Small business has been the great incubator of technological innovation throughout most of U.S. industry. But not in the defense industry. One reason is the normal rules of commercial contracts do not apply to defense contracting. The federal government can “take”—i.e. seize—whatever technology it wants from a U.S. company, including patented technology, and it can hide behind the excuse of military secrecy in refusing to provide constitutionally guaranteed “just compensation” for the public use of private property.

I know about this problem firsthand, as the founder and largest shareholder of a company denied monetary compensation for a significant contribution to the success of two second-generation stealth aircraft—the B-2 bomber and F-22 fighter.

Our patent (issued in 1988 and reissued in 1993) relates to the production of specifically designed carbon fibers as radar-absorbing material (RAM), one of the key developments that made it possible to build large aircraft that are almost invisible to radar.

The now-retired F-117 Nighthawk—which entered service in 1983 as the first operational stealth aircraft—was a compact mass of jutting angles designed to deflect radar. The F-117 also employed a radar-absorbing material, but its RAM, made from a nonhomogenous mixture of glass and carbon fibers, was only minimally effective. Our patented technology made the F-117 RAM technology obsolete.

Through a novel method of manufacturing, using only carbonized material (no glass fibers), we demonstrated the ability to produce carbon fiber sheets of controlled, uniform surface resistivity—within a wide range of desired values measured in ohms/square centimeter for different parts of the aircraft. With that, it became possible to make radar signals disappear by converting a significant portion of their electromagnetic energy into heat.

This was a true breakthrough, and Northrop—the prime contractor for the B-2—recognized it as such. In August 1987, George Rodgers, a top engineer at Northrop, sent us a letter that explicitly stated: “[Your] product was unique . . . Northrop purchased four different levels of resistivity ranging from 24 to 3,000 ohms/square. At the time the order was placed, Northrop Materials & Processes had never seen a material of this type before and was not aware of any other company that could supply material in this form with varying electrical properties.”

The B-2 flew in 1989 and entered service in 1997. The F-22 flew in 1997 and entered service in 2005. It also uses carbonized RAM with zero glass. How to make that is spelled out in our patent.

To date, the government has spent well over $100 billion on the two programs. But it has not paid a dime to Zoltek over and above the few thousand dollars that we received from Northrop for test samples.

After more than 11 years of litigation, the government first invoked what is known as the “secrecy privilege” in 2007 to block Zoltek's discovery of conduct infringing our patent in building the B-2 bomber. Then, earlier this year, it invoked the privilege again in the case of the F-22. In effect, the government is using—and abusing—the privilege as a Catch-22, telling us: “For you to prove your case in a court of law, we would have to divulge information to you, and we won't do that. We won't answer any of your questions.”

And just what is this privilege? It dates back 60 years. In 1953, the U.S. Supreme Court recognized the state-secret privilege in U.S. v. Reynolds. Pointing to the Fifth Amendment, which states that “private property (cannot) be taken for public use without just compensation,” the court warned that state secrecy is “not to be lightly invoked.” Nevertheless, at this critical stage of the Cold War, the court accepted on faith the government's assertion of need for secrecy in refusing to release an accident report on a deadly airplane crash.

Almost 50 years later, in 2000, the truth came out. Relatives of people killed in the crash found a copy of the original accident report. There were no state secrets in the report. But there was clear evidence of negligence on the part of the Air Force. It, however, was too late for relatives to sue the government.

But it is not too late for our justice system to recognize—and correct—abuse of the secrecy privilege as a means of strong-arming smaller companies that do not have large lobbying organizations in Washington. The government itself will benefit from vigorous development of new technologies if it is prepared to treat smaller, entrepreneurial companies with the respect that they deserve in being compensated for use of game-changing technology.