Compulsory Licensing. Chapter II: Government Use Under 28 USC 1498

• 28 USC 1498, concerning uses of patents or copyrights, when the use is by or for the government. Under this statute the US government does not have to seek a license or negotiate for use of a patent or copyright. Any federal employee can use or authorize the use of a patent or a copyright. The rightowner is entitled to compensation, but cannot enjoin the government or a third party authorized by the government, to prevent the use. Any contractor, subcontractor, person, firm, or corporation who receives authorization from the federal government to use patents or copyrights is construed as use by the federal government, and cannot be sued for infringement.

• October 25, 1999. Nasa office of Technology Commercialization Program Office. Note on Government Use as Eminent Domain.

• June 4, 1998. Report of the National Institutes of Health (NIH) Working Group on Research Tools. "Rights of government agencies: As a government agency, NIH may use and manufacture any patented invention, whether or not developed with federal funds, and authorize its use and manufacture by others for the United States, without a license, subject to liability for "reasonable and entire compensation" under 28 U.S.C. §1498."

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PATENT DISPUTE OVER ANTHRAX DRUG AND COMPULSORY LICENSE UNDER 28 USC 1498

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• Crater Corporation v. Lucent Technologies
  • June 6, 2001. Decision by the US Court of Appeals for the Federal Circuit, in the Crater Corporation V. Lucent Technologies. Docket No. 00-1125. Lucent argued that it was not liable for patent infringement because any work it performed with respect to the Crater coupler was done under a government project and was authorized by the United States. Pursuant to § 1498(a), a private party cannot be held liable for infringement for any goods "used or manufactured by or for the United States." The court upheld the lower court's ruling that Lucent was not liable for infringement.

• Hughes Aircraft and the Wiliams patent.
  • June 19, 1996. Decision by the US Court of Appeals for the Federal Circuit, in Hughes Aircraft Company v. The United States, 94-5149,95-5001. (86 F.3d 1566). Kenneth Starr represented Hughes in an unsuccessful appeal, where Hughes was seeking a higher royalty rate on a compulsory license of US Patent No. 3,758,051 (the Williams Patent). The Williams patent "relates to an apparatus for controlling the orientation of the spin axis of spin-stabilized space vehicles such as satellites positioned in orbit around the earth." The US Court of Federal Claims set a royalty rate of 1 percent in a 1994 decision (31 Fed. Cl. 481). Worth noting was the appeals court observation that "Because recovery is based on eminent domain, the proper measure is 'what the owner has lost, not what the taker has gained,'" quoting Leesona (599 F.2d at 969).

• Brunswick Corporation and the 606 patent.
  • March 31, 1998. Decision by the US Court of Appeals for the Federal Circuit in Brunswick Corporation v. the United States, 97-5017, 97-5021. The case involves US patent 3,733,606 (the 606 patent), and the government's purchase of camouflage screens, some of which were held to infringe on the 606 patent. Brunswick appealed an earlier US Federal Court of Claims case setting compensation for a compulsory license of the 606 patent. Brunswick sought "lost profits" for its license, while the court awarded a "reasonable royalty." In its decision, the court indicated that the US Congress directed the Army to "expand its industrial base for the production of camouflage screens in order to maintain a reliable industrial mobilization capacity," and noted that "This type of outside policy making and political influence is peculiar to the federal government and is properly taken into account when considering whether a reasonable royalty would adequately compensate an aggrieved patentee." The court further indicated that the number of units purchased by the government was greater than would have been the case in the absence of the compulsory license, and that this supported a lower amount of compensation than that sought by Brunswick. Here is the

• Gargoyles patent for protective eyewear.
  • May 20, 1997, decision of the United States Court of Appeals for the Federal Circuit, in Gargoyles, Inc. and Pro-Tec, Inc. v. the United States, 96-5089,-5094 (113 F.3d 1572). This is another case where the private plaintiff sought "lost profits" rather than a "reasonable royalty" as compensation. The royalty set by the Court of Federal Claims was 10 percent. The government considered this excessive and sought a reduction (of half or more). The dispute involves US patent 4.741,611 (the 611 patent), for protective eyewear. Gargoyles, a company that sells commercial eyewear, was seeking compensation for a compulsory license of the patent, which had been used by American Optical to provide the US Army with several thousand pairs of ballistic/laser protective spectacles. The Appeals court upheld the lower court decision. Again, the court quoted Leesona (599 F.2d at 969), "Because recovery is based on eminent domain, the proper measure is 'what the owner has lost, not what the taker has gained.'" Here is a link to the Appeals Court Ruling.

• Carter-Wallace and the patent on the drug Meprobamate.
  • May 15, 1974. Decision by the US Court of Claims in Carter-Wallace v. the United States., no. 322-67 (204 Ct. Cl. 341; 496 F. 2d 535; 1974 U.S. Ct Cl. LEXIS 127; I.S.P.Q. (BNA) 172. Click here for more information on the Cater-Wallace case.

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