Wednesday, February 21, 2007

Zoltek v. United States - Petition For Certiorari

Zoltek holds U.S. Patent No. RE 34,162, which claims a method for producing carbon-fiber sheets having properties useful in military applications, such as providing stealth qualities to aircraft. The patented method uses partially carbonized fibers that are then processed into sheets for use on military aircraft.

Lockheed Martin was accused of using Zoltek’s patented process to produce carbon-fiber sheets and imported these materials into the United States for use in making the F-22
Fighter Plane pursuant to a contract with the federal government to design and build F-22 stealth fighters.

Zoltek sued Lockheed and the US government in the CFC under 28 U.S.C. § 1498(a), claiming that Lockheed’s “use or manufacture of [a patented] invention” is “construed as use or manufacture for the United States.” Section 1498(a) further provides that whenever a patented invention “is used or manufactured by or for the United States without license of the owner thereof . . . the owner’s remedy shall be by action against the United States in the [CFC] for the recovery of his reasonable and entire compensation for such use or manufacture.”

The case reached the CAFC, where a per curiam opinion was rendered on two important issues. First, the court addressed the Fifth Amendment takings clause in the context of patents. The CAFC, relying of the 1894 Schillinger decision, held that Zoltek could not assert a Fifth Amendment takings claim, since a particular claim for patent infringement by a government contractor sounded in tort and hence could not be brought against the United States under the Tucker Act. The court rejected the notion that patent rights were “property” protected by the Fifth Amendment, but instead viewed them as “a creature of federal law” protected only by such relief as the federal government saw fit to grant under § 1498.

With regard to § 1498, the CAFC determined that a process is not infringed unless “each of the steps is performed within this country." Since Lockheed's sheets were partially manufactured in Japan, the court ruled that the US has no liability under Section 1498(a).

Zoltek has petitioned for a grant of certiorari, arguing that the CAFC decision "strips an entire class of property owners – patent holders – of their Fifth Amendment right to just compensation for the taking of their patent rights." The petition cites the prominence of IP in today's business world and argues that it is unfair and unwise to exclude patent holders.

Furthermore, Zoltek argues that § 1498 should be interpreted consistently with § 271, which provides an independent right to exclude the products of foreign processes from importation into or use in the United States, as well as the fact that a claim for infringement under § 271(g) arises from the domestic importation or use of those products:

Under the facts of this case, there is no question that, aside from § 1498(a) substituting the Untied States as a defendant under certain circumstances, Zoltek would have a cause of action against Lockheed or any other private party for the importation and/or domestic use of the [products] made by its patented process, regardless whether some or all steps of the patented process itself were performed abroad.
Zoltek Petition for Certiorari

Zoltek Petition Appendix

(Special thanks to Erik Jaffe for forwarding the petitions.)

Original CAFC decision here

CAFC en banc denial, with concurring opinions from Dyk and Gajarsa, and a dissenting opinion from Newman

See article from Professor Adam Mossoff (Michigan State): "Conventional wisdom maintains that early courts never secured patents as constitutional private property under the Takings Clause. In examining long-forgotten judicial opinions and legislative records, this Essay reveals that this is a profoundly mistaken historical claim. "

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