Small business status impacts government contractors in several ways. Set-aside procurements and financial assistance programs are available for small businesses. Small business status is important for those seeking to meet the goals and commitments set forth in their small business subcontracting plans. Looming over all determinations of small business size status is the concept of affiliation. If the Small Business Administration finds that two business concerns are “affiliates” (one controls or has the power to control the other or a third party controls or has the power to control both), a business may no longer be a “small business.”

Affiliation determinations are likewise essential for pharmaceutical companies seeking to have the Food and Drug Administration waive the user fee for reviewing a new human drug application. Under § 736(d)(4) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 379h(d)(4), a small business is entitled to a waiver of the prescription drug user fee when the business meets three criteria:

  1. The business must employ fewer than 500 persons, including employees of its affiliates.
  2. The business does not have a drug product that has been approved under a human drug application and introduced or delivered for introduction into interstate commerce.
  3. The application must be the first human drug application, within the meaning of the FD&C Act, that a company or its affiliate submits to the Food and Drug Administration for review.

Continue Reading FDA breaks with SBA on small business affiliation

Liberty stamp.jpgWhen selecting a photo to use on its popular “Liberty” stamps, the Postal Service unknowingly used a replica of the 128-year old Statue of Liberty. Instead of the original version welcoming the tired, the poor, and the huddled masses in New York harbor,  USPS selected the “fresh-faced,” “sultry” and “sexier” 17-year old version summoning merry-makers to the New York-New York Hotel & Casino in Las Vegas, NV. Robert Davidson, sculptor of the Sin City version of Lady Liberty, has thus filed a copyright infringement action in federal court, seeking unspecified damages.

Continue Reading Postal Service sued for using “sexier” Statue of Liberty on stamp

Thumbnail image for Patent Infringement - 148981269.jpg“Oh, a-hunting we will go!” The U.S. Postal Service Office of Inspector General (OIG) is looking for a supplier to help it track down infringers of the agency’s patents and other intellectual property. Under a solicitation issued on March 26, 2013, the OIG intends to start with five patents that have the “highest potential for infringement or licensing.” OIG has already examined six USPS patents for this purpose, including those involving:

  • managing powered industrial vehicles, 
  • web-based address corrections,
  • image lift and capture, and
  • tracking a moveable article.

The Postal Service has identified 181 agency-owned patents that show promise for commercial development or catching infringers. These will be narrowed down by the OIG and the supplier to five. The supplier will then research online data from the US Patent and Trademark Office, assess potential commercial value of the patent, and evaluate the opportunity for potential licensing revenue and recovery of royalties. In other words, become the Postal Service’s patent troll.

Unlike other federal agencies, the Postal Service is not subject to the Federal Acquisition Regulation (FAR) and has a slightly different approach to intellectual property than its federal cousins. For example, the Postal Service occasionally seeks outright ownership of patent rights, not just unlimited rights in them. Companies who contract with the Postal Service should take care to ensure that they do not inadvertently hand over intellectual property rights to the agency. The good news is that the Postal Service’s standard intellectual property contract clauses are not necessarily set in stone. Under the USPS Supplying Principles and Practices manual, which sets out the agency’s unique procurement policies and rules, these clauses are subject to negotiation or alternatives proposed by the supplier.

It’s a worst-case scenario for many government contractors. Despite using strict confidentiality agreements and bold restrictive legends, the government releases a valuable trade secret to the public. The Trade Secrets Act may result in criminal consequences for the offending individuals, but the more pressing question for the contractor is how to recoup the loss of a valuable asset. The recent decision in Spectrum Sciences and Software, Inc. v. United States, No. 04-1366C (Fed. Cl. Feb. 14, 2011) [pdf], offers some guidance.

Continue Reading Measuring damages for government theft of contractor trade secrets

It’s a common assumption in litigation under the Freedom of Information Act that trade secrets lose value with the passage of time. The January 19, 2011 decision in Taylor v. Babbitt, No 03-0173-RMU (D.D.C. Jan. 19, 2011), shows there’s much more to the story. The case involved a 2002 FOIA request seeking “plans, blueprints, specifications, engineering drawings and data” submitted to the government in 1935 in support of a type certificate application for the Fairchild F-45.  After a harrowing ride through the court system, including a trip to the Supreme Court, United States District Judge Ricardo M. Urbina ordered the government to produce the 75-year-old documents.

Continue Reading FOIA trade secrets exemption unavailable for 75-year-old aircraft design