Source: http://www.jdsupra.com/legalnews/in-the-tradition-of-gilda-radner-the-co-59990/
Timestamp: 2015-09-01 02:12:09
Document Index: 164140548

Matched Legal Cases: ['§1498', '§1498', '§271', '§1498', '§1498', '§1498', '§1498', '§1498', '§1498', '§1498', '§1498', '§1498', '§1498', '§1498']

In the Tradition of Gilda Radner, the Court of Appeals for the Federal Circuit Proclaims "Never Mind" in Zoltek II | Sheppard Mullin Richter & Hampton LLP - JDSupra
[author: Louis D. Victorino]
The U.S. (Government) moved for summary judgment on this portion of the Zoltek lawsuit based on the language of sub-section (c) of 28 U.S.C. §1498. That sub-section provides, in total, "[t]he provisions of this section shall not apply to any claim arising in a foreign country." The Government argued that this section precluded recovery by Zoltek under its "methods" patent claims because some or all of the infringement occurred in Japan and, thus, arose "in a foreign country." The COFC held, in part, that §1498 did not waive Government's sovereign immunity to all infringements (direct infringements but not indirect infringements) but ultimately denied the Government's motion. Both parties appealed the court's decision on various grounds.
On remand, Zoltek sought leave to amend its complaint to add an infringement claim against Lockheed based on 35 U.S.C. §271 and sought, further, to have the matter transferred to a federal district court in Georgia. The Government argued that §1498(a), while not waiving sovereign immunity for Zoltek's patent claims, nevertheless provided Lockheed immunity from Zoltek's suit and, therefore, there was no jurisdiction in the federal district court in Georgia. The COFC rejected the Government's arguments and found that it was in the interest of justice to transfer the case to Georgia. Subsequently, the COFC certified for appeal to the CAFC the issue of Lockheed immunity under §1498(a).
The CAFC concluded, with one dissent, that neither of these options was acceptable and, instead, ruled to overturn its earlier decision in several respects. First, the Court ruled that the COFC and the CAFC's earlier decision had wrongly relied on case law to conclude that §1498(a) covered only direct infringements and not indirect infringements. The CAFC reviewed the prior case law relied upon in Zoltek I and found that statements used by the COFC to reach its decision regarding the scope of §1498(a) were dicta. Second, the CAFC found that unauthorized "sales" and "use" of products incorporating patented technology were indirect patent infringements falling within the coverage of §1498(a). Finally, the CAFC reversed its prior holding that all steps in a "process" or "method" patent must be infringed in the United States for §1498(a) to apply.
The practical result of Zoltek is that very few sales to the U.S. Government by contractors and subcontractors of products or services that infringe patents will not be covered by §1498(a). The Court's holding that indirect patent infringements are covered by §1498(a) largely achieves this result since §1498(a) states:
28 U.S.C. §1498(a) (emphasis added). This language, together with the Court's holding that not all processes in a process or method patent need be performed in the U.S., encompasses the overwhelming majority of patent infringement cases covered by §1498(a). If a product or service of a contractor is produced through the unauthorized use of a U.S. patent with the authorization and consent of the Government, any resulting patent infringement action must be brought against the Government in the United States Court of Federal Claims. This is, of course, the result that most government contractors believed to be the case prior to the Zoltek I decision.