B-147536, MAR. 22, 1962

B-147536: Mar 22, 1962

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INC.: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 9. YOU ALLEGE THAT SINCE THE PART DESCRIBED IS PATENTED. THE AVIATION SUPPLY OFFICE REPORTED THAT INVITATIONS WERE ISSUED TO 38 POSSIBLE SUPPLIERS AND THE FOLLOWING BIDS WERE RECEIVED: TABLE ITEM SUPPLIER UNIT PRICE TOTAL PRICE . 248.30 BID SAMPLES SUBMITTED BY THE THREE LOWER BIDDERS WERE EXAMINED AND FOUND NOT EQUAL TO DAVIS AIRCRAFT PRODUCTS PART NO. AWARD WAS MADE TO YOUR COMPANY. AS FOLLOWS: "WHENEVER 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. WE ADVISED THE SECRETARY OF THE AIR FORCE THAT IT IS OUR VIEW "THAT SECTION 1498 APPEARS CLEARLY TO CONSTITUTE A MODIFICATION OF THE PATENT LAW BY LIMITING THE RIGHTS OF PATENTEES INSOFAR AS PROCUREMENT OF SUPPLIES BY THE GOVERNMENT MAY BE CONCERNED.

B-147536, MAR. 22, 1962

TO DAVIS AIRCRAFT PRODUCTS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 9, 1962, QUESTIONING THE PROCEDURE OF THE AVIATION SUPPLY OFFICE, PHILADELPHIA, PENNSYLVANIA, IN ISSUING INVITATION FOR BIDS NO IFB-383-274-62 CONTAINING A PURCHASE DESCRIPTION FOR ITEM 1 CALLING FOR DAVIS AIRCRAFT PRODUCTS PART NO. FDC 3458A1, OR EQUAL. YOU ALLEGE THAT SINCE THE PART DESCRIBED IS PATENTED, THIS METHOD OF PROCUREMENT DISREGARDS THE PATENT LAW, INVITES INFRINGEMENT AND FORCES LITIGATION.

THE AVIATION SUPPLY OFFICE REPORTED THAT INVITATIONS WERE ISSUED TO 38 POSSIBLE SUPPLIERS AND THE FOLLOWING BIDS WERE RECEIVED:

TABLE ITEM SUPPLIER UNIT PRICE TOTAL PRICE ---- --------

---------- --------------- 1 EASTERN ROTOCRAFT CORP. $8.55 $19,152.00 1 CARCO INDUSTRIES, INC. 12.25 27,440.00 1

LAKEVIEW MFG. CORP. 13.20 29,568.00 1 DAVIS AIRCRAFT PRODUCTS

13.92/13.97 31,248.30

BID SAMPLES SUBMITTED BY THE THREE LOWER BIDDERS WERE EXAMINED AND FOUND NOT EQUAL TO DAVIS AIRCRAFT PRODUCTS PART NO. FDC 3458A1 AND THEREFORE NOT SUITABLE FOR THE INTENDED USE. AFTER REJECTION OF THE THREE LOWER BIDDERS, AWARD WAS MADE TO YOUR COMPANY.

THE STATUTORY PROVISIONS FOUND IN 28 U.S.C. 1498 PROVIDE, IN PERTINENT PART, AS FOLLOWS:

"WHENEVER 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, THE OWNER'S REMEDY SHALL BE BY ACTION AGAINST THE UNITED STATES IN THE COURT OF CLAIMS FOR THE RECOVERY OF HIS REASONABLE AND ENTIRE COMPENSATION FOR SUCH USE AND MANUFACTURE.'

IN 38 COMP. GEN. 276, WE ADVISED THE SECRETARY OF THE AIR FORCE THAT IT IS OUR VIEW "THAT SECTION 1498 APPEARS CLEARLY TO CONSTITUTE A MODIFICATION OF THE PATENT LAW BY LIMITING THE RIGHTS OF PATENTEES INSOFAR AS PROCUREMENT OF SUPPLIES BY THE GOVERNMENT MAY BE CONCERNED, AND BY VESTING IN THE GOVERNMENT A RIGHT TO THE USE OF ANY PATENTS GRANTED BY IT UPON PAYMENT OF REASONABLE COMPENSATION FOR SUCH USE.' WE FURTHER ADVISED THAT NEGOTIATION UNDER 10 U.S.C. 2309 (10) IS NOT AUTHORIZED MERELY ON THE BASIS THAT A PROCUREMENT INVOLVES PATENTED ARTICLES BUT RATHER THE TEST SHOULD BE WHETHER PROSPECTIVE CONTRACTORS OTHER THAN A PATENT HOLDER ARE LIKELY TO BE INTERESTED IN SUBMITTING BIDS IN ACCORDANCE WITH THE GOVERNMENT'S SPECIFICATIONS.

ALTHOUGH THERE CAN BE NO QUESTION OF THE GOVERNMENT'S RIGHT TO USE ANY PATENT UPON PAYMENT OF A REASONABLE COMPENSATION TO THE PATENT HOLDER, WE DO NOT AGREE WITH YOUR CONTENTION THAT INVITATION FOR BIDS NO. IFB-383-274 -62 INVITES INFRINGEMENT OF YOUR PATENT. TO BRING A PROCUREMENT WITHIN THE PROVISIONS OF SECTION 1498, THE GOVERNMENT MUST AUTHORIZE OR CONSENT TO THE USE OF A PATENTED INVENTION, WHICH IS NORMALLY ACCOMPLISHED BY INCLUSION OF AN AUTHORIZATION AND CONSENT CLAUSE AS SET FORTH IN THE ARMED SERVICES PROCUREMENT REGULATION, PARAGRAPH 9-102. NO SUCH CLAUSE APPEARS IN IFB-383-274-62 AND THEREFORE THE GOVERNMENT DID NOT AUTHORIZE ANY OTHER BIDDER TO MAKE USE OF YOUR PATENT. WHEN PURCHASE DESCRIPTION IS USED UNDER THESE CONDITIONS, WE FEEL THAT IT CANNOT BE CONSTRUED TO INVITE PATENT INFRINGEMENT MERELY BECAUSE THE BRAND NAME ARTICLE DESCRIBED HAPPENS TO BE PATENTED.

IN OUR OPINION, THE FACTS AND CIRCUMSTANCES IN THIS CASE DO NOT SUPPORT YOUR CONTENTION THAT THE PATENT LAW HAS BEEN DISREGARDED. WE FIND NO VIOLATION OF YOUR LEGAL RIGHTS AND, CONSEQUENTLY, NO REASONABLE BASIS FOR QUESTIONING THE ADMINISTRATIVE ACTION.