FOR IMMEDIATE RELEASE                                         CIV
MONDAY, AUGUST 4, 1997                             (202) 616-2765
                                               TDD (202) 514-1888

     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.