The GAO Holds It Possesses Jurisdiction Over Bid Protests of Civilian Agency Task and Delivery Order Awards

Many believed that the Government Accountability Office’s (“GAO’s”) jurisdiction over bid protests of civilian agency task and delivery order awards valued at over $10 million expired on May 27, 2011. This belief was based on the fact that certain broadened jurisdiction over civilian agency task and delivery order protests granted by the 2008 National Defense Authorization Act (“2008 Act”) expired on that date. With the expiration of the broadened jurisdictional grant found in the 2008 Act, many thus contended that a contractor would not be able to protest a civilian agency task or delivery order award at the GAO unless the protest alleged that the order exceeded the scope, period or maximum value of the underlying contract. Protests of Department of Defense task and delivery order awards valued at over $10 million were not similarly affected because Congress extended the GAO’s exclusive, broadened jurisdiction over these protests through the 2011 National Defense Authorization Act.

The House of Representatives and the Senate introduced bills in March 2011 to level the playing field by providing the GAO with exclusive jurisdiction over civilian agency task and delivery order awards valued at over $10 million. See H.R. 899;  S. 498. The Senate recently passed its version of the bill. The bill must still pass the House and be signed by the President before it becomes law. But, the GAO did not wait. Rather, based on a plain meaning of the 2008 Act, the GAO recently held that it now possesses jurisdiction over bid protests of civilian agency task and delivery order awards. See Technatomy Corp., B-405130, June 14, 2011.

The GAO provided the following rationale for its decision:

The Competition in Contracting Act (“CICA”) provided the GAO with authority to decide bid protests, including protests in connection with task and delivery order awards. See id. at p. 2. In 1994, Congress changed that jurisdiction with the passage of the Federal Acquisition Streamlining Act (“FASA”), which barred protests against individual task and delivery order awards, unless the protest alleged that the order exceeded the scope, period or maximum value of the underlying contract. See id. at pp. 2-3.

In 2008, Congress again fiddled with the jurisdiction of the GAO, in this instance, replacing the FASA provision with the 2008 Act. The 2008 Act again barred protests against individual task and delivery order awards but included exceptions to that bar where the awards were valued at over $10 million or the allegation was that the award exceeded the scope, period or maximum value of the underlying contracts. See id. at p. 3. The 2008 Act’s broadened grant of authority, however, contained a three year sunset period. See id. at pp. 3-4. Importantly, as drafted, the sunset provision of the 2008 Act applied to the entire statutory subsection, which included (a) the bid protest bar, (b) the exception for protests alleging that the order exceeded the scope, period or maximum value of the underlying contract, as well as the (c) the new broadened exception that allowed protests of orders valued at over $10 million. See id. at p. 4. The GAO concluded that since this entire subsection ceased to exist on May 27, 2011, the GAO thereafter regained jurisdiction over bid protests of civilian agency task and delivery order awards under its original CICA jurisdiction. See id. at pp. 4-5.
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The legislative process continues to move forward. The suspense over what would happen in the interim to the protest jurisdiction over task and delivery orders issued by civilian agencies, however, has been lifted. We now know that, even as we await Congressional action, the GAO will continue to entertain jurisdiction over bid protests challenging civilian agency task and delivery order awards

Adding Only Dependent Claims Is Error Correctible By Reissue

The U.S. Court of Appeals for the Federal Circuit held that patent applicants can file a reissue application that retains all original claims and adds only dependent claims. In re Yasuhito Tanaka (Fed. Cir., Apr. 15, 2011) (Linn, J.) (Dyk, J., dissenting).

Yasuhito Tanaka (Tanaka) appealed from the precedential decision of the Board of Patent Appeals and Interferences (the Board), holding that a reissue application that adds only dependent claims does not present the type of error correctible by reissue under 35 U.S.C. §251.  Tanaka filed a reissue application seeking to broaden claim 1 of his patent and did so within two years of the patent issuance.  Over the course of prosecuting the reissue application, Tanaka gave up on broadening claim 1 and presented original claims with a new dependent claim.  The examiner rejected the claims, asserting that no error has been specified that broadens or narrows the scope of the claims.  The rejection was made final.  Tanaka appealed to the Board.

The Board held that §251 “disallow[s] reissue applications that simply add narrow claims to the reissue patent when no assertion of inoperativeness or invalidity for the reasons set forth in § 251 can be made by the patentee.”  Therefore, the Board affirmed the examiner’s decision, whereupon Tanaka appealed to the Federal Circuit.

On appeal, Tanaka argued that the Board’s holding is inconsistent with long standing Court of Customs and Patent Appeals (CCPA) precedent such as In re Handel and In re Muller, as well as with Federal Circuit precedent such as Hewlett-Packard v. Bausch & Lomb.  The Federal Circuit agreed, noting that § 251 provides “[w]henver any patent is … deemed wholly or partly inoperative or invalid … by reason of the patentee claiming more or less than he had a right to claim in the patent, the Director shall…reissue the patent.”  Referring to its precedent, the Federal Circuit noted that the term less means claiming fewer claims than patentee could have properly claimed rather than referring to the scope of protection.  In In re Handel, it was stated that adding dependent claims as a hedge against possible invalidity of original claims is a proper reason for asking for a reissue to be granted.

Accordingly, the Federal Circuit concluded that patent applicants can file a reissue application for purposes of adding only additional dependent claims.

Judge Dyk, in dissent, cited an 1883 Supreme Court case, Gage v. Herring, that in his view prohibited a reissue applicant from returning his original claims without amendment.

Supreme Court Rules That Knowledge Of Patent Is Required For Liability For Inducing Patent Infringement, But Willful Blindness Is Enough

Under section 271(b) of the Patent Act, a defendant in a patent infringement lawsuit may be held liable for inducing the infringement of a patent, i.e., causing another person to directly infringe a patent. However the language of the statute is not clear as to what conduct or intent is required for one to be liable for inducing infringement. Section 271(b) simply provides: “Whoever actively induces infringement of a patent shall be liable as an infringer.”

The U.S. Supreme Court recently grappled with the meaning of Section 271(b) in Global Tech Appliances, Inc. v. SEB S.A., U.S., No. 10-6, 5-31-2011, acknowledging that the statutory language regarding induced infringement is ambiguous, and attempting to clarify the requirements for liability under this section.

In Global Tech, defendant was accused of inducing infringement of a patent for an innovative deep fryer owned by SEB S.A. Defendant had purchased an SEB fryer in Hong Kong (thus it lacked U.S. patent markings), copied all of the fryer’s features except for cosmetics, retained an attorney to conduct a right-to-use study without telling the attorney that it had copied SEB’s design, and ultimately sold its fryers to companies that then resold them in the United States. A jury found defendant liable for inducing infringement and the Federal Circuit affirmed, stating that one may be liable for induced infringement where he “knew or should have known that his actions would induce actual infringements.” At issue before the Supreme Court was whether the standard applied for finding induced infringement (i.e., that defendant knew or should have known) was appropriate.

In considering Section 271(b), the Court explained that the phrase “induces infringement” could merely require that “the inducer lead another to engage in conduct that happens to amount to infringement,” (i.e., no knowledge that the induced act constitutes infringement) or “the inducer must persuade another to engage in conduct that the inducer knows is an infringement.” (Emphasis added.) In other words, as the Court pointed out, the statute fails to give any indication as to what, if any, intent is required for a defendant to be liable for inducing patent infringement.

After considering case law pre-dating enactment of the law on contributory patent infringement (including induced infringement) and finding it conflicting, the Court turned its attention to its decision in Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964) (“Aro II“). In Aro II, the Court determined the intent required for contributory infringement under Section 271(c). Under Section 271(c), a party is liable for patent infringement where it “offers to sell or sells . . . a component of a patented [invention] . . ., constituting a material part of the invention,knowing the same to be especially made or especially adapted for use in an infringement of such patent . . . .” In Aro II, the Court concluded that for contributory liability to attach under Section 271(c), knowledge of the existence of the patent that is infringed is necessary.

Based on the Aro II decision and the fact that Section 271(b) and 271(c) incorporate a similar ambiguity as to intent, the Court concluded in Global Tech that the same knowledge standard for contributory infringement under Section 271(c) is necessary for induced infringement under Section 271(b). Thus, the Court held that “induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement.” A “deliberate indifference to a known risk that a patent exists is not the appropriate standard under § 271(b).”

The analysis does not end there however. The next step is the determination of what constitutes “knowledge” for liability for inducing infringement. Despite finding a “deliberate indifference” insufficient to meet this knowledge requirement, Global Tech Court went on to affirm the lower court rulings against the defendant in this case finding that the evidence was sufficient to support a finding of knowledge based on the defendant’s “willful blindness.” The Court reviewed the history of the doctrine of willful blindness and concluded that for the doctrine to apply, two requirements must be met: “(1) the defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact.” In justifying the imposition of liability based on a defendant’s willful blindness, the Court distinguished willful blindness from recklessness and negligence explaining: “a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known of the critical facts.”

In Global Tech, the facts that sufficed to amount to willful blindness for liability for inducing infringement included defendant’s decision to copy an overseas model of SEB’s fryer (lacking patent markings) and its failure to inform its attorney from whom it sought a right-to-use opinion of that fact. Based on these facts, the Court concluded that defendant “subjectively believed there was a high probability that SEB’s fryer was patented, that [defendant] took deliberate steps to avoid knowing that fact, and that it therefore willfully blinded itself to the infringing nature of [purchasers’] sales.”

In summary, under the Court’s Global Tech decision, one may be liable for inducing infringement if he knew that the acts induced constitute an infringement. While a deliberate indifference to a known risk that a patent exists is insufficient to demonstrate induced infringement, willful blindness is enough.

The Wisconsin Court of Appeals Upholds Dismissal of Medical Monitoring Claims

In Alsteen v. Wauleco, 2011 WL 2314988 (Wis. Ct. App. June 14, 2011), the Wisconsin Court of Appeals upheld the dismissal of numerous plaintiffs’ claims for medical monitoring, holding that the plaintiffs’ alleged increased risk of future harm was not an actual injury that would support an award of damages under Wisconsin law. Amber Alsteen and 69 other plaintiffs (collectively, “Alsteen”) alleged the defendants were liable for the release of a chemical preservative called “Penta” into a residential neighborhood in Wausau, Wisconsin from 1946 to 1986. While Alsteen did not suffer from any present adverse health effects due to the alleged contamination, she alleged that Penta exposure “significantly increased [her] risk of contracting cancer” and sought “future expenses related to medical monitoring.” The trial court dismissed Alsteen’s claims, finding that the alleged risk of future harm was insufficient to state a claim for actual injury, as required by Wisconsin law.

The Wisconsin Court of Appeals affirmed the dismissal of Alsteen’s claims. The court noted that Wisconsin law requires plaintiffs to prove an actual injury before they may recover in tort, and Alsteen did not allege any actual injury or damage. First, Alsteen’s allegation that she faces a significantly increased risk of cancer does not state an injury, because Wisconsin law holds that the “mere possibility of future harm” does not constitute actual injury. Second, the court held that mere exposure to a hazardous substance is not an actual injury, rejecting Alsteen’s reliance on cases involving needlesticks and the fear of HIV. The court explained that the needlestick cases involved actual injury (the needlestick) and different policy concerns than the possibility of environmental exposure to toxins, as “most people are exposed to a wide variety of environmental contaminants, including carcinogens, on a daily basis.” Finally, the court rejected Alsteen’s argument that her alleged future need for diagnostic examinations was an actionable injury. As the court explained, “Alsteen’s argument turns tort law on its head by using the remedy sought – compensation for future medical monitoring – to define the alleged injury.” Id.

By dismissing Alsteen’s claims, the Wisconsin Court of Appeals “recognize[d] that allowing a medical monitoring claim absent present injury would constitute a marked alteration in the common law.” Thus, the court preserved Wisconsin’s basic common law principle that a plaintiff must allege and prove an actual, present injury to recover in tort.

Amber Alsteen et. al. v. Wauleco, Inc. et al., 2011 WL 2314988, 2010AP1643 (Ct. App. June 14, 2011)