Patent infringement by the Government, of privately owned patents, is governed by 28 U.S.C. 1498, which provides that a suit against the Government in the U.S. Court of Federal Claims is the exclusive remedy for patent holders who allege their patented invention has been infringed by the U.S. Government or by one acting for the Government. The primary purpose of this statute is to protect and relieve contractors from any liability for infringement by the owner when an invention is used by or manufactured for the United States. By virtue of this statute, the Government may be held liable to the patent owner for payment of the "reasonable and entire compensation" for its unauthorized use of the patent. Unlike a private party, however, the Government cannot commit the tort of "patent infringement." Governmental use of a patented invention is viewed as an eminent domain taking of a license under the patent and not as a tort.
The Government may delegate its eminent domain power over patents to contractors acting on its behalf. This is accomplished through inclusion of the "Authorization and Consent" clause in the contract [FAR clause 52.227-1]. This clause is usually included in research and development contracts and is a very significant power to grant to a contractor as it makes the Government responsible for the contractors' infringement of any patents during the course of performance of the contract; the patent owner must bring her/his action against the Government, not the contractor.
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