3rd Eye Surveillance, LLC v. United States, 133 Fed. Cl. 273

Background

Plaintiffs 3rd Eye Surveillance (exclusive licensee) and Discovery Patents (assignee) assert three patents covering a realtime video security alarm system. Discovery Patents received assignment of the patents on February 12, 2013.
One inventor, James Faulkner, had assigned the patents to Ichos, LLC in 2009; Ichos assigned them back to Faulkner on February 7, 2013, and Faulkner assigned them to Discovery Patents on February 12, 2013.
Plaintiffs sued the United States under 28 U.S.C. § 1498(a) for unauthorized use/manufacture by the government; plaintiffs concede damages only for conduct on or after February 12, 2013.
Plaintiffs moved to compel government discovery about potentially infringing systems procured or installed before February 12, 2013, arguing procurement date has no bearing on whether systems in use after that date could infringe.
The government and intervenor Northrop Grumman argued the Assignment of Claims Act, 31 U.S.C. § 3727, bars plaintiffs from recovering (or asserting related claims) for government uses that first occurred before Discovery Patents acquired rights.
The court reserved decision on pre-February 12, 2013 systems and later held that systems first used or manufactured before that date are outside the scope of discoverable potentially infringing systems, unless they were modified after February 12, 2013 so as to become infringing.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether government systems first procured/used before Feb 12, 2013 are within scope of potentially infringing systems for discovery	Plaintiffs: procurement date irrelevant; systems in use after Feb 12, 2013 could infringe and are discoverable regardless of original procurement date	Government: Assignment of Claims Act bars plaintiffs from asserting claims based on uses that first occurred before plaintiffs acquired the patents; discovery on such systems is unnecessary and poses risk of multiple claims	Systems first used/manufactured before Feb 12, 2013 are not within scope and are not discoverable, unless modified/upgraded after Feb 12, 2013 to become potentially infringing
Whether § 1498 permits recovery for ongoing use of a device first used before assignee acquired the patent	Plaintiffs: continuing use after assignment can be relevant to infringement issues	Government: under § 1498 the government’s taking (and the claimant’s right) accrues at first use/manufacture; only that first taking gives rise to recovery	Court: § 1498 treats government use as a one-time taking; claims accrue on first use/manufacture, so ongoing use alone does not create a new claim
Whether the Assignment of Claims Act permits plaintiffs to assert pre-assignment claims	Plaintiffs: assignment should allow them to pursue infringement arising from continued use after assignment	Government: 31 U.S.C. § 3727 bars voluntary assignments of unliquidated claims; plaintiffs are not the original claimants for pre-assignment uses	Court: Assignment here does not fall within recognized exceptions; Assignment of Claims Act bars recovery/claims for conduct predating Feb 12, 2013
Scope of permissible discovery regarding pre-assignment systems that were later changed	Plaintiffs: should get full discovery because prior procurement date immaterial if later use or changes cause infringement	Government: only discovery about post-assignment changes that could create infringement is relevant	Court: limited discovery allowed only into modifications/upgrades put into use after Feb 12, 2013 that could render pre-existing systems infringing

Key Cases Cited

Motorola, Inc. v. United States, 729 F.2d 765 (Fed. Cir.) (analogizing § 1498 government use to a taking)
Decca Ltd. v. United States, 640 F.2d 1156 (Ct. Cl.) (government takes a compulsory license upon first use/manufacture)
Starobin v. United States, 662 F.2d 747 (Ct. Cl.) (only one right to recovery per particular device; accrual on first use)
United States v. Shannon, 342 U.S. 288 (Supreme Court) (purpose and scope of the Assignment of Claims Act)
Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10 (Fed. Cir.) (contrasting private-party ongoing infringement remedies under Title 35)
Unitrac, LLC v. United States, 113 Fed. Cl. 156 (Court of Federal Claims) (ongoing infringement alone does not establish § 1498 jurisdiction)
Rel-Reeves, Inc. v. United States, 606 F.2d 949 (Ct. Cl.) (assignment exceptions where transfer is within recognized categories)
MDS Assocs., Ltd. v. United States, 31 Fed. Cl. 389 (Court of Federal Claims) (assignments not barred where assignee is effectively the same claimant)
Standard Mfg. Co., Inc. v. United States, 42 Fed. Cl. 748 (Court of Federal Claims) (Assignment of Claims Act bars assignee from recovering for pre-assignment infringement)
Hughes Aircraft Co. v. United States, 29 Fed. Cl. 197 (Court of Federal Claims) (discussing takings analogy for § 1498 claims)