======= Date Modified 15 Dec 2011 10:16:03 =======
If you're not planning to go ahead and do it then yes, I think they can. Once you submit your proposal to them then I have a feeling the research becomes theirs... check your contract if you still have it and see what it says about intellectual property... mine has a clause about sections 11 and 15 of the copyright, designs and patents act 1988... I will have to look them up now!
Section 11 states that the work is yours (the authors) EXCEPT "Where a literary, dramatic, musical or artistic work, or a film10, is made by an employee in the course of his employment, his employer is the first owner of any copyright in the work subject to any agreement to the contrary" so I think they may have the right according to law to continue to use your work. Not morally right, of course, but legal I'm afraid if your contract says the same.
Edited to include info on the Coyright, Designs and Patents Act 1988