Federal Circuit Finds No Waiver of Sovereign Immunity under DMCA

In Blueport Co. v. United States, 533 F.3d 1374, 87 USPQ2d 1512 (Fed. Cir. 2008), Mark Davenport, a Technical Sergeant with the Air Force, worked with the Air Force’s Manpower Data System (MDS).  Through working with the MDS, Davenport concluded that the software used to run the MDS program was inefficient and began to seek ways of improving the software.  Davenport sought training in computer programming from the Air Force, but was denied.  As such, Davenport learned how to program on his own time, and subsequently wrote a new program called “the AUMD” program, also on his own time at his home.

Davenport used the AUMD program at work and began sharing it with coworkers.  Based on his experiences using the AUMD program at work, Davenport made changes from time to time to improve the program.  At no time did Davenport bring the source code to work or copy it onto Air Force computers.

The AUMD program began to catch on, and Davenport shared it with other colleagues by posting it on a page in the Air Force intranet.  He continued to modify the AUMD program, and eventually added an expiration date feature where users had to download a new version of the program whenever the old one expired.

Davenport gave a presentation to senior Air Force personnel and convinced them of the usefulness of the AUMD program.  Davenport’s performance evaluations marked him as the go-to guy for troubleshooting with the MDS and recommended an immediate promotion.

The Air Force eventually determined that it was too reliant on Davenport for access to the AUMD program and asked him to turn over the source code.  When he refused, his superiors at the Air Force threatened him with a demotion and a pay cut and removed him from the MDS advisory board.  Davenport then assigned his rights in the AUMD program to Blueport, the plaintiff.

Blueport attempted to negotiate a license with the Air Force, but was unable to reach an agreement.  The Air Force contracted with SAIC to recreate the AUMD program and to modify the existing AUMD program to remove the expiration date.  Blueport brought claims against the Air Force alleging copyright infringement and a violation of the DMCA in the Court of Federal Claims.  The Court of Federal Claims dismissed the actions for lack of jurisdiction on the ground that the Government had not waived its sovereign immunity for any of the claims.  Blueport appealed to the Federal Circuit.

On appeal, the Federal Circuit considered the scope and application of the Government’s waiver of sovereign immunity for copyright infringement under 28 U.S.C. § 1498(b).  The Court also considered whether the Government has waived its sovereign immunity for claims brought under the DMCA.  Blueport at 5-6.

In making its determinations, the Federal Circuit kept in mind two long-established principles of sovereign immunity.

First, “the United States, as [a] sovereign, ‘is immune from suit save as it consents to be sued . . . and the terms of its consent to be sued in any court define that court’s jurisdiction to entertain the suit.’” United States v. Testan, 424 U.S. 392, 953 (1976) (quoting United States v. Sherwood, 312 U.S. 584, 586 (1941)).

Second, “a waiver of the Government’s sovereign immunity will be strictly construed, in terms of its scope, in favor of the sovereign.” Lane v. Pena, 518 U.S. 187, 192 (1996).

Id.  In summary, the Federal Circuit noted that the United States is immune from suit except for where it waives its immunity, and any such waivers are to be strictly read and construed in favor of the sovereign.

Sovereign Immunity for Copyright Infringement Does Not Extend to Infringement Caused By Author While Government Employee

The Federal Circuit held that 28 U.S.C. § 1498(b) grants copyright owners a right of action for copyright infringement against the United States.  Further, Government Employees are specifically allowed to bring such suits, subject to three provisos.  The first proviso denies a right of action to a Government employee who “was in a position to order, influence, or induce use of the copyrighted work by the Government.”  28 U.S.C. § 1498(b).  The second proviso confers no right of action “with respect to any copyrighted work prepared by a person while in the employment or service of the United States, where the copyrighted work was prepared as a part of the official functions of the employee.”  Id.  The third proviso confers no right of action “with respect to any copyrighted work . . . in the preparation of which Government time, material, or facilities were used.”  Id.  See Blueport at 6-7.

The Court of Federal Claims held that Blueport’s infringement claim was separately barred by all three provisos.  On appeal, Blueport argued that the provisos were affirmative defenses, that the Government had the burden to show that the claims were barred, and that their claim did not fall under any of the provisos.  Blueport at 7.

Turning to the first argument, the Federal Circuit recognized that whether a limitation is jurisdictional or an affirmative defense depends on the language and the content of the statute at issue.  The Federal Circuit found that the text and structure of 28 U.S.C. § 1498(b) demonstrated that the three provisos limiting the waiver of sovereign immunity were intended to be jurisdictional limitations.  First, the fact that the provisos were included in the same subsection as the waiver suggested that they defined the scope of the waiver.  Second, the provisos were phrased in terms of withholding a waiver for certain rights of action.  Accordingly, the Federal Circuit interpreted the inclusion of the provisos as carving out three classes of copyright violations that would not be covered by the waiver of sovereign immunity.  This reading was in line with the principle that the waiver of sovereign immunity should be interpreted in favor of the sovereign.  Blueport at 8-10.

Turning to the second argument, the Federal Circuit held that a party seeking the benefit of the courts has the burden of establishing jurisdiction.  Blueport at 11 (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936)).  The Federal Circuit was not persuaded by the cases introduced by Blueport where other circuits had read a requirement that the burden rested on the Government.  This was because the cases cited were limited to the Federal Torts Claim Act and the circuits were undecided on the issue.

Turning to the third argument, the Federal Circuit agreed with the CFC that Blueport’s claim was barred by the first proviso (“order, influence, or induce”) and did not address the other two provisos.  The Federal Circuit found that Davenport was in a position to influence and induce his coworkers at the MDS to use his AUMD program.  He distributed and promoted the program within the Air Force.  Further, the Air Force’s use after Davenport was removed from the advisory board was also found to be guarded by sovereign immunity.  This is because the Federal Circuit saw nothing in 28 U.S.C. § 1498(b) to suggest that a party who was in a position to influence the Government’s use of copyrighted work can later bring a claim for continued use after he lost his position of influence.  Blueport at 12.

Thus, the Federal Circuit found that Blueport could not bring a claim of copyright infringement against the Government because the Government had not waived its sovereign immunity.

Sovereign Immunity under the DMCA

The Digital Millennium Copyright Act of 1998 (“DMCA”) provides additional liability for copyright infringement.  Pub. L. No. 105-304, 112 Stat. 2860 (Oct. 28, 1998), codified at 17 U.S.C. § 1201, et seq. Blueport brought claims under the DMCA against the Government for use of their copyrighted software.  The CFC dismissed the claims on the ground that the Government has not waived sovereign immunity for DMCA claims.  The Federal Circuit affirmed.

In affirming the decision, the Federal Circuit held that the “DMCA itself contains no express waiver of sovereign immunity. Indeed, the substantive prohibitions of the DMCA refer to individual persons, not the Government.”  Blueport at 13.  Blueport argued that a waiver should be implied, but the Court recognized that “it is well-established that a waiver of sovereign immunity ‘cannot be implied but must be unequivocally expressed.’ ” Blueport at 13 (citing United States v. King, 395 U.S. 1, 4 (1969)).

Blueport further argued that the Tucker Act, 28 U.S.C. § 1491(a)(1) provided a general waiver of sovereignty.  The Federal Circuit found that the Tucker Act served to provide jurisdiction to the Court of Federal Claims over any claim arising under a law that creates the right to money damages from the Government, and thus did not grant the waiver of sovereignty necessary for Blueport to bring their claim.  Specifically, the Federal Circuit held that “the DMCA does not contain an express or implied right to recover money-damages from the Government.”  Blueport at 15.

Blueport’s final argument was that the waiver of sovereignty under copyright infringement was sufficient to waive sovereignty under the DMCA.  The Federal Circuit rejected this argument, pointing out that the DMCA created new claims for liability that are separate and distinct from copyright infringement.  Blueport at 15-16.  As such, the Federal Circuit held that the DMCA does not provide an alternative grounds for relief outside of any claims otherwise viable under 28 U.S.C. § 1498.


Significance to Government Claimants

As similarly found in Zoltek Corp. v. United States, 442 F.3d 1345 (Fed. Cir. 2006), Blueport confirms the narrow construction afforded any waiver of sovereign immunity by the Government.  Thus, where it is believed that the Government, or a contractor, is infringing intellectual property, the intellectual property owner needs to ensure that any claim is made clearly within the bounds of an explicit waiver for sovereign immunity.  Additionally, where such explicit waiver is not found and the Government is not liable for infringement, a contractor needs to be aware that there is the possibility that the contractor will be liable for such work.  Additional discussion on this topic can be found in the Intellectual Property In Government Contracts: Protecting And Enforcing IP At The State And Federal Level, which is slated for release in early 2009 by Oxford University Press.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s