Astornet Technologies Inc. v. Bae Systems, Inc.
802 F.3d 1271
Fed. Cir.
2015

Background

  • Astornet (exclusive licensee of U.S. Patent No. 7,639,844) sued three contractors—NCR, MorphoTrust, and BAE Systems, Inc.—alleging their equipment induced TSA to infringe the patent used in airport boarding-pass scanning systems (CAT/BPSS).
  • Initial parallel suits: inventor Haddad filed both a Court of Federal Claims §1498 action and a Maryland district-court action; the Claims Court suit was dismissed under 28 U.S.C. §1500 after Haddad’s district dismissal complications.
  • Astornet later filed three separate district-court complaints (one per defendant) asserting only indirect infringement (inducement and contributory infringement) based on TSA’s use of the supplied systems.
  • Defendants moved to dismiss; the district court dismissed all three actions, reasoning among other things that §1498 limited Astornet’s exclusive remedy to suing the United States in the Court of Federal Claims, and raised additional grounds (wrong BAE defendant; Rule 41 two-dismissal rule for NCR/MorphoTrust).
  • The Fourth Circuit affirmed dismissal on the ground that §1498(a) bars suits against contractors where the government’s use is the direct infringement; it rejected the district court’s alternative rationales (veil-piercing focus as sole basis for dismissing BAE; and expansive application of Rule 41)

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether §1498(a) bars suits against contractors for indirect infringement when the government (TSA) directly uses the patented invention Astornet: its only pleaded theory is indirect infringement based on TSA’s use; it can sue contractors in district court Defendants: §1498(a) makes the owner’s remedy exclusive against the United States for uses by the U.S., so suits against contractors are barred Held: §1498(a) bars these suits; indirect infringement claims predicated on U.S. use must be pursued under §1498 against the United States (affirmed)
Whether BAE Systems, Inc. was a proper defendant where a subsidiary contracted with TSA Astornet: alleged BAE induced TSA’s infringing use (affirmative acts) so parent may be liable for inducement regardless of contract party BAE: only a subsidiary contracted with TSA; complaint lacks veil-piercing facts and thus fails to state a claim against the parent Held: District court erred to dismiss solely for lack of veil-piercing allegations; parent could be liable for its own inducement acts — but dismissal affirmed on §1498 grounds, so pleading sufficiency not decided on the merits
Whether Rule 41(a)(1)(B) two-dismissal rule precludes Astornet’s suits against NCR and MorphoTrust Astornet: the prior dismissal was by Haddad, not Astornet; plaintiff in the later actions is Astornet, so Rule 41 inapplicable NCR/MorphoTrust: prior Haddad dismissal and later amendment amounted to two voluntary dismissals under Rule 41, creating an adjudication on the merits Held: Rule 41(a)(1)(B) inapplicable by its plain terms because the same plaintiff did not earlier dismiss the action; district court’s reliance on Rule 41 rejected
Whether part of the complaint (e.g., defendant testing) could survive even if majority of claims fall under §1498 Astornet: impliedly suggested some direct-infringement testing allegations could remain Defendants: complaints plead only indirect infringement tied to TSA’s use; any stray direct-infringement theory not adequately pleaded Held: Court declined to credit stray references to direct infringement not pleaded adequately; whole suits dismissed under §1498 and partial survival not addressed

Key Cases Cited

  • E.I. du Pont de Nemours & Co. v. Kolon Indus., 637 F.3d 435 (4th Cir. 2011) (pleading standards on Rule 12(b)(6) review)
  • Philips v. Pitt County Memorial Hosp., 572 F.3d 176 (4th Cir. 2009) (pleading and complaint-attachment principles)
  • United States v. Tohono O’Odham Nation, 563 U.S. 307 (2011) (Court of Federal Claims lacks jurisdiction under §1500 when similar case pending elsewhere)
  • Harbuck v. United States, 378 F.3d 1324 (Fed. Cir. 2004) (simultaneous filings implicating §1500)
  • Richmond Screw Anchor Co. v. United States, 275 U.S. 331 (1928) (§1498’s remedy is exclusive; congressional purpose to protect government contractors)
  • Zoltek Corp. v. United States, 672 F.3d 1309 (Fed. Cir. 2012) (§1498 applicability and exclusivity principles)
  • Advanced Software Design Corp. v. Federal Reserve Bank of St. Louis, 583 F.3d 1371 (Fed. Cir. 2009) (§1498 and government use/manufacture analysis)
  • Limelight Networks, Inc. v. Akamai Techs., Inc., 134 S. Ct. 2111 (2014) (requirement that direct infringement be shown as predicate for induced infringement)
  • Info-Hold, Inc. v. Muzak LLC, 783 F.3d 1365 (Fed. Cir. 2015) (elements of inducement: affirmative act plus knowledge of induced infringement)
  • United States v. Bestfoods, 524 U.S. 51 (1998) (distinction between veil-piercing and a defendant’s independent liability for its own acts)
  • Toxgon Corp. v. BNFL, Inc., 312 F.3d 1379 (Fed. Cir. 2002) (§1498 does not deprive district courts of jurisdiction in all contexts)
  • Cunningham v. United States, 748 F.3d 1172 (Fed. Cir. 2014) (res judicata considerations when remedial limits in first action affect second action)
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