Amicus Curiae Brief — Kalitta Flying Service, Inc. v. G. S. Rasmussen & Associates, Inc.

CC

No. 91-1970

In the Supreme Court of the United States

OCTOBER TERM, 1992

KALITTA FLYING SERVICE, INC., ET AL... PETITIONERS

G.S. RASMUSSEN & ASSOCIATES, INC.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

WILLIAM C. BRYSON

Acting Solicitor General

STUART E. SCHIFFER

Acting Assistant 7 Ltto? rey Gene ral

LAWRENCE G. WALLACE

De puty Solicitor General

EDWARD C. DUMONT

Assistant to the Solicitor Gene ral

DOUGLAS N. LETTER

RICHARD A. OLDERMAN

Attorneys

Department of Justice

Washington, D.C. 205230

(202) 514-2217

QUESTION PRESENTED

Whether a state law action for conversion and unjust

enrichment, based on the unauthorized use of a design

approval granted by the Federal Aviation Administration

to obtain final certification of an aircraft modified in

accordance with the approved design, is preempted by

the federal system of air safety regulation or by federal

patent or copyright law.

(1)

TABLE OF CONTENTS

Page

Statement |

EOE ALS I 9

Conclusion 18

Neen oa enhasdnenbucndinkaiinns la

TABLE OF AUTHORITIES

Cases:

Arkansas Elec. Coop. Corp. V. Arkansas Public

Service Comm’n, 461 U.S. 375 (1983) 12

Aronson V. Quick Point Pencil Co., 440 U.S. 257

(1979) Des SE ener aD 15

Bonito Boats, Inc. Vv. Thunder Craft Boats, Inc.,

489 U.S. 141 (1989) .......... 14, 15, 17

City of New York v. FCC, 486 U. S. 57 (1988) 12

Compco Corp. Vv. Day-Brite Lighting, Inc., 376 U.S.

234 (1964) 14, 15

Computer Associates Int'l, Inc. Vv. Altai, Inc., 982

F.2d 693 (2d Cir. 1992) 17

Crescent Tool Co. Vv. Kilborn & Bishop Co., 247 F.

299 (2d Cir. 1917) 15

Feist Publications, Inc. v. Rural Telephone Serv-

ice Co., 111 S. Ct. 1282 (1991) . 17

Kewanee Oil Co. v. Bicron Corp., 416 U. S. 470

Cee sssnenienananehnen _ 15,17

Miles, Inc. Vv. Scripps Clinic & Research Found.,

810 F. Supp. 1091 (S.D. Cal. 1993) 18

Oddo v. Ries, 743 F.2d 630 (9th Cir. 1984) 7

Ruckelshaus v. Monsanto Co., 467 U.S. 986

(1984) ..... CE a os enatnneien 12, 13, 14

Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225

(1964) SS SIE ie A 14

United Shoe Machinery Corp. Vv. United States,

258 U.S. 451 (1922) . 14

United States v. S.A. Empresa de Viacao Aerea

Rio Grandense (Varig Airlines), 467 U.S. 797

(1984) 2

(III)

19 U.S.C. Ap

19 |

49 |

19 U.S.C. Ay

Pt.

Section

Section

section

Section

21.4]

21.47

sections 21.111-21.119

Section

section

section

Section

section

section

Section

Section

5)

23

21.115

21.11%

21.119

21.139

21.143

21.183

21.183(d) (1)

21.503 (c) (4)

Page

Iu the Supreme Court of the United States

OCTOBER TERM, 1992

No. 91-1970

KALITIA FLYING SERVICE, INC., ET AL., PETITIONERS

V.

G.S. RASMUSSEN & ASSOCIATES, INC.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

This brief is submitted in response to the Court’s invi-

tation to the Solicitor General to express the views of

the United States.

STATEMENT

1. The Federal Aviation Act of 1958 directs the Sec-

retary of Transportation to promote the safety and devel-

opment of air commerce by establishing “minimum stand

ards governing the design, materials, workmanship, con-

struction, and performance of aircraft, aircraft engines,

and propellers.” 49 U.S.C. App. 1421(a)(1). The Sec-

retary, through the Federal Aviation Administration

(FAA), has established a comprehensive set of airworthi-

ness standards governing matters such as flight perform-

ance, structural characteristics, design, and construction.

See 14 CLF.R. Ft. 23.

(1)

2

The law provides a three-step certification process to

ensure compliance with these standards. See generally

United States v. S.A. Empresa de Viacao Aerea Rio

Grandense (Varig Airlines), 467 U.S. 797, 804-807

(1984). First, a manufacturer wishing to introduce a

new aircraft must obtain a “type certificate” from the

FAA. 49 U.S.C. App. 1423(a)(2). The type certificate

reflects the FAA’s determination that the plane’s basic

design satisfies the applicable airworthiness standards.

49 U.S.C. App. 1423(a); 14 C.F.R. 21.21. It includes

drawings and specifications necessary to define the con-

figuration and design of the plane, and it specifies any

operating limitations. 14 C.F.R. 21.31, 21.41. Second,

in order to produce planes of an approved design, a

manufacturer must obtain a “‘production certificate.” 49

U.S.C. App. 1423(b). A production certificate reflects

the FAA’s determination that the manufacturing process

will adequately ensure that each plane will conform to

the approved design. 14 C.F.R. 21.139, 21.143. Finally,

before a particular airplane may be placed in service, the

owner must obtain from the FAA an “airworthiness cer-

tificate’” confirming that the airplane conforms to the type

certificate and is in condition for safe operation. 49

U.S.C. App. 1423(c); 14 C.F.R. 21.183.

Neither the holder of a type certificate nor the owner

of a particular aircraft may modify an approved design

without the FAA’s further approval. Extensive changes

may require the manufacturer or owner to obtain an

entirely new type certificate. 14 C.F.R. 21.19. Other

changes may be approved through amendment of the

type certificate or, where the change is sought by a party

other than the holder of the type certificate, by the issu-

ance of a “supplemental type certificate’ (STC). 14

C.F.R. 21.111-21.119. The application for an STC must

be supported with data demonstrating that the plane, as

modified, continues to meet airworthiness standards. 14

C.F.R. 21.115. Data submitted by the applicant, includ-

ing any drawings, engineering calculations, test results

3

and the like, are treated by the FAA as confidential and

are not made available to the public. See, e.g., FAA

Order No. 8110.4, 4 19-20, reprinted in App., infra,

la-Sa. The FAA does, however, reserve the right to

refer to all such submitted data for whatever purposes

it deems appropriate, including comparison to data sub-

mitted by other parties in support of applications for

approval of similar or identical modifications. Ibid. Cf.

14 C.F.R. 21.303(c)(4) (replacement parts manufac-

turer must show that design meets airworthiness stand-

ards or is identical to one covered by a previously ap-

proved type certificate ).

If the FAA concludes, on the basis of the submitted

design and technical data, see 14 C.F.R. 21.115, 21.117,

that a proposed modification is acceptable, it will issue

an STC for the modification. An STC permits the holder

to make the designated modifications on covered aircraft

and, provided all other requirements are met, permits the

issuance of related production or airworthiness certificates

for the modified design. 14 C.F.R. 21.119, 21.183(d) (1).

The FAA informs us that it operates on the assumption

that an applicant for an airworthiness certificate based on

a previously issued STC will be either the holder of the

STC itself or a third party acting under explicit authori-

zation from that holder. Largely for the reasons sug-

gested by the court below, Pet. App. 10a, the FAA has

consistently refrained from expending its limited re-

sources in verifying, or even inquiring into, the validity

of that assumption in particular cases. Nonetheless, if it

becomes aware that an airworthiness applicant has neither

its own STC for a particular modification nor authoriza-

tion from the holder of such an STC, the FAA will gen-

erally submit the application (and applicant) to more

searching scrutiny.’ Indeed, such an applicant would

1The FAA informs us that it would have undertaken such an

enhanced review of petitioner’s application for airworthiness certifi-

cation if it had been aware at the time that petitioner was not

4

normally be required to obtain its own STC by inde-

pendently supplying calculations, test results, or other

data to substantiate the appropriateness and safety of the

modification. See 14 C.F.R. 21.119; 14 C.F.R. 21.47,

Pet. App. 43a, 44a (bottom of page) (licensing); FAA

Order No. 8110.4, € 20(a) (App., infra, la-2a).

2. Respondent applied to the FAA for an STC cover-

ing modifications that enabled certain DC-8 aircrafi to

carry cargo loads heavier than those authorized by their

Original type certificates. After evaluating “volumes of

technical data” submitted by respondent based on “hun-

dreds of hours of engineering work,” the FAA issued the

STC to respondent. Pet. App. 6a. Respondent’ pro-

ceeded to market an “implementation kit” designed to

allow owners of DC-8 aircraft to increase their cargo

capacity. The kit consisted of three instruments, instruc-

tions for their installation, a flight manual supplement

describing the modified aircraft’s limitations and payload

capacities, and a copy of the STC for use in obtaining an

airworthiness certificate after the modification. See id.

at 25a; Br. in Opp. 3-4.

Respondent has conceded for purposes of this case

that neither the hardware nor the documents included in

the implementation kit could be patented, copyrighted,

or protected under state trade secret law. Pet. App. 25a.

Respondent nonetheless sold the modification kit based

on its STC to aircraft owners, using agreements that

authorized to apply for such certification under the aegis of re-

spondent’s STC. See Pet. App. 9a n.9. As noted, however, the FAA

does not normally make any independent inquiry as to authoriza-

tion. See, e.g.. FAA Order 8110.4 © 20(b) and (c)(4) (App.,

infra, 2a-3a, 4a).

* Like the court of appeals, Pet. App. 6a n.2, we simplify by

ignoring the fact that respondent acted at times through separate

entities under common control. Similarly, we follow the style of

the petition, Pet. 2, in referring to petitioners Kalitta Flying Serv-

ice, Inc. and Connie Kalitta Services, Inc. collectively as “peti-

tioner.”’

5

+

stated that the kit was “proprietary information.” * The

buyer typically agreed that it would protect the “trade

secrets’ embodied in the kit, that it would not use the

documentation supplied by respondent (or supply it to

third parties) for purposes of developing a similar pay-

load enhancement system, and that it would notify re-

spondent of any subsequent change in ownership of the

modified aircraft. /d. at 25a-26a & n.1. Respondent also

attempted to protect its interests by subcontracting the

manufacture of the necessary instruments to a single com-

pany. /d. at 26a.

Petitioner, an operator of cargo aircraft, bought two

DC-8 aircraft already modified under agreements with

respondent. Pet. App. 26a-27a & n.3. It also acquired

a third, unmodified DC-8. The parties agreed below that

operation of the unmodified aircraft as a cargo plane

would have been economically infeasible. /d. at 21a.

When respondent learned that petitioner intended to

modify the third aircraft, it offered to sell petitioner its

modification kit for $95,000. /d. at 27a. Petitioner re-

fused that offer and proceeded to modify the aircraft

itself.

Petitioner already possessed aircraft that contained

copies of all the necessary drawings and installation in-

structions, the flight manual supplement, and the STC

itself, as well as two of the three instruments needed to

effect the modification. It used a parts locating firm to

find the third instrument, and had some repair work done

by respondent’s authorized manufacturer. Using these

components and the copied documents from its other

planes, petitioner successfully “pirated” the modifications

covered by respondent’s STC. Pet. App. 27a-28a. The

FAA issued an airworthiness certificate for the modified

aircraft, after verifying that the modifications conformed

3 As respondent points out, Br. in Opp. 10-11 & n.9, there is a

recognized and substantial market for previously approved aircraft

modifications, including licenses for the related STCs.

6

to those authorized by respondent’s STC, but without

inquiring into the source of petitioner's documentation

or its legal relationship with respondent. /d. at 28a-29a,

26a & n.2.

3. Respondent sued petitioner in federal court on state

law theories of conversion and unjust enrichment, basing

jurisdiction on diversity of citizenship. Pet. App. 7a &

n.5. The district court found that, as respondent con-

ceded, no part of respondent's modification kit was or

could be patented, copyrighted, or protected by trade

secret law. /d. at 25a, 28a-29a. Characterizing the “es-

sence” of respondent’s “awkwardly pled” claims as “the

protection of an intellectual property right in the STC

and the documents and instruments” comprising the im-

plementation kit, the court held that respondent had no

such right, and that in any event any “common law

intellectual property right claims in the [STC] or the

documents and instruments” would be preempted by fed-

eral copyright and patent laws. /d. at 29a. The court

also rejected respondent’s claim -of an implied private

right of action under the Federal Aviation Act or its

implementing regulations. /d. at 30a-33a.

The court of appeals affirmed the district court’s deci-

sion with respect to an implied private right of action

under federal law, but reversed with respect to the state

law claims and federal preemption. Pet. App. 10a-1 1a,

23a. Applying California law, which it noted “defines

property very broadly,” id. at lla, the court held that

respondent's interest in its STC met the three criteria

essential for recognition of a property right in that State.

Id. at 12a-14a. First, the right was “capable of precise

definition: It enabled an airplane owner to obtain an

airworthiness certificate for a particular design modifica-

tion without the delay, burden and expense of [independ-

ently] proving to the FAA that a plane so modified will

be safe.” /d. at 13a. Second, the right was ‘capable of

exclusive possession or control” because there were no

“conceptual or practical difficulties in restricting the right

7

to the holder of the STC, or to someone who is a trans-

feree or licensee.” /bid. Third, respondent had “estab-

lished a legitimate claim to exclusivity’ with respect to

the right recognized by the court because it had “ex-

pended considerable time and effort” in designing and

gaining FAA approval of the modification covered by

the STC, thus demonstrating “the type of reasonable

investment-backed expectations that give rise to a legiti-

mate claim of exclusive control over the STC.” Jd. at

l3a-14a & n.13.

Having concluded that California law would recognize

a property right in the control of the particular FAA

approval represented by respondent’s STC, the court of

appeals then held that a state-law action to vindicate that

right was not preempted by federal copyright or patent

law, or by the Federal Aviation Act. As to copyright

law, the court concluded that respondent’s claim chal-

lenged “not * * * the actual copying of the documents

[involved], but * * * their use as a shortcut in obtaining

a valuable government privilege—the right to modify an

airplane in a particular way without going to the trouble

and expense of proving that the modification meets FAA

standards.” Pet. App. 15a. Because the state claim was

thus “predicated upon an act incorporating elements be-

yond mere reproduction or the like,” id. at 1I5a-16a

(quoting Oddo vy. Ries, 743 F.2d 630, 635 (9th Cir.

1984) ), the court found that it did “not interfere in any

way with the operation of the copyright laws” and hence

was not preempted. Pet. App. 16a.

The court acknowledged the broad preemptive sweep

of federal patent law, noting that “the instruments re-

quired to modify the plane in accordance with the STC,

and the entire modification process, must be protected by

patent law. or not at all.” Pet. App. 16a. But the court

distinguished, id. at 17a, the property right that it had

identified in the use of the particular STC granted to

respondent from the broader right to use the principles,

ideas, or instruments covered by that STC:

8

The right involved here, however, is not “patent-

like” at all. [Respondent] claims no exclusive right

to modify DC-8s as described in [its] STC. [Peti-

tioner] or anyone else may perform the necessary

studies and obtain an STC from the FAA—even if

the modification so certified is identical to [respond-

ent’s]. See Doyn Aircraft, Inc. v. Wylie, 443 F.2d

579, 580 n.! (10th Cir. 1971) (“[STCs] do not...

grant exclusive rights since any number of people

can acquire an STC for the same type of modifica-

tion.” ).

In the court’s view, recognizing respondent's state claim

would promote, rather than conflict with, the objectives

of federal patent law. First, the state claim would “foster

and reward invention” by allowing respondent to “collect

the fruits of [its] research.” Pet. App. 17a. Second,

respondent’s modifications would “stimulate further inno-

vation.” /bid. Third, the disclosure in the STC itself of

the results of respondent’s testing and experimentation,

combined with the fact that petitioner “need perform only

those tests and studies that establish the safety of [re-

spondent’s] modification to obtain its own STC,” would

‘ensure free use of ideas in the public domain.” /did.

Because it perceived no conflict between enforcement of

the state right and the federal patent laws, the court held

that enforcement of the state right was not preempted.

Id. at 17a-18a.

Finally, the court held that enforcing the state prop-

erty right at issue did not conflict with anything in the

federal system of aviation regulation. The court noted

initially that neither the Federal Aviation Act nor the

regulations implementing it “explicitly preclude recogni-

tion of a property right in STCs.” Pet. App. 18a. In

addition, the court found that enforcement of such a

right would complement, rather than conflict with, the

statutory and regulatory purpose of promoting air safety,

because it would both encourage safety-enhancing inno-

vations and enable the innovators, such as respondent, to

sa ence cr

9

“maintain closer control over the alteration process, and

to notify licensees of problems or improvements in the

modification.” /d. at 18a-19a. Noting that the federal

regulations at issue themselves ‘“‘confer exclusive privileges

on the holder of an STC, and provide for transfer and

licensing,” the court found no conflict between state and

federal law necessitating federal preemption. /d. at

19a-20a.

Having held that California law granted respondent

a property right in its STC and that enforcement of that

right was not preempted by federal law, the court of

appeals ultimately concluded that as a matter of state law

petitioner had “tortiously converted [respondent’s] STC

when it used the STC to obtain airworthiness certification

for the modified DC-8.” Pet. App. 20a. In addition, it

held that on the facts of the case a California court would

find an implied contract between the parties on a theory

of unjust enrichment. /d. at 2la. The court left the

precise terms of that contract, questions of damages, and

the merits of any contractual claims relating to the other

two (previously modified) aircraft acquired by petitioner

to be resolved by the district court on remand. /d. at

21a-22a.

DISCUSSION

This case involves a particular type of federal regula-

tory approval that is granted based on data compiled and

submitted to the government by the holder. We interpret

the decision below as recognizing a narrowly detined

State-law property right in the use of that approval to

shorten the process of receiving subsequent similar ap-

provals, which nonetheless remain available to any appli-

cant that is willing and able to compile and submit simi-

lar or identical data on its own. We take no position on

the accuracy of the court of appeals’ interpretation of

state law. Assuming that such a limited right exists,

4 Petitioner contends that the court of appeals erred in stating

that the parties agreed on the application of California law, see

10

however, we do not believe that its enforcement would

interfere with the administration of current federal law

and regulations governing aircraft safety. Moreover, al-

though any broad interpretation or expansion of the court

of appeals’ decision might well raise significant issues of

federal preemption, we think it would be appropriate

to await further developments in the lower courts before

deciding whether it is necessary for this Court to address

those issues. We therefore think that a grant of review

in this case would be premature.

1. Petitioner argues, Pet. 5-12, that the court of ap-

peals’ decision will allow respondent to prohibit others

from “referring to, or submitting a copy of” respondent's

STC in connection with their own applications for FAA

approvals, prohibit the FAA itself from using data sub-

mitted by respondent in evaluating applications by others

for approval of similar or identical modifications, and

generally “disrupt and interfere with the FAA’s regula-

tion of interstate aviation.” Pet. 5, 10. We think those

contentions overstate the effect of the judgment below.

a. We do not understand the decision below to pro-

hibit an STC applicant from merely “referring to, or

submitting a copy of” an STC previously granted for a

similar or identical modification. See Pet. 5. The court

of appeals did discern a protected interest in “‘[t]he right

to use the STC as a basis for obtaining an airworthiness

certificate,” and stated that although petitioner was free

to copy the STC and associated documents, it could be

“prevented from then using these copies to obtain an

airworthiness certificate.” Pet. App. 15a-l6a. These ref-

erences to the “use” of respondent’s STC may appropri-

ately be read, however, in the context of the court’s “‘pre-

cise definition” of the right that it held was conferred by

an STC and could be protected under state law: the right

Pet. App. lla, and suggests that Michigan law would have been

more appropriate. Pet. 9-10 & n.8. This choice-of-law argument

does not appear to have been presented to or considered by the

court of appeals, and at any rate does not warrant review by this

Court.

1]

“to obtain an airworthiness certificate for a particular de-

sign modification without the delay, burden and expense

of proving to the FAA that a plane so modified will be

safe.” Id. at 13a (emphasis added).

As explained above (see pp. 3-4, supra), an application

for airworthiness certification for a modified aircraft is

ordinarily subjected to different and more searching re-

view if the FAA is aware that the applicant has not

obtained specific authorization from the holder of an STC

covering the modification. In fact, such an applicant is

normally required to obtain its own STC. Yet the FAA

does not use its resources to inquire into the legal rela-

tions among aircraft operators and STC holders, see Pet.

App. 26a n.2, but generally relies on the representation

of authorization implicit in the submission, without fur-

ther comment, of a copy of another person’s STC in

connection with an airworthiness application.’ In this set-

ting, the essence of the right identified by the court of

appeals consists of the ability to obtain an airworthiness

certificate without enhanced review or the production of

independent substantiating data, and it is the implicit

misrepresentation by a new applicant that it is acting

with the authorization of the holder of an existing STC

that the court of appeals has, in effect, held actionable

under California law. See id. at 20a-21a.

To be sure, ensuring greater disclosure to a federal

regulatory agency than the agency itself chooses to en-

force is a strange project for a State’s common law of

5 If, for example, petitioner had supplied the FAA with a copy of

an STC purloined from respondents’ offices, the FAA might well

have granted the requested certification without further inquiry as

to authorization. Similarly, if petitioner had applied for its own

STC using nonpublic engineering or test data stolen from respond-

ent, the FAA would not normally have inquired into the origins of

the submitted information in the course of evaluating its sufficiency

in terms of aircraft safety. We note that in either case nothing in

the federal regulatory scheme would preempt enforcement of ap-

plicable state laws against theft.

12

a

property—a project undertaken for the benefit of federal

permit holders who are not otherwise entitled to the aid

of state law in excluding others from copying or using the

data or information on which the STC is based. Cer-

tainly a federal agency, including the FAA, could adopt

rules or procedures that would obviate or preempt any

such state-law right, and certainly such a right that im-

peded an agency’s receipt of relevant information or

otherwise interfered with the federal regulatory process

would be so preempted. See, e.g., City of New York vy.

FCC, 486 U.S. 57, 63-64 (1988); Arkansas Elec. Coop.

Corp. Vv. Arkansas Public Service Comm'n, 461 U.S. 375,

388-389 (1983). Nonetheless, in the particular circum-

stances of this case, we do not read the court of appeals’

Opinion as restricting petitioner or any other applicant

from pointing out to the FAA—by citation, inclusion of

a photocopy, or otherwise—that its modification is

identical to one for which respondent has previously re-

ceived an STC." Cf. 14 C.F.R. 21.303(c)(4) (‘identi-

cality” approval for parts manufacturers); 14 C.F.R.

21.183(d)(1). The FAA therefore does not expect the

decision below to interfere with the normal functioning

of its safety review and certification process.

b. Petitioner contends, Pet. 5-7, that the decision be-

low conflicts with this Court’s decision in Ruckelshaus

V. Monsanto Co., 467 U.S. 986 (1984). In Monsanto,

the Court made clear that when a private party submits

otherwise proprietary information to a government agency

® Similarly, we would not read the decision as recognizing any

right of recovery for respondent based solely on the fact that the

FAA might require a lesser showing of safety by a later applicant

for an STC substantially identical to one it had previously approved.

Cf. Pet. App. 12a n.11 (suggesting possibility of takings claim

should there be a change in FAA’s confidentiality policies). Any

state law burdening the beneficiary of such a decision, made by the

FAA within its statutory discretion and with full knowledge of the

facts, would interfere impermissibly with the administration of

federal law. This case presents no such issue.

13

inder a comprehensive regulatory scheme, it can have

no “reasonable investment-backed expectation” that the

information will not be used or disclosed in ways con-

sistent with that scheme. /d. at 1005-1008. Petitioner

argues that the court of appeals “based its holding” on a

determination that respondent had such an expectation of

“exclusive rights to the data submited to obtain the

aan «Ft. 7.

We do not read the court of appeals’ opinion as plac-

ing any limitation on use by the FAA of data submitted

by respondent or other STC applicants. As explained

above (see p. 3, supra), it is the FAA’s policy to use

data supplied by prior applicants in evaluating subse-

quent applications filed by others if such use will help

reduce the administrative resources required to ensure

compliance with air safety requirements. See, e.g., FAA

Order No. 8110.4, €€ 19-20 (App., infra, la-S5a). Data

so used are not disclosed to subsequent applicants or to

other third parties, however, without explicit permission

from the original applicant. /bid. Nothing in the opin-

ion below appears to call these procedures into question,

and respondent explicitly disclaims any right to interfere

with the FAA’s operations or its “existing regulations

and practices.” Br. in Opp. 6, 11. We therefore agree

with respondent that this case presents no conflict with

Monsanto.

2. Whether the state law right recognized by the court

of appeals is preempted by federal patent or copyright

law is a closer question. The scope of the court’s hold-

ing is not entirely clear, and if read broadly the decision

might well trench impermissibly on areas reserved exclu-

sively for federal law. Because we think the court’s deci-

sion can and should be read more narrowly, however, we

believe that further review of this case is unnecessary.

a. The sweep of patent preemption is broad and is

founded on the principle that “States may not offer

patent-like protection to intellectual creations which would

otherwise remain unprotected as a matter of federal law.”

14

Bonito Boats, Inc. Vv. Thunder Craft Boats, Inc., 489 U.S.

141, 156 (1989). See also Sears, Roebuck & Co. V.

Stiffel Co., 376 U.S. 225, 231 (1964); Compco Corp.

Vv. Day-Brite Lighting, Inc., 376 U.S. 234, 237-238

(1964). As the court of appeals recognized, however,

Pet. App. 17a. the central question 1s whether the prop-

erty right that the court found protectable under state law

is “patent-like.” If that right protects only nonpublic

data compiled by respondent to prove the safety of its

modification, and not the modification itself, we think the

better answer to that question is no.

As petitioner points out, Pet. 13, “the franchise secured

by a patent consists only in the right to exclude others

from making, using, or vending the thing patented with-

out the permission of the patentee.” United Shoe Ma-

chinery Corp. Vv. United States, 258 U.S. 45i. 463

(1922). But the court of appeals made clear that re-

spondent claims, and the court’s decision confers, “no

exclusive right to modify DC-8s as described in [re-

spondent’s] STC. [Petitioner] or anyone else may per-

form the necessary studies and obtain an STC from the

FAA—even if the modification so certified is identical to

[respondent’s].” Pet. App. 17a.

As we read the decision below, petitioner remains free

to obtain from the FAA, in its own name, an identical

STC for an identical modification; to submit identicai

calculations or other data supporting its application, so

long as it has developed them independently or derived

them from public sources (including the face of respond-

ents STC): and even to point out to the FAA that the

modification it is proposing is identical to one previously

approved in respondent's STC. Petitioner is barred only

from using or referring to respondent’s STC without mak-

ing clear that it has not been authorized to apply for

certification under respondent’s authority. Such a rule

may deny petitioner the benefit of material nonpublic

information submitted by respondent in support of its

15

own STC application.’ But that possible burden is quite

similar to those imposed by state laws prohibiting the

theft of private information, enforcing private contracts

relating to otherwise unpatentable inventions, or prohibit-

ing one merchant from passing off its goods as those of

another. This Court has made clear that such state laws

are generally valid.” See Kewanee Oil Co. v. Bicron

Corp., 416 U.S. 470, 482-493 (1974); Aronson v. Quick

Point Pencil Co., 440 U.S. 257, 262-266 (1979): Bonito

Boats, 489 U.S. at 157-158.

*Or it may not, depending on how much additional documenta-

tion the FAA chooses to require in a given case in which an appli-

cant points out that its modification is identical to one previously

approved.

* The “interesting and peculiar” right recognized by the court of

appeals, Pet. App. 8a, bears some comparison to state laws regulat-

ing deceptive trade dress. In Bonito Boats, the Court quoted Judge

Hand’s summary of the traditional law of unfair competition:

[T]he plaintiff has the right not to lose his customers through

false representations that those wares are his which in fact

are not, but he may not monopolize any design or pattern, how-

ever trifling. The defendant, on the other hand, may copy

plaintiff's goods slavishly down to the minutest detail: but he

may not represent himself as the plaintiff in their sale.

189 U.S. at 157 (quoting Crescent Tool Co. v. Kilborn & Bishop Co.,

247 F. 299, 301 (2d Cir. 1917) ). In this case, similarly, the deci-

sion below leaves petitioner free to copy respondent’s aircraft

modification “down to the minutest detail’—but not to represent

to the FAA that it is doing so with authorization from respondent.

Cf. Compco, 376 U.S. at 238 (“A State of course has power to

impose liability upon those who, knowing that the public is relying

upon an original manufacturer’s reputation for quality and inte-

grity, deceive the public by palming off their copies as the origi-

nal.”) Of course, the analogy between “palming off” goods to con-

sumers and failing to disclose to a federal agency information that

the agency has not formally required to be disclosed is far from

ompelling. As noted above (see pp. 11-12, supra), although we

do not believe further review is warranted in this case, we remain

doubtful that the right recognized by the court of appeals has much

to do with traditional or appropriate concerns of state law.

16

b. The court of appeals’ delineation, Pet. App. 15a-

l6a, of respondent’s state-law rights with respect to the

copying and use of uncopyrighted materials included in

respondent’s modification “implementation kit,” includ-

ing the STC itself and respondent’s flight manual sup-

plement, is less clear and therefore more troubling. We

agree with petitioner, Pet. 15, that if state law prohibited

petitioner from making “practical or commerciai use” of

copies of respondent’s STC or manual supplement, in-

cluding doing so by submitting such copies to the FAA

in connection with petitioner’s application for its own

STC, then it would be preempted by federal copyright

law.

As explained above (see pp. 10-12, supra), however,

we think the court of appeals’ statement, Pet. App. 16a,

that under state law petitioner could be “prevented from

. * using * * * copies [of the STC or manual supple-

ment] to obtain an airworthiness certificate’’ should be

limited by the context of the opinion. The decision as

a whole need stand for no more than the proposition that

state law may restrain petitioner from using copies of the

STC or the manual to pass off its application for an

airworthiness certificate as one made under license from

respondent. We do not think it should be read as permit-

ting state law to interfere with petitioner's use of copies

of uncopyrighted documents in connection with petition-

ers own application for an STC, or for any other pur-

pose, so long as petitioner does not claim or imply that

use of the STC was authorized by respondent.”

Even that narrow construction of the court’s decision

is not unproblematic. To the extent that the decision

would require a user of uncopyrighted materials to ac-

*In particular, we would agree that petitioner has a federal right

to use respondent’s published and uncopyrighted flight manual sup-

plement in connection with its own STC application, and even in

“implementation kits” that it might compile and use or market to

others once it had obtained its own STC for a modification identical

to respondent’s.

17

company those materizis with an affirmative disclaimer

of authorization or origin, it comes perilously close to

prohibiting the mere act of public distribution—one of

the rights protected exclusively by federal law. See, e.¢.,

Computer Associates Int'l, Inc. v. Altai, Inc., 982 F.

693, 716 (2d Cir. 1992). Because of the unusual regu-

latory regime involved in this case, however, and in light

of the court of appeals’ reliance on that regime as a

material part of its analysis (see, e.g., Pet. App. 9a-10a),

this aspect of the court’s decision, even if erroneous, is

likely to prove of very limited practical importance. We

therefore do not think that the decision merits review

on this ground."

3. As is evident, our view that the decision below

does not warrant review by this Court rests on our in-

terpretation of the decision as a narrow holding applica-

ble in an unusual context. It is possible that further

Noy

1” Petitioner claims that the decision below conflicts with Feis#

Publications, Inc. V. Rural Telephone Service Co.. 111 S. Ct. 1282

1991), in which this Court held that a telephone directory, although

1 laborious compilation of factual data, was not suffi lently origina]

to be protected under the copyright laws. As petitioner notes, Pet.

13, the Feist court specifically rejected a “sweat of the brow” theory

of copyright protection, see 111 S. Ct. at 1291-1295, while the court

of appeals relied in part, Pet. App. 14a, on similar considerations

of invested effort in determining that California law would recog-

nize a protectable property interest in the use of the design certifi-

cation that respondent obtained from the FAA. Feist rests. how-

ever, on “[t]he most fundamental axiom of copyright law’: that

no one may copyright an idea or a fact. 111 S. Ct. at 1287. That

axiom has little relevance to this case, which involves protection

not of respondent’s idea, data, or information (which petitioner is

free to copy), but of its exclusive right to proceed under a particu-

lar regulatory approval issued to it and based in large part on non-

public data that it compiled. As discussed above (see n.8. supra)

the cases somewhat more analogous to respondent’s situation are

those allowing States to protect private interests in nonpublic in-

formation and to prevent implied misrepresentation as to source.

See Kewanee Oil Co. Vv. Bicron Corp., 416 U.S. at 482-493: Bonito

Boats, 489 U.S. at 157-158.

18

proceedings in this or other cases will prove that inter-

pretation incorrect. In that event, it may be necessary

for this Court to grant review at some later time in order

tc prevent interference with preeminent federal interests

both in aircraft safety (or another area of federal regula

tion) and in the protection and limitation of intellectual

property rights. We think it more likely, however, that

the decision below will be read narrowly and with proper

deference to overriding federal concerns.’ Further re

view of this case at this time would therefore be pre-

mature.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submited.

WILLIAM C. BRYSON

Acting Solicitor General

STUART E. SCHIFFER

Acting Assistant A ttorne y Ge ie ral

LAWRENCE G. WALLACE

Deputy Solicitor General

EDWARD C. DUMONT

Assistant to the Solicitor Ge ii¢ ral

DOUGLAS N. LETTER

RICHARD A. OLDERMAN

Attorneys

MAy 1993

11 Cf. Miles, Inc. V. Scripps Clinic & Research Found., 810 F.

Supp. 1091, 1094-1098 (S.D. Cal. 1993) (recognizing, under Cali-

fornia law test set forth in the decision below, an intangible prop-

erty interest in the “right to commercialize” a biological “cell line,”

but refusing to recognize a state law action for conversion of that

interest).

19.

20.

APPENDIX

FAA Order No. 8110.4 (as revised through June

1985) reads in pertinent part as follows:

RELEASE OF AND REFERENCE TO

TECHNICAL DATA.

a.

The general policy regarding information

disclosure is covered in OA P 1200.2.(1)

‘eference to manufacturer’s and certificate

holder’s data files by FAA engineering per-

sonnel is permissible and is not considered as

infringing on the proprietary rights of the

owner as long as the information is used

solely by FAA engineering personnel to min-

imize the time and effort required for evalua-

tion and is not disclosed to third narties who

have not obtained permission from the orig-

inal applicant.

PROCEDURES. The following are typical ex-

amples involving the release or other use of

applicant’s data.

a.

New Type Certificate or Supplemental Type

Certificate. In order to establish compliance

with the airworthiness requirements, an ap-

[1] FAA Handbook OA P 1290.2, Release of Information by

FAA Employees, was cancelled by a new Handbook 1200.2

issued in April 1969 to implement Department of Transporta-

tion regulations under the Freedom of Information Act. The

current Department regulations implementing the FOIA are

codified at 14 C.F.R. Pt. 310. See id. at 310.3, App. B, {4

(“matter submitted in confidence * * * will be held confidence

to the extent deemed allowable”).

(la)

b.

2a

plicant for a complete new type certificate or

a supplemental type certificate may wish to

make use of data submitted by a previous

applicant or holder of a type certificate. In

such cases, the later applicant will be advised

to obtain and submit to FAA the written

consent of the earlier applicant. If the later

applicant does not obtain such consent, he

will either:

(1) Be limited to a supplemental type cer-

tificate covering only the design changes

which he substantiates himself, or

(2) Be required to submit complete type de-

sign data and conduct all tests required

by the applicable requirements; how-

ever, in this case, the FAA may reduce

its own participation in the project to

the minimum necessary to substantiate

compliance with the airworthiness re-

quirements. For example, instead of

making a complete evaluation, the FAA

may make spot-check comparisons of the

later applicant’s data with the first ap-

plicant’s data.

Altered Aircraft, Aircraft Engine, or Pro-

peller. Alterations to aircraft may be ap-

proved on the basis of conformity to the

supplemental type certificate data. To show

conformity, the applicant for approval of the

individual aircraft should have available

copies of the approved installation drawings,

and instructions. However, the FAA repre-

sentative making the approval is not respon-

|

3a

sible for determining how the applicant ob-

tained this information.

ce. Replacement and Modification Parts.

(1) The design data as defined by Federal

Aviation Regulations, Section 21.31, sub-

mitted to the FAA to substantiate air-

worthiness for the certification of a

product is part of the type certificate.

This data should be retained in files of

the FAA but may be retained by the

type certificate holder providing he

agrees to maintain it in the currently

approved status and make it available

to FAA at all times without restriction.

(2) Type design data submitted to FAA for

approval shall not be disclosed without

the written consent of the owner or as

permitted by the provisions of Section 3

of the Administrative Procedure Act, as

revised effective July 4, 1967, and Sec-

tions 902(b) and 1104 of the Federal

Aviation Act of 1958.

(3) Any person may apply for design ap-

proval for modification or replacement

parts fer use in a certificated product.

The FAA responsibility, in such cases,

is to determine that the modification or

replacement parts conform to the ap-

proved type design or to the applicable

standards. The use of the approved type

design data solely by the FAA for de-

termining conformity of design data

submitted by any applicant is not con-

(4)

(6)

(7)

4a

sidered to be public disclosure of in-

formation.

The FAA will not question the source or

method by which an applicant, for a

modification or replacement part § ap-

proval, obtains his design information.

A modification or replacement part ap-

proval may be granted when the appli-

cant demonstrates that the modification

or replacement part is identical to that

of the approved type design.

When the applicant does not show iden-

ticality with the approved type design,

for parts other than those covered by

Section 21.303(b) of the FAR or when,

in the opinion of FAA, identicality of

design does not substantiate an equiva-

lent level of safety, there can be no ap-

proval based on comparison of data. In

such instances, no disclosure shall be

made of the nonconformity nor of any

aspects of the approved type design

data. The applicant will be informed

that his design data does not comply

with the approved type design and that

he may substantiate his design by tests

or other means of substantiation as pro-

vided in FAR, Section 21.805, if he

wishes to pursue his request for design

approval.

Each region granting FAA-Parts Man-

ufacturer Approval (PMA) fabrication

system approval should maintain a sum-

Sa

mary of all replacement parts approved

within the region for use on all type cer-

tificated products under the FAA-PMA

system. Information on the name and

address of the PMA holder, the part

number of PMA part(s), and the type

certificated product(s) in which part(s)

is approved should be supplied to the

public upon request. In the interest of

minimizing the expenditure of FAA

manpower, interested parties may be

referred to the other regional offices and

the PMA holders when the desired in-

formation is not available in the region

receiving the request.

d. Release of Data when a Type Certificate is

Cancelled or the Holder of a Type Certificate

Goes Out of Business Without Transferring

it. The data pertaining to such certificates

may be made available to any person who

appears to have legitimate need of the infor-

mation to properly maintain aircraft of the

type involved. However, if manufacturing is

involved, the case should be referred in ac-

cordance with Handbook 1200.2A, Public

Availability of Information.

WT oG. S$. GOVERNMENT PRINTING oFFIcZ, 1993 342479 60276