Addressing the issue of government contractor’s obligation to disclose a subject invention, the U.S. Court of Appeals for the Federal Circuit, in a case of first impression, affirmed a decision from the Armed Services Board of Contract Appeals (the Board) that a defense contractor forfeited title to a patent for failure to timely disclose the invention the government. Campbell Plastics Engineering & MFG., Inc. v. Lest Brownlee, Acting Secretary of the Army, Case No. 03-1512 (Fed. Cir. Nov. 10, 2004) (Clevenger, J.).
Campbell Plastics entered into a contract with the Army to develop certain components of an aircrew protective mask, as part of a program for small, disadvantaged business concerns. The contract incorporates in relevant part clauses from the Federal Acquisition Regulations (FARS), including a "Patent Rights-Retention by the Contractor" clause (FAR 52.227-11) and a "Patents Reporting of Subject Inventions" clause (FAR 252.227-7039). These clauses require a contractor to disclose and elect title to any subject invention developed pursuant to a government contract and set forth the requirements to do so. These clauses further provide that the government may obtain title to an invention developed pursuant to a government contract if the contractor fails to disclose the invention within two months from the date in which the inventor discloses the invention in writing to the contractor personnel responsible for patent matters. The contract also specifies the contractor is to disclose all inventions in interim and final reports and on a prescribed form.
During the period of performance pursuant to the contract, Campbell Plastics made progress reports on the development of a "sonic weld or snap fit" a component of an aircrew mask. Campbell Plastics also submitted invention disclosure forms on which it repeatedly indicated there was no invention. The Army published a report on the protective mask that referenced the sonic welded components in the mask. Soon after, Campbell Plastics contacted an attorney to draft a patent application for a "Sonic Welded Gas Mask and Process." The government was made aware of the patent application as it was subject to a secrecy determination review after it was files with the U.S. Patent and Trademark Office (USPTO). After the patent issued Campbell Plastics notified the Army in writing of the patent to the sonic welded gas mask and the administrative contracting officer (AEO) made a demand for title.
Campbell appealed, arguing it had complied with the invention disclosure timing requirements of the FAR because it disclosed to the government, via progress reports, all the features of the invention throughout the contractual period; the government had in its possession an enabling disclosure of the invention as evidenced by the government’s publication regarding the aircrew protective mask; and the government had in its possession an enabling disclosure of the invention when it reviewed the patent application filled by Campbell and the USPTO for secrecy determination purposes. The AEO and the Board denied Campbell’s appeal, finding Campbell failed to comply with the prescribed method of disclosure and, citing to the clear language of the contract as to the manner in which inventions were to be disclosed, rejected Campbell’s argument that "forfeiture" is disfavored at common law.
The Federal Circuit affirmed. In doing so, it rejected Campbell’s argument that the Board abused its discretion in demanding title to the Campbell’s patents. The Federal Circuit found that the Board correctly applied the proper test, considering evidence of whether the government official acted with subjective bad faith; whether the official had a reasonable, contract-related basis for the decision rendered; the amount of discretion given to the official; and whether the official violated a statute or regulation.
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