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NO RESTRICTIONS TO PATENT HOLDERS AND THEIR LICENSES WHERE PATENTS ARE HELD. INCORPORATED: REFERENCE IS MADE TO YOUR TELEFAX OF APRIL 12 AND YOUR LETTER DATED APRIL 16. THE BASIS FOR YOUR PROTEST IS THAT THE EQUIPMENT BEING PROCURED CANNOT BE FABRICATED WITHOUT INFRINGING YOUR RIGHTS IN U.S. 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.

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B-178416, APR 30, 1973

HEADNOTES - AVAILABLE DENIAL OF BID PROTEST AGAINST THE AWARD OF ANY CONTRACT TO ANOTHER OFFEROR UNDER RFP DAAB07-72-R-0359 ISSUED BY ARMY ELECTRONICS COMMAND, FORT MONMOUTH, NEW JERSEY, ALLEGING INFRINGEMENT OF PATENT RIGHTS. NO RESTRICTIONS TO PATENT HOLDERS AND THEIR LICENSES WHERE PATENTS ARE HELD. INSTEAD, ALL POTENTIAL SOURCES SHOULD BE PERMITTED TO COMPETE FOR GOVERNMENT CONTRACTS.

TO AEROSPACE RESEARCH, INCORPORATED:

REFERENCE IS MADE TO YOUR TELEFAX OF APRIL 12 AND YOUR LETTER DATED APRIL 16, 1973, WITH ENCLOSURES, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANY OTHER OFFEROR UNDER RFP DAAB07-72-R-0359, ISSUED BY THE ARMY ELECTRONICS COMMAND, FORT MONMOUTH, NEW JERSEY. THE BASIS FOR YOUR PROTEST IS THAT THE EQUIPMENT BEING PROCURED CANNOT BE FABRICATED WITHOUT INFRINGING YOUR RIGHTS IN U.S. PATENT 3,576,564.

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.

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