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Patent Infringement by the U.S. Government under § 1498

What should you do if the U.S. Government infringes your patent?  Under 28 U.S.C. §1498, whenever the government uses or manufactures a invention covered by a patent of the United Stated, without a license from the owner, the owner may only bring an action against the United States in the United States Court of Federal Claims.  The section serves both as an express waiver of the government’s immunity and an assumption of liability by the government for any direct liability attributable to any contractor, so long as they acted with the government’s authorization or consent.  Often times, a close review of the contract will be required in order to determine if the contractor in fact had the government’s consent to undertake the act which resulted in the infringement.

As a result, a qualifying government contractor enjoys, as an affirmative defense, immunity from any claim of patent infringement based upon goods produced “for the government.”  However, many government contracts provide for indemnification of the government by the contractor for patent infringement.  Therefore, in these instances, while statutorily the liability falls upon the government and the forum is fixed, the contractual relationship between the government and the contractor may ultimately see the contractor being liable and/or forced to defend the action.

The scope of §1498 was recently reconsidered, en banc, by the Federal Circuit in the context of carbon fiber panels which were partially manufactured abroad only to be imported and finished in the United States.  The Federal Circuit reversed its prior holding and found that §1498 did apply to the importation of a product made by a patented process.  In so holding, the court clarified that the correct interpretation of 1498(a) is that it creates a cause of action for direct infringement that is separate and different from 271(a), and that it could include conduct falling under 271(g). See Zoltek Corporation v. United States (Fed. Cir. 2012).