Inslaw, Inc. is a Washington, D.C.–based information technology company that markets case management software for corporate and government users. Inslaw is known for developing PROMIS, an early case management software system. It is also known for a lawsuit that it brought against the United States Department of Justice (DOJ) in 1986 over PROMIS, alleging that the Justice Department had dishonestly conspired to "drive Inslaw out of business 'through trickery, fraud and deceit'" by withholding payments to Inslaw and then pirating the software.
Inslaw won damages in bankruptcy court, but these were overturned on appeal. The suit resulted in several Justice Department internal reviews, two Congressional investigations, the appointment of a special counsel by Attorney General William P. Barr, and a lengthy review of the special counsel's report under Attorney General Janet Reno. Inslaw's claims were finally referred by Congress to the Court of Federal Claims in 1995, and the dispute ended with the Court's ruling against Inslaw in 1998. During the 12-year long legal proceedings, Inslaw accused the Department of Justice of conspiring to steal its software, attempting to drive it into Chapter 7 liquidation, using the stolen software for covert intelligence operations against foreign governments, and involvement in a murder. These accusations were eventually rejected by the special counsel and the Court of Federal Claims.
History of Inslaw Inslaw began as a non-profit organization called the Institute for Law and Social Research. The Institute was founded in 1973 by William A. Hamilton to develop case management software for law enforcement office automation. Funded by grants and contracts from the Law Enforcement Assistance Administration (LEAA), the Institute developed a program it called "PROMIS", an acronym for Prosecutors' Management Information System, for use in law enforcement record keeping and case-monitoring activities.Senate Staff Study, p. 1 When Congress voted to abolish the LEAA in 1980, Hamilton decided to continue operating as a for-profit corporation and market the software to current and new users. In January 1981 Hamilton established the for-profit Inslaw, transferring the Institute's assets over to the new corporation.
Development of PROMIS
PROMIS (Prosecutors Management Information System) was a case management software developed by Inslaw.Steve Ditlea, In New French Best-Seller, Software Meets Espionage, New York Times (June 20, 1997). The software program was developed with aid from the Law Enforcement Assistance Administration to aid prosecutors' offices in tracking cases. PROMIS software was originally written in COBOL for use on mainframe computers; later a version was developed to run on 16 bit mini-computers such as the Digital Equipment Corporation PDP-11. The primary users of this early version of the software were the United States Attorneys Office of the District of Columbia, and state and local law enforcement. Both the mainframe and 16 bit mini-computer versions of PROMIS were developed under LEAA contracts, and in later litigation, both Inslaw and DOJ eventually agreed that the early version of PROMIS was in the public domain, meaning that neither the Institute nor its successor had exclusive rights to it.Bua Report, p. 16
The Promis implementation contract In 1979, the DOJ contracted with the Institute to do a pilot project that installed versions of PROMIS in four US Attorneys offices; two using the mini-computer version, and the other two a "word-processor" version which the Institute was developing. Encouraged by the results, the Department decided in 1981 to go ahead with a full implementation of locally based PROMIS systems, and issued a request for proposals (RFP) to install the mini-computer version of PROMIS in the 20 largest United States Attorneys offices. This contract, usually called the "implementation contract" in later litigation, also included developing and installing "word-processor" versions of PROMIS at 74 smaller offices.Senate Staff Study, p. 1. According to the House report (p. 26), the "word processor" version was designed for Lanier word processors. The now for-profit Inslaw responded to the RFP, and in March 1982 was awarded the three-year $10 million contract by the contracting division, the Executive Office of United States Attorneys (EOUSA).Senate Staff Study, p. 2 Having previously developed a 16-bit version of PROMIS, Inslaw developed a 32-bit version, for various operating systems, specifically VAX/VMS, Unix, OS/400, and (in the 1990s) Windows NT.
Contract disputes and Inslaw bankruptcy The contract did not go smoothly. Disputes between EOUSA and Inslaw began soon after its execution.Bua Report, pp. 21-25 A key dispute over proprietary rights had to be solved by a bi-lateral change to the original contract. (This change, "Modification 12," is discussed below.) EOUSA also determined that Inslaw was in violation of the terms of an "advance payment" clause in the contract. This clause was important to Inslaw's financing and became the subject of months of negotiations.Senate Staff Study, p. 3. Bua Report, p. 24-25. There were also disputes over service fees. During the first year of the contract, the DOJ did not have the hardware to run PROMIS in any of the offices covered by the contract. As a stopgap measure, Inslaw provided PROMIS on a time-share basis through a VAX computer in Virginia, allowing the offices to access PROMIS on the Inslaw VAX through remote terminals, until the needed equipment was installed on-site.Bua report, pp. 26 EOUSA claimed that Inslaw had overcharged for this service and withheld payments.Senate Staff Study, p. 3
The DOJ ultimately acquired Prime computers, and Inslaw began installing PROMIS on these in the second year of the contract, in August 1983.Bua report, p. 34 The "word-processor" PROMIS installation, however, continued to have problems, and in February 1984 the DOJ cancelled this portion of the contract. Following this cancellation, the financial condition of Inslaw worsened, and the company filed for Chapter 11 bankruptcy in February 1985.Senate Staff Study, p. 4.In re Inslaw, Inc., 97 B.R. 685 (D.D.C. 1989).
Proprietary rights dispute The implementation contract called for the installation of the mini-computer version of PROMIS, plus some later modifications that had also been funded by LEAA contracts and, like the mini-computer version, were in the public domain.There were disputes earlier over which modifications were included in the contract and whether various versions of PROMIS were in the public domain (Bua Report, p. 17 fn 7). These were resolved in the litigation, where the modified version called for in the contract is usually referred to as the "Pilot Project PROMIS plus the BJS enhancements" (Bua Report, p. 19). In addition, the contract data rights clause "gave the government unlimited rights in any technical data and computer software delivered under the contract."Bua Report, p. 19 This presented a potential conflict with Inslaw's plans to market a commercial version of PROMIS which it called "PROMIS 82" or "Enhanced PROMIS." The issue came up early in the implementation contract, but was resolved by an exchange of letters in which DOJ signed off on the issue after Inslaw assured the DOJ that PROMIS 82 contained "enhancements undertaken by Inslaw at private expense after the cessation of LEAA funding."The Bua Report, pp. 21-23, gives a detailed account of the dispute. The quote is from Bua Report, p. 23. The Senate Staff Study, p. 2, gives a much briefer description, and the House Investigation (pp. 16-18) adopts the Bankruptcy Court's characterization of the incident as an example of DOJ Project Manager C. Madison Brewer's hostility towards Inslaw.
The issue arose again in December 1982 when the DOJ invoked its contract rights to request all the PROMIS programs and documentation being provided under the contract.Senate Staff Study, p. 3; House Investigation, p. 26-27; Bua Report, p. 25-27. The reason the DOJ gave for this request in later litigation was that it was concerned about Inslaw's financial condition. At that point, DOJ had access to PROMIS only through a VAX time-sharing arrangement with Inslaw; if Inslaw failed, DOJ would be left without a copy of the software and data it was entitled to under the contract.The Bankruptcy Court rejected this explanation for the DOJ request. The Senate investigators do not discuss this in detail, but do present some of the reasoning used in the Bankruptcy Court's findings of fact (Senate Staff Study, p. 3). The House investigators mention the incident, but do not express any views on it (House Investigation, p. 26-27). The Bua Report (p. 129-132), and later the Court of Federal Claims, both accept the DOJ explanation. Inslaw responded in February 1983 that it was willing to provide the computer tapes and documents for PROMIS, but that the tapes it had were for the VAX version of PROMIS, and included proprietary enhancements. Before providing the tapes, Inslaw wrote, "Inslaw and the Department of Justice will have to reach an agreement on the inclusion or exclusion" of the features.Bua Report, pp. 27-28
The DOJ response to Inslaw was to emphasize that the implementation contract called for a version of PROMIS in which the government had unlimited rights and to ask for information about the enhancements Inslaw claimed as proprietary.Bua Report, p. 28. Inslaw agreed to provide this information, but noted that it would be difficult to remove the enhancements from the time-sharing version of PROMIS and offered to provide the VAX version of PROMIS if the DOJ would agree to limit their distribution.Bua Report, p. 29. According to Bua (fn. 17), the reason for the difficulty and expense in producing an unenhanced version of PROMIS was that Inslaw maintained only the enhanced version of PROMIS on its servers; providing an unenhanced version would have required Inslaw to "manually back out each enhancement out of each module of the program." In March 1983, the DOJ again informed Inslaw that the implementation contract required Inslaw to produce software in which the government had unlimited rights, and that delivery of software with restrictions would not satisfy the contract.Bua Report, p. 29
Contract revisions After some back and forth, DOJ contracting officer Peter Videnieks sent a letter proposing a contract modification. Under the modification, in return for the software and data request, DOJ agreed not to disclose or disseminate the material "beyond the Executive Office for United States Attorney and the 94 United States Attorneys' Offices covered by the subject contract, until the data rights of the parties to the contract are resolved."Bua Report, p. 31 To resolve the data rights issue, the letter proposed that Inslaw identify its claimed proprietary enhancements and demonstrate that the enhancements were developed "at private expense and outside the scope of any government contract." After these were identified, the government would then "either direct Inslaw to delete those enhancements from the versions of PROMIS to be delivered under the contract or negotiate with Inslaw regarding the inclusion of those enhancements in that software." Inslaw eventually agreed to this suggestion, and the change, referred to as "Modification 12," was executed in April 1983. Inslaw then provided DOJ with tapes and documentation for the VAX version of PROMIS.Bua Report, p. 31-32.