1. Protecting and Maximizing Value of Contractor Intellectual Property Under Government Contracts Presented By: William A. Shook and G. Matthew Koehl October 2, 2008

2. 1 Outline FAR Part 27 Definitions Clauses Practical Issues Early Identification Marking Listing No Patents Today

3. 2 FAR Part 27 – Definitions  Data  Recorded Information  Technical Data  Software  Technical Data  Recorded Information  Technical or scientific nature  Does NOT include software  Does include data in computer databases

4. 3 FAR Part 27 – Definitions – Non-Software  Form, fit, and function data  data relating to items, components, or processes that are sufficient to enable physical and functional interchangeability, and data identifying source, size, configuration, mating and attachment characteristics, functional characteristics, and performance requirements.

5. 4 FAR Part 27 -- Definitions  Unlimited Rights  Government has the right to  Use  Disclose  Reproduce  Prepare derivative works  Distribute to public  Perform publicly  Display publicly  Permit others to do so  Essentially ownership rights

6. 5 FAR Part 27 – Definitions – Non-Software  Limited Rights Data – Standard – 52.227-14  data that embody trade secrets or are commercial or financial and confidential or privileged, to the extent that such data pertain to items, components, or processes developed at private expense, including minor modifications.  Contract does not require delivery of limited rights data  Contract requires delivery of form, fit and function data  Limited Rights Data – Alternate I – 52.227-14  data developed at private expense that embody trade secrets or are commercial or financial and confidential or privileged.

7. 6 FAR Part 27 – Definitions – Non-Software  Limited Rights (FAR 27.401)  “the rights of the Government in limited rights data as set forth in a Limited Rights Notice”  Limited Rights (FAR 52.227-14)  “the rights of the Government in limited rights data as set forth in the Limited Rights Notice of paragraph (g)(3) if included in this clause”

8. 7 Limited Rights Definition – Non-Software  (g)(3) – Alternate II  Included if CO determines delivery of limited rights data is required – prior to or after contract award  Requires Contractor To Use “Limited Rights Notice”  Data not used for manufacture  Not disclosed outside of government  Except as stated  Use by service contractors (no manufaturing)  Evaluation by nongovernment evaluators  Use by other contractors (no manufacturing)  Emergency repair or overhaul work  Release to foreign government  Or “NONE” stated

9. 8 Allocation of Rights – Non-Software  Government Unlimited Rights  Data first produced in the performance of the contract  Form, fit, and function data delivered  Delivered data that are:  Manuals  Instructions  Training  Installation, operation, maintenance and repair  All Data delivered unless provided as Limited Rights Data

10. 9 Allocation of Rights – Non-Software  Contractor’s Rights  Data first produced in the performance of the contract  Use  Release to others  Reproduce  Distribute  Publish  Data used in performance  Prohibitions  Federal law, e.g., export control  Contract provision  Restrictive markings

11. 10 Markings – Non-Software  52.227-14(f) “Data delivered to the Government without any restrictive markings shall be deemed to have been furnished with unlimited rights. The Government is not liable for the disclosure, use, or reproduction of such data.”  If unmarked data has not been disclosed outside the government, Contractor can request marking:  Within 6 months after delivery (or longer with CO approval)  Identification of data  Demonstration that omission of marking was inadvertent  Marking is authorized  No prior Government liability

12. 11 Copyright – Non-Software  Data first produced in performance of contract  CO approval required for contractor copyright unless Alt. IV included  Contractor may assert copyright without approval for publication in scientific and technical articles  Copyright notice affixed and acknowledgment of government support and contract number  Government license  Paid up – Nonexclusive – Irrevocable - Worldwide license  Reproduce – Prepare derivative works – Distribute copies to the public -- Perform publicly – Display publicly

13. 12 Copyright – Non-Software  Data not first produced in performance of contract  Contractor not to incorporate such data, unless  Contractor identifies data  Grants or obtains license  Paid up – Nonexclusive – Irrevocable - Worldwide license  Reproduce – Prepare derivative works – Perform publicly – Display publicly – MAY NOT distribute

14. 13 FAR Part 12.211 – Technical Data  Except as provided by agency-specific statutes, the Government shall acquire only the technical data and the rights in that data customarily provided to the public with a commercial item or process. The contracting officer shall presume that data delivered under a contract for commercial items was developed exclusively at private expense. When a contract for commercial items requires the delivery of technical data, the contracting officer shall include appropriate provisions and clauses delineating the rights in the technical data in addenda to the solicitation and contract (see Part 27 or agency FAR supplements).Part 27

15. 14 FAR Part 27 – Definitions – Software  Form, fit, and function data  Data  Identifying source  Functional characteristics  Performance  Excludes  Source Code  Algorithms  Processes  Formulas  Flow Charts

16. 15 FAR Part 27 – Definitions  Unlimited Rights  Government has the right to  Use  Disclose  Reproduce  Prepare derivative works  Distribute to public  Perform publicly  Display publicly  Permit others to do so  Essentially ownership rights

17. 16 FAR Part 27 – Definitions – Software  Restricted Computer Software  Developed at private expense  Trade secret  Commercial or financial  Confidential or Privileged  Or Copyrighted software

18. 17 FAR Part 27 – Definitions – Software  Restricted Rights  The Rights in the “Restricted Rights Notice”  Restricted Rights Notice – 52.227-14 – Alternate III  Contractor required to affix notice  May not be used, reproduced, or disclosed – except  Used or copied with a back up computer  Used or copied with the computers for which it was acquired  Backup purposes  Modified, adapted, or combined with other computer software – restricted rights remain  Disclosed to and reproduced for support service contractors  Used on replacement computer  Copyrighted software licensed with same rights  Other rights or limitations must be expressly stated or incorporated in contract

19. 18 FAR Part 27 – Definitions – Software  FAR 27.404-2(d)  CO shall use Alt III if delivery of restricted computer software required  Minimum rights  Used or copied with a back up computer  Used or copied with the computers for which it was acquired  Backup purposes  Modified, adapted, or combined with other computer software – restricted rights remain  Disclosed to and reproduced for support service contractors  Used on replacement computer  CO may specify different rights

20. 19 Allocation of Rights – Software  Government Unlimited Rights  Data first produced in the performance of the contract  Form, fit, and function data delivered  Other than Restricted Software, delivered data that are:  Manuals  Instructions  Training  Installation, operation, maintenance and repair  All Data delivered unless provided as Restricted Software

21. 20 Markings – Software  52.227-14(f) “Data delivered to the Government without any restrictive markings shall be deemed to have been furnished with unlimited rights. The Government is not liable for the disclosure, use, or reproduction of such data.”  If unmarked data has not been disclosed outside the government, Contractor can request marking:  Within 6 months after delivery (or longer with CO approval)  Identification of data  Demonstration that omission of marking was inadvertent  Marking is authorized  No prior Government liability

22. 21 Copyright – Software  Data first produced in performance of contract  CO approval required for contractor copyright unless Alt IV included  Contractor may assert copyright without approval for publication in scientific and technical articles  Copyright notice affixed and acknowledgment of government support and contract number  Government license  Paid up – Nonexclusive – Irrevocable - Worldwide license  Reproduce – Prepare derivative works – Perform publicly – Display publicly – MAY NOT distribute

23. 22 FAR Part 12.212 – Computer Software  (a) Commercial computer software or commercial computer software documentation shall be acquired under licenses customarily provided to the public to the extent such licenses are consistent with Federal law and otherwise satisfy the Government’s needs. Generally, offerors and contractors shall not be required to—  (1) Furnish technical information related to commercial computer software or commercial computer software documentation that is not customarily provided to the public; or  (2) Relinquish to, or otherwise provide, the Government rights to use, modify, reproduce, release, perform, display, or disclose commercial computer software or commercial computer software documentation except as mutually agreed to by the parties.  (b) With regard to commercial computer software and commercial computer software documentation, the Government shall have only those rights specified in the license contained in any addendum to the contract. For additional guidance regarding the use and negotiation of license agreements for commercial computer software, see 27.405-3.27.405-3

24. 23 FAR 27.405-3 – Commercial Computer Software  No specific contract clause  Contract to specifically address rights to use, disclose, modify, distribute and reproduce  Government may accept different rights for software delivered under subcontract  FAR 52.227-19 “MAY” be used  Used or copied with a back up computer  Used or copied with the computers for which it was acquired  Backup purposes  Modified, adapted, or combined with other computer software – restricted rights remain  Disclosed to and reproduced for support service contractors  Used on replacement computer  Notice Required  Notice-Notwithstanding any other lease or license agreement that may pertain to, or accompany the delivery of, this computer software, the rights of the Government regarding its use, reproduction and disclosure are as set forth in Government Contract No.___________________________.

25. 24 Instructive Case – Night Vision Corp. v US (2005)  Failure to affix required data rights legend on a physical prototype delivered to the government can result in the waiver of technical data rights. Night Vision Corp. v. United States, 68 Fed. Cl. 368 (2005), aff’d, 469 F.3d 1369, cert. denied, 127 S. Ct. 2252 (2007).  If a physical prototype constitutes technical data, contactors must affix the appropriate data rights legend to prototype itself  Assuming a prototype does not constitute technical data, the government is free to provide prototype to others (including for reverse engineering), unless there is a patent or contractual agreement protecting prototype  Impact: Prior to delivering a prototype, affix the appropriate data rights legend to prototype itself to protect any technical data, and have a patent/contractual agreement to further protect prototype.

26. 25 Dowty Decoto, Inc. v. Navy (1989)  Issue is whether Navy had limited or unlimited rights in “holdback bars”  During term of contracts, Dowty placed restrictive legend noting it was only providing “limited” rights to the government  Navy requested removal and challenged marking  Navy determined restrictive rights not warranted  Disclose to competitors for proposals  Suit under APA based on Trade Secrets Act

27. 26 Dowty Decoto, Inc. v. Navy (1989)  Court finds bars developed at private expense  Who took risk in investing money to transform the item from a speculative idea into a workable item that would probably succeed in its intended use  In place and workable before the contract  Held 2 patents which formed core design  Never quoted or asked for design funds  Fixed price parts agreement  Mistake was change order

28. 27 Ervin & Assoc., Inc. v. US (2004)  Contractor paid to create computer database for HUD  Contractor argues that components of database were created prior to contract – without marking or identification  Mixed funding is not developed exclusively at private expense