Acme Worldwide Enterprises, Inc. v. United States

In the United States Court of Federal Claims

No. 17-843C

(Filed: April 11, 2018)

*************************************

ACME WORLDWIDE ENTERPRISES, *

INC., *

* RCFC 24; Intervention as a Matter of

Plaintiff, * Right; Legally Protectable Interest;

* Permissive Intervention; Common

v. * Question of Law or Fact; Undue Delay or

* Prejudice; Scope of Intervenor’s

THE UNITED STATES, * Participation

*

Defendant. *

*************************************

John P. Moran, Washington, DC, for plaintiff.

Conrad J. DeWitte, Jr., United States Department of Justice, Washington, DC, for defendant.

Milton C. Johns, Tysons, VA, for putative defendant-intervenor.

OPINION AND ORDER

SWEENEY, Judge

In this patent infringement case, plaintiff ACME Worldwide Enterprises, Inc. (“ACME”)

alleges that the United States Army (“Army”) and the United States Air Force (“Air Force”)

procured multiple training systems that included an M240H weapon recoil system capable of

simulating the look and feel of an actual weapon (“M240H weapon recoil simulator”). ACME

contends that the M240H weapon recoil simulator infringes upon United States Patent Number

8,690,575 (the “’575 patent”). Currently before the court is a motion filed by Industrial Smoke

& Mirrors, Inc. (“ISM”) to intervene in this case as a matter of right pursuant to Rule 24(a) of the

Rules of the United States Court of Federal Claims (“RCFC”) or, alternatively, for permissive

intervention pursuant to RCFC 24(b). As explained below, ISM does not meet the standards for

intervention as a matter of right because it does not appear to have a legally protectable interest

in the subject matter of this action. Nevertheless, ISM should be permitted to intervene.

Accordingly, the court denies ISM’s motion to intervene as a matter of right and grants ISM’s

alternative motion for permissive intervention.

I. BACKGROUND

A. Factual History

The Army executed contracts with Science Applications International Corporation

(“SAIC”)—now Leidos, Inc. (“Leidos”)—and CymSTAR LLC (“CymSTAR”) on January 27,

2010, and April 30, 2014, respectively, that each included a specification for M240H weapon

recoil simulators.1 SAIC and CymSTAR, in turn, each subcontracted with ISM to manufacture

the M240H weapon recoil simulators. ISM delivered the M240H weapon recoil simulators to

SAIC and CymSTAR, which then delivered the simulators to the Army at various locations

throughout the United States. Similarly, the Air Force executed a contract with Sikorsky Aircraft

Corporation (“Sikorsky”) on June 26, 2014, that included a specification for M240H weapon

recoil simulators. As part of that effort, Sikorsky subcontracted with FlightSafety International

Simulation Systems (“FlightSafety”). FlightSafety, in turn, subcontracted with ISM to

manufacture the M240H weapon recoil simulators. The simulators were ultimately delivered to

the Air Force.

All of the prime contracts incorporated Federal Acquisition Regulation (“FAR”) 52.227-1

by reference. The SAIC and Sikorsky contracts also incorporated FAR 52.244-6 by reference.

Further, the Sikorsky contract incorporated FAR 52.227-3 by reference with respect to

“[c]ommercial items” delivered to the Air Force. In turn, Sikorsky’s subcontract with

FlightSafety also incorporated FAR 52.227-1, FAR 52.227-3 with respect to “[c]ommercial

items” delivered to the Air Force, and FAR 52.244-6. FlightSafety’s lower-tier subcontract with

ISM contained FAR 52.227-1, FAR 52.244-6, and a generic, non-FAR patent infringement

indemnity clause.

B. ACME Pursues Litigation Against ISM

On November 17, 2014, ACME filed a patent infringement suit against ISM in the United

States District Court for the District of New Mexico (“New Mexico district court”).2 On March

30, 2015, the suit was dismissed for lack of personal jurisdiction after ACME conceded the issue.

See ACME Worldwide Enters., Inc. v. Indus. Smoke & Mirrors, Inc., No. CV 14-01041, 2015

WL 11181341, at *1 (D.N.M. Mar. 30, 2015) (unreported order dismissing case). In dismissing

the case, the New Mexico district court also denied ACME’s request to transfer the case to the

United States District Court for the Middle District of Florida (“Florida district court”).3 Id. at

*1-2.

1

The facts discussed in this opinion—which are undisputed—are derived from the

complaint, the parties’ submissions, and the exhibits attached to the same, as well as matters of

which the court may take judicial notice pursuant to Rule 201 of the Federal Rules of Evidence.

2

ACME is a New Mexico corporation. Its principal place of business is located in

Albuquerque, New Mexico.

3

ISM is a Florida corporation. Its principal place of business is located in Orlando,

Florida.

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On April 21, 2015, ACME filed a patent infringement suit against ISM in the Florida

district court. ISM then asserted 28 U.S.C. § 1498(a) as an affirmative defense and moved for

summary judgment. In its motion for summary judgment, ISM explained that the issue was “not

whether ISM infringed upon any patent that ACME may have (which ISM denies), but whether

ISM is immune from liability pursuant to 28 U.S.C. § 1498(a).” Pl.’s Opp’n to ISM’s Mot.

Intervene (“ACME Opp’n”) Ex. A at 13.4 ISM contended that ACME’s sole remedy was against

the federal government in the United States Court of Federal Claims (“Court of Federal Claims”)

because the accused product was manufactured exclusively for the use and benefit of the federal

government according to the federal government’s specifications. Id. at 19. ACME consented to

ISM’s motion for summary judgment, which the Florida district court granted on January 4,

2016. See generally ACME Worldwide Enters., Inc. v. Indus. Smoke & Mirrors, Inc., No. 6:15-

cv-00637, slip op. (M.D. Fla. Jan. 4, 2016).

C. Procedural History

Plaintiff filed its complaint in the instant case on June 21, 2017. After two unopposed

requests from defendant for an extension of the due date, defendant timely filed its answer on

November 3, 2017. The same day, defendant filed an unopposed motion to notify potentially

interested parties Leidos, CymSTAR, and Sikorsky of the present action. The court granted

defendant’s unopposed motion on November 6, 2017, and stated that, upon service, each prime

contractor would be “permitted to appear in this action pursuant to RCFC 14(c) without having

to file an RCFC 24 motion to intervene.” Order 2, Nov. 6, 2017. Notices were provided that

same day. None of the prime contractors appeared in this action by filing a third-party pleading

by the deadline for doing so.

On December 21, 2017—before the deadline for any of the prime contractors to appear

by filing a third-party pleading—ISM filed the instant motion to intervene pursuant to RCFC 24.

ISM states that it is the manufacturer of the accused product and that ISM may be required to

indemnify each prime contractor against liability for patent infringement due to ISM’s sale or use

of the M240H weapon recoil simulator. ISM seeks intervention as a matter of right under RCFC

24(a)(2) or, alternatively, permissive intervention under RCFC 24(b)(1)(B).5 Defendant does not

oppose ISM’s motion. However, ACME opposes ISM’s motion. On December 28, 2017, the

court vacated the deadline for the parties to file a Joint Preliminary Status Report (“JPSR”)

“pending resolution of ISM’s motion to intervene.” Order, Dec. 28, 2017. The court then

allowed ACME to file a sur-response and ISM to file a sur-reply with respect to ISM’s motion to

intervene. The motion is now fully briefed, and the court deems oral argument unnecessary.

4

Exhibit A of ACME’s opposition to ISM’s motion to intervene is a complete copy of

ISM’s motion for summary judgment in the Florida suit.

5

ISM invokes RCFC 24(b)(2) on the second page of its motion to intervene, but subpart

2 of RCFC 24(b) is not used in the RCFC. However, ISM properly refers to RCFC 24(b)(1)(B)

on the ninth and tenth pages of its motion.

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II. INTERVENTION AS A MATTER OF RIGHT

RCFC 24(a)(2) provides for intervention as a matter of right for any party that

claims an interest relating to the property or transaction that is the

subject of the action, and is so situated that disposing of the action

may as a practical matter impair or impede the movant’s ability to

protect its interest, unless existing parties adequately represent that

interest.

The United States Court of Appeals for the Federal Circuit has articulated a four-part test for

intervention as a matter of right under RCFC 24(a)(2):

First, the motion must be timely. Second, the movant must claim

some interest in the property affected by the case. This interest

must be “legally protectable”—merely economic interest will not

suffice. Third, that interest’s relationship to the litigation must be

“of such a direct and immediate character that the intervenor will

either gain or lose by the direct legal operation and effect of the

judgment.” Fourth, . . . the movant must demonstrate that said

interest is not adequately addressed by the government’s

participation.

Wolfsen Land & Cattle Co. v. Pac. Coast Fed’n of Fishermen’s Ass’ns, 695 F.3d 1310, 1315

(Fed. Cir. 2012) (citations omitted). These requirements are to be “construed in favor of

intervention.”6 Id. A failure to establish even one element of this test is fatal to an RCFC

24(a)(2) motion. See id.

A. Timeliness

The first requirement for intervention as a matter of right is that the putative intervenor

must “timely” file its motion to intervene. Id. Determining whether a motion for intervention is

timely is a discretionary matter for the trial court based on a totality of the circumstances.

NAACP v. New York, 413 U.S. 345, 366 (1973). The timeliness requirement “is meant to

protect the rights of the existing parties to an action.” 6 James Wm. Moore, Moore’s Federal

Practice § 24.21[1] (2012).

In conducting a timeliness inquiry, there are no ironclad rules

about just how celeritously, in terms of days or months, a person

must move to protect himself after he has acquired the requisite

quantum of knowledge. The passage of time is measured in

6

Intervention as a matter of right is also available, on a timely motion, to a putative

intervenor that is “given an unconditional right to intervene by a federal statute.” RCFC

24(a)(1). ISM does not assert such a right, nor is the court aware of any as applied to ISM.

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relative, not absolute, terms. Thus, what may constitute reasonably

prompt action in one situation may be unreasonably dilatory in

another. In the last analysis, the timeliness inquiry centers on how

diligently the putative intervenor has acted once he has received

actual or constructive notice of the impending threat.

R & G Mortg. Corp. v. Fed. Home Loan Mortg. Corp., 584 F.3d 1, 8 (1st Cir. 2009) (citation

omitted). Courts may consider the following factors in deciding whether a motion to intervene is

timely:

(1) the length of time during which the would-be intervenor

actually knew or reasonably should have known of his rights,

(2) whether the prejudice to the rights of the existing parties by

allowing intervention outweighs the prejudice to the would-be

intervenor by denying intervention, and

(3) the existence of unusual circumstances militating either for or

against a determination that the application is timely.

Fairholme Funds, Inc. v. United States, 681 F. App’x 945, 949 (Fed. Cir. 2017) (unpublished

decision) (internal quotation marks and alterations omitted).

The parties do not dispute that ISM’s motion is timely. ISM emphasizes that its motion

was filed within six months of ACME’s complaint and before (1) the deadline for any of the

prime contractors to intervene, (2) any dispositive motions were filed, (3) the deadline for filing

the JPSR, and (4) the beginning of formal discovery. See supra Section I.C (discussing the

procedural history of this case). ISM also posits that “there is no claim of prejudice to the

parties, nor are there any unusual circumstances in this matter that would mitigate against

intervention.” ISM Mot. to Intervene (“ISM Mot.”) 4. Further, ISM observes that, if it is

allowed to intervene, it has already filed its RCFC 14(c) pleading. See generally ISM Mot. Ex.

2. Meanwhile, although ACME avers that “ISM has failed at steps two, three, and four,” it does

not contest the timeliness of ISM’s motion. ACME Opp’n 2. Because ISM’s motion to

intervene was filed in the nascent stages of this case and there are no allegations of prejudice or

other circumstances that would weigh in favor of denying intervention, the court agrees with the

parties that ISM’s motion to intervene is timely.

B. Legally Protectable Interest

The second requirement for intervention as a matter of right is that the putative intervenor

must claim a legally protectable interest in the property that is the subject matter of the case.

Wolfsen, 695 F.3d at 1315. A legally protectable interest is “one which the substantive law

recognizes as belonging to or being owned by the [putative intervenor],” and is “more than

merely an economic interest.” Am. Mar. Transp., Inc. v. United States, 870 F.2d 1559, 1562

(Fed. Cir. 1989) (emphasis and internal quotation marks omitted). While “many of the cases in

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which a sufficient ‘interest’ has been found under [RCFC] 24(a) involve readily identifiable

interests in land or other property, . . . other types of interests have been found to justify

intervention” as well. Klamath Irrigation Dist. v. United States, 64 Fed. Cl. 328, 331 (2005).

ISM contends that, as the “manufacturer of the accused product with possible

indemnification obligations,” ISM Mot. 5, it has a legally protectable interest in the property at

issue in this case. ACME argues that the SAIC and CymSTAR contracts do not contain

indemnification obligations, and that the Sikorsky contract’s indemnification obligation is

limited to “commercial items.” ACME Opp’n 3. Next, ACME avers that ISM’s position in the

Florida suit that ISM is “immune from liability” runs counter to ISM’s position in the instant

case that it may be subject to indemnification obligations. Id. Finally, ACME declares that ISM

has no property interest in the “designs, drawings, and specifications” of the M240H weapon

recoil simulator because, as ISM indicated in its motion for summary judgment in the Florida

suit, all “right, title[,] and interest” it may have held in those designs, drawings, and

specifications was transferred to the federal government. Id. at 3 (internal quotation marks

omitted).

As an initial matter, the court agrees with ISM that ACME’s reliance on ISM’s

disclaimer of liability before the Florida district court is inapposite. In the Florida suit, ISM

relied on 28 U.S.C. § 1498(a) for the proposition that ISM was immune from liability for patent

infringement to ACME because ACME’s sole remedy was against the federal government in the

Court of Federal Claims. The issue of ISM’s potential indemnification liability to the federal

government was not at issue. Indeed, ACME did not oppose the entry of summary judgment in

the Florida suit. ISM’s position here—that it is potentially subject to indemnification obligations

should this court find that the M240 weapon recoil simulator infringes the ’575 patent—is not

inconsistent with its position in the Florida suit.

ISM relies primarily on Uusi, LLC v. United States, 110 Fed. Cl. 604 (2013), and

Honeywell International Inc. v. United States, 71 Fed. Cl. 759 (2006), in support of its position

that potential indemnification obligations are a sufficient interest to warrant intervention as a

matter of right. In Uusi, another judge of this court explained that the putative intervenors had

“identified their clear interest in the subject matter of this litigation, namely their potential

indemnification responsibilities if the Government is found liable to Plaintiffs for patent

infringement.” 110 Fed. Cl. at 611 (emphasis added). The Uusi court observed that “[t]he

interest of the third-party indemnitor is well established” in the Court of Federal Claims. Id. In

Honeywell, another judge of this court found that the putative intervenor’s “indemnification

obligation and position as a potential defendant in a separate proceeding” where patent

infringement would be at issue “more than satisfie[d]” the requirement of a legally protectable

property interest for RCFC 24(a)(2) purposes. 71 Fed. Cl. at 765.

The court agrees with ISM that a potential indemnification obligation is a legally

protectable interest sufficient to satisfy RCFC 24(a)(2). As ISM indicates, the “potential

indemnification liability resulting from the Air Force’s use of the M240H weapon recoil

[simulator] flows from Sikorsky to FlightSafety to ISM.” ISM Reply 6. However, that is not the

end of the inquiry; the potential indemnification obligation must actually exist. In Uusi, the

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federal government (1) “confirmed” that the relevant contracts required its prime contractor to

“indemnify the Government in the event of liability for patent infringement” and

(2) “represented” that lower-tier contracts could allow its prime contractor to, in turn, seek

indemnification from its subcontractor for any such infringement. 110 Fed. Cl. at 611. The Uusi

court declared that such indemnification obligations “clearly qualif[ied]” the subcontractor to

“intervene as a matter of right.” Id. at 611-12. Similarly, the Honeywell court emphasized that

the subcontractor was “contractually obligated” to indemnify the prime contractor “for any

infringement” stemming from the subcontractor’s manufacture of the accused product. 71 Fed.

Cl. at 764. The Honeywell court was able to evaluate the extent of the subcontractor’s

indemnification obligations because the subcontractor had “provided the contracts to the court

and parties to confirm the fact and scope of the indemnification.” Id. In other words, the Uusi

and Honeywell courts’ conclusions that the subcontractors’ indemnification obligations

constituted legally protectable interests for RCFC 24(a)(2) purposes were based on whether those

indemnification obligations actually existed.

As in Honeywell, the contracts have been provided to the court. Defendant attached the

relevant prime contracts to its motion to notify interested parties. All three prime contracts

incorporate FAR 52.227-1 by reference, which provides:

The Government authorizes and consents to all use and

manufacture, in performing this contract or any subcontract at any

tier, of any invention described in and covered by a United States

patent—

(1) Embodied in the structure or composition of any article

the delivery of which is accepted by the Government

under this contract; or

(2) Used in machinery, tools, or methods whose use

necessarily results from compliance by the Contractor or a

subcontractor with (i) specifications or written provisions

forming a part of this contract or (ii) specific written

instructions given by the Contracting Officer directing the

manner of performance. The entire liability to the

Government for infringement of a United States patent

shall be determined solely by the provisions of the

indemnity clause, if any, included in this contract or any

subcontract hereunder (including any lower-tier

subcontract), and the Government assumes liability for all

other infringement to the extent of the authorization and

consent hereinabove granted.

FAR 52.227-1(a) (2010). Thus, unless a contract also contained an indemnity clause, the federal

government would be wholly liable—to the exclusion of prime contractors, subcontractors, and

lower-tier subcontractors—for any patent infringement that took place pursuant to the contract.

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However, of the three prime contracts (SAIC, CymStar, and Sikorsky), it appears that

only the Sikorsky contract contains an indemnification clause with respect to patent

infringement. The patent infringement indemnity clause in the Sikorsky contract provides:

(a) The Contractor shall indemnify the Government . . . against

liability, including costs, for infringement of any United States

patent . . . arising out of the manufacture or delivery of

supplies [or] the performance of services . . . under the

contract . . . .

....

(c) This patent indemnification shall cover the following items:

Commercial items delivered to the Government under this

contract.

FAR 52.227-3; see also Def.’s Mot. Notice Interested Parties Ex. C at 5 (incorporating FAR

52.227-3, by reference, into the Sikorsky contract). Sikorsky’s subcontract with FlightSafety

contained FAR 52.227-1 and the identical patent infringement indemnity clause. In turn,

FlightSafety’s lower-tier subcontract with ISM contained FAR 52.227-1 and the following patent

infringement indemnity clause:

[ISM] warrants that the product will not infringe any U.S.

or foreign patent and [ISM] shall hold harmless and indemnify

[FlightSafety] and [Sikorsky] from and against any liabilities,

claims, costs, losses[,] and expenses arising out of or in connection

with any claim that [ISM’s] product infringes any existing patent

. . . . [ISM] shall, upon [FlightSafety’s] request, expeditiously, at

[ISM’s] own cost and expense, defend [FlightSafety] and

[Sikorsky] against any suit or action for product infringement as

set forth herein.

ISM Reply Ex. 3 at 2.

Under the Sikorsky prime contract and its progeny, ISM can only be subject to an

indemnification obligation with respect to patent infringement to the extent of Sikorsky’s

potential indemnification liability to the federal government. In other words, it appears that ISM

is only subject to a potential indemnification obligation to the extent that “commercial items”

were delivered, which raises the question of whether the M240H weapon recoil simulator is a

“commercial item.”7

7

ISM asserts that “[t]he precise scope of Sikorsky’s potential liability is not an issue

now before this Court.” ISM Reply 7. ISM is incorrect. ISM’s potential liability, which it relies

on as a legally protectable interest to justify intervention as a matter of right, is derivative of

Sikorsky’s potential liability. However, because the court finds that ISM meets the standards for

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Since it was produced exclusively for the use and benefit of the federal government

according to government specifications, the M240H weapon recoil simulator does not appear to

meet the criteria for a commercial item. See FAR 2.101 (providing the definition of a

commercial item).8 Accordingly, ISM does not appear to be subject to a potential

indemnification obligation for patent infringement with respect to the M240H weapon recoil

simulator.

Further, ISM has failed to identify any other legally protectable interest in the subject

matter of this action. For example, ISM has no legally protectable interest in the M240H weapon

recoil simulator itself because, as required, ISM transferred all right, title, and interest it may

have held in any designs, drawings, and specifications with respect to the M240H weapon recoil

simulator to the federal government. See ACME Opp’n Ex. A at 18.

ISM’s reliance on other purported legally protectable interests is unavailing. ISM posits

that, if patent infringement is found, it will be forced to either (1) discontinue selling the M240H

weapon recoil simulator, (2) negotiate with ACME for a license to continue selling the simulator,

or (3) continue selling the simulator without a license and risk additional litigation. ISM Mot. 5;

see also ISM Reply 5 (“But for a finding of infringement, ISM has every reason to anticipate

future orders . . . .”). ISM also posits that it “continually develops and markets new products to

meet its customers’ needs” and that it could “develop new products that incorporate the same

technology Acme claims infringes the ’575 patent.” ISM Mot. 7. ISM’s arguments that these

possible outcomes constitute legally protectable interests lack merit for three reasons. First, as

ACME remarks, “speculation [concerning] future contracts” does not give rise to a protectable

interest. ACME Opp’n 6. Second, to the extent that ISM expects future sales, such an

expectation is a “merely economic” interest. See Wolfsen, 695 F.3d at 1315. Finally, to the

extent that such expectations could be considered business interests and not merely economic

interests, there is no allegation that the M240H weapon recoil simulator is the “core” of ISM’s

business model—unlike in Honeywell, where the accused product “comprise[d] the core,” 71

Fed. Cl. at 764, of the putative intervenor’s business.

In short, ISM does not appear to have a legally protectable interest in the M240H weapon

recoil simulator that is at issue in this case (or in any other matter that could be impacted by this

case’s eventual outcome). Assuming, without deciding, that ISM does not have such a legally

protectable interest, ISM cannot intervene in this case as a matter of right. However, the court

need not reach a conclusion with respect to whether there is such an interest and, ultimately,

intervention as a matter of right because, as explained below, ISM meets the standards for

permissive intervention.

permissive intervention, see infra Part III, it need not reach a conclusion with respect to the

potential liability of Sikorsky to the federal government—neither of which has weighed in on the

issue—to resolve the instant motion.

8

The Sikorsky prime contract and its progeny—Sikorsky’s subcontract with

FlightSafety and FlightSafety’s lower-tier subcontract with ISM—each incorporate FAR 52.244-

6, which refers to FAR 2.101 for the definition of a commercial item.

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III. PERMISSIVE INTERVENTION

Having determined that ISM is not entitled to intervene in this action as a matter of right,

the court turns to ISM’s alternative argument that it meets the standards for permissive

intervention. RCFC 24(b)(1) provides that “[o]n timely motion, the court may permit anyone to

intervene who . . . has a claim or defense that shares with the main action a common question of

law or fact.”9 Further, the court must “consider whether the intervention will unduly delay or

prejudice the adjudication of the original parties’ rights.” RCFC 24(b)(3). Courts have “broad

discretion in deciding whether to allow permissive intervention.” Chippewa Cree Tribe of

Rocky Boy’s Reservation v. United States, 85 Fed. Cl. 646, 660 (2009).

A. Timeliness

The first requirement for permissive intervention is that a motion to intervene must be

“timely” filed. RCFC 24(b)(1). The timeliness requirement for permissive intervention “is often

applied less strictly” in comparison to the timeliness requirement for intervention as a matter of

right. R & G Mortg. Corp., 584 F.3d at 8.

The court has already determined that ISM has satisfied the timeliness requirement for

intervention as a matter of right for the reasons stated above, which need not be repeated. See

supra Section II.A. Therefore, ISM has also satisfied the less stringent timeliness requirement

for permissive intervention.

B. Common Question of Law or Fact

The second requirement for permissive intervention is that the putative intervenor must

“share[] with the main action a common question of law or fact.” RCFC 24(b)(1)(B). ACME

asserts that ISM’s disclaimer of liability in the Florida suit demonstrates that ISM fails the

commonality requirement. ACME’s invocation of the Florida suit is unavailing for the reasons

stated above. See supra Section II.B. ACME also asserts that “[b]ecause ISM is immune from

Acme’s infringement claims [either directly or indirectly], ISM does not have any defenses . . . .”

ACME Sur-Resp. 5. For the sake of argument, the court assumes (without deciding) that ACME

is correct that ISM’s potential indemnification obligations do not exist. See supra Section II.B.

However, ACME appears to conflate the standards for intervention as a matter of right and

permissive intervention. ISM need not demonstrate that it has “a direct personal or pecuniary

interest in the subject of the litigation” to succeed on its alternative request for permissive

intervention; ISM need only show that it has “an interest sufficient to support a legal claim or

defense which is founded upon that interest and which satisfies the Rule’s commonality

requirement.” Diamond v. Charles, 476 U.S. 54, 77 (1986) (alteration and internal quotation

marks omitted).

9

ISM does not allege that it has a “conditional right to intervene [pursuant to] a federal

statute,” RCFC 24(b)(1)(A), nor is the court aware of any such right as applied to ISM.

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In the instant case, it is undisputed that ISM is the manufacturer of the accused product

and that both ISM and defendant argue noninfringement and invalidity. See, e.g., Def.’s Answer

¶¶ 39-40 (asserting noninfringement and invalidity); ISM Mot. Ex. 2 ¶¶ 39-40 (same). It is of no

moment whether ISM faces an indemnification obligation for patent infringement with respect to

its manufacture of the M240H weapon recoil simulator because ISM certainly has an interest in

demonstrating noninfringement. Without such a finding, ISM may be required to cease selling

the M240H weapon recoil simulator, purchase a license for the simulator from ACME, or defend

further lawsuits. See, e.g., infra Section III.C. Therefore, ISM has satisfied the “common

question of law or fact” requirement for permissive intervention.

C. Delay or Prejudice

The third and final requirement for permissive intervention is that such intervention must

not “unduly delay or prejudice the adjudication of the original parties’ rights.” RCFC 24(b)(3).

ISM avers that “[t]here can be no claim of prejudice” because, whether or not ISM is permitted

to intervene, ACME will have to prove that the M240H weapon recoil simulator infringes the

’575 patent and that the ’575 patent is valid. ISM Mot. 10.

The court has already observed that there are no allegations of prejudice or other

circumstances that would weigh in favor of denying intervention. See supra Section II.A.

Indeed, ACME addresses only the “common question of law or fact” requirement in opposing

ISM’s alternative motion for permissive intervention. The court agrees with ISM that ACME

will not be prejudiced should ISM be allowed to intervene. If ISM is included as a party to this

action, ACME will not have to prove any additional claims or overcome any additional defenses.

See, e.g., Sec. Ins. Co. v. Schipporeit, Inc., 69 F.3d 1377, 1381 (7th Cir. 1995) (“[Plaintiff] can

hardly be said to be prejudiced by having to prove a lawsuit it chose to initiate.”). On the other

hand, if ISM is not allowed to intervene, there is the possibility that either ACME or ISM could

seek a declaratory judgment in federal district court regarding patent infringement (or lack

thereof) with respect to the M240H weapon recoil simulator. Such an action would involve the

same facts as the instant case and would thus be unnecessarily duplicative. This possibility

weighs in favor of allowing intervention. See id. (“Perhaps the most obvious benefits of

intervention in general are the efficiency and consistency that result from resolving related issues

in a single proceeding.”).

Further, because defendant does not oppose ISM’s intervention, the court assumes

(without deciding) that defendant will not be prejudiced should ISM be allowed to intervene.

Finally, the court concludes that, due to the procedural posture of this case, allowing ISM to

intervene will not delay this case’s adjudication. Therefore, ISM has satisfied the third and final

requirement for permissive intervention.

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IV. SCOPE OF ISM’S PARTICIPATION

Having determined that ISM has satisfied all of the requirements for permissive

intervention under RCFC 24(b), the court must consider what conditions, if any, to impose upon

ISM’s participation. See Forest Cty. Potawatomi Cmty. v. United States, 317 F.R.D. 6, 15

(D.D.C. 2016) (“[C]ourts may impose appropriate conditions or restrictions upon the

intervenor’s participation in the action.”). The purpose of imposing conditions upon an

intervenor’s participation is to “ensure the fair, efficacious, and prompt resolution of the

litigation.” Id.

ACME asks the court to limit ISM’s participation to “coordinating with [defendant]

concerning the two areas identified by ISM as to which it purports to have special insight:

(1) the design and operation of the accused systems, and (2) prior art.” ACME Opp’n 9. ACME

asserts that “ISM should not be able to complicate this case by filing its own discovery requests

or motions, separate and apart from [defendant].” Id.

In order to “strike the appropriate balance between ensuring the expedient resolution of

this action while preserving a space for [ISM] to articulate [its] respective positions and

interests,” Forest Cty., 317 F.R.D. at 16, the court will require ISM to coordinate its discovery

requests and responses with defendant to determine whether ISM’s and defendant’s positions

with respect to discovery may be set forth in a consolidated manner. With respect to other

matters, ISM and defendant are encouraged to utilize consolidated filings to the extent

practicable, and need not seek leave of court before doing so. Otherwise, ISM shall be entitled to

participate fully in this case as a party for all purposes. To the extent that further restrictions are

needed to expeditiously advance this proceeding, they are already contained within the RCFC.

See Klamath, 64 Fed. Cl. at 336 (“[T]he court has adequate facility to limit the issues which may

be presented in a proceeding and, in particular, to prevent extraneous issues that might prove

disruptive from being injected . . . .”). As a further measure in the interest of judicial economy,

ACME will be permitted to utilize consolidated requests and responses (both with respect to

discovery and other matters) where appropriate.

V. CONCLUSION

The court has considered all of the parties’ arguments. To the extent not discussed

herein, they are unpersuasive, without merit, or unnecessary for resolving the issues currently

before the court.

Although ISM has timely moved to intervene in this patent infringement action, ISM

does not appear to have a legally protectable interest in the subject matter of this action because

ISM’s purported indemnification obligations appear to be nonexistent. However, as the

manufacturer of the accused product, ISM shares the defenses of noninfringement and invalidity

with defendant. Further, allowing ISM to intervene will neither delay the adjudication of this

case nor prejudice the rights of any existing parties.

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Accordingly, the court DENIES ISM’s motion to intervene as a matter of right pursuant

to RCFC 24(a) and GRANTS ISM’s alternative motion for permissive intervention pursuant to

RCFC 24(b). The clerk is directed to add ISM as an intervenor. ISM is entitled to participate

fully as a party to this case subject to the conditions outlined above. Further, all future filings in

this case shall bear the following caption:

*************************************

ACME WORLDWIDE ENTERPRISES, *

INC., *

*

Plaintiff, *

*

v. *

*

THE UNITED STATES, *

No. 17-843C

*

Judge Margaret M. Sweeney

Defendant, *

*

and *

*

INDUSTRIAL SMOKE & MIRRORS, *

INC., *

*

Defendant-Intervenor. *

*************************************

The parties shall file a JPSR no later than Wednesday, May 30, 2018.

IT IS SO ORDERED.

s/ Margaret M. Sweeney

MARGARET M. SWEENEY

Judge

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