Patent owner must seek remedy in Federal Court of Claims for alleged TSA infringement

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Federal Circuit Review No. 69-01
28 U.S.C. § 1498(a) Makes Claims Against the United States in the Court of Federal Claims Exclusive and Bars Claims Against Indirect Infringers

Astornet Tech. Inc. v. BAE Systems, Inc., No. 2014-1854, 2015-1006, -1007, 2015 U.S. App. LEXIS 16535 (Fed. Cir. Sep. 17, 2015) (Before Prost, C.J., Newman and Taranto, J.) (Opinion for the court, Taranto, J.). Click Here for a copy of the opinion.

Astornet sued NCR Government Systems, MorphoTrust, and BAE Systems Inc., alleging that they supplied the Transportation Security Administration (“TSA”) with certain boarding pass scanning systems, and that TSA’s use of the equipment infringed or would infringe its patent. Initially, Astornet alleged direct infringement by the defendants in a single complaint. Subsequently, Astornet amended the complaint to name BAE Systems as the defendant and filed two new complaints, one each against NCR and MorphoTrust. Astornet also amended the allegations from direct to indirect (induced and contributory) infringement, because the asserted claims require certain processing steps that are performed only when the system is being used for its intended purposes.

The defendants moved to dismiss the complaints and argued that 28 U.S.C. § 1498 barred the suits by limiting Astornet’s remedy to an action against the United States in the Court of Federal Claims. The district court agreed with NCR and BAE Systems and dismissed the case. Astornet appealed.

The Federal Circuit affirmed the dismissal based solely on 28 U.S.C. § 1498(a), which provides:

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 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…

The Court held that this provision applied to the allegations against all three defendants. The use of the indefinite article “the owner’s remedy” and the statement that the remedy is for payment of the owner’s “entire compensation” in the statute indicated that the remedy against the United States is exclusive. Furthermore, the complaints alleged that the defendants “induced (and contributed to) direct infringement by TSA by virtue of TSA’s use of equipment supplied by the defendants.” Additionally, the TSA’s claim of use of the equipment was well within the statutory terms. In sum, the statutory language is not limited to claims filed against the United States or its agencies. The Court concluded that the analysis of “use by the United States” requires “dismissal based on the sole claims of infringement – i.e., indirect infringement – actually in the operative complaints.”