1498: A Guide to Government Patent Use

Activists from the HIV advocacy group PrEP4All and their legal team at New York University Law School’s Technology Law & Policy Clinic released a first-of-its-kind “user’s guide” to “government patent use” under 28 U.S.C. § 1498.

Section 1498’s government patent use power permits the U.S. government to use, and to authorize others to use, any patented invention on behalf of the American public. Under § 1498, the U.S. government can use any patent, no matter who owns or funded it, without the permission of the patent holder. In exchange, however, the law guarantees the patent holder fair— “reasonable and entire”—compensation, calculated by a neutral judge and paid proportionately to the government’s use. The law’s roots are over a century old, and it has been employed by many federal agencies to ensure supplies of critical patented technologies at fair prices. Yet the law is widely misunderstood and has been underused in recent years.

The user’s guide clarifies ambiguity and misperceptions around § 1498 and explains, in detail, why and how the U.S. government can use its government patent use power, practically and effectively, to ensure that Americans get access to patented inventions they need—especially prescription drugs. The guide, written by three students of the Clinic, Joseph Adamczyk, Adrienne Lewis, and Shivani Morrison, and edited by its Deputy Director, Chris Morten, is directed at policymakers and provides a step-by-step roadmap to government patent use.

 “Government patent use under § 1498 provides the Biden administration with a legal, practical, and proven policy tool to expand supplies and bring down prices of prescription drugs and other patented technologies,” said Lewis.

 “A key feature of § 1498 is that federal policymakers can use it instantly, meaning that President Biden and his department of Health & Human Services don’t have to wait for Congress. They can use their § 1498 authority today to bypass patent barriers and promptly provide Americans with lifesaving, low-cost medicines for COVID-19, HIV, hepatitis C, and other diseases,” said Morten.

 “Although the U.S. government has not formally exercised its government patent use power to procure pharmaceuticals since the 1970s, the power has played a crucial role in recent drug pricing negotiations,” noted Adamczyk. For example, the U.S. Department of Health and Human Services under President George W. Bush openly contemplated using § 1498 during the 2001 anthrax attacks to lower the price of ciprofloxacin, an anthrax treatment. In response, Bayer, the leading manufacturer of ciprofloxacin, agreed to ramp up production and cut its prices in half to meet the government’s needs, dramatically increasing access to the drug.

The user’s guide provides policymakers with details of what to expect through every stage of government patent use in the procurement of pharmaceuticals, from contracting with a generic supplier to compensating the patent holder. The guide provides details on how the court-ordered compensation is typically calculated, as well as guidance to policymakers on how they can negotiate in the “shadow” of § 1498 to reach a mutually agreeable compromise with patent holders and thereby avert litigation.