When New England inventor Philip French had his epiphany 15 years ago, he didn't dream it would lead to an invention that would be pressed into service in a top-secret government project, or spawn an epic court battle over the limits of executive power. He was just admiring a tennis ball.

The ball's seam, with its two symmetrical halves embracing each other in a graceful curve, intrigued him. "I thought, my god, I bet you can do something with that kind of shape," he recalls. He was right. French and two colleagues went on to design and patent a device now called the Crater Coupler, a simple, foolproof connector for linking one pipe or cable to another without nut threads or bolted flanges.

The device is interesting on its own, but the broader legal legacy of the invention may be more important. In a little-noticed opinion this month, a federal appeals court ruled against the Crater Coupler patent holders and upheld a sweeping interpretation of the controversial "state secrets privilege" – an executive power handed down from the English throne under common law that lets the government effectively kill civil lawsuits deemed a threat to national security, even if the state is not a party to the suit.

The ruling is notable as a rare appellate interpretation of the state secrets privilege as it applies to patent holders. As such, it is a potentially worrying development for inventors – particularly those developing weapons, surveillance and anti-terror technologies for government contractors – who may find infringement claims dismissed without a hearing under the auspices of national security. It also offers a fascinating, if limited, view into the machinery of official secrecy at a time when the privilege is being exercised as never before.

"It's the most powerful privilege the government has," says William Weaver, senior adviser to the National Security Whistleblowers Coalition. "It's the nuclear option. It never fails."

French says he and his partners – Charles Monty and Steven Van Keiren – got the first inkling of a national security application for the Crater Coupler a decade ago. While shopping the new design around to "a whole mess of quick-disconnect companies," the trio received an intriguing inquiry from Lucent Technologies, the reincarnation of the legendary Bell Labs research center, and at that time still part of AT&T.

Lucent wanted to evaluate the Crater Coupler for use as a fiber-optic "wetmate" – an airtight connector for two fiber-optic cables designed to operate underwater. It was part of a contract with a U.S. government agency that, the company said, would have to remain unnamed. "It was a secret black job, they couldn't divulge what it was for," says French. "Who it was for, the Navy or the CIA, or who knows, they never said."

A Lucent spokesman confirmed that the company had contact with French in 1995, but wouldn't discuss the details, citing government secrecy concerns.

But according to French, the inventors agreed to help Lucent try to adapt the Crater Coupler to the company's needs, with the expectation that Lucent would license the group's patent if it all worked out. The inventors sent over plans, sketches and a model, and French began consulting and advising a Lucent engineer in monthly phone calls.

After about a year of development and testing, Lucent had good news for the inventors: The device passed all the tests, shaming a competing, clunky design that French says resembled an old thermos. But when the inventors got on the phone with Lucent's lawyers to discuss license terms, the company dropped a bomb. "Almost the first thing they said was, 'Well, we don't have to do anything, because this is under some sort of provision for military secret stuff where we don't have to pay anything,'" says French.

French felt betrayed. "This was after a year of encouragement, with me helping them and them informing us of their progress," says French. "That was one hell of a shock."

Lucent eventually offered the inventors $100,000 for the right to produce 1,000 wetmate couplers. The offer caused a rift between French and his partners: They wanted to make a counteroffer of $500,000, but French – in his 60s and recently retired – wanted to take what was on the table. "I said, well, Lucent doesn't have to do a thing, so why don't we take $100,000 and be happy with that?"

Unable to agree, French's partners bought him out for a flat $30,000. "I used some of the money to have a garage built," French says.

Lucent rejected the remaining inventors' counteroffer, and in 1998 Monty and Van Keiren, now incorporated as Crater Corp., filed a federal lawsuit in eastern Missouri against Lucent alleging patent infringement, trade-secret theft and breach of contract. Crater's attorney, Robert Schultz, says there's a question of basic fairness. "Lucent's made a ton of dough, and my clients are out in the cold," says Schultz.

The patent-infringement portion of the case has since been dismissed, under a federal law that says a company can't be sued for infringement if the development was for the exclusive use of the government.

After a year of pretrial wrangling, the case had progressed to the point that Schultz could start subpoenaing documents to support his claim, when the government intervened to assert the state secrets privilege.

Never passed by Congress, the privilege has its roots in English common law and was cemented into American jurisprudence by a landmark 1953 Supreme Court case titled U.S. v. Reynolds. In Reynolds, the widows of three men who died in a mysterious Air Force crash sued the government, and U.S. officials tried to quash the lawsuit by claiming that they couldn't release any information about the accident without endangering national security. The Supreme Court upheld the claim, establishing a legal precedent that today allows the executive branch to block the release of information in any civil suit – even if the government isn't the one being sued.

According to research by Weaver, an associate professor of political science at the University of Texas, the government invoked the privilege only four more times in the next 23 years. But following the Watergate scandal, the executive branch began applying state secrecy claims more liberally. Between 1977 and 2001, there were at least 51 civil lawsuits in which the government claimed the state secrets privilege – in every case successfully.

"There was more oversight of presidential activity" after Watergate, says Weaver. "In response to that, I think presidents resorted to the state secrets privilege to keep that oversight from cramping their style."

Under Reynolds, the head of a federal agency must personally intervene to invoke the privilege. In Crater v. Lucent, it was Richard J. Danzig, then-secretary of the Navy, who did the honors. In a March 1999 declaration, Danzig claimed that permitting Crater to pursue a legal inquiry into the government's alleged use of their coupler would tip off U.S. adversaries to certain highly classified government operations and "could be expected to cause extremely grave damage to national security."

"Those operations and programs are currently ongoing," Danzig wrote. "It is therefore my opinion that disclosure of information concerning them would permit potential adversaries to adopt specific measures to defeat or otherwise impair the effectiveness of those operations and programs."

Judge E. Richard Webber granted the government's request immediately, and blocked the Crater inventors from obtaining any information from Lucent or the feds about the government's alleged use of the Crater Coupler or any other coupling device. In the legal battle that followed, it emerged that the order covered an astonishing 26,000 documents – some of which were not only unclassified, but had already been entered into the public record. In 2002, Webber examined those documents in chambers, and concluded that not one of them would be available for Crater's use in pressing its case.

Schultz turned to the Federal Circuit Court of Appeals. This month a divided three-judge panel ruled (.pdf) that the lower court had properly applied the state secrets privilege. "I would have thought that courts would be more hesitant to apply it to the patent area, but in this case there was no hesitancy whatsoever," says Weaver.

In a dissenting opinion, Circuit Judge Pauline Newman wrote that the ruling efficiently killed Crater's lawsuit, and argued that a saner solution would have been to proceed with the case behind closed doors – a procedure already used to protect classified information during criminal espionage prosecutions.

"Although there may be areas of such sensitivity that no judicial exposure can be countenanced – such as, perhaps, the formation of the Manhattan Project – there is no suggestion that the sensitive information concerning the Crater Coupler cannot be protected by well-established judicial procedures for preserving the security of sensitive information," Newman wrote.

Schultz argues that the secrecy order shouldn't apply to documents concerning an unclassified presentation that Lucent held in which it allegedly showed off the Crater Coupler. He plans to ask for a rehearing of the appeal but claims to be optimistic that the case can proceed with or without access to the evidence.

If so, it would be a rarity, says Steven Aftergood, director of the Federation of American Scientists' Project on Government Secrecy. "The privilege has worked very effectively for the government," says Aftergood. "In almost every case where they've invoked it, it leads to the termination of litigation."

Indeed, the list of cases in which the state secrets privilege has been invoked seems a pantheon of injustice. The privilege was upheld in 1982 to prevent former Vietnam War protestors from learning more about an illegal CIA and NSA electronic surveillance effort that targeted them during the 1970s. In 1991, it was used to stop a lawsuit by a banker who'd unwittingly been roped into an illegal CIA money-laundering operation, and who claimed the agency had ruined his career when he tried to get out.

In 1998, workers at the Nevada airbase known colloquially as Area 51 were blocked from learning what chemicals they'd been exposed to during illegal burning of toxic waste by base administrators.

In 2004, the Bush administration resorted to the privilege to silence former FBI translator Sibel Edmonds, who said she was fired from the bureau after reporting security breaches and misconduct in the agency's translation program. And in perhaps the most disturbing case, this year the Justice Department asserted the privilege to kill a lawsuit by Maher Arar, a Syrian-born Canadian citizen who, in 2002, was picked up by U.S. officials as a suspected terrorist while changing planes at JFK, and promptly shipped off to Syria for a year of imprisonment and torture.

"Here's a guy who was a victim of a crime, that is, kidnapping, who was sent by us to a foreign country to be tortured to get information for us," says Weaver. "That violates all kinds of laws and the Convention Against Torture and who knows what else."

Weaver says the state secrets privilege is a blunt instrument that too often utterly obliterates any further inquiry by the plaintiffs in a civil case. "I'm not saying it's always invoked for evil purposes – it almost certainly is not. But we can't tell when it is, and that's the problem." He faults Jimmy Carter for being the first president to use the privilege with frequency, and George W. Bush for using it systematically. "This presidency is the first one in history to use the secrecy privilege in a programmatic, organized comprehensive policy," Weaver says. "It's the first secrecy presidency."

"It effectively shuts down the judicial process," says Aftergood. "It tells people that they cannot have their day in court because national security will not permit it, and that's a terrible message to send."

Justice Department spokeswoman Cynthia Magnuson says the department generally doesn't comment on how the state secrets privilege is applied. "The only thing I can say is it's applied if appropriate only," she says.

But if the outcome sometimes seems unjust, it's a necessary trade-off to preserve national security, says Washington attorney Shannen Coffin, a lawyer at Steptoe and Johnson and a former U.S. deputy assistant attorney general from 2002 to 2004.

"That is the balance the court has struck in certain circumstances," says Coffin. "A lawsuit that relates to monetary damages isn't nearly as important as protecting the security of the American people."

While at the Justice Department, Coffin was involved in several cases asserting the privilege. "I've been in meetings with cabinet officials that have invoked the privilege, and they don't take it lightly," Coffin says.

If there's been an increase in the exercise of the privilege, "It is simply a recognition that information is a weapon in the modern day and age," says Coffin. "And that is a serious concern for national security."

Coffin says bold action, like withholding 26,000 documents in the Crater case, is sometimes necessary to prevent a U.S. adversary from compiling bits and pieces of seemingly harmless, unclassified information into a state secret. That "mosaic theory" of national security is frequently cited in litigation surrounding the privilege, and Department of Justice attorney Lisa Olson raised the argument in the Crater case last year.

"The more information that is disclosed, the easier it becomes to disclose more, and soon the floodgates are opened and nothing is secret," Olson told Judge Webber.

A Navy spokeswoman declined to comment on the Crater case, but outside experts say it's easy enough to guess the nature of the top-secret project the government is protecting. "It's all but self-evident that it has to do with the clandestine monitoring of fiber-optics communications cables on the ocean floor," says Aftergood.

"They've been interested in it since the first fiber-optic cable was ever invented," says James Bamford, author of two books on the NSA. "It's clear that they have a major operation in terms of tapping into sea cables."

Fiber-optic cables were well on their way to supplanting less-secure communications technologies at the time that Lucent approached the Crater inventors, and it's been widely reported that the switch threatened to cut off the electronic spies at the NSA. "There's been this huge shift from using satellite communications, which is very easy to tap into, to using both terrestrial and transoceanic fiber-optic cables, and that's presented a major problem for NSA," says Bamford.

To counter that problem, and keep the electronic intelligence flowing, NSA has reportedly developed sophisticated techniques for wiretapping undersea cables, relying on specially equipped Navy submarines, the most advanced of which is the newly recommissioned USS Jimmy Carter, fresh from a $1 billion upgrade that reportedly includes state-of-the-art technology for tapping into undersea fiber-optic communications.

French, now 74 and living in Maine, is not a party to the case since his partners bought out his interest in the invention. But he still has bad feelings over the affair.

"If it had been war time, World War II, I'd have given it to them. But if they're hiding behind some friggin' law, basically to screw somebody...." says French, trailing off.

Lucent spokesman John Skalko says the court's secrecy order prevents him from addressing the inventors' claims in depth. "We deny any breach of contract or any misappropriation of trade secrets," says Skalko.

"You can't try this case in your publication, it's only to be tried in a court of law," Skalko adds – a prospect that seems increasingly unlikely.