12

14. Intellectual Property,

Technical Data and Computer Software

INNOVATIONS IN ENGINEERING

Nadja Adilovic

Mary Luther

Krista Stone

The Basics of

Intellectual Property in

Government Contracts

Outline

Intellectual Property Overview

Intellectual Property Rights of the Federal Government

Best Practices to Protect Intellectual Property in

Government Contracting

Intellectual Property

Patents

Protect technological and scientific

innovation

Trade Secrets

Can protect all confidential business

information

Copyrights

Protect creative expressions of ideas

Trademarks

Protect your brand; prevent customer

confusion

Intellectual Property

Valuable intangible property created by

the human mind.

Provided for in the Constitution.

To promote the progress of science and

useful arts, by securing for limited times to

authors and inventors the exclusive right to

their respective writings and discoveries. Art. 1, sec. 8, cl. 8.

Patents

Patents - STRICTLY DEFINED legal requirements

Novel

Non-Obvious

Useful

Patentable Subject Matter

Machine

Process

Composition of matter

Article of manufacture

Improvements on any of the foregoing

Note: You DO NOT actually have to make or use an

invention before filing a patent application covering it

Patent Rights

A patent is a Government-granted right to stop others from making/using/selling the patented invention

Patent holder receives exclusivity in exchange for disclosing the invention to the public

Duration: 20 years from the date the non-provisional patent application is filed

Patent protection is territorial – only effective in the countries where a patent is actually on file

A patent does not give you the right to practice an invention, it only gives you the right to exclude others

Patents

Two required elements: (1) conception and (2) reduction

to practice

“Conception” is when you have thought of enough of

the invention that a person of ordinary skill in the art

could make it without undue experimentation

“Reduction to practice” is:

Actually making/using the invention; or

Filing a patent application (“constructive reduction to

practice”)

Patents

Timing is everything

When to File

Old Patent Law

First-to-Invent

Inventor with earliest date of invention = Date first conceived or reduced to practice

1-year Grace Period to file after first:

Sale

Public use

Publication

New Patent Law

First-Inventor-to-File

Inventor with earliest Filing Date of patent application

Absolute Novelty

Public disclosure prior to filing an application

Public use prior to filing an application

Sale or offer for sale prior to filing an application

“Offer for sale” can include including a detailed description of the

invention in a U.S. Government proposal

One-year grace period in US only – foreign rights gone

immediately – no grace period after March 18, 2013

Inventorship

Anyone who contributes materially to the conception of the invention is an inventor

Inventorship is determined by the claims of the patent A person is an inventor on the patent if s/he contributed at least

one element of at least one of the claims

Corollary: Inventorship can change during prosecution Additional claims might lead to additional inventors

Rejection of claims might lead to the elimination of inventors

Trade Secrets

• Is not generally known to the public

• Confers economic benefit on its holder if the benefit derives from the lack of public knowledge of the information

• Reasonable efforts to maintain its secrecy

A Trade Secret Can Be Almost Anything

Formulation, Internal Practice or Process, Design, Instrument, Customer Lists, Compilation of Information, Secret Formulas, Computer Code

ANYTHING THAT IS ADVANTAGEOUS TO KEEP SECRET

• NEVER EXPIRE, so long as good internal policies are followed and confidentiality is maintained

• Can protect an extremely wide range of information; anything that confers an economic benefit through confidentiality

• Implemented internally, but legal protection is dependent upon adherence to clear internal policies that are disseminated and monitored

Trade Secrets

Copyrights

Protect your creativity; you have copyright eligible material, and some will be worth registering.

Copyrights

Protect the creative expression of ideas as soon as that

idea is set down in tangible form

Copyrights

Copyrights are not only for works of art

Copyrights also protect:

Computer code

Web content

Sculptural works, architecture, board games, flower arrangements, fashion

Rights Granted are Exclusive

Reproduce the work

Prepare derivative works

Distribute copies of the work to the public

by sale or other transfer of ownership, or

by rental, lease, or lending

Perform the work publicly

Display the work publicly

Copyright Registration

• Requires payment of a fee, an application, a deposit of the material

• Legal rights and remedies extremely limited unless you REGISTER your work. • Presumption of validity - giving the infringer the legal burden of proving your copyright invalid.

• No registration. No law suit.

Copyright Registration

Registration can allow recovery of attorney fees

Demonstrates ownership, adds value in the eyes of

a potential investor, discourages infringement

Registration places potential infringers on NOTICE –

even if they NEVER SAW your content.

Trademarks

A trademark is a word, phrase, symbol or

design, or a combination thereof, that

identifies and distinguishes the source of

the goods of one party from those of

others.

Software

Three Bites of the Apple

Software can be protected via

Patents

Copyrights

Trade Secrets

Software and Patents

Patents can be obtained on software

The process claimed must be tied to a machine specifically

devised to carry out the process or must transform an article

A contentious area that elicits strong feelings

The law is in flux

Other methods of protecting software are available

Software Elements NOT Protected by Copyright

Functional Elements

Ex. – All medical patient record management software will have

to keep track of the same types of information

Commonly Used Software Elements

Ex. – “Would you like to save your file?” or common icons

Interfaces and File Formats Needed for Compatibility

Ex. – one can create a program using file formats that will

compatible with Microsoft Word

GUI, menu, command structure, overall user interface

Software Elements NOT Protected by Copyright

Internal structure of a program is considered and IDEA,

not a creative element

Organization of program modules or data structures, techniques

for managing memory usage

There is no infringement if there is no copying

Independent creation is a complete defense

Organization of program modules or data structures, techniques

for managing memory usage

Clean rooms

Software Elements Protected by Copyright

Source Code or Object Code

Verbatim copying is infringing

Companies can use clean room practices in order to insure

independent creation of similarly functioning code

Artistic and Creative elements of User Interface

Analysis would depend on similarity of functional, thematic,

audio, graphic elements of display, as with copyright analysis for

other media

Software can be registered without revealing all of the

source code

http://www.copyright.gov/circs/circ61.pdf

Software and Trade Secrets

Can protect software

Especially good if users will only license seats to

software and never have access to the source code

Subject to the same risks and obligations as any other

information kept as a trade secret

IP RIGHTS AND

GOVERNMENT CONTRACTING

IP Issues in Government Contracting

Differences between Government and

Commercial Contracts

FAR/DFARS Clauses, Policy

Patents

Data Rights

IP Issues in Subcontracting

Government v. Commercial Contracts

Commercial: UCC

Government: Pre-set terms – FAR, DFARS, etc.

FAR Part 27: Patents, Data, and Copyrights

Major Differences that Affect IP

IP RIGHTS OF THE

FEDERAL GOVERNMENT

WHO OWNS WHAT?

Intellectual Property Rights

Patents Copyrights Trade Secrets Trademarks

1. Make 2. Use 3. Sell 4. Import 35 U.S.C. 271

1. Reproduce 2. Prepare

derivative works (modify)

3. Distribute copies

4. Publicly perform

5. Publicly display

17 U.S.C. 106

1. Use 1. Use in connection with goods and services

“Bundles of Rights”

Licensing

An owner can sell or license some or all of these rights.

IP is a

Licensing

All Intellectual Property can be LICENSED. Each kind of intellectual property license has its own unique contractual considerations.

Types of Intellectual Property

Patents Copyrights Trade Secrets Trademarks

Patents Data Rights

Intellectual Property Rights in Government Contracting

Intellectual Property Rights in the US

IP RIGHTS OF THE

FEDERAL GOVERNMENT

PATENTS

Background/Policy

1980: Bayh Dole – first applied to small business and

non profit organizations

Before Bayh-Dole, USG had 28,000 patents; <5%

commercialized

Later extended to Large Businesses

FAR 52.227-11 Patent Rights – Ownership by the

Contractor

Background/Policy

Contractors generally have the right to elect title to any

“subject invention” – any invention of the contractor

made in the performance of work under a Government

contract . . . if they comply with necessary formalities

Contractors must comply with FAR formalities and patent

law formalities

Stanford v. Roche, 131 S. Ct. 2188 (2011) Patent rights

vest in the inventor – Bayh-Dole does not mean that

universities automatically get title to subject inventions

Government Rights in Patents

Background Inventions: Developed at private expense. Contractor retains ownership; not covered by the FAR

Subject Inventions: Rights of Federal Government determined by FAR or FAR Supplement

Contractors generally retain ownership of IP generated as result of government contract.

Government may elect to take title – FAR 52.227-13; DOE & NASA: Government gets title to large business inventions unless waiver

Government gets broad license to use IP - FAR 52.227-11 “the Government shall have a nonexclusive, nontransferable, irrevocable, paid-up license to practice, or have practiced for or on its behalf, the subject invention throughout the world”

Strict Reporting Requirements to retain title

Patent Ownership

Government Rights in Patents

Government’s license in FAR 52.227-11 is nonnegotiable: “the

Government shall have a nonexclusive, nontransferable,

irrevocable, paid-up license to practice, or have practiced for or on

its behalf, the subject invention throughout the world”

Commercial terms are negotiable

Exclusivity

Transferability

Ability to sublicense

Term and termination

Payment – Royalties and License Fees

Difference Between Commercial License

Government Rights in Patents

Failure to disclose: Campbell Plastics Engineering &

Mfg., Inc. v. Brownlee, 389 F.3d 1243 (Fed. Cir. 2004)

Government took patent title for failure to report subject

invention for a gas mask. Campbell had previously

reported no subject inventions on interim reports to Army

Court rejected Campbell’s argument that although it did

not disclose on the specific DD 882 form, it disclosed all

technical aspects of the invention to the Army

STRICT Reporting Requirements: Cautionary Tale

Government Rights in Patents

Disclose Inventions Within 2 months after inventor discloses to Contractor personnel

responsible for patent matters. Provided detailed information

Interim Reports Required by DFARS

Elect to Retain Ownership Within 2 years of disclosure to the agency, but must be prior to 1

year statutory bar

DFARS 252.227-7038(c)(2): 8 months

File Patent Application Within 1 year of election OR statutory bar, whichever is earlier

If provisional, nonprovisional must be filed within 10 months

Extensions of Time Possible upon request

Contractor’s Obligations for Subject Inventions – FAR 52.227-11

Government Rights in Patents

FAR 27.302(e) Utilization reports. The Government has the right to require periodic reporting on how any subject invention is being used by the contractor or its licensees or assignees

Generally, Government satisfied with “a nonexclusive, nontransferable, irrevocable, paid-up license to practice . . . the subject invention . . .”

However, a third party license may be compelled: march-in rights

27.302(f) March-in rights. May be exercised only if: (i) contractor has not taken effective steps to achieve practical application of

the subject invention in the field of use

(ii) health or safety

(iii) to meet requirements for public use specified by federal regulations

(iv) 35 U.S.C. 204 has not been complied with (Preference for US Industry)

Commercializing the Subject Invention - March In Rights

Government Rights in Patents

March-In Rights have never been exercised

Determination in the Case of Fabrazyme, NIH, Nov. 3,

2010

3 patients suffering from Fabry disease (affects ability to

metabolize fat, leading to heart & kidney disease) petitioned NIH

to compel Genzyme to license others to make Fabrazyme, the

only treatment, which was reduced because of production delays

NIH denied petition essentially because no competitor would be

able to get the product to market before Genzyme corrected its

problems

Commercializing the Subject Invention - March In Rights

IP RIGHTS OF THE

FEDERAL GOVERNMENT

DATA RIGHTS

Government Rights in Data Technical Data and Computer Software

Technical Data: Recorded information of a scientific or technical nature (including computer databases and computer software documentation). This term does not include computer software . . . or data incidental to contract administration. Includes recorded information of a scientific or technical nature that is included in computer databases. Includes manufacturing processes; technical manuals; form, fit and function

data; raw data; technical reports, databases; computer software documentation, etc.

Computer Software: Computer programs, source code listings, design details, algorithms, processes, flow charts, formulae and related material that would enable the software to be reproduced, recreated, or recompiled. Computer software does not include computer data bases or computer software documentation. Includes source and object code, and material that would allow for

recreation or reproduction of the software.

Government Rights in Data Technical Data and Computer Software

FAR: Separately deals with ©s and trade secrets

DFARS: Trade secrets and ©s are part of a “hybrid”

data rights license

Data Rights •Reproduce •Modify (FAR:

“prepare derivative works”)

•Perform •Display •Distribute

•Use •Release •Disclose

Copyright •Reproduce •Prepare Derivative Works

•Perform •Display •Distribute

Trade Secret •Use

Government Rights in Data

Government acquires only those rights essential to its needs.

Contractor generally retains title, even if software/data developed entirely at Government expense.

Government obtains license rights. The extent of rights varies based on source of funds used to develop data.

Government’s rights in the information are distinct from the deliverables. FAR specifies the rights; contract specifies the deliverables.

Government Rights in Data

Items Developed with Government Funding

Government has Unlimited Rights. Can publish data on front page of Boston Globe.

Applies to: data first produced in performance of a contract, form, fit and function data delivered under contract; manuals or instruction material.

Proprietary Technical Data developed at Private Expense

Government has Limited Rights. Can reproduce and use, but not for purpose of manufacture and generally cannot disclose outside of Government.

Must be marked with Limited Rights Notice.

Proprietary Computer Software developed at Private Expense

Government has Restricted Rights. May use on the computer for which it was acquired or on a backup or replacement computer; archive and backup copies; modify, adapt or combine with other software; disclose to service support contractors.

Must be marked with Restricted Rights Notice.

Government Purpose Rights

Use in co-sponsored R&D; contractor makes substantial contributions of funds; contractor’s and government’s respective contributions not readily segregable.

Assures use of the data for agreed-to Governmental purposes only.

DFARS: Government Purpose Rights become Unlimited Rights after 5 years.

Commercial Off the Shelf Technologies

Government uses commercial license as long as consistent with law.

Depends on the Funding Source

Government Rights in Data

If you do not claim limited rights, the Government gets

unlimited rights

Underscores Data Rights’ connection to Trade Secrets – you

must take proper precautions to keep your secrets secret

Mark your data in accordance with the FAR – marking

“proprietary” is insufficient

– Pre-award: You must list deliverable data/software

– Post-award: Update assertions & mark the deliverables

Must keep records of your basis for assertion

Technical Data and Computer Software

Government Rights in Data and Software

Failure to mark: Night Vision Corp. v. United States, 68

Fed. Cl. 368 (2005).

Contractor delivered prototype goggles without restrictive

markings required by DFARS 252.227-7018

Government was allowed to disclose prototype hardware to

competitors because it did not have proper limited rights

markings

Cautionary Tale

Government Rights in Data

Technical Data to be Furnished with Restrictions*

Basis for Assertion** Asserted Rights Category*** Name of Person Asserting Restrictions****

(LIST) (LIST) (LIST) (LIST)

Some Best Practices

• Use the proper format. DoD: DFARS 252.227-7013

• Embed the correct legend digitally in software and technical data

that is transmitted electronically

• Have systems in place to ensure all limited rights technical data and

restricted rights software are marked with the exact legends

required, and are placed when and where required

IP Considerations in Subcontracting

General Rule: NO privity of contract between

government and subcontractor

Limited, express privity for patent matters

– Government and sub can transact IP business directly

Flowdown: Contractor must include the appropriate

patent rights clause, which is not necessarily the

prime contract clause

Must be flowed to subcontractors at any tier

FAR 52.227-11(k): “At all tiers, the patent rights clause must be

modified to identify the parties as follows: references to the

Government are not changed, and the subcontractor has all

rights and obligations of the Contractor in the clause.”