B-178452, APR 30, 1973
Highlights
WE STATE THAT GOVERNMENT CONTRACTS SHOULD NOT BE RESTRICTED TO PATENT HOLDERS AND THEIR LICENSES WHERE PATENTS ARE HELD. 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. 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.
B-178452, APR 30, 1973
DECISION DENYING BID PROTEST ON BEHALF OF CYRIL BATH COMPANY ALLEGING INFRINGEMENT UPON PATENTS OF CYRIL. WE STATE THAT GOVERNMENT CONTRACTS SHOULD NOT BE RESTRICTED TO PATENT HOLDERS AND THEIR LICENSES WHERE PATENTS ARE HELD. INSTEAD, ALL POTENTIAL SOURCES SHOULD BE PERMITTED TO COMPETE FOR GOVERNMENT CONTRACTS REGARDLESS OF POSSIBLE PATENT INFRINGEMENT.
TO KRAMER AND MCCARTNEY:
WE REFER TO YOUR LETTER OF APRIL 13, 1973, PROTESTING ON BEHALF OF THE CYRIL BATH COMPANY THE PROPOSED PROCUREMENT OF MACHINERY BY THE WASHINGTON NAVY YARD UNDER IFB N00600-73-B-0228. YOU ALLEGE THAT COMPLIANCE WITH THE SOLICITATION SPECIFICATIONS WOULD REQUIRE INFRINGING ON ONE OR MORE CLAIMS BY CYRIL BATH UNDER U.S. PATENTS NOS. 2,849,048 AND 2,810,421.
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.