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Home News Archive Intellectual Property Dispute

Intellectual Property Dispute

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We noted in passing that Advanced Aerospace Technologies, Inc. (AATI) had settled its dispute with Insitu and The Boeing Company and the US government over allegations that its patented technology had been infringed upon. AATI received $12.5 million in the settlement.

The settlement marks a long and contentious litigation history, going back to 2012. A key turning point occurred in early 2016, when Chief Judge Braden reviewed documents alleged to be attorney-client privileged, and ruled that many of the documents were not, in fact, privileged—and thus subject to discovery. Another litigation milestone occurred in November, 2016, when Chief Judge Braden denied a late Government Motion to Dismiss. In that latter decision, Chief Judge Braden provided a lengthy recital of the history of the dispute, as well as an appendix detailing “relevant statutory and regulatory provisions” that would seem to be a good resource for those hoping to deal with intellectual property matters within a government contracting environment.

We are not attorneys, nor are we any kind of intellectual property experts. That said, as we understand the decisions, AATI filed its patents, then received a government contract that required use of the patented technology. To summarize the dispute, we’ll just quote from Chief Judge Braden’s decision, omitting all internal citations.

On October 23, 25, and 27, 2000, AATI demonstrated a recovery system having a propeller guard mounted with a latching mechanism for the Coast Guard. Although the Recovery Contract required ten demonstrations, the Coast Guard decided to cease demonstrations, because several UAVs were severely damaged during the demonstrations. Thereafter, a Coast Guard Commander prepared a draft report evaluating the demonstrations and provided it to Mr. McDonnell. This report did not reference ownership of, or licensing rights to, the propeller guard mounted with a latching mechanism that was demonstrated by AATI to the Coast Guard. More than fifteen years later, on March 29, 2016, a Contracting Officer for the Naval Surface Warfare Center Dahlgren Division (‘NSWCDD’) sent a letter to AATI demanding title to the ‘inventions disclosed in AATI’s PCT/US/2009 Application; U.S. Patent Nos. 6,874,729; 7,097,137; 8,517,306; 8,167,242; 8,567,718; and 8,864,069; and U.S. Patent Application Serial No. 14/518,348,’ pursuant to 35 U.S.C. § 2025 and Federal Acquisition Regulation § 52.227-11.

(The CO demand occurred years after AATI filed a claim asserting that Insitu and Boeing had infringed on its patents, with the government’s authorization and consent.)

So it took five years and an unknown amount of legal fees, but AATI and the defendants reached an acceptable settlement. We do not know where the $12.5 million settlement payment will come from. The government could pay it. Boeing could pay it. Boeing could pay it and be reimbursed by the government. We don’t know. But we know that AATI is $12.5 million richer than it was, before its patents were infringed upon.

 

 

Newsflash

In March 2009, Nick Sanders’ article “Surviving Government Audits: Have the Rules of Engagement Changed?” was published in Government Contract Costs, Pricing & Accounting Reports (4 No. 2 GCCPAR P. 11). Apogee Consulting, Inc. is proud to announce that Mr. Sanders’ article was selected for reprint and publication in Thomson West’s The New Landscape of Government Contracting.  Mr. Sanders, Apogee Consulting’s Principal Consultant, joins such distinguished contributors as Professors Steven Schooner and Christopher Yukins, Luis Victorino and John Chierachella, Joseph West and Karen Manos, Joseph Barsalona and Philip Koos and Richard Meene, and several others.  The text covers a lot of ground, ranging from the American Recovery and Reinvestment Act (ARRA) to Business Ethics and Corporate Compliance, and includes several articles on the False Claim Act and the Foreign Corrupt Practices Act.  In addition, the text includes the full text of many statutory and regulatory matters affecting Government contract compliance.

 

The book may be found here.