Falsification in Proposal/Progress Rpt Intellectual Theft

Published by the National Science Foundation, Office of Inspector General on 1999-07-21.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                              CLOSEOUT FOR M98020007

        On 25 February 1998, OIG received from the president (the complainant1)of a company2
an allegation of intellectual thefl and false certification in a proposal3 submitted by the subject,"
whose company was a subcontractorSfor the complainant's company. The complainant alleged
that the subject had based his proposal on a patent assigned to the complainant's company, even
though the subject had no rights in the patented technology, and the subject's subcontract
included a confidentiality agreement. The complainant also said that he was suing the subject.
                                                                                                       .   -
         OIG examined the subject's proposal and verified that it was based upon the patented
technology. Indeed, the project summary stated that the purpose of the proposal was to
demonstrate the technical and economic merit of the patented invention. The subject had clearly
identified the patented technology as the basis for the proposal by citing the patent in the first
sentence of the proposal and several times thereafter; by including the patent in the proposal's
list of references; and by providing two large copies of illustrations from the patent that were
clearly marked with the patent number.

        The subject told OIG that the complainant's company had approached his company to
build the patented technology, and that he thought that he and his company had permission to use
that technology as a basis for the NSF proposal. The subject further explained that he and his
company had mistakenly believed that he had permission to use the patented technology because
the purpose of the NSF award was to establish the credibility of the product based on the patent,
and the complainant's company was aware of that purpose. OIG also received a letter from the
complainant's attorney: verifying that the subject mistakenly believed he had permission from
the complainant's company to use the patented technology in the NSF proposal. Furthermore,
the attorney indicated that the complainant and subject had reached a setdement in regard to their
lawsuit, and would cooperate in any future proposals to NSF.

         OIG concluded that the issues in this case arose from a breakdown in communication and
collaboration between the complainant and the subject, and that the subject's mistaken belief that
he had permission to proceed was not unreasonable. While it was not the best practice for the
subject to proceed without clear permission to use the technology, we do not believe that the
subject's actions were a serious deviation fiom accepted practice. We also conclude that there is
no substance to the allegation of false certification in the NSF proposal, because the subject
clearly indicated the proposal's reliance on the patented technology, and NSF PIS are required to
certifL to the originality of the proposed text and graphics, "unless otherwise indicated." Finally,
the restoration of cooperation between the subject and complainant make it unlikely that fiuther
incidents of this type will occur. Accordingly, this case is closed and no further action will be

cc:    Integrity, IG

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