Governmental Indirection Patent Infringement: The Need to Hold Uncle Sam Accountable Under 28 U.S.C. § 1498

Author:Richard J. McNeely
Position:Associate, Dinsmore & Shohl, L.L.P, Dayton, Ohio
Pages:1065-1129
 
FREE EXCERPT
GOVERNMENTAL INDIRECT PATENT INFRINGEMENT:
THE NEED TO HOLD UNCLE SAM ACCOUNTABLE
UNDER 28 U.S.C. § 1498
RICHARD J. MCNEELY*
INTRODUCTION
The government bestows on a patent owner a bundle of rights to
exclude others from practicing the patented invention.1 A private
individual “directly” infringes the patent owner’s right to exclude others by
making, using, selling, or offering to sell the invention within the United
States, or by importing the invention into the United States.2 A private
individual can be liable to the patent owner also for “indirectly” infringing
the patent—in essence aiding and abetting someone else’s infringement.3
Unlike the private individual, the United States government enjoys
sovereign immunity except when it consents to be sued.4
Since 1910, the government has graciously consented to be sued for
many acts that approximate the list of direct patent infringements,5 but
courts do not extend the government’s consent to claims of liability for
indirect infringement.6 The courts reason that the statute waiving
sovereign immunity, 28 U.S.C. § 1498, equates direct infringement with an
Copyright © 2008, Richard J. McNeely.
*Associate, Dinsmore & Shohl, L.L.P, Dayton, Ohio; J.D. 2008, Capital University Law
School; Ph.D. chemistry 1999, Northwestern University; B.S. chemistry 1994, Indiana
University. Views and opinions expressed in this Article are solely those of the author and
do not represent the views or opinions of Dinsmore & Shohl, L.L.P., or its partners. Special
thanks to Dennis Crouch, of the blog Patently-O (http://www.patentlyo.com), for inspiring
this topic through his comment on April 3, 2006: “NOTE: There is lots more here for a law
review article.”
1 See 35 U.S.C. § 154(a) (2000).
2 See 35 U.S.C. § 271(a) (2000).
3 See id. 35 U.S.C. §§ 271(b), (c), (f) (2000).
4 United States v. Sherwood, 312 U.S. 584, 586 (1941).
5 Decca Ltd. v. United States, 640 F.2d 1156, 1169–70 (Ct. Cl. 1980). Federal Circuit
Judge Giles Rich is responsible for describing the consent as “gracious.” See W.L. Gore &
Assocs., Inc. v. Garlock, Inc., 842 F.2d 1275, 1283 (Fed. Cir. 1988).
6 See LiLan Ren, Comment, A Comparison of 28 U.S.C. § 1498(a) and Foreign Statutes
and an Analysis of § 1498(a)’s Compliance with TRIPS, 41 HOUS. L. REV. 1659, 1690
(2005).
1066 CAPITAL UNIVERSITY LAW REVIEW [36:1065
eminent domain taking of a compulsory license.7 Indirect infringement,
however, sounds in tort.8
Even for the incomplete list of direct infringements that render the
government liable, Congress explicitly limited the government’s waiver of
sovereign immunity by excluding liability for “claim[s] arising in a foreign
country.”9 Effectively, the government can infringe a patent directly and
openly, but as long as one small part of the infringement occurs in a
foreign country, the patent owner loses in court.10
Because the governmental direct infringements are eminent domain-
type takings, could the Fifth Amendment apply in the same manner as it
does when the government condemns a person’s house?11 Can a patent
owner call on the Fifth Amendment as an alternative theory to recourse
when the government infringes a patent but escapes liability because a
small part of the infringing acts occurred outside the United States?
According to the Federal Circuit in Zoltek v. United States, no, the Fifth
Amendment does not apply.12
This all begs another question. The operative rule that the government
cannot be liable for indirect patent infringement involves distinguishing
direct and indirect infringements as eminent domain takings and torts,
respectively.13 After Zoltek, however, direct patent infringement by the
government no longer involves an eminent domain taking.14 Does this
mean that both direct patent infringement and indirect patent infringement
by the government sound only in tort? If so, should courts and Congress
now reconsider the scope of government liability for indirect patent
infringement, with the taking/tort distinction removed? This Comment
7 Decca, 640 F.2d at 1166.
8 Id. at 1170 n.31.
9 See 28 U.S.C. § 1498(c) (2000).
10 NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1318 (Fed. Cir. 2005).
11 See U.S. CONST. amend. V (“[N]or shall private property be taken for public use,
without just compensation.”). See Justin Torres, Note, The Govenment Giveth, and the
Government Taketh Away: Patents, Takings, and 28 U.S.C. § 1498, 63 N.Y.U. ANN. SURV.
AM. L. 315, 328 (2007) (quoting language from the original House reports to the
predecessor act of § 1498 that seemed to indicate Congress thought patents and houses were
equally deserving of Fifth Amendment protection).
12 Zoltek Corp. v. United States, 442 F.3d 1345, 1353 (Fed. Cir. 2006) (per curiam),
reh’g and reh’g en banc denied, 464 F.3d 1335 (Fed. Cir. 2006), cert. denied, 127 S. Ct.
2936 (2007).
13 See Decca Ltd. v. United States, 640 F.2d 1156, 1170, n.31 (Ct. Cl. 1980).
14 See infra note 42 and accompanying text.
2008] GOVERNMENTAL INDIRECT PATENT INFRINGEMENT 1067
argues that, indeed, both types of infringement are torts and, yes, courts
and Congress should reconsider how to address the government’s liability.
This Comment examines and denounces the incongruity between
patent infringement liability for acts by a private individual and liability for
the same acts by the government.15 The innocent victims of the
incongruity—owners of United States patents—deserve stronger protection
than they currently have, because injustice abounds.16
Part I supplies a statutory framework comprising a brief, historical
overview of patents as property vis-à-vis the Takings Clause;17 a primer of
the types of patent infringement claims a patent owner can make against a
private individual;18 and a background of the scope of government liability
under 28 U.S.C. § 1498.19
Part II exposes the loopholes in the statutory framework through
examples of when a private individual or corporation would be liable to a
patent owner but when the government, performing the same acts, would
not be liable.
Part III illustrates how a line of cases, ending with Zoltek, has affected
the view of patent property with respect to the Fifth Amendment and
§ 1498.
Part IV questions whether government liability for indirect patent
infringement could be based on § 1498 alone, even without invoking the
Fifth Amendment. First, a single error in interpretation, propagated over
nearly thirty years, is explored as the primary cause of the plague of
confusion over § 1498.20 Second, the general history of indirect
infringement liability is juxtaposed onto the legislative history of § 1498 to
suggest strongly that Congress intended the government to be liable for
indirect patent infringement.21 Nevertheless, in the end, the requirement
15 For example, active inducement of infringement under 35 U.S.C. § 271(b),
contributory infringement under 35 U.S.C. § 271(c), or inducement to assemble a patented
machine abroad from components of the machine made within the United States under 35
U.S.C. § 271(f).
16 See, e.g., Ren, supra note 6, at 1690; Mark A. Lemley, Inducing Patent Infringement,
39 U.C. DAVIS L. REV. 225, 228 (2005) (“[I]nducement law can avoid injustice by holding
liable those who contract infringing work out to someone who cannot pay a damages
judgment.”).
17 See infra Part I.A.
18 See infra Part I.B.
19 See infra Part I.C.
20 See infra Part IV.A.
21 See infra Part IV.A.2.

To continue reading

FREE SIGN UP