LIBERTY AMMUNITION, LLC v. United States
1:11-cv-00084
Fed. Cl.Dec 31, 2014Background
- Liberty Ammunition (owner of U.S. Patent No. 7,748,325 (the ’325 patent) to inventor P.J. Marx) designs a three‑piece, lead‑free projectile that maintains rotation in flight and "controlled rupturing" (fragmentation) on soft target impact.
- Beginning mid‑1990s the Army sought a lead‑free, more‑lethal replacement for M855/M80; Army developed the reverse‑jacketed M855A1 (and later M80A1) with exposed steel nose, copper slug, and a jacket designed to rupture on soft targets.
- Marx disclosed EPIC rounds to Army and SOCOM personnel under three NDAs and filed the ’325 patent in 2005 (issued July 6, 2010); Liberty later brought this suit under 28 U.S.C. § 1498(a) alleging infringement and also claimed breach of the NDAs.
- After an 11‑day trial the court found the M855A1 and M80A1 literally infringe independent Claims 1 and 32 (and their dependents) of the ’325 patent.
- Government asserted invalidity (anticipation and obviousness) and argued the NDAs were not binding (no actual authority or ratification). The court rejected the invalidity defenses and held the NDAs were not enforceable against the United States.
- Remedy: court awarded Liberty $15,617,533.68 as of April 30, 2013, set a continuing royalty of $0.014 per infringing round through patent expiry (Oct. 20, 2027), and prejudgment interest at the 5‑year Treasury note rate compounded semi‑annually from July 6, 2010.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Direct infringement under §1498(a) (Claims 1 & 32) | Liberty: A1 rounds contain all claim limitations (interface disposed intermediate opposite ends; reduced area of contact; controlled rupturing). | Govt: A1 rounds lack some claim limitations (esp. reduced area of contact comparators; "intermediate opposite ends"). | Held: A1 projectiles literally infringe Claims 1 and 32 and dependent claims. |
| Anticipation (35 U.S.C. §102) | Liberty: Prior art (Leussler, Nosler, M855/M855 LFS) do not disclose "controlled rupturing"; thus no anticipation. | Govt: Prior patents and predecessor rounds disclose the elements or inherently cause fragmentation. | Held: Patent not anticipated; prior art does not show controlled rupturing/inherent fragmentation. |
| Obviousness (35 U.S.C. §103) | Liberty: No motivation to combine prior art to yield claimed combination; secondary considerations (long‑felt need, commercial success, copying) support non‑obviousness. | Govt: Multiple prior references could be combined to produce the claimed three‑piece, reduced‑contact, fragmenting projectile. | Held: Govt failed to show clear and convincing evidence of obviousness; court gives weight to secondary considerations and rejects hindsight combination. |
| Enforceability of NDAs / breach of contract | Liberty: NDAs signed by Army/SOCOM contacts created binding confidentiality obligations; Army used disclosed information and breached NDAs. | Govt: Signatories lacked actual (express or implied) authority to bind U.S.; no ratification by an official with contracting authority; institutional ratification not shown. | Held: NDAs not binding on the United States; breach‑of‑contract claim fails. |
| Damages remedy under §1498(a) | Liberty: Reasonable royalty per round higher (Liberty proposed baseline and adjustments yielding $0.20/round and total higher award). | Govt: Lower royalty; various alternative scenarios would reduce reasonable royalty; expert proposed $0.01/round. | Held: Court sets baseline and, accounting for state of commercialization, awards $0.014 per round; lump sum to date $15,617,533.68 plus interest and ongoing per‑round royalties. |
Key Cases Cited
- Motorola, Inc. v. United States, 729 F.2d 765 (Fed. Cir.) (§1498 takes a compulsory non‑exclusive license; defenses available to government)
- Decca Ltd. v. United States, 640 F.2d 1156 (Ct. Cl.) (direct infringement under §1498 and timing of taking)
- Lemelson v. United States, 752 F.2d 1538 (Fed. Cir.) (two‑step infringement analysis: claim construction then comparison)
- Markman v. Westview Instruments, Inc., 517 U.S. 370 (U.S.) (claim construction is a question of law for the court)
- Rite‑Hite Corp. v. Kelley Co., 56 F.3d 1538 (Fed. Cir.) (reasonable royalty/hypothetical negotiation framework)
- Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (U.S.) (Graham factual inquiries for obviousness)
- KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (U.S.) (obviousness: avoid hindsight and require reason to combine prior art)
- Brown & Williamson Tobacco Corp. v. Philip Morris Inc., 229 F.3d 1120 (Fed. Cir.) (presumption of nexus when commercial product embodies claimed features)
- Hughes Aircraft Co. v. United States, 534 F.2d 889 (Ct. Cl.) (government liability under §1498 and scope of damages for compulsory license)