Different Market, Different IP Rules

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Intellectual Property (“IP”) refers to creations of the mind. Despite the term “property,” IP is better characterized as a proprietary interest in intangibles such as inventions, literary and artistic works, symbols, names, images, and designs.

Most companies are familiar with the different ways that a company’s IP is protected in the commercial marketplace, through the use of patents, copyrights, and trademarks. Federal government contracts, however, use different data rights allocation regimes that merge these commercial concepts with federal contract law. 

Companies that develop, sell, or otherwise transfer or deliver “technical data” or “computer software” to the federal government need to know the data rights provisions that are applicable to federal procurements because these data rights provisions determine the scope of the government’s rights in the technical data and computer software developed or delivered by the company. “Technical data” includes any recorded information of a scientific or technical nature (e.g., product design or maintenance data, computer databases, and computer software documentation). “Computer software” includes executable code, source code, code listings, design details, processes, flow charts, and related material.

The government’s rights in a company’s technical data/computer software are covered by the data rights provisions of the Federal Acquisition Regulation (“FAR”) and the Defense Federal Acquisition Regulation Supplement (“DFARS”). The FAR data rights provisions apply to government contracts with civilian agencies, while the DFARS provisions apply to government contracts with the Department of Defense (“DoD”). Under these data rights provisions, the government automatically acquires certain rights to the technical data/computer software developed by a company performing on a federal contract and may acquire rights to technical data/computer software delivered by a company. The extent of the federal government’s rights will vary depending on the agency, the type of contract, the item being delivered, and the specific circumstances concerning that particular procurement.

There are generally three categories of licenses the government obtains over technical data/computer software developed or delivered under a government contract:

1. unlimited rights;

2. government purpose rights (which only apply to DoD contracts); and

3. limited rights/restricted rights. There are also several other categories of licenses that the government can obtain but they are beyond the scope of this article. 

The government obtains “unlimited rights” in cases where the government funds the technical data/computer software developed by a company. Unlimited rights are the broadest rights the government can obtain and give the government the “rights to use, modify, reproduce, release, perform, display or disclose, technical data or computer software in whole or in part, in any manner and for any purpose whatsoever, and to have or authorize others to do so.” DFARS 252.227-7013(a); DFARS 252.227-7014(a); FAR 52.227-14(a).

The government obtains “government purpose rights” in cases where the parties jointly fund the technical data/computer software developed by a company. Government purpose rights fall between unlimited rights and the third category of licenses, limited rights/restricted rights. Government purpose rights give the government the rights to “[u]se, modify, reproduce, release, perform, display or disclose technical data within the government without restriction; and [r]elease or disclose technical data outside the government and authorize persons to whom release or disclosure has been made to use, modify, reproduce, release, perform, display or disclose that data for United States government purposes.” DFARS 252.227-7013(a); DFARS 252.227-7014(a). 

A “government purpose” is “any activity in which the United States Government is a party, including cooperative agreements with international or multi-national defense organizations, or sales or transfers by the United States Government to foreign governments or international organizations. Government purposes include competitive procurement, but do not include the rights to use, modify, reproduce, release, perform, display, or disclose technical data for commercial purposes or authorize others to do so.” Id. 

The government obtains “limited rights” in technical data and “restricted rights” in computer software in cases where the technical data/computer software delivered by a company is funded exclusively at private expense. Limited rights/restricted rights are the narrowest rights the government can obtain. Limited rights give the government the “rights to use, modify, reproduce, release, perform, display, or disclose technical data, in whole or in part, within the Government.” DFARS 252.227-7013(a); FAR 52.227-14.

Under a limited rights license, the government generally cannot share the technical data with third parties and cannot make it available for competitive procurements. Restricted rights are similar to limited rights and give the government the right to use the software within the government for limited purposes. DFARS 252.227-7014(a)(15); FAR 52-227-14.   

To assert your government data rights, companies should complete a data rights assertions table prior to submitting a proposal and mark any deliverable technical data/computer software using the appropriate restrictive license which can be found in the FAR or DFARS. The data rights assertions table should describe the technical data/computer software, the reason the technical data/computer software qualifies for protection, and the name of the person responsible for making the assertion. Companies should also mark any technical data/computer software that is included in any presentation with the appropriate restrictive legend. Accurate marking and disclosure are important to not only protect a company’s IP, but to also protect the company from potential liability under the False Claims Act for false records or statements.

Though the above summary describes the three general categories of government data rights, there are other licenses that the government can obtain, each with their own nuanced requirements. Companies should develop strategies to protect their IP, and an experienced attorney is a powerful resource. Early identification and planning to protect your IP will strengthen your company not only as a defense contractor who provides services to the government, but also as an innovator that creates technology qualifying for protection.

CONTACT SCALE LLP

If you are a contractor or tech company interested in a review of your technology or would like further details about IP protection for defense contractors, please contact an attorney on the Dual-Use and Emerging Defense Technology team at Scale LLP to discuss your situation.

Disclaimer: This article is provided for informational purposes only and is not intended as, and should not be construed as, legal advice or counsel of any kind. Please consult with your attorney or other appropriate professional.

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