B-178124, MAR 9, 1973

B-178124: Mar 9, 1973

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SINCE IF ANY PATENT IS INFRINGED IN THE PERFORMANCE OF GOVERNMENT CONTRACT. THE EXCLUSIVE REMEDY FOR THE INFRINGEE IS TO FILE AN ACTION IN THE COURT OF CLAIMS AGAINST THE GOVERNMENT FOR DAMAGES PURSUANT TO 28 U.S.C. 1498. TO ELECTRO MECH COMPANY: THIS IS IN REFERENCE TO YOUR TELEGRAM OF MARCH 2. AS INDICATED BY YOUR BRIEF TELEGRAM THE BASIS FOR YOUR PROTEST IS THE POSSIBILITY OF A PATENT INFRINGEMENT WHICH WOULD RESULT FROM A CONTRACT AWARD. GOVERNMENT CONTRACTORS AND SUBCONTRACTORS ARE RELIEVED ENTIRELY OF LIABILITY FOR INFRINGING PATENTS EMBODIED IN ITEMS ACCEPTED OR TO BE ACCEPTED BY THE GOVERNMENT PURSUANT TO ITS CONTRACTS. SECTION 1498 PROVIDES THAT IN SUCH CIRCUMSTANCES THE PATENT HOLDER'S REMEDY IS EXCLUSIVELY AGAINST THE GOVERNMENT BY AN ACTION IN THE COURT OF CLAIMS FOR DAMAGES.

B-178124, MAR 9, 1973

BID PROTEST - PATENT INFRINGEMENT DECISION DENYING THE PROTEST OF ELECTRO MECH COMPANY AGAINST ANY AWARD UNDER A SOLICITATION ISSUED BY THE DEFENSE SUPPLY AGENCY, PHILADELPHIA, PA. ALL POTENTIAL SOURCES MAY BE PERMITTED TO COMPETE FOR GOVERNMENT CONTRACTS REGARDLESS OF POSSIBLE PATENT INFRINGMENT, 46 COMP. GEN. 205 (1966), SINCE IF ANY PATENT IS INFRINGED IN THE PERFORMANCE OF GOVERNMENT CONTRACT, THE EXCLUSIVE REMEDY FOR THE INFRINGEE IS TO FILE AN ACTION IN THE COURT OF CLAIMS AGAINST THE GOVERNMENT FOR DAMAGES PURSUANT TO 28 U.S.C. 1498.

TO ELECTRO MECH COMPANY:

THIS IS IN REFERENCE TO YOUR TELEGRAM OF MARCH 2, 1973, PROTESTING THE MAKING OF ANY CONTRACT AWARD UNDER SOLICITATION DSA100-73-R-0738, ISSUED BY THE DEFENSE SUPPLY AGENCY, PHILADELPHIA, PENNSYLVANIA.

AS INDICATED BY YOUR BRIEF TELEGRAM THE BASIS FOR YOUR PROTEST IS THE POSSIBILITY OF A PATENT INFRINGEMENT WHICH WOULD RESULT FROM A CONTRACT AWARD. YOU REQUEST THAT AWARD BE DELAYED UNTIL THE DETAILS OF YOUR PROTEST CAN BE CONSIDERED.

UNDER 28 U.S.C. 1498, GOVERNMENT CONTRACTORS AND SUBCONTRACTORS ARE RELIEVED ENTIRELY OF LIABILITY FOR INFRINGING PATENTS EMBODIED IN ITEMS ACCEPTED OR TO BE ACCEPTED BY THE GOVERNMENT PURSUANT TO ITS CONTRACTS. SECTION 1498 PROVIDES THAT IN SUCH CIRCUMSTANCES THE PATENT HOLDER'S REMEDY IS EXCLUSIVELY AGAINST THE GOVERNMENT BY AN ACTION IN THE COURT OF CLAIMS FOR DAMAGES. THE COURTS HAVE RECOGNIZED SECTION 1498 AS CONSTITUTING, IN EFFECT, AN EMINENT DOMAIN STATUTE, WHICH VESTS IN THE GOVERNMENT THE RIGHT TO USE ANY PATENT GRANTED BY IT UPON PAYMENT OF REASONABLE COMPENSATION TO THE PATENT HOLDER. RICHMOND SCREW ANCHOR CO. V. UNITED STATES, 275 U.S. 331 (1928); STELMA, INCORPORATED V. BRIDGE ELECTRONICS CO., 300 F.2D 761 (1962). THE ACT WAS INTENDED TO GIVE PATENT HOLDERS AN ADEQUATE AND EFFECTIVE REMEDY FOR INFRINGEMENT OF THEIR PATENTS WHILE SAVING THE GOVERNMENT FROM HAVING ITS PROCUREMENT PROGRAMS THWARTED, DELAYED OR OBSTRUCTED PENDING LITIGATION OF PATENT DISPUTES. BERESLAVSKY V. ESSO STANDARD OIL CO., 175 F.2D 148 (1949).

CONSIDERING THE ACT AND ITS PURPOSES, THIS OFFICE HAS CONCLUDED THAT GOVERNMENT CONTRACTS SHOULD NOT BE RESTRICTED TO PATENT HOLDERS AND THEIR LICENSEES WHERE PATENTS ARE HELD. INSTEAD, ALL POTENTIAL SOURCES SHOULD BE PERMITTED TO COMPETE FOR GOVERNMENT CONTRACTS REGARDLESS OF POSSIBLE PATENT INFRINGEMENT. 46 COMP. GEN. 205 (1966).

ACCORDINGLY, YOUR PROTEST, WHICH IS BASED ON THE GROUND THAT PATENT INFRINGEMENT WOULD RESULT FROM PERFORMANCE UNDER A CONTRACT AWARD TO ANOTHER COMPANY, MUST BE DENIED.