Transcript resources.ncmahq.org

Protecting Data Rights
Under DoD Contracts
October 14, 2009
NCMA Workshop
Cape Canaveral Chapter
Keith R. Szeliga
Sheppard Mullin Richter & Hampton
Overview
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Categories of Data
Types of Government License Rights
Understanding the Follow-the-Funds Test
Protecting Proprietary Rights
Questions
Categories of Data
Categories of Data
 Technical Data
– Recorded information of a scientific or technical
nature (includes computer software
documentation)
– Does not include computer software or data
incidental to contract administration
 Computer Software
– Source code and object code
– Design details, algorithms, processes, flow
charts, formulae, etc.
Types of Government
License Rights
Limited Rights (Technical Data)
 Application
– Technical data pertaining to items, components, or
processes developed exclusively at private expense
– Technical data created exclusively at private expense
under contracts that do not require development
 Scope of License
– May be used internally
– May not be used for manufacturing or reprocurement
– May not be disclosed to third parties without NDA
Restricted Rights (Computer Software)
 Application
– Non-commercial computer software developed exclusively at private
expense and delivered to the Government under a contract
 Scope of License
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May be used on a single computer
May be transferred to another Government agency
May be copied for archival or backup purposes
May be modified (Government obtains restricted rights in
modification)
– May not be duplicated, reverse engineered, or decompiled
– May not be disclosed to third parties without NDA
Government Purpose Rights
 Applicability
– Technical data pertaining to items, components, or processes
developed with mixed Government and private funding
– Technical data created with mixed funding under contracts that do
not require development
– Computer software developed with mixed funding
 Scope of License
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May be used in any activity where Government is a party
May be used for manufacturing or competitive procurement
May be duplicated, reverse engineered, or decompiled
May not be used for commercial purposes
May not be disclosed to third parties without NDA
Unlimited Rights
 Applicability
– Technical data pertaining to items, components, or
processes developed exclusively with Government funds
– Technical data created exclusively with Government
funds under contracts that do not require development
– Computer software developed exclusively with
Government funds
 Scope of License
– May be used in any manner and for any purpose
– May be disclosed freely to third parties
Additional Types of Unlimited Rights Data
 Studies, analyses, and test data produced for a contract and specified
as an element of performance
 Form, fit, and function data
 Technical data necessary for installation, operation, maintenance, or
training purposes
 Corrections or changes to Government furnished technical data and
computer software
 Data that is otherwise publicly available or has been released or
disclosed without restriction
 Data furnished to the Government without a restrictive legend
Special Categories of License Rights
 Commercial License Rights
– Technical Data = Analogous to limited rights
– Computer Software = Standard commercial
license
 Specifically Negotiated License Rights
– Government may not accept lesser rights than
those obtained under a limited rights license
Understanding the
Follow the Funds Test
Follow-the-Funds Test
 Government’s rights are determined by source of
funding for development effort
– Government Expense = Unlimited Rights
– Mixed Funding = Government Purpose Rights
– Private Expense = Limited/Restricted Rights
 Preventing competitors from using your data
requires development exclusively at private
expense
 Doctrine of segregability allows source of funding
determination at lowest practicable level
Private Expense
 Commercial Items
– Presumed to be developed at private expense
 Non-Commercial Items
– Development must be funded exclusively with:
• Costs properly charged to indirect cost pools
• Costs properly not allocated to a Government contract
• Any combination of the foregoing
Development (Key Concepts)
 Before a product has attained the status of being
“developed,” any development work at Government
expense will cause the Government to acquire
unlimited or Government purpose rights
 After a product has attained the status of being
“developed,” minor redesign work at Government
expense will not cause the Government to acquire
unlimited or Government purpose rights
Development (Hardware)
 Hardware must “exist” and be “workable”
– An item or component “exists” when it has been
constructed and a process “exists” when it has been
practiced
– An item, component, or process is “workable” if there has
been sufficient analysis and testing to demonstrate a high
probability that it will function as intended
– Extent of testing required depends on technology and
state of the art
Development (Software)
 Software Programs and Modules
– Operated successfully in a computer
– Tested to the extent they can be expected to
perform their intended function
 Non-Code Aspects of Software
– Sufficient testing and analysis to demonstrate
that the software program, when coded, can be
expected to perform its intended purpose
Segregability (Key Concepts)
 Source of funding may be determined at the component or
process level
 Rather than Government purpose rights in technical data
pertaining to an entire item, the Government receives:
– Limited rights in technical data pertaining to components and
processes developed exclusively at private expense
– Unlimited rights in technical data pertaining to components and
process developed exclusively at Government expense
 If the privately developed component is difficult to duplicate,
the Government may not be able to obtain the item from a
competitor – even though it has paid for much of the
development effort
Segregability
 Hardware
– Source of funding determination “should be made at any
practical sub-item or subcomponent level or any
segregable portion of a process”
• Segregable replacement parts or assemblies
• Separate elements of a process
 Software
– Source of funding determination “should be made at the
lowest practicable segregable portion of the software or
documentation”
• Subroutines and modules that perform a specific function
Protecting
Proprietary Rights
Develop a Business Plan
 Identify items, components, or processes
that offer long-term competitive advantages
 Do not accept any Government funding to
develop those items, components, or
processes
 Ensure that any improvements developed
with Government funding are segregable
from the core technology
Document Source of Funding
 Government may challenge contractor’s
assertion of proprietary rights
 Contractor has the burden to justify that it
was entitled to deliver data with less than
unlimited rights
 Contractor must create and maintain
evidence sufficient to establish development
at private expense
Document Source of Funding
 A memorandum that documents the baseline technology,
describes the nature of the planned development, and creates a
separate account number for the development effort
 Records of all costs charged to the separate development
account
 Periodic status reports on the progress of the development effort
 Records of all significant tests performed and the design status at
the time of testing
 Engineering, laboratory, and project management logs and
journals
 Copies of all contracts under which products incorporating the
relevant technology are delivered, modified, tested, or enhanced
Analyze Data Rights Before Bidding
 Implement a formal procedure for analyzing the data rights implications
of each potential Government contract
– Does the SOW require further development or testing of products developed
at private expense?
– Can necessary development or testing efforts be limited to segregable
components, elements, or modules?
– Does performance of the contract require the production of new technical
data for preexisting, privately developed products or software?
– Does the solicitation include any unusual data rights clauses (e.g., “Rights in
Special Works”)?
– Is it necessary to include any proposal language that clarifies the parties’
proprietary rights or the companies obligations under the SOW?
List Proprietary Data in Pre-Award Notice
 Proposals submitted to DoD agencies must include a
standard form attachment that identifies all data to be
delivered with less than unlimited rights
 Data not included on this form must be delivered with
unlimited rights unless the contractor can establish that its
failure to identify those data resulted from:
– Lack of information regarding the need to use that data
– Inadvertent omission – but only if unlimited rights in the relevant data
was not a significant factor in the Government’s award determination
Use Appropriate Restrictive Legends
 Data delivered with less than unlimited rights must
be marked with an appropriate restrictive legend
 Government obtains unlimited rights in data
furnished without an appropriate restricted legend
 Contractor can add a legend to unmarked data
within six months after delivery – but the
Government will not be liable for use or disclosure
of data that were not marked
Questions?