Zoltek Corp. v. United States

Decision Date14 March 2012
Docket NumberNo. 2009–5135.,2009–5135.
Citation672 F.3d 1309,102 U.S.P.Q.2d 1001
PartiesZOLTEK CORPORATION, Plaintiff–Appellee, v. UNITED STATES, Defendant, v. Lockheed Martin Corporation, Defendant–Appellant.
CourtU.S. Court of Appeals — Federal Circuit

OPINION TEXT STARTS HERE

Joe D. Jacobson, Green Jacobson, P.C., of Clayton, Missouri, argued for plaintiff-appellee. Of counsel were Dean A. Monco and John S. Mortimer, Wood, Phillips, Katz, Clark & Mortimer, of Chicago, Illinois.

Donald R. Dunner, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, of Washington, DC, argued for defendant-appellant. With him on the brief were Richard T. Ruzich, Duane Morris LLP, of Chicago, Illinois, Matthew C. Mousley, of Philadelphia, Pennsylvania, and Kerry B. McTigue, of Washington, DC, and Scott J. Popma, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, of Washington, DC.

Anisha Dasgupta, Attorney, Appellate Staff, Civil Division, United States Department of Justice, of Washington, DC, argued for amicus curiae United States. With her on the brief were Tony West, Assistant Attorney General, and Scott R. McIntosh, Attorney.Jerry Stouck, Greenberg Traurig, LLP, of Washington, DC, for amicus curiae Federal Circuit Bar Association.William C. Bergmann, Baker & Hostetler LLP, of Washington, DC, for amicus curiae Aerospace Industries Association of America, Inc.Before RADER, Chief Judge, PLAGER and GAJARSA,* Circuit Judges.

RADER, Chief Judge, NEWMAN, LOURIE, BRYSON, LINN, PROST, MOORE, O'MALLEY, REYNA, and WALLACH, Circuit Judges, join Part I–B of this opinion. DYK, Circuit Judge, dissents from Part I–B.

GAJARSA, Circuit Judge.

This appeal represents the continuing saga of the Zoltek Corporation (Zoltek) in its effort to obtain compensation for the alleged infringement of its patent. The specific issue in this appeal is whether the Court of Federal Claims properly allowed Zoltek to amend its complaint and transfer its claim for infringement under 35 U.S.C. § 271(g) against Lockheed Martin Corporation (Lockheed) to the United States District Court for the Northern District of Georgia. The trial court allowed the amendment and transfer because it concluded that the requirements of 28 U.S.C. § 1631, the transfer statute, were satisfied. On the facts of this case, however, amendment and transfer were legal error. Moreover, because the error in this case was precipitated in part by this court's earlier decision in Zoltek Corp. v. United States (“ Zoltek III ”), 442 F.3d 1345 (Fed.Cir.2006) (per curiam; Gajarsa, J. concurring; Dyk, J. concurring; Plager, J. dissenting) we revisit the basis for that decision. Thus, in light of our revisiting of our earlier decision, we (1) reverse the trial court's decision here allowing amendment of Zoltek's complaint and transferring the amended complaint to the district court; and (2) we remand the case to the trial court for further proceedings consistent with this opinion.

Background

Zoltek is the assignee of United States Reissue Patent No. 34,162 (the “RE '162 Patent”), entitled “Controlled Surface Electrical Resistance Carbon Fiber Sheet Product.” Claims 1–22 and 33–38 relate to methods of manufacturing carbon fiber sheets with controlled surface electrical resistivity; claims 23–32 and 39–40 are product-by-process claims for the partially carbonized fiber sheets. Zoltek is presently asserting only the method claims, which generally contain two steps: partially carbonizing the fiber starting material and then processing those fibers into sheet products. The carbon fiber products at issue were used in the F–22, a fighter jet, which Lockheed designed and built pursuant to a contract with the Government. The F–22 contains two types of carbon fiber products: silicon carbide fiber mats (“Tyranno fibers”), which are fibrous reinforcing material, and prepregs (“Nicalon fibers”), which are pre-impregnated material typically used in the manufacture of high performance composites. Zoltek Corp. v. United States (“ Zoltek I ”), 51 Fed.Cl. 829, 831 & nn. 1–2 (2002).

In its original complaint filed in 1996, Zoltek sued the United States under 28 U.S.C. § 1498(a), alleging that, without a license from Zoltek or other lawful right, the claimed invention covered by the RE '162 Patent was infringed because the resulting product was used or manufactured by or for the United States. At that time, Zoltek did not assert any claims against Lockheed. Under § 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 compensation for such use and manufacture.

Section 1498(a) “is more than a waiver of immunity and effects an assumption of liability by the government.” Advanced Software Design Corp. v. Fed. Res. Bank, 583 F.3d 1371, 1375 (Fed.Cir.2009) (quoting Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 344, 48 S.Ct. 194, 72 L.Ed. 303 (1928)).

The United States (Government) moved for partial summary judgment arguing that 28 U.S.C. § 1498(c) precluded Zoltek's recovery for the Government's use of the method claims. Zoltek I, 51 Fed.Cl. at 830. Section 1498(c) states that [t]he provisions of this section shall not apply to any claim arising in a foreign country.” The manufacturing of the Tyranno and Nicalon fibers begins in Japan, where the fibers are “partially carboniz[ed].” Zoltek Corp. v. United States (“ Zoltek II ”), 58 Fed.Cl. 688, 690 (2003). The fibers are then imported into the United States, where they are processed into sheets.1 Id. The Government argued Zoltek's claim arose in a foreign country and, therefore, its sovereign immunity was not waived.

The trial court held in Zoltek I that § 1498 “does not [waive the Government's sovereign immunity as] to all forms of direct infringement as currently defined in 35 U.S.C. § 271.” 51 Fed.Cl. at 837. The trial court, however, did not rule on the Government's summary judgment motion, but stayed the motion pending additional briefing concerning Zoltek's ability to assert a claim for a taking of its patent rights under the Fifth Amendment. See id. at 839. It subsequently denied the Government's motion, holding that Zoltek could assert a takings claim. Zoltek II, 58 Fed.Cl. at 707. Both parties appealed.

In our per curiam opinion, the panel majority reversed the trial court's ruling that Zoltek could allege patent infringement as a Fifth Amendment taking under the Tucker Act. Zoltek III, 442 F.3d at 1353 (per curiam). In the same opinion, the panel majority affirmed the trial court's conclusion that Zoltek's infringement allegations were precluded by § 1498, but—unlike the trial court and the dissent—the majority cited § 1498(a) as the basis for the holding, without reaching the issue of § 1498(c). Id. In doing so, the panel majority relied on NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282, 1316 (Fed.Cir.2005), for the proposition that “direct infringement under section 271(a) is a necessary predicate for government liability under section 1498.” Id. at 1350. Because “a process cannot be used ‘within’ the United States as required by section 271(a) unless each of the steps is performed within this country,” we held that a § 1498 remedy is foreclosed “where, as here, not all steps of a patented process have been performed in the United States.” Id. (citing NTP, 418 F.3d at 1318). We then remanded the case for further proceedings. Id. at 1353.

On remand, Zoltek sought leave to amend its complaint to add a claim against Lockheed for infringement of the RE '162 Patent's method claims under 35 U.S.C. § 271(g) and to transfer that claim to the Northern District of Georgia pursuant to 28 U.S.C. § 1631. The trial court explained that it lacked jurisdiction over Zoltek's claims against the Government based on this court's holding in Zoltek III and that the Northern District of Georgia would have jurisdiction over Zoltek's claim for infringement against Lockheed. Zoltek IV, 85 Fed.Cl. at 413, 418.

The trial court rejected the Government's argument that on the basis of the grant of immunity for contractors provided in § 1498(a), there is no jurisdiction in the Northern District of Georgia. The second paragraph of § 1498(a) states that “the use or manufacture of an invention described in and covered by a patent of the United States by a contractor ... for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States.” According to the trial court, § 1498(a) only insulates government contractors from suit when the Government can be found liable,” and even if § 1498(a) insulated government contractors from liability, transfer was still proper because § 1498(a) is an affirmative defense and not a jurisdictional bar. Id. at 418–19.

The trial court also found that it was in the interest of justice to transfer the claim because (1) it was plausible that without transfer at least part of Zoltek's claim for infringement against Lockheed would be time-barred; (2) Lockheed had participated in the suit through discovery beginning in 1997 and was aware that its product was the subject of this litigation; and (3) Zoltek was the first plaintiff to discover “a legislative gap between the definition of infringement under § 1498 and the definition of infringement under § 271.” Id. at 420–21. The trial court thus granted Zoltek leave to amend its complaint. Based upon the trial court's determination, Zoltek amended its complaint.

Subsequently, the Court of Federal Claims certified the following controlling question of law to this court for interlocutory appeal: “whether 28 U.S.C. § 1498(c) must be construed to nullify any government contractor immunity provided in § 1498(a) when a patent infringement...

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