Earlier this month, the Federal Circuit Court heard oral argument in Ligado Networks LLC v. United States, a takings case we have been following because it attracted two amicus briefs. In this case, the United States appeals a decision of the Court of Federal Claims, arguing it erred by exercising jurisdiction over the case and treating a license from the Federal Communications Commission as property under the takings clause. Chief Judge Moore, Judge Taranto, and Judge Stoll heard the oral argument. This is our argument recap.
Nathanael Yale argued for the United States. He began by arguing the case should have been dismissed by the lower court. As for why, Yale argued the case is a “regulatory dispute that belongs at the FCC” as required by the “comprehensive remedial scheme of the Communications Act,” which governs jurisdiction “including for takings claims.” A judge asked whether the statute grants the FCC “authority to award damages for past, improper use.” Yale acknowledged the FCC may not have “refund options” available, but maintained the FCC “could reallocate spectrum.” He suggested a possible remedy might include “provid[ing] spectrum equal to what the taking was.”
Another judge asked Yale on the “source of the asserted exclusivity” claimed by Ligado. Yale explained the “purported nature of the right” to exclusivity arises from the Communications Act. Congress, Yale argued, “set up a system where the FCC can issue the license,” although its authority is “limited in nature.” When the judge asked whether the “license or statute says [it] is exclusively for Ligado,” Yale explained the “license grants the ability to use the spectrum for a particular use.” He, however, emphasized the FCC provided no guarantee “that there could be no future licensees” operating in the same spectrum.
Another judge asked Yale to explain how the National Telecommunications and Information Administration “intersects with the FCC to determine use.” This judge also asked whether the Department of Defense’s “use of the L band, as alleged in the complaint, was actually authorized by the NTIA.” Yale answered by arguing that, “under the Communications Act, there’s a specific section” providing that “licensing doesn’t apply to government stations.” Instead, he said, NTIA “assigns the government radio stations” and coordinates with the FCC “about allocations of spectrum they provide.”
The judge then asked if the FCC can “allocate to the government a certain spectrum” or if the government gets spectrum “because it’s not allocated.” Yale explained Congress “set up the dual system for government versus private” entities. Under that framework, he said, the FCC “allocates all of the bands that have been set aside for private use,” while “there’s another big bunch of spectrum exclusively for government.”
Donald B. Verrilli, Jr. argued for Ligado Networks. Verrilli began by arguing “exclusivity flows” from a statutory prohibition “of any unlicensed person to use the spectrum.” He further pointed to a provision allowing “any injured person” to sue to “obtain injunctive relief for a violation.” A judge agreed there “could be de facto exclusivity,” but suggested this does not give a license holder “a right to exclude others,” because the FCC could “extend a right to use the L band” to another entity. Verrilli, however, maintained the license is “de jure exclusive,” since the license holder has “the exclusive right to use” the spectrum “unless and until the FCC makes such a change.” He acknowledged that “there is a statutory provision” permitting sharing, but he described it as “quite rare and requir[ing] all kinds of technical workouts.”
Another judge asked whether licenses are like patents, where the “word exclusive . . . is not equivalent to having a right to exclude.” In response, Verrilli argued the use of the spectrum by anyone other than the license holder constitutes an “unlawful intrusion on the right,” and, he said, the license “could be enforced through FCC proceedings.” One judge asked whether the FCC could grant the the Department of Defense the right to use the spectrum or whether only the NTIA could do so. Verrilli answered by saying “Congress authorized the NTIA to decide which spectrum” is allocated for “commercial use.” The FCC, he continued, is “charged by Congress to allocate the spectrum” that the NTIA designated for “commercial purposes,” and the “L band is in that spectrum.”
A different judge asked Verrilli to confirm the “FCC doesn’t have authority to tell DoD to stop.” In response, Verrilli said the FCC did not have that authority, illustrated by the fact that the government itself asked Ligado to “go back to the FCC and have them ask DoD to play nice.” The judge followed up by asking, “why does the FCC not have authority to tell a squatter to stop?” Verrilli explained the FCC can “encourage DoD to cooperate to satisfy the conditions,” but, he said, the FCC “can’t order them to do so.” For that reason, he contended, Ligado “can’t think of what authority” the FCC has to provide meaningful relief. He also agreed with the government that the “DoD is not a person within the meaning of statute,” and therefore “can’t be sued” to obtain a remedy.
In his rebuttal, Yale argued the FCC does retain some authority because it “could work with NTIA and determine” DoD’s spectrum needs. He added the FCC “could talk to DoD directly.” On the question whether a property interest exists, Yale maintained such an interested must arise “from an independent source,” and here, he said, that property interest “has to come from the statute.”
We will continue monitoring this case and report on developments.