Patent Law

Rothe Development Corp. v. Department of Defense (Fed. Cir. 2008)

Although not a patent case, Rothe raises an important Federal Constitutional issue. In Rothe, the Federal Circuit has held that the statutory quota for governmental contracts with "small disadvantaged business" is facially unconstitutional as a race-based violation of the right to equal protection (through the Due Process Clause of the Fifth Amendment).

10 U.S.C. § 2323 ("Section 1207") sets a goal that "five percent of federal defense contracting dollars" be awarded to small businesses owned and controlled by "socially and economically disadvantaged individuals." Under the Small Business Act, Black Americans, Asian Americans, Hispanic Americans, and Native Americans are presumptively socially disadvantaged individuals.

Statutes that that include explicit racial classifications are reviewed with "strict scrutiny." Such provisions are only valid if they "serve a compelling governmental interest, and [are] narrowly tailored to further that interest." In the race setting, general efforts "to alleviate the effects of societal discrimination" are not considered compelling interests under the Supreme Court's 1996 Shaw decision. Congress reauthorized Section 1207 in 2006. Thus, to be constitutional, the evidence of a compelling governmental interest at that time.

On appeal, the Federal Circuit found that older Congressional evidence (from the original enactment of the provision) was "stale" by 2006 and thus not reliable. Additionally, the record did not reflect that newer evidence was officially considered by Congress.

Finally, the Federal Circuit found that the newer studies ? even if considered by Congress ? were inadequate because of the many methodology defects.

Upon these findings, the Federal Circuit held that congress did not have a compelling governmental interest in enacting Section 1207 and that the statute therefore is invalid as unconstitutional.

Note:

• Opinion written by Chief Judge Michel and joined by Circuit Judge Mayer and District Court Judge Stearns from Massachusetts sitting by designation. These judges were appointed by Presidents Reagan, Reagan, and Clinton, resptively.