The Immunity of Government Contractors for Patent Infringement
A recent nonprecedential decision by the Federal Circuit acts as a reminder of the immunity for government contracts for liability for patent infringement. The provision, 28 USC 1498(a), provides that when an invention covered by a U.S. patent “is used or manufactured by or for the United States,” the remedy of the patent holder shall be a suit for compensation from the United States in the Court of Federal Claims. For purposes of this provision “for the United States” includes activities of “a contractor, a subcontractor, or any person, firm, or corporation for the Government and with the authorization or consent of the Government.”
The history of this provision dates back to an 1894 Supreme Court case, in which the Court found that the U.S. Government had sovereign immunity protecting it from liability for patent infringement, immunity that it had not waived. See Schillinger v. United States, 155 U.S. 163 (1894). This left patent holders without a remedy for infringement by the U.S. Government. In response a law was enacted in 1910 that provided patent holders a way to seek money damages against the U.S. Government for patent infringement.
In 1918 the Supreme Court found that the U.S. Government immunity did not apply to defense contractors, even when the contractors were providing weapons adhering to “comprehensively detailed” government specifications. See Cramp & Sons v. Curtis Turbine, 246 U.S. 28 (1918). The immunity provision was then modified by Congress within months, extending the provision to provide immunity to government contractors.
The Section 1498 immunity for government contractors was at issue in a recent Federal Circuit case, Arlton v. AeroVironment, No. 21-2049, (Fed. Cir. Feb. 4, 2026). The Arltons (a pair of brothers) held a patent (now expired) covering rotary-wing unmanned aerial vehicles (UAV), and licensed the patent to their company, Lite Machines. Lite Machines, which was not a party to the lawsuit, had subsequently been awarded contracts by the U.S. Government for development of the UAV technology.
The Arltons sued AeroVironment over two allegedly infringing UAV helicopters that the latter had produced. The first, a UAV helicopter for use on the planet Mars, was supplied by AeroVironment as a subcontractor under a contract from NASA to Jet Propulsion Laboratory (JPL). The second was a demonstration model of another UAV helicopter, the “Terry,” that would be suitable for use in Earth atmosphere. AeroVironment asserted a Section 1498 defense with regard to both helicopters, and won summary judgment at the district court.
The Arltons challenged AeroVironment’s invocation of Section 1498 on two grounds. First, they contended that the contract awarded to their company Lite Machines obligated the government to award further development funding of the technology to Lite Machines “to the greatest extent practicable,” citing language from 15 USC 638(r)(4), and that this contractual obligation restricted the applicability of Section 1498.
The Federal Circuit turned away this challenge. The language cited by the Arltons did not contradict anything in Section 1498. Furthermore, to the extent that there was a failure by the U.S. Government to live up to its obligations under the provision that the Arltons cited, that cause of action belonged not to the Arltons, but to their company Life Machines (which had gone out of business after failing to secure further government funding).
The Arltons also argued that Section 1498 was inapplicable with regard to the Terry helicopter, since it was not produced under a government contract. However, AeroVironment presented evidence that JPL’s head engineer had suggested building a UAV helicopter such as the Terry helicopter. In addition JPL subsequently used the Terry helicopter in acoustic testing, bringing the Terry helicopter within the scope of Section 1498. Furthermore, the court found that AeroVironment’s initial production of the Terry helicopter as a demonstration vehicle was noncommercial use, and de minimus use at that.
The outcome of the case is not surprising, in that Section 1498 has been consistently read broadly to immunize government contractors and subcontractors from patent infringement liability. Defense contractors have been particular beneficiaries of Section 1498, something to keep in mind during current conflicts[1].
[1] Or is it a war? Trademark law tells us that Champagne can only originate from a certain region of France, and that bubbly alcoholic grape juice originating from other places has to be called something else, such as “sparkling wine.” Analogously, perhaps it only can be a war if it can claim as its home a specific location, for example the Seventh Circle of Hell. See Dante Allighieri, Inferno, Canto XII. Otherwise an armed conflict should be called something else – maybe “sparkling industrialized destruction”?