B-149392, AUG. 1, 1962

B-149392: Aug 1, 1962

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THAT "SHOULD THE GOVERNMENT HAVE INFRINGED. YOUR LETTER CONCLUDES WITH THE STATEMENT "WE DO HEREBY LODGE THIS PROTEST AS A MATTER OF RECORD AND INTEND TO TAKE WHATEVER STEPS ARE NECESSARY TO PROTECT OUR INTEREST IN THIS MATTER.'. REFERENCE IS MADE TO 10 U.S.C. 2386 WHICH PROVIDES THAT FUNDS APPROPRIATED FOR A MILITARY DEPARTMENT FOR THE PROCUREMENT OF SUPPLIES MAY BE USED FOR THE ACQUISITION OF PATENTS AND LICENSES THEREUNDER. BEFORE SUIT IS BROUGHT. REFERENCE IS MADE ALSO TO STATUTORY PROVISIONS CARRIED IN 28 U.S.C. 1498 PROVIDING. THAT WHENEVER AN INVENTION COVERED BY A PATENT OF THE UNITED STATES IS USED OR MANUFACTURED BY OR FOR THE UNITED STATES WITHOUT LICENSE OF THE OWNER OR LAWFUL RIGHT TO USE OR MANUFACTURE THE INVENTION.

B-149392, AUG. 1, 1962

TO DUO-MATIC, INC.:

WE ACKNOWLEDGE YOUR LETTER OF JUNE 26, 1962, WHEREIN YOU SUBMIT YOUR "HERETOFORE UNSUCCESSFUL CLAIM FOR PATENT INFRINGEMENT OF US LETTERS PATENT 1278394 * * * (BY) THE DEPARTMENT OF THE ARMY, THROUGH ITS ORDNANCE TANK AUTOMOTIVE COMMAND.'

YOU ALLEGE IN YOUR LETTER THAT THE INFRINGING AGENCY HAS LET NUMEROUS CONTRACTS TO THE SEVEN FIRMS LISTED THEREIN AMOUNTING TO APPROXIMATELY $1,065,324.50, AND THAT JUST COMPENSATION FOR THE USE OF YOUR PATENT RIGHTS, IN ACCORDANCE WITH ACCEPTED GOVERNMENT PROCUREMENT STANDARDS OF 12 PERCENT OF THE CONTRACT PRICE, AMOUNTS TO $127,838.94. YOU ALSO ALLEGE THAT YOUR CLAIM COVERS ONLY THE CONTRACTS REFERRED TO STATING, HOWEVER, THAT "SHOULD THE GOVERNMENT HAVE INFRINGED, OR BE INFRINGING, ON OTHER CONTRACTS AS YET NOT DISCOVERED BY US, WE SHALL LIKEWISE DEMAND OUR JUST COMPENSATION FOR THE SAME.' YOUR LETTER CONCLUDES WITH THE STATEMENT "WE DO HEREBY LODGE THIS PROTEST AS A MATTER OF RECORD AND INTEND TO TAKE WHATEVER STEPS ARE NECESSARY TO PROTECT OUR INTEREST IN THIS MATTER.' SUPPORTING EVIDENCE ACCOMPANIED YOUR LETTER.

WE ASSUME FROM THE REFERENCE TO YOUR "HERETOFORE UNSUCCESSFUL CLAIM" THAT THIS MATTER HAS BEEN SUBMITTED PREVIOUSLY TO THE PROCURING AGENCY FOR CONSIDERATION. IN THIS CONNECTION, REFERENCE IS MADE TO 10 U.S.C. 2386 WHICH PROVIDES THAT FUNDS APPROPRIATED FOR A MILITARY DEPARTMENT FOR THE PROCUREMENT OF SUPPLIES MAY BE USED FOR THE ACQUISITION OF PATENTS AND LICENSES THEREUNDER, AND ALSO TO ACQUIRE RELEASES, BEFORE SUIT IS BROUGHT, FOR PAST INFRINGEMENT OF PATENTS IF THE ACQUISITION RELATES TO SUPPLIES OR PROCESSES PRODUCED OR USED BY OR FOR, OR USEFUL TO, THAT DEPARTMENT. SEE IN THIS CONNECTION OUR DECISION IN 37 COMP. GEN. 199 AND THE AUTHORITIES CITED THEREIN.

REFERENCE IS MADE ALSO TO STATUTORY PROVISIONS CARRIED IN 28 U.S.C. 1498 PROVIDING, IN PERTINENT PART, THAT WHENEVER AN INVENTION COVERED BY A PATENT OF THE UNITED STATES IS USED OR MANUFACTURED BY OR FOR THE UNITED STATES WITHOUT LICENSE OF THE OWNER OR LAWFUL RIGHT TO USE OR MANUFACTURE THE INVENTION, WHICH INCLUDES USE OR MANUFACTURE FOR THE UNITED STATES BY A CONTRACTOR, A SUBCONTRACTOR, OR ANY PERSON, FIRM OR CORPORATION FOR THE GOVERNMENT AND WITH THE AUTHORIZATION AND CONSENT OF THE GOVERNMENT, 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.

IT HAS BEEN JUDICIALLY DETERMINED THAT THIS SECTION IS IN EFFECT AN EMINENT DOMAIN STATUTE; THAT ITS PROVISIONS RELIEVE THE CONTRACTOR ENTIRELY FROM LIABILITY OF EVERY KIND FOR THE INFRINGEMENT OF PATENTS IN MANUFACTURING ANYTHING FOR THE GOVERNMENT AND LIMITS THE OWNER OF THE PATENT TO A SUIT IN THE COURT OF CLAIMS FOR REASONABLE COMPENSATION, WHICH REMEDY IS EXCLUSIVE AND COMPREHENSIVE IN CHARACTER. ALSO, THAT IT WAS THE PURPOSE AND INTENT OF CONGRESS BY THE PROVISIONS OF THIS SECTION TO STIMULATE CONTRACTORS TO FURNISH GOVERNMENT NEEDS WITHOUT FEAR OF BECOMING LIABLE THEMSELVES FOR INFRINGEMENTS TO PATENT HOLDERS AND LICENSEES, AND TO MAKE IT POSSIBLE FOR THE GOVERNMENT TO PROCEED WITH ITS PROCUREMENT WITHOUT RESTRICTION OR DELAY CAUSED BY PATENT INFRINGEMENT CLAIMS OR CONTROVERSIES. FURTHER, THAT THE STATUTE WAS DESIGNED TO FURNISH PATENTEES AND LICENSEES AN ADEQUATE AND EFFECTIVE REMEDY AND TO SAVE THE GOVERNMENT FROM HAVING ITS PUBLIC WORKS TIED UP AND THWARTED WHILE PRIVATE PARTIES WERE CARRYING ON LONG DRAWN OUT LITIGATION. AND IT HAS BEEN REPEATEDLY EMPHASIZED BY THE SUPREME COURT OF THE UNITED STATES THAT IT IS THE PUBLIC INTEREST WHICH IS DOMINANT IN THE PATENT SYSTEM. SEE RICHMOND CO. V. UNITED STATES (1928), 275 U.S. 331, 343, AND THE OTHER AUTHORITIES CONSIDERED IN OUR DECISIONS OF AUGUST 25, 1958, B-136916, AND OCTOBER 6, 1958, 38 COMP. GEN. 276, AND THE CASES COLLECTED IN THE ANNOTATION 28 U.S.C.A. 1498.

IT SEEMS REASONABLY CLEAR FROM YOUR LETTER THAT THE ALLEGED PATENT INFRINGEMENT CLAIMS FALL WITHIN THE SCOPE OF THE AFOREMENTIONED STATUTORY PROVISIONS WHICH WE BELIEVE TO BE CONTROLLING. IN VIEW THEREOF AND THE REFERENCED JUDICIAL DETERMINATIONS ESTABLISHING THE EXCLUSIVE NATURE OF THE REMEDY AFFORDED UNDER 28 U.S.C. 1498, WE BELIEVE YOU WILL CONCUR WITH OUR VIEW THAT THE ASSERTED CLAIMS

COPIES OF YOUR LETTER AND OF OUR REPLY ARE BEING FORWARDED TO THE SECRETARY OF THE ARMY FOR HIS INFORMATION.