- Those NDAs May Not Be Worth the Paper They Are Written On
- April 22, 2015
- Law Firm: Sheppard Mullin Richter Hampton LLP - Los Angeles Office
It is a given that companies strive to protect their intellectual property. Over the years, as an instrument of that protection, companies have made increasing use of non-disclosure agreements to advance that objective. A recent decision of the Court of Federal Claims - Liberty Ammunition v. United States - calls into serious question the efficacy of NDAs signed by U.S. Government personnel.
Liberty Ammunition is, principally, a patent case brought under 28 U.S.C. § 1498. However, the plaintiff also alleged that the Government had breached a number of NDAs that had been executed by U.S. Government officials and civilian support contractors incident to their acquisition of access to Liberty’s technology. The Government argued that the NDAs could not be enforced because none of the signatories had a contracting officer’s warrant and, therefore, they lacked the authority to bind the Government. The COFC agreed. The Court held that “the government signatories lacked the requisite express actual authority to bind the government to the NDAs.” The Court also held that they lacked actual implied contracting authority and that no warranted contracting officer had ratified the NDAs.
Because two of the four NDAs at issue in Liberty Ammunition were signed by civilian contractors supporting the Government personnel, it would seem that the plaintiff would have recourse against them individually and perhaps against their employers for breach of their individual NDAs. Understandably, that issue was not addressed by the COFC. However, the Court’s holdings with respect to the NDAs signed by Government personnel should be a red flag to anyone who is contemplating the sharing of proprietary intellectual property with Government personnel. The moral of Liberty Ammunition is clear -Do not rely on an NDA, without more, to protect you from the misuse of your intellectual property by the Government;
Verify the actual authority of the Government signatory to bind the Government contractually; and
If the signatory lacks that authority, or cannot verify it to your satisfaction, have the NDA co-signed or endorsed by a warranted contracting officer.
It is well-known that the Government wants your intellectual property and is continually devising and implementing new regulatory means of obtaining that intellectual property. Don’t make the Government’s job any easier by ignoring the lessons of Liberty Ammunition.