IN THE SUPREME = COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS

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No. 05-0292

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State of=20 Texas,=20 Texas General Land Office, and = Texas Land = Commissioner,=20 Petitioners,

Herbert W. Holland,=20 Respondent

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On Petition for Review from = the

Court of Appeals for the Thirteenth = District of=20 Texas

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Argued September=20 27, 2006

Justice O=92Neill delivered = the opinion of=20 the Court.

Herbert=20 Holland developed a cost-effective process to clean oil-contaminated = bilge=20 water. The State of Texas, seeking to abate oil pollution in its coastal = waters,=20 contracted with, and paid more than $160,000 to, Holland=92s companies = for=20 assistance in designing and constructing filtration units along the = Texas Gulf=20 Coast. Holland=20 later received a patent on the decontamination process and began = demanding=20 additional payments as patent royalties. When the State refused to pay,=20 Holland filed=20 this suit claiming the State=92s unauthorized use of his patented = technology=20 constituted a taking under Article I, section 17 of the Texas = Constitution. We=20 must decide whether a takings claim is the proper avenue for a patentholder who performs services under contract = with the=20 State to assert patent rights. We hold that it is not when, as here, the = State=92s=20 use is pursuant to colorable contract rights. Because Holland cannot = state a=20 takings claim for the State=92s alleged unlawful use of his patent, the = State is=20 entitled to immunity from suit. Accordingly, we reverse the court of = appeals=92=20 judgment and dismiss Holland=92s claim for want of = jurisdiction.

I. Background

In = the late=20 1990s, the General Land Office (GLO) began working on a project to abate = pollution resulting from commercial fishing boats illegally discharging = oily=20 bilge water into coastal waters. The GLO contracted with two companies, = Spill=20 Removal Products, Inc. (SRP) and Pollution Prevention Products (PPP), to = provide=20 design services, components, installation and consulting services for = the=20 construction of three bilge water processing facilities located in Port = Isabel,=20 Port Lavaca, and Palacios. Herbert Holland developed the polymer-based = pollution=20 filters used in the facilities and the process for their installation. = According=20 to Holland, he=20 was the =93managing member=94 of PPP and the president of SRP, and it is = undisputed=20 that all of the GLO=92s contacts on the = project were=20 with him. The three processing facilities were completed by 2001, and = all three=20 used Holland=92s=20 polymer-based filtration system to extract oil from contaminated bilge = water.=20 The GLO paid more than $160,000 to PPP and SRP pursuant to their = agreement.

Holland=20 applied for a patent on his filtration process in 1998, and in 2000 = received=20 Patent No. 6,027,653 for a =93Method of Removing Organic Compounds from = Air and=20 Water Columns,=94 referred to as the =93=92653 patent.=94 Claim 13 of = the patent=20 describes a method of removing and collecting contaminants, first by = pretreating the water and then directing it = through a series=20 of separation and filtration media.[1] Claim 19 describes the = apparatuses used=20 in the separation and filtration processes. The GLO facilities use the = method=20 and apparatuses described in Claims 13 and 19 of the patent. In 2002, = Holland = contacted the GLO=20 and began demanding payment of patent royalties for the three = facilities=92 use of=20 his patented process. The GLO=92s contracts = with PPP and=20 SRP did not provide for the payment of patent royalties.

When the GLO=20 refused to make any additional payments, Holland sued the State of = Texas, the=20 GLO, and the Texas Land Commissioner (collectively =93the State=94) = alleging that=20 use of his patented process at the Palacios reclamation facilities = infringed the=20 =92653 patent.[2] He further alleged that the = State=92s use=20 of his patented process constituted a taking of his property for public = use=20 without compensation in violation of Article I, section 17 of the Texas=20 Constitution. After entering a general denial, the State filed a plea to = the=20 jurisdiction which the trial court denied. The court of appeals = affirmed,=20 holding that Holland had adequately pled a takings = claim=20 against the State for which immunity was waived. ___ = S.W.3d at=20 ___. We granted the State=92s petition for review to examine the = State=92s=20 sovereign immunity under the circumstances presented.

II. Jurisdiction

Because this=20 is an interlocutory appeal from the trial court=92s denial of a = jurisdictional=20 plea, and there was no dissent in the court of appeals, we have = jurisdiction=20 only if the court of appeals=92 decision conflicts with a prior decision = of this=20 Court or of another court of appeals. Tex. Gov=92t Code =A7=A7 = 22.001(a)(1), (2). Decisions conflict for jurisdictional = purposes=20 =93when there is inconsistency in their respective decisions that should = be=20 clarified to remove unnecessary uncertainty in the law and unfairness to = litigants.=94 Id. =A7=20 22.001(e). As we explain below, the trial court erred in denying = the=20 State=92s plea to the jurisdiction because the State was acting under = color of=20 contract in utilizing the treatment process that the =92653 patent = covers. Because=20 Holland=92s claim does not arise as a taking under the constitution but = sounds in=20 contract, the court of appeals=92 decision conflicts with our decision = in=20 General Services Commission v. Little-Tex Insulation Co., 39 = S.W.3d 591=20 (Tex. 2001), and we have jurisdiction to resolve the conflict.

III. Standard and Scope of Review

A = plea to the=20 jurisdiction based on sovereign immunity challenges a trial court=92s=20 jurisdiction. Tex. = Dep=92t of Parks=20 & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex. = 2004). A plea=20 questioning the trial court=92s jurisdiction raises a question of law = that we=20 review de novo. Id. at=20 226. We focus first on the plaintiff=92s petition to determine = whether the=20 facts pled affirmatively demonstrate that jurisdiction exists. = Id. We = construe=20 the pleadings liberally, looking to the pleader=92s intent. Id. If = the=20 pleadings are insufficient to establish jurisdiction but do not = affirmatively=20 demonstrate an incurable defect, the plaintiff should be afforded the=20 opportunity to replead. Id. at=20 226-27. In some instances, however, a plea to the jurisdiction = may=20 require the court to consider evidence pertaining to jurisdictional = facts.=20 Id. at 227;=20 Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000). A plea = should=20 not be granted if a fact issue is presented as to the court=92s = jurisdiction, but=20 if the relevant undisputed evidence negates jurisdiction, then the plea = to the=20 jurisdiction must be granted. Miranda, 133 = S.W.3d at=20 227-28.

IV. Analysis

The = State=20 contends Holland=92s petition does not = present a=20 viable takings claim because the State designed and constructed the = bilge water=20 reclamation facilities, which utilized the process described in = Holland=92s = patent, under=20 color of contract. According to the State, it is of no moment that its = contract=20 was with Holland=92s companies rather = than=20 Holland himself;=20 rather, the proper focus is whether the State had the requisite intent = to take=20 property for public use and thus was invoking its eminent-domain powers. = Holland responds, and the court of = appeals=20 agreed, that the State did not establish as a matter of law that it was = acting=20 under color of contract with Holland rather than with PPP and SRP. = 161 S.W.3d at 233. Holland contends the State=92s = contract with his=20 companies is immaterial because he holds the =91635 patent individually, = and=20 whether or not the State was acting pursuant to an implied contract with = him is=20 a disputed fact question that the factfinder = must=20 resolve. We agree with the State.

Absent an=20 express waiver of its sovereign immunity, the State is generally immune = from=20 suit. State v. Shumake, 199=20 S.W.3d 279, 283 (Tex. 2006). But sovereign = immunity does=20 not shield the State from a claim based upon a taking under Article I, = section=20 17 of the Texas Constitution, known as the =93takings clause.=94 = Little-Tex=20 Insulation Co., 39 S.W.3d at 598. The = takings=20 clause mandates that =93[n]o person=92s property shall be taken, damaged = or=20 destroyed for or applied to public use without adequate compensation = being made,=20 unless by the consent of such person.=94 Tex. Const. art. I, =A7=20 17. To establish a takings claim under Article I, section 17, the = claimant must show that a governmental actor acted intentionally to take = or=20 damage property for a public use. Little-Tex Insulation Co., = 39 S.W.3d at 598. When the government acts pursuant = to=20 colorable contract rights, it lacks the necessary intent to take under = its=20 eminent-domain powers and thus retains its immunity from suit. = Id. at=20 598-99. This is because the State may =93wear[]=20 two hats: the State as a party to the contract and the State as = sovereign. The=20 State, in acting within a color of right to take or withhold property in = a=20 contractual situation, is acting akin to a private citizen and not under = any=20 sovereign powers.=94 Id. at 599=20 (citations omitted).

Holland = contends he had no=20 contract with the State and therefore the State=92s use of his patent = was=20 unauthorized. But absence of an express contract = between=20 Holland and the=20 State, or uncertainties about the existence of an implied contract = between them,=20 are immaterial to determining the capacity in which the State is = acting.=20 When we articulated the principle distinguishing the State=92s = eminent-domain=20 capacity from its contractual capacity in Little-Tex, we relied = on=20 State v. Steck Co., 236 S.W.2d 866, = 869 (Tex.=20 Civ. App.=96Austin 1951, writ ref=92d). In that case, Steck, a=20 printer, sought to recover from the State the value of 39,603,690 = cigarette tax=20 stamps it had manufactured and delivered to the State. Id. at=20 867. The year before those stamps were delivered, Steck had manufactured, delivered, and been paid = for=20 300,000,000 cigarette stamps under a competitively bid, one-year = contract.=20 Id. Pursuant to an oral agreement with the chief of the printing = division=20 of the Cigarette Tax Stamp Board, Steck = continued to=20 manufacture and deliver the stamps after the first year=92s contract had = expired.=20 Id.=20 When the State refused payment, Steck sued. = Id. = The trial=20 court determined that Steck was entitled to=20 compensation under Article I, section 17. Id. at 867-68. We disagreed. First, we held there was = no=20 enforceable contract because the State had failed to abide by the = legally=20 required bidding procedures. Id. at=20 868. We also held that Steck could = not assert a=20 takings claim under Article I, section 17. Id. at 869. We reasoned that because Steck had delivered and the State had accepted the = stamps=20 under the purported, but nonexistent, contract, Steck=20 could not contend that the stamps had been taken under the State=92s=20 eminent-domain power. Id.

Similarly, in=20 A.C. Aukerman Co. v. State of Texas, = 902 S.W.2d=20 576 (Tex. App.=97Houston [1st Dist.] 1995, writ denied), the State paid=20 independent highway-construction contractors who had used concrete = roadway=20 barriers manufactured according to a process over which Aukerman asserted patent rights. Id. at=20 577. Claiming the State had obtained the benefits of his patents = without=20 paying compensation, Aukerman sued the State = for=20 inverse condemnation. Id. The court of appeals = affirmed the=20 trial court=92s summary judgment in the State=92s favor, determining = that any cause=20 of action Aukerman might have was for patent = infringement against the independent contractors. Id. at=20 578. Even if the contractors had infringed Aukerman=92s patent, the court held, the State was = merely a=20 party to contracts with them and, without more, could not be liable for = patent=20 infringement. Id. (citing Am. Graphophone Co. v. Gimbel=20 Bros., 234 F. 361, 368 (S.D.N.Y. 1916) (holding that a purchaser of = a=20 product which has been made in infringement of a patented process cannot = be=20 liable as an infringer)). Having acquired the concrete barriers through = its=20 third-party contract, the court concluded the State lacked the intent = necessary=20 to establish a takings claim. Id. at=20 578-79.

In = this case,=20 the State presented uncontroverted evidence = that=20 Holland=20 voluntarily provided, and the State accepted, his filtration process = along with=20 his design assistance pursuant to contractual agreements with SRP and = PPP.=20 Whether or not a contract may be implied between the State and Holland individually, the State accepted = Holland=92s = product and his=20 services under color of its contracts with SRP and PPP, and not pursuant = to its=20 powers of eminent domain. Any claim for patent infringement Holland might = have would=20 be against SRP and PPP, not the State as a mere party to a contract with = them.=20 Lacking the requisite intent to take Holland=92s patented process under = its=20 eminent-domain powers, the State is not subject to liability under = article I,=20 section 17 of the Texas Constitution. Accordingly, the trial court erred = in=20 denying the State=92s plea to the jurisdiction.

V. Conclusion

We = reverse=20 the court of appeals=92 judgment and dismiss the case for lack of=20 jurisdiction.

___________________________________________

Harriet=20 O=92Neill

Justice

OPINION=20 DELIVERED: April 20, 2007

^[1] A = patent=20 =93claim=94 sets forth an invention=92s parameters and describes in some = detail =93the=20 subject matter which the [patent] applicant regards as his invention.=94 = 35 U.S.C. =A7 112; see 3 Donald S. Chisum, Chisum on Patents =A7 8.01=20 (2005).

^[2] = The State=20 submitted an affidavit attesting that the three facilities were = completed in=20 1998. In response, Holland submitted an affidavit = disputing the=20 State=92s affidavit to the extent it asserted that the Palacios facility = =93currently in use and operating was completed in 1998.=94 This dispute = is=20 irrelevant to our analysis, which focuses on the assistance Holland = provided in=20 designing the three facilities. Holland=92s petition in the trial = court=20 acknowledges that all three facilities use the same process and = apparatus to=20 process bilge water.