On November 10, 2004, the United States Court of Appeals for the Federal Circuit affirmed a decision that cost a government contractor its title to a patent. In Campbell Plastics Engineering & Mfg., Inc. v. Brownlee, No. 03-1512, slip op. (Fed. Cir. November 10, 2004), the Federal Circuit affirmed the decision of the Armed Services Board of Contract Appeals, which in turn, sustained the final decision of the Army contracting officer to seize title to the invention because the inventor had failed to disclose the government-funded invention. While the federal government has had the right to seize title to inventions for failure to disclose since the Bayh-Dole Act was passed in 1980, this is the first time it has exercised that right.
Facts of the Case:
Campbell Plastics Engineering & Mfg., Inc. had a contract with the U.S. Army Chemical Research, Development and Engineering Center to develop certain components of an aircrew protective mask. The contract included the standard government contract patent clause requiring a contractor to disclose to the Army contracting officer subject inventions in interim reports furnished every twelve months and final reports within three months after completion of contracted work. Pursuant to the Bayh-Dole Act, 35 U.S.C. Â§Â§ 200-212, "invention" means "any invention or discovery that is or may be patentable . . ." and "subject invention" means "any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement." 35 U.S.C. Â§ 201(d)-(e). Neither party disputed that the method was a "subject invention."
The clause, pursuant to the Bayh-Dole Act, states that the government may obtain title if the contractor fails to disclose the invention within two months from the date upon which the inventor discloses it in writing to contractor personnel responsible for patent matters. Mr. Campbell, company president, submitted numerous disclosure forms containing a certification that all "subject inventions" have been reported, indicating "none" or "no invention." In August 1997, Mr. Campbell contacted a patent attorney. The Board below held this was the event that began the 60-day disclosure period as neither party disputed this disclosure date. Campbell filed a patent application for "Sonic Welded Gas Mask and Process" and the application expressly reserved for the government a paid-up license and "the right in limited circumstances to require the patent owner to license others on reasonable terms as provided for by the terms of" its contract. This reservation of rights set forth in the patent application is required by the government contract patent clause for "subject inventions."
The Army performed a secrecy review of the patent application. The patent application issued on April 20, 1999 as U.S. Patent No. 5,985,537. Campbell notified the Army of the patent and the Army asserted a claim of joint ownership as government employees had drafted a report providing an enabling disclosure of the invention before the patent application was filed. The contracting officer concluded that Campbell forfeited title to the patent by failing to provide proper notice.
In the opinion written by Judge Clevenger, joined by Judges Michel and Dyk, the Federal Circuit held that not only was an invention disclosure required, but that it was required within the statutory two months and the Army had a right to specify the form of the disclosure. Campbell argued that it had disclosed all features of the invention through various faxes to the Army during the contracting period or when the Army performed a secrecy review of the patent. The court rejected Campbell's argument that the disclosure requirements apply only to timing and not to the substance of the disclosure, saying, "[u]nder Campbell Plastics' interpretation, however, it could disclose anything under the sun in any form whatsoever and still avoid forfeiture, so long as it does so within two months of disclosing the subject invention to its personnel responsible for patent matters." The court supported the Army's requirement that invention disclosure be made on the DD Form 882, as specified in the contract.
As a policy matter, Campbell argued that the Army should not be able to take the drastic measure of seizing title because it had not demonstrated any harm by Campbell's failure to disclose the invention. The Bayh-Dole Act provides the federal government a "nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject invention throughout the world." 35 U.S.C. Â§ 202(c)(4). The decision gave short shrift to Campbell's argument that there was no reason for the federal government to seize title to the invention since it already had such a broad license at no cost. The decision mentions the potential risk to the Army's foreign patent rights without disclosure, but frankly, the Federal Circuit finessed in the decision the fact that this was raised for the first time on appeal.