John Madey, a former Duke physics professor and director of Duke’s free-electron-laser laboratory, owned two patents covering technology used in laboratory equipment. After Duke removed him as lab director and Madey resigned, Duke continued operating portions of the lab. Madey sued Duke for infringing the patents, along with asserting related federal and state-law claims.
The alleged infringing devices included the Mark III FEL and Storage Ring FEL, which embodied both patents, and a Microwave Gun Test Stand, which embodied one patent. Although the test stand was housed at Duke, it was an asset of North Carolina Central University (NCCU), whose professor controlled access to it under a government-funded project.
The district court partially dismissed claims involving use of one patent under an Office of Naval Research grant, reasoning that 28 U.S.C. § 1498(a) placed those claims in the Court of Federal Claims. It later granted Duke summary judgment on the remaining patent claims, holding that Duke’s academic, nonprofit research qualified for the experimental-use defense. It also held that Duke had not infringed through the NCCU test stand because Duke neither owned nor controlled it and there was no evidence Duke personnel used it after June 1997. Having disposed of the patent claims, the court declined supplemental jurisdiction over Madey’s remaining state-law claims.
The Federal Circuit reversed the partial dismissal and the experimental-use ruling, affirmed the judgment concerning the NCCU test stand, and remanded for further proceedings.
Issue #1
Whether 28 U.S.C. § 1498(a) justified dismissing Madey’s patent claim insofar as Duke used the patented technology under an Office of Naval Research grant.
Holding
No. The district court improperly treated § 1498(a) as a jurisdictional bar and failed to determine whether the grant actually satisfied the statute’s requirements.
Reasoning
Section 1498(a) can protect a private contractor from infringement liability where a patented invention is used or manufactured for the United States with the government’s authorization or consent. In that setting, the patent owner’s remedy is generally an action against the United States in the Court of Federal Claims. But when raised by one private party against another, § 1498(a) is an affirmative defense, not a limit on the district court’s subject-matter jurisdiction.
Because § 1498(a) is a patent-law defense, Federal Circuit law governed its application. The district court therefore erred by applying a regional-circuit doctrine concerning disputed jurisdictional facts and by dismissing part of the claim under Rule 12(b)(1).
A federal research grant does not automatically establish that all research performed under it is use 'for the United States' or that the government authorized or consented to the challenged patent use. The district court did not identify grant language showing authorization or consent, did not explain how Duke’s use was for the government, and did not determine which uses were actually within the grant’s scope.
The Federal Circuit rejected Madey’s broader argument that a research grant can never trigger § 1498(a). A grant potentially may satisfy the statute, but the necessary factual and legal findings had not been made here. The issue therefore had to be addressed on remand as an affirmative defense.
Issue #2
Whether the judicially created experimental-use defense remained available after Warner-Jenkinson.
Holding
Yes, but only in a very narrow form recognized by Federal Circuit precedent.
Reasoning
Madey argued that the defense could not survive Warner-Jenkinson because experimental use considers the user’s purpose, while Warner-Jenkinson held that intent does not govern infringement under the doctrine of equivalents. The court rejected that argument because its own precedents remained binding and continued to recognize an experimental-use doctrine.
Under Embrex and Roche, the defense is strictly limited. It covers conduct undertaken solely for amusement, idle curiosity, or strictly philosophical inquiry—not ordinary research simply because it is academic, scientific, or nonprofit.
Issue #3
Whether the district court improperly placed on Madey the burden to prove that Duke’s use was not experimental.
Holding
Yes. Duke, as the party invoking experimental use, had to establish the defense rather than requiring Madey to negate it as part of his prima facie infringement case.
Reasoning
The district court stated that Madey had to show that Duke had not used the equipment solely for experimental or nonprofit purposes. That formulation folded the defense into Madey’s initial burden to prove infringement and required him to establish an additional negative proposition.
Although the Federal Circuit declined to hold that experimental use must always be pleaded as a formal affirmative defense in the responsive pleading, it held that the defense, if available, must be established by Duke. The trial court’s opinion did not merely find that Madey had failed to rebut evidence produced by Duke; it expressly concluded that Madey had failed to prove infringement because he had not disproved experimental use. That was legal error.
Issue #4
Whether Duke’s nonprofit educational research fell within the experimental-use defense.
Holding
No. The district court applied an impermissibly broad view of the defense by treating research, academic, and nonprofit uses as categorically exempt.
Reasoning
The relevant inquiry is not whether the alleged infringer is a nonprofit university or whether the particular project has an immediate commercial application. The inquiry is whether the use was solely for amusement, idle curiosity, or strictly philosophical inquiry, rather than in furtherance of the user’s legitimate business.
A research university’s scientific projects ordinarily further its legitimate institutional objectives. They educate students and faculty, advance the institution’s stature, help attract grants, students, and researchers, and may support later licensing or technology-transfer efforts. Those institutional benefits place the activity outside the narrow experimental-use exception even if the university itself is nonprofit.
Duke’s FEL research appeared to further its legitimate university business. The district court gave excessive weight to Duke’s educational and nonprofit status and insufficient weight to the nature and institutional function of the research. On remand, the court had to apply the substantially narrower standard.
Issue #5
Whether Duke was liable for alleged infringement involving NCCU’s Microwave Gun Test Stand after June 1997.
Holding
No. Summary judgment for Duke was proper because the record did not create a genuine factual dispute that Duke used or controlled the test stand during the relevant period.
Reasoning
NCCU owned the test stand under the government project, and NCCU’s principal investigator controlled the equipment through the operating key switch. His evidence stated that he knew of no Duke faculty member or employee using the device after June 1997.
Madey responded largely with his own assertions, joint publications involving NCCU and Duke researchers, and inferences from Duke faculty members’ research interests. That material did not amount to evidence that Duke actually used or controlled the device, and speculation cannot create a genuine issue for trial.
Madey also had not pleaded theories such as inducement, contributory infringement, or other vicarious liability by Duke. He could not overcome the absence of proof of Duke’s direct use or control by relying on unsupported allegations.
Issue #6
Whether the Federal Circuit could affirm on Duke’s alternate theory that the government held a license permitting Duke’s use of the patents.
Holding
No. The record was insufficient to resolve the asserted government-license defense, which required further development on remand.
Reasoning
The patent notations stating that the government had rights in the inventions did not define the scope of those rights. Duke did not place the controlling funding agreements in the record or otherwise provide evidence showing that the government’s license extended to Duke’s challenged uses.
Duke’s reliance on the Bayh-Dole Act did not cure that evidentiary gap, particularly because the cited provisions were enacted after the patents issued and another source might have produced the government-rights notations. The district court could consider the defense after the parties developed the relevant record.
Issue #7
Whether the district court’s dismissal without prejudice of Madey’s remaining state-law claims remained appropriate after the reversal of the experimental-use ruling.
Holding
The claims remained available for the district court to consider on remand.
Reasoning
The district court declined supplemental jurisdiction only after it had disposed of the patent claims. Because the Federal Circuit reinstated significant federal patent issues for further proceedings, the premise for that disposition no longer controlled.
The Federal Circuit did not mandate a particular supplemental-jurisdiction outcome, but directed the district court to consider the state-law claims in light of the case’s further progress on remand.