Government Use of Patents

Can the US government use a patented invention without permission?

Yes. Under 28 U.S.C. § 1498(a), whenever a patented invention is used or manufactured 'by or for the United States' without a license, the patent owner's exclusive remedy is a lawsuit against the United States in the United States Court of Federal Claims for 'reasonable and entire compensation' for the use. The practical effect is dramatic: (1) No injunction. The patent owner cannot stop the government from using the invention — there is no injunctive relief against the United States under § 1498. The government can use any patented technology it needs and simply pay for it afterward, functioning like an eminent-domain taking of a license. (2) No suit against the contractor. If a private contractor practices the patent in performing work 'for the government' with the government's authorization or consent, the contractor is shielded — the patentee must sue the United States, not the contractor. This protects defense contractors and other government suppliers from infringement injunctions and damages that would disrupt government procurement. (3) Compensation, not market royalty necessarily. 'Reasonable and entire compensation' is determined by the Court of Federal Claims and aims to compensate the patentee, typically approximating a reasonable royalty, sometimes with delay compensation. § 1498 originated to let the government procure what it needs (historically, wartime materiel) without being held hostage by patent injunctions, and it remains a powerful, if underappreciated, government power. It has been discussed as a tool the government could use to obtain lower-cost medicines or other technologies by 'using' patents and paying compensation rather than market monopoly prices — though such use outside traditional procurement (especially defense) would be legally and politically contested.

What are Bayh-Dole march-in rights and have they ever been used?

March-in rights are a power under the Bayh-Dole Act, 35 U.S.C. § 203, that lets a federal funding agency require a contractor (or its exclusive licensee) who retained title to a federally-funded invention to grant a license to a responsible third party — or, if the contractor refuses, grant the license itself — on reasonable terms. The statute permits march-in only in specific circumstances: (1) the contractor has not taken, and is not expected to take within a reasonable time, effective steps to achieve 'practical application' of the invention; (2) action is necessary to alleviate health or safety needs not reasonably satisfied by the contractor; (3) action is necessary to meet requirements for public use specified by federal regulations not reasonably satisfied; or (4) the contractor breached the U.S.-manufacturing preference for exclusive licensees. Crucially, despite numerous petitions over the decades — many seeking to lower the price of drugs developed with NIH funding by marching in and licensing generic competitors — NO federal agency has ever granted a march-in petition. Agencies (particularly NIH) have consistently declined, generally reasoning that high price alone is not a failure to achieve 'practical application' when the product is available on the market, and that march-in was not intended as a price-control mechanism. The scope of march-in — especially whether 'unreasonable pricing' can trigger it — has been a recurring policy fight; a 2023 draft framework from the government suggested price could be ONE factor among others in considering march-in, intensifying the debate, but the core reality remains that march-in has never been exercised. Separately from march-in, Bayh-Dole reserves to the government a nonexclusive, nontransferable, royalty-free license to practice federally-funded inventions for government purposes — a routinely-held but rarely-litigated 'government license' distinct from the march-in power.

Does the United States have compulsory licensing of patents?

The United States has no general statutory compulsory-licensing regime for patents — unlike many countries whose patent laws expressly authorize compulsory licenses for non-use, dependent patents, or public interest. But the US achieves compulsory-license-like outcomes through several specific mechanisms: (1) 28 U.S.C. § 1498 government use — the government (or its contractors) can use any patent and owe only compensation, with no injunction, functioning as a compulsory license for government purposes. (2) Bayh-Dole march-in (§ 203) — a narrow compulsory-licensing power over federally-funded inventions, never actually exercised. (3) Antitrust remedies — courts and the FTC/DOJ have ordered patent holders to license their patents (sometimes royalty-free) as a remedy for antitrust violations; compulsory licensing is a recognized antitrust remedy where a patent has been used to violate competition law. (4) Post-eBay ongoing royalties — after eBay Inc. v. MercExchange (U.S. 2006) made patent injunctions discretionary rather than automatic, courts that deny an injunction to a prevailing patentee often set an ongoing reasonable royalty for the infringer's continued use — effectively a court-created compulsory license, common where the patentee is a non-practicing entity. (5) Specific statutory schemes — limited compulsory-licensing-type provisions exist in particular areas (e.g., certain Clean Air Act provisions, the Atomic Energy Act, and the Plant Variety Protection Act), but these are narrow and rarely used. So while there is no general 'compulsory license' statute a private party can invoke against a patent owner, the combination of § 1498, antitrust remedies, and post-eBay royalty-setting gives US law functional equivalents in defined situations — and the international TRIPS framework governs compulsory licensing in other countries.

What does TRIPS Article 31 say about compulsory licensing?

Article 31 of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) governs 'other use without authorization of the right holder' — the international framework for compulsory licensing. It does not prohibit compulsory licenses; instead it permits WTO members to grant them subject to conditions designed to balance access with the patent owner's interests. Key conditions under Article 31: (1) Case-by-case consideration — compulsory licenses must be considered individually, not granted as a blanket rule. (2) Prior negotiation — the user must ordinarily have tried to obtain a voluntary license on reasonable commercial terms first; this requirement may be WAIVED in cases of national emergency, other circumstances of extreme urgency, or public non-commercial (government) use. (3) Scope and duration limited to the purpose for which it was granted; (4) Non-exclusive and non-assignable (except with the enterprise that enjoys it); (5) Predominantly for the supply of the domestic market of the authorizing member; (6) Adequate remuneration to the right holder, considering the economic value of the authorization; (7) Subject to judicial or other independent review. The Doha Declaration on TRIPS and Public Health (2001) affirmed that members have the right to grant compulsory licenses and to determine the grounds, and to define what constitutes a national emergency (expressly including public-health crises like HIV/AIDS, tuberculosis, and malaria). Because the 'domestic market' limitation hampered countries without pharmaceutical manufacturing capacity, the WTO created a waiver — later made permanent as Article 31bis — allowing compulsory licenses specifically to produce and EXPORT medicines to eligible importing countries that cannot manufacture them. Countries including Brazil, Thailand, India, and others have invoked compulsory licensing for medicines (e.g., HIV antiretrovirals, certain cancer drugs), sometimes prompting trade tension. The US itself rarely uses formal compulsory licensing, relying instead on § 1498 and other mechanisms, but it actively participates in the international debate over the scope of these flexibilities.

Could the government use Section 1498 to lower drug prices?

It is legally conceivable and has been proposed, but it would be contested and has not been done at scale for that purpose. The theory: under 28 U.S.C. § 1498, the federal government can 'use or manufacture' a patented invention (including a patented drug) and owe only 'reasonable and entire compensation' in the Court of Federal Claims, with no injunction available to the patent holder. Advocates have argued the government could authorize generic manufacturers to supply a patented medicine 'for the government' (for example, for federal health programs), pay the patentee a court-determined royalty rather than the monopoly price, and dramatically reduce costs — a domestic analogue to compulsory licensing. The counterarguments and obstacles: (1) Scope and authorization — § 1498 requires the use to be 'by or for the United States' with government authorization or consent; using it as a broad price-control mechanism for the general market (as opposed to genuine government procurement) stretches the statute's traditional purpose and would invite litigation over whether the use truly qualifies. (2) Compensation uncertainty — 'reasonable and entire compensation' could be set high by the Court of Federal Claims, potentially including the patentee's lost profits in some analyses, reducing the savings. (3) Policy and political resistance — pharmaceutical innovation incentives, trade commitments, and industry opposition make aggressive § 1498 use politically fraught; agencies have historically been reluctant. (4) Bayh-Dole march-in has been the more-discussed (and equally unused) tool for drug-pricing intervention. Historically § 1498 HAS been used or threatened in procurement contexts (e.g., to obtain lower-cost supplies of patented products the government needed, with a notable instance involving a threat over an anthrax-treatment stockpile that produced a price concession). The bottom line: § 1498 is a real and powerful tool that gives the government broad freedom to use patents and pay compensation, and it periodically surfaces in drug-pricing policy proposals — but its use as a deliberate, large-scale price-control mechanism remains untested and legally and politically uncertain.