In Astornet Technologies, Inc. v. BAE Systems, Inc., the Federal Circuit affirmed the district court’s dismissed of actions for induced infringement where the alleged direct infringer was the U.S. government. In particular, the court agreed that under 28 USC § 1498, the patentee’s “exclusive remedy for the alleged infringement was a suit against the United States in the Court of Federal Claims.”

The Patent At Issue

The patent at issue was Astornet’s U.S. Patent No. 7,639,844, directed to “[a]n automated access control system for securing airport vehicular gates and airport sterile areas.” The defendants or entities related thereto had entered into contracts with the Transportation Security Administration (TSA) (a U.S. government agency) to supply “certain boarding-pass scanning systems.” Astornet asserted that TSA’s use of the equipment supplied by the defendants infringed the patents and that the defendants were liable for inducing infringement.

The district court granted the defendants motions to dismiss on several grounds, but the Federal Circuit upheld only the dismissals under 28 USC § 1498.

Remedies For Patent Infringement By The U.S. Government

As noted by the court, 28 USC § 1498(a) sets forth the only remedy available when the U.S. government infringes a patent:

Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof … the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture. ….

For the purposes of this section, the use or manufacture of an invention described in and covered by a patent of the United States by a contractor … for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States.

The court noted that the statue serves two purposes: (i) it waives sovereign immunity to permit a patent owner to recover damages for infringement “by or for the United States” and (ii) it protects contractors from liability for patent infringement committed on behalf of the United States. The court emphasized that the remedy provided in § 1498 is the “exclusive remedy” available when the U.S. government infringes a patent, and “squarely applies to Astornet’s allegations, since “[t]he direct infringement alleged as a prerequisite for the alleged indirect infringement” is TSA’s use of the contractor’s products.

The court left open the possibility that the contractors might be liable for direct infringement based on their own use of the products (such as for testing), but it seems to me like the contractors could establish that any testing was conducted “for the Government,” particularly if testing or verification of testing is required in their contracts.