IRIS Corp. v. Japan Airlines Corp.; SecurityPoint Holdings, Inc. v. TSA

Addressing the jurisdiction of a patent infringement claim against the U.S. government, the U.S. Court of Appeals for the Federal Circuit affirmed the district court’s dismissal of the plaintiff’s complaint, as the allegedly infringing acts were carried out for the United States under 28 U.S.C § 1498 (a). IRIS Corp. v. Japan Airlines Corp., Case No. 10-1051 (Fed. Cir., Oct. 21, 2014) (Prost, J.) Similarly, the U.S. Court of Appeals for the District of Columbia Circuit addressed the U.S. government’s attempt to require airports indemnify the Transportation Security Administration (TSA) from all liability of intellectual property claims, holding the contract improper. SecurityPoint Holdings, Inc. v. TSA, Case No. 13-1068 (D.C. Cir., Oct. 28, 2014) (Williams, J.)

In IRIS Corp., IRIS sued Japan Airlines (JAL) in district court alleging infringement of its patent covering a method of manufacturing a passport with a RFID chip. IRIS asserted that JAL’s examination of electronic passports made abroad in a manner within the scope of the patented claims infringes the claims of the patent under 35 U.S.C. § 271 (g). JAL responded that U.S. federal law required it to examine the passports, which exempted JAL from infringement liability. JAL further asserted IRIS’s exclusive remedy for patent infringement is an action against the United States under 28 U.S.C § 1498 (a). After the district court granted JAL’s motion, IRIS appealed.

The Federal Circuit affirmed explaining that the United States had assumed liability under § 1498 (a) for JAL’s allegedly infringing activities. First, the Court found that the U.S. government clearly provided its authorization and consent for JAL’s activities, as JAL could not comply with its legal obligations without engaging in the allegedly infringing activities. Second, the Federal Circuit found that the U.S. government benefits from JAL’s allegedly infringing activities, because JAL was required by the government to perform this quasi-governmental function of examining passports to improve detection of fraudulent passports and reduce the demands on government resources.

In the SecurityPoint Holdings case, the petitioner, SecurityPoint, challenged TSA’s changes to a program involving advertisements at airport security checkpoints. In a separate, currently pending case, SecurityPoint sued TSA for allegedly infringing SecurityPoint’s patent covering some of the equipment and methods used by airports for advertising on bins used at airport security checkpoints (the Bin Advertising Program). In response to this pending lawsuit, TSA modified the terms its contracts with airports under the Bin Advertising Program by requiring participating airports to indemnify TSA from all liability for intellectual property claims related to the checkpoint equipment. TSA’s modified contract further provided that, upon cancellation of the agreement, TSA would retain the right to use the checkpoint equipment and obtain a license to all intellectual property necessary for such use. SecurityPoint requested TSA cease and desist from making these contractual changes, asserting airports would not be able to comply with a contract indemnifying TSA from intellectual property claims. After TSA denied SecurityPoint’s request, SecurityPoint appealed to the D.C. Circuit.

The D.C. Circuit held that TSA’s denial of the request failed to provide a brief statement on the grounds for denial. Specifically, TSA failed to respond to SecurityPoint’s arguments that the new indemnification provision would make it impossible for airports to participate in the Bin Advertising Program. Thus, the D.C. Circuit vacated TSA’s decision as arbitrary and capricious.