B-168013, JUN. 26, 1970

B-168013, JUN. 26, 1970

TRADEMARKS--INFRINGEMENT--GOVERNMENT LIABILITY UNSUCCESSFUL BIDDER'S CLAIM FOR DAMAGES DUE TO WHAT IS ALLEGED TO BE DELIBERATE PATENT AND TRADEMARK INFRINGEMENT ON PART OF GOVERNMENT BY USING CLAIMANT'S PROPRIETARY INFORMATION PATENT AND TRADEMARK RIGHTS IN PUBLICATION AND LECTURES, IS AGAIN DENIED. ALTHOUGH OWNER MAY BE DUE REASONABLE COMPENSATION UNDER 28 U.S.C. 1498 FOR GOVERNMENT USE OF HIS PATENT WITHOUT LICENSE, SINCE SAID STATUTE WAS DESIGNED TO PREVENT OBSTRUCTION OF GOVERNMENT ACTIVITIES BY PRIVATE PATENT DISPUTES, GAO HAS HELD COMPETIVE PROCUREMENT OF GOVERNMENT'S NEEDS SHOULD BE ENCOURAGED REGARDLESS OF POSSIBLE PATENT INFRINGEMENT. SEE B-166072, MAY 28, 1969.

TO SURFACE CONDUCTION, INCORPORATED:

THIS IS IN REFERENCE TO THE LETTER OF MAY 4, 1970, REQUESTING RECONSIDERATION OF OUR DECISION, B-168013, APRIL 1, 1970, IN WHICH OUR OFFICE CONSIDERED CERTAIN CONTENTIONS RAISED BY SURFACE CONDUCTION, INCORPORATED (SCI), IN ITS LETTERS DATED SEPTEMBER 29 AND OCTOBER 28, 1969.

THE LETTER OF MAY 4, 1970, STATES AS FOLLOWS WITH RESPECT TO THE REASONS FOR REQUESTING RECONSIDERATION:

"THE IMPORTANCE PLACED ON THIS WORK BY OHSGT CAN BE DERIVED FROM THE AMOUNTS PAID TO THE NEW GROUP AND WHEELER, SUMITOMO, ET AL; WHICH IS ESTIMATED TO BE SEVERAL TIMES THE EXPENDITURE PROPOSED BY SCI.

"THE FACT THAT SCI ACQUIRED, IN 1950, THE NON-GOVERNMENTAL OR COMMERCIAL RIGHTS OF THE GOUBAU LINE, DOES NOT GIVE THE GOVERNMENT THE RIGHT TO EXTEND ITS RIGHTS TO ALL TYPES OF SURFACE WAVE TRANSMISSION SYSTEMS, NOTABLY THE SURFACE WAVE CONCEPT SUBMITTED IN THE PROPOSAL OF APRIL 21, 1966.

"NOR HAS THE GOVERNMENT THE RIGHT TO WHITTLE DOWN THE COMMERCIAL RIGHTS ASSIGNED TO SCI BY SIMPLY EXTENDING ITS ACTIVITY INTO COMMERCIAL FIELDS. SUCH GOVERNMENT ACTIVITY THEN BECOMES SUBJECT TO THE LAW CONTROLLING ORDINARY BUSINESS CONDUCT.

"TO IMPROVE THE TECHNIQUE OF HIGH-SPEED GROUND TRANSPORTATION, WHETHER BY THE LEASING OR RUNNING OF TRAINS OR BY DOING RESEARCH FOR THE CONTROL OF SUCH TRAINS, INHERENTLY IS NOT A GOVERNMENT FUNCTION. SUCH FUNCTION IS NOT ONLY SUBJECT - AS IS WELL ESTABLISHED - TO THE LAW OF PATENTS, BUT ALSO TO THE LAWS CONTROLLING OTHER BUSINESS ACTIVITY, SUCH AS THE USE OF TRADEMARKS AND OF PROPRIETARY INFORMATION.

"THE USE BY OHSGT OF SCI'S PROPRIETARY INFORMATION, ITS PATENT AND TRADEMARK RIGHTS, RESULTED IN DAMAGE TO ITS BUSINESS AND REPUTATION; THE USE OF ITS TRADEMARK AND CORPORATE NAME IN PUBLICATIONS AND LECTURES, TO INDICATE GOODS AND SERVICES OTHER THAN ITS OWN, CAUSED AND IS CAUSING CONFUSION.

"PUBLICATIONS OF GOVERNMENT SPONSORED WORK ENJOY AN EXTREMELY WIDE DISTRIBUTION; THEY ARE CONSIDERED AS PIONEER WORK, LEADING THE ENTIRE INDUSTRY INTO NEW DIRECTIONS OPENED SUBSTANTIALLY BY GOVERNMENT SUCCOR.

"TO INFRINGE BY THIS MEANS UPON SCI'S PROPRIETARY RIGHTS AND DESIGNATE THE WORK PERFORMED BY OTHERS, WITH THE TRADEMARK WHICH SCI HAD CREATED FOR ITSELF IN TWENTY YEARS OF CONTINUOUS WORK, THIS IS JUST AS ACTIONABLE AS A PATENT INFRINGEMENT, AND THEREFORE SUBJECT TO TRIPLE DAMAGES.

"SINCE IT IS ADMITTED THAT THE PROCEDURE ADOPTED BY OHSGT INCLUDED A STUDY OF THE PATENTS, THE INFRINGEMENTS MUST BE CONSIDERED DELIBERATE AND THEREFORE SUBJECT TO PUNITIVE DAMAGES."

BASICALLY YOUR LETTER ASKS FOR DAMAGES FOR DELIBERATE PATENT AND TRADEMARK INFRINGEMENT.

THE NEXT PORTION OF YOUR LETTER OF MAY 4, 1970, IS ENTITLED "ANALYSIS OF ADMINISTRATIVE VERSION" AND HERE IT IS URGED THAT THE ADMINISTRATIVE VERSION OF THE FACTS IS INCORRECT AND INCOMPLETE.

IT IS STATED THAT THE ADMINISTRATIVE REPORT IS INCOMPLETE WITH RESPECT TO THE INFORMATION FURNISHED ON THE "GOUBAU LINE" (G-LINE), SINCE THE REPORT MENTIONS THE G-LINE BUT DOES NOT GO INTO THE SYSTEM IN WHICH THE LINE IS EMPLOYED. IT IS URGED THAT THE SURFACE WAVE CONCEPT SUBMITTED BY SCI WHICH IS THE SUBJECT OF SCI'S PATENT, REPRESENTS A SYSTEM COMBINING SEVERAL LINES --- A FIXED LINE WITH A FIELD IN WHICH THE VEHICLE RIDES AND A MOBILE LINE ATTACHED TO THE VEHICLE AND THAT THE VEHICULAR SYSTEM IS THE ONE ADOPTED BY OHSGT AS THE BASIS OF ITS OWN WORK AND THAT OF ITS CONTRACTORS.

WITH RESPECT TO YOUR CONTENTION CONCERNING ALLEGED PATENT INFRINGEMENT BY THE GOVERNMENT, YOUR ATTENTION IS INVITED TO THE FOLLOWING EXCERPT FROM B- 166072, MAY 28, 1969, TO THE LORVIC CORPORATION, WHICH STATES THE POSITION OF OUR OFFICE WITH REGARD TO PATENT INFRINGEMENT SITUATIONS:

" *** WHILE THIS OFFICE MAY IN SOME INSTANCES UNDERTAKE TO PREVENT ACTION WHICH WOULD CLEARLY SUBJECT THE GOVERNMENT TO LEGAL LIABILITY FOR VIOLATION OF A RECOGNIZED OBLIGATION, WE HAVE TAKEN THE POSITION THAT THE GOVERNMENT IS AUTHORIZED BY 28 U.S.C. 1498 TO UTILIZE OR PERMIT THE USE OF A PATENTED INVENTION UNDER A GOVERNMENT CONTRACT WITHOUT A LICENSE, SUBJECT TO PAYMENT OF REASONABLE COMPENSATION FOR SUCH USE. THE ACT OF JULY 1, 1918, 40 STAT. 705, AMENDING THE ACT OF JUNE 25, 1910, 36 STAT. 851, FROM WHICH THE CITED SECTION WAS DERIVED, WAS DESIGNED TO FURNISH PATENT HOLDERS ADEQUATE COMPENSATION FOR THE USE OF THEIR PATENTS BY OR ON BEHALF OF THE GOVERNMENT, AND AT THE SAME TIME TO PREVENT THE OBSTRUCTION OF GOVERNMENT ACTIVITIES BY DISPUTES OR LITIGATION BETWEEN PRIVATE PARTIES CONCERNING SUCH PATENTS. WE HAVE ACCORDINGLY HELD THAT COMPETITIVE PROCUREMENT OF THE GOVERNMENT'S NEEDS SHOULD BE ENCOURAGED, REGARDLESS OF A POSSIBLE PATENT INFRINGEMENT, AND IT IS OUR POSITION THAT NEGOTIATION OF A CONTRACT ON A SOLE SOURCE BASIS IS NOT AUTHORIZED MERELY FOR THE REASON THAT THE PROCUREMENT MAY INVOLVE PATENTED ARTICLES. SEE 38 COMP. GEN. 276; 39 ID. 760, 762; AND WELCH, PATENT INFRINGEMENT IN GOVERNMENT PROCUREMENT: GAO'S ROLE, 10 WM. & MARY L. REV. 39."

WHILE WE DO NOT CONCEDE THAT THERE WAS ANY PATENT INFRINGEMENT BY THE GOVERNMENT THE ABOVE EXCERPT INDICATES THAT IN ANY EVENT THERE WOULD BE NO REMEDY AVAILABLE FROM OUR OFFICE UNDER THE FACTS OF YOUR CASE.

WE HAVE CAREFULLY REVIEWED THE OTHER CONTENTIONS IN YOUR LETTER OF MAY 4, 1970, AND WE HAVE FOUND NO NEW SPECIFIC EVIDENCE WHICH WOULD CAUSE US TO CHANGE THE VIEWS AS EXPRESSED IN OUR DECISION OF APRIL 1, 1970.

ACCORDINGLY, OUR DECISION OF APRIL 1, 1970, IS AFFIRMED.