Justia U.S. Federal Circuit Court of Appeals Opinion SummariesArticles Posted in Energy, Oil & Gas Law
Simens Energy, Inc. v. United States, Wind Tower Trade Coalition
The Department of Commerce determined that utility scale wind towers from the People’s Republic of China and utility scale wind towers from the Socialist Republic of Vietnam (together, the subject merchandise) were sold in the United States at less than fair value and that it received countervailable subsidies. The International Trade Commission made a final affirmative determination of material injury to the domestic industry. The determination was by divided vote of the six-member Commission. The Court of International Trade upheld the Commission’s affirmative injury determination. Siemens Energy, Inc., an importer of utility scale wind towers, challenged the determination. The issues on appeal concerned the interpretation and effect of the divided vote. The Federal Circuit affirmed, holding that the Court of International Trade properly upheld the Commission’s affirmative injury determination. View "Simens Energy, Inc. v. United States, Wind Tower Trade Coalition" on Justia Law
Barlow & Haun, Inc. v. United States
Trona is a sodium carbonate compound that is processed into soda ash or baking soda. Because oil and gas development posed a risk to the extraction of trona and trona worker safety, the Bureau of Land Management (BLM), which manages the leasing of federal public land for mineral development, indefinitely suspended all oil and gas leases in the mechanically mineable trona area (MMTA) of Wyoming. The area includes 26 pre-existing oil and gas leases owned by Barlow. Barlow filed suit, alleging that the BLM’s suspension of oil and gas leases constituted a taking of Barlow’s interests without just compensation and constituted a breach of both the express provisions of the leases and their implied covenants of good faith and fair dealing. The Federal Circuit affirmed the Claims Court’s dismissal of the contract claims on the merits and of the takings claim as unripe. BLM has not repudiated the contracts and Barlow did not establish that seeking a permit to drill would be futile. View "Barlow & Haun, Inc. v. United States" on Justia Law
WesternGeco L.L.C. v. Ion Geophysical Corp.
WesternGeco’s patents relate to technologies used to search for oil and gas beneath the ocean floor. Ships tow long streamers equipped with sensors. An airgun bounces sound waves off of the ocean floor. The sensors pick up the returning sound waves and create a map of the subsurface geology to aid in identifying drilling locations. The streamers can be miles long and can tangle or drift apart, resulting in distorted maps. The patents relate to controlling the streamers and sensors in relation to each other by using winged positioning devices and generating four-dimensional maps with which it is possible to see changes in the seabed over time. WesternGeco manufactures the Q-Marine, and performs surveys for oil companies. ION manufactures the DigiFIN, and sells to its customers, who perform surveys for oil companies. WesternGeco filed suit. A jury found infringement and no invalidity and awarded $93,400,000 in lost profits and $12,500,000 in reasonable royalties. The Federal Circuit affirmed, rejecting arguments that WesternGeco was not the owner of the patents and lacked standing and that the court applied an incorrect standard under 35 U.S.C. 271(f)(1). The court upheld denial of enhanced damages for willful infringement and reversed the award of lost profits resulting from conduct occurring abroad. View "WesternGeco L.L.C. v. Ion Geophysical Corp." on Justia Law
Amergen Energy Co, LLC v. United States
In 1999-2000, AmerGen purchased three nuclear power plants. The Nuclear Regulatory Commission transferred the operating licenses, making AmerGen obligated to decommission the plants, and extended the licensing to 2029, 2034, and 2026. Decommissioning may take 60 years. Prior owners had established qualified and nonqualified trust funds to pay for decommissioning. Contributions to a qualified fund (I.R.C. 468A), subject to limitations, are currently deductible. Investment incomes are taxed at a fixed rate. A nonqualified fund does not have those tax advantages. AmerGen's accountants advised that it was unlikely that the IRS would allow AmerGen to include the assumed decommissioning liability in the basis of the assets acquired on the date of the purchase and that the entire cash consideration would be allocated to the basis of transferred nonqualified funds, rather than to the basis of the plants. AmerGen sought IRS private letter rulings and required the sellers to make additional contributions to the trusts. They transferred $393 million in qualified funds and $581 million in nonqualified funds. On its 2001-2003 tax returns, AmerGen claimed that, in addition to the $93 million purchase price, it assumed decommissioning liabilities of $2.15 billion that should be included in the basis of the plants at the time of purchase. With that adjustment and corresponding depreciation and amortization deductions and reduced capital gains, AmerGen attempted to reduce its taxable income by $110 million per year. The IRS rejected the request. The Federal Circuit affirmed summary judgment that the economic performance requirement of 26 U.S.C. 461(h) applies to AmerGen as an accrual basis taxpayer so that it may not include the liabilities in basis. AmerGen did not economically perform decommissioning in the relevant tax years. View "Amergen Energy Co, LLC v. United States" on Justia Law
Gen. Elec. Co. v. Wilkins
Lightning strikes and animal contacts can cause wires of the power grid to short. Such “low voltage events” can damage wind turbines, which previously disconnected from the grid during a low voltage event. As wind began providing a greater percentage of overall power, utilities began to require low voltage ride-through. GE’s 985 patent, directed to controlling components of a wind turbine that would allow it to remain connected to the grid and to safely ride through a low voltage event, names five co-inventors who were based in Germany. Wilkins is not named. Wilkins was involved in adapting wind turbines to meet certain requirements in the U.S. The German team consulted Wilkins for confirmation that their invention would work with U.S. grid. Wilkins left GE in 2002. The 985 patent is asserted by GE against Mitsubishi in several lawsuits. Mitsubishi challenged the validity of the patent and hired Wilkins, who worked 1,000 hours in an effort to invalidate the 985 patent. Mitsubishi also argued that the patent was unenforceable because GE intentionally failed to name Wilkins as a co-inventor. The administrative law judge found that Wilkins had co-invented the patent but that GE did not intend to deceive the PTO. Later, Wilkins asserted ownership rights in the 985 patent and another patent. Wilkins entered into additional agreements with Mitsubishi and was paid more than $1.5 million. GE sought to quiet title to the patents. Wilkins counterclaimed. After refusing to take an unqualified oath to tell the truth at his deposition, behavior that the court deemed “not acceptable,” Wilkins filed a declaration calling the court “ignorant.” The district court dismissed GE’s ownership claims as time-barred and held that Wilkins and Mitsubishi failed to establish that Wilkins co-invented any claim of the 985 patent. The Federal Circuit affirmed, noting that Wilkins had filed additional claims for malicious prosecution and abuse of process against GE and its counsel. View "Gen. Elec. Co. v. Wilkins" on Justia Law
Shell Oil Co. v. United States
Following the 1941 attack on Pearl Harbor, each of the Oil Companies entered into contracts with the government to provide high-octane aviation gas (avgas) to fuel military aircraft. The production of avgas resulted in waste products such as spent alkylation acid and “acid sludge.” The Oil Companies contracted to have McColl, a former Shell engineer, dump the waste at property in Fullerton, California. More than 50 years later, California and the federal government obtained compensation from the Oil Companies under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601, for the cost of cleaning up the McColl site. The Oil Companies sued, arguing the avgas contracts require the government to indemnify them for the CERCLA costs. The Court of Federal Claims granted summary judgment in favor of the government. The Federal Circuit reversed with respect to breach of contract liability and remanded. As a concession to the Oil Companies, the avgas contracts required the government to reimburse the Oil Companies for their “charges.” The court particularly noted the immense regulatory power the government had over natural resources during the war and the low profit margin on the avgas contracts. View "Shell Oil Co. v. United States" on Justia Law
Century Exploration New Orleans, LLC v. United States
The companies obtained an oil and gas lease from the government for a 5760-acre tract on the Outer Continental Shelf. They made an initial bonus payment of $23,236,314 and have paid additional rental payments of $54,720 per year. The lease became effective on August 1, 2008, and had an initial term running through July 31, 2016. It provided that it issued pursuant to and was subject to the Outer Continental Shelf Lands Act of August 7, 1953, (OCSLA) 43 U.S.C. 1331 and “all regulations issued pursuant to the statute in the future which provide for the prevention of waste and conservation of the natural resources of the Outer Continental Shelf and the protection of correlative rights therein; and all other applicable statutes and regulations.” In 2010, an explosion and fire on the Deepwater Horizon semi-submersible oil drilling rig in the Gulf of Mexico killed 11 workers and caused an oil spill that lasted several months. As a result, the government imposed new regulatory requirements, Oil Pollution Act (OPA), 33 U.S.C. 2701. The companies sued for breach of contract. The Claims Court and Federal Circuit ruled in favor of the government, finding that the government made the changes pursuant to OCSLA, not OPA. View "Century Exploration New Orleans, LLC v. United States" on Justia Law
Danisco U.S. Inc. v. Novozymes A/S, Inc.
Danisco and Novozymes compete as suppliers of Rapid Starch Liquefaction products, genetically modified industrial enzymes that convert plant-based material into ethanol. They have patents that claim α-amylase enzymes, genetically engineered through substitution of amino acids in the peptide sequence to improve liquefaction performance. Novozymes has sued Danisco several times. Once Novozymes amended a pending patent application to claim one of Danisco’s new products, and sued Danisco the same day that the patent issued. Danisco owns the 240 patent, issued 2011 and claiming priority from a 2008 provisional application, claiming a variation for increased viscosity reduction in a starch liquefaction assay; it is the active ingredient in Danisco’s RSL products. After the PTO issued a Notice of Allowance, Novozymes amended a pending application to claim the enzyme, and contested entitlement to priority, arguing that its amended claim covered the same invention as the 240 patent. After Danisco’s 240 patent issued, Novozymes requested continued examination and made comments about its refusal to “acquiesce.” Upon issuance of Novozymes’s 573 patent, Danisco sought declaratory judgments that its products did not infringe and that the 573 patent was invalid, or that its 240 patent had priority under 35 U.S.C. 291. The district dismissed, acknowledging that Novozymes’s 573 patent presented a substantial risk to Danisco, but that Danisco’s action was filed before Novozymes could take action to enforce its rights. The Federal Circuit reversed, holding that the totality of the circumstances established a justiciable controversy. View "Danisco U.S. Inc. v. Novozymes A/S, Inc." on Justia Law
NYCAL Offshore Dev. Corp. v. United States
In 2002 oil companies filed breach of contract actions against the government, concerning sales of offshore oil and glass leases in the 1980s. The Claims Court held that the government had breached its contracts by preventing the companies from drilling for oil in the offshore areas covered by the leases. The Federal Circuit affirmed the judgment and restitution awards of approximately $1 billion. Nycal, which held a 4.25 percent interest in two of the leases, waived its right to restitution and pursued a claim for lost profits. The Claims Court held that it was permissible for Nycal to seek lost-profits damages even though the other owners of the leases in which Nycal held a partial share had accepted restitution, but concluded that Nycal had not proved its case for lost profits. The Federal Circuit affirmed, noting the government’s evidence that Nycal could not have made a profit on its share of the leases.View "NYCAL Offshore Dev. Corp. v. United States" on Justia Law
Butamax(TM) Advanced Biofuels v. Gevo, Inc.
Butamax owns the 188 patent, which covers a recombinant microbial host cell that uses a particular biosynthetic pathway to produce isobutanol, which is useful as a fuel or fuel additive, and the 889 patent, which issued from a divisional of the 188 patent’ application and focuses on a method of producing isobutanol from a recombinant yeast microorganism that expresses a five-step biosynthetic pathway. The patents’ specifications largely are identical. The district court rejected Butamax’s claim of literal infringement and granted Gevo summary judgment of noninfringement under the doctrine of equivalents of the asserted claims and of invalidity of claims 12 and 13 of the 889 patent for lack of written description, and invalidity of claims 12 and 13 of the 889 patent for lack of enablement. The Federal Circuit vacated. The district court erred in its claim construction and determination under the doctrine of equivalents and failed to recognize the existence of genuine issues of material fact. The court reversed summary judgment of invalidity for lack of enablement because that judgment appeared to have been a scrivener’s error. View "Butamax(TM) Advanced Biofuels v. Gevo, Inc." on Justia Law