Sevenson Environmental Services, Inc. v. Shaw Environmental, Inc.
An accused infringer may have government contractor immunity if 1) the use is “for the Government”; and 2) the use is “with the authorization and consent of the Government.”
Sevenson appeals the summary judgement of District Court (W.D. N.Y.) that a patent suit against a hazardous waste remediation contractor was barred by government contractor immunity under 28 U.S.C. § 1498. The relevant statutory provision of 28 U.S.C. § 1498 reads as follows:
Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture . . . .
For the purposes of this section, the use or manufacture of an invention described in and covered by a patent of the United States by a contractor, a subcontractor, or any person, firm, or corporation for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States.
Shaw is a hazardous waste remediation firm that in 2002 contracted with the Corps of Engineers to engage in cleanup and remediation work at a lead-contaminated parcel of land near Colonie, New York that is owned by the United States and managed by the U.S. Army Corps of Engineers. Sevenson is a corporation that holds several U.S. patents regarding hazardous waste remediation, including some that claim methods for treating hazardous waste by applying phosphoric acid. Sevenson alleged that Shaw’s work at the Colonie site infringed these patents.
In this case, Shaw’s immunity to suit hinged on the interpretation of its contracts with the government. Shaw’s relationship with the Government is defined by two separate contracts, the “Total Environmental Restoration Contract” (“TERC”) and the “Pre-placed Remedial Action Contract” (“PRAC”). Because Shaw is a contractor, its use of the patented method qualifies as “use . . . for the United States,” and it is thus immune from suit except “by action against the United States in the United States Court of Federal Claims,” if two criteria are met: (1) the use is “for the Government”; and (2) the use is “with the authorization and consent of the Government.”
The CAFC found that Shaw’s use of the accused method was in its capacity as a government contractor and pursuant to its contract for the benefit of the government. Also, the government contract contained an explicit authorization and consent clause that explicitly encompassed “specifications” that are a part of the contract, e.g. Shaw’s work plan. Shaw’s work plan required that Shaw use the accused method at the Colonie site. Accordingly, Shaw’s use of the contract was both “for the Government” and “with the authorization and consent of the Government,” and Shaw is entitled to immunity from suit under § 1498(a).