POSTED IN INTELLECTUAL PROPERTY
From a contractor’s perspective, intellectual property (IP) is a valuable
corporate asset that can be used to generate revenue, create a competitive
advantage, create barriers to entry by competitors, and act as a deterrent to
litigation.
The Government also needs to consider IP issues during the acquisition planning process to help
promote competition, reduce lifecycle/O&M costs, and reduce reprocurement
costs.
Importantly, rights in technical data and computer software is not
a separate area of intellectual property. Rather, it is a merger of
copyright law, trade secret law, and contract law.
In order to protect
your company’s IP it is important to understand the definitions, types of
rights, and the importance of marking technical data and software as required
in the FAR and DFARS for defense contracts. Planning is required to
maximize your company’s rights in technical data and computer software by
complying with the Government’s requirements.
Definition. For Department of
Defense contracts “Technical data” is recorded information, regardless of the
form or method of the recording, of a scientific or technical nature.
“Technical data” includes computer software documentation and computer
databases (but not computer software). “Technical data” does not include
data incidental to contract information, such as financial or management
information (e.g., cost and pricing data). Nor does it include unrecorded information (e.g., general “know how” or “show how”).
Government Licenses. The technical data
rights system in government contracts calls for the Contractor to get
title and the Government to get a license. There are three general categories
of government license rights in technical data and computer software:
Unlimited rights;
Limited rights (technical data)/Restricted rights (computer software); and
Government purpose rights.
Unlimited rights are the rights to use, modify, reproduce, perform,
display, release, or disclose technical data in whole or in part, in any
manner, and for any purpose whatsoever, and to have or authorize others to do
the same.
This is the broadest of the standard licenses, and, though the
contractor retains ownership of the technical data, the contractor has likely
lost any trade secret protection and may have difficulty commercializing the
technical data. The rule under the DFARS is that unlimited rights are
gained when the technical data is developed exclusively with Government funds.
Limited rights provide the Government with unlimited in house rights but
restrict the Government from releasing or disclosing the technical data outside
the Government except in limited circumstances. The two most common
circumstances where outside disclosures are permitted are disclosures necessary
for emergency repair and overhaul, and disclosures to covered government
support contractors.
At the discretion of the owner of the technical data
being disclosed to the covered government support contractor, the covered
government support contractor can be required to enter into a non disclosure
agreement directly with the technical data owner (consistent with DFARS 252.227-7025).
The Government must notify the technical data owner of any disclosures to
covered government support contractors. These rights spring from
technical data being developed at the contractor’s expense.
Government purpose rights (GPR) provide the Government with unlimited
in-house rights and allow the Government to release or disclose the technical
data outside the Government, and authorize third parties to use, modify,
reproduce, release, perform, display, or disclose the technical data for
government purposes. “Government purposes” means any activity in which
the Government is a party. It includes competitive procurement, but
excludes commercial purposes. GPR technical data pertains to items,
components, or processes developed with mixed funding between the Government
and the contractor.
Computer Software. The Government’s rights
in non-commercial computer software generally parallel its rights in
non-commercial technical data, and are covered in DFARS 252.227-7014. “Computer software” means computer programs, source code, source
code listings, object code listings, design details, algorithms, and the like
that would enable the software to be reproduced, recreated, or recompiled.
“Computer software” excludes computer software documentation and computer
databases, which are technical data instead. The standard licenses are
Unlimited Rights (generally the same as unlimited rights in technical data),
Government Purpose Rights (generally the same as government purpose rights in
technical data), and Restricted Rights (the Government shall have restricted
rights in computer software developed exclusively at private expense).
Markings and Records. Contractors’
restrictions on the Government’s rights in their technical data and/or computer
software are not self-executing and depend upon proper pre- and post-award
identification and the application of prescribed markings. In other
words, the Government receives unlimited rights in technical data and computer
software unless the contractor takes affirmative steps to limit such
rights. Contractors may only assert restrictions by marking the
deliverable technical data or computer software with an appropriate legend.
The
only “appropriate” legends are those set forth in the rights allocation clauses
themselves: FAR 52.227-14(g)(3) (Alt. II); FAR 52.227-14(g)(4)(i)
(Alt. III); DFARS 252.227-7013(f); and DFARS 252.227-7014(f). Moreover, companies must keep detailed records. Records
should include tracking of contract requirements, internal research and
development requirements, technical development achievements, and who
paid for what development. Again, upfront planning required to maximize
Company’s rights in technical data and computer software.
Commercial Items. For commercial
items, the FAR and DFARS license requirements are generally not
applicable, including the labeling requirements. Governments rights are
generally the rights set forth in the standard commercial license.
Final Thoughts. Contractors
would be well advised to maintain separate accounting and charge time and
expenses accordingly to technical data and computer software development.
Based on the rules discussed above, it is critical to maintain traceability
between such separate accounting and the technical documentation.
Finally, contractors should retain the technical and accounting records so that
the contractor can defend its claim to the technical data and computer
software against Government challenges that may arise in the future.
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