ZOLTEK CORP V. US CAREY LEE MECHANICAL ENGINEERING UC BERKELEY IEOR190G FALL 2008 PATENT INFRINGEMENT BY THE US GOVERNMENT – COMPOSITE MANUFACTURING TECHNOLOGY

OUTLINE  Major Players  Composites  Dispute  Ruling  Impact

THE MAJOR PLAYERS  Zoltek Corporation  Manufactures Carbon Composite Raw Material Panex – low cost Pyron – flame resistant  United States  Lockheed Martin Corporation  Defense Contractor  Aerospace Manufacturer F22 Raptor

“COMPOSITES”  What are composites? 1) two or more constituent materials 2) significantly different physical or chemical properties 3) remain separate and distinct on a macroscopic level within the finished structure carbon fiberplywood

MAKING COMPOSITES 1) Heat polyacrylonitrile (PAN) until carbonized 2) Ply type Uniaxial Woven 3) Resin Pre-preg (sticker) Wet Layup

MAKING A PART 4) Layers 0 °90 °45 ° Core 45 ° -45 °

MAKING A PART 5) Debulk – Vacuum Bag - Removes excess resin 6) Oven - Cures resin - Cure cycles produce different properties

BENEFITS AND APPLICATIONS  Lightweight  Strong  Configurable  Applications include:  Airplanes  Racing Cars  Bikes

PATENTS (1993)  Zoltek owns patents for “Controlled Surface Electrical Resistance Carbon Fiber Sheet Product”  Claim 1:  A method of manufacturing a plurality of different value controlled resistivity carbon fiber sheet products employing a carbonizable fiber starting material; said method comprising selectively partially carbonizing previously oxidized and stabilized fiber starting material for a predetermined time period in an oxygen free atmosphere within a furnace at selected temperature values…  Claim 2:  …and thereafter processing the partially carbonized fibers into homogeneous carbon fiber sheet products...  Basically: 1) Heat fiber until carbonized 2) Form fibers into sheets

DISPUTE  US contracts Lockheed Martin to build the F22  Lockheed subcontracts to Japan 1) Pre-preg silicon carbide sheets Fibers are carbonized and made into sheets in Japan Imported to US 2) Silicide fiber mat Fibers are carbonized made in Japan Processed into mats in US

DISPUTE  1498(a) “ …whenever an invention described in and covered by a patent of the United States is used... by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.”  1498(c) “… does not apply to any claim arising in a foreign country.”

DISPUTE (2006)  Zoltek brings suit against US under 1498(a)  Federal Circuit court bars Zoltek’s claim under 1498(c) “We conclude that under § 1498, the United States is liable for the use of a method patent only when it practices every step of the claimed method in the United States.”

RULING  Court directs Zoltek to pursue case as a taking in violation of the Fifth Amendment  Zoltek amends its complaint  Federal Circuit denies claim based on 271(a) “a process cannot be used ‘within’ the United States as required by the [infringement statutes] unless each of the steps is performed within this country.”

IMPACT  Since one of the claimed processes (fibers manufactured in Japan) occurred outside the US  NO INFRINGEMENT under 271(a)  1498(a) does not apply  US government and contractors have an easy way around patents  outsource at least one step

QUESTIONS?