FOR IMMEDIATE RELEASE CIV MONDAY, AUGUST 4, 1997 (202) 616-2765 TDD (202) 514-1888 JUSTICE DEPARTMENT SUCCESSFUL AGAINST INSLAW CLAIMS IN FEDERAL CLAIMS COURT WASHINGTON, D.C. -- Ending a 10-year litigation dispute the Court of Federal Claims rejected claims by the software firm Inslaw that the Department of Justice illegally stole its software and distributed it world-wide, the Justice Department announced today. According to a 186-page opinion, issued by Judge Christine Miller on July 31, 1997, there is "no merit to the claims" of a local software company that have fueled allegations of wrong- doing at the Department of Justice for a decade. The long- running dispute between Justice and Inslaw, Inc. centered around the company's claim that its PROMIS software, delivered to DOJ under a 1982 contract, had, in fact, been "stolen" by the government and was being disseminated world-wide. The court's decision, issued after a three-week trial, rejected all of Inslaw's claims, finding that Inslaw had not shown it had any ownership rights to the software or that DOJ acted improperly in any way in connection with the software. The Inslaw dispute received much press attention in 1988, when, in connection with Inslaw's bankruptcy filing, a District of Columbia bankruptcy judge used highly critical language in siding with Inslaw. That decision, which found that DOJ had taken software that was proprietary to Inslaw, was reversed on appeal, however. Judge Miller found that Inslaw's decision to take its case to the bankruptcy court rather than courts with certain jurisdiction to hear it, was a tactical one. After the bankruptcy court's decision, the Department conducted several internal investigations, including inquiries by the Public Integrity Section of the Criminal Division and the Office of Professional Responsibility. In addition, former Attorney General William Barr appointed a special counsel, former District Judge Nicholas Bua, to conduct an independent investigation. Each inquiry found no merit to Inslaw's claims. Later, Attorney General Janet Reno initiated a new investigation, this one conducted by the Office of the Associate Attorney General. That investigation also concluded that Inslaw's claims were false. The case was retried in the Court of Federal Claims in March of this year because Congress referred the case to the court for an advisory opinion as part of its consideration of whether to pass a private bill to compensate Inslaw. The court found that the claimed software enhancements are not proprietary to Inslaw, that DOJ acted justifiably regarding the software, that the government had unlimited rights in the PROMIS software it received, and the DOJ administered the 1982 contract in good faith. It also rejected Inslaw's copyright claim. Assistant Attorney General Frank Hunger, head of the Civil Division said, "Both parties benefit from having a decision from a court with authority to resolve the matter - a court that has heard all the evidence," he said. "And the public benefits because all the evidence has been aired and they can be confident that the facts have finally been revealed. Certainly, the Department benefits from the lifting of the cloud that has hung over it for a decade." Following the 1988 bankruptcy court decision, Inslaw's allegations of wrong-doing within DOJ expanded substantially to include alleged wide-spread dissemination of the software and its use by intelligence officials world-wide. Hunger said Judge Miller's decision "seems to put an end to that aspect of the Inslaw saga as well." The judge appointed a panel of independent experts to review the software Inslaw claimed were pirated versions of the PROMIS software. The experts found that Inslaw's allegations were false. The decision of the Court of Federal Claims concludes not only that Inslaw has no legal claim against the United States, but also that it has no equitable claim. Courts generally consider only the parties' legal rights, but in congressional reference proceedings, the court is instructed to look to the equities as well as the law. Because the court concluded that the government, not Inslaw, owned the software at issue, and that DOJ officials acted properly in their dealings with Inslaw, Judge Miller concluded that there was no equitable basis for any of Inslaw's claims. According to the court's opinion, the 1982 contract required Inslaw to install in U.S. Attorneys' offices a non-proprietary, public-domain version of the PROMIS software. But, without notice to the government, Inslaw installed a different, allegedly proprietary version of the software and then asserted that the government could not use the software in other offices. The court found that only 12 of the more than 100 alleged enhancements actually existed and that Inslaw could not demonstrate that Inslaw, rather that the government, owned them. Before the court's decision is sent to Congress, Inslaw will have an opportunity to "appeal" the matter to a three-judge panel of the same court. ### 97-323