Christy, Inc. v. United States

In the United States Court of Federal Claims

No. 18-657C

(Filed: January 29, 2019)

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

CHRISTY, INC., *

*

Patents; Inter Partes Review; Leahy-Smith

Plaintiff, *

America Invents Act; RCFC 12(b)(1);

*

RCFC 12(b)(6); Takings Clause; Patents as

v. *

Property; Public Franchise; Breach of

*

Contract; Patents as Contracts; Illegal

THE UNITED STATES, *

Exaction

*

Defendant. *

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Timothy C. Davis, Birmingham, AL, for plaintiff.

Jenna Munnelly, United States Department of Justice, Washington, DC, for defendant.

OPINION AND ORDER

SWEENEY, Chief Judge

In this case, plaintiff Christy, Inc. (“Christy”) contends that the invalidation of eighteen

claims asserted in one of its patents effected a taking without just compensation in violation of

the Takings Clause of the Fifth Amendment to the United States Constitution (“Takings

Clause”), a breach of contract, and an illegal exaction. The invalidation of those claims occurred

when the Patent Trial and Appeal Board of the United States Patent and Trademark Office issued

a final written decision at the conclusion of an inter partes review of Christy’s patent. Defendant

moves to dismiss Christy’s complaint for lack of subject-matter jurisdiction pursuant to Rule

12(b)(1) of the Rules of the United States Court of Federal Claims (“RCFC”) and, alternatively,

for failure to state a claim upon which this court can grant relief pursuant to RCFC 12(b)(6). As

explained below, patents are neither contracts nor property for Takings Clause purposes.

Further, the Patent and Trademark Office did not illegally exact Christy’s funds. Therefore, the

court grants defendant’s motion and dismisses Christy’s amended complaint.

I. BACKGROUND

A. Obtaining a Patent

Article I, Section 8, Clause 8 of the United States Constitution provides that “Congress

shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited

Times to Authors and Inventors the exclusive Right to their respective Writings and

Discoveries.”1 Congress exercises this authority through title thirty-five of the United States

Code. See generally Pub. L. No. 593, ch. 950, 66 Stat. 792 (1952). Specifically, Congress has

provided that “[w]hoever invents or discovers any new and useful process, machine,

manufacture, or composition of matter, or any new and useful improvement thereof, may obtain

a patent therefor, subject to the conditions and requirements” of title thirty-five. 35 U.S.C. § 101

(2012). The claimed invention must be novel; a person is not entitled to a patent if there is prior

art regarding the claimed invention, i.e., if “the claimed invention was patented, described in a

printed publication, or in public use, on sale, or otherwise available to the public” prior to the

filing of the patent application. Id. § 102. Further, the claimed invention must be nonobvious;

even if a claimed invention is novel, a person is not entitled to a patent if “the differences

between the claimed invention and the prior art are such that the claimed invention as a whole

would have been obvious before the effective filing date of the claimed invention to a person

having ordinary skill in the art to which the claimed invention pertains.” Id. § 103.

Patent applications must be submitted to the Patent and Trademark Office in writing and

include a specification, a drawing, an oath or declaration, and the required fees. Id. § 111(a); see

also id. § 41(a) (listing general patent fees). The specification

shall contain a written description of the invention, and of the

manner and process of making and using it, in such full, clear,

concise, and exact terms as to enable any person skilled in the art

to which it pertains, or with which it is most nearly connected, to

make and use the same, and shall set forth the best mode

contemplated by the inventor or joint inventor of carrying out the

invention. . . . The specification shall conclude with one or more

claims particularly pointing out and distinctly claiming the subject

matter which the inventor or a joint inventor regards as the

invention.

Id. § 112(a)-(b). Patent applications are then examined, and the Director of the Patent and

Trademark Office (the “Director”) “shall issue a patent” if, upon such examination, “it appears

that the applicant is entitled to a patent.” Id. § 131. Rejected or deficient applications are

reexamined upon request of the applicant. Id. § 132. The applicant may appeal adverse

decisions to the Patent Trial and Appeal Board upon payment of the appeal fee. Id. § 134; see

also id. § 41(a)(6) (listing appeal fees). Decisions of the Patent Trial and Appeal Board are

subject to appellate review in the United States Court of Appeals for the Federal Circuit

1

The facts in this section—which are undisputed for the purpose of resolving

defendant’s motion to dismiss—derive from the complaint, the parties’ submissions (including

attached exhibits), and matters of which the court may take judicial notice pursuant to Rule 201

of the Federal Rules of Evidence. See Rocky Mountain Helium, LLC v. United States, 841 F.3d

1320, 1325-26 (Fed. Cir. 2016).

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(“Federal Circuit”).2 Id. § 141(a)-(b). Patents are generally valid for twenty years and “grant to

the patentee, [and] his heirs or assigns, . . . the right to exclude others from making, using,

offering for sale, or selling the invention throughout the United States or importing the invention

into the United States.”3 Id. § 154(a)(1)-(2).

B. Terminating a Patent

A patent owner’s interest in a patent may be terminated in multiple ways.

First, a patent owner may terminate its interest in a patent by assignment. An interest in a

patent (whether in the application stage or having already been granted) may be transferred via

written instrument. Id. § 261.

Second, the Patent and Trademark Office may terminate a patent based on failure to pay

fees. See id. § 41(b)(2), (c)(1). Once a patent is granted, its owner must periodically pay fees for

the Patent and Trademark Office to “maintain[] in force” the underlying patent; these fees are

known as maintenance fees. Id. § 41(b)(1).

Third, a patent owner may have a patent (or one or more of its claims) declared invalid in

judicial proceedings. See id. § 282(c). A patent owner whose patent is infringed may seek

available remedies by filing a civil action in federal district court.4 Id. § 281; 28 U.S.C. § 1338

(2012); see also 35 U.S.C. § 271 (describing acts that constitute patent infringement). If the

federal government is the alleged infringer, the patent owner must sue in the United States Court

of Federal Claims (“Court of Federal Claims”). 28 U.S.C. § 1498(a). A defendant in a patent

infringement action may assert prior commercial use, noninfringement, absence of liability for

infringement, unenforceability, or invalidity of the patent itself or one or more of its claims. 35

U.S.C. §§ 273(a), 282(b). A patent, and each claim thereof, is “presumed valid,” and a party

asserting invalidity has the burden of establishing such invalidity by clear and convincing

evidence. Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91, 95 (2011) (quoting 35 U.S.C.

§ 282(a)). Alternatively, rather than waiting to be sued for patent infringement, a party can file a

civil action in federal district court for a declaratory judgment that a patent, or one or more of its

claims, is “invalid, unenforceable, or not infringed.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l,

573 U.S. 208, 214 (2014); see also 28 U.S.C. § 2201(a) (providing federal district courts with

jurisdiction over certain types of declaratory judgment actions).

2

In lieu of appealing to the Federal Circuit, an applicant may file a civil action against

the Director in the United States District Court for the Eastern District of Virginia to obtain a

patent. 35 U.S.C. § 145.

3

If the patented invention is a process, then a patent grants the patentee “the right to

exclude others from using, offering for sale or selling throughout the United States, or importing

into the United States, products made by that process.” 35 U.S.C. § 154(a)(1).

4

Similarly, judicial relief is available when the invention claimed in one patent is

derived from an invention claimed in another patent. See 35 U.S.C. § 291.

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Finally, there are various types of administrative proceedings in which a patent (or one or

more of its claims) may be cancelled. See Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131,

2137 (2016) (“For several decades, the [Patent and Trademark Office] has also possessed the

authority to reexamine—and perhaps cancel—a patent claim that it had previously allowed.”).

These types of administrative proceedings include ex parte reexamination, post-grant review, and

inter partes review. See Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 6, 125 Stat.

284, 299-313 (2011) (codified as amended at 35 U.S.C. §§ 311-329) (providing for post-grant

review and inter partes review).

Any party may request ex parte reexamination of a patent on the basis of prior art upon

filing a written petition and paying a fee. 35 U.S.C. § 302. A patent owner may also “request

supplemental examination of a patent . . . to consider, reconsider, or correct information believed

to be relevant to the patent.” Id. § 257(a). The Patent and Trademark Office must then

determine, within three months after the filing of the reexamination petition, “whether a

substantial new question of patentability affecting any claim of the patent concerned is raised by

the request.” Id. § 303(a). If such a substantial new question is raised, the office institutes ex

parte reexamination proceedings. Id. §§ 257(b), 304. The Patent and Trademark Office may

also institute ex parte reexamination proceedings on its “own initiative” at “any time.” Id.

§ 303(a). Ex parte reexamination proceedings are “conducted according to the procedures

established for initial examination.” Id. § 305. During ex parte reexamination, the patent owner

may propose amendments or additional claims to the patent at issue “to distinguish the invention

as claimed from the prior art cited . . . or in response to a decision adverse to the patentability of

a claim” of the relevant patent. Id. A patent owner dissatisfied with the result of ex parte

reexamination proceedings may appeal to the Patent Trial and Appeal Board, and then to the

Federal Circuit. Id. §§ 134(b), 141(b). Upon the conclusion of ex parte reexamination

proceedings, including appeals, the Patent and Trademark Office issues a certificate confirming

any claims determined to be patentable, cancelling any claims determined to be unpatentable,

and incorporating any amendments or new claims determined to be patentable into the patent.

Id. § 307(a).

Post-grant review allows any party to request, within nine months of a patent being

granted or reissued, that one or more claims in a patent be cancelled on the grounds of invalidity.

Id. § 321. The burden of establishing unpatentability in a post-grant review proceeding is

preponderance of the evidence. Id. § 326(e). To institute post-grant review proceedings, the

Patent and Trademark Office must “determine[] that the information presented in the petition

[for post-grant review], if such information is not rebutted, would demonstrate that it is more

likely than not that at least [one] of the claims challenged in the patent is unpatentable” or that

“the petition raises a novel or unsettled legal question that is important to other patents or patent

applications.” Id. § 324(a)-(b). The Patent and Trademark Office has three months after

receiving a preliminary response to the petition (or three months after the deadline for such a

response, if no response is filed) to decide whether to institute post-grant review. Id. § 324(c).

The Patent Trial and Appeal Board conducts post-grant review and must issue a final written

decision upon the conclusion of proceedings (if not dismissed). Id. §§ 326(c), 328(a). Any party

to the post-grant review proceedings may appeal the Patent Trial and Appeal Board’s decision to

the Federal Circuit. Id. § 141(c). After the Patent Trial and Appeal Board issues its decision and

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appeals have terminated (or the time for appeals expires), the Patent and Trademark Office issues

a certificate confirming any claims determined to be patentable and cancelling any claims

determined to be unpatentable. Id. § 328(b).

Finally, inter partes review allows any party to request, after nine months following the

grant of a patent or upon termination of post-grant review proceedings (if such proceedings are

instituted), that one or more claims in a patent be cancelled for failing the novelty and

nonobvious conditions for patentability under 35 U.S.C. §§ 102-103 and “only on the basis of

prior art consisting of patents or printed publications.” Id. § 311. The burden of establishing

unpatentability in an inter partes review proceeding is preponderance of the evidence. Id.

§ 316(e). The United States Supreme Court (“Supreme Court”) describes inter partes review as a

“second look at an earlier administrative grant of a patent,” and notes that Congress has

described it as “an efficient system for challenging patents that should not have issued.” Cuozzo,

136 S. Ct. at 2144 (internal quotation marks omitted). To institute inter partes review

proceedings, the Patent and Trademark Office must “determine[] that the information presented

in the petition [for inter partes review] and any response . . . shows that there is a reasonable

likelihood that the petitioner would prevail with respect to at least [one] of the claims challenged

in the petition.” 35 U.S.C. § 314(a). The Patent and Trademark Office has three months after

receiving a preliminary response to the petition (or three months after the deadline for such a

response, if no response is filed) to decide whether to institute inter partes review. Id. § 324(b).

The Patent Trial and Appeal Board conducts inter partes review and must issue a final written

decision upon the conclusion of proceedings (if not dismissed). Id. §§ 316(c), 318(a). Any party

to the inter partes review proceedings may appeal the Patent Trial and Appeal Board’s decision

to the Federal Circuit. Id. § 141(c). After the Patent Trial and Appeal Board issues its decision

and appeals have terminated (or the time for appeals expires), the Patent and Trademark Office

issues a certificate confirming any claims determined to be patentable and cancelling any claims

determined to be unpatentable. Id. § 318(b). Issuance and publication of the certificate officially

concludes the inter partes review proceeding. 37 C.F.R. § 1.997(a) (2014). The instant case

concerns inter partes review.

C. Christy Acquires Its Patent

On July 18, 2003, David L. McCutchen assigned ownership of his entire right, title, and

interest in his ambient air backflushed filter vacuum invention to Christy. Am. Compl. Ex. F at

2. That same day, Christy applied for a patent for the ambient air backflushed filter vacuum.

See Am. Compl. Ex. D at 1. On March 2, 2006, the Patent and Trademark Office issued a

Notice of Allowance and Fee(s) Due. See generally Am. Compl. Ex. C. In that notice, the

Patent and Trademark Office indicated that (1) patent prosecution on the merits of Christy’s

application was closed, (2) Christy’s application was “allowed for issuance as a patent” but was

“not a grant of patent rights,” (3) issuance and publication fees totaling $1000 were due within

three months of the notice to avoid abandonment of Christy’s application, and (4) twenty claims

were allowed. Id. at 1, 4. Christy paid the fees on May 31, 2006. Am. Compl. Ex. E. The

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Patent and Trademark Office then issued Patent 7,082,640 (the “′640 patent”) on August 1, 2006

(the “patent grant date”).5 Am. Compl. Ex. D at 1.

Thereafter, Christy paid the maintenance fees required by 35 U.S.C. § 41(b)(1) to be paid

3.5 years, 7.5 years, and 11.5 years after the patent grant date. These due dates were February 1,

2010, February 1, 2014, and February 1, 2018, respectively. The specific amounts paid by

Christy are as follows:

• $490 on October 29, 2009, Am. Compl. Ex. G; see also 37

C.F.R. § 1.20(e) (2009) (providing that the 3.5-year

maintenance fees at the time of Christy’s payment were $490

for “small” entities and $980 for other entities6);

• $1800 on January 24, 2014, Am. Compl. Ex. H; see also 37

C.F.R. § 1.20(f) (2013) (providing that the 7.5-year

maintenance fees at the time of Christy’s payment were $900

for “micro” entities, $1800 for “small” entities, and $3600 for

other entities7); and

• $3700 on January 4, 2018, Am. Compl. Ex. I; see also 37

C.F.R. § 1.20(g) (2017) (providing that the 11.5-year

maintenance fees at the time of Christy’s payment were $1850

for “micro” entities, $3700 for “small” entities, and $7400 for

other entities).

5

The prosecution history of the ′640 patent—which is not relevant to resolving

defendant’s motion to dismiss—is described in a federal district court claim construction

decision concerning the ′640 patent. See CDC Larue Indus., Inc. v. Black & Decker (U.S.) Inc.,

No. 14-CV-0286-CVE-FHM, 2015 WL 224935, at *1 (N.D. Okla. Jan. 15, 2015).

6

A “small” entity is a “small business concern”—i.e., one with no more than 500

employees—that has not transferred its rights in the subject invention. 13 C.F.R. § 121.802

(2003); 37 C.F.R. § 1.27(a)(2) (2003). An entity “will be accorded small entity status by the

[Patent and Trademark Office] in the particular application or patent in which entitlement to

small entity status was asserted.” 37 C.F.R. § 1.27(b)(1).

7

“Micro” entities are a subset of “small” entities. 35 U.S.C. § 123; 37 C.F.R. § 1.29

(2013). Micro entity status became available as of March 19, 2013, pursuant to the micro entity

provision contained in the Leahy-Smith America Invents Act. Changes to Implement Micro

Entity Status for Paying Patent Fees, 77 Fed. Reg. 75,019, 75,019-20 (Dec. 19, 2012).

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D. Christy Instigates Litigation Involving the ′640 Patent

On June 2, 2014, Christy and its licensee, CDC Larue Industries, Inc., filed a complaint

against Dewalt Industrial Tool Co. and Black & Decker Corp. in the United States District Court

for the Northern District of Oklahoma alleging infringement of the ′640 patent. The complaint

was amended, on September 12, 2014, to name Black & Decker (U.S.), Inc. (“Black & Decker”),

the parent company of the defendants named in the original complaint, as the defendant. After

briefing and a hearing, the court issued its claim construction decision on January 15, 2015. See

generally CDC Larue Indus., 2015 WL 224935. The case was subsequently stayed pending the

outcome of inter partes review proceedings pertaining to the ′640 patent.

E. Inter Partes Review of the ′640 Patent

Before the claim construction decision in CDC Larue Industries was issued, Black &

Decker petitioned the Patent and Trademark Office for inter partes review of the ′640 patent.

Specifically, Black & Decker filed two petitions on December 19, 2014. In its first petition,

Black & Decker asserted that claims 1-18 of the ′640 patent were invalid. Am. Compl. Ex. K at

6. After Christy filed a preliminary response, the Patent Trial and Appeal Board instituted inter

partes review of claims 1-18 of the ′640 patent on June 24, 2015, and assigned the matter case

number IPR2015-00468. Am. Compl. Ex. L at 1-2.8 In its second petition, Black & Decker

asserted that claims 1, 4-10, and 13-18 of the ′640 patent were invalid. Am. Compl. Ex. N at 5.

After Christy filed a preliminary response, the Patent Trial and Appeal Board instituted inter

partes review of claims 1, 4-10, and 13-18 of the ′640 patent on June 24, 2015, and assigned the

matter case number IPR2015-00472. Am. Compl. Ex. O at 1-2.9

On June 17, 2016, the Patent Trial and Appeal Board issued its final written decision in

both inter partes review matters. With respect to IPR2015-00468, the Patent Trial and Appeal

Board determined that Black & Decker had “met its burden to prove by a preponderance of the

evidence that claims 1-18 of the ′640 patent are unpatentable.” Am. Compl. Ex. M at 3.10 The

Patent Trial and Appeal Board first explained its standard of review:

8

Exhibit L is a complete copy of the Patent Trial and Appeal Board’s decision to

institute inter partes review in IPR2015-00468. See generally Black & Decker (U.S.) Inc. v.

Christy, Inc., No. IPR2015-00468, 2015 WL 3920069 (P.T.A.B. June 24, 2015).

9

Exhibit O is a complete copy of the Patent Trial and Appeal Board’s decision to

institute inter partes review in IPR2015-00472. See generally Black & Decker (U.S.) Inc. v.

Christy, Inc., No. IPR2015-00472, 2015 WL 3920070 (P.T.A.B. June 24, 2015).

10

Exhibit M is a complete copy of the Patent Trial and Appeal Board’s final written

decision in IPR2015-00468. See generally Black & Decker (U.S.) Inc. v. Christy, Inc., No.

IPR2015-00468, 2016 WL 3382465 (P.T.A.B. June 17, 2016), aff’d per curiam, 696 F. App’x

1020 (Fed. Cir. Sep. 7, 2017) (mem.).

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To prevail in its challenges to the patentability of claims,

the Petitioner must establish facts supporting its challenges by a

preponderance of the evidence. A claim is anticipated, and, thus,

unpatentable, if a single prior art reference discloses each and

every element of the claimed invention. A claim is obvious, and,

thus, unpatentable, if the differences between the subject matter

sought to be patented and the prior art are such that the subject

matter as a whole would have been obvious at the time the

invention was made to a person having ordinary skill in the art.

Id. at 14-15 (citations omitted). Thereafter, the Patent Trial and Appeal Board analyzed each of

the challenged claims, finding that:

• claims 1 and 10 were “anticipated” pursuant to 35 U.S.C.

§ 102, id. at 15; and

• claims 1-18 “would have been obvious” pursuant to 35 U.S.C.

§ 103, id. at 25, 27.

With respect to IPR2015-00472, the Patent Trial and Appeal Board determined that

Black & Decker had “met its burden to prove by a preponderance of the evidence that claims 1,

4-10, and 13-18 of the ′640 patent are unpatentable.” Am. Compl. Ex. P at 3.11 Specifically, the

Patent Trial and Appeal Board found:

• claims 1 and 10 were “anticipated,” id. at 15; and

• claims 1, 4-9, and 13-18 “would have been obvious,” id. at 24,

26-27.

Christy timely appealed both decisions to the Federal Circuit. On September 7, 2017, the

Federal Circuit affirmed the Patent Trial and Appeal Board’s decision in IPR2015-00468.

Christy, Inc. v. Black & Decker (U.S.), Inc., 696 F. App’x 1020 (Fed. Cir. Sep. 7, 2017) (mem.)

(per curiam) (case 2016-2498). That same day, the Federal Circuit dismissed Christy’s appeal of

IPR2015-00472 as moot. Christy, Inc. v. Black & Decker (U.S.), Inc., 696 F. App’x 1020 (Fed.

Cir. Sep. 7, 2017) (mem.) (per curiam) (case 2017-2499). On August 14, 2018, the Patent and

Trademark Office issued and published an Inter Partes Review Certificate officially cancelling

claims 1-18 of the ′640 patent. U.S. Patent No. 7,082,640, at 13-14.

11

Exhibit P is a complete copy of the Patent Trial and Appeal Board’s final written

decision in IPR2015-00472. See generally Black & Decker (U.S.) Inc. v. Christy, Inc., No.

IPR2015-00472, 2016 WL 3382466 (P.T.A.B. June 17, 2016), appeal dismissed as moot per

curiam, 696 F. App’x 1020 (Fed. Cir. Sep. 7, 2017) (mem.).

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Meanwhile, on April 13, 2018, the patent infringement case in federal district court,

which had been stayed pending the outcome of the inter partes review proceedings, was

dismissed with prejudice. Jt. Stip., CDC Larue Indus., Inc. v. Black & Decker (U.S.) Inc., No.

4:14-cv-00286 (N.D. Okla. Apr. 13, 2018).

F. Procedural History

Christy filed suit in this court on May 9, 2018, and subsequently amended its complaint

on July 30, 2018. In its amended complaint, Christy asserts six counts:

• Count I—Taking of Property Without Just Compensation, Am.

Compl. ¶¶ 94-107;

• Count II—Breach of Contract, id. ¶¶ 108-24;

• Count III—Breach of Implied-in-Fact Contract (in the

Alternative to Count II), id. ¶¶ 125-41;

• Count IV—Breach of Implied Duty of Good Faith and Fair

Dealing, id. ¶¶ 142-52;

• Count V—Unjust Enrichment, id. ¶¶ 153-67; and

• Count VI—Exaction (in the Alternative to Count I),

id. ¶¶ 168-76.

Christy requests class certification, a declaratory judgment that inter partes review effects a Fifth

Amendment taking and a breach of contract, damages “including but not limited to expected

royalties and other payments related to use of the patents,” attorneys’ fees, costs, and

prejudgment and postjudgment interest. Id. ¶ 177. Defendant moves to dismiss for lack of

subject-matter jurisdiction pursuant to RCFC 12(b)(1) and, alternatively, for failure to state a

claim upon which this court can grant relief pursuant to RCFC 12(b)(6).

Defendant’s motion is now fully briefed. The parties did not request oral argument, and

the court deems it unnecessary. Defendant’s motion is now ripe for adjudication.

II. STANDARDS OF REVIEW

A. RCFC 12(b)(1)

In determining whether subject-matter jurisdiction exists, the court “must accept as true

all undisputed facts asserted in the plaintiff’s complaint and draw all reasonable inferences in

favor of the plaintiff.” Trusted Integration, Inc. v. United States, 659 F.3d 1159, 1163 (Fed. Cir.

2011). With respect to a motion to dismiss for lack of subject-matter jurisdiction pursuant to

RCFC 12(b)(1), the plaintiff bears the burden of proving, by a preponderance of evidence, that

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the court possesses subject-matter jurisdiction. Id. If jurisdictional facts are challenged, the

court is not limited to the pleadings in determining whether it possesses subject-matter

jurisdiction to entertain a plaintiff’s claims. Banks v. United States, 741 F.3d 1268, 1277 (Fed.

Cir. 2014); Pucciariello v. United States, 116 Fed. Cl. 390, 400 (2014). If the court finds that it

lacks subject-matter jurisdiction over a claim, RCFC 12(h)(3) requires the court to dismiss that

claim.

B. Subject-Matter Jurisdiction

Whether the court possesses subject-matter jurisdiction to decide the merits of a case is a

threshold matter. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94-95 (1998); see

also Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006) (explaining that subject-matter

jurisdiction cannot be forfeited or waived because it “involves a court’s power to hear a case”

(citing United States v. Cotton, 535 U.S. 625, 630 (2002))); Ruhrgas AG v. Marathon Oil Co.,

526 U.S. 574, 583 (1999) (“[A] federal court [must] satisfy itself of its jurisdiction over the

subject matter before it considers the merits of a case.”), quoted in Hymas v. United States, 810

F.3d 1312, 1316-17 (Fed. Cir. 2016); Matthews v. United States, 72 Fed. Cl. 274, 278 (2006)

(stating that subject-matter jurisdiction is “an inflexible matter that must be considered before

proceeding to evaluate the merits of a case”). “Without jurisdiction the court cannot proceed at

all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only

function remaining to the court is that of announcing the fact and dismissing the cause.” Ex

parte McCardle, 74 U.S. (7 Wall) 506, 514 (1868). Either party, or the court sua sponte, may

challenge the court’s subject-matter jurisdiction at any time. Arbaugh, 546 U.S. at 506.

The ability of the Court of Federal Claims to entertain suits against the United States is

limited. “The United States, as sovereign, is immune from suit save as it consents to be sued.”

United States v. Sherwood, 312 U.S. 584, 586 (1941). The waiver of immunity “cannot be

implied but must be unequivocally expressed.” United States v. King, 395 U.S. 1, 4 (1969). The

Tucker Act, the principal statute governing the jurisdiction of this court, waives sovereign

immunity for claims against the United States, not sounding in tort, that are founded upon the

Constitution, a federal statute or regulation, or an express or implied contract with the United

States. 28 U.S.C. § 1491(a)(1). However, the Tucker Act is merely a jurisdictional statute and

“does not create any substantive right enforceable against the United States for money damages.”

United States v. Testan, 424 U.S. 392, 298 (1976). Instead, the substantive right must appear in

another source of law, such as a “money-mandating constitutional provision, statute or regulation

that has been violated, or an express or implied contract with the United States.” Loveladies

Harbor, Inc. v. United States, 27 F.3d 1545, 1554 (Fed. Cir. 1994) (en banc).

C. RCFC 12(b)(6)

A claim that survives a jurisdictional challenge remains subject to dismissal under RCFC

12(b)(6) if the claim does not provide a basis for the court to grant relief. See Lindsay v. United

States, 295 F.3d 1252, 1257 (Fed. Cir. 2002) (explaining that an RCFC 12(b)(6) motion to

dismiss is “appropriate when the facts asserted by the claimant do not entitle him to a legal

remedy”). To survive an RCFC 12(b)(6) motion to dismiss, a plaintiff must include in its

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complaint “enough facts to state a claim to relief that is plausible on its face” sufficient for the

defendant to have “fair notice” of the claim and the “grounds upon which it rests.” Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007) (internal quotation marks omitted). In other

words, a plaintiff must “plead[] factual content that allows the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009) (citing Twombly, 550 U.S. at 556). In ruling on such a motion, the court must

“accept as true all of the factual allegations contained in the complaint” and any attachments

thereto. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam) (citing Twombly, 550 U.S. at

555-56); accord RCFC 10(c) (“A copy of a written instrument that is an exhibit to a pleading is

part of the pleading for all purposes.”); Rocky Mountain, 841 F.3d at 1325 (applying RCFC

10(c) and emphasizing that “a court ‘must consider the complaint in its entirety, . . . in particular,

documents incorporated into the complaint by reference, and matters of which a court may take

judicial notice’” (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322

(2007))).

The issue at this stage of litigation is not the sufficiency of any potential defenses or the

likelihood of Christy’s eventual success on the merits of its allegations, but simply whether

Christy has alleged specific facts describing a plausible claim for relief. See Chapman Law Firm

Co. v. Greenleaf Constr. Co., 490 F.3d 934, 938 (Fed. Cir. 2007) (“The court must determine

‘whether the claimant is entitled to offer evidence to support the claims,’ not whether the

claimant will ultimately prevail.” (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974))).

III. TAKINGS CLAUSE CLAIM

The court first turns to Count I of Christy’s amended complaint, in which Christy asserts

a cause of action pursuant to the Takings Clause.

A. The Court of Federal Claims Has Jurisdiction to Consider Christy’s Takings Clause

Claim

The Fifth Amendment prohibits the federal government from taking private property for

public use without paying just compensation. U.S. Const. amend. V. “It is undisputed that the

Takings Clause of the Fifth Amendment is a money-mandating source [of law] for purposes of

Tucker Act jurisdiction” in the Court of Federal Claims. Jan’s Helicopter Serv., Inc. v. FAA,

525 F.3d 1299, 1309 (Fed. Cir. 2008). However, a plaintiff must still allege a nonfrivolous

Takings Clause claim to invoke this court’s Tucker Act jurisdiction. Moden v. United States,

404 F.3d 1335, 1341 (Fed. Cir. 2005). Christy asserts that it had a property right in its claimed

invention, as well as “property rights in the issue fees and maintenance fees paid, investments in

the underlying technologies to the invalidated claims, and to the monies spent in defending” its

patent claims throughout the inter partes review process. Am. Compl. ¶ 97. According to

Christy, “each of [its] property rights in the invalidated claims, along with the issuance and

maintenance fees and the investments made in the patented technologies,” were taken by the

federal government for public use when claims 1-18 of the ′640 patent were invalidated. Id.

¶ 100. In other words, Christy asserts that it had certain property rights that were taken by the

federal government without just compensation. There is no indication (nor does defendant

-11-

suggest) that such allegations are frivolous.12 Accordingly, the court has jurisdiction to consider

Count I of Christy’s complaint. Whether Christy has stated a plausible claim upon which this

court can grant relief is a separate issue.

B. Christy Fails to State a Plausible Takings Clause Claim Upon Which This Court Can

Grant Relief

To prevail on a takings claim, a plaintiff must “identify[] a valid property interest” under

the Fifth Amendment and show a “governmental action [that] amounted to a compensable taking

of that property interest.” Air Pegasus of D.C., Inc. v. United States, 424 F.3d 1206, 1212-13

(Fed. Cir. 2005); accord Casitas Mun. Water Dist. v. United States, 708 F.3d 1340, 1348 (Fed.

Cir. 2013); Hearts Bluff Game Ranch, Inc. v. United States, 669 F.3d 1326, 1329 (Fed. Cir.

2012). In addition, a plaintiff must concede the legitimacy of the government action that

effected the taking. Hearts Bluff, 669 F.3d at 1332 (citing Tabb Lakes, Ltd. v. United States, 10

F.3d 796, 802 (Fed. Cir. 1993)).

Christy does not contend that inter partes review—the process by which Christy alleges

its property rights were taken—is not legitimate government action. Indeed, Christy emphasizes

that inter partes review was “created through” the Leahy-Smith America Invents Act, Am.

Compl. ¶ 7, and does not argue that the Patent Trial and Appeal Board failed to follow

established procedures throughout the inter partes review process pertaining to the ′640 patent.

Further, Christy relies heavily on the recent decision in Oil States Energy Services, LLC v.

Greene’s Energy Group LLC (“Oil States”), in which the Supreme Court held that “inter partes

review does not violate Article III or the Seventh Amendment” of the United States Constitution.

138 S. Ct. 1365, 1379 (2018). The court’s evaluation of defendant’s motion to dismiss Count I

of Christy’s amended complaint therefore turns on whether Christy’s patent is a “valid property

interest” for Takings Clause purposes. See, e.g., Skip Kirchdorfer, Inc. v. United States, 6 F.3d

1573, 1580 (Fed. Cir. 1993) (“Not all losses generate a Fifth Amendment taking.”).

Whether patents constitute property for Takings Clause purposes is not an issue of first

impression. In Schillinger v. United States, the Supreme Court held that a patentee could not

cast his patent infringement suit against the federal government as a Takings Clause action. 155

U.S. 163, 169 (1894). The Supreme Court observed that a suit for patent infringement was

essentially an action “sounding in tort,” the federal government had not waived its sovereign

immunity with respect to such actions, and patentees had no remedy for patent infringement by

the federal government absent some form of a contractual relationship. Id. at 168-71; accord

United States v. Berdan Firearms Mfg. Co., 156 U.S. 552, 565-66 (1895) (“Even if there were

findings sufficient to show that the government had in any manner infringed upon this patent,

12

In addition, “a claim alleging a Fifth Amendment taking accrues when the act that

constitutes the taking occurs.” Ingrum v. United States, 560 F.3d 1311, 1314 (Fed. Cir. 2009).

Christy’s Takings Clause claim accrued on June 17, 2016, the date on which the Patent Trial and

Appeal Board issued its final written decision invalidating claims 1-18 of the ′640 patent.

Accordingly, Christy’s complaint was filed well within the six-year statute of limitations set

forth in 28 U.S.C. § 2501.

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there is nothing disclosing a contract, express or implied; and a mere infringement, which is only

a tort, creates no cause of action cognizable in the court of claims.”). This jurisdictional hurdle

was resolved in 1910, when Congress enacted the predecessor to 28 U.S.C. § 1498 to provide the

United States Court of Claims, a predecessor to this court, with jurisdiction to entertain patent

infringement suits against the federal government. See generally Act of June 25, 1910, Pub. L.

No. 61-305, 36 Stat. 851.

Nearly a century later, the Federal Circuit considered, among other issues, an appeal of a

determination by the Court of Federal Claims “that it could assert jurisdiction over [the

plaintiff’s] patent infringement allegations by treating the action as a Fifth Amendment taking

under the Tucker Act.” Zoltek Corp. v. United States, 442 F.3d 1345, 1348 (Fed. Cir. 2006),

vacated on other grounds, 672 F.3d 1309, 1317-22 (Fed. Cir. 2012) (en banc portion). The

Federal Circuit described the Schillinger decision as “the Supreme Court reject[ing] an argument

that a patentee could sue the government for patent infringement as a Fifth Amendment taking

under the Tucker Act,” disagreed with the trial court’s determination that the Supreme Court had

“effectively overruled” Schillinger in subsequent decisions, and specified that “Schillinger

remains the law.” Id. at 1350 (internal quotation marks omitted). Allowing patent owners to

style patent infringement actions as Taking Clause claims would, the Federal Circuit explained,

“read an entire statute, [28 U.S.C.] § 1498, out of existence.” Id. at 1352. The Federal Circuit

further expounded on patent rights vis-à-vis the Takings Clause:

As the Supreme Court has clearly recognized when considering

Fifth Amendment taking allegations, property interests are not

created by the Constitution. Rather, they are created and their

dimensions are defined by existing rules or understandings that

stem from an independent source such as state law. Here, the

patent rights are a creature of federal law. In response to

Schillinger, Congress provided a specific sovereign immunity

waiver for a patentee to recover for infringement by the

government. Had Congress intended to clarify the dimensions of

the patent rights as property interests under the Fifth Amendment,

there would have been no need for the new and limited sovereign

immunity waiver.

Id. (emphasis added) (alteration, citation, and internal quotation marks omitted) (citing

Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1001 (1984)). In other words, Congress has not

expressed any intent that patent rights may be the subject of Takings Clause claims. Since patent

rights derive wholly from federal law, Congress is free to define those rights (and any attendant

remedies for an intrusion on those rights) as it sees fit.

The Supreme Court’s recent decision in Oil States does not disturb the principle that

patents (including patent rights) are not property for Takings Clause purposes. As Christy

emphasizes, the Supreme Court specified that its holding regarding the “constitutionality of inter

partes review . . . should not misconstrued as suggesting that patents are not property for

purposes of the Due Process Clause or the Takings Clause.” Oil States, 138 S. Ct. at 1379.

-13-

However, Christy’s statement that the Oil States decision “acknowledged that there exist[s]

precedent holding that patents are property subject to a Fifth Amendment taking,” Pl.’s Resp. 7,

misconstrues that decision. The decision does not suggest, as Christy champions, that patents are

property for Takings Clause purposes. Indeed, the statement that Christy emphasizes merely

defined the scope of the decision:

We emphasize the narrowness of our holding. We address

the constitutionality of inter partes review only. We do not address

whether other patent matters, such as infringement actions, can be

heard in a non-Article III forum. And because the Patent Act

provides for judicial review by the Federal Circuit, we need not

consider whether inter partes review would be constitutional

without any sort of intervention by a court at any stage of the

proceedings. Moreover, we address only the precise constitutional

challenges that Oil States raised here. Oil States does not

challenge the retroactive application of inter partes review, even

though that procedure was not in place when its patent issued. Nor

has Oil States raised a due process challenge. Finally, our decision

should not be misconstrued as suggesting that patents are not

property for purposes of the Due Process Clause or the Takings

Clause.

Oil States, 138 S. Ct. at 1379 (citations and internal quotation marks omitted). In other words,

the Supreme Court took no position in Oil States on the issue of whether patents were property

for Takings Clause purposes because that matter was not before the court.

Although the Supreme Court did not analyze whether patents are property for Takings

Clause purposes in Oil States, it discussed the nature of the property rights that patent owners

have in their patents. That discussion was central to the Supreme Court’s analysis of the

constitutionality of inter partes review and thus cannot be dismissed as dicta. The Supreme

Court observed that its longstanding precedent teaches that “the decision to grant a patent is a

matter involving public rights—specifically, the grant of a public franchise,” id. at 1373, and

noted that the franchise “is a ‘creature of statute law,’” id. at 1374 (quoting Crown Die & Tool

Co. v. Nye Tool & Machine Works, 261 U.S. 24, 40 (1923)). It emphasized that “[p]atent claims

are granted subject to the qualification that the [Patent and Trademark Office] has ‘the authority

to reexamine—and perhaps cancel—a patent claim’ in an inter partes review” and that

“franchises can be qualified in this manner.” Id. at 1374-75 (quoting Cuozzo, 136 S. Ct. at

2137). Importantly, the Supreme Court remarked that the handful of prior decisions

characterizing patents as “private property” did not contradict its conclusion in Oil States that

patents are public franchises. Id. at 1375.

Because “[p]atents convey only a specific form of property right—a public franchise . . . ,

a patent can confer only the rights that the statute prescribes.” Id. Federal law provides that

“patents shall have the attributes of personal property.” 35 U.S.C. § 261 (emphasis added).

However, that rule is not absolute, nor does it reflect Congress’s intent for patents to be treated

-14-

the same as any other particular form of personal property. A patent owner’s rights are qualified

and specifically “[s]ubject to the provisions of [title thirty-five of the United States Code].” Id.;

accord Oil States, 138 S. Ct. at 1377 (“Congress may set out conditions and tests for

patentability.” (quoting Graham v. John Deere Co. of Kan. City, 383 U.S. 1, 6 (1966))); Boyden

v. Comm’r of Patents, 441 F.2d 1041, 1043 (D.C. Cir. 1971) (“No person has a vested right to a

patent, but is privileged to seek the protected monopoly only upon compliance with the

conditions which Congress has imposed.” (citation omitted)), cert. denied, 404 U.S. 842. As

relevant here, the Patent and Trademark Office has “continuing authority to review and

potentially cancel patents after they are issued.” Oil States, 138 S. Ct. at 1376 n.3 (citing 35

U.S.C. §§ 261, 311-319).

Christy relies heavily on Horne v. Department of Agriculture to support the propositions

that the Takings Clause (1) applies equally to personal property and real property and

(2) includes protection against “a regulatory taking—a restriction on the use of property.” 135 S.

Ct. 2419, 2427 (2015), quoted in Pl.’s Resp. 6-7. Christy correctly states the law, but misses the

mark in its application to the cancellation of patent claims pursuant to inter partes review. As

explained above, while patent rights are indeed a form of property rights, patents are public

franchises. Therefore, patent rights are not equivalent to private rights. Moreover, the Horne

decision involved the federal government’s appropriation of farmers’ tangible personal

property—raisins—for public purposes via a process in which title to the raisins passed to the

government. Id. at 2424. In other words, the property rights at issue in Horne were private

rights, whereas the property rights at issue in this case concern public franchises. Further, in the

instant case, claims 1-18 of the ′640 patent were extinguished and thus, unlike in Horne where

title to the raisins passed to the government, there is no title to pass. Accordingly, Horne is

sufficiently distinguishable from the instant case to offer any support for Christy’s position.

In that same vein, Christy’s reliance on nineteenth-century Supreme Court decisions to

equate patent rights to land rights for Takings Clause purposes is ill-considered. Any

comparison of “invention patents” to “land patents” based on those decisions is unavailing:

[T]he analogy between the two [in prior Supreme Court decisions]

depended on the particulars of the Patent Act of 1870. Modern

invention patents, by contrast, are meaningfully different from land

patents. The land-patent cases . . . involved a transaction in which

all authority or control over the lands has passed from the

Executive Department. Their holdings do not apply when the

Government continues to possess some measure of control over the

right in question. And that is true of modern invention patents

under the current Patent Act . . . .

Oil States, 138 S. Ct. at 1376 n.3. In other words, modern invention patents are distinguishable

from land patents because the Patent and Trademark Office exercises continuing authority over

invention patents, whereas the government generally cedes “all authority or control” over the

land in question when it issues a land patent.

-15-

In short, patents are public franchises, not private property.13 Because “[a] taking

compensable under the Fifth Amendment inherently requires the existence of ‘private property,’”

Skip Kirchdofer, 6 F.3d at 1580, patent rights are not cognizable property interests for Takings

Clause purposes. In any event, patent owners have no property right to maintain patent claims

that are found to be unpatentable, regardless of the timing of any such determination. Therefore,

Christy’s Takings Clause claim fails as a matter of law. The court must dismiss Count I of

Christy’s amended complaint for failure to state a claim upon which this court can grant relief.

IV. CONTRACT CLAIMS

The court next turns to Counts II, III, and IV of Christy’s amended complaint. In Count

II, Christy alleges a breach of an express contract. In Count III, Christy alleges (as an alternative

to Count II) a breach of an implied-in-fact contract. In Count IV, Christy alleges a breach of the

implied duty of good faith and fair dealing arising out of either an express or implied-in-fact

contract.

A. The Court of Federal Claims Has Jurisdiction to Consider Some of Christy’s Contract

Claims

In contract disputes, the “money-mandating requirement for Tucker Act jurisdiction

normally is satisfied by the presumption that money damages are available for breach of

contract.”14 Holmes, 657 F.3d at 1314. Therefore, a “non-frivolous allegation of a contract with

the government” is generally sufficient to invoke the court’s Tucker Act jurisdiction. Engage

Learning, Inc. v. Salazar, 660 F.3d 1346, 1353 (Fed. Cir. 2011) (emphasis added). The court’s

contract jurisdiction extends to claims involving implied-in-fact contracts, but not to claims

involving implied-in-law contracts. Hercules, Inc. v. United States, 516 U.S. 417, 423 (1996).

An implied-in-law contract is a “fiction of law where a promise is imputed to perform a legal

duty, as to repay money obtained by fraud or duress.” Id. at 424 (internal quotation marks

omitted). In contrast, an implied-in-fact contract results from a “meeting of minds, which,

although not embodied in an express contract, is inferred, as a fact, from conduct of the parties

showing, in the light of the surrounding circumstances, their tacit understanding.” Id. (internal

13

While patents are not equivalent to private property, patent holders are nevertheless

entitled to procedural due process as recipients of a federal benefit. Cf. Bd. of Regents of State

Colls. v. Roth, 408 U.S. 564, 576 (1972) (“[A] person receiving welfare benefits under statutory

and administrative standards defining eligibility for them has an interest in continued receipt of

those benefits that is safeguarded by procedural due process.”). However, Christy does not

allege any violation of the Due Process Clause of the Fifth Amendment. Even if Christy had

done so, it would be of no moment because the Court of Federal Claims lacks jurisdiction over

Due Process Clause claims. See LeBlanc v. United States, 50 F.3d 1025, 1028 (Fed. Cir. 1995).

14

The mere existence of a contract, however, does not automatically give rise to the

court’s Tucker Act jurisdiction because not all contracts contemplate money damages. See

Holmes v. United States, 657 F.3d 1303, 1314 (Fed. Cir. 2011) (describing contracts that do not

fall within the reach of the Tucker Act).

-16-

quotation marks omitted). The requirements for an implied-in-fact contract with the government

“are the same as for an express contract”:

(1) mutuality of intent,

(2) consideration,

(3) an unambiguous offer and acceptance, and

(4) “actual authority” on the part of the government’s

representative to bind the government in contract.

Hanlin v. United States, 316 F.3d 1325, 1328 (Fed. Cir. 2003). The only difference between

express contracts and implied-in-fact contracts is the nature of the evidence required to establish

their existence. Id.

Even when a plaintiff properly alleges a contract with the government, the Court of

Federal Claims cannot exercise its jurisdiction unless the plaintiff also satisfies the pleading

requirements set forth in RCFC 9(k). See, e.g., Baha v. United States, 123 Fed. Cl. 1, 5 n.4

(2015) (“Satisfaction of RCFC 9(k) is a jurisdictional requirement.”); see also Huntington

Promotional & Supply, LLC v. United States, 114 Fed. Cl. 760, 766 (2014) (“If a plaintiff fails

to comply with RCFC 9(k) and to allege sufficient facts to show that it had a contract with the

United States, the court cannot exercise jurisdiction over the claim.”); Kissi v. United States, 102

Fed. Cl. 31, 35 (2011) (finding no jurisdiction based on the plaintiff’s failure to show an existing

contract and failure to “adequately plead a contract claim under RCFC 9(k)”), aff’d per curiam,

493 F. App’x 57 (Fed. Cir. 2012). RCFC 9(k) requires a party, “[i]n pleading a claim founded

on a contract,” to “identify the substantive provisions of the contract . . . on which the party

relies.” A plaintiff that attaches a copy of the alleged contract to the complaint and “identif[ies]

the provisions and terms of the contract that have been breached” satisfies its burden under

RCFC 9(k) because doing so allows the court to “render a decision . . . know[ing] the relevant

terms of the contract.” Garreaux v. United States, 77 Fed. Cl. 726, 730 (2007), quoted in

Gonzalez-McCaulley Inv. Grp., Inc. v. United States, 93 Fed. Cl. 710, 715 (2010).

1. Express Contract

In Count II of its amended complaint, Christy alleges that the “Patent Certificate

memorializes the terms of contract” between itself and the Patent and Trademark Office. Am.

Compl. ¶ 111. Christy also describes the patent certificate, which was signed by the Director

pursuant to his alleged authority to contract, id. ¶¶ 113, as “constitut[ing] a valid, existing

contract with all the necessary terms,” id. ¶ 115. In other words, Christy alleges the existence of

an express contract. Further, the parties appear to agree, and therefore the court assumes

(without deciding) as such, that Christy’s allegations regarding the existence of an express

contract are not frivolous.

-17-

In addition to alleging the existence of an express contract, Christy satisfied the RCFC

9(k) pleading requirements. Christy attached both the Notice of Allowance and Fee(s) Due and

the patent certificate for the ′640 patent as exhibits to its amended complaint. Christy also

identified the “relevant terms of the [alleged] contract” by describing the duties that the alleged

contract purportedly imposed on both parties and highlighting those duties that Christy contends

the Patent and Trademark Office breached. In other words, Christy’s references to the alleged

contract, which was attached to its amended complaint, are sufficient to apprise the court of the

relevant provisions.

In short, Christy has (1) made a nonfrivolous allegation regarding the existence of an

express contract with the Patent and Trademark Office and (2) satisfied the RCFC 9(k) pleading

requirements. Therefore, the court has jurisdiction to consider Count II of Christy’s amended

complaint.

2. Implied-in-Fact Contract

In Count III of its amended complaint, Christy alleges that, in the alternative to the

existence of an express contract, (1) the Notice of Allowance and Fee(s) Due reflected “a mutual

intent to contract” between itself and the Patent and Trademark Office; (2) the required fees

constituted consideration; (3) “[n]o ambiguity existed as to the terms of the implied contract,”

which were “memorialize[d]” in the patent certificate; and (4) the Director “had actual authority

to contractually bind the government” or, at a minimum, implied actual authority. Id. ¶¶ 128-30.

In other words, Christy alleges the existence of an implied-in-fact contract. As with Christy’s

allegations regarding the existence of an express contract, there is no indication that Christy’s

allegations regarding the existence of an implied-in-fact contract are frivolous, and defendant

does not contend as such. Further, Christy satisfied the RCFC 9(k) pleading requirements for the

reasons discussed above.

Christy contends that under its alleged implied-in-fact contract with the Patent and

Trademark Office, the Patent and Trademark Office had a duty “to keep the patent claims in

force as long as [Christy] paid [its] issue and maintenance fees.” Id. ¶ 129. Christy relies on two

statutes for the source of those duties—35 U.S.C. § 41 (discussing issuance and maintenance

fees) and 35 U.S.C. § 154 (discussing patent terms). Id. ¶¶ 131, 133; see also id. ¶¶ 136-37

(asserting that the Patent and Trademark Office “materially breached the terms of the implied-in-

fact contract” by invalidating claims 1-18 of the ′640 patent prior to the end of the statutory

term). In other words, “[a] plain reading of the amended complaint makes clear” that Christy

relies on these statutes “to establish the existence of [its] alleged contract[] with the

government.” eVideo Owners v. United States, 126 Fed. Cl. 95, 103 (2016), aff’d per curiam,

680 F. App’x 1004 (Fed. Cir. 2017).

Such reliance deprives the Court of Federal Claims of jurisdiction over Christy’s claims

based on an implied-in-fact contract. In Lion Raisins, Inc. v. United States, the plaintiff alleged

that after it had paid for certain inspection services mandated by statute and applicable

regulations, the United States Department of Agriculture breached an implied-in-fact contract to

perform those inspections by failing to perform inspections in the required manner or at all. 54

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Fed. Cl. 427, 429 (2002). The court determined that “the requirement for inspections and the

payment of fees were pursuant to law and not the result of (1) an offer, (2) acceptance,

(3) consideration, and (4) an agreement with a Government agent authorized to bind the

Government.” Id. at 431 (internal quotation marks omitted). Because any such obligations

“would be implied in law, not implied-in-fact” as the plaintiff had argued, the Court of Federal

Claims concluded that it lacked subject-matter jurisdiction to hear claims for the breach of those

obligations. Id. at 432. In eVideo Owners, the plaintiff also alleged the existence of an implied-

in-fact contract to establish subject-matter jurisdiction. 126 Fed. Cl. at 103. The court found that

the plaintiffs “point[ed] to a duty that arises by operation of law to establish the alleged contracts

with the United States” and that “[s]uch a duty cannot create an implied-in-fact contract that

would fall within the [Court of Federal Claims’] jurisdiction.” Id. at 104 (citing Lion Raisins, 54

Fed. Cl. at 432).

Similar to the plaintiffs in Lion Raisins and eVideo Owners, Christy, in an attempt to

establish the existence of an implied-in-fact contract, relies on statutory provisions to define its

purported contracting partner’s obligations. Therefore, as in Lion Raisins and eVideo Owners,

Christy actually alleges that it has entered into an implied-in-law contract, rather than an

implied-in-fact contract. As such, the court lacks jurisdiction to consider Count III of Christy’s

amended complaint, and it must be dismissed.

3. Implied Duty of Good Faith and Fair Dealing

In addition to alleging a breach of contract in Counts II and III of its amended complaint,

Christy asserts, in Count IV, that the Patent and Trademark Office breached its implied duty of

good faith and fair dealing arising from an express (or alternatively, implied-in-fact) contract.

A cause of action based on the implied duty of good faith and fair dealing is simply a

specific breach-of-contract claim. See Centex Corp. v. United States, 395 F.3d 1283, 1304 (Fed.

Cir. 2005) (“The covenant of good faith and fair dealing is an implied duty that each party to a

contract owes to its contracting partner.” (emphasis added)). The duty of good faith and fair

dealing is applicable in both private and government contracts, id., and its existence “depends on

the existence of an underlying contractual relationship,” Scott Timber Co. v. United States, 692

F.3d 1365, 1372 (Fed. Cir. 2012) (internal quotation marks omitted). Therefore, when the court

has subject-matter jurisdiction over a breach-of-contract claim, it has subject-matter jurisdiction

over a claim for breach of the implied duty of good faith and fair dealing pertaining to the same

alleged contract (whether the alleged contract is express or implied-in-fact).

As discussed above, the court has subject-matter jurisdiction to consider Christy’s claim

for breach of an express contract with the Patent and Trademark Office. Accordingly, the court

has jurisdiction to consider Count IV of Christy’s amended complaint to the extent that it relies

on the existence of an express contract. However, also as discussed above, the court lacks

subject-matter jurisdiction to consider Christy’s claim for breach of an implied-in-fact contract.

The court therefore lacks jurisdiction to consider, and accordingly must dismiss, Count IV of

Christy’s amended complaint to the extent that it relies on the existence of an implied-in-fact

contract.

-19-

B. Christy Fails to State a Plausible Contract Claim Upon Which This Court Can Grant

Relief

The court must now consider whether Christy’s surviving breach-of-contract claims are

plausible claims upon which this court can grant relief. To prove a breach of contract, a plaintiff

must establish “(1) a valid contract between the parties; (2) an obligation or duty arising from

that contract; (3) a breach of that duty; and (4) damages caused by the breach.” Century Expl.

New Orleans, LLC v. United States, 110 Fed. Cl. 148, 163 (2013) (citing San Carlos Irr. &

Drainage Dist. v. United States, 877 F.2d 957, 959 (Fed. Cir. 1989)), aff’d, 745 F.3d 1168 (Fed.

Cir. 2014). Once a breach of contract is established, the burden shifts to the defendant to plead

and prove affirmative defenses that excuse the breach. Shell Oil Co. v. United States, 751 F.3d

1282, 1297 (Fed. Cir. 2014) (citing Stockton E. Water Dist. v. United States, 583 F.3d 1344,

1360 (Fed. Cir. 2009)). Christy’s contract claims fail as a matter of law because Christy cannot

demonstrate that it had a valid contract with the Patent and Trademark Office.

Federal Circuit precedent is unequivocal: “[a] patent is not a contract.” In re Yardley,

493 F.2d 1389, 1395 (C.C.P.A. 1974). The United States Court of Customs and Patent Appeals

(“Court of Customs and Patent Appeals”), a predecessor to the Federal Circuit, described the

notion “that a patent is a contract” as a “popular myth.” Krantz v. Olin, 356 F.2d 1016, 1020

(C.C.P.A. 1966). The court further explained that

an application for a patent . . . is not negotiating a contract with the

Government. Rather, [the plaintiff] is applying for a grant in

accordance with a statute under which the right to a patent depends

on compliance with the statutory terms and conditions. The

prosecution of an application is not bargaining but a process of

demonstration and persuasion that the statute has been complied

with.

Id.

The Federal Circuit has reiterated the principle that patents are not contracts in multiple

decisions since Krantz and Yardley. In Constant v. United States (“Constant I”), the Federal

Circuit emphasized that the United States Claims Court (“Claims Court”), the predecessor to the

Court of Federal Claims, “followed the precedents of [the Federal Circuit] by holding that the

issuance of a patent by the [Patent and Trademark Office] does not create a contractual

relationship.”15 No. 88-1426, 1988 WL 94630, at *1 (Fed. Cir. Sept. 13, 1988) (unpublished per

15

The plaintiff had sought “reimbursement for the costs of litigating and defending [his]

two patents, on the theory that the government had breached ‘patent grant contracts’ by issuing

to him two patents containing defects for which they were later held invalid.” Constant v. United

States (“Constant II”), 929 F.2d 654, 656 (Fed. Cir. 1991) (discussing prior case). The trial court

held “as a matter of law that the issuance of a patent by the Patent and Trademark Office does

not create a contractual relationship between that office and the patentee.” Id. (internal quotation

marks omitted).

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curiam table decision) (emphases added). Approximately two years later, the plaintiff in

Constant I unsuccessfully sought to vacate the trial court’s judgment. Constant II, 929 F.2d at

655. In affirming the trial court’s refusal to vacate its earlier judgment, the Federal Circuit

observed that the plaintiff’s “‘patent grant’ contract claim was untenable as a matter of law, and

no additional proceedings could have enabled [him] to prove any set of facts entitling him to

prevail on his claim for relief.” Id. at 657.

Nearly seven years after its first Constant decision, the Federal Circuit acknowledged, in

Markman v. Westview Instruments, Inc., that “[t]he analogy of a patent to a contract may appear

to some extent to be an appropriate way of describing the circumstances surrounding the

issuance of a patent.” 52 F.3d 967, 984-85 (Fed. Cir. 1995) (en banc), aff’d, 517 U.S. 370

(1996). However, the Federal Circuit then described ways in which patent applications were

“unlike contracts,” and indicated that “[t]he more appropriate analogy for interpreting patent

claims is the statutory interpretation analogy” rather than contract interpretation. Id. at 986-87.

Additionally, the Federal Circuit specified that “[t]he analogy of a patent to a contract is not

useful . . . in the context of a patent infringement suit” because “[p]atents are not contracts per

se.” Id. at 985; accord id. (“[P]atent infringement actions have never been viewed as breach of

contract actions. Patent infringement has often been described as a tort.”).

A decade later, in Highway Equipment Co. v. FECO, Ltd., the Federal Circuit further

distinguished contracts from patents when it observed that certain facts described by the plaintiff

“involved not a contract, but a patent.” 469 F.3d 1027, 1038 (Fed. Cir. 2006).

Christy attempts to paint these Federal Circuit decisions as “ineffective.” Pl.’s Resp. 28.

Specifically, Christy avers that those decisions are “inapplicable” to the instant case because they

were issued before the Supreme Court’s Oil States decision and the relevant language is merely

dicta. Id. at 27-28. Christy also avers that Krantz and Yardley do not “bear on this dispute”

because they are decisions of the Court of Customs and Patent Appeals. Id. at 27-28 & n.16.

Similarly, Christy proclaims that the relevant language in Markman and Highway Equipment is

“also dicta” because, although they are Federal Circuit decisions, they were appeals of district

court rulings. Id. at 28. Finally, Christy argues that Constant I is simply a “one-word . . .

affirmance” and “does not cite or appear to have any relationship to Yardley.” Id. at 28 & n.17.

Christy is incorrect.

First, the Oil States decision did not overrule Krantz, Yardley, Constant I, Constant II,

Markman, or Highway Equipment either explicitly or implicitly. In particular, the Supreme

Court’s characterization, in Oil States, of patents as public franchises referred to “the right to

exclude others from making, using, offering for sale, or selling the [patented] invention

throughout the United States,” 138 S. Ct. at 1373 (quoting 35 U.S.C. § 154(a)(1))—not

contracts.16

16

To the extent that the “public franchise” references in Oil States pertained to a contract

with the government, the contract was with the government acting in its sovereign capacity, not

in a commercial or proprietary capacity. See Oil States, 138 S. Ct. at 1373 (“[T]he grant of a

patent involves a matter . . . between the public, who are the grantors, and the patentee.” (internal

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Second, the statements referenced above in Krantz, Yardley, Constant I, Constant II,

Markman, and Highway Equipment were not dicta because those statements were “essential to

the result reached” and therefore “part of the court’s holding.” Arcam Pharm. Corp. v. Faria,

513 F.3d 1, 2 (1st Cir. 2007) (internal quotation marks omitted); accord id. (“Dictum constitutes

neither the law of the case nor the stuff of binding precedent; rather, it comprises observations in

a judicial opinion or order that are not essential to the determination of the legal questions then

before the court.” (citations and internal quotation marks omitted)). Christy’s characterization of

those statements as dicta misconstrues their importance:

• In Krantz, the Court of Customs and Patent Appeals debunked

the “popular myth that a patent is a contract” in rejecting a

theory of the case suggested by the appellant. 356 F.2d at

1020.

• In Yardley, the Court of Customs and Patent Appeals similarly

emphasized that “[a] patent is not a contract” to reject an

argument raised by a party. 493 F.2d at 1395.

• In Constant I, the Federal Circuit’s observation that the Claims

Court had followed Federal Circuit precedent teaching that “the

issuance of a patent . . . does not create a contractual

relationship” was a rejection of one of two theories advanced

by the plaintiff (the other being a constitutional argument).

1988 WL 94630, at *1.

• In Constant II, the Federal Circuit rejected all three contentions

that the plaintiff raised on appeal. 929 F.2d at 657. In

rejecting the plaintiff’s contention that the dismissal of his case

denied him due process, the Federal Circuit explained that

(1) there was no due process violation because his “‘patent

grant’ contract claim was untenable as a matter of law, and no

additional proceedings could have enabled [him] to prove any

set of facts entitling him to prevail on his claim” and

(2) therefore the trial court’s judgment was valid even if the

opinion supporting the judgment may have been lacking. Id.

quotation marks and alterations omitted)). The Court of Federal Claims “has jurisdiction over

most proprietary contracts, but generally does not have jurisdiction over contracts the

government makes in its sovereign capacity.” Awad v. United States, 61 Fed. Cl. 281, 284

(2004). When the government enters into a contract in its sovereign capacity, the Court of

Federal Claims “will only have jurisdiction if . . . the contract’s language provides for the

payment of monetary damages in case of a breach by the government.” Id. at 285. There is no

such language in Christy’s alleged contract with the Patent and Trademark Office.

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• The dispute in Markman concerned “the interpretation and

construction of patent claims.” 52 F.3d at 970. Because the

central issue was the proper paradigm through which to view

claim construction, the Federal Circuit’s determination that

“[p]atents are not contracts,” id. at 985, was a necessary step in

its analysis.

• In Highway Equipment, the Federal Circuit considered, among

other issues, an appeal of the trial court’s exercise of

supplemental jurisdiction over a state-law counterclaim in a

patent infringement action. 469 F.3d at 1037-38. The Federal

Circuit observed that the counterclaim involved a contract,

whereas the “federal counts involved not a contract, but a

patent,” and concluded that there was no supplemental

jurisdiction over the counterclaim because “the respective

instrumentalities [were] different, the products at issue [were]

different, the alleged acts [were] different, and the governing

laws [were] different.” Id. at 1038-39. In other words, the

Federal Circuit’s delineation between contracts and patents was

crucial to its holding.

Third, that Krantz and Yardley are decisions of the Court of Customs and Patent Appeals

is of no moment. In its first published opinion, the Federal Circuit declared that “the holdings of

our predecessor courts, [including] the United States Court of Customs and Patent Appeals . . .

shall be binding as precedent in [the Federal Circuit].” S. Corp. v. United States, 690 F.2d 1368,

1369 (Fed. Cir. 1982) (en banc).

Fourth, that Markman and Highway Equipment originated in federal district courts is also

of no moment. As defendant observes, the Federal Circuit applies Federal Circuit law “to

substantive and procedural issues unique to and intimately involved in federal patent law,” and

applies “regional circuit law to other substantive and procedural issues.” Verinata Health, Inc. v.

Ariosa Diagnostics, Inc., 830 F.3d 1335, 1338 (Fed. Cir. 2017). The issues addressed in the

statements from Markman and Highway Equipment referenced above dealt specifically with

patent law, and thus those statements constitute Federal Circuit law, which is binding here.

Similarly, the above statements from Krantz, Yardley, Constant I, and Constant II squarely

address patent-law issues, and thus constitute Federal Circuit law that is binding on this court.

Finally, Christy’s criticism of the Constant I decision is disingenuous. Constant I is

indeed a one-word affirmance that appears in the Federal Reporter’s “Table of Decisions

Without Reported Opinions.” See 861 F.2d 728 (Fed. Cir. 1988). However, the full opinion is

available from multiple sources (including Westlaw and Lexis) to which Christy cited. See Pl.’s

Resp. 28 n.17. As noted above, the Constant I decision specifically invoked “the precedents of

[the Federal Circuit].” 1988 WL 94630, at *1. The Federal Circuit cited both Yardley and

Krantz in doing so. Id. Christy’s attempts to discredit Constant I, and Constant II by

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implication, can only be explained by the fact that the Constant I and Constant II decisions are

directly on point. See supra note 15.

In short, Christy has failed to state a plausible contract claim upon which this court can

grant relief because patents (including the individual claims contained therein) are not contracts,

and the patenting process is not a contracting process. Pursuant to RCFC 12(b)(6), the court

must dismiss Counts II, III, and IV of Christy’s amended complaint to the extent that it has

subject-matter jurisdiction over the claims contained therein.17

V. UNJUST ENRICHMENT CLAIM

The court now turns to Count V of the amended complaint, in which Christy pleads, in

the alternative to its breach-of-contract claims (i.e., Counts II, III, and IV), unjust enrichment

based on the Patent and Trademark Office having retained the patent fees that Christy paid

despite the invalidation of Christy’s patent claims. See Am. Compl. ¶ 167 (“Defendant was

enriched without justification . . . .”). Defendant correctly asserts that unjust enrichment, as an

equitable cause of action, is beyond the jurisdiction of this court. See 8x8, Inc. v. United States,

854 F.3d 1376, 1383 n.7 (Fed. Cir. 2017). Defendant also correctly asserts that even if the court

possessed jurisdiction over Christy’s unjust enrichment claim, it fails to state a claim upon which

this court can grant relief because “[t]he core allegations of Count V are that an implied-in-fact

contract, created through patenting, was breached by patent invalidation—precisely as alleged in

Count III—and that, as a result of that breach, the government was enriched without

justification.” Def.’s Mot. 18 (alterations and internal quotation marks omitted). Christy

indicates that it “does not oppose the Government’s request that Count V be dismissed and

hereby stipulates to dismissal of Count V of the First Amended Complaint.” Pl.’s Resp. 38. The

court therefore must dismiss Count V of Christy’s amended complaint for lack of subject-matter

jurisdiction. To the extent that the court has jurisdiction over Count V, the court must dismiss it

for failure to state a claim upon which this court can grant relief.

VI. ILLEGAL EXACTION CLAIM

Finally, the court turns to Count VI of Christy’s amended complaint, in which Christy

asserts (in the alternative to its Takings Clause claim in Count I) that the Patent Trial and Appeal

Board’s invalidation of claims 1-18 of the ′640 patent constitutes an illegal exaction.

Specifically, Christy alleges that the Patent Trial and Appeal Board illegally exacted the issuance

and maintenance fees that Christy paid, the investments that Christy made in the ambient air

backflushed filter vacuum invention, the total value of Christy’s patent claims, the value of

Christy’s right to exclude, and the attorney fees that Christy spent in defending its claims during

inter partes review. Am. Compl. ¶ 175.

17

Christy’s allegations regarding a purported implied-in-fact contract did not survive the

court’s jurisdictional inquiry. However, to the extent that the court has subject-matter

jurisdiction over any of Christy’s claims grounded in contract, all such claims fail—regardless of

the type of contract relied upon—because patents are not contracts.

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[A]n illegal exaction claim may be maintained when the plaintiff

has paid money over to the Government, directly or in effect, and

seeks return of all or part of that sum that was improperly paid,

exacted, or taken from the claimant in contravention of the

Constitution, a statute, or a regulation.

Aerolineas Argentinas v. United States, 77 F.3d 1564, 1572-73 (Fed. Cir. 1996) (internal

quotation marks omitted); accord id. at 1573 (“[A]n illegal exaction has occurred when ‘the

Government has the citizen’s money in its pocket.’” (quoting Clapp v. United States, 127 Ct. Cl.

505, 512 (1954))).

A. The Court of Federal Claims Lacks Jurisdiction to Consider Christy’s Illegal Exaction

Claim

The Tucker Act provides jurisdiction for the Court of Federal Claims to entertain illegal

exaction claims “when the exaction is based upon an asserted statutory power,” id., provided that

the “statute or provision causing the exaction itself provides, either expressly or by necessary

implication, that the remedy for its violation entails a return of money unlawfully exacted,”

Norman v. United States, 429 F.3d 1081, 1095 (Fed. Cir. 2005) (internal quotation marks

omitted). A plaintiff asserting an illegal exaction must also allege a direct relationship between

the statute, regulation, or constitutional provision at issue and the alleged exaction in order to

invoke this court’s jurisdiction. Id. at 1095-96. However, the court’s Tucker Act jurisdiction is

displaced when a “specific remedial scheme establishes the exclusive framework for the liability

Congress created under the statute.” United States v. Bormes, 568 U.S. 6, 12 (2012).

According to Christy, it should not have been required to pay fees for a patent containing

unpatentable claims. Christy asserts “that the Government’s demand for fees under what

amounts to false pretenses and not returning the fees paid after Christy’s patent was rescinded

constitutes an illegal exaction.” Pl.’s Resp. 32. Defendant contends that the Court of Federal

Claims lacks subject-matter jurisdiction to consider Christy’s illegal exaction claim because,

among other reasons, the Tucker Act is displaced by a specific statutory and regulatory scheme

regarding fee refunds.

Defendant is correct. As Christy observes, the Patent and Trademark Office “may refund

any fee paid by mistake or any amount paid in excess of that required.” 35 U.S.C. § 42(d).

Patent fee refunds are governed by the terms of 37 C.F.R. § 1.26. See, e.g., Panos v. Dir. of

USPTO, No. 3:14cv698, 2015 WL 5786826, at *1 (E.D. Va. Sept. 30, 2015). The Patent and

Trademark Office has “inherent authority to govern procedure” before it. In re Bogese, 303 F.3d

1362, 1368 (Fed. Cir. 2003). To that end, and pursuant to the authority granted by 35 U.S.C.

§ 42(d) and 37 C.F.R. § 1.26, the Patent and Trademark Office’s Manual of Patent Examining

Procedure (“MPEP”) provides that “[a]ll questions pertaining to the return of fees are referred to

the Refunds Section of the Receipts Division of the Office of Finance” and that issues regarding

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fee refunds may, “to the extent appropriate,” be addressed “in decisions on petition.”18 MPEP

§ 607.02 (9th ed. Rev. 3, Jan. 2018); see also 37 C.F.R. §§ 1.181-.182 (discussing petitions);

Petitions, USPTO, https://www.uspto.gov/patents-application-process/petitions (last visited Jan.

29, 2019) [http://web.archive.org/web/20190129150949/https://www.uspto.gov/patents-

application-process/petitions] (same). A denial of a petition constitutes a “final agency

decision.” MPEP § 1002.02. Because the Administrative Procedure Act “affords a right of

judicial review of agency action,” Panos, 2015 WL 5786826, at *8 (citing 5 U.S.C. § 702),

judicial review regarding the return of fees paid to the Patent and Trademark Office is subject to

the provisions of the Administrative Procedure Act. Cf. Fleming v. Coward, 534 F. App’x 947,

950 (Fed. Cir. 2013) (unpublished decision) (“To the extent that these statutory provisions are

inadequate, an action against the [Patent and Trademark Office] may be brought under the

Administrative Procedure Act if the patent applicant demonstrates receipt of a ‘final agency

action’ under 5 U.S.C. § 704.”).

In Count VI of its amended complaint, Christy advances an illegal exaction claim under

the Tucker Act, not a claim for judicial review of a final agency action under the Administrative

Procedure Act. Because “statutory schemes with their own remedial framework exclude

alternative relief under the general terms of the Tucker Act,” Bormes, 568 U.S. at 13, this court

cannot exercise subject-matter jurisdiction over Christy’s illegal exaction claim. In any event,

the Court of Federal Claims lacks jurisdiction to entertain claims arising under the

Administrative Procedure Act. Roberts v. United States, 745 F.3d 1158, 1167 (Fed. Cir. 2014).

The court therefore must dismiss Count VI of Christy’s amended complaint for lack of

subject-matter jurisdiction.

B. Christy Fails to State a Plausible Illegal Exaction Claim Upon Which This Court Can

Grant Relief

To the extent that the court has subject-matter jurisdiction to consider Christy’s illegal

exaction claim, the claim fails on its merits.

[T]o assert a valid illegal exaction claim, plaintiffs must show that:

(1) they [have] paid money over to the government, directly or in

effect; (2) the exaction was directly caused by the misapplication

of a provision of the Constitution, a statute[,] or a regulation; and

(3) the violated law provides for a return of [the] money

unlawfully exacted.

eVideo Owners, 126 Fed. Cl. at 102 (second and fourth alterations in original) (internal quotation

marks omitted). A “direct” exaction takes place “when money is paid directly to the government

18

“The MPEP [is] commonly relied upon as a guide to patent attorneys and patent

examiners on procedural matters. While the MPEP does not have the force of law, it is entitled

to judicial notice as an official interpretation of statutes or regulations as long as it is not in

conflict therewith.” Molins PLC v. Textron, Inc., 48 F.3d 1172, 1180 n.10 (Fed. Cir. 1995)

(alteration in original) (citation and internal quotation marks omitted).

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as a result of the application of a statute or a regulation.” Id. An “in effect” exaction takes place

“when the government requires a plaintiff to make a payment on [the government’s] behalf to a

third-party or when the government exacts property which it later sells and for which it receives

money.” Id.

As previously noted, with respect to the patent issuance and maintenance fees paid by

Christy for the ′640 patent, the statute governing fees paid to the Patent and Trademark Office

allows the Director to “refund any fee paid by mistake or any amount paid in excess of that

required.” 35 U.S.C. § 42(d). As explained in section 607.02 of the MPEP,

When an applicant or patentee takes an action “by mistake” (e.g.,

files an application or maintains a patent in force “by mistake”),

the submission of fees required to take that action (e.g., a filing fee

submitted with such application or a maintenance fee submitted for

such patent) is not a “fee paid by mistake” within the meaning of

35 U.S.C. § 42(d).

In other words, Christy’s fees “were owed at the time they were paid, and as such, were not fees

paid by mistake.” In re Patent No. 7,061,177, 2006 WL 4559506, at *1 (Comm’r Pat. Oct. 17,

2006). Christy “obtained the results for which [it] admittedly paid the fees,” id., because it paid

those fees to maintain claims 1-18 of the ′640 patent, which were not cancelled until August 14,

2018, and also to maintain claims 19-20 of the ′640 patent, which were not within the scope of

the inter partes review proceedings and remain in force.

Since Christy obtained the result for which it purposefully and knowingly paid the

issuance and maintenance fees, those fees cannot be said to have been illegally exacted. Christy

cannot now seek a return of those fees under 35 U.S.C. § 42(d) and 37 C.F.R. § 1.26(a) (to the

extent that the two-year refund application deadline set forth in 37 C.F.R. § 1.26(b) was not

applicable). At most, the purpose for which Christy paid those fees has changed from

maintaining claims 1-20 of the ′640 patent to maintaining claims 19-20 of the ′640 patent. “To

now request a refund of those rightfully paid fees is a change in purpose after the fact, which

precludes a refund.” Id. at *1. Because “[a] change of purpose after the payment of a fee, such

as when a party desires to withdraw a patent filing for which the fee was paid . . . will not entitle

a party to a refund of such fee,” 37 C.F.R. 1.26(a), Christy is not entitled to a refund of its

issuance and maintenance fees. Thus, the laws upon which Christy relies to support its illegal

exaction claim were neither misapplied nor do they, under the circumstances of the instant case,

provide for a return of those fees.

Besides seeking a return of its issuance and maintenance fees, Christy avers that it is

entitled, under a theory of illegal exaction, to a return of its investments in the ambient air

backflushed filter vacuum invention, the total value of its patent claims, the value of its right to

exclude, and the attorney fees spent to defend its claims during inter partes review. Christy’s

illegal exaction claim for these expenditures is devoid of merit. Christy does not argue, nor

could it, that these funds were exacted directly because they were not paid to any government

entity. Instead, Christy contends that the invalidation of claims 1-18 of the ′640 patent had a

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“direct and substantial impact” on Christy and thus those funds were “effectively exacted.” Am.

Compl. ¶ 175. However, because the government did not require Christy to pay those funds to a

third party on the government’s behalf, or even to be paid at all, those funds cannot be said to

have been paid to the government “in effect.” Additionally, no statutes, regulations, or

constitutional provisions were misapplied or otherwise violated because Christy did not expend

those funds at the government’s direction.

In short, Christy has failed to state a plausible illegal exaction claim upon which this

court can grant relief. Therefore, to the extent that the court has subject-matter jurisdiction to

consider Count VI of Christy’s amended complaint, the court must dismiss it on its merits.

VII. CONCLUSION

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

herein, they are unpersuasive, meritless, or unnecessary for resolving the matters currently before

the court.

The Court of Federal Claims has subject-matter jurisdiction to consider Christy’s Takings

Clause claim. The court also has subject-matter jurisdiction to consider Christy’s contract claims

to the extent that they are founded upon an alleged express contract. However, patents are not

property for Takings Clause purposes, and patents are not contracts. In addition, the parties

agree that Christy’s unjust enrichment claim is beyond the subject-matter jurisdiction of this

court. Finally, although the Tucker Act provides the court with subject-matter jurisdiction over

illegal exaction claims, a specific statutory and regulatory scheme governs the return of the fees

that Christy alleges to have been exacted and thus displaces the Tucker Act for purposes of that

claim. To the extent that the court has subject-matter jurisdiction over Christy’s illegal exaction

claim, it fails on its merits.

Accordingly, the court GRANTS defendant’s motion to dismiss. Counts I and II of the

amended complaint are DISMISSED WITH PREJUDICE pursuant to RCFC 12(b)(6) for

failure to state a claim upon which this court can grant relief. Counts III, V, and VI are

DISMISSED WITHOUT PREJUDICE pursuant to RCFC 12(b)(1) for lack of subject-matter

jurisdiction. Count IV is DISMISSED WITH PREJUDICE pursuant to RCFC 12(b)(6) to the

extent that it relies on the existence of an express contract and DISMISSED WITHOUT

PREJUDICE pursuant to RCFC 12(b)(1) to the extent that it relies on the existence of an

implied-in-fact contract. To the extent that the court has subject-matter jurisdiction over Counts

III, IV, V, and VI, they are DISMISSED WITH PREJUDICE pursuant to RCFC 12(b)(6). No

costs. The clerk is directed to enter judgment accordingly and close the case.

IT IS SO ORDERED.

s/ Margaret M. Sweeney

MARGARET M. SWEENEY

Chief Judge

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