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Invention Secrecy Act Provides No Relief to Patent Owners for Government Use of an Invention Subject to a Secrecy Order After Patent Issues

April 15, 2010
Ferrill, Elizabeth D.

Decision icon Decision

Last Month at the Federal Circuit - May 2010

Judges: Michel, Rader (author), Folsom (Chief District Judge sitting by designation)

[Appealed from: S.D. Cal., Judge Sammartino]

In Hornback v. United States, No. 09-1543 (Fed. Cir. Apr. 15, 2010), the Federal Circuit affirmed the district court’s dismissal of the plaintiff’s complaint for failure to state a claim.  The Court held that the Invention Secrecy Act, 35 U.S.C. § 183, does not provide Mr. Hornback with a cause of action for the government’s use of his invention, which was subject to a secrecy order, after the issuance of the patent on that invention. 

Alton B. Hornback is the named inventor of U.S. Patent No. 6,079,666 (“the ’666 patent”), titled “Real Time Boresight Error Slope Sensor.”  In 1986, Mr. Hornback filed his patent application.  But in 1987, the United States Air Force classified the application as “secret,” and the PTO imposed a secrecy order under 35 U.S.C. § 181.  Shortly thereafter, the PTO issued a Notice of Allowability, but in view of the secrecy order, the PTO withheld the application from issue.  In 1999, the government rescinded the secrecy order and the ’666 patent finally issued in 2000.

Mr. Hornback filed suit seeking compensation under 35 U.S.C. § 183 for the government’s use of his invention, both before and after his patent issued.  First, the district court held that res judicata barred Mr. Hornback’s claims for any government use that occurred on or before the ’666 patent issued.  Mr. Hornback did not challenge that ruling on appeal.  Second, as to the government’s use after the ’666 patent issued, the district court granted the government’s motion to dismiss, holding that under § 183, damages are recoverable for government use only during the pendency of a secrecy order.

On appeal, the Federal Circuit began by reviewing the Invention Secrecy Act, 35 U.S.C. §§ 181-188.  Under the Act, if a government agency determines that the publication or disclosure of an invention described in an application for a patent would be detrimental to national security, the agency notifies the Commissioner.  The Commissioner is required to issue a secrecy order, withholding publication of the application or the grant of the patent “for such period as the national interest requires.”  35 U.S.C. § 181.  When the agency notifies the PTO that disclosure of the invention is no longer deemed detrimental to national security, the Commissioner may rescind the secrecy order. 

Since the secrecy order delays issue of the patent, § 183 authorizes the applicant to seek “compensation for the damage caused by the order of secrecy and/or for the use of the invention by the Government, resulting from his disclosure.”  35 U.S.C. § 183.  The Federal Circuit noted that § 183 describes two avenues an applicant may follow to obtain relief.  First, the applicant may apply for compensation directly from the agency that sought the imposition of the secrecy order, and if the applicant is unhappy with the award, the claimant may bring suit against the United States in district court or the United States Court of Federal Claims.  Under this first avenue, applicants may apply for compensation from the agency “beginning at the date the applicant is notified that, except for [the secrecy order], his application is otherwise in condition for allowance . . . and ending six years after a patent is issued thereon.”  Slip op. at 4-5 (alterations in original) (quoting 35 U.S.C. § 183).  Or second, under § 183, the applicant may bring suit in the Court of Federal Claims “for just compensation for the damage caused by reason of the order of secrecy and/or use by the Government of the invention resulting from his disclosure.”  Id. at 5 (quoting 35 U.S.C. § 183).  In order to file suit without first seeking relief directly from the government department or agency, however, the claimant must wait until “after the date of issuance of [the] patent.”  Id. (alteration in original) (quoting 35 U.S.C. § 183).

The Federal Circuit stated that this appeal provided the first opportunity for the Court to consider whether the “use of the invention by the Government” language in § 183 includes “use of the invention” that occurred after the patent for the invention has issued.  Id.  Although the district court declared that this phrase only covers use during the pendency of a secrecy order, the Federal Circuit noted that the facts demonstrate that there can be a time lag—in this case, over a year—from when the PTO rescinds a secrecy order and when the patent actually issues.  Because Mr. Hornback did not dispute that res judicata bared his claim for compensation as to that time period, the Court did not need to address whether § 183 might encompass use after a secrecy order is rescinded but before the patent issues.

Although the terms of § 183 are broadly stated, the Court stated that in interpreting the statute, it should not be guided by a single sentence but consider other relevant provisions of the law, its object, and policy.  Accordingly, the Court looked to 28 U.S.C. § 1498, a closely related section enacted in 1918 that states that a patent owner shall file suit against the government in the Court of Federal Claims for government use of a patented invention.  The Court noted that the language of § 1498 is mandatory, granting exclusive jurisdiction to the Court of Federal Claims.  Since Congress enacted the Invention Secrecy Act in 1952, the Court presumed that Congress took the earlier § 1498 into account.  Thus, absent modification to the Court of Federal Claims’ exclusive jurisdiction, the Court held that the Invention Secrecy Act could not have established a remedy for claims insofar as they allege postissuance government use.

Finally, the Court noted that the six-year postissuance deadline to apply for compensation from an agency in § 183 stands in contrast to the six-year statute of limitations for patent infringement damages generally found in 35 U.S.C. § 286.  If the Invention Secrecy Act had sought to make the agency route available for postissuance use, then the Court concluded that Congress would not have arbitrarily cut off the right to apply for compensation for such use after only six years postissuance rather than simply adopting the six-year statute of limitations found in § 286.  Instead, by cutting off the right to even apply for compensation at six years after the patent issues, it appeared to the Court that the Invention Secrecy Act only addressed recovery for the limited period of preissuance use.  The Court dismissed Mr. Hornback’s contention that the legislative history supported by argument, finding that the legislative history of the Invention Secrecy Act was ambiguous at best.

Accordingly, the Court concluded that “use of the invention” in 35 U.S.C. § 183 does not include use of an invention after a patent for the invention has issued.  The Court explained that this interpretation was consistent with a 1981 holding of its predecessor, the United States Court of Customs and Patent Appeals, which noted in dicta that § 183 provides for damages in two situations:  when the government wrongfully uses the patented device during the period of secrecy, and when the secrecy order itself causes damages.  Finally, the Court noted that although its interpretation was inconsistent with a 1961 Second Circuit holding, it declined to follow that holding for the reasons stated in its opinion and to honor the holding of its predecessor court.

Thus, the Federal Circuit affirmed the district court’s dismissal of Mr. Hornback’s case for failure to state a claim.


Summary authored by Elizabeth D. Ferrill, Esq.