Implied Contracts with the Government over Counterfeit Coins

by Dennis Crouch

Although not expressly an IP case, the Federal Circuit’s new decision in The Portland Mint v. United States does focus on counterfeiting coins as well as implied contracts with the Federal Government.

The key facts are as follows: The Portland Mint (a private company) participated in the U.S. Mint’s Mutilated Coin Redemption Program, which allowed individuals and businesses to submit bent or partial coins to the U.S. Mint in exchange for payment. The U.S. Mint then uses the mutilated coins to manufacture new coinage.  In 2018, The Portland Mint delivered over 400,000 pounds of coins to a foundry designated by the U.S. Mint. The U.S. Mint melted nearly the entire batch, using the metal to produce new coins. However, it ultimately refused to pay, claiming that testing revealed “a very high percentage of coins submitted were actually made by a manufacturer other than the United States Mint” – i.e. a substantial percentage of the coins were counterfeit.

The Portland Mint then sued the government in the Court of Federal Claims, arguing it was entitled to payment for the genuine portion of the coins under the terms of the regulation and an implied contract. The Claims Court dismissed the case, finding it lacked jurisdiction over the implied contract claim and that all of The Portland Mint’s claims failed to state a valid cause of action.

On appeal, the Federal Circuit reversed on the key implied contract claim. The court held that the Redemption Program regulation acted as an “offer” from the government, and that a binding contract was formed when The Portland Mint accepted by tendering its coins. Citing its predecessor court’s seminal case of Radium Mines, Inc. v. United States, 153 F. Supp. 403 (Ct. Cl. 1957), the Federal Circuit explained that a regulation that induces a party to take certain actions can create an implied-in-fact contract. The Claims Court therefore had jurisdiction over the contract claim.

As to the merits, the Federal Circuit determined that while the U.S. Mint was not obligated to pay for any counterfeit coins in the batch, it was required to pay for any genuine coins that were melted down and used. The court relied on general contract principles, as illustrated in the UCC and Restatement, providing that acceptance of non-conforming goods obligates the buyer to pay:

[W]hen the U.S. Mint retains, melts, and uses genuine coins, then the regulation is best read as the U.S. Mint having redeemed those coins, and thus it is required to pay for those genuine coins in accordance with the contract.

The Federal Circuit cited cases like Cincinnati Siemens-Lungren Gas Illuminating Co. v. W. Siemens-Lungren Co., 152 U.S. 200 (1894), where the Supreme Court held that a buyer who kept and used a seller’s lamps was obligated to pay for them, even though the buyer claimed they were defectively constructed. The key is that using the goods is inconsistent with the seller’s ownership.

Importantly, the appeals court left open the possibility that the U.S. Mint could avoid paying if it could show The Portland Mint was attempting to defraud the government, or establish another valid defense. But at the pleading stage, The Portland Mint adequately stated a claim that at least some of the coins were genuine and that it was entitled to payment for that portion.

The Federal Circuit also found that at this early stage of the case, The Portland Mint sufficiently alleged the U.S. Mint official who accepted the coins had the requisite authority to contractually bind the government. Reading the complaint liberally, The Portland Mint claimed that “arranging and contracting for the delivery of mutilated coins was an integral part of Mr. Holmes’s duties as a supervisor employed by the Mint.” Under Federal Circuit precedent like Liberty Ammunition, Inc. v. United States, an allegation that an employee’s assigned duties made contracting “integral” is enough to plausibly plead actual authority.

In light of the revival of the implied contract claim, the Federal Circuit affirmed the dismissal of The Portland Mint’s other claims for violation of the regulation itself, breach of good faith and fair dealing, and an unconstitutional taking. The court explained these claims were duplicative or precluded given a viable contract action.

This decision is significant for a few reasons. First, it demonstrates the power of regulations to create binding implied contracts in certain circumstances. The case also illustrates how traditional contract principles, like those governing acceptance, apply even when the federal government is involved.  On remand, it will be interesting to see if the company can ultimately establish what proportion of its coin submission was genuine, and if the government uncovers any evidence of fraud.

10 thoughts on “Implied Contracts with the Government over Counterfeit Coins

  1. 4

    “ the religion of the Far Left ”


    Time to get those meds adjusted again, Billy. I’m just standing here reporting the facts and you’re kicking up dust in service of a convicted felon and a notorious r-a-p-i-s-t. Why are you doing that? Is that something you’ve always done or is that something you find yourself compelled to do suddenly?

    1. 4.1

      Not at all – I am NOT defending who you think that I am defending, and there is no ‘dust-kicking’ in noting the factual nature that the Sprint Left description of the Far Left is religious in nature.

      This is well documented, and of historical fact dating back well before Hegel and Marx.

      Maybe you should try to understand that.

      It may help with your cognitive dissonance.

  2. 3

    I have two puzzlements here:

    1) The CAFC opinion styles itself as bound by precedent to find an implied contract here, but the precedent that it cites did not find an implied contract. Radium Mines, Inc. v. United States, 153 F. Supp. 403, 406 (Ct. Cl. 1957) (“That, of course, means that the plaintiff did not have ore available which satisfied the conditions of the Government’s offer to purchase; hence, no contract, either by offer and acceptance or by promissory estoppel, arose.”).

    2) Radium Mines also never talks about “implied” contracts, and I am not clear why the CAFC is talking about them. The contract at issue here is not “implied,” but rather “unilateral,” like a “WANTED” poster with a reward offered.

  3. 2

    OT but the r-a-p-I-s-t is now also a felon (no surprise to anyone paying attention). He’s guilty of a lot more than this, of course.

    Reminder to everyone here that this stain on humanity was (and is) supported by commenters here who are allegedly attorneys and who mostly just complain like two year olds about their precious “patent rights” and various “conspiracies” against them. Take a long look in the mirror, s-c-u-m-b-a-g-s.

    1. 2.1

      Well, there you go again, playing your ‘one-bucket’ game.

  4. 1


    Does the nature of patents being personal property of the type of ‘Public Franchise” (resulting from the Oil States case) carry any “implied in fact” contract between the FranchisER to the FranchisEE with such usual duties with franchises (expectation value, duty to protect, etc).

    You know, like I have postulated since the Oil States case.

    1. 1.1

      Gonna get on your knees to defend poor ol’ convicted felon Mango Manson again, Billy?

      1. 1.1.1

        Not at all.

        You going to keep on using that one bucket of yours (as you sprint ever farther left)?


          Except I’ve never moved, Billy, you s-t-u-p-i-d a-s-s-h-o-l-e I-d-i-o-t.


            Not so — it is in the religion of the Far Left to never stop moving Left.

            While you personally have always used your one-bucket approach, the religious fervor is always trying to have Overton window shifts.

            Do you remember the Musk stick figure memes?

Leave a Reply

Your email address will not be published. Required fields are marked *

You can click here to Subscribe without commenting

Add a picture