B-139597, JULY 2, 1959, 39 COMP. GEN. 6

B-139597: Jul 2, 1959

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WHO WAS THE SECOND LOW BIDDER. ALLEGES THAT HIS PATENT WILL BE INFRINGED AND THAT THE LOW BIDDER IS WITHOUT ANY LEGAL RIGHT TO MANUFACTURE THE ITEM COVERED BY THE INVITATION. THE DESCRIPTION WAS CHANGED TO READ: BLOW TORCH ASSY. WHICH WERE OPENED ON APRIL 27. WERE AS FOLLOWS (WITHOUT CONSIDERATION OF PROMPT PAYMENT DISCOUNTS): CHART BIDDER UNIT PRICE D. 873.99 WAS MADE TO THE LOW BIDDER. IT APPEARS THAT THE CONTRACTOR IS RESPONSIBLE AND SUBMITTED THE LOW BID. AWARD WAS. THE GOVERNMENT WILL. HAVE AVAILABLE TO IT THE REMEDIES AFFORDED BY LAW FOR BREACH OF CONTRACT. IF THE AMOUNT OF THIS CONTRACT IS IN EXCESS OF $5. FOR INFRINGEMENT OF ANY UNITED STATES LETTERS PATENT (EXCEPT LETTERS PATENT ISSUED UPON AN APPLICATION WHICH IS NOW OR MAY HEREAFTER BE KEPT SECRET OR OTHERWISE WITHHELD FROM ISSUE BY ORDER OF THE GOVERNMENT) ARISING OUT OF THE MANUFACTURE OR DELIVERY OF SUPPLIERS OR OUT OF CONSTRUCTION.

B-139597, JULY 2, 1959, 39 COMP. GEN. 6

BIDS - PATENTED ARTICLES - AWARDS TO OTHER THAN LOW BIDDER A LOW BID SUBMITTED IN RESPONSE TO AN INVITATION WHICH CONTAINS A PATENT INDEMNITY CLAUSE RELIEVING THE GOVERNMENT OF LIABILITY FOR INFRINGEMENT OF ANY PATENT IN CONNECTION WITH THE CONTRACT MAY NOT BE DISREGARDED MERELY BECAUSE THE PATENT OWNER, WHO WAS THE SECOND LOW BIDDER, ALLEGES THAT HIS PATENT WILL BE INFRINGED AND THAT THE LOW BIDDER IS WITHOUT ANY LEGAL RIGHT TO MANUFACTURE THE ITEM COVERED BY THE INVITATION.

TO THE P. WALL MANUFACTURING COMPANY, JULY 2, 1959:

WE REFER AGAIN TO YOUR LETTER WITH ENCLOSURE AND TELEGRAM OF MAY 12, 1959, PROTESTING THE AWARD TO ANOTHER BIDDER OF A CONTRACT UNDER INVITATION NO. ORD-11-199-59-145 ISSUED MARCH 27, 1959, BY THE ORDNANCE WEAPONS COMMAND, ROCK ISLAND, ILLINOIS.

THE INVITATION AS ORIGINALLY ISSUED CALLED FOR, UNDER ITEM NO. 1, A QUANTITY OF 1351 ITEMS DESCRIBED AS:

BLOW TORCH ASSY., 1 PINT CAPACITY, STEEL TANK, OD COLOR, WALL MANUFACTURING COMPANY MODEL 61CW-2, OR EQUAL.

STOCK NR. 4933-047-4137-J003

BY AMENDMENT DATED APRIL 14, 1959, THE DESCRIPTION WAS CHANGED TO READ:

BLOW TORCH ASSY., 1 PINT CAPACITY, STEEL TANK, OD COLOR, WALL MANUFACTURING COMPANY MODEL 616W-2 OR EQUAL, MODIFIED AS SHOWN ON " MARKED PRINT" C80403624 DATED 14 APRIL 1959.

STOCK NR. 4933-047-4137-JOO3

BIDS RECEIVED, WHICH WERE OPENED ON APRIL 27, 1959, IN ACCORDANCE WITH THE INVITATION AS AMENDED, WERE AS FOLLOWS (WITHOUT CONSIDERATION OF PROMPT PAYMENT DISCOUNTS):

CHART

BIDDER UNIT PRICE D. W. ONAN AND SONS, INC------------------------------- -$25.50 TURNER CORPORATION---- ---------------------------------- 12.49 P. WALL MANUFACTURING COMPANY -------------------------- 18.93

ON APRIL 28, 1959, AWARD IN THE AMOUNT OF $16,873.99 WAS MADE TO THE LOW BIDDER, TURNER CORPORATION.

YOU CONTEND THAT PATENT NO. 2,667,214 COVERING THE ITEM DESCRIBED HAS BEEN ISSUED TO YOU AND, THEREFORE, THAT THE SUCCESSFUL BIDDER IN PERFORMING MUST EITHER INFRINGE UPON YOUR PATENT OR FURNISH AN ARTICLE NOT MEETING THE SPECIFICATION.

WITH RESPECT TO THE LATTER POSSIBILITY, IT APPEARS THAT THE CONTRACTOR IS RESPONSIBLE AND SUBMITTED THE LOW BID. AWARD WAS, THEREFORE, MADE TO THAT FIRM. SHOULD THE CONTRACTOR, IN FACT, NOT COMPLY WITH ITS OBLIGATIONS UNDER THE CONTRACT, THE GOVERNMENT WILL, OF COURSE, HAVE AVAILABLE TO IT THE REMEDIES AFFORDED BY LAW FOR BREACH OF CONTRACT.

AS TO YOUR CONTENTION REGARDING PATENT INFRINGEMENT, THE INVITATION AND CONTRACT PROVIDE AT PARAGRAPH 11 OF THE SPECIAL PROVISION IN PART AS FOLLOWS:

11. PATENT INDEMNITY ( PREDETERMINED).

IF THE AMOUNT OF THIS CONTRACT IS IN EXCESS OF $5,000, THE CONTRACTOR SHALL INDEMNIFY THE GOVERNMENT AND ITS OFFICERS, AGENTS, AND EMPLOYEES AGAINST LIABILITY, INCLUDING COSTS, FOR INFRINGEMENT OF ANY UNITED STATES LETTERS PATENT (EXCEPT LETTERS PATENT ISSUED UPON AN APPLICATION WHICH IS NOW OR MAY HEREAFTER BE KEPT SECRET OR OTHERWISE WITHHELD FROM ISSUE BY ORDER OF THE GOVERNMENT) ARISING OUT OF THE MANUFACTURE OR DELIVERY OF SUPPLIERS OR OUT OF CONSTRUCTION, ALTERATION, MODIFICATION, OR REPAIR OF REAL PROPERTY (HEREINAFTER REFERRED TO AS "CONSTRUCTION WORK)" UNDER THIS CONTRACT, OR OUT OF THE USE OR DISPOSAL BY OR FOR THE ACCOUNT OF THE GOVERNMENT OF SUCH SUPPLIES OR CONSTRUCTION WORK. * * *

THE LETTER OF MAY 7, 1959, FROM THE ATTORNEYS FOR THE SUCCESSFUL BIDDER, ENCLOSED WITH YOUR LETTER OF MAY 12, INDICATES THAT YOUR POSITION THAT PERFORMANCE IN CONFORMITY WITH THE SPECIFICATION MUST NECESSARILY RESULT IN INFRINGEMENT OF YOUR PATENT MAY BE DISPUTED. THE PATENT INDEMNITY CLAUSE QUOTED IN PART ABOVE PROVIDES FOR THE INDEMNIFICATION OF THE GOVERNMENT AND ITS AGENTS BY THE CONTRACTOR FOR ANY LIABILITY FOR INFRINGEMENT OF ANY PATENT ARISING OUT OF THE MANUFACTURE OF THE SUPPLIES. UNDER SUCH CIRCUMSTANCES, IT HAS BEEN CONSISTENTLY HELD THAT A LOW BID MAY NOT BE DISREGARDED MERELY BECAUSE IT IS ASSERTED BY A PATENT OWNER THAT HIS PATENT WILL BE INFRINGED AND THAT THE LOW BIDDER IS WITHOUT LEGAL RIGHT TO MANUFACTURE THEREUNDER. B-132468, AUGUST 20, 1957.

EVEN ASSUMING NO QUESTION AS TO THE PATENT RIGHTS, WE HELD AT 38 COMP. GEN. 276 (QUOTING FROM THE SYLLABUS):

IN A PROCUREMENT BY FORMAL ADVERTISING INVOLVING A PATENTED ARTICLE AND INCLUDING IN THE INVITATION THE PATENT CONSENT AND INDEMNITY CLAUSES, AN AWARD IS REQUIRED TO BE MADE TO THE LOWEST BIDDER MEETING THE SPECIFICATIONS WITHOUT REGARD TO POSSIBLE PATENT INFRINGEMENT. * * *

THE "PATENT CONSENT" CLAUSE REFERRED TO ABOVE WAS INCLUDED IN THE INSTANT INVITATION AS PARAGRAPH 6 OF THE SPECIAL PROVISIONS.

IN ACCORDANCE WITH THE FOREGOING WE CONCLUDE THAT NO PROPER BASIS HAS BEEN PRESENTED TO SUPPORT A DETERMINATION THAT AWARD TO THE TURNER CORPORATION WAS IMPROPER.