Ariton v. AeroVironment, Inc.

• Court: U.S. District Court — Central District of California
• Writing for the Court: ANDRÉ BIROTTE JR., United States District Judge
• Citation: 687 F.Supp.3d 899
• Docket Number: Case No.: 2:20-cv-07438-AB-GJS
• Decision Date: 15 August 2023
• Parties: Paul E. ARITON et al. v. AEROVIRONMENT, INC.

687 F.Supp.3d 899

Paul E. ARITON et al. v. AEROVIRONMENT, INC.

Case No.: 2:20-cv-07438-AB-GJS

United States District Court, C.D. California

Filed August 15, 2023

Seth A. Gold, Jonathan Boustani, Roya Rahmanpour, Barnes and Thornburg LLP, Los Angeles, CA, Deborah Pollack-Milgate, Pro Hac Vice, Joseph L. Fehribach, Pro Hac Vice, Barnes and Thornburg LLP, Indianapolis, IN, for Paul E. Arlton et al.

Adrienne J. Kosak, Pro Hac Vice, Scott Andrew Felder, Pro Hac Vice, Wesley E. Weeks, Pro Hac Vice, Wiley Rein LLP, Washington, DC, Christina N. Goodrich, Zachary Thomas Timm, K and L Gates LLP, Los Angeles, CA, for AeroVironment, Inc.

Proceedings: [In Chambers] Further Order Regarding Defendant's Motion for Summary Judgement [Dkt. Nos. 35, 119, 125]

ANDRÉ BIROTTE JR., United States District Judge

This matter arises from alleged patent infringement by the Mars Helicopter, Ingenuity. In February 2021, Defendant AeroVironment, Inc. ("AeroVironment" or "Defendant"), the contractor who provided Ingenuity to the government, moved for summary judgement on its 28 U.S.C. § 1498 contractor-immunity defense. ("Motion," Dkt. No. 35.) The Court found that § 1498 shields Defendant's activities concerning Ingenuity from infringement liability and granted the Motion. ("MSJ Order," Dkt. No. 58.) About two months later, after Plaintiffs, Paul E. Arlton and David J. Arlton (collectively, "the Arltons" or "Plaintiffs"), discovered new evidence that Defendant made "Terry," an earth-based version of Ingenuity, the Court vacated the judgement and ordered the case reopened to allow Plaintiffs to take discovery. (Dkt. No. 77.) After examining whether Defendant was selling or making substantial commercial use of Terry, Plaintiffs filed their renewed opposition to the Motion for summary judgement. ("Opp.," Dkt. Nos. 119, 131 (sealed).) Defendant filed a brief in support of reaffirming summary judgement. ("Reply," Dkt. Nos. 125, 130 (sealed).)

After considering the parties' arguments, the Court again GRANTS summary judgment in favor of Defendant under § 1498 and DENIES Plaintiffs' request for further relief.

I. BACKGROUND

The Court recited the factual and procedural background of this case in detail in the MSJ Order. (See Dkt. No. 58 at 2-6.) The Court incorporates that discussion by reference. Because the parties are familiar with this case, the Court provides a summary only.

Three years ago, Plaintiffs filed a Complaint in this Court accusing Defendant of infringing U.S. Patent No. 8,042,763 (the "'763 Patent"), which is titled "Rotary Wing Vehicle," by making, using, offering to sell, and selling the Mars Helicopter. (Dkt. No. 1 ¶¶ 25-26.) In its Answer, Defendant averred that "Plaintiffs have no remedy against AeroVironment due to the applicability of 28 U.S.C. § 1498[.]" (Dkt. No. 19 ¶ 1.) The Court allowed Defendant to file an early motion for summary judgment on this defense, which confers patent infringement immunity on government contractors for infringing work done at the behest of the government. (Dkt. No. 33 at 2.)

In February 2021, Defendant filed its Motion. (Dkt. No. 35.) At that time, NASA filed a "Statement of Interest of the United States" stating that the United States granted its authorization and consent for Defendant's alleged use and manufacture of patented inventions claimed in the '763 Patent. ("Statement of Interest," Dkt. No. 37.) Plaintiffs opposed the Motion, Defendant replied, and Plaintiffs filed a sur-reply. (See Dkt. Nos. 40, 41, 47.) After holding a hearing on the Motion, the Court granted it. (See MSJ Order.)

Shortly thereafter, Defendant introduced Terry, a terrestrial version of the Mars Helicopter Ingenuity that is manually controlled by a pilot with a hand controller. (Dkt. No. 66 at 2.) In view of this new information, Plaintiff moved for relief from judgment or to alter the judgment. The Court granted Plaintiffs' motion, vacated the judgement, and ordered the case reopened to allow Plaintiffs to address the new evidence regarding Terry. (Dkt. No. 77 at 7.)

After a lengthy discovery period, the Court set a discovery cut-off date and set a briefing schedule for Plaintiffs to file a supplemental brief in support of denial of summary judgment, and for Defendant to file a supplemental brief in support of reaffirming the grant of summary judgment. (Dkt. No. 116.) The Court provided that, upon receipt of the briefs, the matter would stand submitted without a hearing. (Id.)

II. LEGAL STANDARDS

A. Summary Judgement

"Summary judgment is appropriate in a patent case, as in other cases, when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Nike Inc. v. Wolverine World Wide, Inc., 43 F.3d 644, 646 (Fed. Cir. 1994); Fed. R. Civ. P. 56(c) (motion for summary judgment must be granted when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law."); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party bears the initial burden of identifying the elements of the claim or defense and evidence that it believes demonstrates the absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

"Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.' " Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The Court must draw all reasonable inferences in the nonmoving party's favor. In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (citing Anderson, 477 U.S. at 255, 106 S.Ct. 2505). Nevertheless, inferences are not drawn out of thin air, and it is the nonmoving party's obligation to produce a factual predicate from which the inference may be drawn. Richards v. Nielsen Freight Lines, 602 F. Supp. 1224, 1244-45 (E.D. Cal. 1985), aff'd, 810 F.2d 898 (9th Cir. 1987). "[M]ere disagreement or the bald assertion that a genuine issue of material fact exists" does not preclude summary judgment. Harper v. Wallingford, 877 F.2d 728, 731 (9th Cir. 1989).

B. 28 U.S.C. § 1498

Section 1498 is an affirmative defense, not a jurisdictional bar. Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 554 (Fed. Cir. 1990). Section 1498 "relieves a third party from patent infringement liability, and it acts as a waiver of sovereign immunity and consent to liability by the United States." Madey v. Duke Univ., 307 F.3d 1351, 1359 (Fed. Cir. 2002). A § 1498 affirmative defense is a highly factual determination, whereby a defendant must establish that "(1) the [infringing] use is 'for the Government'; and (2) the [infringing] use is 'with the authorization and consent of the Government.' " Sevenson Env'l. Servs., Inc. v. Shaw Envtl., Inc., 477 F.3d 1361, 1365 (Fed. Cir. 2007). "The burden is initially upon the movant to establish the absence of any genuine issue of material fact and entitlement to judgment as a matter of law." Crater Corp. v. Lucent Techs., 255 F.3d 1361, 1366 (Fed. Cir. 2001) (citing Celotex, 477 U.S. at 323-34, 106 S.Ct. 2548).

C. Analysis

In the MSJ Order, the Court agreed with Defendant that section 1498 shields Defendant from infringement liability for its work on the Mars Helicopter Ingenuity. The Court ruled that no disputed material facts exist concerning whether Defendant's work on the helicopter was "for the government" and done with the government's "authorization and consent." (MSJ Order at 9-13.) In the Order granting relief from judgment, the Court advised that it would reinstate summary judgment in Defendant's favor unless Plaintiffs can "show that Defendant sold or offered to sell these helicopters commercially, or otherwise used them commercially in a substantial way." (Dkt. No. 77 at 6.) Because Plaintiffs have failed to do so, the Court again GRANTS Defendant's request for summary judgment.

Plaintiffs acknowledge that "the question is whether AeroVironment, 'used [the helicopters] commercially in a substantial way,' and not simply for educational purposes or future Mars helicopter research, which the Court concluded would be de minimis." (Opp. at 15 (quoting Dkt. No. 77 at 6).) To answer this question, Plaintiffs aver that "AeroVironment clearly intended to use, and did use Terry commercially to draw market attention to its technical prowess and position itself alongside aviation industry giants," and used the patented technology to "build brand recognition and garner coveted aerospace industry awards such as the Collier Trophy," none of which Plaintiffs contend is "de minimis." (Id. at 15.) Thus, Plaintiffs argue that summary judgment is unwarranted in view of Defendant's "pervasive and widespread marketing" of the technology. (Id.)

More specifically, Plaintiffs aver that this "widespread commercial use" includes Defendant "marketing itself far and wide as the developer" of Ingenuity, and "using Terry to leverage [its] business and technical reputation." (Id. at 15-16.) In support of this theory, Plaintiffs identify Defendant's alleged commercial use of the technology to include using it to "gain the interest of SpaceX, UP.Partners, Impulse Space and UAVSI attendees (among others);" presenting it to UP.Partners, an early-stage venture capital firm comprised of officials, executives and aerospace enthusiasts; demonstrating Terry at the Wright Brothers National Memorial; and articulating "an ongoing plan to leverage the helicopter technology AeroVironment used for Ingenuity in the private sector." (See id. at 8-12.) Plaintiffs aver that Defendant has also used it "to obtain additional projects," such as "assisting Applied Physics Laboratory with a study of multi-rotor co-axial blades, in connection with Johns Hopkins work on a NASA...