The Federal Circuit, in Zoltek Corp. v. United States, No. 2009-5135 (Fed. Cir. Mar. 14, 2012), recently clarified the scope of immunity for government contractors from infringement suits arising from work they perform for the U.S. government. The Federal Circuit held that a government contractor is not individually liable when the government is subject to suit under the 28 U.S.C. § 1498(a). Furthermore, the U.S. government waives sovereign immunity under § 1498(a) for all direct infringement of a U.S. patent, including importation of a product made outside the U.S. using a process patented in the U.S.

Typically, a patent holder alleging infringement by a government contractor files suit against the U.S. government in the U.S. Court of Federal Claims. Under § 1498, the patent holder must sue the U.S. government if their patented invention is "used or manufactured" for the U.S. without a license or "lawful right." Section 149 (c) states "the provisions of this section shall not apply to any claim arising in a foreign country."

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