SBIR Gateway
SBIR Data Rights in Jeopardy as Night Vision Corp.
Loses SBIR Phase III Appeal

From SBIR Gateway Insider Newsletter
December 11, 2006


The Night Vision Corp has suffered another blow as the U.S. Court of Appeals upheld a lower court ruling against them.

Previously a ruling by the U.S. Court of Federal Claims against the Night Vision Corp (NVC) back in November of 2005, sent shock waves through the SBIR community. In the case of Night Vision Corp. v. United States, NVC filed a 5 part claim (see www.zyn.com/sbir/articles/nvc-case.htm) relating to their successful Air Force SBIR phase I and II awards in which NVC created 12 prototypes of night vision goggles.

The claims against the Air Force alleged:

  1. That the defendant breached the SBIR contracts with the plaintiff by disclosing proprietary technical data to Insight;
  2. That the defendant breached a provision allegedly incorporated by law into the SBIR contracts with the plaintiff, which required defendant to award plaintiff an SBIR Phase III contract;
  3. That the defendant breached an oral contract with plaintiff by not awarding plaintiff a SBIR Phase III contract;
  4. That the defendant violated a duty of good faith and fair dealing owed to plaintiff throughout the procurement process:
  5. A bid protest challenging the award of the contract to Insight instead of NVC.
NVC lost on all 5 counts and the SBIR community was shaken.

NVC appealed the case to the United States Court of Appeals for the Federal Circuit 06-5048. The Small Business Technology Council (SBTC) strongly disagreed with the lower court's decision and viewed it as a threat against small business SBIR data rights and the overall phase III program. While NVC was preparing their appeal, the SBTC went into action and undertook the complex and expensive procedure to write and file a detailed Amicus Brief with the court to try and help NVC, but more importantly to protect all SBIR companies' Phase III data rights.

On November 22, 2006, the U.S. Court of Appeals upheld the lower court's ruling and found in favor of the Air Force.

Although NVC lost the case, the SBTC's Amicus Brief yielded a strong positive influence on the court. In a 12 page ruling, the three judge panel stated:

We are mindful of the strong public policy, reflected in the SBIR program, favoring the awarding of government research and development contracts to small business concerns, as the Small Business Technology Council discusses in its amicus curiae brief. That policy, however, cannot prevail over the fatal defects in Night Vision's case that we have discussed.
The SBTC is studying the complete ruling of the court and will offer comments to their members in the near future. It is apparent that a remedy for data rights and phase III problem must come from the SBA and/or Congress. SBTC will be very proactive with both entities to resolve this problem and strengthen data rights for small businesses in the SBIR program. Interested parties should visit the SBTC web site at www.sbtc.org


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