Honeywell Int'l Inc. v. United States

• Decision Date: 05 December 2012
• Docket Number: No. 02-1909,02-1909
• Parties: HONEYWELL INTERNATIONAL INC., and HONEYWELL INTELLECTUAL PROPERTIES INC., Plaintiffs, v. UNITED STATES, Defendant, LOCKHEED MARTIN CORP., Defendant-Intervenor, and L-3 COMMUNICATIONS CORP., Defendant-Intervenor.
• Court: U.S. Claims Court

HONEYWELL INTERNATIONAL INC., and HONEYWELL INTELLECTUAL PROPERTIES INC., Plaintiffs,

v. UNITED STATES, Defendant,LOCKHEED MARTIN CORP., Defendant-Intervenor, andL-3 COMMUNICATIONS CORP., Defendant-Intervenor.

No. 02-1909

United States Court of Federal Claims

Filed under seal: December 5, 2012

Reissued for publication: December 5, 2012

Damages for Patent Infringement, 28 U.S.C.

§ 1498(a);

Burden of Proof;

Causation;

Invention Secrecy Act, 35 U.S.C. §§ 181-88;

Military Specification;

Remand;

Standard Essential Patent.

Lawrence J. Gotts, Latham & Watkins LLP, Washington, D.C., Counsel for Plaintiffs.

Christopher L. Crumbley, United States Department of Justice, Civil Division-Commercial Litigation Branch, Washington, D.C., Counsel for the Defendant.

Thomas J. Madden, Venable, LLP, Washington, D.C., Counsel for Lockheed Martin Corporation, Defendant-Intervenor.

John Weldon Harbin, King & Spalding LLP, Atlanta, Georgia, Counsel for L-3 Communications Corporation, Defendant-Intervenor.

MEMORANDUM OPINION AND ORDER ON REMAND REGARDING

THE INVENTION SECRECY ACT AND PATENT INFRINGEMENT DAMAGES

This Memorandum Opinion first addresses the issues to be adjudicated on remand under the Invention Secrecy Act, 35 U.S.C. §§ 181-88 ("the Invention Secrecy Act"), and then turns to patent infringement damages to which Honeywell is entitled under 28 U.S.C. § 1498(a).

To facilitate a review of this Memorandum Opinion and Order, the court has provided the following outline:

I. RELEVANT PROCEDURAL HISTORY AND SCOPE OF THE REMAND.

II. DISCUSSION.

A. Issues To Be Adjudicated On Remand Under The Invention Secrecy Act.

1. "Whether [The Invention Secrecy Act] Requires That Government Use Must Result From The Disclosure" Of A Patent Application Subject To An Invention Secrecy Act Order.

2. Whether The Government's Use Of The '914 Patent In This Case Resulted From A Disclosure Of The '269 Application.

a. Relevant Facts.

i. Navy Air Defense Center Activities Regarding Night Vision Compatibility From 1974 To October 10, 1985.

ii. On October 10, 1985, The '269 Patent Application Was Filed With The United States Patent And Trademark Office.

iii. On January 24, 1986, MIL-L-85762 Issued.

iv. In Early 1986, A Panel On Aircraft Lighting Was Established To Amend MIL-L-85762.

v. On March 6, 1986, The Navy Reviewed The '269 Patent Application To Determine Whether An Invention Secrecy Order Should Issue.

vi. On April 2, 1986, An Invention Secrecy Act Order Issued On The '269 Patent Application.

vii. On August 26, 1988, MIL-L-85762A Issued.

viii. On September 7, 2000, The Invention Secrecy Act Order Regarding The '269 Application Was Rescinded And, On October 22, 2002, "Matured" Into The '914 Patent.b. The Parties' Arguments.

c. The Court's Resolution.

B. Patent Infringement Damages That Honeywell Has Established Under 28 U.S.C. § 1498.

1. The Relevant Statutes And Governing Precedent.

2. The Expert Opinions Regarding Damages.

a. The Plaintiffs' Expert Opinions.

i. The Direct Testimony of Ms. Julie L. Davis.

ii. The Direct Testimony Of Colonel William S. Lawrence.

b. The Government's Expert Opinions.

i. The Direct Testimony Of Mr. Phillip Green.

ii. The Direct Testimony of Dr. Harry Lee Task.

3. Determination Of "Reasonable And Entire Compensation."

a. The Date Of The Hypothetical Negotiation.

b. The Parties To The Hypothetical Negotiation.

c. The "Reasonable" Royalty Rate.

d. Consideration Of The Relevant Georgia-Pacific Factors.

e. The Relevant Product Base.

i. Military Aircraft Displays Sold As A Component Of A Domestic Military Aircraft.

ii. Displays Sold As A Component Of Military Aircraft Sold Under The Foreign Military Sales Act.

iii. CMFD Display Generators.

iv. Night Vision Goggles.

v. Summary Of The Relevant Product Base In This Case.

4. Determination Of Delay Compensation.a. The Date Of Accrual.

b. The Rate Of Accrual.

III. CONCLUSION.

* * *

I. RELEVANT PROCEDURAL HISTORY AND SCOPE OF THE REMAND.

On December 18, 2002, Honeywell International Inc. and Honeywell Intellectual Properties Inc. (collectively hereafter "Honeywell"), filed a Complaint in the United States Court of Federal Claims alleging that the United States ("the Government") violated 28 U.S.C. § 1498(a) by infringing: U.S. Patent Application Serial No. 6,786,268 (the "'268 application");¹ U.S. Patent Application Serial No. 6,786,269 (the "'269 application"); and U.S. Patent No. 6,467,914 (the "'914 patent"). Compl. ¶¶ 1, 53-75. On September 17, 2003, the court granted Lockheed Martin Corp.'s ("Lockheed Martin") September 3, 2003 Unopposed Motion To Intervene.

On May 31, 2005, Honeywell filed an Amended Complaint ("Am. Compl.") adding a new Count I, that the Government also violated the Invention Secrecy Act, 35 U.S.C. §§ 181-88 ("the Invention Secrecy Act"). Am. Compl. ¶¶ 18-23.²

On July 5, 2006, the court issued an order reflecting the parties' agreement that only the designated display systems used in the F-16 Air Force Fighter Jet ("F-16"), the C-130H Aircraft ("C-130H"), and the C-130J Aircraft ("C-130J") would be subject to initial liability proceedings in this case. See Dkt. 206.

To date, the court has issued six memorandum opinions and orders in this case.

On June 14, 2005, the court issued a Memorandum Opinion and Order ascertaining jurisdiction. See Honeywell Int'l Inc. v. United States, 65 Fed. Cl. 809 (2005) ("Honeywell I"). In addition, on June 14, 2005, the court issued a Memorandum Opinion and Order construing claims of the '914 patent requested by the parties. See Honeywell Int'l, Inc. v. United States, 66 Fed. Cl. 400, 428-87 (2005) ("Honeywell II"). Thereafter, no party requested reconsideration nor appealed the court's claim constructions.

On April 28, 2006, the court issued a Memorandum Opinion and Order discussing the relevant technology at issue and determining that Honeywell established, by a preponderance ofthe evidence, that the contested limitations of a "plurality of filters at the local color display" and "substantially block" in claim 2 of the '914 patent were present in the military aircraft cockpit displays of: the F-16; the C-130J; and the C-130H. See Honeywell Int'l, Inc. v. United States, 70 Fed. Cl. 424, 437-46 (2006) ("Honeywell III") (discussing the relevant technology); see also id. at 465-68 (determining literal infringement); see also id. at 469-79 (determining infringement under the doctrine of equivalents, but only as to "plurality of filters at the local color display").

On April 14, 2008, the court granted Defendant-Intervenor L-3 Communications Corporation's ("L-3 Corp.") Motion To Intervene. See Honeywell Int'l Inc. v. United States, 81 Fed. Cl. 224 (2008) ("Honeywell IV"). On that date, the court also issued a Memorandum Opinion and Order determining that claim 2 of the '914 patent was invalid as obvious, under 35 U.S.C. § 103(a). See Honeywell Int'l, Inc. v. United States, 81 Fed. Cl. 514, 538-66 (2008) ("Honeywell V"). Therein, the court also determined that the "first sale doctrine" precluded Honeywell from recovering damages for the Government's use of the infringing color multifunction displays ("CMFDs") in the F-16, C-130J, and C-130H military aircraft. Id. at 577.

On April 14, 2008, the also court issued a separate Memorandum Opinion and Order, determining that Honeywell did not establish the "second element of Article III standing to assert a claim for just compensation under the Invention Secrecy Act, [35 U.S.C. §§ 181-88], i.e., 'causation - a fairly traceable connection between [Honeywell's] injury and the complained-of conduct of the [Government].'" Honeywell Int'l Inc. v. United States, 81 Fed. Cl. 224, 233 (2008) ("Honeywell VI") (quoting Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 103 (1998)).

On July 23, 2008, the court issued an order entering judgment for the Government on Honeywell's Invention Secrecy Act and patent infringement claims, pursuant to RCFC 41(a)(2), and dismissing Honeywell's Takings Clause claims, pursuant to RCFC 58. See Dkt. 329.

On February 18, 2010, the United States Court of Appeals for the Federal Circuit reversed the court's rulings on invalidity and the "first sale doctrine" as to the '914 patent and remanded the case for the court to determine damages. See Honeywell Int'l Inc. v. United States, 596 F.3d 800, 813 (Fed. Cir. 2010). The appellate court also held that Honeywell had standing to assert a claim under the Invention Secrecy Act. Id. The Government, Lockheed Martin and L-3 Corp. subsequently filed petitions for rehearing and rehearing en banc. On May 25, 2010, the request for a panel rehearing was granted for the "limited purposes of revising portions of the discussion of the Invention Secrecy Act and to properly limit the scope of remand." Honeywell Int'l Inc. v. United States, 377 F. App'x 14, 15 (2010) (per curiam).

On May 25, 2010, the United States Court of Appeals for the Federal Circuit withdrew its February 18, 2010 opinion and replaced it with an opinion clarifying the scope of the remand. See Honeywell Int'l Inc. v. United States, 609 F.3d 1292, 1303 (2010) ("Honeywell VII"). Circuit Judge Mayer, however, dissented, expressing his view that: claim 2 of the '914 patent was invalid as obvious; the '269 application did not fully disclose the invention described in claim 2 of the '914 patent; and Honeywell was precluded from recovering damages for infringement under the "first sale doctrine." Id. at 1304-08.

On June 17, 2010, the mandate issued. On October 8, 2010, L-3 Corp. filed a petition for certiorari with the United States Supreme Court.³ On March 10, 2011, this court stayed further proceedings, pending the resolution of L-3 Corp.'s petition. On June 20, 2011, the United States Supreme Court denied L-3 Corp.'s petition. See L-3 Commun. Corp. v. Honeywell Int'l Inc., 131 S. Ct. 3021 (2011).

On September 8, 2011, the court issued a Scheduling Order to allow the parties to file supplemental briefing on the issues to be adjudicated on remand and address intervening cases by the United States Court of...