State Contracting & Engineering Corp. v. State of Florida

• Decision Date: 20 July 2001
• Docket Number: PLAINTIFFS-APPELLANTS,DEFENDANTS-APPELLEES,No. 00-1434,00-1434
• Parties: (Fed. Cir. 2001) STATE CONTRACTING & ENGINEERING CORPORATION AND STATE PAVING CORPORATION,, v. STATE OF FLORIDA, FLORIDA DEPARTMENT OF TRANSPORTATION, RECCHI AMERICA, INC., THE MURPHY CONSTRUCTION COMPANY, THE HARDAWAY COMPANY, HUBBARD CONSTRUCTION COMPANY, BALFOUR BEATTY CONSTRUCTION, INC., COMMUNITY ASPHALT CORPORATION, AND JOELSON CONCRETE PIPE COMPANY, INC.,
• Court: U.S. Court of Appeals — Federal Circuit

Page 1329

258 F.3d 1329 (Fed. Cir. 2001)

STATE CONTRACTING & ENGINEERING CORPORATION AND STATE PAVING CORPORATION, PLAINTIFFS-APPELLANTS, v. STATE OF FLORIDA, FLORIDA DEPARTMENT OF TRANSPORTATION, RECCHI AMERICA, INC., THE MURPHY CONSTRUCTION COMPANY, THE HARDAWAY COMPANY, HUBBARD CONSTRUCTION COMPANY, BALFOUR BEATTY CONSTRUCTION, INC., COMMUNITY ASPHALT CORPORATION, AND JOELSON CONCRETE PIPE COMPANY, INC., DEFENDANTS-APPELLEES.

No. 00-1434

United States Court of Appeals for the Federal Circuit

July 20, 2001

Appealed from: U.S. District Court for the Southern District of Florida

[Copyrighted Material Omitted]

Richard S. Ross, of Ft. Lauderdale, FL, argued for plaintiffs-appellants.

Stefan v. Stein, Holland & Knight Llp, of Tampa, FL, argued for defendants-appellees. Of counsel was Harvey S. Kauget.

Before Rader, Gajarsa, and Dyk, Circuit Judges.

Dyk, Circuit Judge.

Judge William P. Dimitrouleas

State Contracting & Engineering Corporation ("State Contracting") and State Paving Corporation ("State Paving") (collectively "plaintiffs") appeal the decision of the United States District Court for the Southern District of Florida granting summary judgment in favor of the defendants. State Contracting & Eng'g Corp. v. Florida, No. 97-7014-CIV-DIMITROULEAS (S.D. Fla. Mar. 2, 2000) ("Final Order"). We affirm the district court's grant of summary judgment to the State of Florida as to the patent infringement and Lanham Act claims (counts I, II, IV) on grounds of sovereign immunity. We also affirm the district court's grant of summary judgment to the State of Florida as to the takings claim (count V) and the breach of contract claim (count VI). However, we hold that the district court erred in granting summary judgment to the private contractors on the patent infringement claims (counts III and VII), and therefore we vacate and remand as to these claims. Accordingly, we affirm in part, vacate in part, and remand.

BACKGROUND

In 1989, State Paving Corporation, a highway construction company, successfully bid on a State of Florida Department of Transportation ("FDOT" or "State of Florida") project for construction of sound barrier walls. The original agreement was reduced to writing and expressly incorporated the FDOT Standard Specifications for Road and Bridge Construction ("Standard Specifications"). During the course of the construction, State Paving submitted a Value Engineering Change Proposal ("VECP") proposing to use a new design for sound walls that would reduce costs. The new sound wall design described in the VECP allegedly included the use of a post (column) positioned in a cement-filled pile using a new method devised by State Paving which was particularly suitable for use in sandy soil. FDOT accepted the VECP on July 5, 1990, agreeing to change the specifications of the contract to include the use of the sound wall design described in the VECP. The "Supplemental Agreement" signed by the parties stated that the contract adjustment and sum agreed to "constitutes a full and complete settlement" and that State Paving "accepts the terms of this Supplemental Agreement as full compensation for all costs of equipment, manpower, materials, overhead, profit and delay damages and for all their costs, whether direct or indirect, or whether incurred now or in the future, related to the issues set forth in this Agreement." Pursuant to the contract and "Supplemental Agreement," the State of Florida paid State Paving fifty percent of the cost savings realized by the VECP.

On June 29, 1990, State Paving filed a patent application with the United States Patent and Trademark Office for a structure and method using the technology described in the VECP. The application matured into two U.S. patents: (1) Patent No. 5,234,288 (the "'288 patent"), issued on August 10, 1993, directed to an improved method of forming a post by inserting the post into a cement slurry pile which is particularly suitable for use in building structures in sandy soil; and (2) Patent No. 5,429,455 (the "'455 patent"), issued on July 4, 1995, directed to the structure of the post and cement pile. ¹

FDOT began using data from the VECP in subsequent requests for bids. State Paving learned about one of these instances in September 1992 and sent a letter to potential bidders, advising them of the pending patent application and seeking a patent royalty. State Paving also sought additional payments under the contract for its use of the VECP data in other contracts to which State Paving was not a party.

The issues were not resolved by negotiation, and in August 1997 State Paving and State Contracting (collectively "State Contracting" or "plaintiffs") brought the present lawsuit against the State of Florida and seven private contractors in the United States District Court for the Southern District of Florida.

The plaintiffs filed a seven-count amended complaint on June 5, 1998, asserting the following claims: (1) direct patent infringement by the State of Florida of the '288 patent directed to the method of forming the improved post and cement pile (count I); (2) direct patent infringement by the State of Florida of the '455 patent directed to the structure of the improved post and cement pile (count II); (3) direct patent infringement by private highway construction contractors which worked for the State of Florida for infringement of both patents (count III); (4) violations of the Lanham Act by the State of Florida for its representation to potential bidders of construction projects that the specified method for sandy soil construction was "unpatented" (count IV); (5) unconstitutional taking by the State of Florida of plaintiffs' proprietary and patent rights in designs and specifications for the construction of sound barrier walls (count V); (6) breach of contract by the State of Florida for failure to compensate plaintiffs under the contract for use of plaintiff's proprietary technology on sound barrier construction projects after the original contract with plaintiffs (count VI); and (7) contributory patent infringement by Joelson Concrete Pipe Company based on its manufacture use and sale of posts specially made as a component of the patented apparatus and method (count VII).

On June 22, 1998, the defendants answered the amended complaint as to all counts except for the Lanham Act claims, which the State of Florida moved to dismiss on grounds of sovereign immunity. In the answer, the defendants counterclaimed for a declaratory judgment of non-infringement and invalidity of the '288 and '455 patents. The district court denied the State of Florida's motion to dismiss the Lanham Act count. That decision was appealed to this court. We remanded the case to the district court to "consider all issues that may be before the court in the first instance" in light of the Supreme Court's decisions in Florida Prepaid Post-secondary Education Expense Board v. College Savings Bank, 527 U.S. 627 (1999), and College Savings Bank v. Florida Prepaid Post-secondary Education Expense Board, 527 U.S. 666 (1999). ² State Contracting & Eng'g Corp. v. Florida, No. 99-1236, 1999 WL 717798 (Fed. Cir. Sept. 2, 1999) (nonprecedential order).

On remand, the parties filed cross motions for summary judgment. In the final order of March 2, 2000, the district court dismissed counts I, II, and IV (which stated claims against the State of Florida for patent infringement and violation of the Lanham Act) on grounds of sovereign immunity. The court also granted summary judgment to the State of Florida on count V -- the takings claims. The court granted summary judgment on count VI (seeking recovery against the State of Florida under the contract) against State Contracting on the ground that the contract had not been breached. Finally, the court granted summary judgment on counts III and VII (patent infringement) to the private contractors on the ground that the contract with the State created a license to practice the patent. The court failed to expressly address the defendants' counterclaims for a declaratory judgment of non-infringement and invalidity of the '288 and '455 patents in the March 2, 2000, final order. State Contracting appealed to this court.

DISCUSSION

I. Standard of Review

We follow the regional circuit's standard of review regarding issues not pertaining to patent law. Coll. Sav. Bank v. Fla. Prepaid Post-secondary Educ. Expense Bd., 148 F.3d 1343, 1346, 47 USPQ2d 1161, 1163 (Fed. Cir. 1998), rev'd on other grounds, 527 U.S. 627 (1999); Molins PLC v. Quigg, 837 F.2d 1064, 1066, 5 USPQ2d 1526, 1527 (Fed. Cir. 1988). Under the law of the Eleventh Circuit, we review without deference a district court's ruling on the issue of sovereign immunity to suit. Fla. Paraplegic Assoc., Inc. v. Miccosukee Tribe of Indians of Fla., 166 F.3d 1126, 1128 (11th Cir. 1999); Tinney v. Shores, 77 F.3d 378, 383 (11th Cir. 1996). We review a district court's grant of summary judgment without deference. Ethicon Endo-Surgery, Inc. v. United States Surgical Corp., 149 F.3d 1309, 1315, 47 USPQ2d 1272, 1275 (Fed. Cir. 1998).

II. Jurisdiction/Finality of Judgment

Before addressing the merits, we are obligated to consider the issue of our jurisdiction. Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986) ("[E]very federal appellate court has a special obligation to satisfy itself . . . of its own jurisdiction.") (internal quotations and citations omitted); see also Helfgott & Karas, P.C. v. Dickenson, 209 F.3d 1328, 1333, 54 USPQ2d 1425, 1428 (Fed. Cir. 2000). At the time the plaintiffs appealed to this Court, there remained pending in the district court the counterclaims directed toward non-infringement and patent invalidity. Since it appeared that there might be no appealable final judgment and no certification pursuant to Fed. R. Civ. P. 54(b), on June 7, 2001, we issued an order directing the parties to address the jurisdictional issue. The parties agreed that the judgment...