This month, the Federal Circuit heard oral argument in a patent case we have been following because it attracted an amicus brief. The case, Arlton v. AeroVironment, Inc., raises several questions, most prominently questions concerning patent infringement and the jurisdiction of the Court of Federal Claims under 28 U.S.C. § 1498. Judges Prost, Cunningham, and Stark heard the oral argument. This is our argument recap.
Deborah Pollack-Milgate argued for the Arltons. According to Pollock-Milgate, § 1498 “focuses on the policy that the government is free to contract irrespective of private concerns of patent infringement.” She maintained “no government policy is served by finding the government’s consent to immunity and liability” in this case. As a result, she argued, this case should not be heard in the Court of Federal Claims.
A judge asked what relief the Arltons wanted from AeroVironment that they “cannot get from the government” in the Court of Federal Claims. In response, Pollock-Milgate argued the Mars helicopter “is not covered under § 1498 because the government did not validly consent.” She suggested that, under the district court’s holding, Phase III rights holders under the Small Business Innovation Research statute “may be shocked to learn that the rights they thought were guaranteed” do not “prevent the government . . . from taking the technology” and “immunizing their competitors.” Following up on the question, a judge asked for a “succinct answer” to it. Pollock-Milgate answered by saying the Arltons were requesting from the court “declaratory relief so that it is clear” the Mars helicopter was the Arltons’ invention and were seeking “damages pursuant to the patent statute.”
Judge Prost asked if § 1498 exists “so that the government assumes liability when it’s in contractual arrangements” such as in the present case. In response, Pollock-Milgate argued “the application of § 1498 under these circumstances has produced an unjust result.” She emphasized her view that “absolutely no policy purpose” is served by the district court’s holding.
Pollock-Milgate then transitioned to the district court’s analysis of the issue of de minimis use of the patented technology by non-governmental actors. Pollock-Milgate suggested the district court’s analysis was “faulty” because it “required a commercial sale, and that’s not the law of this court.”
Caroline W. Tan argued for the United States. She began by saying “Congress channeled patent infringement claims involving government contractors” that have “authorization or consent of the United States” to the Court of Federal Claims. She focused her argument on whether “authorization and consent exist” in the present case.
A judge asked if the government was arguing if all uses of the terrestrial helicopter at issue in this case are immunized. Tan responded by saying “everything with respect to the Mars helicopter falls within § 1498,” and then she listed various immunized uses. Tan noted the government did not take a position on the application of § 1498 to “educational and marketing activities,” but clarified the government’s position by saying the provision of the statute “does not categorically exclude these kinds of activities” from protection.
Scott Felder argued for AeroVironment. He began focusing on the procedural posture of the case, emphasizing that “this was a one-product complaint” and that one product was “the subject of AeroVironment’s summary judgment motion.” Felder argued the district court “only reopened discovery following summary judgment for a limited purpose,” and thus the Federal Circuit need not “address the other uses” of the product to affirm the district court’s holding.
A judge asked if a helicopter was still “part of the case.” Felder responded that it “was the basis for reopening the summary judgment” and maintained the district court properly limited that reopening to whether “there have, in fact, been commercial uses of the single accused product.” He reiterated that AeroVironment had “no intention to commercialize this product” to support his assertion that the court could affirm without considered other issues.
Referring to the government’s refusal to say whether all known uses of the helicopter were authorized, Judge Prost asked Felder if the contractor’s immunity and the government’s waiver of sovereign immunity were “perfectly co-extensive.” Felder answered he did not know if the “broad immunity for the contractor under § 1498 is perfectly co-extensive.” He admitted he had “argued that there are some gaps,” but he qualified this statement by saying he didn’t “think any of those gaps are applicable to the fact pattern we have here.”
Felder suggested § 1498 exists so government contractors are not deterred from contracting with the government “by considerations of private patent infringement” and concerns related to “the burden and expense of litigation,” which “AeroVironment has shouldered here.”
In her rebuttal, Pollock-Milgate argued “substantial commercial uses” is not the relevant standard related to de minimis use. Rather, she argued, the standard is related to the “furtherance of the alleged infringer’s legitimate business, and is not solely for amusement to satisfy idle curiosity or very strictly philosophical inquiry.” She argued § 1498 does not contain a qualification for “the very narrow and strictly limited experimental use defense.” A judge countered that the court has never stated “what the de minimis exception, if any, is under § 1498.” Pollock-Milgate responded by arguing that, in a past Federal Circuit case, the court held “in the context of the experimental use” the standard was “to be on all fours with de minimis” use.
In a brief rebuttal, Felder emphasized “AeroVironment’s position is that this case is exceptional because the applicability of § 1498 was so clear.”
We will continue monitoring this case and report on developments.