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I. Summation

a. Recommendation 1-8
Give the United States District Courts concurrent jurisdic-
tion with the Court of Claims for suits brought pursuant to
28 U.S.C. 1498 subject to the jurisdictional amount under the

Tucker Act. The Recommendation appears in Volume 4, page 124 of the Report, and is in Category B.

b. Proposed Position
It is proposed that the Recommendation should not be
adopted.

II. Background

The primary objective of the Commission in making the Recommendation was to accord patent claimants the same opportunity of concurrent jurisdiction that is accorded to contract claimants thereby to provide patent claimants with an opportunity for judicial relief at minimum cost.

In reviewing the Commission's records, it was noted that the Commission's Recommendation and objectives differ somewhat from those of the Commission's Study Group No. 6. More particularly, the Commission's Recommendation seemingly contemplates suits by patent claimants against the Government in the district courts or the Court of Claims. In turn, the Study Group proposed concurrent jurisdiction only in situations where an indemnifying contractor was involved in the accused Governmental activities. In this situation, the patent claimant would have the option of bringing suit for compensation against either the Government in the Court of Claims or the contractor in a district court. The objective of this proposal was to give greater recognition to private patent holders in the Government procurement process.

As an alternative to the Recommendation, consideration was given to improving the administrative consideration of patent claims by the Executive agencies.

III. Findings

The following findings concerning the likely impact of the Recommendation on patent claimants, the Government and Government contractors were developed during consideration of the Recommendation.

From a patent claimant's standpoint, the objective of reduced litigation expense may be achieved in those instances where infringing activities are both Governmental and commercial and a single suit can be filed against both parties in a district court. In other respects, achievement of the objective is more apparent than real.

More specifically, even if the provision of 28 U.S.C. 1402(a) providing for venue in Tucker Act suits to be the judicial district where the claimant resides is applied to patent claimants, district court practice is not tailored to reduce litigation costs to the extent of the Court of Claims practice. Additionally, since the Court of Claims does not require a claimant to be represented by local counsel, a claimant may be represented by the same counsel in the Court of Claims as in his home district. Furthermore, the benefit of a trial in the claimant's home district is partially realized by the willingness of the Court of Claims trial judges to conduct pretrial conferences in locations requested by claimants.

It would also appear that a district court decision favorable to a claimant is more likely to be appealed by the Government than a similar decision by the Court of Claims.

A claimant's suit in the district court is susceptible to dismissal if the amount in controversy exceeds the jurisdictional amount thereby necessitating the claimant's initiation of another suit in the Court of Claims. In view of the largely indeterminable nature of the amount in controversy in a patent suit at the outset thereof, particularly where the Government's activities are cloaked in military secrecy, the possibility of such dismissal is not remote.

The likelihood of the applicability of the Tucker Act venue provision to situations where the accused Government activities are indemnified by a contractor and the claimant's home judicial district would lack venue over the contractor under the general patent venue provision of 28 U.S.C. 1400 (b) is remote. Thus, a claimant may again be faced with a dismissal and the necessity of filing another suit in an indemnified procurement situation.

District courts generally lack the "expertise" possessed by the Court of Claims in the organizational and operational make-up of the Government and, therefore, may overlook all unauthorized Government uses to the financial detriment of a patent claimant.

From the Government's standpoint, there appears to be no benefit except in those situations where an indemnifying contractor is involved and the parties and the district court consent to the contractor's assumption of the defense of the suit.

An indemnifying contractor would not be benefited whether the venue provisions of 28 U.S.C. 1402 (a) or 28 U.S.C. 1400 (b) were made applicable. Under the former provision, an indemnifier may feel a bias to exist by a district court in favor of a resident claimant, while under the latter provision, the widespread nature of Government operations may permit the claimant to establish venue in a judicial district favorably disposed to patent claimants.

IV. Conclusions

The objective of reduced litigation expenses of a patent claimant is not likely to be achieved by the Recommendation in most situations. The small benefits to patent claimants which may result from adoption of the Recommendation are far outweighed by the adverse consequences to the Government, its contractors and patent claimants.

V. Discussion

Although the objective of reducing a patent claimant's litigation expenses is certainly meritorious, the achievement of this objective by adoption of the Recommendation is doubtful. All patent litigation, whether in a district court or the Court of Claims, is expensive. If anything, litigation expenses in the Court of Claims are probably lower than in the district courts. It would appear evident, therefore, that the possibility of patent claimants obtaining relief for unauthorized Government use of their patented inventions can be better achieved by an avenue of relief other than in the courtroom, whether the courtroom be the Court of Claims or the district courts. Accordingly, in lieu of providing additional avenues of judicial relief to gain the stated objective, it is submitted that the objective may be better achieved by providing for effective administrative consideration of patent claims by all Executive agencies. An initial step in this direction would be the adoption of Commission Recommendations I–6 and 1–7. A further step in this direction would be to strengthen the administrative proceedings by correction of two of the major weaknesses thereof. The first of these is the absence of an incentive for agency settlements of meritorious claims from agency appropriations because of the recognition that a successful suit in the Court of Claims by the claimant will be paid from an appropriation source other than the agency's. The second of these is the difficulty of an agency's settlement of meritorious claims involving indemnified procurement where an indemnifier refuses to consent to the settlement.

VI. Implementation

In view of the proposed nonadoption of the Recommendation, a proposed implementation approach is viewed as inappropriate.

VII. Dissenting Views

The view was expressed that a patent claimant should be permitted the freedom of election of a judicial forum whether or not relief at a minimum cost would be attainable under the concurrent jurisdiction of the Recommendation. No dissenting views were submitted in writing.

FINAL VERSION

Proposed Executive Branch Position for

Recommendation I-9 of the

Report of the Commission on Government Procurement

Rendered October 31, 1973

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