M-I Drilling Fluids UK Ltd. v. Dynamic Air Inc.
Filing
30
MEMORANDUM OPINION AND ORDER denying 16 Defendant's Motion to Dismiss for Lack of Jurisdiction (Written Opinion). Signed by Judge Ann D. Montgomery on 04/10/2015. (TLU)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
M-I Drilling Fluids UK Ltd.,
Plaintiff,
v.
MEMORANDUM OPINION
AND ORDER
Civil No. 14-4857 ADM/HB
Dynamic Air Inc.,
Defendant.
______________________________________________________________________________
Scott J. Pivnick, Esq., Alston & Bird, LLP, Washington, DC, on behalf of Plaintiff.
Kevin P. Hickey, Esq., Bassford Remele, PA, Minneapolis, MN, on behalf of Defendant.
______________________________________________________________________________
I. INTRODUCTION
On January 29, 2015 the undersigned United States District Judge heard oral argument on
Defendant Dynamic Air Inc.’s (“Dynamic Air”) Motion to Dismiss [Docket No. 16]. For the
reasons discussed below, Dynamic Air’s motion is denied.
II. BACKGROUND
This patent infringement action presents a single but interesting question: does the
United States Patent Act (“Patent Act”) apply on U.S.-flagged ships in international waters? The
facts giving rise to this lawsuit are recited in this Court’s February 2014 Order in a related case,
Civil No. 13-2385, and will not be repeated in full here. See M-I Drilling Fluids UK Ltd. v.
Dynamic Air Inc., No. 13-2385, 2014 U.S. Dist. LEXIS 14804 (D. Minn. Feb. 6, 2014)
(hereinafter M-I Drilling Fluids, Case No. 13-2385). In short, Plaintiff M-I Drilling Fluids UK,
Ltd. (“M-I Drilling”) alleges Dynamic Air infringed on its patented CLEANCUT® pneumatic
conveyance system technology1 related to transporting oil well waste from oil rigs.2 Compl.
[Docket No. 1]. When oil wells are drilled, cuttings from the drilling are brought to the surface.
Id. ¶ 5. CLEANCUT® collects and contains the waste, allowing it to be transported in an
environmentally friendly way. Id. ¶ 7. M-I Drilling seeks damages and a permanent injunction
to enjoin further infringement of its patents by Dynamic Air.
A. Parties
This suit involves the Brazilian subsidiaries of M-I Drilling and Dynamic Air. M-I
Drilling is a United Kingdom limited-liability company with its principal place of business in the
UK. Id. ¶ 2. M-I Drilling is a “supplier of drilling fluid systems and equipment engineered to
improve drilling performance.” Id. M-I Swaco do Brasil (“M-I Brazil”) is a sister company and
customer of M-I Drilling. Id. ¶ 17.
Dynamic Air is a Minnesota corporation with its principal place of business in St. Paul,
Minnesota. Id. ¶ 3. Dynamic Air is a developer, designer, and manufacturer of pneumatic
conveyance systems. Id. ¶ 14. Dynamic Air has been involved in the pneumatic conveyance
industry since 1969. Dynamic Air Ltda. (“Dynamic Ltda”) is Dynamic Air’s Brazilian
subsidiary with its principal place of business in Brazil. Id. ¶ 17.
Petroleo Brasilerio (“Petrobras”) is a Brazilian company that issued a request for
proposal for a pneumatic conveyance system to contain and transport drill cuttings from
Petrobras-owned Brazilian oil rigs. Id.
1
A pneumonic conveyance system uses “compressed air or gas to move bulk solids from
one location to another.” Compl. ¶ 5.
2
M-I Drilling alleges infringement of a total of five patents “directed to methods,
systems, and apparatuses used for collecting, conveying, transporting, and storing . . . drill
cuttings, in an environmentally safe way.” Id. ¶¶ 1, 3. The patents are U.S. Patent Nos.
6,702,539; 6,709,217; 7,033,124; 7,186,062; and 7,544,018 (“Asserted Patents”). Id. ¶ 1.
2
B. M-I Brazil and Dynamic Ltda submit proposals to Petrobas
Between October 2011 and January 2012, Petrobras requested proposals for a pneumatic
conveyance system to remove drill cuttings from its oil rigs located in international waters off
the coast of Brazil. Id. ¶ 17. M-I Brazil and Dynamic Ltda submitted proposals. Id. Dynamic
Ltda was awarded the contract and worked with Dynamic Air to direct the “design, manufacture,
and installation of certain pneumatic conveyance systems for Petrobras.” Id. ¶ 19. Dynamic Air
directed Dynamic Ltda to install the conveyance and containment systems aboard at least two
U.S.-flagged ships. Id. ¶ 20. Dynamic Air provides “onsite support” for these systems,
“including supervising and assisting in the installation and startup of the systems” aboard the
ships. Id. ¶ 21.
In January 2013, M-I Drilling alleged that Dynamic Air either installed or directed the
installation of a pneumatic conveyance system on the U.S.-flagged ship HOS Resolution
(“Resolution”), located in international waters. Id. ¶ 23. In February 2013, the pneumatic
conveyance system was used to transport drill cuttings from an offshore Petrobras oil rig to the
Resolution. Id. ¶ 24.
In August 2013, M-I Drilling alleged that another Dynamic Air pneumatic conveyance
system was manufactured, sold, delivered and installed aboard the U.S.-flagged HOS Pinnacle
(“Pinnacle”), also located in international waters off the coast of Brazil. Id. ¶ 26. This system
was also used to transport drill cuttings from another offshore Petrobras oil rig to the Pinnacle.
Id.
M-I Drilling alleges these installed systems aboard the Resolution and Pinnacle infringe
upon its Asserted Patents. Id. ¶¶ 28-29.
3
C. M-I Drilling files several lawsuits
Three lawsuits are pending based on the facts described above. In August 2013, M-I
Drilling, individually or in conjunction with M-I Brazil, sued Dynamic Ltda in Brazil. Def.’s
Mem. Supp. Mot. Dismiss [Docket No. 18] 2. According to the parties, that case is proceeding
on the merits in the Brazilian Court system. Id.
M-I Drilling also filed a patent infringement complaint against Dynamic Air and
Dynamic Ltda in this Court in August 2013. In February 2014, the undersigned dismissed the
Complaint without prejudice based on a finding that the Court lacked personal jurisdiction over
Dynamic Ltda and for failure to state a claim against Dynamic Air. M-I Drilling Fluids, Case
No. 13-2385. In March 2014, the undersigned vacated its previous dismissal of Dynamic Air
Ltda from the lawsuit. See M-I Drilling Fluids UK Ltd. v. Dynamic Air Inc., Case No. 13-2385,
2014 U.S. Dist. LEXIS 31007 (D. Minn. Mar. 11, 2014). M-I Drilling argued the Court erred by
concluding, sua sponte, that it lacked personal jurisdiction over Dynamic Air Ltda. M-I Drilling
also argued that the Court erred in concluding that M-I Drilling failed to serve Dynamic Air Ltda
because it was in the act of completing the lengthy international service process. Out of “an
abundance of caution and in the interest of fairness,” M-I Drilling was granted the opportunity to
complete its efforts to serve Dynamic Air Ltda. Because the procedure for effectuating service
of Dynamic Air Ltda is ongoing, M-I Drilling filed an amended complaint against Dynamic Air
in November 2014, seeking to cure the deficiencies highlighted the Court’s February 2014
Order.
III. DISCUSSION
The parties agree that the sole issue presented by this motion is whether the U.S. Patent
Act applies to protect M-I Drilling’s patented technology in use on board the Resolution and the
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Pinnacle, U.S-flagged ships in international waters.3 The parties dispute whether Dynamic Air’s
motion is properly considered as a motion to dismiss for lack of subject matter jurisdiction under
Rule 12(b)(1) or for failure to state a claim under Rule 12(b)(6). M-I Drilling cites Litecubes,
LLC v. Northern Light Prods., Inc. for the proposition that the geographic location of alleged
infringing activity is an element of the claim, not a jurisdictional question. 523 F.3d 1353, 1362
(Fed. Cir. 2008). Dynamic Air contests the applicability of Litecubes, but admits “there is no
difference in the outcome if the issue is analyzed as one of subject matter jurisdiction or
substantive patent law.” Def.’s Rep. Mem. [Docket No. 25] 8.
Subject matter jurisdiction exists in patent cases under the “well-pleaded complaint” rule
where a complaint establishes either that federal patent law creates the cause of action or that the
plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal
patent law. Litecubes, 523 F.3d at 1360 (citing AT&T Co. v. Integrated Network Corp., 972
F.2d 1321, 1323-24 (Fed. Cir. 1992)). In this case, the Court agrees that M-I Drilling has
sufficiently pled a violation of the Patent Act and thus Dynamic Air’s motion will be considered
3
International waters, or the high seas, are defined as “the ocean waters beyond the
jurisdiction of any country. Under traditional international law, the high seas began 3 miles from
the coastline. Under the 1982 United Nations Convention on the Law of the Sea, which is
currently the generally accepted international law, the high seas begin 200 nautical miles from
the coastline, outside any country’s exclusive economic zone.” Black’s Law Dictionary 1550
(10th ed. 2014). The parties dispute whether the U.S.-flagged ships at issue in this case are in
international waters or the territorial waters of Brazil. It is not clear that this distinction will
affect the merits of this case. See Restatement (Third) of the Foreign Relations Law of the U.S.
§ 502 (1987) cmt. (d) (“Jurisdiction of flag state”) (noting the “flag state has jurisdiction to
prescribe with respect to any activity aboard the ship, but such jurisdiction is not exclusive when
the ship is in a port or internal waters of another state”) (emphasis added). While discussion of
this nuance may be further explored on a motion for summary judgment, the U.S. vessels at issue
are presumed to be in international waters here because all facts as pled in the Complaint must
be taken as true on a motion to dismiss. Fed. R. Civ. P. 12(b)(6).
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as one to dismiss for failure to state a claim.4
A. Motion to Dismiss Standard Under Rule 12(b)(6)
Rule 12 of the Federal Rules of Civil Procedure provides that a party may move to
dismiss a complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P.
12(b)(6). In considering a motion to dismiss, the pleadings are construed in the light most
favorable to the nonmoving party, and the facts alleged in the complaint must be taken as true.
Hamm v. Groose, 15 F.3d 110, 112 (8th Cir. 1994) (citation omitted). However, the factual
allegations must “raise a right to relief above the speculative level,” and push claims “across the
line from conceivable to plausible.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In
other words, the complaint must establish more than a “sheer possibility that a defendant has
acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Determining whether a
complaint states a plausible claim for relief will . . . be a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense.” Id. at 679. In doing so,
the court must draw reasonable inferences in the plaintiff’s favor, but it need not make
unreasonable inferences or accept unrealistic assertions. See Brown v. Medtronic, Inc., 628 F.3d
451, 461 (8th Cir. 2010).
B. Whether the U.S. Patent Act applies to U.S.-flagged ships
Dynamic Air contends the Patent Act does not apply to the Resolution and the Pinnacle
for two reasons: first, the Patent Act must be strictly construed, thus prohibiting its application
4
The parties do not dispute the basic rights granted to a patentee by the Patent Act of
1952. Section 154 gives patent holders the “right to exclude others from making, using, offering
for sale, or selling the [patented] invention throughout the United States or importing the
invention into the United States.” 35 U.S.C. § 154(a)(1). Section 271 establishes that a patent is
infringed when one “without authority makes, uses, offers to sell, or sells any patented invention
within the United States or imports into the United States any patented invention during the term
of the patent. Id. § 271(a).
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to U.S.-flagged ships absent explicit authorization from Congress; and second, regardless of the
Patent Act, the century-old case law relied on by M-I Drilling has been “effectively overruled.”
Def.’s Mem. Supp. Mot. Dismiss at 20. M-I Drilling contends that the plain language and
legislative history of the Patent Act support its application to U.S. territories which, under the
law of the flag doctrine, includes U.S.-flagged ships at high sea. Moreover, M-I Drilling
emphasized that Gardiner v. Howe is the only authority that addresses the precise question
presented by this case and, while some courts have questioned its meaning, it has never been
explicitly overruled. 9 F. Cas. 1157, 1158 (C.C.D. Mass. 1865).
1. Geographic scope of U.S. patent rights
The Constitution empowers Congress to promote the development of science and the
useful arts by granting a limited monopoly to inventors. Art. I, §8, cl. 8. The first Patent Act
was enacted by Congress in 1790. Scholarship has not revealed any early history related to the
geographic scope of patent rights in the United States. See Moy’s Walker on Patents § 12:1.
(4th ed. 2012). The first two disputes about the scope of patent rights in the United States arose
in the late 1800s and were related to marine activities. Id. The first dispute, Brown v. Duchesne,
concerned a French vessel conducting commerce in the port of Boston. 60 U.S. (19 How.) 183
(1857). The vessel was built in France and owned by a Frenchman, but the gaff of the sailing
vessel allegedly infringed on the plaintiff’s United States patent. Id. at 194. The Supreme Court
affirmed the lower court’s ruling and held “the rights of property and exclusive use granted to a
patentee does not extend to a foreign vessel lawfully entering one of our ports.” Id. at 198. The
Court concluded that a patentee’s rights were “confined within the limits of the United States”
and any use of one’s protected invention “outside of the jurisdiction of the United States is not
an infringement of his rights.” Id. at 195.
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The second early dispute, Gardiner v. Howe, is more directly on point. 9 F. Cas. at 1158.
Defendant was the owner of a United States vessel that was commanded by an American captain
at high sea. Id. The ship allegedly infringed the plaintiff’s patent related to sailing technology.5
The defendant objected to an instruction that infringement would occur on the vessel, regardless
of whether it was in port or at sea. Moy’s Walker, supra, at § 12:5. The Court disregarded the
defendant’s reliance on Brown, noting that the vessel in Brown was foreign whereas the
defendant’s vessel was American. Gardiner, 9 F. Cas. at 1158. In a brief opinion, the Court
held “the patent laws of the United States afford no protection to inventions beyond or outside of
the jurisdiction of the United States; but this jurisdiction extends to the decks of American
vessels on the high seas, as much as it does to all the territory of the country, and for many
purposes is even more exclusive.” Id.6 Gardiner has endured critique by two 1970s Court of
Claims cases, but no Court has explicitly overruled its holding. See Decca, Ltd. v. U.S., 544
F.2d 1070, 1073 (Ct. Cl. 1976) (“We do not, however, disapprove or overrule Gardiner . . . . We
only rely on [it] lightly and with hesitation.”); Ocean Sci. & Eng.’g Inc. v. U.S., 595 F.2d 572,
574 (Ct. Cl. 1979) (noting that “it is well to adjudicate cases on other grounds when possible”
rather than apply the “fiction that a United States flag ship . . . is an ambulatory portion of United
States territory.”).
5
Dynamic Air argues Gardiner is distinguishable on the facts because the
“instrumentality of the vessel” is not at issue in this case. This is a distinction without a
difference, however, as there is no indication that the type of patent at issue influenced the
Court’s holding.
6
Notably, the appellate decision affirmed by the Supreme Court in Brown was decided
ten years before Gardiner and included a more lengthy discussion about the law of the flag,
including a still accurate representation of the doctrine as “[w]hile on the high seas, a vessel is
deemed to be part of the territory of the nation to whose citizens it belongs, and under whose flag
it sails.” Brown v. Duchesne, 4 F. Cas. 369, 370 (C.C.D. Mass. 1855).
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In the Patent Act of 1952, Congress expressly stated the geographic limits of patent rights
and defined the “United States” as “the United States of America, its territories and possessions.”
35 U.S.C. §100(c). At least one commentary on patent law notes the “broad” definition of
“United States” in the 1952 Act, which is understood to include “land areas under U.S. Control,
U.S. registered vessels at high sea, and space vehicles under U.S. jurisdiction or control.” Moy’s
Walker, supra, at §12.1.
2. Law of the flag doctrine
“It is a fundamental principle of customary international law that no state may exercise
sovereignty over the high seas.” WesternGeco L.L.C. v. Ion Geophysical Corp., 776 F. Supp. 2d
342, 366 (S.D. Tex. 2011) (citing United States v. Louisiana, 394 U.S. 11, 22 (1969)); see
also Thomas J. Schoenbaum, Admirality and Maritime Law (5th ed., 2011) (“The doctrine of the
high seas holds that these areas are open to all states, and no state may validly subject any part of
them to its sovereignty.”). Jurisdiction over ships on the high seas is determined by the law of
the flag doctrine. Lauritzen v. Larsen, 345 U.S. 571, 585 (1953); see also Restatement (Third) of
the Foreign Relations Law of the U.S. § 502 (1987) (“The flag state may exercise jurisdiction to
prescribe, to adjudicate, and to enforce, with respect to the ship or any conduct that takes place
on the ship.”).
The law of the flag doctrine traditionally states that “a merchant ship is part of the
territory of the country whose flag she flies, and that actions aboard that ship are subject to the
laws of the flag state.” United States v. Kun Yun Jho, 534 F.3d 398, 405 (5th Cir. 2008) (citing
Cunard S.S. Co. v. Mellon, 262 U.S. 100, 123 (1923)); see also Schoenbaum, supra, at § 2-18
(“Jurisdiction over ships on the high seas is relegated to the flag state.”). Each state is entitled to
determine the conditions of registration before a ship is permitted to fly that state’s flag. Id. §
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501. International law requires a “genuine link” between the ship and the registering state,
which may include the nationality of the ship’s owners, nationality of the ship’s crew, how often
the ship stops in the state’s ports, and other considerations. Id. § 501(b) cmt. (“genuine link”).
3. Legislative history supports application of U.S. patents to U.S. ships
Dynamic Air argues that the 1952 Patent Act narrowed the scope of the Patent Act’s
applicability to prohibit application of the law of the flag. This argument holds neither fresh nor
sea water. The 1952 Patent Act extends patent rights to the territories of the United States, and
the law of the flag doctrine stands for the proposition that ships are considered the territory of the
country where the ship is registered, as represented by the flag flown on the ship. Nevertheless,
Dynamic Air argues that this logical connection should not be drawn because Congress has not
explicitly authorized application of the Patent Act to U.S.-flagged ships. See Air Line Stewards
& Stewardessess Ass’n v. N.W. Airlines, 267 F.2d 170, 178 (8th Cir. 1959) (“In construing the
Railway Labor Act, we have in mind the rule that unless there is an explicit and unequivocal
showing of a contrary intent, Acts of Congress are to be given an interpretation which is
domestic in nature.”). Because the 1952 Patent Act does not explicitly endorse patent rights on
U.S.-flagged ships at high sea, Dynamic Air argues there is a gap in the statute that Congress
must fill, not the Courts. See Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 531
(1972) (“We would require a clear and certain signal from Congress before approving the
position of a litigant who, as respondent here, argues that the beachhead of privilege is wider,
and the area of public use narrower, than courts had previously thought.”); see also Microsoft
Corp. v. AT&T Corp., 550 U.S. 437, 457 (2007) (any alleged “loophole” in the Patent Act is
“properly left for Congress to consider, and to close if it finds such action warranted.”).
M-I Drilling argues that the 1952 Patent Act does not overturn or disapprove of
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Gardiner’s rule that U.S. Patent laws extend to American vessels on the high seas. M-I Drilling
further contends that relevant legislative history indicates Congress was not only aware of
Gardiner’s holding, but that the 1952 Patent Act’s definition of the United States was “intended
to be descriptive rather than limiting.” S. Rep. No. 101-266 (1990). In 1990, Congress enacted
the Inventions in Outer Space Act, which states that “any invention made, used or sold in outer
space on a space object or component thereof under the jurisdiction or control of the United
States, shall be considered to be made, used or sold within the United States. . . .” Pub. L. No.
101-580, § 1(a), 104 Stat. 2863 (1990) (codified at 35 U.S.C. § 105). Dynamic Air argues the
Space Act shows that when Congress decides to expand patent rights beyond the borders of the
United States, it does so explicitly by statute. On the other hand, M-I Drilling argues that the
more reasonable conclusion to be drawn from the Senate Judiciary Report discussing the Space
Act is that “territory” of the United States was understood to extend to U.S.-flagged ships under
Gardiner. The Report states that “some caselaw supports the proposition that the decks of U.S.flagged vessels may be treated as U.S. territory for jurisdictional purposes in patent infringement
proceedings.” S. Rep. No. 101-266 (1990). Acknowledging the critiques of Gardiner, the
Report cautioned that “the proposition that U.S. patent law may be applied to activities aboard
U.S. spacecraft, simply because spacecraft are analogous to ocean vessels, is uncertain at best.”
Id. M-I Drilling’s conclusion that the Space Act was “not a repudiation of the application of the
Patent Act to U.S.-flagged ships, but rather an extension of the coverage of U.S.-flagged ships to
spacecraft as well” is the most reasonable reading of this legislative history. Pl.’s Mem. Opp.
Mot. Dismiss [Docket No. 22] 33.
4. Gardiner has not been overruled
Dynamic Air argues that even if application of Gardiner is not foreclosed by the 1952
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Patent Act, it has been effectively overruled and should be disregarded. The two primary cases
highlighted by Dynamic Air are Cunard S.S. Co. v. Mellon, 262 U.S. 100 (1923), and Air Line
Stewards & Stewardesses Ass’n v. N.W. Airlines, Inc., 267 F.2d 170, 175 (1959). These cases
resisted extending of the law of the flag by analogy to the particular constitutional and statutory
provisions analyzed by each. Ultimately, however, the holdings of these cases are confined to
the specific contexts in which they arose and are not directly applicable to the facts of this case.
In Cunard the Supreme Court held that the National Prohibition Act applied to domestic
and foreign-flagged ships in United States’ territorial waters. 262 U.S. 100 (1923). Central to
the Court’s conclusion was an analysis of the now-repealed 18th Amendment, which prohibited
the manufacture, sale or transportation of liquors within, into, or out of the United States and “all
territory subject to the jurisdiction thereof.” Id. The Court concluded that the text of the
Amendment used the term “territory” in a physical rather than metaphorical sense and
interpreted the Prohibition Act coextensively with the 18th Amendment. Id. at 122. The Court
declined to extend the 18th Amendment’s application to U.S.-flagged ships at high sea, noting
that “by the laws of all the foreign ports at which the ships touch [the carrying and consumption
of alcohol] is permitted and by the laws of some it is required.” Id. 262 U.S. at 119.
The Court also characterized the law of the flag as a “figure of speech, a metaphor” and
concluded that “the jurisdiction which it is intended to describe arises out of the nationality of
the ship . . . and partakes more of the characteristics of personal than territorial sovereignty.”
Cunard’s reference to the law of the flag as a “fiction” was a common expression used to
recognize “that the notion that a ship is floating on part of the territory of the flag state is a
fiction.” Restatement (Third) of the Foreign Relations Law of the U.S., supra § 502, reporter’s
notes at 3. Subsequent Supreme Court precedent confirms that the law of the flag is applied on
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the “pragmatic basis that there must be some law on shipboard, that it cannot change at every
change of waters, and no experience shows a better rule than that of the state that owns her.”
Lauritzen, 345 U.S. at 585; see also McCulloch v. Sociedad Nacional De Marineros De Hond.,
372 U.S. 10, 21 (1963) (noting the law of the flag, which ordinarily governs the internal affairs
of a ship, is a well-established rule of international law). Finally, it is worth nothing that in
Cunard, the Court was trying to protect Congress’ intent to prohibit the manufactuer or sale of
liquor within U.S. territory, whereas here, the Court must seek to preserve the central purpose of
the Patent Act, protecting patentee’s rights.
In Northwest Airlines, the Eighth Circuit concluded that the Railway Labor Act did not
apply to employees of a common carrier by air who were hired outside of the U.S. and
performed services between locations outside of the continental United States. 267 F.2d 170,
175 (1959). The Court considered the specific language of the Railway Labor Act, which
incorporates the Interstate Commerce Act, in concluding that carriers by air are covered only to
the extent that the commerce or transportation they are involved with takes place within the
United States. Id. at 175.
Northwest Airlines is distinguishable from the present case for at least two reasons. First,
the legislative history relating to the Space Act provides a reasoned basis for concluding that
Congress intended the definition of the United States and its “territories” to apply to U.S.flagged ships at high sea. Given the case law supporting this proposition, it is reasonable to
conclude that Congress would have taken action to forbid such application if desired. The
parties have not cited, and the Court is not aware, of any analogous legislative history related to
the Railway Labor Act or the Interstate Commerce Act. Second, because Northwest Airlines
was a labor case, the policy implications of extending the Railway Labor Act to the workers on
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all U.S.-flagged aircraft operating outside of the United States were far more complex than
extending a patentee’s rights to infringing technology on U.S.-flagged ships at high sea.
Extending M-I Drilling’s patent rights to the Resolution and the Pinnacle is far more analogous
to extending patent rights to U.S.-flagged spacecraft. Even before Congress passed the Space
Act, it was arguable that there were “ no conceivable policy grounds for not placing U.S.
spacecraft within U.S. patent law.” Glenn H. Reynolds, SPACE LAW FORUM: Legislative
Comment: The Patents in Space Act, 3 Harv. J. Law & Tec 13, 24 (1990). Extending patent
protection to technology on U.S.-flagged ships is consistent with this rationale, as well as the
purpose and intent of the Patent Act. The same cannot be said for extending U.S. labor law
protections to workers on U.S. aircraft operating outside the United States.
Finally, Dynamic Air urges reliance on the most recent case to consider Gardiner,
WesternGeco L.L.C. v. Ion Geophysical Corp., for a “legal road map to conclude that Gardiner
is not controlling.” Def.’s Mem. Supp. Mot. Dismiss 21. The Court concludes the opposite;
WesternGeco affirms that Gardiner is good law and also applies the law of the flag to a patent
case. At issue in WesternGeco was whether patent-protected technology for seismic mapping of
the subsurface ocean floor to facilitate natural resource exploration and management was being
infringed when deployed behind a Norwegian-flagged ship (the Geo Celtic) in the Chukchi Sea
off the coast of Alaska. 776 F. Supp. 2d 342, 347 (S.D. Tex. 2011). The Court reviewed the law
of the flag doctrine in the context of international law and also discussed Brown, Gardiner, and
related cases, including those critical of Gardiner. Nevertheless, the Court applied the law of the
flag and, consistent with Brown and international law, the Court concluded that “the law of the
flag doctrine instructs us that the Geo Celtic is subject to the laws of Norway.” Id. 776 F. Supp.
2d at 367. Dynamic Air posits that because the Patent Act did not apply in WesternGeco where
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the alleged infringement was a mere 100 miles off the coast of Alaska, “it is hard to fathom how
U.S. patent law might apply to acts occurring in the high seas or foreign waters thousands of
miles away from the United States.” WesternGeco’s conclusion was not driven by proximity to
the flag country, nor was it due to proximity of the territorial jurisdiction. Rather, WesternGeco
applied the law of the flag, consistent with Brown and Gardiner, just as the Court must do here.
Answering the interesting question posed by this case is not a clear cut or easy decision.
Nevertheless, based on the relevant legislative history and the greater weight of case law,
protection of M-I Drilling’s pneumatic conveyance system under the Patent Act extends to the
U.S.-flagged ships, the Resolution and the Pinnacle. The doctrine of the flag must be saluted
under the facts of this case.
IV. CONCLUSION
Based on the foregoing, and all the files, records and proceedings herein, IT IS
HEREBY ORDERED that Defendant’s Motion to Dismiss [Docket No. 16] is DENIED.
BY THE COURT:
s/Ann D. Montgomery
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: April 10, 2015.
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