Revealed: the government agency stealing ideas from businesses
A number of businesses are complaining a Defence Department organisation has stolen their intellectual property, Crikey can reveal. Chris Seage reports new legislation makes the problem worse.
At least five businesses have alleged senior officers in the Defence Science and Technology Organisation have plagiarised their intellectual property for their own research and then passed it on to business partners to develop a rival product. They also allege there is a “rogue element within the agency” and a “culture of circling the wagons when confronted with allegations against them”.
And there are fears that IP plagiarising could increase with the Labor government last year implementing the Defence Trade Controls Act,which seeks to limit Australian businesses or individuals supplying technology to someone outside of Australia without first revealing their IP to the Australian government.
Brendan Jones, a Brisbane-based small businessman, spent 12 years of his life developing his revolutionary Kestrel Tactical Simulator, a PC-based professional military platform that simulates air, sea, land and space operations anywhere on the planet. The program simulated various transport modes, weaponry, radars and other sensors.
“It realistically simulated injuries,” Jones explained to Crikey. “A shot soldier would start bleeding at a rate appropriate for the wound, and would have to get medical attention, say, via a medivac before they went into shock. I spent many years studying warfare intently to make it as accurate an experience as possible.”
Jones wanted to sell the software to the Defence Department but he was told he must go through DSTO. The government organisation looked at it but eventually recommended against funding the project because it was “impossible to do on a PC”. Jones battled on.
“I developed the software myself from my own savings, but when I finished, DSTO tricked ADF into believing the software wouldn’t ship for several years. They then gave my IP to scientists I had been warned were plagiarising private sector research, broke a non-disclosure agreement, and three months later they commissioned their business partner to produce a rival version known as BattleModel,” Jones said.
Crikey understands BattleModel only began as an air simulator while Jones’ KTS was multi-domain (land, sea, air and space) and in particular had excellent maritime simulation capability that was a major attraction to the Navy. An independent investigator appointed by the ADF to investigate the theft of IP told Jones: “Your software and the DSTO BattleModel software were remarkably similar. When I started this case I couldn’t see any similarities between KTS and BattleModel. Now I can’t see anything they don’t have in common.”
Most people Crikey spoke to were unwilling to speak on the record due to a fear of upsetting existing business contracts with the ADF. A CEO of a major defence industry organisation told Crikey the organisation was aware of three recent cases where the DSTO had plagiarised a small business and run off with its ideas. “I’m the first to say there are two sides to every story, but as more instances came up and I thought this is starting to happen a bit much,” the CEO said. “The first person you think, well, he might be a bad businessman and didn’t protect his IP, but then you start hearing of other people, and now I’ve had three cases across my desk, and I’m beginning to think that there is some sort of a systemic problem within the organisation.”
One of the businesspeople considered taking legal action but decided not to fight the department as he suffered a nervous breakdown during protracted negotiations. In a confidential email to the CEO, he said:
“Just letting you know that I am finished now. DMO cancelled all of my contracts; DSTO awarded my last contract to xxxxx who had been given access to all of my IP and processes by DSTO so there’s nothing left for me to do now. All the work I developed and pushed with xxxxx will now go to xxxxx.”
Another businessman considering legal action was working alongside DSTO in one of its divisions to develop technology but his IP was passed on to a rival company, potentially costing him millions of dollars. The company is still working with DSTO on other projects. The managing director also had a signed non-disclosure agreement with DSTO.
“We lost many years of investment through no fault of our own,” he said. “If you have technology that you pass on to them you’ve got to be really careful who you are talking to, and you have got to guard against those within; worse still, those rogues that are brazen enough to actually take on a roll of passing that information on. I’m aware of two other cases of where this has happened and were settled out of court.”
Crikey sources say the DSTO is a world leader in science and generally a professionally run organisation, but some rogue officers at junior and senior level within the agency threaten to damage a hard-earned reputation. The sources also believe the level of impartiality in subsequent defence investigations of complaints leaves a lot to be desired.
The defence industry organisation CEO said: “I think that once people gel into what they are doing they get extremely risk-averse and will not acknowledge things that have happened. I think this has happened in the cases I’ve been involved in, and they disbelieve that these things haven’t really gone on and industry are just making it up.”
This was supported by the small business managing director, who told Crikey: “The people concerned that were brought to the attention of DSTO are today still operating with impunity. You then have a layer of defence behaviour where they are all buddies and they will encircle the wagons; you go in and attack them, and they will just shoot you down. They don’t care; they will throw the kitchen sink at you. They will attack before they can defend themselves to the point they will create security incidents that don’t exist to try and discredit you.”
Now there are fears the Labor-initiated Defence Trade Controls Act will open the door to more plagiarising. The purpose of the legislation is to strengthen Australia’s existing export controls and implement the Australia-US Defence Trade Cooperation Treaty. Australia’s export control system aims to control goods and technology that can be used in chemical, biological and nuclear weapons, or military goods and technology, and prevent them from getting into the wrong hands. It will be phased in over a two-year period, but after that those who don’t comply face prison terms of up to 10 years and fines in the hundreds of thousands of dollars.
The legislation has drawn wide criticism across the academic sector. Brendan Jones is sceptical: “If I phoned or emailed someone overseas just to talk about it, e.g. to nibble for sales, get advice or discuss a technical problem, I could go to jail for 10 years. Instead I have to apply for permits from Defence just to talk about my work, with no recourse against Defence stealing my IP. After what happened last time, no way I’d expose myself to them again.”
A Defence spokesperson told Crikey that one complaint of IP plagiarism has been received by the DSTO in the last five years. The complaint was not upheld. Comment was sought from the DSTO Probity Board and the Inspector-General of the ADF, but they did not respond before deadline.