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Honeywell Has Standing Under Invention Secrecy Act

May 25, 2010

Decision icon Decision

Last Month at the Federal Circuit - June 2010

Judges: Mayer (dissenting-in-part), Prost, Moore (author)

[Appealed from: Court of Federal Claims, Judge Braden]

In Honeywell International, Inc. v. United States, No. 08−5181 (Fed. Cir. May 25, 2010), the Federal Circuit revised its prior opinion of February 18, 2010, by clarifying its remand concerning preissuance damages for the government’s defense against an Invention Secrecy Act (“the Act”) claim.  Having inaccurately stated in its original opinion that the only disputed portion of 35 U.S.C. § 183 of the Act involved standing, the Court newly instructed the Court of Federal Claims to determine if the disclosure in a patent application subject to a secrecy order must result in government use of the invention, and whether it did so in this case.

In the Federal Circuit’s earlier opinion, it reversed the Court of Federal Claims’ holding of invalidity based on obviousness and failure to satisfy the written description requirement, and remanded to determine damages.  The Court had also reversed the holdings that Honeywell International, Inc. and Honeywell Intellectual Properties, Inc. (collectively “Honeywell”) lacked standing to sue the government under the Act, and that the first−sale doctrine precluded Honeywell from recovering postissuance damages for government use of an accused device.

The asserted U.S. Patent No. 6,467,914 (“the ’914 patent”) relates to night vision goggles with filters for preventing perceptible red light on a cockpit display from disrupting pilot vision.  The application for the ’914 patent was filed in 1985 by the predecessor company of AlliedSignal Inc. (“Allied”).  Some time before issuance of the ’914 patent, Honeywell merged with Allied, and as new owner of the ’914 patent application, Honeywell amended the specification and drawings, and also substituted claims from an allowed application.  After the government reviewed the application in 1986, the PTO imposed secrecy orders on the application, preventing the patent from issuing until about fourteen years later.  Notably, after the government reviewed the application, it revised its military specification to permit the use of red lighting in cockpits. 

Shortly after the ’914 patent issued, Honeywell sued the United States for infringement for the use of three systems comprised of night vision goggles and color display panels in F−16 and C−130 aircraft.  Honeywell sought compensation under the Act for the government’s preissuance use of the invention and under 28 U.S.C. § 1498(a) for postissuance infringement.  The Court of Federal Claims found that all three accused systems infringed claim 2, but that this claim was invalid for obviousness and, in the alternative, for a lack of written description.  The district court also held that Honeywell lacked standing to sue under the Act because the secrecy order under 35 U.S.C. § 181 applied to the originally filed claims, not the substituted claims that issued in the ’914 patent.  Finally, the district court found that the first−sale doctrine precluded Honeywell from recovering damages for infringing systems in the F−16 aircraft because Honeywell had manufactured and sold the systems at issue. 

On appeal, the Federal Circuit held that the district court erred in finding claim 2 obvious by applying an improper claim construction that did not require the passing of “perceptible red light.”  The Court held that the relevant prior art references did not disclose passing perceptible red light, and that it would not have been obvious to one skilled in the art to employ the prior art systems using such light.

Next, the Federal Circuit found that the district court erred in invalidating claim 2 under the written description requirement.  The Federal Circuit disagreed that the original application did not provide support for claimed displays other than cathode ray tube (“CRT”) displays, for the application referenced “other display transducers” and stated that the invention could be applied to a “wide variety of display and vision aid devices.”  The Court also rejected the government’s argument that the invalidity determination of claim 2 could be affirmed under a failure to comply with the definiteness requirement of 35 U.S.C. § 112, ¶ 2.  The Court disagreed that the construction of “local color display” using the term “perceptible” was a subjective standard amenable to two different interpretations—color and brightness.  The Court found that the specification explains that the display is “viewable by [a] crewmember” and further describes the range of wavelengths usable which are “visible to the human eye,” both of which comport with the fundamental purpose of the invention—to convey information through red warning lights to crew members.  The Court thus held that the claimed phrase “local color display” was not insolubly ambiguous.

Turning to the Act, the Court rejected the finding that the ’914 patent did not issue “upon” the original application that was subject to the secrecy order.  The Court found that the amended application that issued as the ’914 patent qualifies as an “application” under the Act, as § 184 defines the term to include “any modifications, amendments, or supplements thereto, or divisions [of the application].”  In its revised opinion, the Federal Circuit reiterated that the Court of Federal Claims’ test requiring a “contiguous relationship or dependence between [the original application and the issued patent]” was not supported by the text of the statute, and that claim amendments during prosecution cannot defeat entitlement to compensation under the Act.  The Court then honed its remand, instructing the Court of Federal Claims to determine whether 35 U.S.C. § 183 requires that the government use must result from the disclosure, and, if so, whether it does in this case.  

Finally, the Federal Circuit held that the Court of Federal Claims erred in concluding that the first−sale doctrine precluded Honeywell from recovering damages for infringing devices in F−16 aircraft.   The Court held that Honeywell’s sale of infringing devices was not authorized for the first−sale doctrine to apply, because, at the time of the sale, Honeywell had no rights under the ’914 patent.  That Honeywell now owns the ’914 patent did not retroactively authorize the earlier sale.  Notably, the Court stated that to the extent the government has recourse, it is not through the first−sale doctrine.

Judge Mayer dissented−in−part, disagreeing with the majority’s obviousness and written description conclusions, and with the majority’s finding that the first−sale doctrine did not preclude Honeywell from recovering damages.  He stated that one skilled in the art would have known how to adjust filters and light sources to achieve the claimed displayed system.  Judge Mayer rejected Honeywell’s arguments against obviousness based on secondary considerations, finding that the government’s shift in allowing red lighting in cockpits resulted from a desire to sacrifice some amount of night vision goggle sensitivity, coupled with advancements made to the color displays themselves. 

He further noted that the written description requirement was not satisfied because the ’914 patent application did not describe filtering a single light source carrying multiple color bands, which was the subject matter of claim 2.  Finally, Judge Mayer indicated he would have affirmed the finding that Honeywell was precluded from recovering damages under the first−sale doctrine.  He noted that because Honeywell was the ultimate recipient of the profits from the infringing product’s sale as the previous seller and now patent owner, Honeywell’s patent rights in those products were extinguished with their earlier sale.