Performance of a government contract often requires use of patented processes and products, which may not be owned by or licensed to the United States or the performing contractor. Section 1498 of Title 28 of the U.S. Code establishes an exclusive remedy for patent owners to obtain just compensation when the United States or its contractors infringe their patents, while also shielding contractors from infringement liability and ensuring private patent rights do not obstruct government operations.
Under that statutory framework, when a contractor performing work “for the Government and with authorization or consent of the Government” is accused of patent infringement, § 1498 generally shields the contractor from liability and provides that any infringement action must be brought as a claim for money damages against the United States in the Court of Federal Claims.
In other words, § 1498 “waives the Government’s sovereign immunity and provides a remedy ‘[w]henever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same.'”
“By waiving the Government’s sovereign immunity, § 1498 ‘provides a cause of action against the United States’ and [a]t the same time, … protects government contractors against infringement liability and remedies where it applies.'”
Over a century old, § 1498 implements important, long-standing policies that:
1) contractors should not bear the risk associated with performing work for the government that may be infringing, and
2) the government may be liable for money damages (i.e., just compensation) for its infringing activities, but its operations will not be enjoined.
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As the Senate Armed Services Committee last week began its markup of the fiscal 2019 National Defense Authorization Act, a contractors group was pushing committee leaders to reject a Pentagon proposal to curb time-consuming bid protests.
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