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New Ideas, Methods and Products Series
Volume XIII |
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Rights-in-Data, Patents and Copyrights Under
SBIR and Other Government Contracts
RIGHTS IN DATA
Under the Rights in Data
clause used in many
government contracts, the
government requires
unlimited rights in several
categories of
data. These categories
include:
1. Data specifically stated
in the contract
to be delivered without
restriction;
2. Form, fit and function
data delivered
under the contract for
enabling physical
and functional interchangeability
of the
items, components or processes
delivered
under the contract;
3. Data delivered under
the contract that
constitutes documentation
for installation,
use, maintenance and upkeep
of the items,
components or processes
delivered under the
contract; and
4. All other data delivered
under the contract
unless the contractor curtails
these rights
as is allowed with respect
to certain kinds
of data. It is through
this fourth category
that the contractor has
the opportunity to
retain rights to the data.
To the extent that the
contractor delivers
data falling in the first
three categories,
he must realize that the
government receives
unlimited rights in data.
That is, the government
receives the right to use,
display and publish
the data and permit others
to do so. This
may seriously detract from
the contractor's
ability to commercially
exploit the subject
data. Contractors are therefore
concerned
with identifying those
data in which the
government does not acquire
unlimited rights;
that is data falling into
that fourth category.
There are actually two
types of data which
fall into this fourth category.
The first
type is SBIR data; the
second is data which
is developed at private
expense.
Unique to the SBIR program
is a category
known as SBIR data, which
is data produced
by the contractor in the
performance of an
SBIR contract. To qualify
as SBIR data, the
data must not have been
made available to
others by the contractor
and must not already
be available to the government.
If this data
is deliverable under the
contract and does
not qualify in the first
three categories
of data, in which the government
has unlimited
rights, then the contractor
may limit the
government's rights by
affixing an SBIR rights
notice to the SBIR data
delivered under the
contract. The notice informs
the government
that its rights in the
data are limited as
set forth in the notice.
Pursuant to the
notice, the government
may use the data for
government purposes only,
and the government
is restrained from disclosing
the data outside
the government for a period
of two years
after completion of the
contract. After the
two-year nondisclosure
period, the government
is relieved of all disclosure
prohibitions
and has a royalty-free
license to use and
authorize others to use
the data on behalf
of the government for government
purposes.
The government is not authorized
to publish
or distribute the data
at any time. The SBIR
Rights Notice is found
in 48 C.F.R. 52.227-20(d)
and reads as follows:
SBIR Rights Notice (Jun
1987)
"These SBIR data are
furnished with
SBIR rights under Contract
No. _________
(and subcontract _________
if appropriate).
For a period of 2 years
after acceptance
of all items to be delivered
under this contract,
the Government agrees to
use these data for
Government purposes only,
and they shall
not be disclosed outside
the Government (including
disclosure for procurement
purposes) during
such period without permission
of the Contractor,
except that, subject to
the foregoing use
and disclosure prohibitions,
such data may
be disclosed for use by
support Contractors.
After the aforesaid 2-year
period the Government
has a royalty-free license
to use, and to
authorize others to use
on its behalf, these
data for Government purposes,
but is relieved
of all disclosure prohibitions
and assumes
no liability for unauthorized
use of these
data by third parties.
This Notice shall
be affixed to any reproductions
of these
data, in whole or in part."
The Federal Acquisition
Regulations (FAR)
include a number of other
clauses regarding
rights in data, but according
to the SBIR
Rights in Data section,
48 CFR 27.405(c),
no other data rights clauses
are to be used
in SBIR contracts.
Even if the subject data
is not SBIR data,
it may be data which is
developed at private
expense, and in that way
qualify for treatment
under the fourth category
of data. This second
type of data actually has
two classes. The
first class is known as
restricted computer
software; the second class
is known as limited
rights data. Under SBIR
contracts, restricted
computer software is computer
software including
computer programs, databases
and related
documentation, developed
at private expense
which embodies a trade
secret, or which is
either commercial or financial
in nature
and confidential or privileged,
or which
is published and copyrighted.
If restricted
computer software has not
been specified
for delivery without restriction,
the contractor
may properly retain control
of this data
by withholding delivery.
The contractor must,
however, supply in place
of the restricted
computer software form,
fit and function
data.
The second class of privately
developed data
protectable by a contractor
as data is known
as limited rights data,
which, under SBIR
contracts, is data (other
than computer software)
which is developed at private
expense and
which contains trade secrets,
or which is
commercial or financial
in nature and confidential
or privileged. Again, unless
these data are
specified for delivery
without restriction,
the contractor may choose
to continue to
retain control of this
data by withholding
delivery and supplying
form, fit and function
data in its place.
Non-SBIR contractors may
be working under
a variety of variations
on the SBIR theme
with regard to rights in
data. Pursuant to
FAR Regulation 27.403,
the Standard Rights
in Data clause to be used
in government contracts
is found at 48 CFR 52.227-14.
Under this
clause the government has
unlimited rights
in the same categories
of data as for the
SBIR contractor, except
that the fourth category
of data allows the contractor
to protect
only limited rights data
or restricted computer
software since there is
no SBIR data. Further,
limited rights data is
more narrowly defined
as data other than computer
software that
embody trade secrets or
that are commercial
or financial and confidential
or privileged
to the extent that such
data pertains to
items, components or processes
developed
at private expense, as
compared to SBIR situations
where the data developed
at private expense
need not pertain to such
items, components
or processes.
As a general rule, the
non-SBIR contractor
can withhold restricted
computer software
and limited rights data
in the same way as
an SBIR contractor. However,
Form 52.227-14
includes several alternate
paragraphs which
vary the scope of available
protection. Alternate
1 broadens the definition
of limited rights
data by not requiring that
the data pertain
to items, components or
processes developed
at private expense and
is intended for contracts
that do not require the
development, use
or delivery of items, components
or processes
to or for the government.
Alternate 2 allows
the contracting office
to require the delivery
of limited rights data
which has been or
may be withheld. If a demand
for delivery
is made under this alternate
paragraph, the
contractor may affix a
specified legend to
the data to impose upon
the government a
permanent prohibition against
disclosure
of the data and against
using the data for
purposes of manufacture.
Likewise, the contract
may allow the contracting
officer to require the
delivery of restricted
computer software, and,
as with limited rights
data, the contractor may
limit the government's
disclosure of this software
by adding a specified
restricted rights legend
to the software.
The nondisclosure prohibition
applicable
to restricted computer
software does not
apply to computer software
which is published
and copyrighted, in which
case the restriction
imposed by the restricted
rights legend merely
prevents the government
from distributing
the software. Be aware
also that if restricted
computer software is delivered
with a copyright
notice it will be presumed
to be published
and copyrighted unless
the copyright notice
includes the following
statement: "Unpublished
- Rights reserved under
the copyright laws
of the United States".
COPYRIGHT
Even as to non-protectable
data, the SBIR
contractor is entitled
to establish a claim
to copyright in any data
first produced in
the performance under the
contract by affixing
specified legends on the
data upon delivery
to the government and upon
making application
for registration and a
deposit of the work
with the U.S. Copyright
Office. However,
with regard to data which
is not computer
software, this copyright
claim has no effect
on the unlimited rights
acquired by the government
under the contract. But
if the data is computer
software, then the government's
right to
distribute copies to the
public is not included
in the license which has
been automatically
granted by the contractor
to the government
upon claiming the copyright.
Therefore, with
regard to data which is
not computer software
and in which the government
has unlimited
rights, the contractor's
claim to copyright
does not prevent him from
being in competition
with the government with
regard to the distribution
of the data. For computer
software, the government
may not distribute copies
of the data but
is licensed to publicly
display it, and to
this extent the contractor
is still in competition
with the government as
a supplier of the
data. The legend includes
the standard copyright
notice and an acknowledgement
of government
sponsorship and may read
as follows: "(c)
1990 ABC Co. This work
was produced under
a contract with the Department
of Agriculture,
Contract No. 1234567-8".
Unlike SBIR contractors,
non-SBIR contractors
cannot claim a copyright
in data first produced
in performance of a contract
as a matter
of right. They may establish
claim to copyrights
in works such as technical
or scientific
articles based on or containing
such data
under paragraph C of clause
52.227-14 pursuant
to the government policy
of enhancing the
transfer of or dissemination
of information
produced at government
expense, stated at
48 CFR 27.404(f). However,
the non-SBIR contractor
must obtain the written
permission of the
contracting officer before
claiming copyright
in any other data first
produced in performance
of the contract. If this
permission is granted,
a claim to copyright may
be made by affixing
the same legend required
for SBIR contractors.
Note, however, that alternate
Paragraph 4
of 52.227-14 gives the
non-SBIR contractor
the same rights in data
first produced in
performance of the contract
as the SBIR contractor.
The contractor's request
to establish a claim
to copyright in the data
must be made pursuant
to F.A.R. 27.404(f)(ii),
which specifies
that the request must be
in writing and may
be made before the contract
award or during
contract performance. The
request should
identify the data and a
description of the
form of publication for
which copyright is
desired.
The failure to include
the proper copyright
notice and acknowledgement
of government
sponsorship will result
in a forfeiture of
the contractor's claim
to copyright and will
give the government unlimited
rights in the
data.
PATENTS
As with data, government
contractors can
retain patent rights under
inventions made
in the performance of work
under a government
contract. No special provisions
are used
for inventions made under
SBIR contracts.
At a minimum, the government
acquires a non-exclusive,
non-transferable, irrevocable
paid-up license
to practice or have practiced
the invention
for or on behalf of the
government. However,
unless the contractor observes
procedures
specified in the contract,
the government
may receive title to the
invention rather
than a mere license. If
this occurs, however,
the contractor is normally
granted a revocable
non-exclusive royalty-free
license to the
invention.
If the contractor is a
small business concern
or non-profit organization
under Section
27.301 or the contract
is with certain specified
agencies (DOD, DOE and
NASA), the form found
in 48 CFR 52.227-11, the
Short Form Patent
Rights Retention Clause,
should be incorporated
in the contract, except
in limited circumstances
relating to contracts for
the operation of
government-owned facilities,
national security
considerations and exceptional
circumstances,
in which cases the contracting
officer may
use an alternative form.
According to this
clause, the contractor
may retain title to
each invention conceived
or first reduced
to practice in the performance
of the contract,
subject to the government's
non-exclusive
paid-up license to use
the invention for
government purposes. The
contract may extend
this license to other governments
to which
the U.S. has treaty or
other obligations.
The procedure for retaining
title is spelled
out in Paragraph C, where
it is specified
that the contractor must
disclose the subject
invention to the Contracting
Officer within
two months after the inventor
discloses the
subject invention in writing
to contractor
personnel responsible for
patent matters.
The disclosure to the Contracting
Officer
must be written, it must
identify the contract
and the inventors, and
must be sufficiently
complete in technical detail
to convey a
clear understanding of
the invention. The
disclosure must also identify
whether there
has been any publication,
sale or public
use of the invention, whether
a manuscript
describing the invention
has been submitted
for publication, and whether
the manuscript
has been accepted for publication.
The contractor
is under an ongoing duty
to notify the contracting
officer of any changes
in status of disclosure
of the invention to the
public.
Having submitted the disclosure,
the contractor
has up to two years to
elect in writing whether
or not to retain title
to the invention.
The two-year period may
be shortened by the
agency if a statutory bar
date requires that
the patent application
be filed before the
end of that period. In
the absence of such
a statutory bar date, the
contractor must
file its initial patent
application within
one year after electing
to retain title to
the invention. This timetable
is subject
to extensions of time which
may be granted
at the discretion of the
federal agency upon
request by the contractor.
In contrast to rights in
data, the election
to retain title to a subject
invention is
country-specific and applies
only in countries
where the contractor actually
files a patent
application within ten
months of the original
filing or six months from
the date a foreign
filing license is granted.
Having properly acquired
title to a subject
invention, the contractor
is then under a
positive duty to take effective
steps to
achieve practical application
of the subject
invention. The contractor
agrees to submit
periodic reports at least
annually, describing
these efforts. If the contractor
fails to
meet this obligation, the
government can
exercise march-in rights
and grant licenses
to others for the use of
the invention. Since
patent rights are country-specific,
the contractor
may lose title to an otherwise
properly elected
invention by failing to
file in foreign countries
within the time limits
specified above or
by failing to continue
prosecution or otherwise
abandoning an application
or patent in any
country. Contractors that
are nonprofit organizations
may be subject to special
licensing restrictions.
If the contractor does
not follow the procedure
for making an election
to retain title to
a subject invention, the
government may obtain
title by requesting title
from the contractor
within sixty days after
learning of the contractor's
failure to disclose or
elect the invention
within the specified times.
In most cases
in which the government
has obtained title
to a subject invention,
the contractor retains
a non-exclusive royalty-free
license throughout
world in the subject invention.
The license
may be revoked or modified
after a hearing
if it is found necessary
to grant an exclusive
license to a third party
to achieve expeditious,
practical application of
the subject invention
in areas where the contractor
has not achieved
this goal. An important
exception to these
minimum rights is that
if the contractor
fails to disclose the subject
invention to
the Contracting Officer
as described above,
the contractor obtains
no license in the
event the government obtains
title to the
invention.
For contractors who are
not small business
or nonprofit, then the
long form patent rights
clause is generally incorporated
into the
contract. Like the short
form, it allows
the contractor to retain
title to a subject
invention while giving
the government at
least a non-exclusive,
non-transferable,
irrevocable worldwide license
to practice
the invention for or on
behalf of the United
States. The long form imposes
more stringent
disclosure requirements
and a shorter election
period than the short form
and allows the
government to more easily
obtain title to
a subject invention and
more carefully details
the contractor's obligations
to protect the
government's interest in
the subject invention.
The long form also gives
the contracting
officer the right to inspect
the contractor's
records relating to the
conception or first
reduction to practice of
the invention, and
other inventions in the
same field of technology,
to determine whether the
contractor and its
inventors have complied
with the contract.
It also allows the contracting
officer to
withhold payments under
the contract if the
contractor fails to comply
with disclosure
and certain other requirements.
Other rights and requirements
apply to contracts
for which the work is to
be performed outside
of United States territories
by contractors
that are not small businesses,
nonprofit
organizations or domestic
firms, and are
found in 48 C.F.R. 52.22713.
Thus, while rights in data,
patents and copyrights
are obtained by contractors
under government
contracts, it is clear
that careful action
is required at the outset
and throughout
the contract to insure
that those rights
are secured. This article
has described the
terms of clauses which
appear in contracts
with many government agencies.
Some agencies
use different clauses,
however, so the scope
of rights in data and subject
inventions
may vary.
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