When the Government Authorizes Patent Use, Who Gets Sued? Understanding the § 1498 Contractor Shield
A federal contractor can infringe someone else’s patent while performing government work and, in certain circumstances, the patent owner’s remedy is not against the contractor.
Instead, the claim shifts to the United States.
That unusual protection comes from 28 U.S.C. § 1498(a).
When a patented invention is used or manufactured for the Government with Government authorization or consent, the statute generally channels the patent owner’s compensation claim to the U.S. Court of Federal Claims rather than permitting ordinary infringement litigation against the contractor. The protection operates as an affirmative defense for the contractor.
For defense and technology contractors, the provision can be enormously important.
A contractor integrating third-party technology into a Government-directed product may otherwise face the risk of damages or an injunction that could interrupt performance of an important federal program. Section 1498 was designed in part to prevent private patent disputes from stopping authorized Government activity.
The Federal Circuit’s 2026 decision in Arlton v. AeroVironment reinforced the breadth of that protection.
The litigation concerned technology associated with AeroVironment’s work supporting NASA’s Mars helicopter program. The court concluded that §1498 protection extended to challenged uses that remained connected to Government-authorized work, including certain demonstrations related to that development. Federal Circuit Court
But the decision does not mean federal contractors receive a universal patent-immunity card.
The critical statutory questions remain whether the use or manufacture is for the Government and whether it occurs with the Government’s authorization or consent.
That can become difficult with dual-use technology.
A product developed under a Government program may later be marketed commercially. A prototype may be demonstrated to investors or potential private customers. Government-funded and privately funded development may occur simultaneously. The same patented technology may appear in both federal and commercial products.
At some point, activity may cease to be sufficiently connected to Government use to remain protected.
Contractors should therefore address patent exposure before disputes arise.
Relevant diligence includes identifying third-party patents, determining whether a contract includes an authorization-and-consent clause, documenting the Government purpose for potentially infringing activities, understanding which uses are required or approved by the Government, and separating clearly commercial exploitation from Government-authorized performance where possible.
Subcontracts also matter. Section 1498 can extend protection to subcontractors performing authorized Government work, but contract structure and factual circumstances remain important.
The commercial implication is equally significant.
Section 1498 shifts liability; it does not erase intellectual-property value. A patent owner may still pursue reasonable compensation from the United States in the Court of Federal Claims.
For contractors, the statute is therefore best understood as a performance shield, not an ownership right.
It can protect Government-authorized activity.
It should never substitute for knowing what intellectual property the contractor is using and why.
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FedClause360 can help contractors identify patent authorization and consent, intellectual-property, technical-data, software, licensing, and related contract clauses that affect the allocation of IP risk during federal performance.
Disclaimer:
This article is provided for general informational and educational purposes only and does not constitute patent, intellectual-property, litigation, or government-contracting advice. Section 1498 applicability depends on the specific Government authorization, purpose, contract clauses, alleged infringing acts, jurisdiction, and facts.