United States Court of Appeals, District of Columbia Circuit
March 7, 2017
Petition for Review of an Order of the Transportation
Security Administration Bradley C. Graveline argued
the cause and filed the briefs for petitioner.
S. Koppel, Attorney, U.S. Department of Justice, argued the
cause for respondent.
him on the brief were Benjamin C. Mizer, Principal Deputy
Assistant Attorney General at the time the brief was filed,
and Mark B. Stern, Attorney.
Before: Henderson and Srinivasan, Circuit Judges, and
Ginsburg, Senior Circuit Judge.
Circuit Judge Ginsburg.
Senior Circuit Judge: SecurityPoint Holdings, Inc.,
which contracts with airports to participate in an
advertising program established by the Transportation
Security Administration, again petitions for review of the
agency's decision to revise its memorandum of
understanding (MOU) used with participating airports. On
remand after this court's decision in SecurityPoint
Holdings, Inc. v. TSA, 769 F.3d 1184 (D.C. Cir. 2014)
(SPH I), the agency again declined
SecurityPoint's request that it cease using the revised
MO U.SecurityPoint's petition challenges the TSA's
decision as arbitrary and capricious and as an act of
retaliation that violates its rights under the First
Amendment to the Constitution of the United States. For the
reasons that follow, we deny the petition.
is the owner of a method patent covering, as relevant here,
the practice of placing onto a cart bins that have passed
through an x-ray screening machine at an airport security
checkpoint and pushing the cart back to the front of the
machine so the bins can be used by the next passengers to go
through the checkpoint. According to SecurityPoint, the TSA
uses its patented system to help screen passengers at over
400 airports throughout the United States. At about 40 of
those airports, SecurityPoint participates in the TSA's
"Bin Advertising Program." Under that program, an
"advertising broker" such as SecurityPoint
assume[s] the costs of providing and maintaining certain
checkpoint equipment - bins, wheeled carts to transport the
bins, and tables - in exchange for the right to sell
advertisements to be displayed inside the bins. Participating
airports execute [an MOU] with
TSA; they then contract with private companies to obtain the
equipment subject to the MOU's terms. Once TSA has
adopted a new MOU template, it requires all participating
airports entering into new contracts under the program to use
that template…. The advertising revenues, though
shared by the airport operators and private companies,
relieve TSA of the expense of supplying the bin-related
SPH I, 769 F.3d at 1186.
concedes that, at airports where it is the advertising
broker, the TSA may practice the patent through what the
Company calls an "implied license" arising from its
agreement with the airport. The TSA, consequently, does not
have a license to practice the patent at airports that do not
participate in the Bin Advertising Program with
the Company sued the TSA in the Court of Federal Claims,
alleging patent infringement at approximately 400 U.S.
airports with which SecurityPoint had not contracted to
participate in the Bin Advertising Program. The parties
agreed to bifurcate the liability and damages phases of the
case and the TSA conditionally stipulated to infringement at
ten large airports. The court then held the patent was valid,
rejecting the TSA's argument that the invention was
"obvious" and therefore not patentable.
SecurityPoint Holdings, Inc. v. United States, 129
Fed.Cl. 25, 28 (2016). The TSA appealed that decision to the
Federal Circuit, but its appeal was dismissed as premature.
SecurityPoint Holdings, Inc. v. United States, No.
17-1421 (Fed. Cir. Mar. 9, 2017) (because order did not
resolve TSA's liability at all U.S. airports, it was not
final and reviewable). The Court of Federal Claims has not
yet determined whether the TSA infringed the patent at other
case arises from prospective changes to the MOU that the TSA
made in 2012. Two additions to the MOU are relevant here. One
"require[s] participating airports to indemnify TSA from
all liability for intellectual property claims related to the
checkpoint equipment." SPH I, 769 F.3d at 1186.
The other provides that "on cancellation of an agreement
between an airport and a private company [i.e., an
advertising broker such as SecurityPoint], TSA would retain
the right to use the checkpoint equipment as well as a
license to all intellectual property necessary for such
use." Id. at 1186-87.
with these changes, SecurityPoint asked the TSA to
"cease and desist" from using the revised MOU,
which it claimed the agency revised in retaliation for
SecurityPoint's having sued it for patent infringement.
In its letter request, SecurityPoint argued the indemnity
provision was a "poison pill" that would make it
"impossible" for any additional airports to enter
the Bin Advertising Program. In this regard, the Company
pointed out that the fewer the airports contracting with
SecurityPoint to participate in the Bin Advertising Program,
the less the TSA would benefit from the implied license to
use SecurityPoint's patented system and from
SecurityPoint's provision of free checkpoint equipment.
The letter also listed four airports - St. Louis, San Jose,
San Antonio, and Boston - where SecurityPoint claimed the new
MOU had prevented deployment of the agency's Bin
rejected SecurityPoint's demands, stating the revisions
to the MOU are based on prudent business practices to protect
[the agency] from legal liability that could arise from the
use of checkpoint furnishings provided by airport operators,
and to ensure that agency activities are not disrupted by the