Stein v. U.S.

• Decision Date: 06 April 2001
• Docket Number: No. CIV. A. 98-11682-WGY.,CIV. A. 98-11682-WGY.
• Parties: Seymour STEIN, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. District Court — District of Massachusetts

135 F.Supp.2d 265

Seymour STEIN, Plaintiff, v. UNITED STATES, Defendant.

No. CIV. A. 98-11682-WGY.

United States District Court, D. Massachusetts.

April 6, 2001.

Jerry Cohen, James C. Hamilton, Perkins, Smith & Cohen, Boston, Abraham Ogman, Delray Beach, FL, for Plaintiff.

Cameron Elliot, Department of Justice, Commercial Litigation Branch Civil Div., Washington, DC, Susan M. Poswistillo, United States Attorney's Office, Barbara Healy Smith, U.S. Attorney's Office, Boston, MA, for Defendant.

MEMORANDUM AND ORDER

YOUNG, Chief Judge.

The invention at issue in this case is disclosed in U.S. Patent Application Serial No. 05/301,945 ("the Application") filed on October 30, 1972. Def.'s Opp'n Ex. B. The plaintiff, Seymour Stein ("Stein"), acceded to the rights of the Application by assignment on July 18, 1997. Id. Ex. A at 002158-59. The Application describes a basic technique for locating broad classes of radio emitters using receivers located on one or more moving platforms. Although the United States ("the Government") allowed Claims 1-3 and 5-10 of the Application, id. Ex. B at D005104, D005138-41, the Government imposed a secrecy order on the Application on April 9, 1973, id. Ex. B at D005144, pursuant to 35 U.S.C. § 181, which states in pertinent part that "[w]henever publication or disclosure by the grant of a patent on an invention in which the Government has a property interest might, in the opinion of the head of the interested Government agency, be detrimental to the national security, the Commissioner of Patents upon being so notified shall order that the invention be kept secret and shall withhold the grant of a patent therefor under the conditions set forth hereinafter," 35 U.S.C. § 181. The secrecy order was annually renewed until its rescission on March 22, 2000. Def.'s Opp'n Exs. B, C (rescinding order). The Government has not yet granted a patent.

Stein filed the present action against the Government on August 10, 1998 pursuant to 35 U.S.C. § 183, seeking compensation for the Government's use of the invention while it was under the secrecy order. Both Stein and the Government have filed cross motions for partial summary judgment on the Government's defense of laches.¹ The Court heard these motions on November 8, 2000, and took the issue under advisement. On February 27, 2001, this Court denied both cross motions for partial summary judgment without opinion. However, the Court now alters its initial order. Treating the cross motions as a case stated pursuant to the parties' consent, the Court now concludes that the Government's laches defense is without merit, and thus grants Stein's Motion for Partial Summary Judgment.

I. FACTUAL BACKGROUND²

Stein's complaint seeks compensation for the Government's use of the invention described in the Application. Compl. ¶ 1. Stein, pursuant to section 183, applied for an administrative determination of compensation by sending a demand for compensation to the Department of the Army on November 1, 1997. Id. ¶ 8. Because no agreement was reached, Stein seeks compensation in this Court for the Government's alleged use of the invention in government projects under the names of CHAALS, SUNDANCE, ELOQUENCE, OLYMPIAD, and DGSS. Id. ¶ 5. In its Interrogatories, the Government specified two specific systems that allegedly used the technology disclosed in the Application: (1) the Emitter Location System ("ELS"); and (2) the Coherent Emitter Location Testbed ("CELT"). Def.'s Opp'n Ex. D at 8 (Def.'s Resp. to Pl.'s Interrogs.).

For the purpose of establishing its laches defense, the Government argues that there was a twenty-year delay in filing suit from the time at which Stein and his assignor had actual or constructive knowledge of the Government's use of the invention disclosed in the Application. Adams-Russell Co. owned the Application until 1989. Id. Ex. F. In 1969, Stein founded and headed until 1979 Stein Associates, which became a division of Adams-Russell in 1970. Id. Ex. E at 599. Thus, To prove that Stein and his assignor, Adams-Russell Co., had constructive knowledge of the Government's use of these two systems, the Government argues that Stein, as head of Stein Associates, and Adams-Russell, as owner of Stein Associates, were on constructive notice of contracts that Stein Associates entered into or competed for that related to the Government's use of the invention between 1970 and 1979. Specifically, the Government argues that Stein and Adams-Russell should have been aware of the Government's use of the invention based on Stein Associates' participation in Contract Number F30602-74-C-0239.

In April 1975, under Contract Number F30602-74-C-0239, GTE Sylvania and Stein Associates designed a system for locating communication emitters based on the differential time of arrival ("DTOA") and differential Doppler ("DD") of the emitted signal received at two or more airborne collection sites through the process of "cross-correlating." Protected Annex Ex. 1 at 000900, 000924-25, 000934. The intersection of the DTOA and DD defined the emitter location. Id. at 000932. The design contract was based in part on Stein's own research. Id. at 001464. IBM, GTE Sylvania, and Stein Associates competed for this design program, and the following production contract was ultimately granted to IBM. Id. Ex. 2 at D005825, Ex. 3 at D005502. The purpose of the IBM production contract was to test the feasibility of the design ELS technique. Id. The ELS project was completed by February 1978, id. Ex. 3 at D005502, and the CELT project, which is a second generation emitter location system derived from ELS, id., was completed by October 1980, id. at D005500.

The Government argues that because Stein Associates competed for the production contract, which followed its participation in the design contract, Stein and Adams-Russell should have been aware, at least constructively, of the Government's intent to build the ELS system in the production contract. Stein replies that the most one can infer is that Stein knew of the existence of such programs but not the particular techniques being used in them. Given Stein Associates' participation in the design contract, however, the Court infers that Stein and Adams-Russell were on constructive notice of the Government's use as early as 1978.

The ELS and CELT systems are also relevant to the laches defense because the Government contends that it suffered evidentiary prejudice in the form of lost or destroyed documentation that would establish its defenses to Stein's present suit with respect to these two infringing systems. Def.'s Opp'n at 12. Specifically, the Government raises two defenses to Stein's claims based on these two systems.

The Government first points to a license defense, arguing that Stein Associates reduced to practice at least Claims 1 and 5 of its Application in performance of U.S. Air Force contract F33615-73-C-1147 in 1973. Id. at 3. The Government asserts that the contract itself was probably destroyed pursuant to government regulation. Id. Exs. J (letter), K (Air Force Manual 37-139) (mandating destruction of general contract records after six years and three months of final payment).³ Remaining evidence of the contract is twofold: (1) a final report for the contract submitted by Stein Associates, id. Ex. H; and (2) a contract close-out sheet, id. Ex. I. The parties are in disagreement as to the import of these two documents.

Stein contends that the final report is conclusive evidence of the fact that the contract was not a production contract but rather was merely a design contract meant to demonstrate the use of its proprietary signal processor to confirm assumptions on acceptable receiver characteristics. Pl.'s Reply at 5; id. Ex. A at 00249 (quoting final report as indicating that "[t]he primary objective of this program is to provide a realistic demonstration that differential delay and Doppler measurements can be made with high enough accuracy to be useful in a communications emitter location system"). Stein also contends that because the contract close-out lacks any list of inventions reduced to practice under the contract, it "conclusively establishes that there were none." Pl.'s Reply at 5-6.

To the contrary, the Government contends that the final report proves that the contract was a reduction to practice of Claims 1 and 5 of the Application. Def.'s Reply at 8; Def.'s Opp'n at 3 (quoting id. Ex. H at 000249 [noting that the contract was "a realistic demonstration that differential delay and Doppler measurements can be made with high enough accuracy to be useful in a communications emitter location system"]); Def.'s Reply Ex. P. Moreover, the Government contends that the fact that the close-out sheet references a patents rights clause constitutes circumstantial evidence of the existence of a patents rights clause in the contract. Def.'s Opp'n at 11; id. Ex. I.

The second defense that the Government points to is that the disclosure of information used to create the ELS and CELT systems was not from Stein's Application, but rather from independent sources. Under section 183, recovery for use of an invention only stems from damages from the disclosure of the patent application by the Patent Office. 35 U.S.C. §§ 181, 183. The Government maintains that ELS resulted from the work of Dr. John Grindon of the Conductron Corporation and of IBM employees. Def.'s Opp'n at 12; id. Ex. L (Interrogatory Resp. No. 6). The Government, however, maintains that the relevant contract, F33615-73-C-1147, and its technical proposal entitled "Time of Arrival (TOA) Location of Nonpulse Emitters," which was prepared for the Rome Air Development Center by Conductron and purportedly could corroborate Dr. Grindon's contribution to the development of ELS and CELT, Def.'s Opp'n at 12, have not been located and have probably both been destroyed over time, id. The Government argues that it is prejudiced by the loss of these documents...