Post on 28-Dec-2015
Intellectual Property and Government Contracts
What is intellectual property? Creations of the human mind Physical manifestations of original thought Products of the intellect that has
commercial value Intangible personal property interests
IP in Procurement Contracts Statutory Coverage
Patents – Bayh-Dole Act Regulatory Coverage
Patents Commerce Department regulations in the Code of Federal Regulations Federal Acquisition Regulations
Technical Data Federal Acquisition Regulations for civilian agencies DFARS for DoD agencies
Computer Software Federal Acquisition Regulations for civilian agencies DFARS for DoD agencies
Bayh-Dole Act Codified at 35 U.S.C. §200 et seq. Applies to procurement contracts, grants and cooperative
agreements Does not apply to Non-FAR instruments (OT for
Prototypes) Passed in 1980 in an effort by Congress to encourage
entities doing work under Government contracts to commercialize their inventions
Prior to 1980, the Government would take ownership of inventions and make them public Few U.S. contractors were commercializing these inventions and
foreigners were reaping the benefit of many of these inventions.
Bayh-Dole Act Universities and non-profits lobbied to retain
more rights in the inventions so they could have commercial exclusivity to exploit the inventions in the marketplace
Statutory language applies only to non-profits, including universities, and small businesses
President Reagan issued an Executive Order in 1983 stating that the same allowances should be extended to large businesses as well.
Bayh-Dole Act 35 U.S.C. §200
States the general policy of the Government Promote utilization of inventions arising under Federally
supported research projects Encourage maximum participation of small business firms in
federal research Promote collaboration between commercial industry and non-
profits Promote commercialization and public availability of inventions Ensures the Government obtains sufficient rights in the
invention for its needs and purposes Protect the public from nonuse or unreasonable use of
inventions
Bayh-Dole Act 35 U.S.C. § 201 – Definitions
“Funding agreement”- contract, grant or cooperative agreement
“Invention” – any invention or discovery which is or may be patentable
“Subject Invention” – any invention conceived or first actually reduced to practice in performance of work under a funding agreement
“Practical Application” – to manufacture, practice, operate to establish that the invention is being utilized and the benefits are available to the public
Bayh-Dole Act 35 U.S.C. §202
Allows contractor to retain title to the subject invention, except in unusual circumstances
Before the Government takes title, it must make a determination and file with the Department of Commerce for approval
The contractor must disclose the subject invention, elect to retain title and file a patent within a certain period of time
Must state in patent application that invention was made with Government support
Bayh-Dole Act 35 U.S.C. §202
The Federal Agency receives a license in the invention that is: Nonexclusive Nontransferrable Irrevocable Paid-up
License allows the Government To practice the invention itself To have practiced for or on behalf of the Government Throughout the world
Bayh-Dole Act 35 U.S.C. §203 – March-in Rights
Allows the Agency that funded the instrument to require the inventor to grant a license to someone else under certain circumstances
If the contractor refuses, the Government can grant the license itself if it determines that The contractor has not taken effective steps to achieve
practical application within a reasonable time, To alleviate health or safety needs To meet requirements for public use specified by regulations
or Because the agreement to required in §204 was not obtained.
Bayh-Dole Act 35 U.S.C. §204 – Preference for U.S. industry
Prohibits the granting of an exclusive right to sell or use the invention outside U.S. unless the potential licensee agrees to manufacture substantially in the U.S.
Can be waived if the contractor shows that it has made reasonable but unsuccessful efforts to find an appropriate licensee or domestic manufacture is not commercially feasible.
Department of Commerce Regulations
Contained in the Code of Federal Regulations (CFR) at Title 37, Part 18, Sections 401.1-401.17
Issued and administered by the Department of Commerce
Applies to any instrument for experimental, developmental or research work
Work can funded in whole or in part by the Government
Federal Acquisition Regulations
Applies to procurement contracts only Patents
Policy – Subparts 27.2 and 27.3 FAR 52.227-11 (Short Form)
To be used with small businesses and non-profits
Clauses – FAR 52.227-12 (Long Form) Large Businesses
US Patent Rights in Government Contractswith other than small business concerns and non-profit organizations
Patentable Invention
Conceived or first actually reduced to practice in the performance of work under the contract?
N Y
Invention disclosed to government within two months after inventor discloses it to contractor
Contractor Retains Title
Y
Elect within 8 months of disclosure to government whether or not to retain title
fail to elect
N
Government may obtain title within 60 days
NY
Y
Filed within one year of election to retain title
Y Government may acquire title Patent Prosecution denied
Patent deniedor or
Patentgranted
GovernmentLicense
N
Government may retain title
Data Provisions Under the FAR and DFARS
Regulatory Coverage for Procurement Contracts
FAR Subpart 27.4 Applies to all agencies except those that have
supplemental regulations particularly NASA and DOD
DFARS Subpart 227 Applies to DOD services and agencies only
FAR Subpart 27 Important definitions
Data Recorded information, regardless of form or media Includes technical data and computer software Does not include financial, administrative, cost or pricing or
management information Technical Data
Scientific or technical data Does not include computer software
Computer Software Computer programs, computer databases and documentation
FAR Subpart 27 Important definitions
Form, fit and function data Data relating to items, components, or processes that are
sufficient to enable physical and functional interchangeability
Data identifying source, size and configuration characteristics
Functional characteristics and performance requirements For software
It includes source, functional characteristics and performance requirements
Excludes the source code, algorithms, process, formulae and flow charts of the software
FAR Subpart 27 Important Definitions
Unlimited Rights Right of the Government to use, disclose,
reproduce, prepare derivative works, distribute copies and perform and display publicly
In any manner, for any purpose and permit others to do so
Most unrestricted type of license right
FAR Subpart 27 Important Definitions
Limited Rights Data Excludes computer software Data that includes trade secrets or Data that is commercial, financial, confidential or privileged Data pertaining to items developed at private expense
Restricted Rights Computer Software Software developed at private expense and is a trade secret Software that is commercial, financial, confidential or
privileged Software that is published and copyrighted
FAR 52.227-14 Rights in Data-General
Government receives unlimited rights in: Data first produced in performance of the contract Form, fit and function data delivered under the
contract Data delivered in the form of manuals,
instructional and training materials
Contractor has the right to use the data subject to the rights given to the Government
FAR 52.227-14 Copyright
The contractor is free to establish a copyright on data first produced in performance of the contract and used in articles, symposia or similar works.
The copyright notice shall acknowledge the Government sponsorship
The Government receives a paid-up, nonexclusive, irrevocable worldwide license
The Government shall not remove the copyright notices
FAR 52.227-14 Limited Rights Data
If the contractor officer determines that limited rights data is needed, then he/she should include Alternate II
Such data will not be used for manufacture or disclosed outside the Government
Cannot be used for a future competitive procurement
FAR 52.227-14 Restricted Rights Computer Software
If the contracting officer determines that restricted rights software is needed, then he/she should include Alternate III
The software may only be Used or copied for use in the computer with which it was
acquired Used or copies in a backup computer Reproduced for archival or backup purposes Used by support contractors
FAR 52.227-14 Alternate V copyright clause should be
used in contracts for basic or applied research performed solely by universities
FAR 52.227-15 Representation of Limited Rights Data and
Restricted Computer Software Should be used if the contracting officer
wishes to have offerors state in response whether limited right data or restricted rights software will be used
This clause is included in solicitations
FAR 52.227-16 Additional Data Requirements
Should be included in solicitations and contracts Applicable to experimental, developmental, research
or demonstration work (not including basic or applied research by a university)
Used in contracts where additional data may be required but is unknown at the outset of the contract
Small Business Innovative Research Contracts
SBIR program is a Government program to encourage small businesses to enter into research contracts
Program is broken into two phases Phase I - $99,000 Phase II – up to $750,000 Phase III – contractor is expected to find commercial funding
Clause allows the contractor to limit the Government’s use of data for 4 years after acceptance Government purposes only (not procurement) Shall not disclose outside the Government Can release to support contractors After 4 years, Government get Government Purpose Rights
Data under the DFARS Clauses are broken down into technical data and
computer software What’s technical data?
Includes recorded information regardless of form or method of recording
Includes information of a technical nature Includes software documentation Does not include
Computer software Data incidental to contract administration, such as financial
and/or management information
Who paid? Important distinction in the DFARS clause is who
paid for the development Developed at private expense
Developed entirely with costs charged to indirect cost pools or not allocated to a Government contract (i.e. IR&D)
Developed exclusively with government funds Developed with mixed funding
Developed partially with contractor private funds and Government funds
Rights in Noncommercial Computer Softwareand Technical Data
Rights Category Applicability: Technical Data or Computer Software?
Permitted UsesWithin Government
Permitted UsesOutside Government
Unlimited Rights Both
Government Purpose Rights
Both Unlimited—no restrictions
Only for government purposes—no commercial use
Limited Rights Technical data only
Unlimited except cannot be used for manufacture
Emergency repair or overhaul, evaluation by foreign government
Restricted Rights Computer software only
Only one computer at a time, minimum backup copies, modification
Emergency repair or overhaul, certain service or maintenance contracts
Prior Government Rights
Both
Specifically Negotiated License Rights
Both
Unlimited—no restrictions
Same as under previous contract
As negotiated by the parties but must not be less thanlimited rights in technical data, and must not be less
than restricted rights in computer software
Required Lists Both 252.227-7013 and 7014 require a list to be
added to the contract that describes the intellectual property to be provided, who paid for the development and what rights are given to the Government
Before additional items are added to the list and used in the program, the parties should negotiate and come to agreement about the rights to be given to the Government.
Small Business Innovative Research Program
DFARS 252.227-7018 Special clause for use in contracts under the
SBIR programs Government is given limited rights in the
SBIR data for five years After five years, the rights revert to unlimited
rights
Intellectual Property Developed by Government employees
The key consideration is the connection of the invention or data to the employees official duties
Patents Government employees can get patents on inventions
they create and receive royalties on licenses to industry
Consult your counsel for the procedures for patenting and receiving royalties in such a situation
Intellectual Property Developed by Government Employees
Copyrights Generally government employees do not get a
copyright on anything created in the course of their official duties
Prior law prevented government employees from getting a copyright or licensing their copyright on any creation even if it was made during their private time
Current law now restrictions only creations made during Government time or as a course of official duty
Common Misconceptions The Government owns the intellectual
property developed under the contract Wrong – rarely does the Government take
title. The Government gets a license for use When rights are given to the Government,
they are given to the agency signing the contract Wrong – “Government” means the entire
Federal Government
Conclusion As intellectual property becomes more important
to industry, it will be a more hotly negotiated issue in government contracts
There are several current task groups underway to look into updating the current IP laws and regulations
Both Government and contractors will have to take more time to consider and plan their IP positions than ever in the past
Back-up Slides
Trade Secrets What is it?
Protects secret business information against unauthorized use or disclosure
Recognition of this type of protection began in the early 1800’s and has become a popular way to protect information
Defined as information that Derives independent economic value from not being
generally known or generally ascertainable by others who could use the information and
Is the subject of efforts that are reasonable under the circumstances to maintain secrecy
Trade Secrets How do you get one?
Information must be: Eligible for protection
Any concrete information qualifies (something more than an idea, theory or possibility)
Can be non-technical information, customer lists or a combination of otherwise unprotectable information
Secret To be judged in light of the circumstances
Have commercial value
Based on state law
Trade Secrets How long does a trade secret last?
A trade secret can last as long as the owner successfully prevents it from becoming widely known
If secrecy is destroyed, the protection is lost. Insufficient precautions Marketing of a product the discloses the secret Compliance with patent laws Disclosure in judicial proceedings or to government agencies.
Generally, confidential disclosure on a “need to know” basis to employees, joint venturers, and suppliers will be deemed sufficient for secrecy