SecurityPoint Holdings, Inc. v. Transportation Security Administration
2017 U.S. App. LEXIS 15177
| D.C. Cir. | 2017Background
- SecurityPoint owns a method patent for using bins and wheeled carts at airport security checkpoints and operates a bin-advertising program at ~40 airports; TSA uses the system at ~400 airports.
- In 2012 TSA revised its MOU for participating airports to add (1) an indemnity clause protecting TSA from IP claims and (2) a clause allowing TSA to retain a license to use equipment on contract termination.
- SecurityPoint sued the TSA for patent infringement in the Court of Federal Claims; TSA conditionally stipulated to infringement at ten airports; broader liability remains unresolved.
- SecurityPoint alleged the revised MOU was retaliatory (for suing) and would deter airports from joining the program, harming SecurityPoint’s business; it requested TSA cease using the revised MOU.
- The D.C. Circuit previously vacated TSA’s denial for failing to explain why the indemnity was rational given opportunity-cost concerns (SecurityPoint Holdings, Inc. v. TSA, 769 F.3d 1184) and remanded.
- On remand TSA revised the MOU again (adding an option for the broker to indemnify TSA), explained the indemnity as risk management advised by new IP counsel, pointed to several airports that adopted the revised MOU, and defended the cost-benefit rationale.
Issues
| Issue | SecurityPoint's Argument | TSA's Argument | Held |
|---|---|---|---|
| APA arbitrary-and-capricious challenge to MOU revisions | TSA failed to consider that indemnity would deter airport participation and impose net costs on TSA | TSA reasonably balanced risks: indemnity limits IP exposure, equipment costs are low, some airports accepted MOU, broker indemnity alternative available | Court: Not arbitrary or capricious; TSA provided a rational connection and adequate grounds for denial |
| First Amendment retaliation (right to petition) | TSA revised MOU in retaliation for SecurityPoint suing, shown by emails and timing | Revisions were neutral risk-management measures formulated by IP counsel; emails are ambiguous and postdate drafting | Court: No sufficient evidence that litigation was a motivating factor; retaliation claim fails |
Key Cases Cited
- State Farm Mut. Auto. Ins. Co. v. Campbell, 463 U.S. 29 (agency must consider relevant factors and show a rational connection between facts and decision)
- SecurityPoint Holdings, Inc. v. TSA, 769 F.3d 1184 (D.C. Cir. 2014) (prior remand for inadequate explanation under APA)
- Tourus Records, Inc. v. DEA, 259 F.3d 731 (D.C. Cir. 2001) (agency must provide brief statement of grounds for denial)
- Pickering v. Board of Education, 391 U.S. 563 (test for government retaliation claims balancing speech and governmental interest)
- Board of County Comm’rs v. Umbehr, 518 U.S. 668 (First Amendment protection for contractors’ petitioning activity)
- Doe v. District of Columbia, 796 F.3d 96 (D.C. Cir. 2015) (applying retaliation framework to governmental actions affecting petitioning)
- Trudeau v. FTC, 456 F.3d 178 (D.C. Cir. 2006) (APA review may set aside agency action contrary to constitutional rights)
- California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508 (right of access to courts is part of the right to petition)