We write a lot about how to protect intellectual property (IP) during the contract bidding and negotiation process, but you can’t let your IP protection guard down once the contract is signed. Thanks to the Bayh-Dole Act, 35U.S.C. §§ 200-212 (and related executive orders), a contractor can obtain patents on and maintain full patent rights to “any invention of the contractor conceived or first actually reduced to practice in the performance of work under” a government contract, subject to a license to the government. 35 U.S.C. §201(e).
Dig through the legalese, and this is great news for all government contractors. You can not only meet the terms of your contract, but you can also commercialize and make money on your invention. Sounds great, right? But here’s the catch: If you don’t disclose the invention to the government, the government can grab full patent rights for itself.
To this end, government contracts contain provisions that require a contractor to “disclose each subject invention to the Federal agency within a reasonable time after it becomes known to contractor personnel responsible for the administration of patent matters.” 35 U.S.C. §202(c)(1) If you don’t disclose this, the “Federal Government may receive title to any subject invention not disclosed to it within such time.” Id.
In other words, so long as you disclose the invention to the government, you get to patent it – but you must disclose your invention in the right way.
For example, FAR 52.227-11 mandates that the contractor “will disclose each subject invention to the Federal agency within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters.” The same provision requires that the disclosure be written and that it “identify the contract under which the invention was made and the inventor(s)” along with “technical detail to convey a clear understanding” of the invention. That’s a lot of i’s to dot and t’s to cross!
Of course, it gets a little more complicated, because it’s not just the timing and the substance of the disclosure that matters. Form matters, too.
The leading case on disclosure, Campbell Plastics Engineering & Manufacturing v. Brownlee, 389 F.3d 1243 (Fed. Cir. 2004), demonstrates just how important proper form is to the government.
As part of a Small Business Act program for disadvantaged businesses, Campbell won a contract with the U.S. Army to develop a protective mask for aircrews. Id. at 1244. During the contract, Campbell worked on various methods of sonic welding in creating the masks, and informed the Army of their progress through various monthly reports that included diagrams and pictures. Id. at 1245. But the contract required more.
In addition to FAR 52.227-11, Campbell’s contract incorporated FAR 252.227-7039, which requires invention disclosure reports every 12 months and final reports within three months of the completed contract work. Additionally, Campbell’s contract required that those reports be made on a specific form: “DD Form 882, Report of Inventions and Subcontracts.” Campbell did submit two DD Form 882s, but unfortunately, neither listed any inventions.
Campbell later filed a patent application for its sonic welded gas mask, and the application was made available to the Army for secrecy determinations. The PTO issued the patent noting the statutorily required license to the government.
However, the Army demanded title to the patent for itself because Campbell had failed to comply with the contractually required disclosures. The Board of Contract Appeals agreed and said the Army could take title to the patent (so did the Federal Circuit).
While Campbell argued that it disclosed the technical information regarding the sonic welding process in its monthly progress reports, the Federal Circuit held that the FAR provisions requiring disclosure are clear and unambiguous and that “the contract requirement of a single, easily identified form on which to disclose inventions is sound and needs to be strictly enforced.” Campbell Plastics, at 1249.
In other words, it did not matter that Campbell may have provided all of the information to the Army during the course of the contract, because it had not used the proper form for disclosure. Accordingly, Campbell lost the patent to its invention and all revenue it could have earned through licensing.
Discretion Is Broad
The Federal Circuit also clarified two important points in Campbell Plastics:
If the government “invokes forfeiture of patent rights,” it does not have to show it was or would be harmed by issuing a patent to the contractor, just that information about the invention was not properly disclosed.
Further, title to a patent is not automatically forfeited based on a failure to disclose because “[t]he government must take an affirmative action to establish its title and invoke forfeiture.” Central Admixture Pharm. Svcs., Inc. v. Advanced Cardiac Solutions, P.C., 482 F.3d 1347, 1352-53 (Fed. Cir. 2007). If the government decides to take affirmative action to gain title to a patent, there is not much a contractor can do to fight it.
Avoid Losing Your Patent and Be Prepared
Campbell was a small business that lost its patent and the potential to really grow their small business via licensing revenue, all because it didn’t fill out the right form. How can similar contractors avoid this fate?
- Know your FAR:You have to know what FAR provisions and related contract terms are in your contract. Be clear with your team about what they need to disclose and how they need to disclose it.
- Put a process in place: Make sure you have a process that allows you to meet those disclosure requirements. List the forms that need to be filled out and when, as well as who will gather the appropriate information, fill them out, and submit them.
- Talk to your patent attorney: When you decide to patent an invention developed under a government contract, make sure your patent attorney knows about the disclosure requirements in your contract. Your patent attorney should review any disclosures you have made, and he or she can work with you to ensure appropriate disclosures are made before any patent application is filed.
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