Demodulation, Inc. v. United States
103 Fed. Cl. 794
Fed. Cl.2012Background
- Demodulation owns numerous patents related to mierowire technology and alleges government disclosure and use of its trade secrets and IP.
- NDAs were signed with NNSA personnel; one NDA signed by Demodulation’s president, another by an NNSA official, but affiliations were unclear.
- A March 23, 2007 CRADA between BWXT Y-12 and Demodulation purportedly governed collaboration; the DOE approved it, but its status as a CRADA vs. procurement contract is contested.
- Demodulation disclosed proprietary information at a December 2005 DOE workshop; DOE later vetted the technology and funded related work, with extensive government involvement.
- Demodulation filed suit in the Court of Federal Claims asserting five counts alleging breach of contract, implied contracts, patent infringement, takings in relation to trade secrets, and misappropriation; the Government moved to dismiss for lack of jurisdiction and failure to state claims.
- The Court analyzed Tucker Act jurisdiction, CDA prerequisites, and whether claims sound in contract or tort, ultimately dismissing some counts and staying or denying others pending jurisdictional compliance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has jurisdiction over Count I. | Demodulation argues NDAs/CRADA involve the Government; CDA/Contract Disputes Act applies. | NDAs/CRADA were not Government contracts; the CRADA may be a procurement contract absent proper CDA procedures. | Count I as to the NDAs is not dismissed; as to the March 23, 2007 CRADA, dismissal is stayed pending CDA compliance. |
| Whether Count II can be heard as an implied-in-fact contract claim. | There was a tacit understanding with the Government to maintain confidentiality and support commercialization. | Implied-in-fact requires actual authority and mutual assent; NDAs/CRADA do not show representation of Government. | Court has jurisdiction to adjudicate implied-in-fact contract allegations, subject to jurisdictional prerequisites for Count I. |
| Whether Count IV (Takings) is within the Court’s jurisdiction and its subclaims. | Trade secrets can be protected as a taking; In-Q-Tel may be an instrumentality. | Patent takings are barred; misappropriation claims are torts; In-Q-Tel not a government instrumentality; Due Process claims lack jurisdiction. | Takings claim based on patent infringement is dismissed; trade-secret takings jurisdiction exists; Due Process and In-Q-Tel claims are dismissed. |
| Whether Count V’s misappropriation claim is cognizable when arising from a government contract. | Misappropriation tied to contractual duties should be within jurisdiction. | Misappropriation is tort unless grounded in contract; “improper means” phrasing must be struck. | Court has jurisdiction to address Count V to the extent it arises from a Government contract; the phrase about discovery by improper means is stricken. |
Key Cases Cited
- Schillinger v. United States, 155 U.S. 163 (Supreme Court 1894) (Takings theory cannot support patent infringement claims against the Government)
- Zoltek Corp. v. United States, 442 F.3d 1345 (Fed. Cir. 2006) (Takings; trade-secret protection under Monsanto; Schillinger not overruled)
- Monsanto Co. v. Schotz, 467 U.S. 1003 (Supreme Court 1984) (Trade secrets can be protected as a Fifth Amendment taking)
- Radioptics, Inc. v. United States, 621 F.2d 1113 (Ct. Cl. 1980) (Misappropriation of trade secrets is a tort; limits jurisdiction for tort claims)
- Paradigm Learning, Inc. v. United States, 93 F. Cl. 465 (Fed. Cl. 2010) (Jurisdictional treatment of contract-based misappropriation claims)