[Ip-health] History of 28 USC 1498, as reported in Zoltek Corp v US (2009-5135)

Jamie Love james.love at keionline.org
Fri Oct 28 07:08:57 PDT 2016

Amy's comment illustrates that 1498 can be used to address a diverse set of
government objectives, including to address an excessive price on a drug.

The challenge for a 1498 drug patent case will be when the court sets the

Several people have pointed out that when the US government has rights in
the patent, the combination of 1498 and the US royalty free right creates
royalty free path to using a patent that any federal agency can pursue (for
example, the Kesselheim Engleberg article, and some of Amy's work), within
the constraints of how the agency defines the use as on the agencies
behalf.  But for the cases where such a royalty free right is not relevant,
such as Sovaldi,  the compensation issue looms large and involves
uncertainty.  That is why Senator Sanders had proposed an amendment that
would have created a different norm, for the Department of Veterans
Affairs.  http://keionline.org/node/2290, and in part why we suggested one
might want to borrow the Bayh-Dole Act march-in standard, through a one
sentence amendment to 35 USC 203 (http://www.keionline.org/node/2651), and
why some other statutory changes could be appropriate.

28 USC 1498 is not a dead end as regards compensation.  There is a rich
case law where the compensation issues have been argued and decided, and
many favorable ruling that suggest 1498, even without modification, can
provide leverage on drug pricing.   That said, it is probably a good idea
to explore a bit more the challenges of using 1498 as the standard to
compensate patent holders, so people can understand why agencies have been
reluctant to use it for drugs in 2001 and in 2015, and why new and better
legislative authority for compulsory licensing of drug patents is also


On Fri, Oct 28, 2016 at 8:21 AM, Kapczynski, Amy <amy.kapczynski at yale.edu>

> We also discuss some of the history of the act in this piece:
> http://yjolt.org/prescription-excessive-drug-pricing-
> leveraging-government-patent-use-health
> Part of what we recount is evidence from the legislative record reflecting
> that Congress intended the statute to protect the government against price
> gouging.  During hearings regarding the 1942 amendments, e.g. there was
> explicit discussion of price gouging, and affirmations that the government
> could “use unhesitatingly” any patent for which no license agreement
> existed “by the simple expedient of expropriation and infringement.”
> Still more interesting are the hearings in 1965, when pharma companies
> tried to limit the law to instances where national security required it.
> This was in response to the USG using the law several times to buy cheap
> generic drugs from Italy, despite US patents.  In those hearings, as we
> describe, “the Comptroller General and representatives of agencies argued
> emphatically against the change. They noted that the amendment would impose
> the burden of evaluating claims of patent infringement on agencies. They
> also argued that such an amendment would “forgo one of the valuable powers
> which the Government has to assure fair prices,” and to remedy “exorbitant
> pricing” where it was present. Ultimately, the industry’s entreaties were
> rejected, and § 1498’s language remains identical to that enacted in 1942.”
> On Oct 25, 2016, at 11:23 AM, Jamie Love <james.love at keionline.org> wrote:
> ​Give the interest in the 28 USC 1498 options for compulsory licensing,
> some people may want to review the history of the act, as reported by
> the United
> States Court of Appeals for the Federal Circuit  in ​ Zoltek Corp v US
> (2009-5135),   The sections of the option describing the changes in the law
> in 1910, 1918, 1942, 1949 and 1960 are interesting.   We have the
> discussion on this page.
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James Love.  Knowledge Ecology International
KEI DC tel: +1.202.332.2670, US Mobile: +1.202.361.3040, Geneva Mobile:
+41.76.413.6584, twitter.com/jamie_love

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