John J. McMullen Assoc., Inc. v. STATE BOARD OF HIGHER ED.

• Decision Date: 18 May 1967
• Docket Number: Civ. No. 65-261.
• Citation: 268 F. Supp. 735,154 USPQ 236
• Parties: JOHN J. McMULLEN ASSOCIATES, INC., a New York Corporation, Plaintiff, v. STATE BOARD OF HIGHER EDUCATION, a public corporation of Oregon et al., Defendants.
• Court: U.S. District Court — District of Oregon

268 F. Supp. 735

154 USPQ 236

JOHN J. McMULLEN ASSOCIATES, INC., a New York Corporation, Plaintiff, v. STATE BOARD OF HIGHER EDUCATION, a public corporation of Oregon et al., Defendants.

Civ. No. 65-261.

United States District Court D. Oregon.

May 18, 1967.

Erskine B. Wood, John R. Brooke and John G. Holden, Portland, Or., Martin Fleit, Harvey B. Jacobson, Jr., Washington, D. C., for plaintiff.

Robert Y. Thornton, Atty. Gen., Wolf von Otterstedt, Asst. Atty. Gen., Eugene, Or., Joseph B. Sparkman, Sp. Asst. Atty. Gen., Portland, Or., for all defendants except Albina Engine and Machine Works, Inc.

William B. Shively, Portland, Or., for defendant, Albina Engine and Machine Works, Inc.

OPINION

BEEKS, District Judge.

This patent infringement action, brought by John J. McMullen Associates, Inc. ("McMullen"), arises from the alleged incorporation of a patented stabilization tank into a vessel which was adapted and used for oceanographic research by Oregon State University ("OSU"). The vessel was acquired from the U. S. Army at no cost to OSU; and the costs of its conversion and of its use for research purposes have been financed by Government grants and contracts. Defendants contend that the Court of Claims has exclusive jurisdiction over this case by virtue of 28 U.S.C. § 1498.¹ For purposes of this defense, this court must assume that the patents in question were valid and infringed, and the determinative question is whether the manufacture and use of the stabilization tank were "for" the United States, within the meaning of the statute. The parties have presented evidence, arguments and briefs on this limited question, and it is the only issue here decided.

Oceanographic research was started at OSU in 1954, financed at least in part by a contract with the United States Navy for performance of certain research projects. The research work required the use of a vessel, and in the early years of the program, OSU chartered small fishing vessels for this purpose. Later, OSU was permitted to use the ACONA, a U. S. Government vessel.

Governmental support of oceanographic research was substantially expanded in 1959 with the establishment of a special agency² to coordinate the activities of the many government agencies which benefit from and sponsor oceanographic research. The ten-year plan published in June of 1963 by that agency, (which is in evidence) states that one of the ways such support would be implemented in the decade following 1963 is by the addition of seagoing research vessels to the fleets of private laboratories and university departments, using NSF and Navy funds.

In the same year this report was published, 1963, OSU received from the Government at no cost a surplus Army Air Corps Maintenance and Supply vessel, the FS 210, which was renamed the YAQUINA. Under the terms of the transfer of the vessel to the State of Oregon, the vessel could, "be used only for the health or educational purpose for which acquired, including research for any such purpose, and for no other purpose." The grant provides for a period of restriction of two years of the designated use of the vessel, during which time OSU was prohibited from selling, leasing, encumbering, lending, or otherwise disposing of it without the consent of the U. S. Government.

Substantial alterations were required to equip the YAQUINA for oceanographic research. To finance these alterations, OSU applied to the National Science Foundation for a grant, submitting several proposals for the necessary alterations.

By a grant letter of June 7, 1963, NSF formally accepted a conversion proposal by OSU and granted $600,000 for the conversion of the vessel.³ The conditions of the NSF grant included: "The grantee shall use the vessel primarily for the conduct of basic scientific research and if the Foundation shall determine that she is not being used sufficiently and efficiently for research, the grantee will convey her to the U. S. Government or its nominee without further cost to the Government * * *." A further condition was: "The grantee shall not dispose of the vessel without the prior approval of the National Science Foundation * * *." The grant also obligated OSU to convey the vessel to the U. S. Government without cost to the Government in case of declared national emergency.

The plans for the conversion of the YAQUINA which were submitted to the NSF prior to its grant of $600,000 for this purpose did not show that plaintiff's patented stabilization tank would be incorporated in the vessel. But a letter from an NSF official to the Office of the General Counsel of NSF (introduced into evidence) reflects that NSF knew, at least as early as September of 1963, that OSU intended to use such a tank in the YAQUINA. In April of 1964, NSF increased by $170,000 its earlier grant to OSU for the conversion project. In August of 1964, moreover, NSF approved plans submitted by OSU which showed in detail plaintiff's stabilization tank as one of the proposed alterations to the vessel. The YAQUINA went into service as a research vessel in October of 1964, containing plaintiff's patented stabilization tank, and has been continuously engaged in successful oceanographic research ever since. The costs of operation and use of the vessel have been financed approximately as follows: 50% by grant from the NSF; 40% under research contracts with the Navy; and 10% under contracts with the Atomic Energy Commission ("AEC"). The record is not entirely clear as to what use has been made of the tank.

Plaintiff McMullen brought this action in May of 1965 alleging infringement of its four patents relating to this stabilization tank. The defendants included the State Board of Higher Education, which manages and controls OSU; the nine individual members of the State Board; the President of OSU; the Chairman of the Oceanography Department of OSU; the master of the YAQUINA; and the shipbuilder that converted the vessel for oceanographic research purposes.

Against this factual background, the question for the Court's determination is whether the manufacture and use of plaintiff's stabilization tank were "for" the Government within the meaning of § 1498. Plaintiff points out, correctly, that heretofore the jurisdictional strictures of § 1498 have generally been applied only in cases where infringement occurred during the performance of a contract to supply the Government specific goods or services. While a substantial portion of the usage of the YAQUINA has been under contract with the Office of Naval Research and the AEC for specific research projects, she also has been used extensively for "basic research" under grants from the NSF. Plaintiff questions whether the language of § 1498, in requiring that a device be manufactured or used "for" the Government, was intended to include within its ambit such research work under Government grants. From an examination of the legislative history and purpose of that section, this Court concludes that such an interpretation is not only permissible but required.

The Supreme Court reviewed the history and purpose of the precursor of § 1498 in Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 48 S.Ct. 194, 72 L.Ed. 303 (1928). This section was enacted in 1918, at the height of the First World War, to encourage private concerns to manufacture crucial products and to perform vital services for the U. S. Government, even where such activities might generate claims of patent infringement. Apparently the risk and burden of patent infringement litigation had impeded performance of these functions for the Government by private concerns;⁴ and this legislation was enacted to shift those burdens to the Government.

From the evidence in the case at bar, the Court concludes that (1) oceanographic research, including "basic" research of unknown practical application, has been recognized by the legislative and executive branches as vital...