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Summary presentation of Zoltek v. U.S.

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This is a presentation I gave in early 2009, summarizing the progress of the case of Zoltek v. U.S. as it passed through multiple federal courts. This case shows the interesting interplay between the U.S. patent statutes and governmental contractor relationships.

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Summary presentation of Zoltek v. U.S.

  1. 1. An embodiment of U.S. Pat. No. Re. 34,162 U.S. Air Force photo
  2. 2. The Long, Strange Trip of Zoltek Bryan Beel, J.D., Ph.D. [email_address] 503-224-6655 Copyright 2009
  3. 3. Question <ul><li>Is there a court that has jurisdiction over a patent infringement claim when a patented process is used by or for the United States government? </li></ul>
  4. 4. Zoltek v. U.S. , Court of Federal Claims (2009) <ul><li>Government’s position: no court has jurisdiction to hear an infringement claim involving the government or its contractors, under certain circumstances. </li></ul><ul><li>The court: We agree. </li></ul>
  5. 5. As Paul Harvey would say: <ul><li>Let’s hear the rest of the story… </li></ul>ABC Radio Networks
  6. 6. Factual background <ul><li>The F-22 Raptor Advanced Tactical Fighter </li></ul><ul><ul><li>1981: Parameters of the program </li></ul></ul><ul><ul><li>1991: Lockheed wins the design and test flight competition </li></ul></ul><ul><ul><li>Jan. 2003: First production fighter delivered </li></ul></ul><ul><ul><li>Dec. 2004: First crash </li></ul></ul><ul><ul><li>Aug. 2007: </li></ul></ul><ul><ul><ul><li>$5 billion, multi-year contract with Lockheed </li></ul></ul></ul><ul><ul><ul><li>100th fighter delivered </li></ul></ul></ul><ul><ul><li>Fighter designed to use the most advanced technologies available for flight control, weapons/communication control, and stealth </li></ul></ul>
  7. 7. Factual background <ul><li>Stealth and performance capabilities derived from use of advanced fiber construction. </li></ul><ul><li>Nicalon®: Continuous silicon carbide fiber (Nippon Carbon, imported by COI Ceramics). </li></ul><ul><li>Tyranno®: silicon carbide fiber with titanium, zirconium, or aluminum (Ube Industries). </li></ul><ul><li>Lockheed imported the fibers for use in F-22 construction. </li></ul>
  8. 8. Factual Background <ul><li>U.S. Patent No. Re. 34,162 </li></ul><ul><ul><li>Controlled Surface Electrical Resistance Carbon Fiber Sheet Product </li></ul></ul>
  9. 9. U.S. Pat. No. Re. 34,162 <ul><ul><li>1 . A method of manufacturing a plurality of different value controlled resistivity carbon fiber sheet products employing a carbonizable fiber starting material; said method comprising selectively partially carbonizing previously oxidized and stabilized fiber starting material for a predetermined time period in an oxygen free atmosphere within a furnace at selected temperature values within a temperature range from 370 degrees Centigrade to about 1300 degrees Centigrade by soaking the stabilized fiber starting material at the selected temperature for the predetermined period of time to provide a preselected known volume electrical resistivity to the partially carbonized fibers corresponding to that volume electrical resistivity value required to provide the preselected desired surface resistance value for the finished sheet products, and thereafter processing the partially carbonized fibers into homogeneous carbon fiber sheet products having the preselected desired surface electrical resistances. </li></ul></ul>
  10. 10. U.S. Pat. No. Re. 34,162 <ul><ul><li>1. A method of manufacturing a plurality of different value controlled resistivity carbon fiber sheet products employing a carbonizable fiber starting material; said method comprising selectively partially carbonizing previously oxidized and stabilized fiber starting material for a predetermined time period in an oxygen free atmosphere within a furnace at selected temperature values within a temperature range from 370 degrees Centigrade to about 1300 degrees Centigrade by soaking the stabilized fiber starting material at the selected temperature for the predetermined period of time to provide a preselected known volume electrical resistivity to the partially carbonized fibers corresponding to that volume electrical resistivity value required to provide the preselected desired surface resistance value for the finished sheet products, and thereafter processing the partially carbonized fibers into homogeneous carbon fiber sheet products having the preselected desired surface electrical resistances. </li></ul></ul>
  11. 11. U.S. Pat. No. Re. 34,162 <ul><ul><li>1. A method of manufacturing a plurality of different value controlled resistivity carbon fiber sheet products employing a carbonizable fiber starting material; said method comprising selectively partially carbonizing previously oxidized and stabilized fiber starting material for a predetermined time period in an oxygen free atmosphere within a furnace at selected temperature values within a temperature range from 370 degrees Centigrade to about 1300 degrees Centigrade by soaking the stabilized fiber starting material at the selected temperature for the predetermined period of time to provide a preselected known volume electrical resistivity to the partially carbonized fibers corresponding to that volume electrical resistivity value required to provide the preselected desired surface resistance value for the finished sheet products, and thereafter processing the partially carbonized fibers into homogeneous carbon fiber sheet products having the preselected desired surface electrical resistances. </li></ul></ul>
  12. 12. U.S. Pat. No. Re. 34,162 <ul><ul><li>1. A method of manufacturing a plurality of different value controlled resistivity carbon fiber sheet products employing a carbonizable fiber starting material; said method comprising selectively partially carbonizing previously oxidized and stabilized fiber starting material for a predetermined time period in an oxygen free atmosphere within a furnace at selected temperature values within a temperature range from 370 degrees Centigrade to about 1300 degrees Centigrade by soaking the stabilized fiber starting material at the selected temperature for the predetermined period of time to provide a preselected known volume electrical resistivity to the partially carbonized fibers corresponding to that volume electrical resistivity value required to provide the preselected desired surface resistance value for the finished sheet products, and thereafter processing the partially carbonized fibers into homogeneous carbon fiber sheet products having the preselected desired surface electrical resistances. </li></ul></ul>
  13. 13. U.S. Pat. No. Re. 34,162 <ul><ul><li>1. A method of manufacturing a plurality of different value controlled resistivity carbon fiber sheet products employing a carbonizable fiber starting material; said method comprising selectively partially carbonizing previously oxidized and stabilized fiber starting material for a predetermined time period in an oxygen free atmosphere within a furnace at selected temperature values within a temperature range from 370 degrees Centigrade to about 1300 degrees Centigrade by soaking the stabilized fiber starting material at the selected temperature for the predetermined period of time to provide a preselected known volume electrical resistivity to the partially carbonized fibers corresponding to that volume electrical resistivity value required to provide the preselected desired surface resistance value for the finished sheet products , and thereafter processing the partially carbonized fibers into homogeneous carbon fiber sheet products having the preselected desired surface electrical resistances. </li></ul></ul>
  14. 14. U.S. Pat. No. Re. 34,162 <ul><ul><li>1. A method of manufacturing a plurality of different value controlled resistivity carbon fiber sheet products employing a carbonizable fiber starting material; said method comprising selectively partially carbonizing previously oxidized and stabilized fiber starting material for a predetermined time period in an oxygen free atmosphere within a furnace at selected temperature values within a temperature range from 370 degrees Centigrade to about 1300 degrees Centigrade by soaking the stabilized fiber starting material at the selected temperature for the predetermined period of time to provide a preselected known volume electrical resistivity to the partially carbonized fibers corresponding to that volume electrical resistivity value required to provide the preselected desired surface resistance value for the finished sheet products, and thereafter processing the partially carbonized fibers into homogeneous carbon fiber sheet products having the preselected desired surface electrical resistances . </li></ul></ul>
  15. 15. 35 U.S.C. Sec. 1498(a)
  16. 16. 35 U.S.C. Sec. 1498(a)
  17. 17. Zoltek files a claim <ul><li>1996: Zoltek v. U.S. in Court of Federal Claims </li></ul><ul><ul><li>Zoltek is the assignee of Re 34,162. </li></ul></ul><ul><ul><li>Lockheed used fibers covered by claims of the patent, or manufactured by a process covered by the claims of the patent. </li></ul></ul><ul><ul><li>Lockheed’s use of the patented process was “by or for” the United States government. </li></ul></ul><ul><ul><li>Zoltek is due “reasonable and entire compensation” from the United States for this use, under 35 U.S.C. Sec. 1498(a). </li></ul></ul>
  18. 18. Arguments in Court of Federal Claims (I) <ul><li>Zoltek: </li></ul><ul><ul><li>Entitled to compensation under 35 U.S.C. Sec. 1498 </li></ul></ul><ul><ul><li>Failing that, the U.S. “took” our “property” and we are entitled to compensation under the Fifth Amendment </li></ul></ul>
  19. 19. U.S. Constitution, Amendment V <ul><li>… [N]or shall private property be taken for public use, without just compensation. </li></ul>
  20. 20. Ct. Fed. Cl., takings jurisdiction Claim: a cause of action; means by or through which claimant obtains possession or enjoyment of privilege or thing. Black’s Law Dictionary, 6th ed.
  21. 21. Arguments in Court of Federal Claims (I) <ul><li>United States: </li></ul><ul><ul><li>Zoltek’s claim is barred at least under 35 U.S.C. 1498(c) </li></ul></ul><ul><ul><li>There is no jurisdiction in this court over takings </li></ul></ul><ul><ul><ul><li>Schillinger v. U.S. , 155 U.S. 163 (1894), the Supreme Court rejected an argument that a patentee could sue the government for patent infringement as a Fifth Amendment taking under the Tucker Act (35 U.S.C. Sec. 1491 et seq. ). </li></ul></ul></ul>
  22. 22. 35 U.S.C. Sec. 1498(c)
  23. 23. Ct. Fed. Cl., resolution (51 Fed. Cl. 829 (2002); 58 Fed. Cl. 688 (2003)) <ul><li>Held: </li></ul><ul><ul><li>When Sec. 1498(c) was enacted, private actors not liable for infringing process where one step was performed outside the U.S.; a similar result should hold here. </li></ul></ul><ul><ul><li>The legislative gap (applying all types of infringement to the U.S.) is too great to be filled by the judiciary. </li></ul></ul><ul><ul><li>Patent rights are property protected by the Fifth Amendment, so a cause of action arises in the Ct. Fed. Cl. </li></ul></ul>
  24. 24. Court of Appeals for the Federal Circuit <ul><li>Two certified questions: </li></ul><ul><ul><li>1) Whether 35 U.S.C. Sec. 1498(c) bars Zoltek’s claim under Section 1498. </li></ul></ul><ul><ul><li>2) The issue of the Court of Federal Claims’ jurisdiction under the Fifth Amendment </li></ul></ul>
  25. 25. Result in Fed. Cir. (442 F.3d 1345 (2006)) <ul><li>Section 1498(a) bars Zoltek’s claim </li></ul><ul><li>No Federal Claims jurisdiction under the Fifth Amendment </li></ul><ul><li>Per curiam </li></ul><ul><ul><li>You lose, but we can’t agree why. </li></ul></ul>
  26. 26. Federal Circuit: per curiam <ul><li>Direct infringement under 35 U.S.C. Sec. 271(a) is necessary for government liability under Sec 1498. ( NTP ) </li></ul><ul><li>A process is not “used” in the U.S. unless all steps are practiced here. ( Id. ) </li></ul><ul><li>Therefore, no liability under Sec. 1498(a). </li></ul><ul><li>Schillinger held no Fifth Amendment jurisdiction in the Ct. Fed. Cl. </li></ul>
  27. 27. Federal Circuit: Gajarsa <ul><li>NTP is exceedingly weak. </li></ul><ul><li>Because of the waiver of sovereign immunity: </li></ul><ul><ul><li>“ Use” in 1498(a) must be construed narrowly </li></ul></ul><ul><ul><ul><li>Practice every method step </li></ul></ul></ul><ul><ul><li>“ Arising in a foreign country” in 1498(c) must be construed broadly </li></ul></ul><ul><ul><ul><li>Any step abroad bars the claim </li></ul></ul></ul><ul><li>At least one step of each claim was performed in Japan; therefore, no cause of action. </li></ul><ul><li>Congress is not required to provide a Fifth Amendment remedy in the courts. </li></ul>
  28. 28. Federal Circuit: Dyk <ul><li>NTP is the law. </li></ul><ul><ul><li>Remedy under 1498(a) only if infringement under 271(a). </li></ul></ul><ul><ul><li>“ Congress could not have intended to confer broader rights against the U.S. than against private parties” </li></ul></ul><ul><li>Patent rights are a creature of statute, so there can be no taking. </li></ul><ul><ul><li>i.e. Your patent rights are defined by what the U.S. gives you (1498(a) = 271(a)) so they can’t be taken by refusal to recognize a greater rights, like those against private parties (Secs. 271(b-g)). </li></ul></ul>
  29. 29. Federal Circuit Plager (dissent) <ul><li>Fifth Amendment takings, independent of statute, have been recognized since 1933 ( Jacobs v. U.S. ) </li></ul><ul><ul><li>Jurisdiction in Ct. Fed. Cl. under Tucker Act (35 U.S.C. 1491). </li></ul></ul><ul><li>1498(a) encompasses more than just 271(a) infringement. </li></ul><ul><ul><li>Not every step must be in the U.S. (such a requirement makes 1498(c) superfluous). </li></ul></ul><ul><ul><li>A cause of action does not “arise” in a place simply because one step of a multi-step process occurs there </li></ul></ul><ul><ul><ul><li>Invites “wrongful conduct” (i.e. it’s unfair). </li></ul></ul></ul>
  30. 30. Petition to Federal Circuit <ul><li>Petition for en banc rehearing, denied. </li></ul><ul><ul><li>464 F.3d 1335 (2006). </li></ul></ul><ul><ul><li>Newman dissents, pointing out the property aspect of patents, and the panel’s ignoring precedent. </li></ul></ul><ul><ul><li>Dyk and Gajarsa concur in denial: we were right the first time. </li></ul></ul>
  31. 31. Petition for certiorari <ul><li>Zoltek argues: </li></ul><ul><ul><li>Patents are Fifth Amendment property. </li></ul></ul><ul><ul><li>Ct. Fed. Cl. had jurisdiction under the Fifth Amendment. </li></ul></ul><ul><ul><li>Sec. 1498 should cover all types of infringement. </li></ul></ul><ul><li>Government argues: </li></ul><ul><ul><li>Schillinger was clear, no Fifth Amendment jurisdiction in Ct. Fed. Cl. </li></ul></ul><ul><li>Result: certiorari denied (127 S.Ct. 2936 (2007)). </li></ul>
  32. 32. Ct. Fed. Cl., motion to transfer <ul><li>Zoltek files motion to transfer the case under 28 U.S.C. Sec. 1631 </li></ul>
  33. 33. 28 U.S.C. Sec. 1631
  34. 34. 28 U.S.C. Sec. 1631
  35. 35. 28 U.S.C. Sec. 1631
  36. 36. Ct. Fed. Cl., motion to transfer <ul><li>Element 1 clearly satisfied </li></ul><ul><ul><li>The Federal Circuit denied jurisdiction on both available grounds </li></ul></ul><ul><li>At issue: </li></ul><ul><ul><li>Element 2: Is transfer in the interest of justice? </li></ul></ul><ul><ul><li>Element 3: Could the case have been brought in the Northern District of Georgia when it was filed? </li></ul></ul>
  37. 37. Ct. Fed. Cl., motion to transfer <ul><li>Zoltek’s arguments </li></ul><ul><ul><li>Element 2: We should get our day in court, somewhere, anywhere. </li></ul></ul><ul><ul><li>Element 3: “No doubt” that claim could have been brought in the Northern District of Georgia (Lockheed’s location). </li></ul></ul><ul><li>Government’s arguments </li></ul><ul><ul><li>Element 2: Transfer and re-filing is unfair to Lockheed Element 3: No court has jurisdiction over Zoltek’s claim </li></ul></ul><ul><ul><ul><li>Sec 1498(a) bars a claim against a contractor </li></ul></ul></ul><ul><ul><ul><li>Sec 1498(c) bars a claim against the U.S. </li></ul></ul></ul>
  38. 38. Ct. Fed. Cl., resolution <ul><li>Transfer serves the interests of justice, since Zoltek is the first party to run into the “legislative gap” </li></ul><ul><ul><li>U.S. not liable for all types of infringement under 35 U.S.C. Sec. 271, and Fifth Amendment not available </li></ul></ul><ul><li>35 U.S.C. 1498(c) wipes out all aspects of 1498(a), so contractor is no longer shielded. </li></ul><ul><li>If Zoltek files an amended complaint, alleging infringement by Lockheed under Sec. 271, the court will transfer the case. </li></ul>
  39. 39. Answer <ul><li>Recall the Question: </li></ul><ul><ul><li>Is there a court that has jurisdiction over a patent infringement claim when a patented process is used by or for the United States government? </li></ul></ul><ul><li>It depends on the answer to this question: </li></ul><ul><ul><li>Was every step of the process performed in the U.S.? </li></ul></ul><ul><ul><ul><li>If yes, it appears there could be jurisdiction over the government in Court of Federal Claims. </li></ul></ul></ul><ul><ul><ul><li>If no, it appears there could be jurisdiction over a contractor in a district court. </li></ul></ul></ul>
  40. 40. What could or should have been done differently? <ul><li>Zoltek files after reading 1498 carefully </li></ul><ul><li>Federal Circuit doesn’t ignore precedent or legislation </li></ul><ul><ul><li>Jacobs v. U.S. , 290 U.S. 13 (1933): “The suits were based on the right to recover just compensation for property taken by the United States for public use in the exercise of its power of eminent domain. That right was guaranteed by the Constitution. The fact…that the right was asserted in suits by the owners did not change the essential nature of the claim. The form of the remedy did not qualify the right. It rested upon the Fifth Amendment. Statutory recognition was not necessary. A promise to pay was not necessary…The suits were thus founded upon the Constitution.” </li></ul></ul><ul><ul><li>U.S. v. Causby , 328 U.S. 256 (1946): “If there is a taking, the claim is ‘founded upon the Constitution’ and within the jurisdiction of the Court of Claims to hear and determine.” </li></ul></ul>

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