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United States Court of Appeals for the Federal Circuit
04-5100,-5102
ZOLTEK CORPORATION,
Plaintiff-Cross Appellant,
v.
UNITED STATES,
Defendant-Appellant.
Dean A. Monco, Wood, Phillips, Katz, Clark & Mortimer, of Chicago, Illinois, filed a
petition for rehearing en banc for plaintiff-cross appellant. With him on the petition was
John S. Mortimer. Of counsel on the petition were David W. Long and Pamela S. Kane,
Howrey LLP, of Washington, DC.
Anne Murphy, Attorney, Appellate Staff, Civil Division, United States Department of
Justice, of Washington, DC, filed a response to the petition for defendant-appellant. With
her on the response were Peter D. Keisler, Assistant Attorney General, and Scott R.
McIntosh, Attorney.
Appealed from: United States Court of Federal Claims
Chief Judge Edward J. Damich
United States Court of Appeals for the Federal Circuit
2004-5100,-5102
ZOLTEK CORPORATION,
Plaintiff-Cross Appellant,
v.
UNITED STATES,
Defendant-Appellant.
ON PETITION FOR REHEARING EN BANC
Before MICHEL, Chief Judge, NEWMAN, MAYER, Circuit Judges, PLAGER, Senior
Circuit Judge, LOURIE, RADER, SCHALL, BRYSON, GAJARSA, LINN, DYK, and
PROST, Circuit Judges.
ORDER
A petition for rehearing en banc was filed by the Cross-Appellant, and a response
thereto was invited by the court and filed by the Appellant. The matter was referred first
as petition for panel rehearing to the panel that heard the appeal, and thereafter the
petition for rehearing en banc and response were referred to the circuit judges who
were authorized to request a poll whether to rehear the appeal en banc1. A poll was
requested, taken, and failed.
Upon consideration thereof,
IT IS ORDERED THAT:
(1) The petition for rehearing is denied.
(2) The petition for rehearing en banc is denied.
1
Circuit Judge Moore assumed office on September 8, 2006, after the voting deadline
had expired in this matter.
(3) The mandate of the court will issue on September 28, 2006.
NEWMAN, Circuit Judge, dissents in a separate opinion.
DYK, Circuit Judge, with whom GAJARSA, Circuit Judge, joins, concurs in the
denial of the petition for rehearing en banc in a separate opinion.
FOR THE COURT
__Sep 21_2006_ _s/Jan Horbaly__
Date Jan Horbaly
Clerk
cc: Anne Murphy, Esq.
Dean A. Monco, Esq.
2004-5100,-5102 2
United States Court of Appeals for the Federal Circuit
04-5100, -5102
ZOLTEK CORPORATION,
Plaintiff-Cross Appellant,
v.
UNITED STATES,
Defendant-Appellant.
NEWMAN, Circuit Judge, dissenting from denial of the petition for rehearing en banc.
The court today rules that the owner of a patent that the government uses for
governmental purposes cannot bring an action under the Fifth Amendment for
compensation for the use of this property, and cannot prevent such unauthorized use. The
panel majority holds that there is no jurisdiction in the Court of Federal Claims -- or any
other court -- of a Takings claim for compensation for unauthorized use by the government
of a patented invention. This ruling is contrary to decision, statute, policy, and constitutional
right.1 I must, respectfully, dissent from the court's endorsement of this ruling.
The Zoltek majority bases its decision on a statement in Schillinger v. United States,
155 U.S. 163 (1894), that since patent infringement is a tort, "cases sounding in tort are not
1 "[N]or shall private property be taken for public use, without just
compensation." U.S. Const. amend. V.
cognizable in the Court of Claims." Id. at 169. The 1910 Patent Act expressly assigned to
the Court of Claims jurisdiction of compensation for patent use by the United States,
explaining that while the government cannot be enjoined from using an invention for
governmental purposes, compensation must be paid. Soon thereafter the Court in Crozier
v. Fried. Krupp Aktiengesellschaft, 224 U.S. 290 (1912) laid Schillinger to rest, establishing
that the government's right to use patent property was based on eminent domain and
subject to the Fifth Amendment: "we think there is no room for doubt that the [1910] statute
makes full and adequate provision for the exercise of the power of eminent domain for
which considered in its final analysis it was the purpose of the statute to provide." Id. at
307. It is curious indeed for this court, a century later, to resurrect Schillinger's long-
rejected and long-overruled decision.
My concern with my colleagues' position starts with their apparent rejection of the
premise that patents are property and subject to the Fifth Amendment. See Florida Prepaid
Postsecondary Educ. Bd. v. College Sav. Bank, 527 U.S. 627, 642 (2002) ("Patents,
however, have long been considered a species of property."); James v. Campbell, 104 U.S.
356 (1881) ("letters-patent for a new invention or discovery in the arts, confers upon the
patentee an exclusive property in the patented invention"); Cammeyer v. Newton, 94 U.S.
225, 226 (1876) ("the right of the [patent] holder is as much entitled to protection as any
other property"); Consol. Fruit-Jar Co. v. Wright, 94 U.S. 92, 96 (1876) ("A patent for an
invention is as much property as a patent for land.").
Almost a century of precedent has implemented the right of patentees to the
remedies afforded to private property taken for public use. There is no basis today to reject
this principle. Indeed, even Schillinger was decided on a quite different ground, the Court
04-5100, -5102 2
simply observing that patent infringement is a tort and that the Tucker Act, as then written,
dealt only with contracts. Schillinger, 155 U.S. at 168. Schillinger did not change the
property status of patents and did not discuss constitutional principles; the only issue was
whether the Court of Claims had jurisdiction under the Tucker Act. The Patent Act of 1910
assigned jurisdiction to the Court of Claims:
That whenever an invention described in and covered by a patent of the
United States shall hereafter be used by the United States without license of
the owner thereof or lawful right to use the same, such owner may recover
reasonable compensation for such use by suit in the Court of Claims . . . .
Provided further, That in any such suit the United States may avail itself of
any and all defenses, general or special, which might be pleaded by a
defendant in an action for infringement, as set forth in Title Sixty of the
Revised Statutes, or otherwise; . . .
Pub. L. No. 61-305, 36 Stat. 851 (1910). The legislative proceedings of the 1910 Act
emphasized that the unauthorized use of a patented invention by the government warrants
just compensation on constitutional principles. As the 1910 Patent bill (H.R. 24649) was
being considered, Rep. Frank Dunklee Currier (N.H.), Chairman of the House Committee
on Patents, explained that although patents were property, the only remedy for
governmental infringement was by appeal to Congress. Chairman Currier placed the
following statement in the legislative record:
The status of a patent as private property, which even the Government is
prohibited from taking for public use without compensation (amendment to
the Constitution, Article V) has been declared and redeclared in many
opinions by the Supreme Court of the United States . . . But it has been
held, also, that in the absence of an express contract between the owner and
the Government, or of transactions between them from which an agreement
by the Government to pay a reasonable royalty must be implied, the patentee
has no remedy at law or by executive action, and must obtain relief, if at all,
by appeal to Congress. Schillinger v. United States, 156 U.S. 163. . . .
04-5100, -5102 3
45 Cong. Rec. 8755, 8769 (June 22, 1910). Several floor statements stressed the principle
of providing remedy in the Court of Claims, and the Report of the House Committee on
Patents stated:
In no civilized country, so far as the committee is informed, except Russia
and the United States, can the Government appropriate an invention without
paying a fair price for it . . . . The Court of Claims now has no jurisdiction to
award a compensation for its use of a patent except when such use is under
a contract, express or implied. The infringement or unauthorized use of a
patent is a tort. Our only purpose is to extend the jurisdiction of that court so
that it may entertain suits and award compensation to the owners of patents
in cases where the use of the invention by the United States is unauthorized
and unlawful; in short, to give the court in patent cases, in addition to the
jurisdiction it has now in matters of contract, jurisdiction in cases of tort.
H.R. Comm. Rep. No. 61-1288, at 1, 2-3 (1910). The Report emphasized that the 1910 Act
enlarged the jurisdiction of the Court of Claims to include claims under the Tucker Act
based on a violation of the Fifth Amendment:.
The purpose of this bill is to enlarge the jurisdiction of the Court of Claims so
that said court may entertain suits against the United States for the
infringement or unauthorized use of a patented invention, in certain cases,
and award reasonable compensation to the owner of the patent.
Id. at 1. This assignment is codified at 28 U.S.C. §1498(a):
§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 . . . .
There can be no doubt that the unlicenced use of a patented invention by the United States
is remediable in the Court of Federal Claims. This principle has been applied in decades of
precedent. This court's statement that we are "bound by Schillinger" to hold that the Court
04-5100, -5102 4
of Federal Claims has no jurisdiction of patent claims against the government, Zoltek, 442
F.3d at 1350, is almost a century out of date.
The panel majority also produces the anomalous result that patent property receives
less protection from the Constitution than other forms of intellectual property, in conflict with
principles and precedent. In Ruckelshaus v. Monsanto Company, 467 U.S. 986 (1984) the
Court held that a trade secret is constitutionally protected property, and a claim for its
taking is within Tucker Act cognizance:
Although this Court never has squarely addressed the question whether a
person can have a property interest in a trade secret, which is admittedly
intangible, the Court has found other kinds of intangible interests to be
property for purposes of the Fifth Amendment's Taking Clause." See, e.g.,
Armstrong v. United States, 364 U.S. 40, 44, 46 (1960) (materialman's lien
provided for under Maine law protected by Taking Clause); Louisville Joint
Stock Land Bank v. Radford, 295 U.S. 555, 596 -602 (1935) (real estate lien
protected); Lynch v. United States, 292 U.S. 571, 579 (1934) (valid contracts
are property within meaning of the Taking Clause). . . .
467 U.S. at 1003. That patent rights are property rights, entitled to just compensation when
taken by the United States, is not subject to revision at this late date. The premises as
explained in 1910 remain intact, as explained in the record of that enactment:
Rep. Dalzell. But if the Government, through an authorized officer, has seen
fit to appropriate a patent of a citizen without making any contract with him, or
under circumstances that no implied contract can be inferred, then this law
proposes to give him a remedy. It proposes to put him on the same footing
that every other citizen is on who is not a patentee; that is, to give him the
right to recover for property that has been taken from him by due process of
law. And every time that the United States Government assumes to take
forcibly, without the consent of the owner, a patented process, it violates the
constitutional provision which says no man's property shall be taken without
compensation and without due process of law.
45 Cong. Rec. 8755 at 8780.
04-5100, -5102 5
I am concerned that my colleagues have strayed, for their holding that the issues
raised by the asserted violation of patent rights are not within the jurisdiction of the Court of
Federal Claims is contrary to clear statutory text and long-resolved application of
constitutional remedy. I respectfully dissent from the court's decision not to review this
holding en banc.
04-5100, -5102 6
United States Court of Appeals for the Federal Circuit
04-5100, -5102
ZOLTEK CORPORATION,
Plaintiff-Cross Appellant,
v.
UNITED STATES,
Defendant-Appellant.
DYK, Circuit Judge, concurring in the denial of the petition for rehearing en banc, with
whom GAJARSA, Circuit Judge, joins.
I agree that this case does not warrant en banc review and write briefly to note
that the dissent has misread the majority panel opinion.
The dissent suggests that the majority opinion here leaves private parties without
an effective remedy for patent misuse against the government. With respect, this is not
correct. As the panel majority holds, following prior decisions of this court, private
parties have a right of action against the government for unauthorized use of a patent
pursuant to 28 U.S.C. § 1498 (2000). What the panel majority holds is that (1) the rights
against the United States under section 1498 are not greater than the rights against
private parties in a suit for patent infringement; (2) there would be no claim for
infringement against a private party under the circumstances of this case; and (3) (as
the Supreme Court held in Schillinger v. United States, 155 U.S. 163, 169 (1894))
Congress has not created a separate parallel takings remedy in the Court of Federal
Claims. We think it clear that, in enacting section 1498, Congress did not overrule
Schillinger by conferring jurisdiction over patent takings claims against the government,
nor has the Supreme Court overruled Schillinger.
This decided lack of interest by the Congress and the Supreme Court in creating
a takings remedy is perhaps not surprising given the fact that patent rights are created
only by federal statute; that a Congressional decision to limit those rights is difficult to
characterize as a taking of established property rights; and that Congress has in most
situations created a right to sue the government for infringement damages equivalent to
the right to sue private parties. The panel decision here, in rejecting the constitutional
claim and in finding no infringement, is faithful to section 1498, to the decisions of the
Supreme Court, and to the decisions of this court.
04-5100, -5102 2