As of 2006, UNICOR Federal Prison Industries Inc. employed over 21,000 inmates and had net sales of $717 million. Source: Wikipedia. Information about UNICOR, founded in 1934 is available on the Bureau of Prisons website here. UNICOR has been criticized for having prisoners engaged in slave labor performing toxic e-recycling jobs here and here.
In Walton v. U.S., 551 F.3d 1367 (Fed. Cir. Jan. 28, 2009), the Court of Appeals for the Federal Circuit decided that the U.S. had not waived sovereign immunity over claims of copyright infringement from persons engaging in labor for UNICOR.
Robert James Walton made an American Eagle calendar for the General Services Administration while in prison. UNICOR, apparently in violation of a statute forbidding it to sell to private purchasers (according to BOP site here), sold the calendar to private purchasers.
The United States has waived sovereign immunity as follows (italicized language from the opinion):
Section 1498(b) of Title 28 of the U.S.Code provides that the “exclusive action” for infringement by the United States or its specified affiliates (including a government corporation) of “the copyright in any work protected under the copyright laws of the United States” shall be a suit in the Court of Federal Claims “for the recovery of his reasonable and entire compensation as damages for such infringement.” This jurisdictional grant is immediately followed by this language:
Provided, however, That this subsection shall not confer a right of action on any copyright owner ... with respect to any copyrighted work prepared by a person while in the employment or service of the United States, where the copyrighted work was prepared as a part of the official functions of the employee, or in the preparation of which Government time, material, or facilities were used[.]28 U.S.C. § 1498(b).
In other words, a copyright infringement suit cannot be maintained against the United States, if the copyrighted work was prepared (1) while in the “employment or service” of the United States and (2)(a) as part of the official functions of the employee or (b) in whose preparation government “time, material[s], or facilities” were used.Walton v. U.S. 551 F.3d 1367, 1369 (C.A.Fed.,2009)
Walton relied on case law saying that prisoners were not "employees" of the federal government. According to the decision, prisoners receive "compensation ranging from $.023 to $1.15 per hour and various other benefits."
The Federal Circuit concluded that Walton's work was done "in the service of the United States" and found the U.S. had not waived sovereign immunity.
The decision appealed from (31 pages on Westlaw) has very good language for a plaintiff who doesn't have a copyright registration certificate and who later cures this by procuring one and either amending or supplementing the complaint. Walton v. US., 80 Fed. Cl. 251 (January 23, 2008).
I don't know how the appeal was briefed, argued and decided five days later. Appellant was represented by Covington & Burling.