§1498 Government-Use License vs. March-In

A federally funded university patent can be subject to two separate, non-overlapping legal mechanisms that let the U.S. government (or someone acting on its behalf) use a patented invention without the patent owner’s prior consent: Bayh-Dole march-in rights under 35 U.S.C. § 203, and the government-use license under 28 U.S.C. § 1498. They are frequently conflated because both can touch the same university patent and both originate in federal law, but they differ in scope, trigger, process, and remedy in ways that matter directly to how a technology transfer office (TTO) drafts licenses, values a portfolio, and responds when the government or a government contractor is already using a licensed technology.

The distinction in one paragraph

Bayh-Dole march-in (35 U.S.C. § 203) applies only to inventions conceived or first reduced to practice under federal funding where the grantee institution elected to retain title, requires a formal agency determination through a defined administrative process, and results in the agency ordering the patent holder to grant additional licenses to third parties. Section 1498, by contrast, applies to any U.S. patent — federally funded or not — the moment the government or a contractor acting with the government’s authorization or consent uses or manufactures the patented invention. It requires no agency proceeding at all: the government simply uses the invention, and the patent owner’s sole recourse is a suit for monetary compensation in the U.S. Court of Federal Claims. There is no injunction available under § 1498, and no march-in-style order compelling the patent holder to license anyone.

What 28 U.S.C. § 1498 actually authorizes

Section 1498(a) provides that whenever a patented invention is used or manufactured “by or for the United States without license of the owner thereof or lawful right to use or manufacture the same,” the patent owner’s exclusive remedy is an action against the United States in the U.S. Court of Federal Claims for “reasonable and entire compensation for such use and manufacture,” rather than a conventional infringement suit against an individual defendant in a U.S. district court. Three structural features distinguish it sharply from march-in:

Scope is not limited to federally funded inventions. Section 1498 applies to any U.S. patent the government or its contractors use, regardless of who funded the underlying research. A purely privately funded, privately patented invention is just as exposed to a § 1498 government use as a Bayh-Dole invention is — funding source is irrelevant to whether the provision applies.
Contractors are covered automatically. The statute expressly states that use or manufacture “by a contractor, a subcontractor, or any person, firm, or corporation for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States.” This is why a defense contractor, federal agency vendor, or NIH-funded manufacturer performing under a government contract that authorizes use of a patented process is generally shielded from a conventional patent infringement suit in district court — the patent owner has to sue the United States instead, in the Court of Federal Claims.
No agency determination or hearing is required. Unlike march-in, which requires a funding agency to make findings under one of the statutory grounds, publish notice, and allow the contractor an opportunity to respond before any order issues, § 1498 requires nothing from the government upfront — the use itself is what happens, and the compensation claim is litigated after the fact, entirely at the patent owner’s initiative.

The remedy is compensation, not an injunction and not a license grant to third parties: courts read “reasonable and entire compensation” as what the government would have paid in a hypothetical negotiated license at the time the use began. For patent owners who are independent inventors, nonprofit organizations, or entities with no more than 500 employees — a description that covers most university technology transfer offices — the statute also provides for recovery of reasonable attorney’s fees and expert witness costs in pursuing the claim, unless the government’s position was substantially justified or special circumstances make a fee award unjust.

What Bayh-Dole march-in rights actually authorize

March-in, by contrast, is a narrower, funding-conditioned mechanism built into the Bayh-Dole Act specifically to police how a grantee institution commercializes a federally funded invention it elected to retain title to. Under 35 U.S.C. § 203, a federal funding agency may require the contractor or an assignee to grant a license to a third party — or grant one itself if the contractor refuses — only on one of four statutory grounds: the contractor has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the invention; action is necessary to alleviate health or safety needs not reasonably satisfied; action is necessary to meet requirements for public use specified by federal regulations and not reasonably satisfied; or the U.S. manufacturing preference agreement required for an exclusive license to sell in the United States has not been satisfied. Exercising march-in requires the agency to follow a defined administrative process — it is not a unilateral use of the invention by the government, and it does not by itself put the government to work practicing the patent. See CASRAI’s dedicated March-In Rights dictionary entry and Bayh-Dole March-In Rights: What They Mean for University Tech Transfer guide for the full mechanics, statutory grounds, and process detail — this page assumes that background and focuses specifically on how § 1498 differs from it.

Side-by-side

Dimension	28 U.S.C. § 1498 government-use license	Bayh-Dole march-in (35 U.S.C. § 203)
Scope of patents covered	Any U.S. patent, federally funded or not	Only federally funded inventions where the grantee elected title under Bayh-Dole
Who can invoke it	Applies automatically whenever the government, or a contractor with government authorization/consent, uses or manufactures the invention	Only the federal funding agency that made the award, and only on one of four defined statutory grounds
Process required	None in advance — the government simply uses the invention; the patent owner sues afterward	Formal agency determination: findings, notice, opportunity to respond, and an appealable decision
Remedy	Monetary compensation only, via suit against the United States in the Court of Federal Claims	An order compelling the patent holder (or the agency itself) to grant additional licenses to third parties — not a damages award
Injunction available?	No — injunctive relief against the government is unavailable under § 1498	Not applicable in the injunction sense; the “remedy” is compulsory licensing, not damages
Forum	U.S. Court of Federal Claims (exclusive jurisdiction)	Administrative proceeding before the funding agency, with judicial review available afterward
Legal basis independent of Bayh-Dole?	Yes — predates and operates independently of Bayh-Dole; not created by or contingent on federal research funding	No — exists only because Bayh-Dole conditions title retention on the government’s reserved rights

Why the same university patent can be subject to both

These two mechanisms are not mutually exclusive, and TTOs should not treat them as interchangeable descriptions of “the same government right.” A federally funded invention that a university elected to retain title to under Bayh-Dole carries the government’s Bayh-Dole rights automatically — including the government’s own royalty-free license to practice the invention for government purposes, separate from march-in itself — and, independently, the invention is a U.S. patent like any other, so it is also within the reach of § 1498 the moment the government or an authorized contractor uses it. The government does not need to invoke march-in, satisfy any of the four statutory grounds, or run an agency proceeding to trigger § 1498 exposure; the two exist on entirely separate legal tracks that happen to both apply to a subset of the same patents.

Practical implications for technology transfer offices

Government-use rights survive licensing. A TTO cannot license away, or warrant against, the government’s § 1498 exposure on a given patent. Even an exclusive commercial license to a private company does not remove the government’s ability to use or have the invention made for its own purposes — the licensee’s exclusivity runs against other private parties, not against the sovereign’s own retained use right.
Infringement by a government contractor usually is not a district-court case. If a company is using a university’s patented technology under a government contract that authorizes that use, the university generally cannot sue that contractor for infringement in district court — the claim, if any, runs against the United States in the Court of Federal Claims. This changes venue, available remedies (compensation only, no injunction), and litigation strategy entirely, and it is a common point of confusion when a TTO first discovers unauthorized-looking use by a federal contractor.
Valuation and royalty negotiations should account for the government’s reserved use. Because the government’s practical ability to use a patented invention already exists independently of any license a TTO signs, that exposure is a fact a licensing professional should factor into how exclusivity and field-of-use restrictions are priced and represented to a prospective licensee — not something to be silent about.
March-in exposure and § 1498 exposure require separate risk assessments. A patent with low march-in risk (steady commercialization progress, no health/safety gap) is not thereby insulated from § 1498 — the two turn on different facts entirely, and neither analysis substitutes for the other.

Frequently asked questions

Does 28 U.S.C. § 1498 only apply to federally funded inventions?

No. It applies to any U.S. patent the government or an authorized contractor uses or manufactures, regardless of who funded the underlying research. This is the single biggest difference from Bayh-Dole march-in, which applies only to federally funded inventions where the grantee elected to retain title.

Can a patent holder get an injunction under Section 1498?

No. The exclusive remedy is a suit for monetary compensation against the United States in the U.S. Court of Federal Claims. Injunctive relief is not available against the government under this provision.

Is a § 1498 government-use claim the same thing as a march-in proceeding?

No. Section 1498 requires no agency determination, notice, or hearing — the government’s use simply happens, and the patent owner sues afterward for compensation. March-in is a formal administrative process a funding agency must follow before it can compel additional licenses, and it results in compulsory licensing, not a damages payment.

Does licensing a federally funded invention exclusively to a company remove the government’s § 1498 exposure?

No. The government’s ability to use or have an invention made for its own purposes under § 1498 (and, separately, its Bayh-Dole royalty-free license for government purposes) is not eliminated by any subsequent license a university grants to a private party.

Can a university recover its legal fees in a § 1498 action?

The statute allows recovery of reasonable attorney’s fees and expert witness costs for owners who are independent inventors, nonprofit organizations, or entities with no more than 500 employees — a description that covers most university patent holders — unless the government’s position was substantially justified or special circumstances make a fee award unjust.

Government-Use License Under 28 U.S.C. § 1498 vs. Bayh-Dole March-In Rights