Crye Precision LLC v. Bennettsville Printing
124 F. Supp. 3d 231
| E.D.N.Y | 2015Background
- Crye Precision developed the MULTICAM camouflage pattern (patented and trademarked) and licensed printers, including Bennettsville, to produce MULTICAM for government contracts.
- Crye and Bennettsville executed a 2012 licensing agreement containing post‑termination covenants not to make products "similar" to MULTICAM and a non‑assistance clause; those covenants were stated to survive expiration.
- Crye presented a 2014 Licensing Agreement with a covenant prohibiting products "confusingly similar" to Crye IP; Bennettsville acknowledged receipt but later disclaimed being bound.
- The Department of Defense moved to adopt Scorpion W2, a pattern nearly indistinguishable from MULTICAM; most licensees paid Crye for Scorpion W2, but Bennettsville asserted a right to produce Scorpion W2 without licensing fees.
- Crye sued seeking (a) declaratory judgment that the 2014 Agreement is enforceable, (b) breach of the 2014 and 2012 Agreements, (c) unjust enrichment, and (d) unfair competition; Bennettsville moved to dismiss state claims as precluded by 28 U.S.C. § 1498(a).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1498(a) precludes Crye's state‑law claims | Crye: § 1498(a) applies only to patent infringement; state contract claims survive | Bennettsville: § 1498(a) bars claims that rest on alleged manufacture/use of a patented design for the government | Court: § 1498(a) is limited to patent infringement claims and is a preclusion statute, not a broad displacement of contract law |
| Are breach‑of‑contract claims precluded by § 1498(a)? | Crye: breaches are independent contractual covenants not contingent on patent infringement | Bennettsville: the contract claims are a covert attempt to litigate patent rights and thus are barred | Court: Breach claims survive; § 1498(a) does not reach purely contractual obligations that do not require proving patent infringement |
| Are unjust enrichment and unfair competition claims barred by § 1498(a)? | Crye: equitable claims compensate for Bennettsville's use of Scorpion W2 without authorization | Bennettsville: these claims are effectively patent‑infringement claims and thus precluded | Court: Dismissed both claims as they presuppose infringement and would circumvent § 1498(a) |
| Can Crye seek injunctive relief on breach theory despite § 1498(a)? | Crye: seeks equitable relief based on contractual covenants (not a patent injunction) | Bennettsville: equitable relief would amount to enforcing patent rights against a government contractor and is foreclosed | Court: Permits injunctive relief on contract theory at this stage because the request is grounded in independent contractual promises, not asserted patent rights |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading‑stage plausibility standard)
- Madey v. Duke Univ., 307 F.3d 1351 (Fed. Cir. 2002) (§ 1498(a) waives sovereign immunity re patent use/manufacture for U.S.)
- Crater Corp. v. Lucent Techs., Inc., 255 F.3d 1361 (Fed. Cir. 2001) (§ 1498(a) gives Court of Federal Claims exclusive jurisdiction over such patent claims)
- Zoltek Corp. v. United States, 672 F.3d 1309 (Fed. Cir. 2012) (§ 1498(a) waives sovereign immunity when U.S. would be liable for direct infringement)
- Richmond Screw Anchor Co. v. United States, 275 U.S. 331 (1928) (statute relieves contractor from liability for patent infringement when manufacturing for the government)
- Crye Precision LLC v. Duro Textiles, LLC, 112 F. Supp. 3d 69 (S.D.N.Y. 2015) (district court decision discussing reach of § 1498(a) re similar facts)