Lessons
Learned: Campbell Plastics
A Warning that Invention Disclosure Rules Matter
By Kevin Flynn
As a patent attorney, I have spoken to SBIR grant recipients at conferences and I emphasized the need to follow the rules set out in the SBIR grant to report inventions to the granting Agency in the prescribed manner within the prescribed time. SBIR grant recipients could not imagine any government agency would use these contract clauses to rip away full title to a patent for the mere failure to submit reports about inventions in a particular quirky way. Besides, they have heard of other grant recipients that failed to report inventions in a timely manner and nothing bad resulted from a tardy disclosure.
That was then, this is now.
There is now a case where the Appeals Court for the Federal Circuit upheld the government's right to take full title for an invention developed during execution of a government contract based on the failure of the contractor to report an invention in the specific manner called for in the contract. The formal name of the case is Campbell Plastics Engineering v. Brownlee, 389 F.3d 1243 (Fed. Cir. 2004).
For grant recipients, it is time to revisit the invention reporting rules and to set in place procedures to get these inventions disclosed in the manner specified by the grant contract.
For investors and those seeking to obtain rights to patents arising from SBIR sponsored research, it is time to add this issue to your due diligence list.
While it was not a SBIR grant recipient that lost its patent rights, the fact pattern is too close to ignore. The relevant Federal Acquisition Requirements (FARs) interpreted in the Campbell Plastics case have identical counter parts in 37 CFR 401.14 which governs SBIR contracts.
As you can guess, Campbell Plastics did not report an invention related to the use of ultrasonic welds in making a protective mask in the manner specified. There is no question that in aggregate the communications from Campbell Plastics to the Army provided an enabling disclosure of the invention, they just didn't report it as an invention.
Campbell Plastics notified the Army of the patent soon after it issued and of the government rights listed in the front of the patent. The Army through its Administrative Contracting Officer claimed title to the issued patent. The parties fought this through the courts where it ended with the United States Court of Appeals for the Federal Circuit affirming the right of the Army to enforce its contract provision.
In the end Campbell Plastics lost its patent rights, paid large legal bills, and alienated the Army. Invention disclosure rules do matter.
Questions or comments about this article can be directed to Kevin E. Flynn, a patent attorney with the North Carolina office of The Eclipse Group, an Intellectual Property Law Firm( www.eclipsegrp.com . Kevin's email address is kflynn@eclipsegrp.com.
Epilogue
To drive home the gravity of this decision,
click here to see the relevant record from the United States Patent
and Trademark web site showing the assignment record for the patent at issue.
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