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Tuesday, December 07, 2010

Alternative Arguments and Opportunism

On Wednesday, the Federal Circuit hears argument in Zoltek v. United States.  The issue in the case, whether government contractors can be sued for patent infringement occuring overseas, is rather interesting to patent lawyers, but not what I want to focus here.  Instead, another aspect of the case raises more general concerns.  Namely, when should parties be able to take back their representations made in earlier parts of the same litigation?

The underlying facts of Zoltek are that Lockheed Martin, acting as a government contractor, built components for the F-22 fighter partly in Japan and partly in the U.S.  Zoltek, which holds a patent on the process of making the component, sued the government for patent infringement, arguing that the government was taking its property (i.e. a license to the patent) without compensation.  In a rather controvertial 2006 decision, the Federal Circuit rejected this claim because the government has not authorized patent suits against itself for infringement done overseas and a patent cannot be taken under the Fifth Amendment.  Zoltek then sought en banc rehearing and petitioned the Supreme Court, arguing that allowing the Federal Circuit decision to stand would deny patent holders "any recourse" for patent infringement by contractors, since the same statute that authorizes suits against the government for domestic infringement (but not foreign infringement) also contains a bar on suits against government contractors.  Implicit in the lack of "any recourse" argument is the concession that this statute bars Zoltek's recovery against Lockheed Martin.

After the Supreme Court denies the petition, Zoltek goes back to the trial court, and viola, discovers a new theory.  Instead of suing the government, it now argues it can sue Lockheed Martin.  The statute barring suits against government contractors doesn't apply, it now argues, because that statute should only apply to domestic infringement where the government is liable in the contractor's place.  The trial court (which held for Zoltek the first time round) finds in favor of Zoltek again, teeing up a second appeal.

Zoltek obviously has a great policy argument on its side, in that we would generally like to be able to hold someone liable for an infringing act.  And of course being able to make mutually exclusive alternative arguments with a straight face ("I was not at the bar last night, and if I was, I did not kiss that woman while I was there") is a quintessential lawyer skill.  But it still strikes me as troubling when attorneys represent to appellate courts and the Supreme Court that a case is important and the adverse ruling will create a bad consequence, which helps both with winning before the appellate court and getting certiorari, and only upon losing going back to the drawingboard and coming up with a creative new argument that makes the feared bad consequence disappear.  The problem is that it appears almost as an opportunistic misrepresentation to the court, making a case seem more important than it is and the consequence of an adverse holding worse than it is, and only going to the backup argument when the appellate court and Supreme Court both fail to bite.  This problem is not covered by standard judicial estoppel doctrine, which requires a winning argument before the representation is considered binding, but it is troubling nonetheless.

Posted by Tun-Jen Chiang on December 7, 2010 at 12:51 AM | Permalink


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Actually, Zoltek's "second" argument was always its best argument. Unfortunately, the "first" argument that kicked off this matter represented conventional wisdom, so it is quite easy to understand how the far better argument was overlooked.

Posted by: Michael L. Slonecker | Dec 28, 2010 11:46:09 PM

I am not particularly troubled by this, at least on the facts at hand. Zoltek clearly had a preferred argument and outcome (being able to sue the U.S.) and it made the best arguments it could in support of that argument. And the argument may have been genuine--depriving Zoltek of the right to sue the U.S. could leave them without a remedy, depending on how other things play out. The next argument Zoltek pulled out was clearly a second-best one for it, that it turned to only because its preferred argument failed.

In some ways, this does not strike me as any different than a party at trial opposing the admission of some evidence, losing, then constructing a way to use that evidence to affirmatively help its case. The preferred option was to keep the evidence out and the urgent arguments to keep it out were entirely genuine. But parties need to have a second-best to fall back on.

Posted by: Howard Wasserman | Dec 7, 2010 11:57:38 AM

There's a similar theory -- often called the "mend the hold" theory -- that pops up from time to time that would say, no, they can't change their story. Usually mend the hold is used in contractual situations, but there are a few judges who will push it farther. I'm familiar with it in the 7th Circuit; I'm not sure where else it's been used.

Posted by: k | Dec 7, 2010 9:03:35 AM

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