United States: Conducting R&D With Government Funding; Great Idea, But How Do We Protect Our Intellectual Property Rights? Part 3 Of 3

I. Introduction

This last segment focuses on the government's rights in data and software developed or used in the performance of government funded research. Due to space limitations, we will focus on the three primary clauses used in procurement contracts under which data/software is produced, furnished, or acquired.

II. FAR 52.227-14 Rights in Data

This clause is used by most government agencies, although some agencies modify it slightly. The term "Data," as used in this clause, encompasses all recorded information, regardless of the media on which it is recorded, including both technical data and computer software, but excluding information incidental to contract administration.

The clause creates three categories (Unlimited, Limited, and Restricted) of rights and must be included in all subcontracts. The Contractor cannot, without the Contracting Officer's (CO) permission, incorporate any copyrighted Data into a deliverable that was not first produced in the performance of the contract, unless the Contractor identifies the Data and obtains all applicable rights for the government.

Unlimited Rights

This gives the government the right to use, disclose, reproduce, prepare derivative works, distribute copies to the public, publicly perform and display in any manner and for any purpose, and to permit others to do so. The government receives Unlimited Rights in Data first produced in the performance of the contract and any other Data delivered under the contract, unless marked with Restricted or Limited Rights. The Contractor should avoid agreeing to deliverables that encompass proprietary Data. If this is not possible, the Contractor must be sure to deliver such Data with Limited Rights or Restricted Rights, as explained below. The Contractor retains ownership, the ability to use or publish, and the right to establish copyrights in Unlimited Rights Data. But third parties will have the ability to use such Data for commercial purposes. Unlimited Rights, as discussed throughout this article, are inchoate (e.g., incomplete) rights, as the government's ability to exercise such rights is dependent upon it receiving delivery of the Data.

Limited/Restricted Rights

Limited Rights encompasses Data, other than software, that embody trade secrets or are commercial or financial and confidential or privileged, pertaining to items/processes developed at private expense, including minor modifications. Restricted Rights encompasses software developed at private expense and that is a trade secret, is commercial or financial and confidential or privileged or copyrighted software, including minor modifications.

A Contractor may withhold Limited Rights data or Restricted Rights software from delivery, provided that such data/software: (a) was not first produced in the performance of the contract, (b) was developed at private expense; and (c) does not constitute form, fit, or function data or manuals or instructional materials for the installation, operation, or maintenance of items being furnished under the contract. To withhold such data/software, the Contractor will need to identify the data/software being withheld and provide form, fit, or function data instead. If it is necessary to include Limited Rights data or Restricted Rights software as part of the deliverables, Alternatives II (data) or III (software) to FAR 52.227-14 must be incorporated into the contract to enable such data or software to be delivered with a Limited or Restricted Rights notice.

Limited Rights allow the government to reproduce and use the data, provided that the data is not, without the Contractor's permission, used for manufacturing or disclosed outside the government. The government, however, may negotiate greater rights in such data. Restricted Rights allow the government to: (1) use the software with computer(s)(and their replacements) for which it was acquired; (2) use/copy for archive/backup purposes; (3) modify, adapt, or combine the Restricted Rights software with other computer software, provided that the portions of the incorporated Restricted Rights software continue to be subject to Restricted Rights; and (4) disclose and reproduce the software for use by support service contractors in accordance with the above restrictions. Subject to the above, the Contractor retains all rights, title, and interest in the Limited or Restricted Rights Data.

Limited Rights allow the government to reproduce and use the data, provided that the data is not, without the Contractor's permission, used for manufacturing or disclosed outside the government. The government, however, may negotiate greater rights in such data. Restricted Rights allow the government to: (1) use the software with computer(s)(and their replacements) for which it was acquired; (2) use/copy for archive/backup purposes; (3) modify, adapt, or combine the Restricted Rights software with other computer software, provided that the portions of the incorporated Restricted Rights software continue to be subject to Restricted Rights; and (4) disclose and reproduce the software for use by support service contractors in accordance with the above restrictions. Subject to the above, the Contractor retains all rights, title, and interest in the Limited or Restricted Rights Data.

III. DFAR 252.227-7013 Rights in Technical Data

This clause is used in Department of Defense (DOD) procurement contracts. The term "Technical Data" encompasses all recorded information, regardless of the form or method of the recording, of a scientific or technical nature, including software documentation, but excludes software or information incidental to contract administration. The clause creates three different categories (Unlimited, Limited, and Government Purpose) of rights and must be included in all subcontracts. The Contractor cannot, without the CO's written permission, incorporate any copyrighted Technical Data into a contract deliverable that was not first produced in the performance of the contract, unless the Contractor identifies the data and obtains all applicable rights for the government.

Unlimited Rights

The government receives "Unlimited Rights" (as defined in Section II) in: (a) Technical Data pertaining to an item/process developed exclusively with government funds; (b) any analyses, test data, etc., specified as an element of performance; (c) Technical Data created solely with government funds under a contract that does not require the development, manufacture, construction, or production of an item/process; (d) form, fit, and function data; (e) installation, operation, maintenance, or training data (but not detailed manufacturing or process data); (f) modifications to government furnished Technical Data; (g) publicly available Technical Data; (h) Technical Data in which the government has obtained Unlimited Rights under another contract or through negotiations; and (i) Government Purpose Rights or Limited Rights Technical Data whose restrictive condition(s) have expired.

The Contractor retains ownership, the ability to use or publish, and the right to establish copyrights in such Technical Data. Third parties will have the ability to use such data for commercial purposes.

Limited Rights

With very limited exceptions, the government receives Limited Rights in any Technical Data: (1) pertaining to items/processes developed exclusively at private expense, or (2) created exclusively at private expense in the performance of a contract that does not require the development, manufacture, construction, or production of items/processes.

Limited Rights allow the government to use, modify, reproduce, release, perform, display, or disclose Technical Data within the government. The Contractor's express written permission is required before the government can: (1) release or disclose such data outside the government; (2) use such data for manufacturing; or (3) authorize its use by a third party. The government may allow third parties who are: (1) government support contractors or (2) performing emergency repair or overhaul services, to use such data. The government may also allow foreign governments to use Technical Data (other than detailed manufacturing data) for evaluation or informational purposes. The Contractor will receive advance notice of any such third-party releases, and the release itself will be subject to prohibitions on further reproduction, disclosure, and use. Subject to the above, the Contractor retains all rights, title, and interest in any Limited Rights Technical Data that it delivers to the government under a contract.

Government Purpose Rights

With limited exceptions, the government receives, for a five year period, Government Purpose Rights in Technical Data: (1) pertaining to items/processes "developed with mixed funding;" or (2) created with mixed funding in the performance of a contract that does not require the development, manufacture, construction, or production of items/processes. Upon expiration of the five-year period, the government retains Unlimited Rights in the Technical Data. "Developed with mixed funding" means development was accomplished partially with costs charged to indirect cost pools and/or costs not allocated to a government contract, and partially with costs charged directly to a government contract.

Government Purpose Rights allows the government to use, modify, reproduce, release, perform, display, or disclose Technical Data within the government without restriction and to disclose such data outside the government to enable others to use, modify, reproduce, release, perform, display, or disclose such data for "Government Purposes." "Government Purposes" encompasses any activity (including competitive procurement) in which the U.S. government is a party, excluding the right to use, modify, reproduce, release, perform, display, or disclose technical data for commercial purposes or authorize others to do so. Except in very limited circumstances, the government is precluded from releasing or otherwise disclosing Government Purpose Rights Technical Data outside of the government. Subject to the above, the Contractor retains all rights, title, and interest in Government Purpose Rights Technical Data, including the exclusive right to use and license others to use such Technical Data for commercial purposes until such rights convert to Unlimited Rights.

To obtain Limited or Government Purpose Rights in Technical Data, the Contractor must identify such data in the contract as being delivered with either Limited or Government Purpose Rights. Except in limited circumstances, the Contractor cannot, subsequently, assert Limited or Government Purpose Rights in Technical Data not previously identified in the Contract. All Limited or Government Purpose Rights Technical Data must be marked with the proper Notice, before it is disclosed to government.

IV. DFAR 252.227-7014 Rights in Computer Software and Software Documentation

This clause in also used in DOD procurement contracts. The term "Non-Commercial Computer Software" is defined as any software that does not meet the definition of "Commercial Computer Software." "Commercial Computer Software" is any software developed or regularly used for nongovernmental purposes which: (a) has been offered for or actually sold, leased, or licensed to the public; (b) will be available for commercial sale, lease, or license in time to satisfy the delivery requirements of the contract; or (c) satisfies either (a) or (b) and would require only minor modification to meet the requirements of the contract. "Computer Software Documentation" refers to owner's manuals, user's manuals, installation instructions, operating instructions, and other similar items, regardless of storage medium, that explain the capabilities of the software or provide instructions for using the software.

The clause creates three categories (Unlimited, Restricted, and Government Purpose) of rights in such software and software documentation and must be included in all subsequent subcontracts. The Contractor cannot, without the CO's written permission, incorporate any copyrighted software or software documentation into a contract deliverable, unless the Contractor identifies such software and documentation and obtains all applicable rights for the government.

Unlimited Rights

The government receives Unlimited Rights (as defined in Section II) in: (a) software developed exclusively with government funds; (b) all software documentation required to be delivered under the contract; (c) corrections or changes to software or documentation furnished by the government; (d) software or documentation that is publicly available or released or disclosed by the Contractor or a subcontractor without use or disclosure restrictions; (e) software or software documentation obtained with Unlimited Rights under another contract; or (f) software or documentation whose Restricted or Government Purpose Rights have expired.

The contractor retains full ownership of the Unlimited Rights software or software documentation as well as the ability to use, modify, reproduce, release, display, or disclose such software and documentation. Third parties will have the ability to use such software or software documentation for commercial purposes.

Restricted Rights

The government receives Restricted Rights in noncommercial software or software documentation required to be delivered or otherwise provided to the government under the contract that was developed exclusively at private expense. Restricted Rights enable the government to: (1) use the software with one computer at one time; (2) transfer the software to another government agency; (3) make the minimum number of copies required for backup, archive, or modification purposes; and (4) modify the software, provided that the modified software is subject to the above restrictions. The government may allow third parties who perform: (a) services relating to the same or a related contract; (b) emergency repair or overhaul services; or (c) government service or support contracts, to use and modify the software, subject to limitations on use, disclosure, restrict decompiling, disassembling or reverse engineering.

Government Purpose Rights

With limited exceptions, the government receives, for a five-year period, Government Purpose Rights in software "development with mixed funding" (as previously defined). Upon expiration of the Government Purpose Rights, the government retains Unlimited Rights in the software or software documentation.

Government Purpose Rights allow the government to: (1) use, modify, reproduce, release, perform, display, or disclose software or software documentation within the government without restriction; and (2) disclose such software or documentation outside the government to allow others to use, modify, reproduce, release, perform, display, or disclose the same for "Government Purposes" (as defined in Section IV). Except in very limited circumstances, the government is precluded from releasing or otherwise disclosing such software/documentation outside of the government. Subject to the above rights, the Contractor retains all rights, title, and interest in Government Purpose Rights software/documentation, including the exclusive right to use and license others to use the same for commercial purposes, until such rights convert to Unlimited Rights.

To obtain Restricted or Government Purpose Rights in software/software documentation, the Contractor must identify such items in the contract as being delivered with either Restricted or Government Purpose Rights. Except in limited circumstances, the Contractor cannot, subsequently, assert Restricted or Government Purpose Rights in software/software documentation not previously identified in the Contract. All Restricted or Government Purpose Rights software/software documentation must be marked with the proper Notice, before it is disclosed to government.

V. Summary

Part Three of the series provided a general understanding of the government's rights in data and software developed or used in the performance of government funded research. Careful consideration should be given to these clauses when negotiating the statement of work and deliverables for government funded research.

In this three-part series of articles, we have identified the basic types of agreements that you may encounter when conducting a government-funded research project and discussed some of the primary clauses pertaining to rights in patents, data, and software developed or used in the performance of research. Although arguably complex when first confronting these clauses, with practice and guidance, compliance should not be difficult. However, given the nature of these clauses and importance of intellectual property in today's market, one must always give careful consideration to these clauses when negotiating an agreement for a government-funded research project.

Previously published by Robotics Business Review

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