Uncle Sam can steal your product.

• Position: Patients

The Federal government is able to reach past a patent owner and contract with others to produce the patented product for the government. "Traditionally, patents offer their holders the exclusive right to produce, market, and sell a product," explains Theodore J. Long, a patent attorney at Lathrop & Clark LLP, Madison, Wis. "However, whenever the U.S. government wishes to obtain a patented product at a lower price than that offered by the patent owner, it can have that product produced by a vendor of its own choosing. Usually the product is produced at a price the government can negotiate or obtain through a bidding process"

While the government may take the patent for its own use, the patent holder retains all rights to it and may continue to manufacture and sell it on the open market. "The taking is only for governmental use," Long indicates. "The patent remains in force against all other parties." He points out that, When a patent is taken by the government, the pa tent owner's sole legal remedy is an action against the U.S. in the Court of Federal Claims. There, the patent owner can recover "reasonable and entire compensation" for the use of the patent. Although the government is entitled to raise the same invalidity and noninfringement defenses available to a nongovernmental infringer, the patent owner's recovery in a majority of instances is limited to a "reasonable royalty."

"In most cases, it may be in the patent holder's best interests to attempt to negotiate a license with the government before the patent is taken." Long suggests. "Such negotiations may establish an acceptable royalty rate for both parties. The government then avoids the risk that the...