Legal Round-up: Owning Your Inventions & Other Reports

Because of the recent tidal wave of general news, there are some legal issues that have been simmering away on the back burner that need our immediate attention. First up … How do you protect inventions derived from a contract?

• Owning Your Own Inventions – It’s one of those problems you never think about until … huh oh. What if your firm invents something new during the course of fulfilling your federal contract? How do you retain the rights? Generally, inventors are given the rights to their inventions, but if created as part of a contract, the federal government gets to use the invention anywhere in the world to carry out its own operations. There are specific deadlines inventors must meet to declare their intentions to claims their rights to sell/lease/license/etc. their inventions to any other entity worldwide, and they’re spelled out in the article linked above. Subcontractors have the same ownership rights as primes.

If the inventor does not follow procedure or elects not to claim his/her rights, worldwide rights are transferred to the federal government.

• Selling a Contracting Business – Selling a business that contracts with the federal government is not as easy as selling a business that doesn’t work with the feds. The Anti-Assignment Act, 41 USC § 15 prohibits assignment of a federal contract, which may mean your business can’t change ownership until all federal contracts have been fulfilled. Pretty much any sale, merger or absorption into a new business entity means the “assets responsible for fulfilling the contract” change ownership. That is what the Anti-Assignment Act was designed to stop. Moving forward with an ownership change requires a “novation agreement,” which is a declaration by the government that assignment is permitted. The procedures for obtaining a novation agreement are spelled out in FAR 42.1024(e) and (f). The Contracting Officer will decide whether the ownership transfer is in the best interest of the government.

Novation Agreements are usually approved, but the process can take up to six months.

• 2nd Circuit Reaffirms Davis-Bacon Preemption – In Carrion v. Agfa Construction, Inc., the Court reaffirmed that the Davis-Bacon supersedes state laws or regulations when it comes to revailing wages paid to workers fulfilling a federal contract. Davis-Bacon is the Depression era law that states that all workers employed as part of a federla contract must be paid the prevailing wage for that job and that region. Wage rates can be found here. In this specific case, the Court rejected the plaintiff’s suit to use Davis-Bacon as the basis to obtain back wages. However, they affirmed the Act and stated that New York law already provided a mechanism for claiming unpaid wages, which should provide the plaintiff with the means to receive payment.
• SIGAR Letter Reveals Lack of Payment to Subcontractors – The Special Inspector General for Afghanistan Reconstruction issued a letter that detailed significant instances of primes failing to pay local Afghan subcontractors. The letter noted that 52 complaints totaling $69 million have been filed. SIGAR noted several remedies including suspension and debarment as outlined in the Federal Acquisition Regulations. The letter, issued on June 17, 2013, is expected to jolt the federal government into action on a long-standing problem that dates back to 2009.
• GAO Upholds IBM’s Bid Protest – A few months ago, the CIA announced it had selected Amazon to provide secure cloud computing services. IBM-Federal also bid and ended up protesting the award. The GAO agreed with most of the protest. GAO agreed that:

-  The price scenarios were not evaluated in a manner that enabled “apples-to-apples” comparison;

-  During post-selection, the Agency relaxed its terms for software certification, which favored Amazon; and

-  The Agency disregarded news reports about reliability concerns with Amazon’s service. The GAO denied that part of the protest stating those reports were used in the evaluations.

However, upholding the first two complaints meant that the bidding processed was reopened, so IBM will get another shot.

• Effectively Managing Social Media in the Workplace – Social media permeates our lives – including the workplace. Drafting a policy to effectively manage its use requires a bit of a balancing act, since the National Labor Relations Act has something to say on the subject:

1. Employees have a right to discuss work conditions on social media without fear of reprisal.
2. Focus on limiting behavior that is not protected by the Act, like discussing trade secrets, harassment, or any conversation that could lead to a discrimination claim.
3. It’s suggested that you always include examples rather than issue broad policies.
4. Advise employees that all communication via company-owned property may be monitored at any time.
5. Train employees, enforce the policies, and advise them that policies are subject to change.

The NLRB memos regarding social media management can be found here.

• Affordable Care Act Notices Posted by October 1, 2013 – The Fair Labor Standards Act specifies that employees must be given proper notice of policies like the Affordable Care Act (ACA) and how those policies affect them. A technical bulletin outlining the requirements can be found here. Notices must generally cover:

• The existence of health insurance marketplaces;
• Services provided by health insurance marketplaces;
• How to contact a health insurance marketplace for assistance;
• The possibility that employees may lose the employer contribution to any employer-provided health plan if they purchase a plan through a health insurance marketplace;
• The possibility that employees may lose the ability to exclude employer and employee contributions from their income for federal income tax purposes if they purchase a plan through a health insurance marketplace; and
• Whether employees may be eligible for a premium tax credit if they purchase a qualified health plan through a health insurance marketplace.

The Department of Labor provided a sample of a proper notice for employers providing coverage here. For employers not providing coverage, an example notice can be found here.

Employers must provide employees of a notice of coverage options by October 1, 2013 and provided all employees hired after that date with a notice within 14 days of their employment.

• New Defense IG Nominated – Jon Rymer, current FDIC Inspector General, has been nominated by President Obama to become the new chief watchdog for the Defense Department. Rymer was also interim IG for the SEC and issued scathing reports on systematic failures during the 2008 financial crisis. He is considered a highly competent regulatory supervisor.

And, finally … From the you’ve-got-to-be-kidding file … An Australian federal court overruled a lower court decision in which a female employee sued her employer for workman’s comp after she was injured during a sexual romp so apparently vigorous that a chandelier hanging above her hotel bed fell on top of her. The court’s “rationale” for its ruling was that she was staying in a room designated by her employer. Therefore, any injury in that room would qualify for workman’s comp.

We are without speech.