Watch your step with intellectual property

Infotech and the law | Legal insights for today's market

Entities that receive U.S. government funding for development
projects typically have a right to retain title to the
intellectual property they develop on those projects.
Although such entities might have a right to own the
intellectual property, that ownership is not automatic. To obtain
title, you must give timely notice to the contracting officer that you
have made a patentable invention and then promptly elect to retain
title. Failure to do so can result in loss of title.

That is what happened in the case of
Campbell Plastics Engineering and
Manufacturing Inc. v. Brownlee. In
Campbell, the contractor repeatedly failed to
comply with the procedural steps necessary
for retaining title. The Army then took title
to the patent from Campbell. This is one
example of the need to ensure that you have
effective intellectual property policies and
procedures in place to avoid inadvertent loss
of rights.

Even if you properly receive title to a
patentable invention, the government may
retain a government purpose
license. It is important to
understand how this can
happen, what it means and
what steps you can take in
some circumstances to avoid or minimize
the government license.

Many people believe that if you file a
patent before you receive government funding,
the government does not get a license
to the resulting patent. That is false.
Anytime an invention is first conceived or
"actually reduced to practice" ? that is, built
? using government funds, the government
gets a license.

Actual reduction to practice means
building the invention and showing that it
will work. However, it does not have to
work well enough to be ready for commercialization
or work according to government
standards. Thus, is some cases, you
might have a patentable idea, file a patent
application and then get government funding
to build the patentable device or have it
built.

In that scenario, because government
funding was used to build the device ? that
is, reduce it to practice ? the government
gets a license. This means that even if you
own a patent, the government can procure
devices covered by it from a competitor, and
you are not entitled to a royalty. Obviously,
this is undesirable.

In some cases, you might be able to avoid
or minimize the government license. For
example, if you have a patentable idea
and can do enough testing to show that it
will work, you might be able to document
reduction to practice at private expense
before you get government funding. You
might still need or want government
funding to refine the device and show
that it is ready for commercialization or
capable of meeting government standards.
But by documenting reduction to
practice using private funds, you can
avoid or minimize the government
license.

Remember, government funding can
be beneficial, but it comes
with a cost. In some cases,
the right course might be to
seek other funding sources.

In other cases, it could just be
a question of timing in obtaining government
funds after a reduction to practice.
The decision is somewhat fact-specific and
requires careful analysis of the legal issues.
The extra effort and consideration can mean
a huge difference in some circumstances.

James Gatto (james.gatto@pillsburylaw.com) is
intellectual property section leader at Pillsbury
Winthrop Shaw Pittman.

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