Federal News sues CQ, alleges predatory conduct

* Federal News says CQ used password to access databases

* Congressional Quarterly parent denies charges

WASHINGTON, July 2 (Reuters) - The transcript service Federal News Service, Inc. filed suit against Congressional Quarterly and its parent companies on Thursday, accusing them of corporate espionage and theft of information.

Federal News said in a lawsuit filed in federal court in Washington, D.C. that Congressional Quarterly, known as CQ, used a customer password to access Federal News transcripts.

In March, Federal News said CQ gave the Defense Department a transcript that it had taken from Federal News.

"Defendants illegally misappropriated other FNS transcripts, altered and removed copyright management information from those news transcripts, and passed them off as CQ transcripts," Federal News said in its complaint.

Federal News also accused CQ of trying to buy the transcript provider to eliminate a competitor and of paying a Federal News employee involved in business development to give them confidential business information.

CQ's parent Times Publishing Company denied the charges.

"Their allegations are baseless and obviously we will defend CQ vigorously. CQ will continue to compete on the basis of the quality, depth, breadth and timeliness of our transcript services," said Andrew Corty, vice president and corporate secretary of the Times Publishing Company.