Justia U.S. Federal Circuit Court of Appeals Opinion Summaries

The Army Corps of Engineers awarded Ikhana a contract to build a Pentagon facility by October 12, 2015. Ikhana procured required performance and payments bonds from GCNA, which required Ikhana to execute a general indemnity agreement, including a provision that assigned GCNA all rights under the contract if Ikhana defaulted or if GCNA made a payment on any bond. Each time Ikhana discovered a new worksite problem, it had to halt work until the Corps issued a unilateral contract change, causing significant delays and cost overruns. One modification required a power outage at the Pentagon, but the Corps never scheduled the outage. By mid-October 2015, construction stopped; Ikhana submitted claims seeking additional compensation and an extension of the deadline. Ikhana’s sub-contractors filed claims against GCNA’s bond. The Corps terminated Ikhana and made a claim on the bond. Ikhana appealed the termination and its claims to the Armed Services Board of Contract Appeals. GCNA and the Corps negotiated for GCNA to tender a completion contractor. GCNA invoked the indemnity agreement and entered into a settlement with the Corps then sought a declaratory judgment that the agreement authorized it to settle Ikhana’s dispute with the Corps and dismiss the Board appeal. The district court stayed GCNA’s action pending resolution of Ikhana’s Board appeal. The Federal Circuit affirmed the denial of GCNA’s motion to intervene and withdraw Ikhana’s Board appeal. GCNA lacked standing. A party seeking to supplant the plaintiff must be able to show that it could have initiated the complaint on its own. GCNA’s settlement agreement with the Corps, even if it constitutes a takeover agreement, does not entitle GCNA to assert claims that arose before the settlement. View "Guarantee Co. of North America USA v. Ikhana, LLC" on Justia Law

In 2005, Raytheon submitted its 2004 incurred cost rate proposal for a Cost-Plus-Fixed-Fee contract for engineering services associated with the Patriot Weapons system. Raytheon’s Corporate Controller certified that all included costs "are allowable in accordance with the cost principles of the [FAR] and its supplements applicable to the contracts to which the final indirect cost rates apply; and (2) This proposal does not include any costs which are expressly unallowable under applicable cost principles of the FAR." The Defense Contract Audit Agency reviewed the proposal and concluded that it contained expressly unallowable costs. In 2011 a Corporate Administrative Contracting Officer of the Defense Contract Management Agency (DCMA) issued a final decision determining that Raytheon’s proposal included, among other expressly unallowable costs, over $220,000 of expressly unallowable lobbying salary costs. The contracting officer demanded that Raytheon repay the government for these reimbursed expressly unallowable costs, and assessed penalties and interest under Federal Acquisitions Regulation (FAR) 42.709-1(a)(1). Although Raytheon admitted that salary costs associated with lobbying are unallowable and that it committed cost errors or omissions in its calculations, Raytheon argued that salaries were not specifically referenced in Subsection 22 and, accordingly, were not “expressly unallowable.” The Armed Services Board of Contract Appeals and Federal Circuit affirmed, finding that the lobbying costs are subject to penalty because salary costs for lobbying activities are expressly unallowable under FAR 31.205-22. View "Raytheon Co. v. Secretary of Defense" on Justia Law

Fraunhofer’s patents relate to multicarrier modulation for transmitting a main data stream over multiple carrier data streams, which is useful in satellite-based communication networks. In 1998, Fraunhofer gave WorldSpace a Master Agreement for a “worldwide, exclusive, irrevocable license, with the right to sublicense” the technology. SXM entered into a Sublicense Agreement with WorldSpace. Fraunhofer assisted SXM in developing a satellite communication system utilizing Fraunhofer’s technology. In 1999, SXM and Fraunhofer entered into a Technical Consulting Contract, confirming that the patents were exclusively licensed to WorldSpace. Fraunhofer allegedly constructed a system for SXM using the technologies covered by the patents. In 2008, WorldSpace filed for bankruptcy and rejected the Master Agreement. Fraunhofer did not terminate the agreement but filed an administrative claim for amounts unpaid under the Master Agreement. WorldSpace did not terminate the Sublicense Agreement. The bankruptcy court approved a settlement between WorldSpace and SXM, stating that the sublicense would remain in effect. SXM continued to use the technology. In 2015, Fraunhofer sent SXM a letter, alleging that SXM was infringing patents that were covered in the Master Agreement and Sublicense Agreement. Fraunhofer also sent WorldSpace a letter, claiming that the Master Agreement was terminated by rejection in bankruptcy and under German law. Fraunhofer sued SXM, alleging infringement. The district court dismissed, finding that SXM had a valid license to the patents-in-suit. The Federal Circuit vacated, concluding that the license defense cannot be resolved on a motion to dismiss. View "Fraunhofer-Gesellschaft Zur Förderung Der Angewandten Forschung E.V. v. Sirius XM Radio Inc." on Justia Law

In 2014, the Department of Commerce initiated an antidumping-duty investigation under 19 U.S.C. 1673–1673h into steel nail products from Oman and other countries. Commerce separated the Omani investigation into its own proceeding and designated OF a mandatory respondent. On Commerce’s initial questionnaire OF noted that its volume of sales in Oman, and in each third country that it operated in, was less than five percent of its U.S. sales and could not be the basis for the normal value calculation. Commerce determined that there was insufficient data to support the use of the preferred method, calculated a “constructed value” of the nails under the statute, and imposed an anti-dumping duty on OF. OF challenged: Commerce’s initial choice of method; Commerce’s selection of certain information as an input into the calculation required by the chosen method; and Commerce’s conclusion that it could not calculate a “cap” limiting the profit component of the constructed value. The Federal Circuit rejected OF’s challenge to the basic choice of method and the profit-cap ruling. The court partly rejected the challenge to Commerce’s information selection when applying the chosen method but remanded to secure further explanation about Commerce’s refusal to consider the effect of subsidies on whether the information it selected was accurate for the relevant statutory purpose. View "Mid Continent Steel & Wire, Inc. v. United States" on Justia Law

The Taxpayers, West Virginia non-stock, not-for-profit, 26 U.S.C. 501(c)(3) organizations, are generally exempt from federal income tax but are not exempt from taxes on “wages” from “employment” under the Federal Insurance Contributions Act (FICA). “Employment” under FICA has a broad definition but excepts service performed in the employ of a school by a student who is regularly enrolled and attending classes at the same school, 26 U.S.C. 3121(b)(10). In 2010, the IRS determined that medical residents fall within that exception, applied the determination retroactively, and issued tax refunds to the Taxpayers. The IRS paid interest on these tax refunds, applying the interest rate for corporations under 26 U.S.C. 6621(a)(1). If the IRS had used the interest rate for noncorporations, the Taxpayers would have received approximately $1.9 million in additional statutory interest. The Claims Court affirmed, reasoning that the Taxpayers are corporations under section 6621(a)(1) notwithstanding their nonprofit status. The Federal Circuit affirmed, agreeing with other circuits that an entity incorporated under state law is a corporation within the meaning of the Code. The Code addresses three basic types of corporations: nonprofit corporations covered by subchapter F; certain for-profit corporations covered by subchapter C; and certain for-profit corporations covered by subchapter S. In section 6621, Congress used the generic definition of “corporation,” which includes both for-profit and nonprofit entities. View "Charleston Area Medical Center, Inc. v. United States" on Justia Law

Horizon’s patents generally relate to methods and compositions for treating osteoarthritis and share a substantially similar specification; there are method-of-use patents and formulation patents. Both groups of patents are listed in the FDA Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book) for Horizon’s PENNSAID® 2% product, a nonsteroidal anti-inflammatory drug (NSAID) and the first FDA-approved twice-daily topical diclofenac sodium formulation for the treatment of pain of osteoarthritis of the knees. Prior art, PENNSAID® 1.5%, also treats osteoarthritis knee pain but differs from PENNSAID® 2% both in the formulation and recommended dosage. Actavis sought to market a generic version of PENNSAID 2% and filed an Abbreviated New Drug Application (ANDA) with certification under 21 U.S.C. 355(j)(2)(A)(vii)(IV), stating that the patents-at-issue were invalid or would not be infringed by Actavis’s generic product. Horizon filed an infringement suit under 35 U.S.C. 271(e)(2)(A). The Federal Circuit affirmed findings of invalidity and noninfringement, upholding claim construction that the terms “impurity A”; “degrades at less than 1% over 6 months”; and “consisting essentially of” are indefinite. Actavis’s ANDA label did not induce infringement of the method-of-use patent. View "HZNP Medicines LLC v. Actavis Laboratories UT, Inc." on Justia Law

B.E. sued Facebook for infringement of B.E.’s 314 patent. Approximately a year into the case, Facebook and two other parties B.E. had accused of infringement, Microsoft and Google, filed petitions for inter partes review of the asserted claims. The district court stayed its proceedings. The Patent Board instituted review and held the claims unpatentable. The Federal Circuit affirmed. Facebook then moved in the district court for a dismissal with prejudice and costs under Rule 54(d). B.E. agreed that dismissal was appropriate but argued that the claims should be dismissed for mootness, rather than with prejudice. The district court agreed with B.E., issuing an Order holding that, in light of the cancellation of claims, B.E. no longer had a basis for the lawsuit. The court ultimately awarded costs under Rule 54(d). The Clerk of Court held a hearing and taxed $4,424.20 in costs against B.E.; the court affirmed, holding that, although the case was dismissed for mootness, Facebook “obtained the outcome it sought: rebuffing B.E.’s attempt to alter the parties’ legal relationship.” The Federal Circuit affirmed, finding Facebook to be the prevailing party in B.E.’s lawsuit. View "B.E. Technology, L.L.C. v. Facebook, Inc." on Justia Law

Non-small cell lung cancer (NSCLC) was the leading cause of cancer deaths in 2000. The standard for treating NSCLC was chemotherapy, which ameliorated some lung cancer-related symptoms, but was limited in use due to toxicity. In response to a need for a therapy that would effective and well-tolerated, investigators pursued targeted therapies as alternatives to chemotherapy. A great majority of alternative therapies for NSCLC failed in clinical trials. One compound that ultimately gained FDA approval was erlotinib. OSI markets erlotinib under the name Tarceva®, which is covered by the 221 patent, which issued in 2005. On inter partes review, the Patent Board found certain claims unpatentable under 35 U.S.C. 103, in light of prior art and the 10-K disclosure filed by OSI with the Securities and Exchange Commission. The Federal Circuit reversed. Substantial evidence did not support the Board’s finding that the asserted combinations of prior art or prior art and the 10-K disclosures each would have provided a person of ordinary skill with a reasonable expectation of success in using erlotinib to treat NSCLC in a mammal. View "OSI Pharmaceuticals, LLC v. Apotex Inc" on Justia Law

Based on Mid Continent’s petition, the Department of Commerce initiated an antidumping duty investigation into steel nail products from Taiwan and certain other places. Commerce separated the Taiwanese investigation into its own proceeding and named Taiwanese exporter PT and its affiliated nail producer Pro-Team as mandatory respondents. Commerce found that the respondents were “dumping” goods, 19 U.S.C. 1673, and imposed a small antidumping duty on their imports. The Federal Circuit rejected Mid Continent’s argument that Commerce mistakenly rejected its argument that PT was affiliated with certain companies and should have imposed a higher duty. The court partially rejected PT’s argument that Commerce made methodological errors, the correction of which would reduce any dumping margin to a de minimis level so that no duty would be imposed, but remanded for further proceedings on Commerce’s choice of a simple averaging in calculating the pooled variance. View "Mid Continent Steel & Wire, Inc. v. United States" on Justia Law

AAM’s 911 patent generally relates to a method for manufacturing driveline propeller shafts with liners that are designed to attenuate vibrations transmitted through a shaft assembly. Propshafts are employed in automotive vehicles to transmit rotary power in a driveline. The patent identified a need for an improved method for damping various types of vibrations in a hollow shaft; AAM argued that the inventive concept to which the claims are directed is the tuning of a liner in order to produce frequencies that dampen the shell mode and bending mode vibrations simultaneously. In AAM’s infringement action against Neapco, the district court granted Neapco summary judgment, holding that the asserted claims are patent-ineligible under 35 U.S.C. 101. The Federal Circuit affirmed. The claims’ direction to tune a liner to attenuate to different vibration modes amounted to merely instructing one to apply Hooke’s law to achieve the desired result of attenuating certain vibration modes and frequencies without providing a particular means of how to craft the liner and propeller shaft in order to do so. Hooke’s law is a natural law, an equation that describes the relationship between an object’s mass, its stiffness, and the frequency at which the object vibrates. View "American Axle & Manufacturing, Inc. v. Neapco Holdings LLC" on Justia Law