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Protecting IP critical for government contractors

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When developing technology for the government, companies should have a specific process for managing their intellectual property, keep good records and not be afraid to speak up, according to attorneys from Morrison & Foerster.

Washington D.C.-area attorneys Richard Vacura and Keric Chin were in town this week, advising members of the San Diego chapter of the National Contract Management Association on how to protect their IP under government contracts.

They said there's an unprecedented level of research and development funding available today, particularly from the Department of Energy, because of the American Recovery and Reinvestment Act.

So far in 2009, $17.7 billion has been issued in contracts, $139.6 billion in grants and $1.7 billion in loans.

The result has been an influx of companies vying for government contractors. But the legal framework governing their intellectual property rights has remained largely unchanged.

The current environment for how IP resulting from government contracts is regulated began with the passage of the Bayh-Dole Act in 1980.

While it was initially meant to cover universities, nonprofits and small businesses, the act now encompasses anyone entering a license with the government, including large companies.

Chin, an of counsel member of Morrison & Foerster's government contracts practice group, said the legislation was designed as a way to encourage the movement of innovative government technology into the commercial market.

The result, according to some studies, has been a significant increase in patent filings since 1980.

The Morrison & Foerster attorneys stressed that officials of government contractors must do their due diligence and ensure their compliance to Bayh-Dole Act requirements.

"Federal funds always come with strings attached," said Vacura, chair of the firm's government contracts practice group.

A company's IP rights vary depending on the type of funding agreement. But no matter the agreement, the federal government can use sovereign immunity as a powerful shield from litigation.

Traditional remedies in patent cases, like injunctive relief, are not available against the government. While the U.S. cannot be stopped from using a patent product, money damages can be awarded if infringement is found.

"This allows the government to continue with a contract in the name of national security (while still recognizing the patent has value," Vacura said.

The attorneys said it's important for companies to carefully read the government's solicitation and realize that what is sufficient in a commercial agreement is not necessarily sufficient for a government agreement.

"It's critical that you have a process for managing your IP," Vacura said.

Company officials also should look through the terms of a contract early on, preferably during the draft RFP (request for proposal), and not hesitate to make suggestions.

"The typical government contracting officer doesn't understand IP," Vacura said. "It's your job to push back and educate them."

Vacura and Chin said it's important to keep good research records as well.

They also advised small companies to always mark the physical invention -- and not just related "technical drawings and documentation" -- in order to protect their data.

Vacura cited a 2005 case in which Night Vision Corp. developed a pair of night-vision goggles for the Air Force.

The company claimed the Air Force breached its Small Business Innovation Research program contract by disclosing proprietary technical data to a competitor.

But the court ruled Night Vision didn't restrict the government's disclosure because the goggles themselves were not marked with a restrictive legend.

"It demonstrates how the regulations and laws have not kept up with the technology," Vacura said. "These rules were developed for another era."

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