Court Opinion

ID: 2744105
Source: CourtListenerOpinion
Date Created: 2014-10-21 16:03:20.400093+00
Date Added: 2024-06-11T10:07:13.105668
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

                IRIS CORPORATION,
                  Plaintiff-Appellant,

                           v.

        JAPAN AIRLINES CORPORATION,
                  Defendant,

                         AND

 JAPAN AIRLINES INTERNATIONAL COMPANY,
                    LTD.,
              Defendant-Appellee.
            ______________________

                      2010-1051
                ______________________

   Appeal from the United States District Court for the
Eastern District of New York in No. 06-CV-6336, Chief
Judge Carol Bagley Amon.
                 ______________________

               Decided: October 21, 2014
                ______________________

    STEPHEN N. WEISS, Law Office of Stephen Norman
Weiss, of New York, New York, argued for plaintiff-
appellant. Of counsel on the brief was EDMUND J.
FERDINAND, III, Ferdinand IP, LLC, of Westport, Connect-
icut.
2          IRIS CORPORATION   v. JAPAN AIRLINES CORPORATION

    CHARLES F. SCHILL, Steptoe & Johnson LLP, of Wash-
ington, DC, argued for defendant-appellee. With him on
the brief were WILLIAM KARAS, CAROL GOSAIN, PAUL D.
LALL, and STEPHANIE L. ROBERTS.

    DANA KAERSVANG, Attorney, Appellate Staff, Civil Di-
vision, United States Department of Justice, of Washing-
ton, DC, argued for amicus curiae United States. With her
on the brief were STUART F. DELERY, Assistant Attorney
General, and SCOTT R. MCINTOSH, Attorney.

   DAN L. BAGATELL, Perkins Coie LLP, of Phoenix, Ari-
zona, for amicus curiae Airlines for America.
                 ______________________

Before PROST, Chief Judge, NEWMAN and HUGHES, Circuit
                        Judges.
HUGHES, Circuit Judge.
    IRIS Corporation brought suit in district court, alleg-
ing that Japan Airlines Corporation committed patent
infringement by examining the electronic passports of its
passengers within the United States. Because the alleg-
edly infringing acts were carried out “for the United
States” under 28 U.S.C. § 1498(a), we affirm the district
court’s decision to dismiss IRIS’s complaint.
                              I
    IRIS owns U.S. Patent No. 6,111,506 (the ’506 pa-
tent), titled “Method of Making an Improved Security
Identification Document Including Contactless Communi-
cation Insert Unit.” The ’506 patent discloses methods for
making a secure identification document containing an
embedded computer chip that stores biographical or
biometric data. ’506 patent col. 20 ll. 11–64.
    Japan Airlines Corporation (JAL) examines passports
according to federal law, including the Enhanced Border
IRIS CORPORATION   v. JAPAN AIRLINES CORPORATION            3

Security Act, 8 U.S.C. § 1221 et seq., the Visa Entry
Reform Act of 2002, 19 C.F.R. § 122.75a(d), and certain
international treaties. According to IRIS, some of these
passports are made using the methods claimed in the ’506
patent.
    IRIS sued JAL for patent infringement in the Eastern
District of New York, alleging that JAL infringed the ’506
patent under 35 U.S.C. § 271(g) by “using . . . electronic
passports in the processing and/or boarding of passen-
gers . . . at . . . JAL services passenger check-in facilities
throughout the United States.” J.A. 74. JAL moved to
dismiss IRIS’s suit for failure to state a claim upon which
relief can be granted. See Fed. R. Civ. P. 12(b)(6).
Among other things, JAL argued that federal laws requir-
ing the examination of passports conflict with the patent
laws and therefore exempt JAL from infringement liabil-
ity. It also argued that IRIS’s exclusive remedy is an
action against the United States under 28 U.S.C.
§ 1498(a).
    The district court granted JAL’s motion to dismiss,
adopting only JAL’s conflict-of-laws rationale.   IRIS
appeals.      We have jurisdiction under 28 U.S.C.
§ 1295(a)(1).
                              II
    We review dismissal for failure to state a claim upon
which relief can be granted under the law of the regional
circuit. Juniper Networks, Inc. v. Shipley, 643 F.3d 1346,
1350 (Fed. Cir. 2011). In this case, we apply Second
Circuit law and review the district court’s judgment de
novo. See Patane v. Clark, 508 F.3d 106, 111 (2d Cir.
2007).
   The parties ask us to decide, among other things,
whether the United States has assumed liability under 28
4           IRIS CORPORATION   v. JAPAN AIRLINES CORPORATION

U.S.C. § 1498(a) for JAL’s allegedly infringing activities. 1
The statute states:
    Whenever an invention described in and covered
    by a patent of the United States is used or manu-
    factured by or for the United States . . . the owner’s
    remedy shall be by action against the United
    States in the United States Court of Federal
    Claims . . . .
28 U.S.C. § 1498(a) (2012) (emphasis added). The statute
further clarifies that an accused activity is “for the United
States” if two requirements are met: (1) it is conducted
“for the Government,” and (2) it is conducted “with the
authorization or consent of the Government.” Id.; accord
Advanced Software Design Co. v. Fed. Reserve Bank of St.
Louis, 583 F.3d 1371, 1375–76 (Fed. Cir. 2009).
    The government’s authorization or consent may be ei-
ther express or implied. TVI Energy Corp. v. Blane, 806
F.2d 1057, 1060 (Fed. Cir. 1986). In this case, the gov-
ernment has clearly provided its authorization or consent
because—as the parties and the United States agree—
JAL cannot comply with its legal obligations without
engaging in the allegedly infringing activities. See Br. of

    1   When the district court ruled on JAL’s motion to
dismiss, the law strongly suggested that alleged acts of
infringement under § 271(g) fell outside the scope of
§ 1498(a). See, e.g., NTP, Inc. v. Research in Motion, Ltd.,
418 F.3d 1282, 1316 (Fed. Cir. 2005); Zoltek Corp. v.
United States, 51 Fed. Cl. 829, 838 (2002). Relying on
those suggestions, the district court concluded that
§ 1498(a) did not apply in this case. We have subsequent-
ly ruled, however, that § 1498(a) does encompass alleged
acts of infringement under § 271(g). Zoltek Corp. v.
United States, 672 F.3d 1309, 1323 (Fed. Cir. 2012) (en
banc).
IRIS CORPORATION   v. JAPAN AIRLINES CORPORATION          5

United States at 13; Br. of Appellant at 24–26; Br. of
Appellee at 4–5. Under such circumstances, the govern-
ment has expressly authorized or consented to those
activities. See, e.g., Sevenson Envtl. Servs., Inc. v. Shaw
Envtl., Inc., 477 F.3d 1361, 1366–67 (Fed. Cir. 2007).
      But, standing alone, a governmental grant of authori-
zation or consent does not mean that the alleged use or
manufacture is done “for the United States” under
§ 1498(a). To qualify, the alleged use or manufacture
must also be done “for the benefit of the government.”
Advanced Software, 583 F.3d at 1378; see also Madey v.
Duke Univ., 413 F. Supp. 2d 601, 607 (M.D.N.C. 2006) (“A
use is ‘for the Government’ if it is ‘in furtherance and
fulfillment of a stated Government policy’ which serves
the Government’s interests and which is ‘for the Govern-
ment’s benefit.’” (quoting Riles v. Amerada Hess Corp.,
999 F. Supp. 938, 940 (S.D. Tex. 1998))). “[I]ncidental
benefit to the government is insufficient,” but “[i]t is not
necessary [for the Government] to be the sole beneficiary .
. . .” Advanced Software, 583 F.3d at 1378.
     In Advanced Software, for example, the United States
Treasury required privately owned and operated Federal
Reserve Banks to use a certain “seal encoding” system to
identify fraudulent bank checks. Id. at 1373. The plain-
tiff then sued three Federal Reserve Banks and the com-
pany that supplied their fraud detection technologies,
alleging that use of the mandatory seal encoding system
constituted infringement of its patented methods. Id. We
determined that the government benefitted from averting
fraud in Treasury checks and in saving Treasury re-
sources through more efficient technology.
    Similarly, the government benefits here because
JAL’s examination of passports improves the detection of
fraudulent passports and reduces demands on govern-
ment resources. This, in turn, directly enhances border
security and improves the government’s ability to monitor
6           IRIS CORPORATION   v. JAPAN AIRLINES CORPORATION

the flow of people into and out of the country. When the
government requires private parties to perform quasi-
governmental functions, such as this one, there can be no
question that those actions are undertaken “for the bene-
fit of the government.” See Oral Argument at 16:52–
17:26, IRIS Corp. v. Japan Airlines Corp., No. 2010-1051
(Fed.     Cir.   Sept.       8,     2014),    available   at
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
10-1051.mp3 (Counsel for the United States as amicus
curiae: “If [JAL] weren’t doing this, [the government]
would have to do it. We have to know who is going in and
out of our country. . . . So this is a uniquely governmental
function that we’re talking about here.”).
      We also note that the United States has unequivocally
stated its position that suit under § 1498(a) is appropriate
here. Id. at 14:52–15:37 (“We do submit that here 1498(a)
is the exclusive remedy. This is use ‘for the Government.’
. . . We do think that suit under 1498(a) is appropriate.”).
Although the government’s statement is not dispositive, it
reinforces our conclusion that the United States has
waived sovereign immunity in this case and, therefore,
that IRIS’s exclusive remedy is suit for recovery against
the United States under § 1498(a). See Advanced Soft-
ware, 583 F.3d at 1377–78.
                             III
    Accordingly, because JAL’s allegedly infringing acts
are carried out “for the United States” under 28 U.S.C.
§ 1498(a), we affirm the district court’s decision to dismiss
IRIS’s suit. 2
                       AFFIRMED

    2    Because we affirm the district court’s dismissal on
the basis of § 1498(a) alone, we do not address any of the
alternative grounds for affirmance proposed by JAL or the
district court’s discussion of those issues.
IRIS CORPORATION   v. JAPAN AIRLINES CORPORATION   7

   No costs.