Service Engineering v. United States Department of Agriculture

In 1984, the United States Department of Agriculture (USDA) (defendant) obtained a patent for an animal-vaccination method (the ’630 patent). The USDA or a licensing division of the federal government publicly announced that the patent was available for commercial licensing. In 1985, the government published a notice of intent to grant a specified party (Merieux) an exclusive license under the ’630 patent. During the comment period, two different private companies, including Embrex, Inc., applied for licenses. In 1986, the government awarded an exclusive license under the ’630 patent to Embrex with a 1996 expiration. The final decision was not published. In 1994, the USDA extended the exclusive license to Embrex until the patent’s expiration. Thereafter, Embrex became involved in litigation against Service Engineering Corporation (SEC) and Edward Bounds, Jr. (plaintiffs). A jury determined that SEC had infringed the ’630 patent. In late 1996, SEC applied to the USDA for a nonexclusive license under the ’630 patent. The USDA denied SEC’s application, explaining that the patent was exclusively licensed to Embrex. SEC’s administrative appeals were denied. SEC sued the USDA, seeking a declaratory judgment that Embrex’s original license and 1994 extension were illegal and invalid under the Bayh-Doyle Act (the act). SEC alleged that the government had failed to provide statutory notice of its decision to grant an exclusive license to Embrex in 1985. The USDA moved for summary judgment, arguing that SEC lacked prudential standing to bring its claims. Specifically, SEC did not come into existence until after 1985 and had not applied for a license when Embrex and other interested companies applied.