Companies Raise Intellectual Property Protection Issues

Article excerpt

* A survey by the National Defense Industrial Association--which collected input from industry on the subject of intellectual property--highlighted major concerns from both prime and subcontractors on practices within the Defense Department.

Many companies gave examples of cases where government employees improperly handled proprietary technical data, including the release of information to competitors.

Also, multiple complaints were raised about the broad use of the Federal Acquisition Regulation (FAR) 52.227-1 resulting in use of patented technology on government programs without the inventor receiving any compensation.

Lastly, a number of small businesses that participated in the Small Business Innovation Research (SBIR) program reported that intellectual property protected by SBIR data rights was misused.

The subcommittee prepared a briefing and compiled industry inputs with recommendations for achieving better IP protection. It predicted that the failure to protect intellectual property would result in shrinking interest and the reluctance of many innovative firms--and in particular small companies--to do business with the government. The conclusion was that ethical business dealings, while respecting the value of intellectual property, are essential to encourage innovative small businesses to participate in Defense Department acquisitions.

Some of the reports described instances of violations by government employees. This included cases of government employees giving equipment and documentation to competitors to "reverse engineer" proprietary products. Government-run laboratories initiated internal research projects to duplicate proprietary solutions and then published the intellectual property as government-owned. There were also cases of proprietary information being included in request for proposals or product specifications that were released as part of an open competition. In one case, Spectrum Sciences provided the Air Force with intellectual property associated with a prototype munitions conveyor system under a cooperative research and development agreement. The Air Force subsequently shared Spectrum's data during the procurement processes, which landed in the hands of one of Spectrum's competitors. The rival company was eventually awarded the contract. Spectrum successfully challenged the Air Force in the Court of Federal Claims (Dec. 8, 2008, 53 CCF 79,044), which took the unusually rare step of awarding expectation damages for lost profits.

While the government makes it a crime for any federal employee to knowingly disclose the trade secrets of a private party (18 U.S.C. [section] 1905), the committee could find no reported cases where the government had initiated administrative action against a federal employee for IP violation. …