.,

83 F.3d 1075, 1081-82 (9th Cir. 1996). 

Moreover, Astaris' argument falters on the unsupported assumption that testing by the

USFS of Fire-Trol's DMTD products will not "be for the U.S. Government unless and until

the Forest Service buys Fire-Trol's DMTD products." This assumption ignores relevant case

law holding that a prospective contractor may qualify for §1948 immunity by bidding with

the United States to supply alleged infringing products. The Federal Circuit has instructed

that "Section 1498(a) would be emasculated if a patent holder could enjoin bidding to supply

infringing products. . . . [A] patent holder may not use its patent to cut the government off

from sources of supply, either at the bid stage or during performance of a government

contract." Trojan, 885 F.2d at 856-57. In Garlock, the Federal Circuit noted that §1498

provides broad coverage "'so as not to limit the Government's freedom in procurement by

considerations of private patent infringement.'" 842 F.2d at 1282 (quoting TVI Energy, 806

F.2d at 1060). The court concluded that the broad reach of §1498 would permit the infringer

"freedom to bid on and participate in the sale to the government of products which, or the

process of making which, infringe Gore's patents. In our view, [§1498] . . . assures it that

right without interference from Gore – automatically." Id. (emphasis added). 

C. Astaris' Motion for Preliminary Injunction (Doc. # 70)

Defendant Fire-Trol's Motion for Stay of Astaris' Motion for Preliminary

Injunction and Fire-Trol's Agreement to be Bound by Temporary Restraining

Order (Doc. #75)

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On June 4, 2004, Astaris requested a preliminary injunction to enjoin Fire-Trol from

having any further testing done on Fire-Trol's products that infringe the '831 patent and from

manufacturing, selling or offering to sell any infringing products, and to require Fire-Trol to

withdraw all infringing retardants from consideration by the USFS for qualification or

placement on the approved product list. [Docs. # 70, 71.] On June 17, 2004, Fire-Trol

moved the Court to stay Astaris' motion for preliminary injunction and asserted its

willingness to agree to be bound by a temporary restraining order prohibiting it from selling

or offering to sell any allegedly infringing products through September 2004 or until this

Court had ruled on Fire-Trol's renewed motion for summary judgment, whichever was the

earlier. Additionally, Fire-Trol signaled some willingness to extend the terms of a TRO

beyond September 2004. [Doc. #75.] 

Astaris filed its Response to Fire-Trol's Motion for Stay of Preliminary Injunction on

July 6, 2004 (Doc. # 76). Astaris concurred with Fire-Trol that "it makes sense to address

the governmental immunity issue early in this litigation" and further agreed that a TRO such

as that offered by Fire-Trol would be sufficient "to address Astaris' infringement concerns."

[Doc. # 76, p. 2.] Astaris also argued that the proposed TRO should be extended until

resolution of Astaris' preliminary injunction motion. [Id., pp. 2-3.] In Reply, Fire-Trol stated

that it would be willing to discuss extending a TRO once its summary judgment motion had

been resolved. [Doc. #77.]

Although this Court's March 31, 2005 Order denied Astaris' Motion for Preliminary

Injunction (Doc. #70) and granted Defendant Fire-Trol's Motion for Stay of Astaris' Motion

for Preliminary Injunction and Fire-Trol's Agreement to be Bound by Temporary Restraining

Order (Doc. #75), the Court deems the better ruling to be denial of these motions as moot.

The Court's March 31, 2005 Order (Doc. #87) will be amended to reflect that ruling. 

IV. CONCLUSION

For the reasons explained above, this Court's March 31, 2005 Order granted in part

and denied in part Astaris' Motion to Strike New Matters, and granted Fire-Trol's summary

judgment motion. As a result, the case will dismissed pursuant to 28 U.S.C. § 1498(a).

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Additionally, this Amended Order denies as moot Astaris' Motion for Preliminary Injunction

(Doc. #70) and Defendant Fire-Trol's Motion for Stay of Astaris' Motion for Preliminary

Injunction and Fire-Trol's Agreement to be Bound by Temporary Restraining Order (Doc.

#75).

Accordingly,

IT IS ORDERED DISMISSING this action with prejudice pursuant to 28 U.S.C.

§1498(a).

IT IS FURTHER ORDERED amending this Court's Order filed on March 31, 2005

(Doc. #87) to DENY AS MOOT Astaris' Motion for Preliminary Injunction (Doc. #70) and

Defendant Fire-Trol's Motion for Stay of Astaris' Motion for Preliminary Injunction and FireTrol's Agreement to be Bound by Temporary Restraining Order (Doc. #75).

DATED this 5th day of January, 2006.

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