Academic journal article Competition Forum

Eminent Domain or Imminent Threat: Government and the Appropriation of Intellectual Properties

Academic journal article Competition Forum

Eminent Domain or Imminent Threat: Government and the Appropriation of Intellectual Properties

Article excerpt

EXECUTIVE SUMMARY

Eminent domain has been used by governments to institute "takings " of private property. Patents have also been subject to these taking activities through use of laws permitting appropriation, preemption and government participation in the intellectual properties of individuals and organizations. This paper examines the legal and administrative processes through which government can affect the "taking" of intellectual properties. The paper also recommends changes in both law and governmental administrative processes in order to better balance the property rights of individuals against the right of government to "take" intellectual properties to support the public good.

Keywords: Eminent Domain, Government "Takings", Patent Infringement, Intellectual Property, U.S. Court of Claims

INTRODUCTION

"PROPERTY MUST BE SECURED OR LIBERTY CANNOT EXIST."

(Adams, 1791:280)

In 1914, the German armaments firm DWM brought a patent infringement suit against the U.S. government for violating its patent on the Spitzer (i.e.: pointed) bullet design and stripper clips that were used to load these bullets into the Model 1903 Springfield rifle (Brophy, 1985). The U.S. Army had denied DWM's claim for a royalty because the Army (under the direction of Lt. Colonel J. P. Farley) had previously attempted to develop a pointed bullet design that predated the DWM patent. The adjudication of this patent infringement suit was preempted by the outbreak of World War I (i.e.: WWI). With U.S. entry into WWI, this DWM patent was seized by the Office of the Alien Property Custodian. This office was established by a Presidential Executive Order (EO 2729-A) and was authorized to "assume control [over] and dispose of enemy-owned property in the United States and its possessions" (National Archives, 2007:131.2). Based upon these actions by the Alien Property Custodian, the Attorney General of the United States subsequently obtained a dismissal of the DWM law suit (Keenan, 2004; Atwater, 2007). Following the signing of the WWI armistice, many German and Austrian companies sought financial recompense for violation of their patents that had occurred during the war. In 1921, a special tribunal was convened in order to evaluate these patent disputes and demands for financial recompense. In reviewing the DWM claim, the tribunal asserted that the U.S. Government had acted in an unconstitutional manner by appropriating intellectual properties (IPs) contained in the DWM patent. To recompense DWM for illicit use of its intellectual property, the tribunal awarded DWM $412,520 (Keenan, 2004). This financial settlement was analogous to paying DWM a royalty on bullets fired by U.S. forces at members of the German military during WWI (Atwater, 2007).

The 5^sup th^ Amendment of the U.S. Constitution establishes the right of the U.S. Government to "take" or appropriate private property for purposes of supporting the general welfare and the public good (U.S. Constitution, 1789). These actions by government have been labeled the right of eminent domain (U.S. v. Jones, 1883). Originally, the sovereign right of government to"take"/confiscate the property of others was thought to be limited to tangible assets or physical property (Taub, 2006). However, a variety of 19^sup th^, 20^sup th^ and 21^sup st^ century court cases have (1) afforded intangible assets such as intellectual properties (i.e.: patents, trademarks, copyrights and trade secrets) the status of real property (Seymour v. Osborne, 1871; Decca Ltd. v. United States, 1980); and (2) clarified the sovereign right of government to "take" or appropriate intellectual properties (IPs) under eminent domain authority (Decca Ltd. v. United States, 1980; .Zoltek Corporation, v. the United States, 2006). Many legal scholars and researchers have also argued that the Supreme Court's recent decision in the Kelo case (Kelo v. City of New London, 2005) has further enhanced the legal authority of all levels of government to appropriate property and/or potentially force IP holders into compulsory licensing agreements for purposes of fostering economic development (Taub, 2006). …

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