Amicus Curiae Brief — Zoltek Corp. v. United States, 127 S. Ct. 2936 (2007) (No. 06-1155)

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No. 06-1155 | oppice oF THe cLenK |

IN THE

Supreme Court of the United States

ZOLTEK CORPORATION,

Petitioner,

Ve

UNITED STATES.

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Federal Circuit

NANOBUSINESS ALLIANCE BRIEF AMICUS CURIAE

IN SUPPORT OF PETITIONER,

ZOLTEK CORPORATION

PHILIP A. NACKE *

FOLEY & LARDNER LLP

3000 K Street, N.W. - Suite 500

Washington, D.C. 20007

(202) 295-4086

* Counsel of Record Counsel for Amicus Curiae

NanoBusiness Alliance

I TEER ORE OSE SER

ellie

WILSON-EPES PRINTING CO. INC. - (202) 789-0096 - WASHINGTON, D.C. 20002

TABLE OF CONTENTS

THE AMICUS AND ITS INTERESTS .....0...0..ccccccceee.

STATEMENT ........... slastehehesnsbnibenseenusecosnesseentbeneeseniteenn

I.

I].

PATENTS ARE PROPERTY RIGHTS PROTECTED

By THE FIFTH AMENDMENT GUARANTEE OF

JUST COMPENSATION WHEN APPROPRIATED

REE Pe FING UGE ocevccevccevecesvevacecessons ee aes

COURT OF FEDERAL CLAIMS JURISDICTION

OVER CLAIMS OF GOVERNMENT APPROPRI-

ATION OF PATENT RIGHTS IS NOT DELIMITED

TO THE CIRCUMSTANCES SPELLED OUT IN

28 U.S.C. § 1498(A). RATHER, AS A CONSE-

QUENCE OF THE TUCKER ACT GRANT OF

JURISDICTION OVER CLAIMS FOUNDED UPON

THE CONSTITUTION, 28 U.S.C. § 1491(a), ITs

JURISDICTION EXTENDS TO ALL CLAIMS

INVOLVING CONDUCT THAT CONSTITUTES

INFRINGEMENT UNDER 35 U.S.C. § 271 .............

a ses scencashuovesdadaionsvdaivolionecnaotaeonebilien

nN

> WwW

i

TABLE OF AUTHORITIES

CASES Page

Allen v. Newberry, 62 U.S. (21 How.) 244 (1859). 18

Booth & Co. v. United States, 61 Ct. Cl. 805,

rehearing denied, 62 Ct. Cl. 288 (1926)............ 13

Brooks-Scanlon Corp. v. United States, 265 U.S.

Pe Cor tincicinniiiociniimn nde te 12,14

Cammeyer v. Newton, 94 U.S. 225 (1877) .........-+- 5

Crozier v. Fried. Krupp Aktiengesellschafi, 224

Tb Ee |, | Sa e SOR ISS TOE PRONG 1]

Dooley v. United States, 182 U.S. 222 (1901)....... 15

Fonalledas v. United States, 107 F. Supp. 1019,

De ae Ste WE CO ncicnibidatinsstneiesidednstcedeniias 15

Foster v. United States, 98 F. Supp. 349, 120 Ct.

Ry We Ga albishehcndanarisuicieiues lg temeneee tie 15

Hill v. United States, 149 U.S. 593 (1893)...... 7, 8, 10, 15

Hollister v. Benedict & Burnham Mfg. Co., 113

See er IE ictniterniinesicachaniahictiatdiaaaed cmon ae »

Jackson v. Steamboat Magnolia, 61 U.S. (20

RO ORO I Sia a i i 18

Jacobs v. United States, 290 U.S. 13 (1933)..... 13-14, 20

James v. Campbell, 104 U.S. 356 (1882) ...........0-. 5

Johnson v. United States, 2 Ct. Cl. 391 (1866) ..... 6

Langford v. United States, 101 U.S. 341 (1879)... 6

Langford v. United States, 12 Ct. Cl. 338 (1876).. 6

Liggett & Myers Tobacco Co. v. United States,

FP A I CE inenititieteaisdinnerbiegett eens 12, 14

McKeever v. United States, 18 Ct. Cl. 745 (U.S.

| RL ae LTS Oe PRT I 5

McKeever v. United States, 14 Ct. Cl. 396 (Dec.

TI De cciaiitecici tt ee 5

Phelps v. United States, 274 U.S. 341 (1927) ...13, 14, 20

Phelps v. United States, 61 Ct. Cl. 1044,

rehearing denied, 62 Ct. Cl. 288 (1926)............ 13

Preseault v. ICC, 494 U.S. 1 (1990)... cccccccecceces, 20

iii

TABLE OF AUTHORITIES—Continued

Page

Propeller Genesee Chief v. Fitzhugh, 53 U.S. (12

ra 18, 19, 20

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

I baiciianintinhilidesidintdipieiare cake eee 20

Russell v, United States, 182 U.S. 516 (1901)....... Tee

Schillinger v. United States, 155 U.S. 163 (1894). passim

Schillinger v. United States, 24 Ct. Cl. 278

og, RE PERE DY 5 Sad sions Oe eT STE 8-9

Seaboard Airline Ry. v. United States, 261 U.S.

|| __ RRNA e aORee NE on E er 12-13, 14

Steamboat Orleans v. Phoebus, 36 U.S. (11 Pet.)

Ss, SEER R oTier en Ret ee 17

Steamboat Thomas Jefferson, 23 U.S. (10

bh 5 ) ST De ee ID 17, 18

Tempel v. United States, 248 U.S. 121 (1918)......7, 8, 15

The Eagle, 75 U.S. (8 Wall.) 15 (1869)...........0.00. 19

The Hine v. Trevor, 71 U.S. (4 Wall.) 555 (1867).- 18

United States v. Berdan Firearms Mfg. Co., 156

Ee SURE TE Ses ieetiaa e 8

United States v. Causby, 328 US. 256

SERA RES a Ny MOOR AORTA a 10, 14-15, 20

United States v. Cress, 243 U.S. 316 (1917)......... 1]

United States v. Dickinson, 331 U.S. 745 (1947).. 15

United States v. Great Falls Mfg. Co., 112 U.S.

gb: SRERE EA NE OI AL RO Ee 6-7, 10

United States v. Grizzard, 219 U.S. 180 (191 ) eee 1]

United States v. Jones, 131 U.S. 1 (1889) ..0.00.0.... 7

United States v. Lee, 106 U.S. 196 (1882) ............ 5

United States v. Lynah, 188 U.S. 445 (1903)........ 8,11

United States v. Mitchell, 463 U.S. 206 (1983)... 7

United States v. North American Transp. &

Trading Co., 253 U.S. 330 (1920) ....cceceeeee 11-12, 15

United States v. Palmer, 128 U.S. 262 (1888) ...... 8, 10

iV

TABLE OF AUTHORITIES—Continued

United States v. Welch, 217 U.S. 333 (1910)........

Waite v. United States, 282 U.S. 508 (1931)......... 14

William Cramp & Sons Ship & Engine Bldg. Co.

v. International Curtis Marine Turbine Co.,

BE lis PA BO UD i edstiiahbenrdenciascdssisvettbenQocse. 1]

RULES

Supreme Court Rule 37.2 oo...cccccccccccccesesccsccececsees l

Supreme Court Rule 37.6 .......cccccocovssscssesesovcereeseces l

CONSTITUTIONAL PROVISIONS

U.S. CONST., Article III, section 2...........cccc0c000-. 17

U.S. CONST., Amendment V, Just Compensa-

I ci ees

STATUTES

PER Fl es a en nee 7

is POE iorncs ca désednenisivdesatzoiawcstiacce 7, 16, 17, 20

Be alice BPO ovinivoctecvvecasessnccesearsreases 2,4, 16,17, 19

ae PO vivctndecenssrsniericeadeoiindecssicnicicicn 2

Be eB I ietaieestscandnnnconstecess igeimidihaee, 2

ee cs ME PUD EMO bite daca de descsleascensdosacaccs, 2, 16, 20

ee aed 2

Act of Sept. 24, 1789 (“Judiciary Act of 1789”),

=e 2 Le | ie 7 See IN De RAS 17, 18, 19

Act of Feb. 26, 1845, ch. 20, 5 Stat. 726 .... 17-18, 19, 20

Act of Feb. 24, 1855, ch. 122, 10 Stat. 612........... 6

Act of March 3, 1883 (“Bowman Act”), ch. 116,

ci RS HA MON POL BIDE ONT Rr Ne TOE AS 9

‘Act of March 3, 1887 (“Tucker Act”), ch. 359,

I se ake passim

Act of June 25, 1910 (“1910 Patent Act”), ch.

RU POP, BP crencise hcacctoecpedbiicncasaecnbicesicaseacieds, passim

Act of June 25, 1948, ch. 646, 62 Stat. 940 (28

RPM WOE pacrosavdssciasckswsrteceecesseceaccosdcdoraeccce

Vv

TABLE OF AUTHORITIES—Continued

CONGRESSIONAL MATERIALS

H.R. Misc. Doc. No. 108, 49th Cong., Ist Sess.

(Feb. 9, 1886)

H.R. Rep. No. 1077, 49th Cong., Ist Sess. (Mar.

17, 1886)

H.R. Rep. No. 1986, 49th Cong., Ist Sess. (Apr.

27, 1886)

H.R. Rep. No. 1288, 61st Cong., 2nd Sess. (May

7, 1910)

S. Rep. No. 1459, 49th Cong., Ist Sess. (July 7,

45 Cong. Rec. 8759, 8769, 8780 (June 22, 1910) ..

OTHER AUTHORITIES

Philip Nichols, Jr. in THE UNITED STATES

COURT OF CLAIMS - A HISTORY, Part II

(1978)

NanoBusiness Alliance, with the consent of both parties,

submits this brief amicus curiae pursuant to Rule 37.2 of the

Rules of this Court in support of the petition for a writ of

certiorari filed by Zoltek Corporation. '

THE AMICUS AND ITS INTERESTS

The NanoBusiness Alliance is a non-profit organization

that acts as the trade association for the emerging nanotech-

nology industry within the United States. The Alliance

has over 300 members, the majority of whom are small to

medium sized entrepreneurs and innovators, but membership

also includes Fortune 500 businesses, research institutions,

and non-governmental organizations. The Alliance seeks

to shape nanotechnology policy and to help accelerate the

commercialization of nanotechnology innovations through its

engagement with lawmakers and with financial analysts,

investors, and bankers.

Nanotechnology is primarily an enabling technology that

provides new ways of making existing products from the

“bottom up.” Process or method patents are a significant

means relied upon by members of the Alliance to protect their

nano-related intellectual property. The Federal Circuit’s

decision severely undermines these protections by allowing

the United States government and its contractors to escape

liability for infringement of method claims in United States

patents if use of the claimed method is outsourced to a for-

eign country. In view of the many possible applications

for use of nanotechnology (for example, industrial materials,

electronics, pharmaceuticals), amicus is vitally interested in

seeing that patent rights are fully protected from government

appropriation and, thus, urges this Court to intervene and

correct the ruling below.

' In accordance with Rule 37.6, this brief is not authored in whole or in

part by counsel for any party. No person or entity other than amicus

curiae and its counsel made any monetary contribution to the preparation

or submission of this brief.

2

STATEMENT

A patentee’s property rights are spelled out in 35 U.S.C.

§ 154(a). Acts constituting infringement of those rights are

identified at 35 U.S.C. § 271, for which a remedy is extended

at 35 U.S.C. § 281. Should the infringement be accomplished

by the United States or for the United States, with its authori-

zation or consent, a remedy is provided at 28 U.S.C. § 1498(a).

Sections 271 and 1498(a) are not coextensive. Excluded from

the language of section 1498(a) are selling, offering to sell

and importing into the United States of a patented invention

and importation into the United States and offering to sell,

selling, or using within the United States a product made

from a process patented in the United States. Compare 28

U.S.C. § 1498(a) with 35 U.S.C. § 271(a) & (g).

Petitioner Zoltek’s process patent was used for the benefit

of the United States by a government contractor and subcon-

tractors in a foreign country. Consequently, the trial court

found that it had no jurisdiction over Zoltek’s claim under

section 1498(a) by reason of the operation of 28 U.S.C.

§ 1498(c). Products resulting from use of the patented pro-

cess were then imported into the United States and used by

and for the United States. On that account, the trial court

reasoned that Zoltek may have a claim for infringement under

section 271(g). Recognizing that this Court, the Federal Cir-

cuit, and the Court of Claims have characterized government

infringement of a patent as a taking of property that entitles

the aggrieved patentee to just compensation, the Court of

Federal Claims (“COFC”) held that a claim for section 271(g)

infringement could be pursued as a Fifth Amendment taking

under the court’s 28 U.S.C. § 1491(a) (“Tucker Act”) juris-

diction.

On appeal the Federa! Circuit reversed that holding. It

ruled that a patentee’s remedy against the United States was

limited solely to the circumstances described in section

1498(a). According to the appeals court, there could be no

section 1491(a) jurisdiction because patent rights are not

3

constitutionally protected property entitled to the guarantee of

the Just Compensation Clause of the Fifth Amendment. To

Support that conclusion, the court relied upon (i) Schillinger

v. United States, 155 U.S. 163 (1894), wherein the Court

observed that the Tucker Act grant of jurisdiction over claims

founded upon the Constitution did not extend to claims

founded upon a tort; and (ii) the fact that subsequently Con-

gress provided patentees with a remedy for government

infringement by separate enactment, Act of June 25, 191 0, ch.

423, 36 Stat. 851, action that in the court’s view would have

been unnecessary if patents were property embraced within

the protections of the Just Compensation Clause.

SUMMARY OF ARGUMENT

Patents are constitutionally protected property interests en-

titled to the full protections of the Fifth Amendment. The

Federal Circuit’s suggestion otherwise conflicts with well

over 100 years of precedent wherein the status of patent rights

has been recognized.

The Federal Circuit’s employment of Schillinger to achieve

its result betrays a serious lack of attention to this Court’s

development of the law since 1894 as respects the bounds of

Tucker Act jurisdiction. That which is now the accepted view

regarding jurisdiction over claims founded upon the Constitu-

tion was not recognized then. In 1894, Tucker Act jurisdic-

tion over a claim for compensation for government appropria-

tion of property, whether realty or a patent, could be sustained

only on the basis of an implied in fact contract. The implied

in fact contract fiction now has been discarded by this Court

in favor of the plain language of the Tucker Act (“claims

founded upon the Constitution”) to establish jurisdiction over

Fifth Amendment takings.

The evolution in the basis for takings claim jurisdiction,

which took place roughly from 1929 to 1946, occurred with-

out reference to patent rights, not because patents were

deemed outside the protections of the Fifth Amendment but

for the simple reason that Congress in 1910 enacted separate

4

legislation for the benefit of patent owners to ameliorate the

effect of decisions such as Schillinger. That fact, however,

does not mean that patentees thereby lost the protections of

the Fifth Amendment. The 1910 legislation (now section

1498(a)) was intended to be auxiliary to and in aid of the

jurisdiction supplied by the Tucker Act in light of the then

constrained judicial view that takings claims were cognizable

only as implied contract actions. When at last the true juris-

dictional reach of the Tucker Act was enunciated, the 1910

act became, effectively, a vestigial remain to the extent of

overlap with the Tucker Act, because the original purpose of

the 1910 act became encompassed within the broader under-

standing of Tucker Act jurisdiction. In such circumstances,

the rules of decision in this Court are that the operation of the

general statute, the Tucker Act, will not be limited or re-

stricted by the special statute, the 1910 act.

As no other appellate court besides the Federal Circuit

entertains jurisdiction over the Tucker Act and section 1498,

only this Court can remedy the Federal Circuit’s error.

Accordingly, this Court should grant the petition for certiorari.

ARGUMENT

I. PATENTS ARE PROPERTY RIGHTS PROTECTED BY THE

FIFTH AMENDMENT GUARANTEE OF JUST COMPENSA-

TION WHEN APPROPRIATED FOR A PUBLIC USE.

The per curiam majority of the Federal Circuit miscon-

strued the Schillinger opinion of this Court (155 U.S. 163

(1894)) and erroneously concluded that a rule of law was

announced to the effect that government infringement of

patent rights is never compensable as a Fifth Amendment

taking. Pet. App. A8-All. Moreover, it compounded the

error by disparaging the legal status of patent rights, in the

face of 130 years of precedent to the contrary. Pet. App.

All; see id. at A35-A36 (Gajarsa, J., concurring). The

appeals court’s error was facilitated by a failure to consider

the historical development of the basis for jurisdiction over

5

takings claims against the United States. Had it delved into

the matter, it would have found that the view expressed in

Schillinger, to which it accorded such weight, also was

commonplace during that era in cases involving real property.

All takings, irrespective of the subject matter taken, were

torts over which the Court of Claims had no jurisdiction. But

that view’s currency waned over the ensuing 50 years and it

ultimately was interred. An appreciation of Court of Claims

jurisdiction over takings claims, and the evolution thereof

over time, is essential to a just and principled resolution of the

protections afforded patentees upon government appropria-

tion of their patents. Once acquired, that understanding leads

inexorably to the conclusion that patents are property rights

protected by the Fifth Amendment guarantee of just com-

pensation when appropriated for a public use.

Prior to 1887, the Supreme Court acknowledged in several

opinions that a taking by the United States of a citizen’s real

property or personal property obligated the United States to

provide the owner with just compensation on the basis that

the Constitution so commanded. E.g., United Siates v. Lee,

106 U.S. 196, 259 (1882). With specific respect to patents,

the Court, in at least three opinions, observed that unauthor-

ized government use of a patent amounted to an exercise of

the power of eminent domain and entitled the patentee to just

compensation. Cammeyer vy. Newton, 94 U.S. 225, 234-35

(1877); James v. Campbell, 104 U.S. 356, 357-58 (1882):

Hollister v. Benedict & Burnham Mfg. Co., 113 U.S. 59, 67

(1885). See also McKeever v. United States, 14 Ct. Cl. 396,

420-21 (December Term, 1878), aff'd without opinion, 18 Ct.

Cl. 745 (U.S. 1882). The rub, however, whether the property

interest was realty or a patent, was that Congress had not

granted jurisdiction to any court to hear such takings claims,

because it had not waived the government’s sovereign immu-

nity. See, e.g., James v. Campbell, 104 U.S. 356, 358-59

(1882).

6

Nonetheless, Congress had created the Court of Claims in

1855 and given it jurisdiction over claims against the United

States founded upon contract, whether express or implied.

Act of Feb. 24, 1855, ch. 122, § 1, 10 Stat. 612. A taking

though had no common law predicate in contract. If the gov-

ernment were analogized to a private individual, the govern-

ment action constituting a taking would amount to a tort,

either an action in trespass (real property) or an action on the

case (patent infringement). Thus, to entertain jurisdiction

over a takings claim, the Court of Claims adopted the fiction

of implied contract. See Johnson v. United States, 2 Ct. Cl.

391, 415-16 (1866). The implied promise was that found in

the Just Compensation Clause of the Fifth Amendment of the

Constitution, whether implied in fact or in law.

The Supreme Court reigned in this exercise of jurisdiction

in Langford v. United States, 101 U.S. 341 (1879), a suit for

compensation for the taking of real property. Although the

Court of Claims had found against the claimant on the merits

(12 Ct. Cl. 338 (1876)), upon his appeal to the Supreme

Court, the government prevailed upon the Court to dispose of

the case on the basis of lack of jurisdiction. Throughout the

dispute, the United States had contested Langford’s title, and,

prior to suing in the Court of Claims, Langford had brought

an ejectment action in territorial court against the government

officer occupying the property. Accordingly, on those facts

there could be no implied in fact contract. “In such case the

government, or the officers who seize such property, are

guilty of a tort, if it be in fact private property.” 101 U.S. at

.344. The Court of Claims’ jurisdiction being confined to

contract, it had no jurisdiction to entertain the claim.’

Yet, five years later in United States v. Great Falls Manu-

facturing Co., 112 U.S. 645 (1884), the Court approved of the

* Langford has since been understood for the proposition that the Court

of Claims’ implied contract jurisdiction extended only to contracts implied in

fact and not to contracts implied in law. Philip Nichols, Jr., in THE UNITED

STATES COURT OF CLAIMS - A HISTORY, Part Il, at 40 (1978).

7

exercise of Court of Claims jurisdiction in a takings case,

where (i) the government did not dispute the claimant’s title,

(ii) the government activity was authorized by Congress, and

(iii) the claimant had made no attempt to remove the federal

presence from the property at issue. The accepted basis of

Court of Claims jurisdiction was an implied in fact contract.

Id. at 656-57 Shortly afterwards, the rationale of Great Falls

Mfg. was declared applicable in the patent context. Hollister

v. Benedict & Burnham Mfg. Co., 113 U.S. 59, 67 (1885).

At this juncture, Congress enacted the Tucker Act of 1887

to expand the jurisdiction of the Court of Claims, by, among

other things, giving it cognizance over suits against the

United States arising under the Constitution.’ Act of Mar. 3,

1887, ch. 359, § 1, 24 Stat. 505, codified, as amended, ai 28

U.S.C. §§ 1346(a)(2), 1491(a)(1). In modern parlance, the

money mandating provision of the Constitution that creates a

substantive right enforceable against the United States under

the Tucker Act is the Just Compensation Clause of the Fifth

Amendment, which provides that private property shall not be

taken by the federal government except upon payment of just

compensation. See United States v. Mitchell, 463 U.S. 206,

216-218 (1983). This grant of jurisdiction, however, would

go unheeded by a majority of the Supreme Court for at least

40 years. Beginning with United States v. Jones, 131 U.S. 1,

16 (1889) and continuing through Hill v. United States, 149

U.S. 593, 598 (1893), Schillinger v. United States, 155 US.

163 (1894), Russell v. United States, 182 U.S. 516 (1901),

and Tempel v. United States, 248 U.S. 121, 130 (1918), the

Court persisted in reading the Tucker Act as nothing more

than a reiteration of the Court of Claims’ original jurisdic-

* The House Judiciary Committee, in reporting the bill that would be-

come the Tucker Act, stated: “The jurisdiction of the Court of Claims is

extended by engrafting . . . the following additional subjects of jurisdic-

tion: (a) ‘Claims founded upon the Constitution of the United States,’

such as for just compensation for property taken for public use, &c.” H.R.

Rep. No. 1077, 49th Cong., Ist Sess., at 4 (Mar. 17, 1886).

8

tional grant of 1855. Thus, as put in Schillinger, “[s]ome

element of contractual liability must lie at the foundation of

every action.” 155 U.S. at 167.

Consequently, when the government did not challenge title

OF assert a superior interest (such as its navigational servi-

tude) in the property, Tucker Act jurisdiction was sustained

on the basis of implied contract. E.g., United States v. Lynah,

188 U.S. 445, 458, 464-68 (1903). Or, as emphasized in suits

involving patent rights, an implied contract for compensation

would arise (i) when the government used the patent with the

patentee’s consent and with an expectation on the patentee’s

part of receiving a reasonable compensation, United States v.

_ Palmer, 128 U.S. 262, 269 (1888); or (i1) where there was no

denial of the patentee’s rights to the invention, no assertion

by the government that the patent was wrongfully issued, no

claim of a right to use the invention regardless of the patent,

and no use in spite of protest or remonstrance on the part of

the patentee, United States v. Berdan Firearms Mfg. Co., 156

U.S. 552, 567-69 (1895). But, when the government disputed

title, asserted a superior interest in the property, or denied the

validity of a patent, there could be no implied contract and

‘hence no jurisdiction. Hill v. United States, 149 U.S. 593

(1893) (realty); Schillinger v. United States, 155 U.S. 163

(1894) (patent); Russell v. United States, 182 U.S. 516 (1901)

(patent); Tempel v. United States, 248 U.S. 121 (1918)

(realty). In such circumstances, “[i]f the government’s claim .

is unfounded, a property right of plaintiff was violated; but

the cause of action therefor is one sounding in tort; and for

such the Tucker Act affords no remedy.” Tempel, 248 U.S. at

130.

In view of the significance accorded it below, a brief re-

view of the Schillinger litigation is in order at this point.- Suit

was commenced in the Court of Claims on March 22, 1887."

* Assignees of Schillinger (Creecy, ef al.) initially had petitioned Con-

gress for relief. The House Committee on Patents, March 25, 1884, re-

9

24 Ct. Cl. at 279. Plaintiffs proceeded on a theory of implied

contract. /d. at 288-91. Noting that the facts before it were

ths same as had been presented under the Bowman Act

referral, the court concluded that those facts supported a

claim for infringement, a tort, not a claim of implied contract.

There never had been an acknowledgement of the validity of

the patent; the acts of the government officials were openly

adverse to the patentee’s rights. /d. at 293, 298. Accord-

ingly, jurisdiction was found lacking. There was no attempt

by plaintiffs to base jurisdiction upon the Tucker Act grant of

_ jurisdiction over claims founded upon the Constitution.

On appeal, the Supreme Court, per Justice Brewer, affirmed,

with Justices Harlan and Shiras dissenting. Schillinger v.

United States, 155 U.S. 163 (1894). While there is no indica-

tion that the petitioners changed their argument regarding the

jurisdictional basis for suit, from implied contract to a claim

founded upon the Constitution, the majority nonetheless chose

to discuss the Tucker Act grant of jurisdiction over claims

founded upon the Constitution, no doubt as a riposte to

Justice Harlan’s dissent. Compare 155 U.S. at 168 with id. at

179. According to Justice Brewer, this grant of jurisdiction

was ineffective to support jurisdiction over a takings claim

because a taking was a tort. The “rule” as so expressed applied

to all takings claims, not just those involving patent rights, as

ferred the matter to the Ceurt of Claims under the Bowman Act (Act of

Mar. 3, 1883, ch. 116, 22 Stat. 485) for an investigation of the claim and a

report upon the facts. The court transmitted its report to the House of

Representatives on February 6, 1886, finding inter alia that the Schillinger

patent was valid and that it had been infringed by the contractor retained

by the Architect of the Capitol. H.R. Misc. Doc. No. 108, 49th Cong., Ist

Sess., at 2 (Feb. 9, 1886). Ensuing congressional consideration led to a

rejection of the Court of Claims’ findings of fact, primarily in reliance

upon a subsequent decision of the supreme court of the District of Columbia

which also addressed the validity of the Schillinger patent. H.R. Rep. No.

1986, 49th Cong., Ist Sess. (Apr. 27, 1886) (House Comm. on Patents);

S. Rep. No. 1459, 49th Cong., Ist Sess. (July 7, 1886) (Senate Comm. on

Claims).

a

10

was made plain by the reference to the recently decided Hill

case. Jd. at 168. A takings claim was cognizable only if an

implied contract could be sustained, such as had been the

situation in the Palmer and Great Falls Mfg. Co. cases. Id. at

169-71. Justice Harlan disagreed: “[T]he claim to have just

compensation for an appropriation of private property to the

public use is ‘founded upon the constitution of the United

States.’ It is none the less a claim of that character even if the

appropriation had its origin in tort.” Jd. at 179. The Harlan

view ultimately prevailed, but only after the passage of

another 50 years. See United States v. Causby, 328 U.S. 256,

267 (1946).

Meanwhile, faced with judicial disregard of the Tucker

Act’s expanded grant of jurisdiction over claims founded

upon the Constitution, Congress stepped in to provide an

explicit grant of jurisdiction over claims for compensation for

unlicensed use of a United States patent by the federal

government. Act of June 25, 1910, ch. 423, 36 Stat. 851

(“1910 Patent Act”). One may question why such an explicit”

grant was necessary with respect to patents and not realty.

The answer is provided by the nature of the property interest,

a patent being intangible in nature, and the difficulty of

establishing the requisite facts to support an implied in fact

contract, notably the fact that determinations of validity in the

first instance often were made by government employees

utilizing the patented invention and those employees were

reluctant to commit the government to a compensation obli-

gation. See, e.g., 45 Cong. Rec. 8759 (June 22, 1910) (Letter

of Brigadier-General William Crozier, Chief of Ordnance, in

support of H.R. 24649, which became the Act of June 25,

1910). With respect to real property, the situations were far

fewer in number where the government could set up a com-

peting interest in the property at issue that would defeat

jurisdiction, and questions such as those implicated in a

determination of patent validity were not present. Thus, the

mere act of appropriation of real property usually sufficed to

1]

imply an agreement to make compensation. See id. at 8769

(excerpts of report of the American Bar Association Commit-

tee on Patent Law in support of H.R. 24649). Therefore,

courts could comfortably accommodate the great majority of

takings claims involving real property under the implied in

fact contract rationale. See, e.g., United States v. Lynah, 188

U.S. 445 (1903); United States v. Welch, 717 U.S. 333 (1910);

United States v. Grizzard, 219 U.S. 180 (1911); United States

v. Cress, 243 U.S. 316 (1917), each being a takings claim

under the Tucker Act.

The 1910 Patent Act was grounded in the Fifth Amend-

ment guarantee that private property shall not be taken for

public use except upon payment of just compensation. Con-

gress so believed,’ and this Court so declared in Crozier v.

Fried. Krupp Aktiengesellschaft, 224 U.S. 290, 307 (1912)

(“[{W]e think there is no room for doubt that the statute makes

full and adequate provision for the exercise of the power of

eminent domain... .”). See also id. at 305, 308. This view

of the 1910 Act was reaffirmed by the Court in William

Cramp & Sons Ship & Engine Bldg. Co. v. International

Curtis Marine Turbine Co., 246 U.S. 28, 44 (1918).

With respect to real property, however, the Court eschewed

any reference to eminent domain or the Fifth Amendment and

continued to ground Tucker Act jurisdiction in the implied in

fact contract fiction. See United States v. North American

> See H.R. Rep. No. 1288, 61st Cong., 2nd Sess., at | (“When the

United States issues a patent to an inventor he takes an absolute and

exclusive property right in that invention, which, under the Constitution,

can no more be taken away from him without compensation than cz” his

house.”), 2 (“The United States can not be sued except where it has

consented thereto by statute, and unless this or some similar bill shall be

passed the owners of patents will continue to be the only persons who are

outside the protection of the fifth amendment to the Constitution, which

provides: ‘Nor shall private property be taken for public use without just

compensation.’”) (May 7, 1910). See also 45 Cong. Rec. 8769 (remarks

of Congressman Curmier), 8780 (remarks of Congressman Dalzell) (June

22, 1910).

12

Transportation & Trading Co., 253 U.S. 330, 335 (1920)

(holding with respect to a claim for compensation for a placer

mining claim that “(t]he right to bring this suit against the’

United States in the Court of Claims is not founded upon the

Fifth Amendment but upon the existence of an implied con-

tract... .”). The issue in North American Transportation &

Trading Co. that precipitated the above-quoted passage

concerning the basis of jurisdiction in a takings case was

entitlement ve/ non to interest as damages for delay in pay-

ment of just compensation. Subsequent litigation of this issue

served as the vehicle by which the Court reassessed its

position regarding Court of Claims jurisdiction over claims

founded upon the Constitution, leading ultimately to enuncia-

tion of the law as we know it today.

Throughout the 1920s, a number of cases growing out of

World War I requisitions came before the Court in which

property owners sought interest in addition to award of the

taken properties’ fair market value at the time of taking. The

United States resisted payment of interest on the authority of

the prevailing general rule that the United States was exempt

from payment of interest on unpaid claims unless it had

contracted to pay the interest or a statute provided for interest.

An implied in fact contract, then the basis for Tucker Act

takings jurisdiction, contained no promise to pay interest.

Beginning with Seaboard Airline Ry. v. United States, 261

U.S. 299 (1923) and continuing through Brooks-Scanlon

Corp. v. United States, 265 U.S. 106 (1924) and Liggett &

Myers Tobacco Co. vy. United States, 274 U.S. 215 (1927),

awards of interest were found due and proper. The takings in

each instance had been accomplished under authority of

legislation specifying that the property owner should be paid

“Just compensation.” Hence, the general rule upon which the

government relied was found not applicable. “Just compen-

sation is provided for by the Constitution and the right to it

cannot be taken away by statute.” Seaboard Airline Ry., 261

USS. at 304.

13

The requirement that “just compensation” shall be paid

is comprehensive and includes all elements and no

specific command to include interest is necessary when

interest or its equivalent is a part of such compensation.

Id. at 306.

Next to come before the Court were claims of property

owners whose interests had been appropriated for the war

effort under authorizing legislation that did not employ the

magic words “just compensation” nor otherwise specify any

procedures to be followed in determining or seeking recom-

pense. These suits were brought before the Court of Claims

under the general jurisdictional grant of the Tucker Act.

Awards of compensation were made but without interest,

because at that time the Tucker Act predicate for jurisdiction

over a takings claim continued to be implied contract. Booth

& Co. v. United States, 61 Ct. Cl. 805 (1926) and Phelps v.

United States, 61 Ct. Cl. 1044 (1926), rehearing denied, 62

Ct. Cl. 288 (1926). On writ of certiorari, this Court reversed

and awarded interest. Phelps v. United States, 274 U.S. 341

(1927). The government again relied upon the argument that

no contract or statute provided for interest. The Court deter-

mined that jurisdiction over the claim was pursuant to the

Tucker Act and specifically the grant of jurisdiction to hear

claims founded upon the Constitution. Under the Fifth

Amendment, one is entitled to just compensation, and just

compensation encompasses interest on any deficiency from

the time of taking to the time of satisfaction of the deficiency.

Phelps was reaffirmed in Jacobs v. United States, 290 U.S.

13 (1933). Unlike Phelps which had its derivation in a par-

ticularized war requisition statute, Jacobs dealt with a taking

of the more commonplace variety resulting from overflow of .

lands caused by construction of a dam. Suit was brought in

district court under the concurrent jurisdiction provisions of

the Tucker Act. The district court awarded interest as part of

just compensation. The appeals court reversed the interest

award based on a distinction between government-initiated

14

condemnation suits and Tucker Act suits which it held were

founded upon an implied contract. The Supreme Court, per

Chief Justice Hughes, reversed.

This ruling cannot be sustained. The-suits were based on

the right to recover just compensation for property taken

by the United States for public use in the exercise of its

power of eminent domain. That right was guaranteed by

the Constitution. The fact that condemnation proceed-

ings were not instituted and that the right was asserted in

suits by the owners did not change the essential nature of

the claim. The form of the remedy did not qualify the

right. It rested upon the Fifth Amendment. Statutory

recognition was not necessary. A promise to pay was

not necessary. Such a promise was implied because of

the duty to pay imposed by the amendment. The suits

were thus founded upon the Constitution of the United

States.

290 U.S. at 16.° |

Subsequent decisions further underscored that takings

claim jurisdiction is grounded in the first branch of jurisdic-

tion enumerated in the Tucker Act—claims founded upon the

Constitution—and that tort versus implied contract considera-

tions are no longer determinative of jurisdiction when the

Fifth Amendment guarantee of just compensation is invoked.

In United States v. Causby, 328 U.S. 256 (1946), the govern-

ment contested jurisdiction arguing that it had not recognized

° Between Phelps and Jacobs, the Court decided Waite v. United States,

282 U.S. 508 (1931), a suit under the 1910 Patent Act, as amended, which

presented the question whether a patentee was entitled to interest on his

award of compensation. The Court held that he was, based on the words

of the statute which granted “reasonable and entire compensation for such

use.” Cited in support were Seaboard Airline Ry., Brooks-Scanlon Corp.,

Liggett & Myers, and Phelps. \nasmuch as entitlement to interest in the

absence of a statute or contract term could only derive from the constitu-

tional command of “just compensation,” the Waite decision unquestiona-

bly confirmed that government appropriation of a patent is a taking of

constitutionally protected property, which upon occurrence entitles the

patentee to just compensation.

15

a property right ‘ plaintiff (hence no implied contract) and

that, to the ex its actions were wrongful, they were

trespasses over which the Court of Claims had no jurisdiction.

This contention was rejected—“We need not decide whether

repeated trespasses might give rise to an implied contract. If

there is a taking, the claim is ‘founded upon the Constitution’

and within the jurisdiction of the Court of Claims to hear

and determine.”’ 328 U.S. at 267. See also United States v.

Dickinson, 331 U.S. 745, 748 (1947) (“[T]he claim traces

back to the prohibition of the Fifth Amendment .... The

Constitution is ‘intended to preserve practical and substantial

rights, not to maintain theories.’”). The Court of Claims fully

comprehended this revised interpretation of the basis for its

takings claim jurisdiction. See Foster v. United States, 98 F.

Supp. 349, 351-52, 120 Ct. Cl. 93 (1951); Fonalledas v.

United States, 107 F. Supp. 1019, 1022, 123 Ct. Cl. 483 (1952).

The legal guideposts have been established. The appeals

court, however, could not discern the path that they mark.

While Schillinger may never have been explicitly overruled,

neither have Hill, Tempel or North American Transportation

& Trading Co. Yet no one today would posit that jurisdiction

over a real property takings claim must be sustained on the

basis of implied contract or else be dismissed for want of

jurisdiction as a tort. Nonetheless that is the logical though

unstated result that follows from the Federal Circuit’s deci-

sion. The owner of constitutionally protected property is

” Causby thus resolved the reach of the limiting clause—‘in cases not

sounding in tort’—found in the Tucker Act, which question previously

had occupied the Court. E.g., compare Schillinger, 155 U.S. at 169 with

Dooley v. United States, 182 U.S. 222, 224 (1901). That clause refers only

to the immediately preceding category of claims, “actions for damages,

liquidated or unliquidated,” and has no application to the other enumer-

ated categories of claims, including those founded upon the Constitution.

Congress obviously agreed, because two years later, when enacting title

28 into positive law, section 1491 was subdivided into five numbered sub-

parts, and the clause “in cases not sounding in tort” was appended solely

to the fifth subpart. Act of June 25, 1948, ch. 646, 62 Stat. 940.

16

entitled to just compensation when the government appropri-

ates his property. He may bring his claim under the Tucker

Act as one founded upon the Constitution. Patents are

constitutionally protected property, just as is real estate. This

Court should grant the petition and confirm the patent

owner’s entitlement to seek just compensation under 28

U.S.C. § 1491(a).

Il. COURT OF FEDERAL CLAIMS JURISDICTION OVER

CLAIMS OF GOVERNMENT APPROPRIATION OF

PATENT RIGHTS IS Not DELIMITED TO THE

CIRCUMSTANCES SPELLED OuT IN 28 U.S.C. § 1498(A).

RATHER, AS A CONSEQUENCE OF THE TUCKER ACT

GRANT OF JURISDICTION OVER CLAIMS FOUNDED

UPON THE CONSTITUTION, 28 U.S.C. § 1491(A), ITS

JURISDICTION EXTENDS TO ALL CLAIMS INVOLVING

CONDUCT THAT CONSTITUTES INFRINGEMENT UNDER

35 U.S.C. § 271.

The per curiam majority of the Federal Circuit found

support for its conclusion that patent rights lie beyond the

pale of the Fifth Amendment, and for the consequent conclu-

sion that a patentee’s judicial recourse against the United

States is set forth and limited by the terms of 28 U.S.C.

§ 1498, in the fact that Congress enacted the 1910 Patent Act.

Pet. App. A8-A9, A-11. The appeals court majority offered

no reasoned reconciliation of the Tucker Act and the 1910

Patent Act, but opined only that if it were to interpret section

1491(a) like the trial judge or the dissenting panel member,

section 1498(a) would be rendered superfluous. /d. at A190,

All. But see id. at C31-C34. Nonetheless, inherent in the

lower court’s determination to limit a patentee’s judicial

recourse solely to section 1498 lurks the application of certain

principles of statutory construction: either the preference for

the specific statute over the more general one or for the later

enacted statute over the earlier one. Neither principle is

suited for application in the present case. To apply them, as

the Federal Circuit did sub silentio, only exalts abstract prin-

17

ciples over the congressional purpose and intent that animated

the 1910 Patent Act. Correction by this Court is necessary.

Reconciliation of sections 1491(a) and 1498(a) must account

for the peculiar circumstances attending their respective en-

actments and evolving judicial interpretations over an ex-

tended time. Truly analogous situations are rare. Nonethe-

less, a striking parallel can be found in the Supreme Court’s

evolving views during the nineteenth century of federal

admiralty and maritime jurisdiction under section 9 of the

Judiciary Act of 1789, culminating in a determination that an

1845 act of Congress, enacted for the specific purpose of

expanding admiralty and maritime jurisdiction, was obsolete,

since it was no longer necessary once the Court had arrived at

a true interpretation of the grant of jurisdiction given by the

1789 act.

Article III, section 2 of the Constitution specifies that “the

[federal] judicial power shall extend . . . to all cases of

admiralty and maritime jurisdiction.” In furtherance thereof,

Congress in the Judiciary Act of 1789 provided the district

courts with an explicit and detailed grant of admiralty and

maritime jurisdiction. Act of Sept. 24, 1789, ch. 20, § 9, 1

Stat. 77 (the “1789 Act’). Thereafter, this Court went about »

delineating the bounds of admiralty and maritime jurisdiction.

In Steamboat Thomas Jefferson, 23 U.S. (10 Wheat.) 428

(1825), an action arising out of commerce on inland, western

rivers, Justice Story adopted the English view that admiralty

and maritime jurisdiction was confined to the high seas and

waters within the ebb and flow of the tide. This jurisdictional

ruling was reaffirmed in Steamboat Orleans v. Phoebus, 36

U.S. (11 Pet.) 175 (1837).

Cognizant of the burgeoning commerce conducted on the

Great Lakes as well as of the limited scope of admiralty and

maritime jurisdiction announced in The Thomas Jefferson,

Congress acted to extend the district courts’ admiralty juris-

diction in certain classes of cases involving vessels of a

certain size engaged in interstate commerce upon the Great

18

Lakes and the navigable waters connecting them. Act of Feb.

26, 1845, ch. 20, 5 Stat. 726 (the “1845 Act”). The con-

Stitutionality of this act Came before the Court in Propeller

Genesee Chief v. Fitzhugh, 53 U.S. (12 How.) 443 (1852), an

action arising out of a collision on Lake Ontario. In response

_ to a challenge to the lower court’s jurisdiction under the 1845

Act, Chief Justice Taney revisited the territorial scope of

admiralty and maritime jurisdiction. The rule laid down in

The Thomas Jefferson was held erroneous and was replaced

by a test of actual navigability. The 1845 Act was upheld as

an exercise of admiralty jurisdiction.

The 1845 Act came before the Court again in Allen v.

Newberry, 62 U.S. (21 How.) 244 (1859), which involved a

claim in admiralty for goods lost in the course of transit over

Lake Michigan between two Wisconsin ports. The vessel’s

ultimate destination on the voyage, however, was Chicago,

Illinois. The federal district court entertained the suit and

dismissed it on the merits. This Court affirmed the dismissal,

but on jurisdictional grounds. The 1845 Act extended the

admiralty and maritime jurisdiction only to vessels when

engaged in commerce between states, not commerce within a

state. This particular contract of affreightment had dealt only

with carriage between ports in the same state. Meanwhile,

however, exclusive federal jurisdiction in admiralty matters

arising on inland navigable waters other than the Great Lakes

became firmly established under the reinterpretation of sec-

tion 9 of the 1789 Act announced in The Genesee Chief.

Jackson v. Steamboat Magnolia, 61 U.S. (20 How.) 296

(1858) (involving a collision on the Alabama River where the

vessel’s voyage was wholly intrastate); The Hine v. Trevor,

71 U.S. (4 Wall.) 555 (1867) (involving a collision on the

Mississippi River).*

* The Hine, nevertheless, recognized that federal admiralty jurisdiction

with regard to the Great Lakes was governed by the 1845 Act. 71 U.S. (4

Wall.) at 569.

19

The tension between the 1845 Act and the reinterpreted

understanding of the 1789 Act was confronted and resolved

in The Eagle, 75 U.S. (8 Wall.) 15 (1869), which involved an

accident on the Detroit River among three vessels moving

between Lake Huron and Lake Erie. The libeled vessel chal-

lenged jurisdiction on several grounds, one being that the

jurisdictional requirements ofthe 1845 Act were not satisfied.

The Court dismissed the challenge and held that admiralty

jurisdiction was proper under the 1789 Act, for that was the

natural import of The Genesee Chief. The 1845 Act, which

preceded The Genesee Chief, had been intended to expand

federal jurisdiction by removing the tide water limitation on

admiralty jurisdiction with respect to the Great Lakes in

certain classes of cases involving vessels of a specified size.

But once The Genesee Chief was decided, the 1845 Act had

been overtaken, becoming “inoperative and ineffectual as a

grant of jurisdiction.” 75 U.S. (8 Wall.) at 25. It certainly did

not serve as a limitation, with respect to the Great Lakes, of

the full scope of admiralty jurisdiction that prevailed under

the 1789 Act.

[A]s it [the 1845 Act] was an act, on the face of it, and as

intended, in its purpose and effect, to extend the admi-

ralty jurisdiction to these waters, we cannot, without

utterly disregarding the purpose and intent, give effect to

it as a limitation or restriction upon it. We must, there-

fore, regard it as obsolete and of no effect, with the

exception of the clause which gives to either party the

right of trial by jury when requested ....

Id.

In like fashion, the 1910 Patent Act, now section 1498(a),

has been overtaken by the revised interpretation of the Tucker

Act grant of jurisdiction over claims founded upon the Con-

stitution. The 1910 Patent Act was enacted to “add to,”

“augment,” or “enlarge” the Court of Claims’ jurisdiction.

See Pet. App. A8, A9. If patentees were to enjoy the protec-

tions of the Fifth Amendment, that addition, augmentation, or

20

enlargement was necessary, given the constrained interpre-

tation of the Tucker Act grant of jurisdiction over claims

founded upon the Constitution that prevailed in 1910. To

suggest, as the panel majority did, that Congress instead

could have clarified “the dimensions of patent rights as

property interests under the Fifth Amendment” is nonsensical.

See id. at All. Just as The Genesee Chief imparted a new

and expansive interpretation of the 1789 Act, so too did

Phelps, Jacobs, and Causby give a new and expanded inter-

pretation of the Tucker Act grant of jurisdiction over claims

founded upon the Constitution. That expanded interpretation

of the Tucker Act renders the 1910 Patent Act just as obsolete

as the 1845 Great Lakes admiralty act. To contend otherwise

is to sanction an implied partial repeal of the Tucker Act, a

result at odds with the very purpose of the 1910 Patent Act

and with the teachings of this Court that such implied repeals

are disfavored. See Preseault v. ICC, 494 U.S. 1, 12-13

(1990); Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1017

(1984). In sum, the Court of Federal Claims’ jurisdiction

under 1491(a) extends to all claims of government appropria-

tion of a patent that involve conduct constituting infringement

under 35 U.S.C. § 271.

CONCLUSION

For the foregoing reasons, and for the reasons stated in the

petition, the petition for a writ of certiorari should be granted.

Respectfully submitted,

PHILIP A. NACKE *

FOLEY & LARDNER LLP

3000 K Street, N.W. — Suite 500

Washington, D.C. 20007

(202) 295-4086

* Counsel of Record Counsel for Amicus Curiae

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