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Recent Federal Circuit Opinion Highlights Risks of IP Rights in Government Contracts

By Maximilian Grant and David Hazelton

In a case that should serve as a warning to firms with active intellectual property development programs and that have, or aspire to have, the federal government as a customer, the U.S. Court of Appeals for the Federal Circuit recently ruled that a government contractor that failed to properly disclose an invention developed pursuant to a government contract forfeited title and all rights to the invention and its related patent. See Campbell Plastics Eng'g & Mfg., Inc. v. Brownlee, No. 03-1512, 2004 U.S. App. LEXIS 23502 (Fed. Cir. Nov. 10, 2004). The case demonstrated the government's willingness to seek, and ability to obtain, the particularly harsh remedy of forfeiture.

Although the Federal Circuit's decision in Campbell Plastics addresses the issue of patentable inventions, it also highlights the need to follow the government contract requirements related to technical data and computer software (regardless of whether the data or software is patented or patentable). The Federal Acquisition Regulation (“FAR”) contains specific provisions describing what a company must do to protect its IP rights. The Campbell Plastics decision highlights that if a company fails to comply strictly with the FAR requirements, it risks surrendering substantial IP rights to the government. These IP rights go beyond the context of patentable inventions. For example, the FAR contains provisions covering software even if not patented or patentable. While this article focuses on the Campbell decision and its interpretation of the FAR Patent Rights clause, it is important to note that a government contractor is exposed to IP risk beyond that set forth in this particular context.

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