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Imagine your company or client has just invented a fuel efficient, environmentally-sound aircraft wing with widespread commercial applications. After your company applies for a number of patents covering this technology, the Department of Defense (DOD) requests that a "secrecy order" be placed on one of the applications preventing the disclosure or exploitation of the technology for at least a year.
After a year, the secrecy order is lifted and your company is able to negotiate a licensing and distribution agreement with a US-based private defense contractor. During negotiations, the contractor informs you that the US government plans to integrate your technology into a new fighter plane. The contractor tells you the deal is off unless you can limit or stop the government's use.
Finally, your company strikes a deal with an overseas manufacturer to build aircraft utilizing the technology. You agree to license not only the patent, but also the related know-how and trade secrets that are essential to the manufacturer's engineering and production process. After negotiating the deal, you receive notice from the Department of Commerce, (DOC) stating that your disclosure of certain know-how to the foreign manufacturer is subject to federal export regulations.
Inventors and companies that depend on discoveries and inventions are often unaware of the powers that the US government can exert over certain technologies. Recall the controversy surrounding the government's exercise of these powers over computer software encryption technologies in the 1990s. For years, encryption technology was subject to strict export regulations designed to prevent criminals and other nations from undermining the efforts of law enforcement agencies and threatening the national security of the United States. Ultimately, the government and makers of encryption software struck a policy balance that enabled makers to export encryption technology under a more liberal review and licensing process. (1)
The US government's ability to exert control over technology is not limited to encryption software. The government's powers derive from federal statutes, export regulations, and case law. They are broadly defined to allow our federal government to stop, restrict, or license the use of technology that affects national security or that may be of interest to a particular governmental agency. This article provides an overview and analysis of issues raised by the government's ability to exercise control over patented technology and related know-how. Our government's ability to control technology is of particular interest to lawyers and their clients in light of the tragic events occurring on September 11, 2001.
Governmental Takings of Patented Technology
A patent holder is protected against both private and governmental appropriation of the protected property. An inventor can prevent others from making, using, selling, offering to sell, or importing technology that infringes the inventor's patent. (2) This is similar to a landowner's ability to prevent others from trespassing on his or her property. It is well-established in the cases that patents and other forms of intellectual property are protected under the Fifth Amendment's Takings Clause. What remains unclear are the circumstances under which a patent holder is entitled to compensation resulting from governmental appropriation. The easier cases tend to involve "takings" under federal statutes that expressly provide for compensation. The harder cases involve patentees seeking compensation for "takings" under a Fifth Amendment cause of action in which no statutory or other express remedy is available.
The Inventions Secrecy Act of 1951 establishes a system whereby the Commissioner of Patents and Trademarks (Commissioner) may issue a secrecy order when publication or disclosure of an invention by a patent would be detrimental to the national security of the United States. (3) Under this Act, the US Patent and Trademark Office may withhold the grant of a patent if disclosure of the invention would "be detrimental to the national security" of the United States. (4) Any secrecy order issued under the Act applies not only to the information contained in a patent application itself, but also to the entire subject matter of the invention. The secrecy order therefore restricts disclosure or publication of the invention in any form. Other patent applications previously or later filed that contain any significant part of the subject matter of the application also fall within the scope of the order. These must be brought to the Commissioner's attention, if such applications are not already under a secrecy order.
An applicant for a US patent must wait six months before applying for a foreign patent on the same technology. (5) During this six-month period, the Department of Energy (DOE), DOD, and NASA …