Cutting edge technology is a driving force behind America’s sustained economic growth; domestic technology and knowledge-based markets are growing at unprecedented rates; new markets are opening to American goods under the influence of free-trade treaties; and companies that specialize in high technology are increasingly global in scope and reach. United States Government has played and continues to play very significant role in the development of these, being the biggest consumer of the cutting edge technology. In today’s marketplace, the private sector is also significant contributor. Some of the good examples are Internet and Wireless technology, which has fueled the growth digital age. The United States Constitution gives the rights to the government to protect the technology and innovations which are the key to maintaining competitive edge over other nations. One of the “Bills Of Rights” is the protection of copyrights and patents, or what we now call “Intellectual Property Rights (IPRs)”.

1. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
Intellectual Property in Federal Contracts
Pravin Asar
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2. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
Abstract
Cutting edge technology is a driving force behind America’s sustained economic
growth; domestic technology and knowledge-based markets are growing at
unprecedented rates; new markets are opening to American goods under the
influence of free-trade treaties; and companies that specialize in high technology are
increasingly global in scope and reach. United States Government has played and
continues to play very significant role in the development of these, being the biggest
consumer of the cutting edge technology. In today’s marketplace, the private sector
is also significant contributor. Some of the good examples are Internet and Wireless
technology, which has fueled the growth digital age.
The United States Constitution gives the rights to the government to protect the
technology and innovations which are the key to maintaining competitive edge over
other nations. One of the ―Bills Of Rights‖ is the protection of copyrights and
patents, or what we now call ―Intellectual Property Rights (IPRs)‖.
Long before digital age began, our Founding Fathers understood that these rights
were an important part of the overall need to protect the right to obtain and hold
property necessary for the new nation to grow and prosper economically. Here is
exact text as stated in U.S. Constitution Article I, Section 8, Clause 8 (Heritage.org,
2013), are ―The Congress shall have power to promote the progress of Science and
useful Arts, by securing for limited times to Authors and Inventors the exclusive
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3. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
right to their respective writings and discoveries....‖
Governments Stand on Intellectual Property
The IPtypicallyinvolvedingovernmentcontractsincludespatent,copyrightand/ortrade
secretrights. McEwen et al (2009) have discussed the most common types of IP and specifics
of IP protection.With the exception of certain technologies developed by the NASA, DoE,
DOD, the governmentpolicyencouragesmaximum practicalcommercial use
ofIPdevelopedunder governmentcontracts for the benefit of
mankind.Consequently,theGovernmentismore willingthanacommercial purchasertoallowa
contractortoretainrightsinIPdevelopedundercontract.
TheGovernmentislesswillingtoagreetolimitdistributionanduseofthisIP.
Contractorsmaysecure IPrightsforthemselvesrespectingdevelopmentswithinthescope ofthe
contract,buttypicallysubjecttocertainrightsreservedtothe Government. But the ownership of
contractor developed IP on certain DOD contracts, is an especially sticky problem. Rightly
so, Feldman (2012) states ―The issues pertain to the rights of the government, the contractor,
and third parties; they are most likely the most difficult and complex subject‖.
While seeking to maximize its use of commercial technologies to maintain, upgrade
and replace its legacy systems for National Aeronautics and Space Administration
(NASA), Department of Energy (DoE), Department of Defense (DOD), Department of
Homeland Security (DHS) and others, government imposes specific restrictions to its
supplier and contractors on the use of these for the purposes other than government
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4. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
specific purposes. The implementation of the commercial technology and the joint
development of specific technologies is governed by government contacting rules. The
policybehindthese rulesandregulationsoftenruncountertoprivate sectortendenciesandpractices.
Thisisespeciallytrue withrespecttothe treatmentofintellectual property(IP).
Rules of the Road: Government Contracting and IP Rights Framework
As
we
all
know,
FederalprocurementisgovernedbymanycomplexGovernmentrulesandregulations
as
implemented by Federal Acquisition Regulations (FAR), Defense Federal Acquisition
Regulation Supplement (DFARS) and other agency specific regulations and clauses.
This can be terms as a contracting framework; a collections of regulations, rules that
apply to specific agencies, laws and executive memorandum.
This
contracting
framework
also
provides
the
guidance
fordefiningIPrightsundergovernmentcontractsandhowtopreserve
same,aswellasotherconsiderationsthatshouldbeborne inmind.
FederalAcquisitionRegulation
TheFederalAcquisitionRegulations(FAR)Systemisthecodificationandpublicationofun
iformpoliciesandproceduresforacquisitionbyallexecutive agencies. The FAR is applicable
to all Governmentcontracts. FAR 1.101 ―Statement of guiding principles for the
Federal Acquisition System‖ explains the objective and scope of FAR. FAR Part
27 ―Patents, Data, and Copyrights‖ and FAR Part 35 ―Research and
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5. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
Development Contracting‖ specify the government policies and p rocedures
related to IP.
To obligate the contractor into assigning to the United States any copyrighted works
created during the performance of the contract, the government will insert an
appropriate FAR clause.FAR located at 48 C.F.R. Chapter 1 codifies the policy of the
United States regarding ownership of IP developed during the performance of a
government contract and applies to almost all procurements. Part 1-51 of the FAR
provide government policies and contracting procedures and include an explanation of
the rules and clauses which apply to specific situations.Part 52 of the FAR contains the
actual contractual clauses, the boilerplate used in private contracts, which are to be used
in government contracts.
Government Contract Andrews Litigation Report (2009) states the FAR clauses
often implement statutory or policy directive of Congress or the president and the
language contained therein cannot be changed by contracting officers. With respect to
some FAR clauses, their insertion into the government contract is discretionary on the
part of the contracting office and the contractor can attempt to negotiate these clauses.
DefenseFederalAcquisitionRegulationSupplement
TheDefenseFederalAcquisitionRegulationSupplement(DFARS)supplementsFARpur
chasesandcontractsbyDepartmentofDefensecontractingactivitiesmadeinsupportofforeign
militarysalesorNorthAtlanticTreatyOrganizationcooperativeprojects as stated under
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6. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
DFAR 201.104. Feldman (2012) states the Department of Defense (DOD) is not
governed by the FAR on patent rights, but adheres to separate DFARS instructions and
solicitation/contract terms. DFARS Part 227 Patents, Data, and Copyright, establishes
the clauses and provisions for IP in DOD contracts.
SmallBusinessInnovationResearch(“SBIR”)program
The Title 15 U.S.C. 638 – Research and Development, established the
SmallBusinessInnovationResearch(SBIR)programin1982aspartoftheSmall
BusinessInnovationDevelopmentAct.ManyFederal agencies,includingthe
DepartmentofDefense,arerequiredtooutsource
someresearchanddevelopmentendeavorsforsmallbusinessestostimulateandcommercialize
technologicalinnovationthroughsmallbusinesses. According to Boston University
(2010), The Bayh-Dole act of 1980, together with amendmentsin 1984 and
augmentation in 1986, has helped to unlock allthe inventions and discoveries
that had been made inlaboratories throughout the United States with thehelp of
taxpayers’ money.Typically SBIRprogram typicallyhasthree phases:
1. Trade Studies and Exploration (determiningthe scientific andtechnical
meritandfeasibilityofconcepts)
2. Furtherdevelopment of the conceptsthatmeetparticularGovernmentprogramneeds
3. The implementation of refined concepts for
a. Commercial applicationsofSBIR-fundedresearchwithnon-Federalfunding
b. Productsorservicesintendedforusebythe FederalGovernmentwithnon-
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7. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
SBIRFederalfunding
TheFAR part 35, governsthe aspects of IP developed under SBIRprograms.
Feldman (2012) states, the government’s current position with regard to R&D
contracts are basically the license policy.
Applicable Laws
Among the laws of general applicability, of special note for purposes of IP licenses are
the Competition in Contracting Act (CICA), the Contract Dispute Act (CDA), the Tucker
Act, and the Bayh-Dole Act. CICA is relevant because it requires the Government to seek
full and open competition for all contracts to obtain the maximum number of bidders, and in
doing so, the Government often seeks to obtain and release to the potential bidders as much
detailed information as possible about the relevant systems or technologies—information
that may be considered proprietary by the vendors of those technologies. The CDA and
Tucker Act provide relief when there is a breach of a contract. Boston University (2010)
sites, The Bayh-Dole Act generally provides a framework for allocating rights in patentable
―subject inventions‖ created under a Government contract. Lastly, there are agency-specific
laws that can affect IP rights but that do not apply outside of a specific agency.
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8. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
Government Policy
FAR Sub 27 provides guidance on the rights in patents, data and copyrights
developed under Government contracts. Governmentpolicyfavorsgrantingcontractorsthe
title todevelopments,whetherfederallyfundedinwhole orinpart,inexchange forroyaltyfreeuse byoronbehalfofthe Government. Thispolicy isintendedto: (1)promote
theutilizationandcommercializationofinventionsarisingfromfederallysupportedresearchanddevelopment;and(2)encouragemaximumparticipationofindustryinfeder
allysupportedresearchanddevelopmentefforts as stated under FAR 1.102. The primary
objective of this policyto ensurethatthe GovernmentobtainssufficientrightsinfederallysupportedinventionstomeetGovernmentneedsandprotectthepublicagainstnonuseorunreasona
bleuseof these inventions.
Presidential memorandum
Feldman (2012) cites, the government policy may also supplemented by presidential
memorandum promoting the commercialization of certain patentable results of
federally funded research by granting to all contractors regardless of size, the title to
patents made in whole or in part with federal funds in exchange for royalty-free use by
or on behalf of the government- is reflected in the FAR and the various FAR ―Patent
Rights‖ clauses.
For example, Bayh-Dole Act of 1980, which granted small businesses, universities,
and other non-profit scientific or educational organizations the right to retain title to
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9. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
inventions derived under federally funded R&D contracts and grants, was supplemented
by a memorandum, issued by President Reagan in February 1983, directing the heads of
all departments and agencies to extend the benefits of the Bayh-Dole Act law to all R&D
contractors, including large businesses and for-profit organizations.
What are Patentable Inventions
As discussed earlier, Government is not interested in protecting all of the inventions. The
contracting framework mandates which inventions should be protected. This also provides a
guidance and procedures to Government agencies and contractor on Patentable Inventions
and IP Rights.
Contractor Ownership and Requirements
Although on most the federal contracts, Governmentpolicymayfavorcontractors,
the contractor still mustactand should notexpectthe Governmenttochurnoutready-made
IPrightsforthem.
WhileGovernmentcontractstypicallyspecifyacontractor’srightsrespectingelectinginventi
onownership(negotiable),generallythe contractormustdisclosetothe
Governmenteachsubjectinventionwithinthe earlierof: (1)twomonthsafterthe
inventordisclosesittocontractorpersonnel responsibleforpatentmatters;
or(2)sixmonthsafterthe contractorbecomesaware thatasubjectinventionhasbeenmade.
Then,thecontractormustnotifytheGovernmentofintentiontoretaintitlewithintwoyears.
Ifthecontractorintendstoretaintitle,the contractormusttimelyfilea
patentapplicationdescribingandclaimingthe invention.
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10. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
Ifnot,theGovernmentmayshortenthetitle election periodtogivethe
Governmentsufficienttime toprepareandfile a patentapplication.
Ifthecontractorfailstomake timelydisclosureortofile apatentapplication,
theGovernmentmayfile for the IP rights.
Importantexceptionstothese electionrulesare made
fordevelopmentsrelatedtonationalsecurityorspecific foreignpolicies. Forexample,the
USGovernmentmaynotpermitcontractorIPrightsownershipwherethe
contractorisnotlocatedintheUnitedStatesorissubjecttothe control ofa foreigngovernment.
Whenthe
Governmentacquirestitle,the
contractornormallyisgranteda
revocable,nonexclusive,royalty-free license tothatinventionthroughoutthe world.The
licenseistransferable
onlywithpriorapproval,exceptwhentransferredtothesuccessorofthatpartofthecontractor’
sbusinesstowhichtheinventionpertains.
GovernmentOwnershipandRights
Where the contractorretainstitle toa patentcoveringaninventiondevelopedundera
governmentcontract,the Governmentretainsatleasta
nonexclusive,nontransferable,irrevocable,paid-uplicense topractice,orhave
practicedfororonbehalfofthe UnitedStates,anysubjectinventionthroughoutthe world.
The Governmentmaycontractforadditional rights,forexample,tosublicense a
foreigngovernmentorinternationalorganizationpursuanttoexistingtreatiesoragreements.
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11. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
Infurtherance ofthe Government’spolicytomaximizepractical commercialuse
ofIPdevelopedundercontract,theGovernment typicallyreservesthe
righttorequestthatacontractorgranta licensetoa responsible applicantforcontractoriginatedIP. Toensurethatalicense isgrantedshoulda contractorrefuse sucha request?The
Governmentalsotypicallyreserves―march-in‖ rightstograntthe license to
government.Shouldacontractoruntimelyorfail toshowcause whylicensingshouldnotoccur?
The Governmentmayexercisethese march-inrights:(1)ifanagencydeterminesthatthe
contractorhasnottakeneffective stepstoachievepractical
applicationofthesubjectinvention;(2)toalleviatehealthorsafetyneeds;
(3)tomeetrequirementsforpublicusenotreasonablysatisfiedbythe contractor;or(4)because
the contractororassignee hasnotexecutedorenforcedanagreementtomanufacture
theproductsembodyingthe subject inventionsubstantiallyintheUnitedStates.
Inkeepingwiththese ―marchin‖rights,theGovernmenttypicallyrequiresthatContractorsreportperiodicallytothe
Governmentonthecontractors(anddesignee’s)utilizationoreffortsinutilizingtheinvention.
ThirdPartyRights
FAR 27.2 provides a detailed guidance on use of third party inventions and third
party rights, Aswithanycommercial undertaking,evenifaninventionisoriginal,novel
andnonobviouswithrespecttoknowntechnology,theinventionneverthelessmayfallwithinthe scope
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12. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
ofabroaderpatent. Inthe privatesector,obtainingappropriate
licensingoravoidingproprietarytechnologyisa prerequisitetoanycommercial undertaking.
Butinthegovernmentsector,theGovernmentmaynotbeenjoinedfrom
practicingapatentedinvention,norwill the Governmentrefuse toawarda
contractonthebasisthatanintendedcontractormayinfringeapatentinundertakingacontract.
Further,toensurethataGovernmentcontractorisnotenjoinedonthe basisofpatent
infringement,the Governmentshall giveauthorizationandconsenttotheuse ofaninvention.
Whiledeniedinjunctive relief,thirdpartiesmaypursue otherremedies. Ifthe
Governmentauthorizedmanufacture oruse ofa patentedinvention,the patentee
maybringsuitforinfringementonlyagainstthe Governmentandnotagainstthe contractor, as
stated by U.S.C 1498. However, FAR 27.203 covers the
Governmentliabilityfordamagesinanysuchsuitmaybe
passedontothecontractor,dependingontheknowledge oftheGovernmentoftheexistence ofa
conflictingpatentandthe consentofthe Governmenttoitsuse. Underthe
DFARSscheme,Patenteesalsomaypursueadministrativeinfringementclaims under DAFRS
227.70
PublicOwnership
The Title 35 USC § 102 – ―Conditions for patentability; novelty and loss of
right to patent‖, discusses the conditions for patentability; novelty and loss of right
to patent. Development of
aninventionunderagovernmentcontractdoesnotavoidorsuspenddomesticlawsorinternati
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13. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
onaltreatiesrespectingpatentability. Forinstance,publication,sale orpublicuse
ofaninvention,regardlessofwhetherdevelopedundercontract,will initiatetheoneyearstatutoryperiodwithinwhichpatentprotectionmustbe
soughtifever.Itispossiblethat,evenifthe contractorandGovernmentadheresstrictlytothe
contractrules,the public neverthelessmaywindupentitledtothe
subjectmatterdevelopedunderitbyoperationofUSLaw.
Developments Regarded as Trade Secrets
The FAR 27.4 andDFARS 227.70define ―data‖ asincludingtradesecrets; Trade secrets
and Know-how (including negative know-how) differ from other forms of
intellectual property in many subtle ways that affect incentives to invest in
information development. These differences relate not only to the types of
information protected, but also to the requirements one must meet to protect each
type of information. The trade secret owner is rewarded for keeping information that
may be neither new nor original away from the public for as long as possible. Thus,
information that could not be copyrighted or patented is still protected for as long as
the owner can keep the information secret. The various divergences from and
intersections between trade secret law and other intellectual property laws result in
―differential incentives,‖ leading to differences in the amount and types of
investments companies make in developing information.
Copyrights
The Title 17 U.S.C. 105 ―Subject matter of copyright: United States Government
works‖ mentions,
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14. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
nocopyrightsmayariseinanyworkoftheUnitedStatesGovernment,thatis,workscreatedbyG
overnmentemployeesaspartoftheirofficial duties.
However,theGovernmentmayowncopyrightsthatareassigned.The
Governmenttypicallyreservestherighttoreceive certaincopyrightsin
worksmadeunderorusedinfurtheranceofacontract.
ContractorOwnershipandRights
FAR 27.404(f) states,
Contractorsordinarilymayclaimcopyrights,withoutpriorapproval,inarticlesbasedonorcont
ainingdatafirstproducedundercontractandpublishedinacademic,technicalorprofessionaljou
rnals,symposia,proceedingsandsimilarworks.
Otherwise,theGovernmentwillpermitcontractorclaimstomaterialscontainingthisdatawhen
copyrightprotectionwillenhancetheappropriatetransferordisseminationofthedataortheco
mmercializationofrelatedproductsorprocesses.
GovernmentRights
Governmentrightstocontractors’copyrightedmaterialscorrespondtoGovernmentrightsintech
nicaldataandcomputersoftware. These are discussed in detail in the following section.
ThirdPartyRightsandDeliverables
FAR 27.104(h), FAR 27.404(f) and DFARS 252.227-7013(d) provide the guidelines about
the Third party rights and deliverables. Contractorsmaynotincorporate
incontractdeliverablescopyrightedmaterial thatisnotfirstproducedunderthe
contractwithoutpriorapproval orhavingobtainedfororgrantedtotheGovernmentthe
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15. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
requisitecopyrightlicenserights.
Rights in Technical Data and Computer Software
Asmentioned earlier, the Governmenttypicallyrequirescontractorstoprovide the
Governmentwithcertainrightstouse technical
dataandcomputersoftwarecreatedordeliveredinconnectionwiththe contract.
TheserightstendtocorrespondwiththeextentofGovernmentfundingusedtodevelopthe
technical data orcomputersoftware. Atthe
outsetofthiswork,contractorsmustact,andcautiously comply the
requirements,withinthe applicable Governmentregulationsgoverningrights related to
computer software, data (including knowledgebase).
The ―Technical data‖ underboththe FAR 27 andDFARS 227, includesdata ofa scientific
ortechnical nature. While
bothschemesexcludecomputersoftwarefrom―technicaldata,‖theDFARSadditionallyincludesc
omputerdatabasesandcomputersoftwaredocumentation.
WhileGovernmentrightsintechnicaldataandcomputersoftwarearecomparableundertheFAR
andDFARS, someimportantdifferencesexist,asshowninTable 1andexplainedbelow.
Commercial
Non-Commercial
CIVIL
Co-
Made under
Privately Made by
(FAR)
existwithcommer
contract
contractor
ciallicense
Unlimited
Limitedrightstodata
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16. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
Restrictiverightstosof
tware
MILITARY
Sameasabove
sameasabove
(DFAR)
plusform/fit,etc.
plusgovernmentpurp
oserights
Table 1 Government Rights in Computer Software
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17. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
CommercialSoftwareand Technical Data
BoththeFARandDFARSprovidethatGovernmentrightsincommercialcomputersoftwareor
commercialcomputersoftwaredocumentation and dataextendnomore thanthe
rightsaffordedinlicensestothe general public.Underthe
DFARS,theGovernmentalsoretainsrightsincommercialtechnicaldata and knowledgebase
that is describes the modifications made to meet government requirements and is
requiredfor sustainment and/ormaintenance ofthese items.
Non-CommercialDataandSoftwareunderFARContracts
Underthe FAR
52.227.14(d),acontractorordinarilymayuse,releasetoothers,reproduce,distribute,orpublish
technical dataandcomputersoftwarefirstproducedorusedunderthe contract,exceptwhere
the data are subjecttoFederal exportcontrol ornational
securityregulations.TheGovernmentretains―unlimitedrights,‖―limitedrights‖totechnicalda
ta,or―restrictiverights‖tocomputersoftwaredependingonoriginandnatureoftheIPinvolved.
1. ―Unlimited Rights‖ pertain to:
a. Data firstproducedintheperformance ofthe contract;
b. Form,fit,andfunctiondatadeliveredunderthe contract;
c. Datadeliveredunderthecontract,exceptrestrictedcomputersoftware,thatconstit
utemanualsorinstructionalandtrainingmaterial
forinstallation,operation,orroutine
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18. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
maintenanceandrepairofitems,components,orprocessesdeliveredorfurnishedfo
ruseunderthiscontract;and
d. All otherdata deliveredunderthecontractunlessprovidedotherwise
forlimitedrightsdataorrestrictedcomputersoftware.―Unlimitedrights‖indataors
oftwaremeansthattheGovernmentmayuse,disclose,reproduce,preparederivativ
eworks,distribute copies
tothepublic,andperformpubliclyanddisplaypubliclythedataorsoftware,inanym
annerandforanypurpose,andtohaveorpermitotherstodoso,evenforcommercial
purposes.
2. ―LimitedRights‖and―RestrictiveRights‖
a. ―Limitedrightsdata‖pertainstotechnicaldatapertainingtoitems,components,orp
rocessesdevelopedatprivateexpenseandwhichembodytrade
secretsorarecommercial orfinancial andconfidentialorprivileged.
b. ―Restrictedcomputersoftware‖pertainsto:(1)computersoftwaredevelopedatpri
vateexpenseandthatisatradesecret;
(2)commercialorfinancialandconfidentialorproprietary;or(3)publishedcopyrig
htedcomputersoftware.
c. LimitedrightsdatamaybereproducedorusedbytheGovernment,butmaynotbeuse
dformanufactureordisclosedwithouttheGovernment.
Similarly,restrictedcomputersoftwaremaynotbeused,reproduced,ordisclosedb
ytheGovernmentwithoutexpresspermission,orusedforbackup,archivalandothe
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19. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
rlimitedpurposes.
The ―Limitedrights‖and―restrictiverights‖limittheGovernment’srighttouse,release
toothers,reproduce,distribute,orpublishtechnical data andcomputersoftware.
Withoutstrictadherence totherules,theyarerightsthatacontractoreasilymaylose.
Toavoidconverting―limitedrights‖and―restrictiverights‖into―unlimitedrights,‖
contractorsinitiallymustwithholdlimitedrightsdataandrestrictedcomputersoftwarefrom
delivery,identifythe databeingwithheld,andfurnishform,fit,andfunctiondata
therefor.However,ifthe contractrequiresdeliveryoflimitedrightsdata
orrestrictedcomputersoftwareisrequired,theGovernmentmayexerciseonlylimitedrightst
ouse the data andrestrictedrightstousethe computerprograms.
Non-commercial DataandSoftwareunderDFARSContracts
DFARScontractsgenerallyprovideforthesame rightsrespectingnoncommercialdataandsoftwareasinFARcontracts,asdescribedearlier.
Additionally,theGovernmentgenerallyretains―governmentpurposerights‖intechnicaldataandco
mputersoftwaredevelopedwithmixedfunding.
The ―Governmentpurposerights‖includerightsto
use,modify,reproduce,release,perform,display,ordisclosetechnicaldataorcomputersoftwarewit
hintheGovernmentwithoutrestriction;and release ordisclose thetechnicaldata
orcomputersoftwareoutside theGovernmentandauthorizeitsuse
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20. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
for―UnitedStatesgovernmentpurposes.‖ The ―Governmentpurpose
rights‖statutorilyexpireafterfiveyears,afterwhichtheGovernmentenjoys―unlimitedrights‖.
Thus,onlyduringthe―governmentpurposerights‖periodaretechnicaldata
andcomputersoftwaresafeguardedfromcommercialexploitation.
Accordingly,contractorsshoulddemandlonger―governmentpurposerights‖periodstoallowforop
timalcommercializationorotherconcernsregardingprematuredisclosureoftechnicaldata.
SBIR data
TheGovernmentobtainsonlylimitedrightsindatafirstproducedunderanSBIRcontractforf
ouryearsafteracceptance ofalldeliverables. Mostsignificantly,duringthe time thatthe
contractorhasexclusive use ofthe data andthe Governmentcannotdisclose thedata
forprocurementpurposes. However,unlike underthe
FARorDFARS,SBIRcontractorshavelesstimetocommercializedevelopmentsmadeunderco
ntract.
Preserving Contractors Rights
FARandDFARS
As discussed earlier,
Governmentregulationsmayentitlecontractorstocertainrights,contractorsmustact,andcautio
usly,withintheFARandDFARSschemes. Inparticular,preservingrightsintechnical data
andcomputersoftware involvedina Governmentcontractrequireseither:
(1)withholdingandidentifyingtechnicaldataandcomputersoftware,or(2)appropriatelyandco
nsistentlyidentifyingtechnical dataandcomputersoftware.
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21. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
Contractorsalsomustgivethebasisforassertinganyrestrictedrights.
Additionally,contractorsmustmarkeverycopyofthedata,software,anddocumentationfurnish
edtothe Governmentwithlessthan
unlimitedrights,typicallywithlegendsprescribedintheregulations. For instance, contractor must
request government to protect release of the trade secrets and specifics of his technology
provided during solicitation process to its competitors.
InadequatemarkingmayleadtoforfeitingrightfulrestrictionsanddedicatingvaluableIP.Thisisb
ecause,whilecontractorscanrequestthattheGovernmenttoapplyretroactivelyanyrestrictive
markingsthatwere initiallyinadvertentlyomitted,the Governmentisnotliable fordata use
ordisclosure priortocorrectivemarkingapplication.
SBIR
As mentioned earlier, the government’s current position with regard to SBIR R&D
contracts is basically the license policy. SBIRcontractorsmustpreservetheirrightsinthe
same fashionasFARandDFARScontractorsnotedabove.
However,anSBIRcontractormustbeespeciallywarywhenaprogramshouldadvanceintoaPha
se III,asdescribedearlier. InfurtheranceofGovernmentpolicymentioned,
ratherthanoperatingunderathirdphaseofanongoingSBIRprogram,the
Governmentmayregardthe SBIRprogram tobe concluded. After expiration of
stipulated hold period, Government
mayreleasetechnicaldataandcomputerprogramstoothercontractors.
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22. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
Conclusion
Governmentcontracting traditionallyhasbeenalucrative andreliable businessforthose
resourceful,determined,patientorluckyenoughtolandone.
Governmentcontractscanbegoodforbusinessintheshortterm,especiallyindifficulteconomictimes. However,longtermprosperityderivedfromdevelopmentsfromaGovernmentcontractrequiresspecialvigilance.
UnderstandingandtakingappropriateactiontoprotectIPrightsincontractdevelopmentsisessential
.
Although interactions with the Government have many similar features with interactions
between private parties, there are important distinctions that need to be understood. In a
contractual setting, it is important to recognize that the Government requires the contractor
to take certain actions to protect the investment of the Government, on behalf of the
taxpayer. While certain of these provisions are relatively intuitive and exist in normal
commercial contracting, others represent traps for the unwary and require additional due
diligence in order to ensure a successful license negotiation. Moreover, contractors need to
realize that these other provisions reflect a number of social and public policies, and will be
enforced in a manner substantially affecting intellectual property ownership if there is a
dispute.
However,evenbeforetheinkisdry,governmentcontractorsmusttakecarethatthefruitsforalloftheir
effortsdonotwindupinsomeoneelse’syard.
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23. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
Outside of the contractual setting, the Government enjoys certain privileges due to its
nature as a sovereign. These privileges include being able to choose both the forum in which
liability is resolved, and what remedies are available (if any). At the same time, the
Government generally has set up mechanisms for redress for both perceived contractual
breaches and intellectual property infringement. Thus, when faced with a license with the
Government or an infringement by the Government, it is incumbent on the private party to
recognize that the Government generally has provided one or more mechanisms for
resolution. The trick is determining which one.
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24. INTELLECTUAL PROPERTY IN FEDERAL CONTRACTS
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