Appeal:
1. “Does 28 U.S.C. § 1498 enable the Government to consent to patent infringement by AeroVironment where such consent breaches its contractual and statutory obligations to Lite, a Phase III award recipient, pursuant to the SBIR statute?”
2. “Does AeroVironment’s widespread use of ‘Terry,’ the terrestrial version of the Mars Helicopter Ingenuity, constitute ‘de minimis’ activity, extending Section 1498 immunity to infringing activity that would otherwise be compensable under 35 U.S.C. § 271?”
3. “Did the district court properly exercise its discretion in holding that the Arltons failed to show ‘good cause’ under Federal Rule of Civil Procedure 16 by imposing a requirement that the Arltons demonstrate extreme diligence while at the same time ignoring circumstances that were outside the Arltons’ control?”
Cross Appeal:
1. “Whether the District Court correctly granted summary judgment of noninfringement under 28 U.S.C. § 1498.”
2. “Whether the District Court correctly denied Appellants’ untimely motion for leave to amend their Complaint.”
3. “Whether the District Court abused its discretion in denying AeroVironment’s request for attorneys’ fees and costs.”
Appeal:
1. “The Arltons rely specifically on 15 U.S.C. § 638, which provides: [t]o the greatest extent practicable, Federal agencies and Federal prime contractors shall . . . issue, without further justification, Phase III awards relating to technology . . . to the SBIR and STTR award recipients that developed the technology . . . . Section 638’s use of the mandatory term “shall,” according to the Arltons, obligates the government to award Phase III contracts to Phase I and II awardees unless doing so would be “completely infeasible.” “[W]e conclude that § 638 does not narrow the applicability of § 1498. There is simply no incompatibility, or even conflict, between § 638 and § 1498. Whereas § 638 guides the government’s award of contracts among different private entities, § 1498 governs who a patentee must sue for patent infringement (a direct infringer or the United States) and in which court (district court or the Court of Federal Claims). Accordingly, § 638 does not limit the government’s discretion to assume liability under § 1498.”
2. “The record is devoid of any evidence that AeroVironment offered Terry for sale to anyone. Nor is there evidence that internal discussions within the company about potentially commercializing Terry ever materialized into actual engagements with prospective business partners. These non-sales cannot constitute evidence of commercial activity falling outside the scope of § 1498. . . . At bottom, there is simply not sufficient evidence from which a reasonable jury could find that AeroVironment engaged in infringing conduct that was not for the benefit of, and with authorization of and consent from, the government. Therefore, we affirm the district court’s grant of summary judgment to AeroVironment.”
“We need not, and do not, reach the issue of whether the same de minimis use doctrine we have recognized in connection with infringement under 35 U.S.C. § 271.”
3. “The district court did not abuse its discretion. For one thing, the Arltons, after obtaining new evidence supporting a potential trade secret claim on December 30, 2020, did not (until after the deadline for amendment had passed) inform the district court of what they had recently learned or of their need for additional time to prepare their amendment. The Arltons admitted they suspected Ingenuity incorporated their trade secrets at the time they brought this case. Yet, for whatever reason, they did not pursue the trade secret claim until very close to the scheduling order’s deadline for amendment of pleadings. As importantly, there is no clear error in the district court’s finding that much of the information about Ingenuity on which the Arltons predicate their trade secret claim was publicly available, and therefore accessible to the Arltons if they had acted with diligence, long before January 2021.”
Cross Appeal:
1-2. “We have considered the parties’ remaining arguments but do not find them persuasive.”
3. “The district court’s rejection of AeroVironment’s characterization of the Arltons’ case and their litigation conduct was not an abuse of discretion. The district court found this case was not ‘cut and dried’ and that the Arltons did not ‘ma[k]e frivolous arguments in opposing summary judgment.’ . . . To the contrary, the district court remarked that it had needed to undertake ‘a careful analysis of [a] nuanced area of law’ before ruling on the Arltons’ § 638 theory. . . . Just because the district court rejected the Arltons’ claim does not mean this was an easy call or that this is an exceptional case. . . . Accordingly, we affirm the district court’s denial of AeroVironment’s motion for attorneys’ fees.”
