- Is the Golden Goose on the Chopping Block?
- November 28, 2017 | Author: Dawn Lee Merkle
- Law Firm: Willcox & Savage, P.C. - Norfolk Office
Patent owners are often seen as aggressive—sometimes accurately so—in protecting their patent rights. But when the alleged infringer is likely the only user for the patented invention, the patent owner may want to consider a kinder, gentler approach.
If you have been through airport security since 9/11, you probably have experienced a logjam at Transportation Security Administration (TSA) checkpoints, particularly as people empty their carry-on belongings into bins and then retrieve them on the other side of the x-ray machine. Sensing a need for a better way to get people through the checkpoints, the founder of SecurityPoint Media, LLC formulated a process for efficiently recycling those bins and carts at a checkpoint. The process for moving the bins and carts efficiently was patented in 2004 (U.S. Patent No. 6,888,460) and included claims for using identification tags with the bins and placing advertising displays on the bottom of the bins.
Earlier, in 2002, SecurityPoint began soliciting the TSA to try its method. In 2006, the TSA finally decided to test the system, first at the Los Angeles airport for three months, then in 14 other airports for a year. Until then, TSA had not been able to solve the problem of checkpoint congestion and the injuries suffered by its employees dealing with bins. And SecurityPoint’s offer to provide test equipment for free was enticing.
At least one other advertising broker, The Adason Group, LLC, was interested in being part of the pilot and offered carts and bins similar to that of SecurityPoint to airports. SecurityPoint quickly sued Adason for patent infringement. SecurityPoint also contacted airports and told them that its patent prevented airports from acquiring bins and carts from any other entity. Adason and SecurityPoint settled the lawsuit and Adason filed for bankruptcy. SecurityPoint was left as the sole broker in the pilot program.
The pilot was a success—efficiency increased and TSA employees suffered fewer injuries. In 2008, TSA rolled out a voluntary Bin Advertising Program (Program) under which airports could sign a memorandum of understanding (MOU) with TSA and then request proposals from advertising brokers. Each advertising broker would make money by selling ads, and in some cases so would the airports through revenue sharing. Alternatively, an airport operator could provide the bins and carts itself.
Not only did the TSA institute its Program, its 2009 Checkpoint Design Guide recommended placement of the bins with carts similar to SecurityPoint’s method, and most of the 450 U.S. airports agreed to adopt this process. But the TSA had not asked for, and SecurityPoint had not given, SecurityPoint’s permission to take those steps.
So SecurityPoint, aggressively protecting its patent, sued the TSA for patent infringement, seeking $380 million in damages. In response, the TSA challenged the validity of the patent. At the time of the lawsuit, about 40 of the 450 airports had begun participation in the TSA’s program.
Shortly after SecurityPoint sued, the TSA changed the MOU and required the airport (or the advertising broker) to indemnify the TSA for any infringement claims. Seeing this as a threat to its business and as retaliation for the patent-infringement suit, SecurityPoint sought removal of this new provision. The company claimed that airport operators would not sign MOUs with the indemnity language and that the TSA would incur increased costs for replacement bins and employee injuries. When the TSA declined to remove the indemnification provision, SecurityPoint petitioned the U.S. Court of Appeals for the D.C. Circuit for review, accusing the TSA of “killing the goose that laid the golden eggs.”
The D.C. Circuit found that the TSA had not provided a “reasoned decision” for denying SecurityPoint’s request and remanded the matter to the TSA. In response, the TSA made a few tweaks to the indemnification clause (but did not remove it) and prepared a “reasoned decision” for its inclusion. SecurityPoint sued again, noting that no new airport had contracted for SecurityPoint’s services since the MOU was revised.
Meanwhile, SecurityPoint scored a victory when the U.S. Court of Federal Claims upheld the validity of SecurityPoint’s patent. It seemed SecurityPoint’s aggressive protection of its patent was paying off—first against Adason and then against the TSA. SecurityPoint was even awarded $86,000 in attorneys’ fees for the first challenge to the revised MOU.
But SecurityPoint’s luck ran out in the D.C. Circuit. In August 2017 that court ruled in favor of the TSA and allowed the indemnification clause to remain. The court noted that the cost to the TSA of replacing bins and carts at airports not participating in the TSA’s Program would be less than the TSA’s potential liability for patent infringement. Noting that the indemnification clause was actually beneficial to SecurityPoint because either airports would contract with SecurityPoint or other brokers would get a license from the company, the court found SecurityPoint’s concerns “puzzling.”The usefulness of SecurityPoint’s patent appears to be limited to TSA screening points. SecurityPoint spent four years enticing the TSA to try its method and many more years in court enforcing its patent. But rights to intellectual property have little value if the owner has no market for them. The TSA has noted that only four airports signed the new MOU between 2012 and 2017. Today only a small percentage of airports utilize the Program. It will be interesting to see if the TSA truly has “killed the golden goose,” or if the D.C. Circuit was right and SecurityPoint actually benefits from the indemnification clause, or if, as a third possibility, SecurityPoint finds another way to exploit its patent.