The vaults of the United States Government contain many remarkable patents, reflecting novel inventions arrived at through research funded by U.S. taxpayers. Most of these patents literally sit undiscovered, neither being enforced nor commercialized. Imagine the vault at the end of Indiana Jones where the Ark of the Covenant is being deposited.
So, the United States taxpayers have funded the work that leads to those patents. And those patents grant the government and any proper exclusive licensee the right to enforce the patents, and restore to the Treasury a damages award for infringement of the patents. However, the U.S. government is busy and not generally in the business of engaging in private litigation over patents.
Thus, Congress enacted a law (called the Bayh-Dole Act, 35 U.S.C. 200) reflecting that the government is often not the best entity to engage in these efforts and that it needs to license the patents for enforcement to the private sector to engage in that effort, whereby the private licensee will then share proceeds of any recovery with the government.
When Congress enacted this law, it stated the purpose of the law as including, in part, the need “to promote the commercialization and public availability of inventions made in the United States by United States industry and labor; to ensure that the Government obtains sufficient rights in federally supported inventions to meet the needs of the Government and protect the public against nonuse or unreasonable use of inventions; and to minimize the costs of administering policies in this area.”
Under this law, the government gets its inventions to private sector companies for enforcement and commercialization efforts. Often, this is done through an exclusive license agreement, whereby the government can grant the right to exploit and commercialize without the government’s participation and whereby the government shares in any collected damages award, thereby returning at no cost to taxpayers money to the Treasury.
But when these private entities secure licenses to those patents, they often run into stiff resistance from other private sector companies who do not like the fact that they are being sued for infringing a U.S. patent. A common defense raised is that the enforcing party is not pursuing the best interests of the U.S. government in enforcing the patent. This raises important questions about the ability of private parties to challenge policy decisions of our Government. After all, who is better suited to determine the government’s best exercise of discretion in government matters: the government or a defendant in a patent infringement case where the defendant is incented to conclude, not surprisingly, that being sued for infringement is not good federal policy.
Another defense involves dragging the United States government into the litigation on the theory that the government, as owner of the patent, is a necessary party. But the government has often specifically decided it does not want to be a party, precisely to serve the above-stated purpose of saving costs (taxpayer money for lawyers), and so dragging the government into these cases is often a futile act.
The Federal Circuit Court of Appeals, which hears patent appeals, has seen this strategy in a case called Nutrition 21 v. United States where the government had licensed a patent for commercialization and enforcement, only to be dragged into a lengthy piece of litigation. The Federal Circuit rightly ruled that the government should not have been dragged into the case.
Accordingly, important policy considerations dictate that the government should be able to get its patents out of its vaults and into the private sector and that if parties are infringing those patents, they should be held accountable to reconstitute monies to our Treasury.
By geralt from Pixabay