Federal Court Case Teaches Valuable IP Lessons

The May 2020 decision of the U.S. Court of Federal Claims in Ideal Innovations, Inc. v. United States has resurfaced in legal circles as the U.S. Court of Appeals for the Federal Circuit takes up the case on appeal.  Regardless of the outcome, Ideal Innovations provides valuable reminders about the intellectual property risks associated with government contracting.

The Ideal Innovations plaintiff sought damages on grounds that the U.S. purchased armored vehicles that infringed upon the plaintiff's patent.   The plaintiff could not, however, mount an independent infringement action against the contractors that sold the vehicles to the government because federal sovereign immunity extends to those performing on the U.S. government's behalf.  The lesson here is that competitors in the technology sector may well be immune from liability if they engage in infringing activities but are protected under a federal government contract.

Another lesson is that filing a patent application prior to executing a government contract may not fully protect IP. Government contract requirements under the Bayh-Dole Act define "subject invention"—the Bayh-Dole equivalent to "foreground IP" in the commercial sector—as IP that has actually been reduced to practice. Therefore, to be treated as pre-existing to a government contract and thus free from federal government IP rights, an invention may need to be both conceived and actually reduced to practice prior to execution of the contract.

Moreover, the government in Ideal Innovations asserted a well-established common law known as the Christian doctrine.  Specifically, the government argued that, although it failed to incorporate in the contract the requisite Bayh-Dole IP provisions, public policy nevertheless requires the court to read the omitted clauses into the agreement.  Thus, when negotiating a contract with the federal government, you should determine whether the government has deviated from a statutory mandate that a court may read into the agreement as a matter of law under Christian.

These lessons and others in Ideal Innovations are useful in the negotiation and performance of government contracts for information technology.  If you provide technology items or services in the public sector and have concerns about protecting your IP, please contact Bill Speros or another attorney at our firm.