Digest of Astornet Technologies Inc. v. BAE Systems, Inc.Nos. 2014-1854, 2015-1006, 2015-1007 (Fed. Cir. Sept. 17, 2015) (precedential). On appeal from D. Md. Before Prost, Newman, and Taranto.

Procedural Posture: Plaintiff filed three separate suits alleging indirect patent infringement under 35 U.S.C. § 271(b) and (c) by defendants, BAE, NCR, and MorphoTrust based on government use after delivery of equipment. Plaintiff appealed the district court’s dismissal of each of the three cases for failure to state a claim under Fed. R. Civ. P. 12(b)(6). CAFC consolidated the appeals and affirmed.

  • Court of Federal Claims – Section 1498(a): Plaintiff alleged that defendants had contracts with the Transportation Security Administration (“TSA”), an agency of the U.S. government, to supply certain boarding-pass scanning systems, and that each defendant induced the agency to use their equipment in a manner that directly infringed plaintiff’s patent. The district court properly dismissed plaintiff’s indirect infringement suits against the named government contractors because, under § 1498(a), when the United States uses an invention covered by a patent, the statute blocks the patent owner from any recovery, except from the United States at the Court of Federal Claims. Since the statute is not limited to claims that are filed against the United States or its government agencies, the statute will block a patent owner from obtaining any remedy against a government contractor that induces infringement by the United States and its agencies, like the TSA.
  • Induced Infringement – Failure to State a Claim: The CAFC also addressed the district court’s two other rationales for dismissal because it is unclear if the alternative rationales would have a continuing effect if left undisturbed. BAE argued that its corporate subsidiary two levels down rather than BAE itself entered into a contract with the TSA to supply the equipment involved in the alleged direct infringement by the TSA. The district court improperly dismissed defendant BAE on the ground that plaintiff failed to state a claim for induced infringement because the court did not analyze whether BAE, acting in its own capacity and having the intent required for indirect infringement, affirmatively encouraged the TSA to enter into a contract with BAE’s wholly owned subsidiary to engage in infringement. Such acts are not facially irrational for a parent company that would indirectly benefit from sales made by its subsidiary.
  • Voluntary Dismissal: The district court improperly concluded that the “two-dismissal rule” of Fed. R. Civ. P. 41(a)(1)(B) independently supports the dismissal of the cases against NCR and MorphoTrust. Rule 41(a)(1)(B) states that “if the plaintiff previously dismissed any federal- or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits.” The two actions for infringement against NCR and MorphoTrust were not brought by the same plaintiff.