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Termination Clause Trumps Cost-Sharing

January 30, 2006

The Federal Circuit in Jacobs Eng'g Group, Inc. v. U.S. (Jan. 19, 2006) had before it the interesting scenario of the government terminating a contract with an 80/20 cost share and the contractor insisting that it should get "all" its costs under the termination for convenience clause, not just 80% per the cost share. The court agreed, because the cost share had not been specifically incorporated in the termination clause and the termination had deprived the contractor of his compensating benefit for taking the cost share in the first place, patent rights in the finished work.

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