Zoltek Corp. v. U.S.

• Decision Date: 21 September 2006
• Docket Number: No. 04-5100.,No. 04-5102.,04-5100.,04-5102.
• Citation: 464 F.3d 1335
• Parties: ZOLTEK CORPORATION, Plaintiff-Cross Appellant, v. UNITED STATES, Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

464 F.3d 1335

ZOLTEK CORPORATION, Plaintiff-Cross Appellant, v. UNITED STATES, Defendant-Appellant.

No. 04-5100.

No. 04-5102.

United States Court of Appeals, Federal Circuit.

September 21, 2006.

Appealed from United States Court of Federal Claims, Chief Judge Edward J. Damich.

On Petition for Rehearing En Banc.

Dean A. Monco, Wood, Phillips, Katz, Clark & Mortimer, of Chicago, Illinois, filed a petition for rehearing en banc for plaintiff-cross appellant. With him on the petition was John S. Mortimer. Of counsel on the petition were David W. Long and Pamela S. Kane, Howrey LLP, of Washington, DC.

Anne Murphy, Attorney, Appellate Staff, Civil Division, United States Department of Justice, of Washington, DC, filed a response to the petition for defendant-appellant. With her on the response were Peter D. Keisler, Assistant Attorney General, and Scott R. McIntosh, Attorney.

Before MICHEL, Chief Judge, NEWMAN, MAYER, Circuit Judges, PLAGER, Senior Circuit Judge, LOURIE, RADER, SCHALL, BRYSON, GAJARSA, LINN, DYK, and PROST, Circuit Judges.

ORDER

A petition for rehearing en banc was filed by the Cross-Appellant, and a response thereto was invited by the court and filed by the Appellant. The matter was referred first as petition for panel rehearing to the panel that heard the appeal, and thereafter the petition for rehearing en banc and response were referred to the circuit judges who were authorized to request a poll whether to rehear the appeal en banc¹. A poll was requested, taken, and failed.

Upon consideration thereof,

IT IS ORDERED THAT:

(1) The petition for rehearing is denied.

(2) The petition for rehearing en banc is denied.

(3) The mandate of the court will issue on September 28, 2006.

NEWMAN, Circuit Judge, dissents in a separate opinion.

DYK, Circuit Judge, with whom GAJARSA, Circuit Judge, joins, concurs in the denial of the petition for rehearing en banc in a separate opinion.

NEWMAN, Circuit Judge, dissenting from denial of the petition for rehearing en banc.

The court today rules that the owner of a patent that the government uses for governmental purposes cannot bring an action under the Fifth Amendment for compensation for the use of this property, and cannot prevent such unauthorized use. The panel majority holds that there is no jurisdiction in the Court of Federal Claims — or any other court — of a Takings claim for compensation for unauthorized use by the government of a patented invention. This ruling is contrary to decision, statute, policy, and constitutional right.¹ I must, respectfully, dissent from the court's endorsement of this ruling.

The Zoltek majority bases its decision on a statement in Schillinger v. United States, 155 U.S. 163, 30 Ct.Cl. 480, 15 S.Ct. 85, 39 L.Ed. 108 (1894), that since patent infringement is a tort, "cases sounding in tort are not cognizable in the Court of Claims." Id. at 169. The 1910 Patent Act expressly assigned to the Court of Claims jurisdiction of compensation for patent use by the United States, explaining that while the government cannot be enjoined from using an invention for governmental purposes, compensation must be paid. Soon thereafter the Court in Crozier v. Fried. Krupp Aktiengesellschaft, 224 U.S. 290, 32 S.Ct. 488, 56 L.Ed. 771 (1912) laid Schillinger to rest, establishing that the government's right to use patent property was based on eminent domain and subject to the Fifth Amendment: "we think there is no room for doubt that the [1910] statute makes full and adequate provision for the exercise of the power of eminent domain for which considered in its final analysis it was the purpose of the statute to provide." Id. at 307, 32 S.Ct. 488. It is curious indeed for this court, a century later, to resurrect Schillinger's long-rejected and long-overruled decision.

My concern with my colleagues' position starts with their apparent rejection of the premise that patents are property and subject to the Fifth Amendment. See Florida Prepaid Postsecondary Educ. Bd. v. College Sav. Bank, 527 U.S. 627, 642, 119 S.Ct. 2199, 144 L.Ed.2d 575 (1999) ("Patents, however, have long been considered a species of property."); James v. Campbell, 104 U.S. 356, 26 L.Ed. 786 (1881) ("letters-patent for a new invention or discovery in the arts, confers upon the patentee an exclusive property in the patented invention"); Cammeyer v. Newton, 94 U.S. 225, 226, 24 L.Ed. 72 (1876) ("the right of the [patent] holder is as much entitled to protection as any other property"); Consol. Fruit-Jar Co. v. Wright, 94 U.S. 92, 96, 24 L.Ed. 68 (1876) ("A patent for an invention is as much property as a patent for land.").

Almost a century of precedent has implemented the right of patentees to the remedies afforded to private property taken for public use. There is no basis today to reject this principle. Indeed, even Schillinger was decided on a quite different ground, the Court simply observing that patent infringement is a tort and that the Tucker Act, as then written, dealt only with contracts. Schillinger, 155 U.S. at 168, 15 S.Ct. 85. Schillinger did not change the property status of patents and did not discuss constitutional principles; the only issue was whether the Court of Claims had jurisdiction under the Tucker Act. The Patent Act of 1910 assigned jurisdiction to the Court of Claims:

That whenever an invention described in and covered by a patent of the United States shall hereafter be used by the United States without license of the owner thereof or lawful right to use the same, such owner may recover reasonable compensation for such use by suit in the Court of Claims . . . . Provided further, That in any such suit the United States may avail itself of any and all defenses, general or special, which might be pleaded by a defendant in an action for infringement, as set forth in Title Sixty of the Revised Statutes, or otherwise; . . .

Pub.L. No. 61-305, 36 Stat. 851 (1910). The legislative proceedings of the 1910 Act emphasized that the unauthorized use of a patented invention by the government warrants just compensation on constitutional principles. As the 1910 Patent bill (H.R.24649) was being considered, Rep. Frank Dunklee Currier (N.H.), Chairman of the House Committee on Patents, explained that although patents were property, the only remedy for governmental infringement was by appeal to Congress. Chairman Currier placed the following statement in the legislative record:

The status of a patent as private property, which even the Government is prohibited from taking for public use without compensation (amendment to the Constitution, Article V) has been declared and redeclared in many opinions by the Supreme Court of the United States ... But it has been held, also, that in the absence of an express contract between the owner and the Government, or of transactions between them from which an agreement by the Government to pay a reasonable royalty must be implied, the patentee has no remedy at law or by executive action, and must obtain relief, if at all, by appeal to Congress. Schillinger v. United States, 155 U.S. 163, 15 S.Ct. 85. . . .

45 Cong. Rec. 8755, 8769 (June 22, 1910). Several floor statements stressed the principle of providing remedy in the Court of Claims, and the Report of the House Committee on Patents stated:

In no civilized country, so far as the committee is informed, except Russia and the United States, can the Government appropriate an invention without paying a fair price for it. . . . The Court of Claims now has no jurisdiction to award a compensation for its use of a patent except when such use is under a contract, express or implied. The infringement or unauthorized use of a patent is a tort. Our only purpose is to extend the jurisdiction of that court so that it may entertain suits and award compensation to the owners of patents in cases where the use of the invention by the United States is unauthorized and unlawful; in short, to give the court in patent cases, in addition to the jurisdiction it has now in matters of contract, jurisdiction in cases of tort.

H.R. Comm. Rep. No. 61-1288, at 1, 2-3 (1910). The Report emphasized that the 1910 Act enlarged the jurisdiction of the Court of Claims to include claims under the Tucker Act based on a violation of the Fifth Amendment:.

The purpose of this bill is to enlarge the jurisdiction of the Court of Claims so that said court may entertain suits against the United States for the infringement or unauthorized use of a patented invention, in certain cases, and award reasonable compensation to the owner of the patent.

Id. at 1. This assignment is codified at 28 U.S.C. § 1498(a):

§ 1498(a) Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner's remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire...