1. SAMPLE IP AND GOVERNMENT CONTRACTS TRAINING MATERIALS

2. 2 PURPOSE OF TRAINING

3. 3 1.Technical Data and Computer Software 2.Patents 3.Other AGENDA

4. 4 TECH DATA / SOFTWARE IN USG CONTRACTS Definition  Technical Data Data of scientific or technical nature Not the item developed but related (e.g., drawings, reports generated under contract) Does not include financial data, managerial data, etc.  Computer Software Executable / Object / Source code which causes computer to act

5. 5 TECH DATA / SOFTWARE IN USG CONTRACTS Ownership Analogous to but different from copyright and trade secret protection Default rights:  Contractor owns the IP  USG gets broad license rights DFARS, based on funding FAR “First produced in the performance of a government contract” Mine Safety Appliance Co. v. U.S., 364 F.2d 385 (Ct. Cl. 1966)  Prime gets only rights it needs to fulfill its obligations under the contract DFARS prohibit prime from conditioning award of subcontract on relinquishment of IP (DFARS 227.7103-15(d))

6. 6 TECH DATA / SOFTWARE IN USG CONTRACTS DoD rights Three general categories of rights in technical data and software (DFARS 252.227-7013, -14)  Unlimited rights  Government purpose rights  Limited (TD) / Restricted rights (SW) Contractor still retains title

7. 7 TECH DATA / SOFTWARE IN USG CONTRACTS Unlimited rights  Contractor retains title  No limits on government Data developed exclusively with USG funds Developed = “high probability” that item, component, or process will work as intended (Bell Helicopter Textron, ASBCA No. 21192 (1985); Dowty Decoto, Inc. v. DON, 883 F.2d 774 (9th Cir. 1989) (item workable before USG funding) Specified categories unlimited irrespective of funding, e.g., Form, fit, and function data OMIT (Operation, Maintenance, Installation, Training) data other than detailed manufacturing or process data

8. 8 TECH DATA / SOFTWARE IN USG CONTRACTS Limited rights  Contractor retains title  Developed exclusively at private expense Determination made at lowest practicable level (segregable)  Includes minor modifications  USG may use, disclose, modify, reproduce, release, perform display only within USG  May not disclose outside USG or use for manufacture Some exceptions (e.g., xgcy repair)

9. 9 TECH DATA / SOFTWARE IN USG CONTRACTS GPR / SNR  Government purpose rights Mixed funding Government can use and provide to competitors but only for Government purposes (includes re- procurement) Transition to unlimited rights after negotiable term (default 5 years) Contractor retains title  Specifically negotiated rights Negotiated rights Minimum: limited / restricted rights

10. 10 TECH DATA / SOFTWARE IN USG CONTRACTS IP strategy Module A Preexisting, Developed 100% at Private Expense Module B Preexisting Developed 100% at Private Expense Module C New, Developed with Mixed Funding Module D New, Developed at Gov’t Expense Example: Modular Development of Software: In Line Code Preexisting code, upgraded/changed with USG contract funding = “Mixed Funding” vs. Government Purpose Rights Limited Rights: Modules A + B Government Purpose Rights: Module C Unlimited Rights: Module D

11. 11 TECH DATA / SOFTWARE IN USG CONTRACTS IP strategy Main Body New, Test Data Developed at Gov’t Expense. References Attachment A. Attachment A Description of Contractor-funded technology: Preexisting, Developed 100% at Private Expense Example: Modular Development of Engineering Reports: Engineering Report Background section describes Contractor- funded technology, and test data in rest of document is created with USG contract funding = “Mixed Funding” vs. Government Purpose Rights Limited Rights: Attachment A Unlimited Rights: Main Body

12. 12 TECH DATA / SOFTWARE IN USG CONTRACTS IP strategy Helicopter Blade has tip which is IR&D funded; remainder of blade is Government funded Modularize for delivery Tip: Limited Rights Remainder: Unlimited Rights Example: Modular Development of Drawings:

13. 13 TECH DATA / SOFTWARE IN USG CONTRACTS Data Assertion Table  DFARS 252.227-7017 provides table format  Only for technical data or computer software (not financial data)  Intended for non-commercial items but recommend including commercial items if possible (H clause may require) – need to ID and provide commercial license Needs to comply with laws/regs (e.g., venue, indemnity)  Only for data that should be provided Listing non-deliverables creates expectation of delivery Multiple sources for delivery requirements (RFP, SOW, CDRL) Not data that may be required under deferred ordering clause

14. 14 TECH DATA / SOFTWARE IN USG CONTRACTS Data Assertion Table ¬Identification and Assertion of Restrictions on the Government's Use, Release, or Disclosure of Technical Data. The contractor asserts for itself, or the persons identified below, that the Government's rights to use, release, or disclose the following technical data should be restricted— Item No. Technical Data or Computer Software to be Furnished With Restrictions* Basis for Assertion** Asserted Rights Category*** Name of Person Asserting Restrictions**** **OPTIONAL COLUMN** Associated Delivery Requirement (e.g. CLIN, CDRL, or SoW paragraph) B 1 2 **Generally, the development of an item, component, or process at private expense, either exclusively or partially, is the only basis for asserting restrictions on the Government’s rights to use, release, or disclose technical data pertaining to such items, components, or processes. Indicate whether development was exclusively or partially at private expense. If development was not at private expense, enter the specific reason for asserting that the Government’s rights should be restricted. ***Enter asserted rights category (e.g., government purpose license rights from a prior contract, rights in SBIR data generated under another contract, limited or government purpose rights under this or a prior contract, or specifically negotiated licenses). ****Corporation, individual, or other person, as appropriate. Date Printed Name and Title

15. 15 TECH DATA / SOFTWARE IN USG CONTRACTS Delivery v. access SOW sometimes does not require delivery, but requires access Access is less than delivery Take advantage of SOW language If SOW asks for Access, Use Access Agreement since USG not asking for delivery Access is faster Avoids marking/validation issues Avoids assertion issues Need access agreement to govern terms

16. 16 TECH DATA / SOFTWARE IN USG CONTRACTS Acceptable data assertions Technical Data or Computer Software to be Furnished With Restrictions Basis for Assertion Asserted Rights Category Name of Person Asserting Restrictions Engine Control Panel Detail Drawing Number 999-033-7 Developed Exclusively at Private Expense Limited RightsContractor Name Drawings, analyses and reports for P/N 123456, Actuator, Pitch Lock, Blade Fold System Developed Exclusively at Private Expense Limited RightsContractor Name Slim-Line Control Panel architecture data as contained in Equipment Specifications, Interface Control Drawings (ICD) Interface Design Documents (IDD) and Sales Drawings Developed Exclusively at Private Expense Limited RightsContractor Name Baseline Qualification Test Procedure (QTP) for Main and Tail Rotor Servo pertaining to features associated with bypass valve & differential chamber pressure sensor valve Developed Exclusively at Private Expense Limited RightsContractor Name Modifications to Qualification Test Procedure (QTP) for Main and Tail Rotor Servo pertaining to features associated with bypass valve & differential chamber pressure sensor valve Developed Partially at Private Expense Government Purpose RightsContractor Name

17. 17 TECH DATA / SOFTWARE IN USG CONTRACTS Unacceptable data assertions Original DescriptionProblemCorrection All detailed manufacturing processes In general, process information is not required to be delivered to the USG. As such, there is no need to identify processes in a data assertion table. If the manufacturing is deliverable, the process must be identified by specific document name and relevant pages, if less than all pages. Manufacturing Process for Coating Composite Blades, PR 123456 U.S. Patent No. X,XXX,XXX entitled Manufacturing Process for Coating Composite Blades U.S. Patents are published documents and are not entitled to restrictions on their distribution. To the extent that the U.S. Patent describes items developed at least partially at private expense, the Supplier needs to identify which specific technical data or software described in the U.S. Patent is being delivered with restrictions. Report XYZ for Manufacturing Process for Coating Composite Blades, PR 123456 Operation and Maintenance Manual USG has unlimited rights in this per DFARS 252.227- 7013 (b)(1)(v). Delete or Non-OMIT data for Manufacturing Process for Coating Composite Blades included in Operation and Maintenance Manual Data Accession List A listing of data that includes no substantive information probably has limited utility in asserting to a Supplier. The USG may have unlimited rights in this data per DFARS 252.227-7013 (b)(1)(i). Data items are asserted after creation Delete All software, firmwareToo vagueABC Avionics Software, ver. 1.0 BladeThis is an item, not technical dataMain blade drawing no 123456

18. 18 TECH DATA / SOFTWARE IN USG CONTRACTS Amending data assertion table  DFARS has specific process allowing amendment  Two acceptable grounds New issue (e.g., new requirement, Deferred Ordering) Inadvertent omission not affecting source selection  CO must attach unless find evidence neither ground available  Note: some RFPs include language saying assertion list is material to source selection to avoid amendments

19. 19 TECH DATA / SOFTWARE IN USG CONTRACTS Administration Marking  Must mark data and software with appropriate legend; USG will get unlimited rights if unmarked (DFARS 252.227-7014) USG (not prime) may challenge (FAR 52.227- 14(c); DFARS 252.227.7103) Record keeping  Records (accounting, technical) establish what is “developed at private expense”

20. 20 TECH DATA / SOFTWARE IN USG CONTRACTS Key points  Contractor owns the IP  If possible, develop at private expense key segregable tech data / software; avoid ‘fully integrating’ developments with pre- existing tech data / software  If practical, generate rights-specific tech data (e.g., 1 drawing with LR “baseline” data, another with GPR data, etc.)  Limit what is required to be delivered to USG and deliver no more than what is required  Satisfy admin requirements (marking, track development costs, etc.)  If commercial item, use commercial license (with minor changes – e.g., venue, indemnification)

21. 21 1.Technical Data and Computer Software 2.Patents 3.Other AGENDA

22. 22 PATENTS IN USG CONTRACTS FAR default: contractor owns IP Contractor may elect to retain title of any invention made in the performance of work under a contract (FAR 27.302(b); DFAR 52.227- 11(b))  Must first comply with disclosure requirements  Exceptions (FAR 27.302(b)(2)): (1) foreign companies, (2) national security, (3) USG owned R&D facility, (4) exceptional circumstances If no election, contractor (and subsidiaries / affiliates) entitled to revocable, nonexclusive, sub-licensable, royalty-free, world wide license (transfer with CO approval)

23. 23 PATENTS IN USG CONTRACTS USG title If Contractor elects to retain title  USG gets nonexclusive, nontransferable, irrevocable, worldwide, paid-up license to practice, or have practiced for or on behalf of the USG (FAR 27.302(c)) May have additional rights to sublicense to any foreign government or international organization to effectuate treaties or international agreements Government has right to receive title if (FAR 27.302(d), FAR 52.227- 11(d); DFARS 252.227-7038(d)):  Contractor has failed to disclose in a timely manner  Contractor has not elected to retain rights  Contractor has failed to pursue / maintain a patent

24. 24 PATENTS IN USG CONTRACTS USG march in rights Government March in Rights (FAR 27.302(f)); FAR 52.227-11(h); DFARS 252.227-7038(h))  Where contractor acquires title, USG can require contractor to license, or USG may license to others itself: If contractor has failed to take adequate steps for practical application To alleviate health or safety concerns To meet requirements for public use To meet domestic production preference Almost never exercised

25. 25 PATENTS IN USG CONTRACTS Disclosure to USG Time of Disclosure – earlier of (FAR 52.227-11(c); DFARS 252.227- 7038(c)):  two months from disclosure to contractor personnel responsible for patent matters, or  six months from conception of the invention Form of Disclosure (FAR 52.227-11(c), -12(c))  Comply with contract (typically DD-882) Implications of Failure to Disclose  Forfeiture of all rights (Campbell Plastics (Fed. Cir. 2004))  Potential liability for government infringement

26. 26 PATENTS IN USG CONTRACTS Disclosure to USG Relevant definitions  “invention” – any invention or discovery that is or may be patentable or otherwise protectable under the Patent laws  “subject invention” – any invention of the contractor conceived or first actually reduced to practice in the performance of work under a Government contract  “reduced to practice” – testing demonstrates that invention will work for intended purpose

27. 27 PATENTS IN USG CONTRACTS Contractor election to retain title Procedural Requirements for Election to Retain Title (FAR 52.227-12(c))  In writing  Within 8 months of disclosure  Must identify countries in which contractor will retain title

28. 28 PATENTS IN USG CONTRACTS Contractor election to retain title Exceptions to FAR rule entitling contractor to title to invention:  DOE (42 USC §§ 2182, 5908)  NASA Upon request, NASA and DOE may waive right to title (unless foreign contractor, national security, or exceptional circumstances)

29. 29 PATENTS IN USG CONTRACTS Infringement 28 USC § 1498 – patent infringement action must be brought against USG (not contractor working for USG) in the Court of Federal Claims Damages limited to “reasonable and entire compensation” (i.e., reasonable royalty); no treble damages, attorney fees No injunctions USG can require that the contractor indemnify it for infringement (FAR 52.227-3)  generally included in contracts for commercial items but excluded from R&D contracts (Authorization and Consent clause FAR 52-227-1)

30. 30 PATENTS IN USG CONTRACTS Key points Contractor owns the patent  If USG is the only customer of patented subject matter, little value  If significant commercial market, perhaps OK for USG to have broad rights If possible, reduce to practice before entering into USG contract Satisfy reporting requirements (disclosure, election, etc.)

31. 31 1.Patents 2.Technical Data and Computer Software 3.Other AGENDA

32. 32 USG CONTRACTS “Bad” clauses  Rights in Data Special Works (FAR 52.227-17) Grants the government unlimited rights in (i) all data delivered under the contract and (ii) all data produced in the performance of the contract Limits contractors use of data  “Reachback” clauses Deferred delivery (2 years; only predesignated data and computer software) (DFARS 252.227-7026) Deferred ordering (3 years; any tech data or computer software generated in the performance) (DFARS 252.227-7027) Additional Data Requirements (3 years; “any data first produced or specifically used in the performance of th[e] contract”) (FAR 52.227-16)

33. 33 USG CONTRACTS “Bad” clauses (cont’d) Agency-specific clauses

34. 34 USG CONTRACTS Commercial items Commercial item (FAR 2.101)  “of a type” used for nongovernmental purposes or  sold, leased, licensed to the public or  Minor modifications to same For commercial items  FAR/DFARS requirements waived  Standard commercial license usually preferred over DFARS commercial IP clauses