District Judge Denise Cote dismissed plaintiffs Crye Precision LLC’s and Lineweight LLC’s (collectively “Crye’s”) unjust enrichment claim against defendant Duro Textiles, LLC’s (“Duro’s”) as barred by 28 U.S.C. § 1498(a), and granted Crye’s motions to dismiss Duro’s declaratory judgment counterclaims of invalidity and inequitable conduct for failure to state a claim.

Crye developed the pattern known as MULTICAM, which was the standard issue camouflage pattern for U.S. soldiers deployed to Afghanistan from 2010 to 2014. MULTICAM is the subject of at least U.S. Design Patent No. D592,861 (“the ’861 Patent”). Duro had a license to the design until 2014 but continued to make camouflage designs whose “overall appearance is virtually undistinguishable from MULTICAM’s” after the license expired.

Duro argued that 28 U.S.C. § 1498(a) divests the court of subject matter jurisdiction over Crye’s breach of contract and unjust enrichment claims because they are patent infringement claims against the U.S. that must be brought in the Court of Federal Claims. The court held that Section 1498(a) applies to patent infringement claims only and thus does not preclude Crye’s breach of contract claim, but does block Crye’s unjust enrichment claim. It explained that Crye’s breach of contract claim “is not a claim for patent infringement against the Government masquerading as a contract claim” because, “[s]eparate and apart from any duties that Duro may have under the patent laws, under the 2012 Agreement Duro voluntarily incurred an independent obligation to Crye by contracting not to ‘make any products that are similar to MULTICAM . . . .’” The court added that characterizing this cause of action “as a breach of contract claim beyond the reach of Section 1498(a) is possible only to the extent that [it] seeks damages, as opposed to an injunction for breach of patent rights.” However, it found that Crye’s unjust enrichment claim did fall within Section 1498(a)’s ambit because “if Duro’s enrichment from the sale of Scorpion W2 fabric is ‘unjust,’ it is because that enrichment infringed one of Crye’s rights” deriving from the patent laws.

Also, the court granted Crye’s motion to dismiss Duro’s counterclaims for invalidity of four patents assigned to Crye for failure to comply with the Twombly/Iqbal pleading standard, “as they allege[d] without more that each of Crye’s Patents is ‘invalid for failure to satisfy one or more of the conditions of patentability . . . including but not limited to 35 U.S.C. §§ 102, 103, 112, and/or 171.’” The court explained that although Duro referred to conditions of patentability, it did not “identify any prior art that anticipates or renders obvious Crye’s Patents.

Case: Crye Precision LLC v. Duro Textiles, LLC, No. 15CV1681 (DLC), 2015 BL 190869 (S.D.N.Y. June 16, 2015)