Government Contractors: Disclose Your Inventions!

If you or your company has ever received federal funding (from any of the various agencies) for research, you’re likely very aware of the numerous Federal Acquisition Regularionts (FARs) and HHS Acquisition Regulations (HHSARs) that may be imposed as contract terms for receiving the money. In particular, you might have come across FAR 52.227-11, “Patent Rights – Retention by Contractor.” This clause discusses the contractor’s obligations to disclose inventions developed under a government contract, and the requisite format of the disclosure.

Unfortunately, far too many companies are ignoring this provision and trying to still go ahead and claim various intellectual property rights to inventions developed under the contracts. The recent opinion of Campbell Plastics Mfg., Inc. v. Brownlee shows why this is a really bad idea and cautions against trying to sneak around the government.

 

The facts of the case are fairly simple. Campbell Plastics signed a cost-plus-fixed-fee contract with the Army to develop pieces of an aircrew protective mask. FAR 52.227-11 was a clause in the contract, thus Campbell Plastics was obligated to disclose any inventions developed pursuant to the government contract. Further, the government could obtain title to an invention if Campbell Plastics failed to disclose that invention within two months.

Campbell Plastics developed a new gas mask over the course of the contract, but repeatedly failed to disclose the invention (and, in fact, told the Army time and again that there were no inventions on the appropriate form).  The company then proceeded to obtain a patent in the device and disclosed that the government had a paid-up license to the invention. The Patent Office sent the application over to the Army for its review, and the Army was not exactly happy at seeing the patent. Especially because of the nature of the invention, the Army was interested in having more than a license to the invention. It contended that Campbell Plastic’s failure to disclose the invention pursuant to the contract triggered a forfeiture of its rights, and that the Army was the proper owner of the invention.

The Armed Service Board of Appeals agreed. When Campbell Plastics appealed that decision, the Federal Circuit Court of Appeals issued a fairly terse opinion that upheld the prior ruling. In its analysis of the Bayh-Dole Act and the contract terms, the court came to the holding that the contract was extremely clear about the disclosure requirements, and that Campbell Plastics’ failure to live up to that obligation resulted in a forfeiture of title to the invention. Campbell Plastics tried to argue that it sort of had disclosed the invention, as it had sent to the Army all sorts of drawings and other documents that together had disclosed the invention. The court didn’t buy that argument for a minute, and stated that allowing contractors to send over a hodgepodge of documents and thus force the government agency to try to tease out what was supposed to be the invention was ludicrous.

This same FAR is in most NIH research grants, too. Here is a link to an easy to follow table of the obligations.  If you are the recipient to a government grant, don’t make the foolhardy decision of just ignoring all of the reporting requirements. Keep your lab books up-to-date, and keep a consistent monitoring and review procedure in place so that any inventions are timely disclosed to the government. You only have two months to fill out the appropriate forms, so some organization and communication is absolutely key to making sure that you aren’t about to have your patents and other intellectual property yanked from you.