Can the United States government infringe on a patent?

A patent is a set of exclusive rights granted to the inventor of an invention, by a government. An inventor is granted a monopoly for a limited period of time on the invention, in exchange for teaching the public how to make and use the invention. To be granted a patent in the United States an inventor must file a patent application with the United States Patent and Trademark Office. The United States Patent and Trademark Office will only approve a patent application if the inventor can demonstrate that the patent is novel, not obvious and useful. If someone besides a patent owner makes, uses or sells a patented invention that can be patent infringement. A patent owner can request a court issue an injunction to stop patent infringement and can request monetary damages.

If the United States government issues patents can the government be liable for patent infringement?

This question is worth discussing because some activist groups and politicians in the United States have been discussing the rising costs of medicines and how the high cost of medicine negatively impacts society.

The simple answer is, the United States can use a patented invention without permission but must compensate the patent owner. However, the complete answer is complicated and involves many branches of law.

Patents in the United States are governed by the Patent Act which can be found in Title 35 United States Code. Title 28 United States Code deals with the Judiciary and how the courts in the United States are divided up. Specifically Title 28 United States Code Chapter 91 sets the jurisdiction and venue for the United States Court of Federal Claims. That section of United States law requires that lawsuits against the United States government be filed only in the Court of Federal Claims.

28 U.S. Code § 1498 – Patent and copyright cases – specifically deals with lawsuits against the United States government for patent infringement lawsuits. 28 U.S. Code § 1498 (a) states in part: 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. The statute goes on to say that private companies acting under the instruction of the United States government would be similarly protected from patent infringement lawsuits.

The astute reader will notice that injunctions are not mentioned in the statute. This means that the United States government or a private company acting on behalf of the United States government may practice a patented invention, the patent owner cannot stop them with an injunction and the most compensation the patent owner can hope for is a reasonable royalty.

The statute does not define what a reasonable royalty. A few cases define a reasonable royalty as 10%, or less, of sales of the patented invention. Gargoyles, Inc., and Pro-Tec, Inc., v. United States, 113 F.3d 1572 (Fed. Cir. 1997) see also Decca Limited v. United States, 225 Ct. Cl. 326 (1980).

There is no case law to support United States government authorizing companies to manufacture patented drugs for sale to the general public. All the case law relates to a patented invention being used by the federal government. But government programs such as federal health care for the poor and elderly (Medicaid / Medicare), veteran health care and federal prisoner health care could possibly be covered by 28 U.S. Code § 1498.

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