Institut Pasteur v. U.S., 86-1541

Citation2 USPQ2d 1048,814 F.2d 624
Decision Date09 March 1987
Docket NumberNo. 86-1541,86-1541
Parties, 2 U.S.P.Q.2d 1048, 33 Cont.Cas.Fed. (CCH) 75,153 INSTITUT PASTEUR, Appellant, v. The UNITED STATES, Appellee. Appeal
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

James B. Swire, Townley & Updike, New York City, argued for appellant. With him on the brief were Richard J. Barnes and Lawrence C. Fox, New York City.

Thomas J. Byrnes, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued for appellee. With him on the brief were Richard K. Willard, Asst. Atty. Gen., Vito J. DiPietro, Director and Oscar A. Towler, Washington, D.C., of counsel.

Before FRIEDMAN, Circuit Judge, BALDWIN, Senior Circuit Judge, and ARCHER, Circuit Judge.

ARCHER, Circuit Judge.

Institut Pasteur appeals from the grant by the United States Claims Court 1 of summary judgment against it and in favor of the United States. We reverse and remand.

Background

In early 1983, Institut Pasteur (Pasteur) scientists in France, led by Dr. Luc Montagnier, the head of Pasteur's viral oncology unit, isolated and identified a virus which they called Lymphadenopathy Associated Virus (LAV) and which they believed to be the cause of the disease known as Acquired Immune Deficiency Syndrome (AIDS).

On September 15, 1983, Dr. Montagnier filed a patent application in the United Kingdom, Application No. 83.24.800, for a diagnostic kit which utilizes the LAV virus to detect antibodies in the blood of persons with AIDS and pre-AIDS conditions. 2 That same day he presented the results of his research at a scientific conference held at Cold Spring Harbor, New York, where Dr. Gallo and other National Cancer Institute (NCI) researchers were also present.

A week later, at the request of Dr. Gallo, Pasteur sent samples of the LAV virus to Dr. Gallo for research use. Accompanying the samples was a document 3 conditioning In April 1984, Dr. Gallo announced that he had proven the cause of AIDS to be a virus which he called Human T-Cell Lymphotropic Virus, Type III (HTLV-III). NCI research personnel, including Drs. Gallo and Popovic, filed a patent application on April 23, 1984 for a diagnostic kit for AIDS which utilizes HTLV-III. This application resulted in issuance of U.S. Patent No. 4,520,113 on May 28, 1985. 4 The patent was assigned to and licensed by the Department of Health and Human Services (HHS), generating royalties to the United States government.

acceptance of the samples by NCI on provisions prohibiting disclosure and commercial or industrial use without permission and limiting the allowable use to research purposes. The document was signed on September 23, 1983 by Dr. Mikulas Popovic, a visiting scientist working with Dr. Gallo's group.

Thereafter, a series of meetings and communications took place among high ranking personnel of Pasteur and HHS in which Pasteur asserted that the virus responsible for AIDS was discovered by the group working at Pasteur, that the Gallo, et al. patent could not be considered valid, and that the collection of royalties by the United States constituted unjust enrichment. When HHS responded that it could "find no basis to support [Pasteur's] position," Pasteur filed its complaint in this matter in the United States Claims Court stating that the virus described in the Gallo et al. patent "is, or is substantially identical to, the LAV strain first isolated by Pasteur ... and provided to NCI by Pasteur under promises of confidentiality and noncommercialization." Pasteur alleged that the United States, in obtaining a diagnostic kit patent, negotiating license agreements and obtaining royalties, breached an express contract with Pasteur, the September 23, 1983 document signed by Dr. Popovic. The complaint also alleged breach of an implied contract, arising from the statements and conduct of the parties and the custom and practice of the scientific research community, which obligated the United States to share information concerning its research discoveries and to give appropriate recognition and acknowledgment to the work of Pasteur. As relief Pasteur sought, inter alia, an accounting of royalties and damages in excess of $1 million.

The Claims Court dismissed the complaint without prejudice for lack of jurisdiction. Assuming for the purpose of its analysis the existence of a valid and binding contract, the court held that the scientific material received by Gallo was clearly "property," but not real property in being, and that the alleged contract was squarely within the Contract Disputes Act of 1978, 41 U.S.C. Sec. 601-13 (1982) (CDA). Under the CDA, a prerequisite to Claims Court jurisdiction of claims over $50,000 is the prior presentation of a certified claim to an agency contracting officer and a decision (or a failure to decide) by that officer. Finding that Pasteur had not complied with these mandatory requirements, the Claims Court dismissed the complaint.

OPINION

The Claims Court did not reach the issues of contract existence, validity, enforceability or breach and on these issues we express no opinion. The sole issue before this court on appeal is whether the pleaded contracts are covered by the CDA. This involves statutory interpretation, which is a question of law on which this court must exercise its independent judgment. Minnesota Power And Light Co. v. United States, 782 F.2d 167, 169 (Fed Cir.1986).

Upon consideration of the language and purpose of the CDA, its legislative history and associated regulations, we conclude that the Claims Court erred in holding the CDA applicable to the pleaded contracts.

In any situation involving the interpretation of a statute, "[a]nalysis must begin with the language of the statute." United States v. John C. Grimberg Co., 702 F.2d 1362, 1365 (Fed.Cir.1983) (citing Southeastern Community College v. Davis, 442 U.S. 397, 405, 99 S.Ct. 2361, 2366, 60 L.Ed.2d 980 (1979)). 41 U.S.C. Sec. 602(a) provides

(a) Executive agency contracts

Unless otherwise specifically provided herein, this chapter applies to any express or implied contract ... entered into by an executive agency for--

(1) the procurement of property, other than real property in being;

(2) the procurement of services;

(3) the procurement of construction, alteration, repair or maintenance of real property; or,

(4) the disposal of personal property.

Although this court has referred to the language of Sec. 602(a) as unambiguous, Coastal Corp. v. United States, 713 F.2d 728, 730 (Fed.Cir.1983), it has also stated that

even where a statute is clear on a purely linguistic level, interpretation may be necessary if that interpretation does not do justice to the realities of the situation. As stated by the Supreme Court in Church of the Holy Trinity v. United States, 143 U.S. 457, 459, 12 S.Ct. 511, 512, 36 L.Ed. 226 (1892), it is a "familiar rule that a thing may be within the letter of the statute, but not within its spirit nor within the intention of its makers."

Texas State Comm'n for the Blind v. United States, 796 F.2d 400, 406 (Fed.Cir.1986).

To determine whether the applicability of the CDA to the pleaded contracts is within the intention of Congress, we must look to the purpose of the Act and its legislative history.

The CDA is an implementation of recommendations made by the Commission on Government Procurement, created by Congress in 1969, to

promote economy, efficiency, and effectiveness in the procurement of goods, services and facilities by and for the executive branch of the Federal Government by--

(1) establishing policies, procedures, and practices which will require the Government to acquire goods, services, and facilities of the requisite quality and within the time needed at the lowest reasonable cost, utilizing competitive bidding to the maximum extent practicable....

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