Case 1:19-cv-00859-RTH Document 50-2 Filed 04/23/21 Page 1 of 7
`Case 1:19—cv-00859—RTH Document 50-2 Filed 04/23/21 Page 1 of 7
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`EXHIBIT A
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`EXHIBIT A
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`Case 1:19-cv-00859-RTH Document 50-2 Filed 04/23/21 Page 2 of 7
`Case 1:17-cv-00933-RGA Document 42 Filed 10/19/18 Page 1 of 6 PageID #: 2807
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`E-NUMERATE SOLUTIONS, INC. and
`E-NUMERATE, LLC,
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`MATTRESS FIRM HOLDING CORP.,
`MERRILL COMMUNICATIONS LLC,
`and MERRILL CORPORATION,
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`C.A. No. 17-933-RGA
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`Plaintiffs,
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`v.
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`Defendants.
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`STATEMENT OF INTEREST OF THE UNITED STATES
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`The United States files this Statement of Interest pursuant to 28 U.S.C. § 5171 to inform
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`the Court that the United States has granted the Defendants the Government’s “authorization and
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`consent” as to certain acts alleged to have been committed by the Defendants. As explained
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`below, the effect of such “authorization and consent” is to relieve the Defendants of any liability
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`for patent infringement resulting from such acts for the benefit of the United States and to
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`transfer to the United States any liability for any manufacture or use of the inventions claimed in
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`the patents in suit resulting from the authorized or consented acts. The Government’s
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`“authorization and consent” relieves the Defendants from liability for all infringement for such
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`acts, including indirect, induced, and/or contributory infringement. Accordingly, to the extent
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`that liability exists for such acts, the patentee is limited to pursuing a claim against the United
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`States in the Court of Federal Claims under 28 U.S.C. § 1498(a).
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`1 Section 517 provides, in pertinent part, that “any officer of the Department of Justice, may be
`sent by the Attorney General to any … district to attend to the interests of the United States in a
`suit pending in a court of the United States … or to attend to any other interest of the United
`States.”
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`-1-
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`I.
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`BACKGROUND
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`Congress established the Securities and Exchange Commission (SEC) in 1934 to restore
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`public confidence in the United States securities markets after the stock market crash in October
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`1929. Since that time, the SEC has endeavored to protect investors and to maintain fair, orderly,
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`and efficient markets. To achieve those goals, the SEC requires public companies to submit
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`financial disclosures. The SEC also facilitates the public’s access to and use of financial
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`disclosures. By facilitating public disclosure of financial information, the SEC seeks to reduce
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`the risk of information asymmetries and fraud in the capital markets.
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`The Defendants are companies that are engaged in filing required disclosures with the
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`SEC. The Plaintiffs allege that Defendant Mattress Firm infringed the claims of the patents by
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`filing financial information with the SEC in eXtensible Business Reporting Language (XBRL)
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`format, and that Mattress Firm uses Defendant Merrill Corp.’s software or services to prepare the
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`allegedly infringing filings. See ECF 31 ¶¶ 30-32; see generally id. ¶¶ 38-40, 43, 50-52, 55, 62-
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`63, 66, 73-75, 78.
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`The SEC has supported the use of the XBRL format for filings for more than a decade.
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`The XBRL is an international open-standard mark-up language for business information. In
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`2005, the SEC began allowing filers to voluntarily submit some information in XBRL format.
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`See ECF 38-1 Ex. F. Since 2006, the SEC has worked with others to develop standardized
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`XBRL tags to represent financial concepts recognized in U.S. Generally Accepted Accounting
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`Principles (GAAP) and other required SEC disclosures. In 2009, the SEC began mandating the
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`use of XBRL tagging for several types of financial statements filed with the SEC. See 17 C.F.R.
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`§§ 232.405, 229.601(b)(101); see also 17 C.F.R. § 232.11 (“‘Interactive Data File’ means the
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`machine-readable computer code that presents information in [XBRL] electronic format pursuant
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`-2-
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`to § 232.405”). Since that time, the SEC has increasingly required filers to use XBRL tagging
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`for other types of disclosures. At the present time, the SEC estimates that XBRL tags are
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`included in the majority of the SEC’s filings.
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`II.
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`DISCUSSION
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`“Authorization and consent” is a term of art. It is defined by the first and second
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`paragraphs of 28 U.S.C. § 1498(a), which provides, in pertinent part:
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`Whenever an invention described in and covered by a patent of the United States
`is used or manufactured 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. …
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`For the purposes of this section, the use and manufacture of an invention
`described in and covered by a patent of the United States by a contractor, a
`subcontractor, or any person, firm, or corporation for the Government and with
`the authorization or consent of the Government, shall be construed as use or
`manufacture for the United States.
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`28 U.S.C. § 1498(a). The granting of “authorization and consent” thus “relieves a third party
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`from patent infringement liability, and it acts as a waiver of sovereign immunity and consent to
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`liability.” Madey v. Duke University, 307 F.3d 1351, 1359 (Fed. Cir. 2002).
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`In a suit between private entities where the government is not a party, Section 1498 is
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`treated as an affirmative defense. See Sperry Gyroscope Co. v. Arma Engineering Co., 271 U.S.
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`232, 235-36 (1926); Manville Sales Corp. v. Paramount Systems, 917 F.2d 544, 554-55 & n. 6
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`(Fed. Cir. 1990) (discussing that Section 1498(a) is not jurisdictional when raised by a private
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`party as a defense but is jurisdictional when raised in a suit against the United States in district
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`court). Accordingly, by this Statement of Interest, the United States hereby confirms that the
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`United States has granted its authorization and consent to the extent the Defendants use XBRL to
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`file documents with the SEC pursuant to federal regulation.
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`-3-
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`Proof of authorization and consent requires “explicit acts or extrinsic evidence sufficient
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`to prove the government’s intention to accept liability for a specific act of infringement.”
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`Auerbach v. Sverdrup Corp., 829 F.2d 175, 177 (D.C. Cir. 1987). But it need not be
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`accomplished in any particular fashion. See Advanced Software Design Corp. v. Federal
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`Reserve Bank of St. Louis, 583 F.3d 1371, 1376 (Fed. Cir. 2009); Hughes Aircraft Co. v. United
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`States, 534 F.2d 889, 901 (Ct. Cl. 1976) (no “requirement that authorization or consent
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`necessarily appear on the face of a particular contract”). And it may be granted at any time,
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`including after the fact or during litigation. See Advanced Software, 583 F.3d at 1377-78;
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`Hughes, 534 F.2d at 901. Further, Section 1498(a) “does not require that the government be
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`party to any contract, but may apply to activities by ‘any person, firm, or corporation’ for the
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`benefit of the government.” Advanced Software, 583 F.3d at 1377.
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`Authorization and consent may also be found where the government legally requires a
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`party to engage in allegedly infringing activities for the benefit of the government. See IRIS
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`Corp. v. Japan Airlines Corp., 769 F.3d 1359, 1362-64 (Fed. Cir. 2014) (concluding that an
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`airline’s examination of passports pursuant to federal regulations was done with the
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`Government’s authorization and consent). That is the situation in the present case. By
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`regulation, the Defendants are obligated to submit certain financial information in XBRL format.
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`See 17 C.F.R. §§ 232.405, 229.601(b)(101). By doing so, the Defendants – and many others –
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`aid the SEC’s efforts in protecting investors and maintaining fair, orderly, and efficient markets.
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`Additionally, the Government’s authorization and consent extends to relieve the
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`Defendants of liability with respect to allegations of indirect, induced, or contributory
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`infringement. The purpose of Section 1498(a) is to “relieve the contractor entirely from liability
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`of every kind for the infringement of patents.” Richmond Screw Anchor Co., Inc., v. United
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`States, 275 U.S. 331, 343 (1928). “The word ‘entire’ emphasizes the exclusive and
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`comprehensive character of the remedy provided.” Id. Additionally, Section 1498 does not
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`expressly limit recovery to direct (as opposed to indirect) infringement; it simply states that the
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`liability of the Government occurs when the patent is “used or manufactured by or for the United
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`States.” 28 U.S.C. § 1498; Advanced Aerospace Technologies, Inc. v. United States, 113 Fed.
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`Cl. 265, 275-76 (Fed. Cl. 2013) (explaining that Section 1498 does not use “the adjectives
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`‘direct’ or ‘indirect,’” but Section 1498 is clear that infringement occurs by use or manufacturing
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`of a patented invention by or for the United States).
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`Finally, in their briefs to the Court, the Plaintiffs have incorrectly asserted that “[t]he SEC
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`made it known [to its filers] that submitting XBRL documents may infringe third-party patents.”
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`See, e.g., ECF 38 at 10. The Government respectfully submits that the Plaintiffs have
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`misinterpreted the SEC’s statements. The SEC’s statements in SEC Release No. 33-8529, as
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`quoted in Plaintiffs’ brief, relate to “the cost of licensing software” to submit financial
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`disclosures in XBRL format. ECF 38 at 4-5 (quoting ECF 38-1 at 52 (Ex. F)). e-Numerate does
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`not allege that it has offered or is offering Defendants any software products or services, and
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`software licensing is not at issue in this litigation. See generally ECF 31. Thus, the SEC’s
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`statements regarding “annual software licensing costs” have nothing to do with the patent
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`infringement allegations or the doctrine of authorization and consent at issue in this case. More
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`relevant to the patent infringement allegations at issue is the discussion in the same SEC Release
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`of XBRL being an “open standard ….” ECF 38-1 at 46, n.20 (Ex. F). The SEC understood that
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`“XBRL was developed and continues to be supported by XBRL International, a collaborative
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`consortium of approximately 250 organizations representing many constituents of the financial
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`reporting community.” Id. The SEC did not consider a scenario in which a patent holder could
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`-5-
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`threaten filers with patent infringement suits and the SEC correspondingly did not put its filers
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`on notice of any patent infringement risk.
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`Accordingly, with respect to all allegations of infringement (including any allegation of
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`indirect, induced, or contributory infringement) based on the use of XBRL to file documents
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`with the SEC pursuant to federal regulation, the Defendants should be relieved of liability.
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`Respectfully submitted,
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`JOSEPH H. HUNT
`Assistant Attorney General
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`GARY L. HAUSKEN
`Director
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`/s/ Scott Bolden
`SCOTT BOLDEN
`Deputy Director
`Commercial Litigation Branch
`Civil Division
`Department of Justice
`Washington, DC 20530
`Scott.Bolden@USDOJ.gov
`(202) 307-0262
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`DAVID C. WEISS
`United States Attorney
`District of Delaware
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`/s/ Jennifer L. Hall
`Jennifer Hall (#5122)
`Assistant United States Attorney
`1313 North Market Street, Suite 400
`Wilmington, DE 19801
`Jennifer.Hall@usdoj.gov
`(302) 573-6277
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`Attorneys for the United States
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`October 19, 2018
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`Of Counsel:
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`RICHARD M. HUMES
`Associate General Counsel
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`GEORGE C. BROWN
`Assistant General Counsel
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`NELSON KUAN
`Senior Counsel
`Office of the General Counsel
`U.S. Securities and Exchange
`Commission
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`-6-
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