Public Patent Powers

Laura E. Dolbow* February, 2025

Congress has created multiple structures for agencies to control how patents are used, but that institutional design choice has received little academic attention. This Article provides the first comprehensive survey of existing laws that expressly authorize agencies to control patents. I locate 113 express conditions across 68 laws that expressly authorize executive actors to make some form of decision about patents. These powers, which I refer to as “public patent powers,” allow the government to use patented inventions, to obtain patents, to authorize third parties to use patented inventions, and to regulate how patents are used. Agencies have used many of these powers, but they have been reluctant to use others. Notably, agencies have refused to grant compulsory licenses on patents covering federally funded drugs, despite multiple requests to do so.

The descriptive account of public patent powers has several implications for patent regulation. Public patent powers show different actions that the executive branch could take without the need for any legislative action when patents create policy concerns, as is currently happening with high drug prices. Themes in public patent powers and their use also reveal consistent policy judgments present throughout the history of patent regulation in the United States. These themes create a framework for identifying contexts where executive control over patents may be appropriate and politically feasible. The descriptive account further suggests that the Supreme Court’s decision in Oil States v. Greene’s Energy may have broader implications than previously recognized. Moving forward, this Article contends that the executive branch should create an interagency framework to guide how agencies use public patent powers and that courts should consider themes in public patent powers when deciding whether to grant injunctions in patent cases.

Introduction

The federal government helped fund the development of Xtandi, a life-saving prostate cancer drug. Researchers at the University of California Los Angeles discovered the drug, supported by millions of dollars of grants from the National Institutes of Health (NIH) and the Department of Defense (DOD).¹ Now, U.S. taxpayers and patients pay exorbitant prices for the drug. Medicare spent over $7.8 billion on Xtandi prescriptions over a five-year period.² In 2022, the average wholesale price was $130 per capsule in the United States—more than six times the price in Japan.³

The high U.S. price is largely due to patents. Since 2012, Astellas Pharma and Pfizer have marketed Xtandi in the United States without generic competition. The Food & Drug Administration (FDA) has approved generic versions of the drug, but patents are preventing those generics from reaching the market.⁴ Recently, legislators and scholars have asked the NIH and DOD to step in and authorize generic manufacturers to start producing Xtandi despite the patents.⁵ The Bayh-Dole Act, which provides default rules for patents on federally funded inventions, gives the government power to grant compulsory licenses on the patents covering Xtandi.⁶ Advocates argue that granting compulsory licenses on the Xtandi patents would allow generics to enter the market, which in turn would lower the drug price.⁷ But so far, agencies have refused to grant compulsory licenses.⁸

Most recently, in December 2023, the Biden Administration published proposed guidance stating that even though the government has not granted compulsory licenses to address the high price of Xtandi, it could if it wants to.⁹ This proposed guidance drew harsh criticism from some, such as the Wall Street Journal Editorial Board, who described the proposal as an attempt to “steal” patents.¹⁰ As this “patent heist” rhetoric shows, a heated debate persists over whether the government should order compulsory licenses on patents covering prescription drugs. In recent years, numerous members of Congress and other commentators have urged the government to order compulsory licenses to expand access to life-saving medicines.¹¹ Others, however, strongly oppose such licenses.¹²

Amidst the debates about whether the government should intervene when patent holders charge unreasonably high prices for drugs, less attention has been given to the larger ecosystem of patent powers that Congress has given agencies. The law that authorizes agencies to order compulsory licenses on federally funded inventions is just one of many laws that expressly authorize agencies to make decisions about how patents are used in commerce. Other similar laws have received attention in isolation. For example, scholars and legislators have pointed to Section 1498—a law that insulates government contractors from injunctions for patent infringement—as another potential tool to address high drug prices.¹³ Scholars have also observed that the International Trade Commission (ITC) has statutory discretion to allow imports of products that infringe patents to address concerns about anticompetitive conduct.¹⁴ But the broader institutional design choice by Congress to give agencies express power to control patents has gone relatively unnoticed.

This Article examines that institutional design choice by providing the first comprehensive survey of the U.S. Code to compile laws that expressly give agencies power to make decisions about patents. This empirical survey provides new insights about how Congress has struck the balance between public and private control when designing the patent system, as well as new insights about the full scope of express powers that agencies currently have.

Across 68 statutes, I locate 113 conditions that explicitly allow the executive branch to control patents.¹⁵ These powers, which I refer to as “public patent powers,” generally allow agencies to make choices about who can access patented technology and how patent holders can exercise their rights to exclude.¹⁶ I then create a taxonomy of four distinct types of public patent powers: powers for the government (1) to obtain patent licenses, (2) to obtain patents, (3) to grant third parties patent licenses, and (4) to directly regulate how patents are used.¹⁷ Although agencies have used many of their powers in a variety of contexts,¹⁸ they have been reluctant to grant compulsory licenses on patents covering federally funded inventions. The NIH, for example, has consistently refused to grant compulsory licenses on federally funded drugs under the Bayh-Dole Act, despite multiple requests to do so—both in the case of Xtandi and in other cases.¹⁹

Based on these findings, this Article makes a descriptive claim that Congress has expressly created numerous structures for agencies to make decisions about how patents are used in commerce. At least 68 different laws explicitly allow executive actors to make some form of decision about patents, including decisions about whether the government and third parties can use patented inventions. This descriptive claim contributes to the ongoing debate about the nature of patent rights by showing that the patent system includes more explicit structures for regulatory oversight than previously recognized. The landscape of laws provides a roadmap of existing executive powers, and the observations about their use in practice provide guidance about practical barriers that may arise for different types of powers. It also reveals several themes in public patent powers: Congress has granted these express powers in contexts where inventions were developed with federal funds, where technology is useful for government programs, where public health and safety needs are at stake, and where patents are coupled with market power.²⁰ These themes create a framework for identifying situations where limits on private control of patents might be both appropriate and politically feasible. Furthermore, the plethora of public patent powers shows that the Supreme Court’s 2018 decision in Oil States v. Greene’s Energy may have broader implications than previously appreciated.²¹

The descriptive account of public patent powers raises normative questions about whether agencies should use these powers more often. Several reasons could be behind the failure to order compulsory licenses on federally funded inventions, some of which are more worrying than others.²² The same is true for agencies’ sporadic use of other powers, such as the power to place conditions in funding agreements. It is difficult to normatively assess how agencies have been using their powers because there is no coherent theory supporting when the various powers should be used. To address this problem, the executive branch should create an interagency framework that provides guidance about when agencies should use their powers. Interagency guidance would be helpful because although public patent powers allow a range of agencies across a range of regulatory contexts to make decisions about patents, questions about whether to use the powers involve similar economic policy and public welfare questions across contexts. The Biden Administration took a first step toward this model in December 2023 when it released a draft interagency framework regarding when agencies should use their powers to order compulsory licenses on federally funded inventions.²³ This Article contends that the federal government should not stop there. It should provide interagency guidance about when the full scope of public patent powers should be used, including the powers of the government to produce patented products, to authorize government contractors to use patents, to place conditions in funding agreements, and to grant exclusive licenses on agency-owned patents.²⁴

Outside of the executive branch, courts also should consider lessons from public patent powers. The themes in public patent powers reveal consistent policy judgments about contexts where regulatory oversight of patent decisions is appropriate.²⁵ In these contexts, Congress has recognized that the government should have the power to limit private control over decisions about how patents are used. How much control private patent holders should have over their patents is the same issue that courts consider when deciding whether to grant injunctions in patent cases.²⁶ Therefore, themes in public patent powers provide guidance about where limits on private control—through the denial or tailoring of injunctions—might be appropriate.

This Article proceeds in four parts. Part I describes the patent right to exclude and surveys the ongoing debate over how broadly private patent holders should control decisions about how patents are used. Part II defines the concept of “public patent powers” and explains how these powers operate in the administrative state. Part III discusses implications of the descriptive claim about public patent powers for patent regulation. Part IV addresses normative considerations about the use of public patent powers and provides suggestions for how agencies and courts could use insights from the descriptive account of public patent powers moving forward.

I. The Patent Right to Exclude

The Constitution authorizes Congress to create a patent system.²⁷ Throughout the history of the United States, Congress has authorized the executive branch to grant patents.²⁸ Under the current law, patents entitle patent holders “to exclude others from making, using . . . or selling” the claimed inventions.²⁹ The right to exclude, however, is not unlimited. This Part describes limits on the right to exclude and ongoing debates about the appropriate level of control to grant to private patent holders. It then describes recent calls for agencies, rather than courts, to play a more active role in tailoring patent rights.

A. Limits on the Right to Exclude

A patent creates an entitlement to “exclude others from making, using, offering for sale, or selling the invention.”³⁰ After obtaining a patent, a patent holder has broad discretion over how to use their right to exclude. Typically, the patent holder can decide whether to grant licenses to others to use the patented invention and on what terms.³¹ But the patent right to exclude is not absolute. For example, antitrust law places some constraints on patent licensing activities.³² Patents also last only for a limited time, typically around 20 years.³³ Moreover, patent holders cannot exclude others if a court or the U.S. Patent & Trademark Office (Patent Office) concludes that the patent does not meet the patentability requirements.³⁴

The right to exclude is also limited by the remedies available when third parties infringe patents.³⁵ Generally, when the law creates an entitlement, the law must also decide what rules will apply to protect the entitlement.³⁶ These protections typically involve a mix of what scholars have referred to as “property rules” and “liability rules.”³⁷ Under a property rule, the person who holds the entitlement cannot be forced to relinquish the entitlement involuntarily³⁸: If a patent holder does not want to voluntarily license its patent to someone, the patent holder could obtain an injunction to stop the other entity from infringing the patent.³⁹ Under a liability rule, a third party can encroach on an entitlement if the party is willing to pay an objectively determined amount⁴⁰: A liability rule is in place when the remedy for patent infringement is damages rather than an injunction. Under a liability rule for patents, a third party can simply make payments to infringe a patent, regardless of the patent holder’s desires.⁴¹ Patent law provides for a mix of property rules and liability rules to protect patent entitlements. Sometimes injunctions are awarded as remedies for patent infringement, and sometimes damages are⁴²—courts play the primary role in determining whether injunctions are appropriate in different circumstances.⁴³

B. The Role of Injunctions in Patent Law

In general, when a court denies an injunction, it limits a patent holder’s right to exclude. By denying injunctions, courts allow third parties to access technology in exchange for a fee. Because of this tradeoff, debates about the availability of injunctive relief have become debates about how broadly patent holders should control patent rights to exclude.

For much of American history, patent law doctrine created strong property rules for patent infringement remedies. Courts routinely awarded injunctions as remedies for patent infringement.⁴⁴ In 2006, however, the Supreme Court announced a new test for courts to decide whether injunctions are appropriate for patent infringement.⁴⁵ In eBay Inc. v. MercExchange, LLC, the Court held that the equitable four-factor test that courts generally apply to decide whether to grant injunctions also applies to patent cases.⁴⁶ The eBay test provides that courts may award injunctions if (1) the plaintiff has shown an irreparable injury, (2) damages are inadequate to compensate for the injury, (3) the equitable balance of the hardships between the parties supports an injunction, and (4) the public interest would not be disserved by an injunction.⁴⁷

Even after eBay, the availability of injunctions for patent infringement remains a contentious topic.⁴⁸ The tradeoff between a property rule (injunctions) and a liability rule (damages) involves a balance of competing policy interests. This tradeoff seeks to balance the goal of providing incentives for investment in research with the goal of providing public access to innovative technologies.⁴⁹ In general, scholars have argued that strong property rights encourage investment in research and development because they provide stable expectations about investments and allow investors to capture more of the value of their inventions.⁵⁰ Proponents of injunctions have also argued that injunctions are particularly appropriate in patent law because patents are difficult to value, which systematically risks undervaluing patent damages.⁵¹

At the same time, others have embraced the eBay test, and most acknowledge that liability rules are appropriate in some circumstances.⁵² In the eBay decision itself, Justice Kennedy observed in a concurring opinion that limits on injunctive relief can be appropriate to address concerns about anticompetitive conduct by patent holders. Specifically, Justice Kennedy discussed concerns that firms that do not “practice” inventions could use the threat of injunctions “as a bargaining tool to charge exorbitant fees” on patent licenses.⁵³ Non-practicing firms are those that acquire and assert patents but do not make, use, sell, or license their patented inventions.⁵⁴

In Justice Kennedy’s view, when a firm that does not practice an invention uses the threat of an injunction solely to gain “undue leverage in negotiations,” an injunction “may not serve the public interest.”⁵⁵ Courts, having adopted this test, now deny injunctions more often when patent holders do not practice inventions.⁵⁶ Scholars have suggested that limits on injunctions are in the public interest in other situations, such as in public health crises like the COVID-19 pandemic.⁵⁷ Moreover, some have observed that liability rules are not necessarily inconsistent with the goal of incentivizing research and development.⁵⁸ If compensation awards are high, they can provide strong incentives to innovate.⁵⁹ Based on these considerations, scholars have argued that a more context-specific utilitarian view of when injunctions are appropriate—rather than a strong property rules framework—better supports the goals of the patent system.⁶⁰

C. Regulatory Oversight of Patents

Recently, discourse about the availability of injunctions for patent infringement has shifted from debates about what courts should do to debates about what agencies should do. In response to high drug prices, scholars and policymakers have urged federal agencies to take more control over patents on costly drugs.⁶¹ Many have also suggested that agencies should step in and remove the threat of injunctions for generic manufacturers who infringe pharmaceutical patents.⁶² These proposals are controversial, and agencies have been reluctant to use their powers to authorize generic production of pharmaceuticals.⁶³

Drug pricing proposals focus primarily on two laws that give agencies powers to remove the threat of injunctions for patent infringement: Section 1498 and the Bayh-Dole Act.⁶⁴ Proposals to use Section 1498 and the Bayh-Dole Act are notable because they rely on existing laws that allow executive actors to make judgments about the breadth of control patent holders have over their rights to exclude. When advocating for agency use of these powers, commentators urge agencies to balance the same policy goals that courts typically balance when deciding whether to grant injunctions in patent cases. Both Section 1498 and the Bayh-Dole Act authorize agencies to decide whether injunctions will be available for third parties who infringe patents under certain conditions.⁶⁵ If an agency decides to insulate a third party from an injunction, the agency is making the decision to protect the patent by a liability rule rather than a property rule. In making these decisions, agencies can balance the policy goals of incentivizing investment and promoting public access to technology.

The fact that Congress has given agencies powers to make these patent policy decisions has not received much academic attention. As discussed above, it is well known that both courts and Congress have powers to tailor rights to exclude.⁶⁶ Less attention has been given, however, to contexts where agencies have powers to tailor patent rights to exclude.⁶⁷

Indeed, some scholars have assumed that little regulatory oversight exists after patents are issued. For example, Professor Greg Reilly describes the patent examination system as including “[n]o significant government role in regulating, enforcing, or reconsidering patent rights.”⁶⁸ Moreover, he argues that throughout the twentieth century, there was “virtually no government control, regulation, or involvement with issued patents.”⁶⁹ At the same time, however, others discuss individual laws that allow for executive actors outside the Patent Office to regulate rights to exclude—for example, proposals to use Section 1498 and the Bayh-Dole Act.⁷⁰ Scholars have also discussed the role of the ITC in making decisions about whether to allow imports that infringe U.S. patents.⁷¹ Moreover, others have discussed the role that agencies play in influencing patent policy, including standards for patentability and patent litigation.⁷²

Amidst this literature, little is known about how often and in what contexts Congress has expressly authorized agencies to control patents. To understand what powers agencies have under existing laws and to evaluate whether the current landscape of public patent powers strikes the right balance, this Article conducts a survey of the U.S. Code to provide empirical information about contexts where Congress has expressly authorized agencies to make decisions about patents.

II. Public Patent Powers in the Administrative State

This Article defines “public patent powers” as laws that expressly give the executive branch a lever of control over patent rights to exclude. These laws allow agencies to control patents in two primary ways. First, they allow agencies to make decisions about when patents will be protected by liability rules. Agencies can make decisions that require patent holders to license or sell patents in exchange for compensation. Second, they allow agencies to directly regulate how rights to exclude are exercised. Agencies can either take control of patent title or place limits on patent use. This Part describes my methodology for locating public patent powers, then provides a detailed description of how public patent power laws operate in the administrative state.

A. Identifying Public Patent Powers

I conducted an empirical, comprehensive search of the U.S. Code and identified 113 express powers across 68 statutes that expressly create public patent powers.⁷³ I sorted these powers into four different categories: powers to obtain patent licenses, to obtain title to patents, to grant licenses to third parties, and to regulate how patent holders can use their rights to exclude. Table 1 summarizes the frequency of each type of power.

Table 1: Frequency of Public Patent Powers

Type of Public Patent Power	Number of Express Statutory Grants
Government License	40
Government Title	40
Third-Party Licenses	26
Direct Regulation	7
Total	113

Together, these laws show that Congress has created numerous structures that allow executive actors to make decisions about how patents are used in commerce. Public patent powers allow the government to regulate access to patented inventions, either by accessing technologies itself or by deciding the terms upon which third parties can access technologies. In doing so, these laws allow executive actors, rather than courts or private parties, to make decisions about how broadly patent holders can use their right to exclude.

Outside of these express public patent powers, it is worth noting that many other laws may allow agencies to influence patent holder conduct, including decisions about whether to grant third parties access to patented inventions. For example, the recently enacted Medicare price negotiation program allows Medicare to negotiate the prices of drug products that do not face competition in the market.⁷⁴ This law may lead patent holders to license their patents more readily to avoid price negotiation.⁷⁵ Similarly, antitrust laws can influence patent settlement and licensing agreements.⁷⁶ These other laws that do not expressly mention patents provide even more structures for agencies to regulate patent holder conduct. This Article, however, focuses on explicit grants of powers over the right to exclude to study the institutional design choices that expressly authorize public control over patent decisions.

Furthermore, this Article focuses on laws that allow agencies to control patents after they issue, regardless of whether the patents are valid or invalid. The Patent Office has powers to revoke patents that issued in error.⁷⁷ This Article studies other types of powers that allow agencies to regulate patents, even when patents meet the patentability standards. Additionally, because the Patent Office plays little role in regulating how patents are used after they issue, this Article focuses on agencies outside the Patent Office. The following Sections describe the different types of public patent powers.

B. Government Patent Licenses

One type of public patent power allows the government to obtain a license to make or use patented technology.⁷⁸ These laws allow the government, rather than private patent holders, to make decisions about whether the government can use patented inventions.⁷⁹ The laws provide three main ways that the government can obtain patent licenses: (1) it can use patented technology without a license and then pay later if patent infringement is shown, (2) it can prospectively obtain patent licenses, or (3) it can reserve licenses when it funds research. Table 2 summarizes those laws.

Table 2: Government Patent Licenses

	Liability Rule	Public Control
Unlicensed Patent Use	If court finds gov’t infringed patent, remedy is limited to reasonable compensation.	Gov’t can decide whether to use patented technology.
Prospective Patent Licenses	Gov’t pays patent holder for patent license before use.
Reserved Licenses on Federally Funded Inventions	Gov’t obtains license as condition of providing funding for research.

1. Unlicensed Patent Use

Several statutes relate to unlicensed use of patented technology by the government.⁸⁰ Generally, patent holders cannot obtain injunctions to stop the government from using patented technology.⁸¹ When the government uses patented technology without permission, however, the patent holder can seek reasonable compensatory damages.⁸² These laws, therefore, functionally create patent licenses for government use of inventions.⁸³

Section 1498, codified at 28 U.S.C. § 1498, provides the default legal framework when the government uses patented technology without a license.⁸⁴ The law states that if the government does so, the patent holder can seek “reasonable and entire compensation.”⁸⁵ Executive agencies have regularly used technology without a license, and patent holders have regularly used Section 1498 to seek compensation from a range of agencies.⁸⁶ Examples include use of combat ships by the U.S. Navy,⁸⁷ use of ammunition rounds by the U.S. Army,⁸⁸ use of materials processing methods by the Oak Ridge National Laboratory,⁸⁹ and use of an automated process for processing mail by the U.S. Post Office.⁹⁰ Some Section 1498 suits have resulted in compensation awards,⁹¹ though courts have denied damages when they conclude that the government did not infringe the asserted patents.⁹²

2. Prospective Patent Licenses

Twenty-two statutes expressly authorize agencies to acquire patent licenses in a range of situations.⁹³ These laws also allow the government to acquire patent licenses either with or without the consent of the patent holder.⁹⁴ In contrast to Section 1498, these statutes contemplate prospective licenses before agencies use inventions.⁹⁵ Prospective licensing provisions appear in two primary contexts. First, some are in general grants of authority for agencies to carry out programs. For example, one statute authorizes patent licenses for acquisitions of supplies or processes “useful” to any military department.⁹⁶ Some statutes authorize acquisition of patents licenses “useful” to the Department of Education⁹⁷ or the Department of Energy (DOE).⁹⁸ Others allow acquisition of patent licenses deemed “necessary” by the FAA Administrator,⁹⁹ by the TSA Administrator,¹⁰⁰ or by NASA.¹⁰¹ Second, some licensing provisions appear in laws that create specific government research programs. For example, statutes authorize the DOE to acquire patent licenses useful for a coal mining research program¹⁰² and the EPA to do the same for an air pollution research program.¹⁰³

Agencies regularly obtain patent licenses for a variety of uses.¹⁰⁴ For example, agencies spend significant funds on information technology products, such as software licenses, which often involve patents.¹⁰⁵ When the government negotiates patent licenses, its public patent powers affect bargaining dynamics.¹⁰⁶ The government has threatened to use its powers to use or buy patents in order to obtain more favorable licensing terms on a couple notable occasions—like negotiations over purchases of aircraft technology during World War I and anthrax treatments after the September 11 terrorist attacks.¹⁰⁷

3. Federally Funded Inventions

When the federal government funds research, laws generally reserve a license for the government to use any resulting inventions.¹⁰⁸ These laws typically do not require compensation for patent use. Instead, they reserve “paid-up” licenses that are “nonexclusive, nontransferable, [and] irrevocable.”¹⁰⁹ The most prominent example in this group is the Bayh-Dole Act, which sets the default rules about patents on inventions developed with federal funding.¹¹⁰ The Bayh-Dole Act reserves a royalty-free license for the government to practice all federally funded inventions when third parties obtain patents on those inventions.¹¹¹ Government researchers regularly use these licenses.¹¹² Moreover, the government has successfully invoked its licenses under the Bayh-Dole Act as an affirmative defense in Section 1498 suits against the government.¹¹³

C. Government Patent Title

A second category of laws allows the government to obtain title to patents. When the government holds title to a patent, it has total control over the right to exclude. The government can choose whether to license the patent and on what terms. It can choose to make the patented invention freely available to the public or, alternatively, it can decide to exclude others from using the invention.¹¹⁴ The government also has discretion over whether to sue parties for patent infringement and whether to sell the patent.¹¹⁵

Laws provide for situations where the government can both obtain patents in the first instance and obtain patents from third parties. Under certain circumstances, laws authorize the government to obtain a patent in the first instance when an invention was developed with federal funding.¹¹⁶ Other laws authorize the government to obtain existing patents during routine government operations and during times of war.¹¹⁷ Table 3 summarizes those laws.

Table 3: Government Patent Title

	Liability Rule	Public Control
Patent Buyouts	Gov’t pays private party for patent title.	Gov’t has total control over right to exclude.
War Powers	Gov’t pays private party after war, as Congress directs.
Federally Funded Inventions	N/A—gov’t obtains patent in the first instance.

1. Patent Buyouts

Several laws allow agencies to buy existing patents, i.e., for “patent buyouts.”¹¹⁸ All twenty-two laws that expressly authorize agencies to acquire prospective patent licenses also expressly authorize agencies to acquire patents themselves.¹¹⁹ For example, 10 U.S.C. § 3793 appropriates funds for the Department of Defense to acquire both useful “patents” and “[l]icenses . . . under patents.” Like statutes that allow the government to obtain patent licenses, these statutes contemplate that agencies could acquire patents with or without the consent of the patent holder.¹²⁰

In the nineteenth and early twentieth centuries, Congress authorized funds for agencies to purchase patents on several occasions for military operations.¹²¹ After World War II, Congress created a specific patent buyout scheme when it decided to nationalize the atomic energy industry.¹²² In order to maintain a government monopoly over the industry, the government purchased atomic energy patents.¹²³ To do this, the Atomic Energy Act of 1946 revoked all patents that were useful solely for the production of fissionable material and prohibited future patents.¹²⁴ Congress provided compensation for revoked patents, which made the statute operate as a patent buyout. Since then, however, the government does not appear to have purchased patents.¹²⁵

2. War Powers

The Trading with the Enemy Act of 1917 authorizes the President to seize patents and patent applications during wartimes.¹²⁶ In response to hostile conduct by German property owners during World War I,¹²⁷ Congress authorized the President to appoint an official (a “property custodian”) to take custody of property in the United States belonging to enemies or enemy allies.¹²⁸ The law expressly allows the President to order enemy-owned “patents” and “applications therefor” to be transferred to the property custodian.¹²⁹ As subsequently amended, the law allows the custodian to then act as the owner of these patents.¹³⁰ While the custodian holds any patents, it has discretion over how to use those patents, including whether to grant licenses or to sell them.¹³¹ During this time, the custodian can grant licenses for the government to use any patented invention for free.¹³² At the end of the war, patents can be returned as Congress directs.¹³³

Presidents have authorized such property custodians twice: during World War I and World War II.¹³⁴ In both wars, the property custodian acquired tens of thousands of patents and patent applications.¹³⁵ During World War I, the government acquired patent applications made by German citizens and assigned some of those to the Secretary of War and the Secretary of Navy.¹³⁶ The custodian sold 6,000 chemical patents at a nominal price to the U.S. government.¹³⁷ Notably, it auctioned off Bayer’s patent on aspirin to an American company.¹³⁸ During World War II, the property custodian seized at least 40,000 patents and patent applications, and then offered nonexclusive, royalty-free licenses under those patents to the American public.¹³⁹ After both wars, Congress created procedures for claims for the return of property not sold and for proceeds on property sold.¹⁴⁰ No president has authorized a property custodian since.

3. Federally Funded Inventions

Several laws allow the government to obtain patents covering inventions developed with federal resources. The most significant laws in this category are the Bayh-Dole Act and the Stevenson-Wydler Act. Passed in 1980, these laws create the default rules for patents covering inventions developed by both government employees and third parties that receive federal funding.¹⁴¹ Generally, agencies can obtain patents on inventions developed by government employees.¹⁴²

When agencies fund research by third parties, the law is more complicated. The Bayh-Dole Act requires that when agencies provide funding to small businesses or nonprofits (namely, universities), agencies must give the grantee the option to obtain title to any patents on the resulting inventions.¹⁴³ Yet the government may still retain title to federally funded inventions developed by small businesses and nonprofits in multiple circumstances, such as where grantees are foreign, where exceptional circumstances warrant “restriction or elimination” of patent rights, and where grantees do not timely disclose the invention.¹⁴⁴

Outside the limits of the Bayh-Dole Act, agencies generally have discretion to decide how to allocate patent rights when they fund third-party research. For example, in funding agreements with large companies, the law gives agencies discretion to decide whether to retain patent rights. The executive branch has consistently exercised that discretion to broadly give grantees the option to obtain patents. In the 1980s, President Reagan issued an executive order that expanded the Bayh-Dole Act to all recipients of federal research grants, regardless of size.¹⁴⁵ Subsequent presidents left this policy in place, and, in 2018, the National Institutes of Standards and Technology (NIST) passed a regulation that codified this longstanding policy.¹⁴⁶ As a result, agencies today typically give large companies the option to obtain patents on federally funded research.¹⁴⁷

Yet that regulation does not apply to all funding agreements with large companies because ten laws restrict agency discretion further. These laws require patent title to vest with the government, unless the government waives its rights.¹⁴⁸ Before the Bayh-Dole Act created a uniform patent policy for federally funded inventions, several laws created program-specific patent rules. Although some of those laws have since been repealed, others still remain on the books.¹⁴⁹ Because the Bayh-Dole Act expressly left those laws in place for funding agreements with entities other than small businesses and nonprofits,¹⁵⁰ these laws still apply to inventions developed by large companies.¹⁵¹

These laws require government title on inventions made under contracts with agencies in a range of research areas, including nuclear energy research¹⁵² and space research.¹⁵³ Again, commercialization and public interest are concerns. The law that vests patent rights on nuclear energy research with the DOE, for example, provides that the Secretary may waive the government’s patent rights to promote commercialization.¹⁵⁴ Furthermore, one law—covering inventions developed by contracts with the Tennessee Valley Authority (TVA)—is unaffected by the Bayh-Dole Act, and thus, requires all patents on TVA-funded inventions to vest with the government.¹⁵⁵ Table 4 summarizes when the government can obtain patents on federally funded inventions.

Table 4: Government Title on Federally Funded Inventions

Funding Agreements	Government Title
Government employees	Gov’t can obtain patent.
Small businesses and nonprofits	Gov’t must give contractor option to obtain title on patents, unless: (1) contractor is foreign, (2) exceptional circumstances exist, or (3) contractor does not timely disclose invention.
Other entities	Gov’t can obtain title, but has exercised discretion to let contractors obtain title. Nonetheless, 14 laws require title to vest in gov’t, unless the gov’t waives rights for public interest or commercialization.

Under this complex framework, the government has given patents to many private companies.¹⁵⁶ But it has also amassed a relatively large patent portfolio on a range of technologies. In FY2020, eleven agencies collectively obtained 2,577 patents and filed 2,623 patent applications.¹⁵⁷ Four agencies—DOD, DOE, HHS, and NASA—received over 100 patents each.¹⁵⁸

When the government obtains patents, there are some limits on how agencies can use those patents. Generally, agencies can grant exclusive licenses, but only if necessary to promote commercialization of an invention.¹⁵⁹ When agencies grant exclusive licenses, the Bayh-Dole Act includes several further limits. Exclusive licenses must provide for inventions to be manufactured “substantially in the United States,” and agencies must give preferences to small businesses.¹⁶⁰ The government has regularly granted exclusive licenses on its patents.¹⁶¹ Five agencies—USDA, DOD, DOE, HHS, and the VA—reported more than 100 income-bearing exclusive licenses each in FY2019, and eleven agencies collectively reported 1,069 income-bearing exclusive licenses.¹⁶²

Occasionally, agencies have used their discretion to place additional terms in patent licenses beyond what the Bayh-Dole Act requires.¹⁶³ In the biomedical context, the NIH placed a reasonable pricing clause in some license agreements for a short period. In 1987, a pharmaceutical company launched an HIV drug developed with NIH assistance at a price of $10,000 per year.¹⁶⁴ In response to public protests, the company lowered its price, and the NIH began a policy of including a reasonable pricing clause in certain agreements.¹⁶⁵ From 1989 to 1995, the NIH included a reasonable pricing clause in exclusive patent licenses on government patents that resulted from cooperative research and development agreements with private industry.¹⁶⁶ The agency stopped the policy in response to industry arguments that the clause was deterring collaborations.¹⁶⁷ When it did so, industry panelists stated that the clause created uncertainty about how the government might intervene in a pricing decision under the clause.¹⁶⁸ More recently, in May 2024, the NIH proposed to develop a policy to consider patient access plans when it licenses NIH-owned inventions.¹⁶⁹

On rare occasions, the government has brought affirmative patent infringement suits based on government-owned patents.¹⁷⁰ Recently, the government sued Gilead for infringement of CDC-owned patents on a preventive HIV treatment.¹⁷¹ In that case, the NIH funded clinical trials that demonstrated positive results in patients.¹⁷² Using publicly available data from those trials, Gilead obtained FDA approval for an antiviral drug used to prevent HIV, Truvada. In response to concerns about high prices on Truvada, commentators advocated that the government enforce its patents to recoup public investment in the drug.¹⁷³ After licensing negotiations failed, DOJ sued in November 2019.¹⁷⁴ A jury returned a verdict that found the patents invalid, which a district court judge recently upheld.¹⁷⁵

D. Third-Party Licenses

A third category of laws allows the government to grant patent licenses to third parties, with or without the consent of patent holders. The laws in this category allow the government to authorize third parties to use patented technology without the threat of an injunction in exchange for compensation. These laws allow third-party licenses in a variety of contexts, including for government contractors,¹⁷⁶ for federally funded inventions,¹⁷⁷ for patents necessary to comply with clean air regulations,¹⁷⁸ for patents crucial to the atomic energy industry,¹⁷⁹ and during times of war.¹⁸⁰ Several others require patents on federally funded inventions to be dedicated to the public.¹⁸¹ Table 5 summarizes these contexts.

Table 5: Third Party Licenses

	Liability Rule	Public Control
Government Contractors	Gov’t pays private party under Section 1498 framework or in research funding agreement.	Gov’t decides whether third party can use patented technology.
War Powers	Third party pays compensation.
Compulsory Licenses	Third party pays patent holder.
Public Dedication	Gov’t funds research, and patent holder must make invention freely available to the public.

1. Government Contractors

As discussed above, Section 1498 and the Bayh-Dole Act allow the government to obtain licenses to use patented inventions. Both laws also authorize the government to obtain patent licenses for government contractors. If the government authorizes its contractor to use a federally funded invention, the government contractor’s actions are covered by the paid-up reserved license under the Bayh-Dole Act.¹⁸² Agencies have used this power to authorize government contractors to use federally funded inventions in the defense industry.¹⁸³ These reserved licenses can also be a defense in patent suits against government contractors. Recently, the United States successfully invoked a reserved license as a defense in a patent suit when a government contractor used a method of preparing mouse models to study Alzheimer’s Disease.¹⁸⁴

If the government authorizes a government contractor to use any other patented invention, the Section 1498 framework applies.¹⁸⁵ If the government authorizes a contractor to use any invention for the government’s benefit, the exclusive remedy for the patent holder is to seek reasonable compensation.¹⁸⁶ If patent infringement is shown, the government, rather than the contractor, typically pays.¹⁸⁷ The government has used Section 1498 to broadly protect government contractors from patent infringement liability.¹⁸⁸ Part 27 of the Federal Acquisition Regulation authorizes agencies to include an authorization and consent clause in government contracts.¹⁸⁹ This clause authorizes contractors to use “any invention described in and covered by a United States patent” in performing contracts and therefore makes Section 1498 the exclusive remedy for any resulting patent infringement.¹⁹⁰ The federal government has regularly included authorization and consent clauses in government contracts.¹⁹¹ Furthermore, beginning in 1958, the government enacted a policy of not considering potential patent infringement when considering bids for government contracts, which expanded the use of Section 1498 for government contractors.¹⁹² Around this same time, in the 1960s, the DOD purchased patented drugs from unlicensed sources to obtain lower prices.¹⁹³ These purchases sparked Section 1498 litigation that mostly ended in settlements.¹⁹⁴

Beyond proactively including Section 1498 authorization in contracts, the government has intervened in lawsuits where third parties are accused of patent infringement. In suits involving technology to detect fraudulent U.S. Treasury checks¹⁹⁵ and to scan electronic passports, ¹⁹⁶ the government argued that Section 1498 provided the exclusive remedy because the defendants used the technologies to benefit the government. In both cases, the Federal Circuit agreed with the government and held that the patent holder must seek relief exclusively for reasonable compensation under Section 1498.¹⁹⁷ More recently, the government asserted that Section 1498 applies to shield Moderna from liability for any patent infringement that occurred when Moderna produced COVID-19 vaccines pursuant to government contracts.¹⁹⁸ The case is currently pending before the District of Delaware.¹⁹⁹

2. War Powers

The government can also impose third-party licenses on patents during times of war. One law allows the President to grant licenses to U.S. citizens on enemy-owned patents during wartime.²⁰⁰ A license shall only be granted if the President determines it will serve the “public welfare” and the applicant has a good faith intention to manufacture the patented invention.²⁰¹ When the President grants licenses, royalties collected are held in a trust for patent holders.²⁰² After the war ends, patent holders can bring patent infringement suits against licensees.²⁰³ Moreover, after World War I, Congress created compulsory patent licenses when it returned patents that had been confiscated during the war by specifying that the patents “shall be returned subject to the license.”²⁰⁴

3. Compulsory Licenses

Several laws allow agencies to order compulsory licenses on patents during normal government operations. These laws allow agencies to award licenses on patents to private parties, under which the private parties pay the licensing fees. Compulsory licensing laws appear in three contexts: federally funded inventions, inventions critical to the atomic energy industry, and inventions necessary to comply with clean air regulations.

Bayh-Dole March-in Rights

In addition to allowing government contractors to use the government’s reserved license, the Bayh-Dole Act gives agencies “[m]arch-in rights” to grant third-party licenses on patents covering federally funded inventions.²⁰⁵ March-in rights are broader than reserved licenses on federally funded inventions because they do not require the third party’s infringing acts to be taken “for or on behalf of” the government.²⁰⁶ Under the march-in rights law, agencies can require patent holders to grant license to third parties “upon terms that are reasonable under the circumstances” when patent holders have refused to grant a license.²⁰⁷ Agencies can grant march-in licenses when necessary to: (1) make the invention available to the public on reasonable terms, (2) alleviate health or safety needs, (3) meet public use requirements of federal regulations, or (4) comply with domestic manufacturing requirements.²⁰⁸

So far, agencies have not used their march-in rights under the Bayh-Dole Act either on their own initiative or in response to a petition requesting a march-in license.²⁰⁹ Most march-in requests have been filed with the NIH, requesting licenses on patents covering five different federally funded biomedical technologies.²¹⁰ Two petitions were based on product shortages, and the others were based on complaints of excessively high drug prices.²¹¹ The NIH denied all petitions with similar reasoning. In response to petitions based on product shortages, the NIH concluded that compulsory licenses would not alleviate the shortages.²¹² For petitions based on high drug prices, the NIH has concluded that march-in licenses are not warranted when the drug is available on the market.²¹³

b. Atomic Energy Industry

Other laws allow the government to grant third parties licenses on patents that are important to the atomic energy industry. As discussed above, Congress created a patent buyout system for atomic energy patents in 1946.²¹⁴ Eight years later, through the Atomic Energy Act of 1954, Congress allowed private companies to participate in the atomic energy industry again, subject to extensive regulation.²¹⁵ As part of opening the atomic industry to the private sector, Congress modified the 1946 Act’s total prohibition on patents related to atomic energy. The 1954 Act continued to prohibit patents on inventions used in atomic weapons, but it allowed the possibility of patents on other types of inventions related to nuclear energy.²¹⁶ At the same time that Congress expanded availability of patents on atomic energy inventions, it reserved powers for the executive branch to grant licenses on those patents. The compulsory licensing provisions aimed to prevent a monopoly from forming over patents that were essential to the atomic energy industry.²¹⁷

One provision allows the Atomic Energy Commission to declare any patent to be “affected with the public interest” if licensing the invention is of “primary importance” in atomic energy production.²¹⁸ When a patent is declared as affected with the public interest, the Commission is licensed to use the invention, and third parties can apply for a “nonexclusive patent license.”²¹⁹ The Act also includes a provision that allows courts to order compulsory licensing for the Commission’s licensees if patent holders intentionally violate antitrust laws, which would allow the Commission to decide who could access the patented technology.²²⁰ It appears that agencies have not ordered third-party licenses on atomic energy patents.²²¹

c. Clean Air Regulations

One law allows the government to grant licenses on patents covering technology that is necessary to comply with clean air regulations. In the 1970 amendments to the Clean Air Act, Congress included a provision that aims to guarantee that regulated entities have adequate access to technology needed to meet statutory obligations.²²² It provides that where a patent is necessary to comply with a clean air regulation, district courts may order the patent holder to license it on “reasonable terms and conditions.”²²³ The district court can only issue this order if, upon a request from the EPA Administrator, the Attorney General makes a certification that the conditions for compulsory licensing are met.²²⁴ EPA and DOJ have not requested compulsory licenses under this law.²²⁵

4. Public Dedication

Nine laws allow agencies to require patents to be dedicated to the public when the inventions were developed with federal funding, subject to the limits of the Bayh-Dole Act.²²⁶ Like laws that vest title to the government on federally funded inventions, these laws do not apply to funding agreements with small businesses and nonprofits.²²⁷ But they do apply to other agreements, such as those with large companies.²²⁸ Public dedication laws cover funding agreements in a range of research programs including arms control²²⁹ and coal mining research.²³⁰ When patents are dedicated to the public, they enter the public domain, and the information contained in them can be used freely.²³¹ The laws place some limits on public-availability requirements. Typically, the federal contribution must be more than minimal,²³² and agencies can waive the public availability requirement if necessary for the public interest²³³ or national security.²³⁴ Therefore, in deciding whether to waive this requirement, agencies can decide whether to require patent holders to make patents freely available to third parties. In other words, they can decide whether to require patent holders to license their inventions for free.²³⁵

E. Direct Regulations

A fourth category of public patent power laws allows executive officials to make decisions about how patent holders (or patent applicants) can exercise their rights to exclude with respect to third parties. These laws do not create liability rules for patent infringement but, instead, allow agencies to make some form of decision that limits how patent holders can exercise their rights to exclude. Table 6 summarizes these laws.

Table 6: Direct Regulations

	Public Control
ITC Exclusion Orders	Gov’t can decide not to enter an exclusion order for imports that infringe U.S. patents for public interest and policy reasons.
Secrecy Orders	Gov’t can decide whether patent issuance should be delayed for national security reasons.
Federally Funded Inventions	Gov’t can place limits on licensing activities of patent holders or place conditions in funding agreements.

1. ITC Exclusion Orders

One law allows the International Trade Commission (ITC) to limit exclusion orders, even when imports infringe U.S. patents.²³⁶ In 1930, Congress created procedures for patent holders to file complaints before the ITC based on allegations that imports of certain articles infringe U.S. patents.²³⁷ If the ITC concludes that the imports would infringe a valid and enforceable patent and that a domestic industry exists for the patented articles, the ITC can then enjoin importation by issuing an exclusion order.²³⁸ But the law does not mandate that the ITC enter an exclusion order. It gives the ITC discretion to deny or tailor injunctive relief, even when it finds patent infringement, based on consideration of an injunction’s potential effects on (1) public health and welfare, (2) competitive conditions in the United States, (3) domestic production of competitive articles, and (4) U.S. consumers.²³⁹ Moreover, if the ITC enters an exclusion order, the U.S. Trade Representative can disapprove the order for “policy reasons.”²⁴⁰

Although the ITC may deny injunctive relief, this denial does not create a de facto liability rule—patent holders can still seek injunctions in district court, notwithstanding an ITC order.²⁴¹ Nonetheless, decisions about whether to limit exclusion orders allow the ITC to decide whether patent holders can use their patents to obtain a particular type of remedy: an administrative order that bars imports. Under this law, executive actors can choose to allow third parties to import goods based on public interest and economic policy reasons, even where those actors conclude importation will infringe a patent.²⁴²

The ITC has denied exclusion orders based on public interest factors before, but only rarely.²⁴³ It has done so three times; in each situation, the ITC concluded that alternative goods were unavailable and an injunction would disserve public health and welfare needs.²⁴⁴ These cases involved technology including car parts needed to meet fuel standards,²⁴⁵ equipment needed for nuclear physics research,²⁴⁶ and hospital beds for burn victims.²⁴⁷ Similarly, the U.S. Trade Representative has denied exclusion orders for policy reasons (also rarely).²⁴⁸ Most recently, in 2013, the U.S. Trade Representative disapproved an exclusion order that would have enjoined Apple from importing iPhone and iPad devices that infringed a Samsung patent. Significantly, the Samsung patent at issue was essential to an industry standard, which raised special policy concerns.²⁴⁹

Beyond denying exclusion orders, the ITC has also applied the public interest factors to tailor exclusion orders. The two primary ways that the ITC has tailored exclusion orders are: (1) providing exceptions that allow certain imports to continue and (2) delaying implementation of exclusion orders.²⁵⁰ For example, in 2020, the ITC delayed implementation of an exclusion order for slurries used in semiconductor production to allow parties time to switch to non-infringing alternatives.²⁵¹

2. Secrecy Orders

Secrecy orders provide another example of how the government can limit patent rights. In the interest of national security, defense agencies can direct the Patent Office to keep patent applications secret and therefore withhold them from publication.²⁵² If the Patent Office thinks public disclosure of a patent application might harm national security, the Patent Office must send the application to the relevant defense agency.²⁵³ Those agency officials then notify the Patent Office if the application should be kept under a secrecy order.²⁵⁴ Another statute creates a similar framework for patent applications filed during wartime.²⁵⁵ By imposing a secrecy order, defense agencies can delay the issuance of the patent because the Patent Office cannot grant a patent unless its application is published.²⁵⁶

Agencies appear to regularly issue secrecy orders. At the end of FY2022, the Federation of American Scientists reported that 6,057 secrecy orders were in effect, based on data it obtained from the Patent Office.²⁵⁷ Agencies issued 87 new secrecy orders in FY2022, most of which came from the U.S. Navy, while others came from the Army, the Air Force, and the Department of Energy.²⁵⁸

3. Federally Funded Inventions

When agencies allow private parties to obtain patents on federally funded inventions, they can place conditions in funding agreements to regulate how patent holders will exercise their rights to exclude. Several laws place restrictions on how patent holders can license patents covering federally funded inventions. These laws do not create liability rules: The patent holders still can decide whether to license the patents at all. But the laws do provide a level of government control over how patent holders can use their patents.

The Bayh-Dole Act places several conditions on how patent holders can use patents on federally funded inventions. For example, the law requires that if grantees license patents exclusively, the licensed products must be manufactured “substantially in the United States” if “commercially feasible.”²⁵⁹ For nonprofit organizations—which are typically universities—the law requires agency approval before the nonprofit can assign its patents,²⁶⁰ and nonprofits must give preference to small businesses in their licensing policies.²⁶¹ Furthermore, nonprofits must give some royalties to inventors and use the remaining royalties for science and educational purposes.²⁶² In certain circumstances, if a nonprofit receives a significant amount of royalties, it must make payments to the U.S. Treasury.²⁶³

Beyond the Bayh-Dole Act, two other laws place conditions on licensing of federally funded inventions. In research programs about solid-state lighting technologies and energy storage technologies, laws require patent holders to give industrial participants in federal programs the first options to negotiate licenses.²⁶⁴

Outside of these statutory requirements, agencies can voluntarily place other conditions in funding agreements.²⁶⁵ For example, in September 2023, HHS included a reasonable pricing clause in a funding agreement with Regeneron on the next generation of research on antibodies to prevent COVID-19.²⁶⁶ The clause states that if Regeneron commercializes a new product based on the federally funded research, the list price in the United States will be equal to or less than the price in comparable countries.²⁶⁷

III. Implications

Public patent powers reveal that as a matter of institutional design, Congress has given agencies outside the Patent Office numerous express powers to regulate how patents are used. The descriptive account of public patent powers has several implications for patent regulation. Because public patent powers appear in existing laws, they create a roadmap of actions the executive branch could take without the need for any legislative action when patents create policy concerns. Moreover, common themes in public patent powers reveal a statutory scheme that contemplates, and even embraces, executive regulatory involvement. These themes provide a framework for identifying situations where regulatory oversight of patent decisions may be appropriate and politically feasible. Furthermore, the descriptive account of public patent powers uncovers a patent system that includes more express structures for regulatory oversight than previously recognized. This in turn means that the Supreme Court’s decision in Oil States v. Greene’s Energy²⁶⁸ may have broader implications than previously appreciated. This Part analyzes these implications.

A. Roadmap for Executive Actions

The landscape of public patent powers and their use provides lessons about what powers exist, where their use might be politically feasible, and where practical barriers may arise. Because public patent powers are expressly included in existing law, agencies can use these powers without any further legislative action. Table 7 summarizes these powers and how the government has used them.

Table 7: Public Patent Powers in Practice

Public Patent Powers	Forms of Public Control	Use in Practice
Unlicensed Patent Use	Gov’t actors and gov’t contractors can use patented technology without threat of injunction; patent holder can seek reasonable compensation.	Gov’t actors and gov’t contractors have used patented technology without licenses in a range of contexts.
Prospective Patent Licenses	Gov’t can pay to use patented technology; government actors and gov’t contractors can use federally funded inventions without payment.	Gov’t actors and gov’t contractors have used patented technology with licenses in a range of contexts.
Patent Buyouts	Gov’t can pay to obtain title to patent.	Gov’t has purchased patents in the defense context, but has not done so in decades.
Government Title on Federally Funded Inventions	Gov’t can obtain title on employee inventions, and on contractor inventions under certain circumstances. When agencies own patents, they can place conditions on patent licenses.	Agencies have voluntarily given large companies options to obtain patents on federally funded inventions. Agencies have granted exclusive licenses and placed conditions on licenses.
R&D Funding Agreements	Laws place several limits on patent licensing activities; agencies can place further conditions on licensing and use of patented technology. Some require public dedication.	Agencies regularly fund third party R&D and have placed conditions in research agreements.
Compulsory Licensing	Gov’t can order compulsory licenses on patents covering federally funded inventions, atomic energy technology, and technology necessary to comply with clean air regulations.	Agencies appear not to have ordered compulsory licenses.
ITC Exclusion Orders	ITC can deny or tailor remedy based on public interest factors, and U.S. Trade Representative can disapprove exclusion orders for policy reasons.	ITC and U.S. Trade Representative have occasionally denied or tailored injunctive relief based on public interest factors.
War Powers	Gov’t can seize patents and require licenses during war.	Gov’t seized patents during WWI and WWII.
Secrecy Orders	Gov’t can withhold patent for national security reasons, subject to payment for gov’t use.	Defense agencies have imposed numerous secrecy orders on patent applications.

When confronted with patent policy concerns in regulated industries, agencies can look to public patent powers as potential regulatory tools. Whether to use public patent powers will be a context-specific inquiry, and different powers might be more useful in different contexts. Section 1498, for example, might be more useful to address urgent public health and safety needs because it allows the government and government contractors to act quickly without threats of injunctions, then determine whether patent infringement occurred and whether damages are owed later.²⁶⁹ Prospective licenses, on the other hand, could save litigation costs down the line, and conditions in funding agreements may allow for more ex ante regulation.

By viewing various public patent power laws together, rather than in isolation, agencies can evaluate which of the existing options would be best suited to address policy concerns. Agencies can also consider which powers might be most feasible to implement in practice. Federally funded drugs, like Xtandi, provide an example of how agencies might consider the full scope of public patent powers. Although agencies have been reluctant to order march-in licenses on federally funded drugs, the government has a host of other tools it could use to address high drug prices. For example, HHS recently included a reasonable pricing clause in a research funding agreement in response to a proposal from Senator Sanders.²⁷⁰ It could include a similar clause in future patent licenses and funding agreements. Some scholars have proposed that the government add more requirements for patent holders to pay royalties to the government, which could then be used to subsidize further research or treatment costs for patients.²⁷¹ The NIH could try other strategies too—for example, when it makes patent licensing decisions, it could consider patient affordability.²⁷² The government might also consider whether it should directly purchase or produce patented drugs to reduce prices.²⁷³ Other commenters have proposed that government authorization of government contractors to produce medicine under Section 1498, or to even buy patents.²⁷⁴ That other public patent powers have been used more often than compulsory licenses historically suggests that these other tools might be more feasible to implement in practice.

B. Framework for Regulatory Oversight

Several themes emerge in contexts where Congress has created and agencies have used public patent powers. In general, public patent powers appear in four contexts: (1) where inventions were developed with federal funding, (2) when technology is useful for government programs, (3) when public health and safety needs are at stake, and (4) when patents are coupled with market power. This Section analyzes these four contexts and explains how they are consistent with policy judgments made throughout the history of patent regulation in the United States. The common themes provide a deeper understanding of policy judgments that Congress has made when designing the patent system. Together, the four themes in public patent powers create a framework for identifying situations where heightened regulatory oversight of patent decisions may be warranted and politically feasible. This framework could provide guidance for both agencies—to identify situations where existing powers could be used—and legislators—to identify contexts where additional express powers may be useful.

1. Federally Funded Research

Congress has given agencies numerous levers of control over patents that cover federally funded inventions. Agencies typically retain total control over inventions developed by government employees.²⁷⁵ Agencies can also sometimes retain title on other federally funded inventions, subject to limits in the Bayh-Dole Act.²⁷⁶ Moreover, when private parties obtain patents on federally funded inventions, the Bayh-Dole Act reserves a license for the government and its contractors to use those inventions, and it allows agencies to grant march-in licenses under certain conditions.²⁷⁷ Congress has also placed additional conditions on how patent holders can use exclusive patent rights on federally funded inventions, like the requirement to give preference to small businesses and domestic manufacturers in exclusive licensing decisions.²⁷⁸ Agencies have further used their discretion in funding agreements and patent licenses to control how patents are used, such as their inclusion of reasonable pricing clauses in agreements.²⁷⁹

Regulatory control over federally funded research reflects a judgment that patents should be subject to limited private control when public funding supported the development of the invention. This judgment is consistent with contractual and equitable principles developed in common law doctrine: It long recognized that employers can require employees to assign patent rights to the employer as part of employment contracts.²⁸⁰ Common law has also provided for a “shop-right,” which gives a party who contributed to the development of a patented invention a license to use the invention based on equitable principles.²⁸¹ Moreover, courts have held that Congress has broad discretion to place conditions on the receipt of federal funds under its spending power.²⁸²

Furthermore, courts and commentators have long observed that fundamental fairness is at stake when public funding contributes to the development of an invention. When exclusive rights cover federally funded inventions, the exclusive rights can create a so-called “double tax,” which requires the public to pay once through taxes to support the research, then again through higher prices when the invention is sold.²⁸³ Courts and scholars have noted that such a double tax raises fairness concerns.²⁸⁴ Several limits in the Bayh-Dole Act aim to address fairness concerns, such as march-in rights, if inventions are not made available to the public on reasonable terms, and the limits on the government’s ability to grant exclusive licenses unless necessary for commercialization.²⁸⁵ Furthermore, federal funding provides an additional incentive to invent beyond the ordinary incentive patent protection provides. This additional innovation incentive may lessen the justification for strong patent rights as necessary tools to encourage investment in research and development.²⁸⁶

Federally funded research is an area where the patent system has consistently included limits on private control. Industries where the federal government funds significant amounts of research—such as the health, space, energy, and defense industries²⁸⁷—are, thus, appropriate targets for regulatory oversight.

2. Government Programs

Congress has also included public patent powers in multiple laws when patents cover technology useful for government programs. As a default rule, government actors and government contractors can use any patented technology without the threat of injunctions.²⁸⁸ Similarly, reserved licenses under the Bayh-Dole Act allow the government and its contractors to freely use patented technology developed with federal funding.²⁸⁹ Many other program-specific laws authorize agencies to purchase patents and patent licenses useful to their operations.²⁹⁰ Under this system, the government has regularly used patented technology and broadly authorized government contractors to do so as well.²⁹¹ It has used these powers in connection with a host of government programs, including military operations and biomedical research programs.²⁹²

These laws reflect a policy judgment that private parties should not be able to use patents to unduly interfere with public uses of patented technology. Collectively, the laws create liability rules by barring injunctions against the government and government contractors. Liability rules, in turn, prevent the possibility that a patent holder could hold out on licensing negotiations, to stop government programs, or could threaten to, in order to obtain unreasonably high compensation.²⁹³ Preventing holdout on public uses of patents is consistent with eminent domain doctrine, which prevents private property owners from stopping public uses of private property.²⁹⁴ Public patent powers are not necessarily exercises of eminent domain power—it remains unsettled whether patents are protected by the Takings Clause.²⁹⁵ But the policy judgment behind barring injunctions for public uses of patented technology is analogous to the policy behind eminent domain. Moreover, limits on remedies against the government are consistent with historical practice, where sovereign immunity has traditionally insulated the government from injunctions and tort liability for patent infringement.²⁹⁶

Government programs are another area where the patent system has consistently included limits on private control. Federal programs, ranging from military operations to research programs,²⁹⁷ are thus also targets for agencies and Congress to consider regulatory oversight.

3. Public Health and Safety Needs

Congress has also consistently empowered agencies to oversee patents when public health and safety needs are at stake. For example, the Bayh-Dole Act allows march-in licenses to alleviate public health and safety needs, and it permits agencies to retain title to patents whenever warranted by public health and safety needs.²⁹⁸ Similarly, the law directs the ITC to consider public health and welfare when deciding whether to limit exclusion orders on imported goods.²⁹⁹ Compulsory licensing provisions for environmental regulations and the atomic energy industry also relate to public health and safety. Furthermore, secrecy orders and war powers allow executive officials to act quickly in response to national security concerns.³⁰⁰ The law also allows agencies to limit the public availability of federally funded inventions if needed for national security.³⁰¹

Agencies have often used their public patent powers in response to health and safety concerns as well. In the national security context, agencies have used licenses and bought patents on defense weapons systems,³⁰² seized patents during World War I and World War II,³⁰³ and imposed secrecy orders on numerous patent applications.³⁰⁴ In the biomedical context, agencies have used patent licenses to conduct research,³⁰⁵ imposed conditions on NIH funding and license agreements,³⁰⁶ purchased drugs for federal health programs,³⁰⁷ and limited exclusion orders.³⁰⁸ Moreover, public health concerns about a federally funded HIV drug recently motivated the government to take the rare action of initiating a patent infringement suit in an effort to recoup its investment.³⁰⁹ The government has also threatened to use public patent powers in licensing negotiations in both the defense and biomedical contexts, such as when it obtained patent licenses on aircraft technology in World War I and anthrax treatments after September 11.³¹⁰

This history reflects a consistent policy judgment that patent holders should not be able to use patents to thwart public health or safety. Patent law doctrine has long incorporated this policy judgment based on equitable principles in remedies. Even before eBay, injunctions for patent infringement were occasionally denied or limited based on public health and safety concerns,³¹¹ such as the need for access to medical diagnostic tests and the need for a sewage drainage facility to continue operating.³¹² The patent system has consistently included limits on private control when public health and safety needs are at stake. Issues involving public health and safety needs, such as health care and safety regulations, are additional targets for regulatory oversight.³¹³

4. Patents Coupled with Market Power

Congress has also included several structures for regulatory oversight where patents are coupled with market power. In competitive markets, a patent allows the patent holder to charge heightened prices, but competition still exerts some control over the ultimate price the patent holder can charge. When patent holders have market power, however, they have more power over the prices they charge for patented products. For example, a producer of a patented type of tennis ball could exclude competitors from making the exact same type of tennis ball, but they would still face competition from producers of other types of tennis balls. If the producer set the price of the patented tennis balls too high, tennis players could purchase other unpatented tennis balls instead. If a patent holder has market power, however, the patent holder has more control over the price. And if the U.S. Tennis Association (USTA) required a particular type of patented tennis balls in matches, for example, tennis players could not so easily switch to other products. This could create a situation where the patent holder has monopoly power over at least one segment of the market, since the patent allows it to exclude competitors from making the USTA-required tennis balls.

When patents cover technology that is required to comply with an industry standard, patent holders have significant market power.³¹⁴ Several public patent powers target technology required to comply with an industry standard, including government regulations. For example, the compulsory licensing provision of the Clean Air Act applies to technologies required to comply with regulatory standards.³¹⁵ The Bayh-Dole Act also allows march-in licenses when patented inventions are required to comply with government regulations.³¹⁶ Furthermore, agencies have considered whether patented technology is required to comply with an industry standard when implementing public patent powers. The U.S. Trade Representative pointed to the fact that technology was required to comply with an industry standard when it disapproved an exclusion order for Apple products that infringed Samsung patents.³¹⁷

Other public patent powers also have taken market power into account. For example, the preference for small businesses and nonprofits in the Bayh-Dole Act was justified in part by arguments that those entities typically did not have market power and would promote competition in the economy.³¹⁸ Similarly, concerns about a monopoly over atomic energy motivated the compulsory licensing law for patents critical to that industry.³¹⁹ Furthermore, the law allows the ITC to consider “competitive conditions” when deciding whether to limit exclusion orders, which could include concerns about market power.³²⁰

Regulation over how patent holders with market power exercise their rights to exclude is often done through antitrust law, which has long placed at least some limits on patent licensing activities for patent holders with market power.³²¹ Market power also historically could be considered as part of the public interest prong in the equitable test for injunctions.³²² Furthermore, in the context of standard essential patents that are required to comply with industry standards, private parties have often voluntarily agreed that limits on injunctions are appropriate.³²³ Most standard-setting organizations require their members to agree to license standard-essential patents on fair, reasonable, and non-discriminatory terms.³²⁴

Contexts where patent holders have market power represent another area where the patent system has consistently included limits on private control. Agencies and Congress thus might consider situations where patent holders have market power—such as when patented technology is required to comply with a government regulation—as potential areas for regulatory oversight.

C. The Regulatory-Property Debate

In addition to creating a framework for regulatory oversight, the descriptive account of public patent powers contributes to the ongoing descriptive debate about the nature of patent rights. Although the patent system has existed for centuries, a surprisingly active debate exists about whether the patent system is better conceived of as a regulatory program or a private property system.³²⁵ The debate involves multiple dimensions—a descriptive debate about what rights patents confer, a doctrinal debate about the protections that attach to patents, and a policy debate about how patent rights should be structured.³²⁶

This Article contributes to the descriptive aspect of that debate by providing new information about the statutory rights that patents confer. The compilation of laws that expressly allow agencies to make decisions about patents shows that patent holder discretion over how to use patents is not as unfettered as some have previously assumed. Professor Greg Reilly, for example, has argued that even though Congress has broad power to decide how to structure patent rights, it descriptively has structured patent entitlements similarly to private property rights because patents have traditionally been subject to “virtually no government control, regulation, or involvement” after they issue.³²⁷ Public patent powers cast doubt on that premise because they reveal a long tradition of numerous levers of government control over patents after they issue. Under these laws, regulatory agencies can make decisions about how patents are used in many different ways. These laws allow agencies, rather than courts or Congress, to balance goals of incentivizing research and providing public access to innovative technology.³²⁸

The descriptive claim about public patent powers also shows that the Supreme Court’s 2018 decision in Oil States v. Greene’s Energy³²⁹ may have broader implications than previously recognized. In that case, patent holders used private property arguments to challenge the use of the administrative procedures to revoke patents, arguing that patents were forms of private property that must be adjudicated in Article III courts.³³⁰ The Supreme Court rejected this argument on the ground that patents “convey only a specific form of property right—a public franchise.”³³¹ Because patents are public franchises, the Court reasoned that they confer “only the rights” that statutes prescribe.³³² Therefore, provisions included in the statutory entitlements—like post-grant review procedures—limit the entitlement from the outset. Such limits therefore do not implicate constitutional protections.³³³

Most of the discussion about Oil States has focused on its implications for constitutional challenges to agency adjudications.³³⁴ But public patent powers reveal that Oil States might have broader consequences for the patent system. Because public patent powers are expressly included in statutes, they are limits on patent entitlements themselves, just like the availability of post-grant review procedures. This means agencies will not violate any patent protections afforded to patent holders if they choose to exercise these powers; the patent grants included the possibility that agencies could use these powers.

Since the Court has classified patents as public franchises, the statutory nature of patent powers also undercuts constitutional challenges that might be raised against the use of public patent powers. For example, a patent holder might bring a Takings Clause or Due Process Clause challenge to grants of compulsory licenses. But under the public franchise framework, the statutory conditions that allow agencies to grant compulsory licenses limit patent entitlements from the outset.³³⁵ Because of the lack of attention to systematic public patent powers, this potential implication of Oil States has flown under the radar.

Public patent powers and Oil States might also influence litigation about laws that indirectly affect how patent holders can use their patents. For example, in pending litigation about the Medicare price negotiation program, drug manufacturers have argued the program is a taking of their patent rights because it limits how much they can charge Medicare for patented drugs.³³⁶ In making this argument, Merck suggested that because it has patents on its drugs, the government cannot make its own versions of those drugs.³³⁷ Public patent powers, however, show that the patent right to exclude is not so broad. The government can infringe any patent without the threat of an injunction, and it can authorize its contractors to do the same.³³⁸ And, under Oil States, this does not raise constitutional issues because it is part of the patent entitlement from the outset.³³⁹ Viewed in this light, the choice to simply limit how much the government is willing to pay, rather than produce it owns drugs, seems far less extreme. Therefore, the descriptive claim about existing public patent powers has wide-ranging implications for the power of agencies to make decisions about patents.

IV. The Future of Public Patent Powers

The descriptive claim about public patent powers and their use raises normative questions about whether agencies should be using their public patent powers more often. This Part discusses normative considerations that surround questions about whether agencies should more actively use their powers, like the power to grant compulsory licenses on federally funded inventions. It first discusses potential reasons why agencies have not used certain powers, then provides suggestions for how agencies and courts might use insights from public patent powers moving forward. Specifically, this Part proposes that the executive branch create an interagency framework to give more concrete guidance about when different powers should be used and that courts should consider themes in public patent powers when deciding whether to grant injunctions in patent cases.

A. Assessing Agency Inaction

Agencies have used some of their public patent powers regularly, such as the powers to obtain patents on government-employee research, to use patented inventions, and to authorize government contractors to use patented inventions.³⁴⁰ Other powers, like the war powers, have been used only occasionally.³⁴¹ But notably, agencies have not granted Bayh-Dole march-in licenses, either on their own initiative or in response to march-in petitions.³⁴² Whether that lack of use is good or bad as a policy matter is difficult to assess; there could be multiple reasons why agencies have been reluctant to order compulsory licenses, which may have different normative implications. This Section discusses several potential explanations for why agencies have not ordered compulsory licenses, particularly for federally funded drugs.

One potential reason for agency hesitation is that agencies may not have adequate information about contexts where compulsory licenses are warranted. Currently, the executive branch provides little comprehensive public information about what inventions are subject to march-in rights, which makes it difficult for members of the public to identify instances where march-in petitions are warranted.³⁴³ Lack of expertise might also hinder an agency’s ability to assess whether compulsory licenses are appropriate. The Bayh-Dole Act allows funding agencies to make decisions about march-in licenses.³⁴⁴ Although funding agencies have expertise about the technology at issue, they may lack expertise about economic policy questions surrounding whether inventions are available to the public on reasonable terms and whether third-party licenses would address these concerns. Similarly, funding agencies may not have expertise in innovation-policy questions about the role that patents serve to incentivize investment in research and development.³⁴⁵

A second reason behind agency inaction might be agency bias. In the research context, agencies often collaborate with the same entities on a repeated basis to develop new technologies, which gives agencies an incentive to maintain good relationships with their collaborators.³⁴⁶ This is particularly true because collaborations can be financially lucrative for an agency if collaborators agree to license agency-owned patents or otherwise make payments to the agency. Since the Bayh-Dole Act leaves decisions about whether to order march-in licenses to the funding agencies, it may create bias that favors their collaborators.³⁴⁷ Furthermore, funding agencies may have a systematic bias to favor strong patent rights. Funding agencies often own patents themselves, and federal employees are often inventors on patents.³⁴⁸ Agencies and individual employees, therefore, could receive higher royalty payments if patents are more valuable.³⁴⁹ Regulatory capture, which refers to the ability of well-resourced regulated entities to influence agencies, might also contribute to agency inaction.³⁵⁰

A third reason for inaction may simply be that agencies do not think compulsory licenses are particularly useful. Procedural requirements, such as judicial review, delay the time between when an agency can order a license and when it will actually go into effect.³⁵¹ These delays are in tension with the time-sensitive goal of authorizing patent use to alleviate pressing public health needs.³⁵² Moreover, because patents themselves only last for limited periods of time, the delay in time before a march-in license goes into effect decreases the time advantage gained by the license (in comparison to just waiting for the patent to expire). The NIH mentioned upcoming patent expirations when it denied the most recent petition requesting a march-in license on Xtandi.³⁵³

Furthermore, in the biomedical context, lengthy FDA approval procedures for manufacturers to sell products in interstate commerce can further delay when generics are able to enter the market in practice, notwithstanding an authorization to use patents.³⁵⁴ Moreover, sometimes federal funding only contributed to a fraction of the total patents covering a drug product³⁵⁵—if the NIH grants a march-in license, and a generic manufacturer has not received FDA approval (or has for only a subset of patents on a drug), the license might not lead to production of generic medicines in practice.³⁵⁶

Finally, agencies may have concluded that compulsory licenses are not needed as a policy matter. For federally funded drugs, it could be that march-in rights have not been necessary to address the concerns that the Bayh-Dole Act sought to protect against.³⁵⁷ When petitions have been submitted about high drug prices, the products have been on the market, just at high prices. High prices create access barriers for the public, but they also create incentives for costly innovation. Whether a patent holder has crossed the line by charging an unreasonable price or creating a public health problem involves tricky policy judgments about both innovation policy and economic policy.

Overall, it is difficult to assess whether the failure to order compulsory licenses has been good or bad as a policy matter because there is not a well-developed framework for understanding when agencies should order them. Some of these potential explanations for inaction could be concerning—for example, if compulsory licenses are needed but agencies are not ordering them due to lack of information or bias. But other potential explanations—such as licenses would not be useful or are not needed—would be less concerning. The next Section considers steps the executive branch could take to provide a better framework for determining when public patent powers should be used and for combatting potentially concerning reasons behind agency inaction.

B. Guidance for Agencies

Normative considerations about whether agencies should use public patent powers involve questions about economic policy and public welfare. Currently, no overarching framework exists for assessing when agencies should use these powers. A clearer framework is thus needed to help agencies understand how to use their powers. It would also provide clear expectations for patent holders and investors about when agencies are likely to use their powers. Furthermore, it could help the public evaluate agency inaction. The executive branch should provide such guidance by creating an interagency framework for the use of each type of public patent power.

The Biden Administration recently took a first step toward creating an interagency framework. In December 2023, the Department of Commerce proposed a draft framework for agencies considering whether to grant march-in licenses on federally funded inventions under the Bayh-Dole Act.³⁵⁸ The proposed guidance described concrete examples of situations where agencies might consider granting march-in licenses, such as when one company stops development on a federally funded drug product or when there is a shortage of reflective coating for traffic signs.³⁵⁹ It also articulated factors for agencies to weigh when making march-in decisions: whether alternative products are available, whether a march-in license would lead to increased public access to technology, and whether a march-in license would negatively impact research collaborations with federal agencies.³⁶⁰ Additional considerations included other policy goals of the Bayh-Dole Act, like the promotion of domestic manufacturing and the participation of small businesses in research and development.³⁶¹ Furthermore, the guidance encouraged agencies to consider seeking input from other agencies, such as the Patent Office, to understand the implications of a potential march-in license.³⁶²

Beyond the articulated factors, the proposed guidance aimed to address uncertainty about agency power to order march-in licenses. There has long been debate about whether the Bayh-Dole Act allows agencies to order march-in licenses based solely on high prices of patented products.³⁶³ The proposed guidance took the position that agencies could order march-in licenses in response to high prices under two different prongs.³⁶⁴ First, agencies may consider high prices when evaluating whether the invention is available to the public on reasonable terms and, second, when determining whether there is a public health need.³⁶⁵

Overall, the proposed guidance was a positive step. Although march-in licenses could be granted across a range of regulatory contexts, interagency guidance makes sense because normative questions about whether agencies should grant march-in licenses involve similar economic policy and public welfare questions. Because these considerations are similar across regulatory contexts, an interagency framework provides clearer guidance for agencies and allows them to compare factual scenarios. An interagency framework also promotes consistency across the executive branch, which in turn promotes clear expectations for investors in research and development.³⁶⁶ Furthermore, interagency guidance promotes transparency by creating a centralized framework for the public to monitor and understand. Indeed, the proposed guidance document received significant public attention when it was announced in December 2023.³⁶⁷

Moreover, interagency guidance can address some of the potentially concerning reasons for agency inaction on march-in licenses. For example, if lack of expertise is a reason that agencies have been reluctant to grant march-in licenses, interagency coordination may allow agencies to gather information from other agencies with expertise on the relevant economic policy questions.³⁶⁸ The proposed guidance encouraged such collaboration. Agencies outside funding agencies, such as the Federal Trade Commission, have greater expertise about economic-policy questions, including whether a price is justified and whether terms of offered patent licenses are unreasonable. Furthermore, if agency bias has influenced the failure to grant march-in licenses, interagency coordination might help reduce that bias by bringing broader perspectives to the table.³⁶⁹

Future presidential administrations should finalize the march-in guidance—and they should not stop there.³⁷⁰ The Biden Administration’s proposed guidance addressed just one of the government’s public patent powers: march-in licenses under the Bayh-Dole Act. But this Article has shown that agencies have an array of other public patent powers. Interagency guidance about when agencies should use their other powers would be useful too. Future guidance should address when agencies should consider invoking Section 1498 to produce patented goods themselves or to contract for production. For example, the proposed march-in guidance mentions one hypothetical scenario—a shortage of COVID-19 masks—in which the government should consider purchasing or manufacturing masks itself.³⁷¹ It would be helpful to have more concrete guidance on situations where agencies should consider this option, perhaps due to production costs, existing regulatory programs, and agency budgets.

Future guidance should also give concrete examples about when agencies should grant exclusive licenses on agency-owned patents and when public dedication might be appropriate. It should also provide examples of the types of conditions agencies might consider placing in funding agreements and patent licenses, such as reasonable pricing clauses. Guidance about when agencies should consider buying patents and bringing patent infringement suits would be helpful as well. Because each of these questions involve a mix of policy considerations about economics, innovation, and public welfare, input from economists would be particularly useful to help guide agencies through those considerations across their various regulatory contexts.

Under the interagency framework, agencies should also create their own guidance and procedures for considering use of public patent powers. The march-in statute provides the basic procedures that agencies must follow before granting a license, but agencies can supplement these procedures with more transparent guidance. For example, agencies could consider publishing more reports about patents on inventions developed with their funding.³⁷² Agencies should also consider more intra-agency coordination to identify situations where march-in licenses may be appropriate. For example, the NIH could collaborate with other subagencies within HHS—the Center for Medicare and Medicaid Services (CMS) and FDA—to gain more information about how much the government is paying for drugs through Medicare and about which generic drugs are likely to soon receive FDA approval.³⁷³ CMS might also be able to provide information about how widely certain drugs are prescribed and how many therapeutic alternatives are available.³⁷⁴ Beyond the march-in context, agencies should also consider creating more public guidance about when they might use other powers. In general, more publicly available guidance about the use of public patent powers would provide more transparency, public accountability, and consistency moving forward.

C. Guidance for Courts

Public patent powers can provide guidance for government officials outside the executive branch as well. Common themes in public patent powers show that Congress has made consistent policy judgments about where limits on private control over patented inventions may be in the public interest.³⁷⁵ These are the same policy judgments that courts make when they decide whether to grant injunctions in patent cases.³⁷⁶ The statutory examples that specify where agencies may create a liability rule for patents highlight contexts where it may also be appropriate for courts to create liability rules. Courts should consider using these public patent power insights when they apply the eBay test to determine whether injunctive relief is appropriate in patent cases.

The four contexts where public patent powers typically arise provide factors that courts might consider under the public interest prong of eBay: (1) whether inventions are developed with federal funding, (2) whether technology is useful for government programs, (3) whether public health and safety needs are at stake, and (4) whether patents are coupled with market power. Where these factors are present, they may weigh toward denying or tailoring injunctive relief.

Courts already apply some of these factors when they consider whether to grant injunctions for patent infringement. Section 1498 makes injunctions unavailable for infringement by the government and authorized contractors.³⁷⁷ Further, public health and safety needs have long been recognized as public interest factors that can weigh against injunctive relief,³⁷⁸ and market power has been considered one too.³⁷⁹ In these contexts, examples of express congressional grants of regulatory powers provide beneficial guidance for courts.

Moreover, the public patent powers framework provides another factor that courts might consider: whether inventions were developed with federal funding. By considering whether federal funding contributed to an invention as part of the eBay analysis, courts could consider equitable issues in contexts where the government funded research. This could even allow courts to deny injunctions in situations where patents cover federally funded drugs.³⁸⁰

More generally, courts could consider the four factors in contexts outside the pharmaceutical industry. For example, when the FCC proposed to require cell phones to automatically share their locations with 911 operators, patent holders sought injunctions against cell phone operators for using their location sharing technology.³⁸¹ The patent disputes contributed to delays in implementing the FCC rule.³⁸² In that case, the technology was useful for a government program, the patent holders had market power (since their technology was required by a government regulation), and public health and safety were at stake—these facts could have weighed against granting injunctive relief. Denial of an injunction in that situation might have served the public interest by aiding implementation of an FCC rule.³⁸³

Considering these factors to deny or tailor injunctions may help align the overall patent system with the overarching values Congress instilled in the patent system when it created public patent powers. Courts are well suited to consider equitable concerns in context-specific cases, as they already make these sorts of determinations when they decide whether to grant injunctions. Moreover, court decisions are often a major tool for influencing policy in patent law.³⁸⁴ If courts deny or tailor injunctive relief in certain contexts, they can influence patent holder conduct and patent licensing negotiations ex ante. For example, it is now well known that courts are more likely to deny injunctions when patent holders do not practice inventions, which in turn addresses the policy concerns about nonpracticing entities being able to extract unfairly high royalties by threatening to seek injunctions.³⁸⁵

Nonetheless, courts are not a substitute for agencies when it comes to public patent powers. Court proceedings are lengthy, and sometimes swift action is needed. Many public patent powers allow agencies to quickly and flexibly respond to urgent public health and safety needs. Agencies can also regulate patent holder conduct ex ante, which is particularly important for preserving public access to technologies.³⁸⁶ In these contexts, potential infringers likely could not achieve the same quick determinations about patent remedies through courts as they could through executive actions.³⁸⁷ Additionally, having some level of regulatory oversight to monitor patent use is good for the patent system. Agencies have expertise about their respective regulated industries and how patents operate in those industries. Regulatory oversight also infuses more public accountability into the patent system, which is a public regulatory program. Therefore, judicial consideration of the public patent power framework should be a supplement, not a replacement, to executive branch judgments about public patent powers.

Conclusion

The Patent Office is not the only agency involved in patent regulation. Congress has designed a system where myriad agencies have statutory powers to regulate how the public can access patented technology even after the Patent Office issues a patent. Agencies have powers to decide whether to license their own patents and whether to license the patents of others. Agencies also have discretion to obtain patents, both on products of their own research and from others. In certain circumstances, agencies can decide the terms upon which third parties can access privately held patents. Congress has regularly granted these powers to agencies across the modern administrative state. The phenomenon of public patent powers thus illustrates a long tradition of statutory limits on how private patent holders can exercise their rights to exclude, particularly when dealing with the government. It also shows a long tradition of allowing executive actors to make policy choices about how patents should be used in commerce.

Public patent powers give agencies many powers to control patents covering inventions developed with federal funding, patents on technologies useful for government programs, patents relevant to public health and safety needs, and patents coupled with market power. But agencies have historically not exercised the full scope of these powers. Notably, agencies have been reluctant to order compulsory patent licenses on federally funded inventions. The descriptive account of public patent powers and their use provides guidance for agencies, policymakers, and scholars in future reform proposals. Moving forward, agencies and policymakers should consider the full scope of the executive branch’s powers over patents, and the relative strengths and weaknesses of different powers, when patents create policy concerns.

A helpful step toward this goal would be for the executive branch to create an interagency framework to guide the use of public patent powers. Courts also should consider public patent powers when deciding whether to grant injunctions in patent cases as a way to align the patent system with congressional design. Ultimately, the patent system is a regulatory program created by the government. If patents create public welfare problems, the government need not stand idly by. The government has many tools to regulate public access to patented technology.

Appendix A: Statutes Expressly Granting Public Patent Powers

Statute	Agency	Patent Categories	Public Powers
			Gov’t License	Gov’t Title	3rd Party License	Direct Reg.
7 U.S.C. § 171(1)	USDA	Patents relating to growing guayule or extracting rubber therefrom	1	1
7 U.S.C. § 171(7)	USDA	Improvements on methods of processing guayule shrubs and rubber		1
7 U.S.C. § 178g	USDA	Patents necessary for critical agricultural materials program	1	1
7 U.S.C. § 178h	Commerce	Patents necessary for critical agricultural materials program	1	1
7 U.S.C. § 4606	USDA	Inventions developed with Honey Board funds		1
10 U.S.C. § 3793	Defense	Any supplies or processes useful for military departments	1	1
15 U.S.C. § 2054(d)	CPSC	Information where federal contribution for R&D is more than minimal			1
15 U.S.C. § 2218	FEMA	Research on fire prevention and control made under government contract	1	1	1
15 U.S.C. § 2511	Energy	Research related to electric and hybrid vehicles made under government contract		1
15 U.S.C. § 3710a	All	Inventions made by government employee under cooperative research agreement	1		1
15 U.S.C. § 3710d	All	Government employee inventions	1		1
15 U.S.C. § 5104	Energy	Inventions developed under Steel Initiative Management Plan or Steel Initiative Research Plan		1
15 U.S.C. § 5308	Energy	Inventions developed by National Metal Casting Research Institutes	1	1	1
16 U.S.C. § 831d	TVA	Government employee inventions related to plants and production of fertilizer and power		1
16 U.S.C. § 831r	TVA	Processes to produce fertilizer ingredients or hydroelectric power used by TVA	1
16 U.S.C. § 832a	Energy	Technology necessary to carry out the Bonneville project	1	1
16 U.S.C. § 833a	Interior	Technology necessary to carry out the Fort Peck project	1	1
16 U.S.C. § 1447b	Marine Research Boards	Technology needed by Regional Marine Research Boards	1	1
19 U.S.C. § 1337	ITC & President	Importation of product that infringes a U.S. patent	1		1	1
20 U.S.C. § 3477	Education	Technology necessary for Department of Education facilities	1	1
20 U.S.C. § 3480	Education	Technology useful to the Department of Education	1	1
22 U.S.C. § 2179	President	Technology related to large-scale desalting plants that receive federal funding	1
22 U.S.C. § 2356(a)	All	Inventions used while furnishing foreign assistance	1
22 U.S.C. § 2572	State	Federally funded research in the fields of arms control, nonproliferation, and disarmament			1
28 U.S.C. § 1498	All	Patented technologies used or manufactured by or for the United States	1		1
30 U.S.C. § 666	Energy	Research related to improved methods of mining and using coal	1	1	1
30 U.S.C. § 937	HHS	Inventions developed under research grants for methods to test and treat lung disease in coal miners (i.e., Black Lung)			1
30 U.S.C. § 951	Interior, HHS	Federally funded inventions to improve working conditions in coal mines			1
30 U.S.C. § 1226	Interior	Federally funded inventions about mining and mineral resources			1
30 U.S.C. § 1328	Interior	Federally funded inventions relating to coal mining technologies			1
31 U.S.C. § 5111	Treasury	Technology necessary to produce coins	1	1
33 U.S.C. § 2314a	Army Corps of Engrs	Employee invention made in technical assistance program	1		1
35 U.S.C. § 183	All	Inventions under secrecy orders	1			1
35 U.S.C. § 202	All	Federally funded research (small businesses and nonprofits)	1	1	1	1
35 U.S.C. § 203	All	Federally funded research (small businesses and nonprofits)			1
35 U.S.C. § 204	All	Federally funded research (small businesses and nonprofits)				1
35 U.S.C. § 207	All	Federally funded research (no restrictions)		1
35 U.S.C. § 210(c)	All	Federally funded research (entities other than small businesses and nonprofits)	1		1
36 U.S.C. § 2114	ABMC	Technology useful for the American Battle Monuments Commission	1	1
42 U.S.C. § 242b	HHS (CDC)	Technology necessary to operations of the National Center for Health Statistics	1	1
42 U.S.C. § 299c-5	HHS	Patents necessary for operations of the Agency for Healthcare Quality & Research	1	1
42 U.S.C. § 2181	Energy	Inventions solely useful for or used in utilization of special nuclear material or atomic energy in an atomic weapon		1
42 U.S.C. § 2182	Energy	Inventions useful for the special nuclear material or atomic energy		1
42 U.S.C. § 2183	Energy	Patents useful for special nuclear material or atomic energy that were filed before 1979	1		1
42 U.S.C. § 2188	NRC	Patents on special nuclear material or atomic energy inventions			1
42 U.S.C. § 2201	NRC	Inventions needed by the Nuclear Regulatory Commission	1	1
42 U.S.C. § 2297h-12	Energy	Patents relating to atomic laser isotope separation technology (AVLIS)		1
42 U.S.C. § 5817	Energy	Patents useful to the Energy Research & Development Administration	1	1
42 U.S.C. § 5906	Energy	Inventions developed by joint federal-industry corporations that research nonnuclear energy		1
42 U.S.C. § 5908	Energy	Inventions are made under a contract with the DOE		1
42 U.S.C. § 6981	EPA	Inventions made under contract with EPA relating to solid waste		1
42 U.S.C. § 7257	Energy	Patents necessary for Department of Energy research	1	1
42 U.S.C. § 7261	Energy	Patents useful to the Department of Energy	1	1
42 U.S.C. § 7403	EPA	Inventions that received a federal award for developing carbon capture technology	1		1
42 U.S.C. § 7404	EPA	Research on air pollution control	1	1
42 U.S.C. § 7608	EPA & DOJ	Patents necessary to comply with Clean Air Act requirements in Sections 7411 (new stationary sources), 7412 (hazardous air pollutants), or 7521 (new motor vehicles) where there are no reasonable alternatives			1
42 U.S.C. § 10308	Interior	Research related to water resources			1
42 U.S.C. § 16192	Energy	Federally funded solid-state lighting technologies				1
42 U.S.C. § 17231	Energy	Federally funded energy storage technologies				1
49 U.S.C. § 106	DOT	Technology useful to the Federal Aviation Administration	1	1
49 U.S.C. § 114	DOT	Technology useful to the Transportation Security Administration	1	1
49 U.S.C. § 30182	DOT	Research on motor vehicle safety			1
50 U.S.C. § 4307	President	Any patent controlled by an enemy or enemy ally during wartime		1
50 U.S.C. § 4309	President	Patents seized during war that were not sold or disposed of			1
50 U.S.C. § 4310	President	Patents controlled by an enemy or enemy ally during wartime; inventions would harm public safety if published during war	1		1	1
51 U.S.C. § 20113	NASA	Technology necessary for NASA operations	1	1
51 U.S.C. § 20135	NASA	Inventions made under NASA contracts	1	1
52 U.S.C. § 21041	Election Assistance Comm’n	Research to improve voting technology	1	1	1

*Associate Professor of Law, University of Colorado Law School. For helpful comments and conversations, thanks to Tom Baker, Yochai Benkler, Doni Bloomfield, Cary Coglianese, Jorge Contreras, Angus Corbett, Charles Duan, John Duffy, Kim Ferzan, Andy Grewal, John Golden, Paul Gugliuzza, Allison Hoffman, Sophia Lee, Mark Lemley, Michael Knoll, Giovanna Massarotto, Mike Meurer, Chris Morten, Tejas Narechania, Lars Noah, Lisa Larrimore Ouellette, Sean Ossei-Owusu, Arti Rai, Sarah Rajec, Jason Rantanen, Greg Reilly, Jason Reinecke, Gabe Scheffler, Ganesh Sitaraman, Peter Strauss, Talha Syed, Andrea Tosato, Saurabh Vishnubhakat, Polk Wagner, Chris Walker, Melissa Wasserman, Shelley Welton, Tess Wilkinson-Ryan, Christopher Yoo, Peter Yu; the participants at the Law & Political Economy Emerging Scholars Workshop, the Texas Law IP Roundtable, the Penn Law Summer Ad Hoc Workshop, the 2023 IP Scholars Conference, the Drexel Law Faculty Workshop, the Yale Junior Scholars Law and Industrial Policy Workshop, the 2024 AALS New Voices in Administrative Law Workshop; and everyone who engaged with this paper on the job market. Thanks also to the Michigan Law Review editors, including Ethan Greenberg and Scott Bays. Erin Higgins provided excellent assistance with researching the legislative history of statutes.