BASICS: Federal government contractors are immune from liability for at least some acts of patent infringement: “Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture. . . . For the purposes of this section, the use or manufacture of an invention described in and covered by a patent of the United States by a contractor, a subcontractor, or any person, firm, or corporation for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States.” 28 U.S.C. § 1498. SeegenerallyReturn Mail (Fed. Cir. 08/28/17) (2-1); Astornet (Fed. Cir. 09/17/15) (aff’g dismissal of suits alleging indirect infringement where TSA was the alleged direct infringer); Zoltek II (Fed. Cir. 03/14/12) (en banc) (long discussion of statute’s history and purpose); Iris (Fed. Cir. 10/21/14) (aff’g dismissal; airline checking passport is done for U.S.); Golden (Fed. Cir. 04/10/20) (aff’g dismissal of takings claim in Claims Court based on alleged patent infringement; “§ 1498 provides the only avenue for a patent owner to bring an action against the government for patent infringement”).
Sec. 1498 Extends To Sec. 271(g) Infringements: Sec. 1498 not limited to Sec. 271(a) infringement; it extends to infringement of method claims under Sec. 271(g) by methods begun outside U.S. producing products imported into U.S. Zoltek II (Fed. Cir. 03/14/12) (en banc, in part) (overruling 2005 and 2006 panel rulings limiting Sec. 1498 to Sec. 271(a) infringements).
“Manufactured” In Sec. 1498 Requires That Each Limitation Be Present And The Invention Is Suitable For Use: “A product is ‘manufactured’ [for purposes of section 1498] when it is made to include each limitation of the thing invented and is therefore suitable for use.” Fastship (Fed. Cir. 06/05/18) (aff’g holding that certain ship was still under construction when patent expired, and declining to adopt the meaning of “make” in section 271(a)).
Consider Pleading Sec. 1498 As Defense In Answer: Always consider if client’s accused product, etc. has been provided to United States. If so, plead that court has no jurisdiction over those units (although Fed. Cir. has ruled Sec. 1498 is not jurisdictional) and that defendant has no liability for those units.
Sec. 1498 Fee-Shifting: Under Sec. 1498(a), when the patent owner is “an independent inventor, a nonprofit organization, or an entity that ha[s] no more than 500 employees,” reasonable and entire compensation for the United States’s use of the patented invention includes “reasonable fees for expert witnesses and attorneys,” 28 U.S.C. § 1498(a), unless the “position of the United States was substantially justified” or “special circumstances make an award unjust.” The “position of the United States” “refers only to the positions taken by the United States in litigation and not to its prior actions or failures to act.” Hitkansut (Fed. Cir. 05/01/20) (aff’g award of fees and expenses against the U.S.).
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