Rights in Data and Software

For any company that does business with the federal government, (the “Government”) protecting its intellectual property and proprietary information rights is important in order to maintain a competitive advantage. Nevertheless, to do so, companies must know what its rights are, particularly with respect to its technology and computer software. Since the Government obtains broad rights when data and software are created with Government funds, contractors are required to grant the Government a license to use the technical data or computer software. In general, the level of protection that technical data and computer software receive or the scope of license granted under a Government contract depends on the source of funding and the stage of development. For the most part, the more Government funding that is used to create such technology, the greater the Government's rights in the product. For example, the Government gets “Unlimited Rights” in all data first produced in the performance of a contract and any data delivered under a contract except for “Limited Rights Data,” “Restricted Use Computer Software,” and “Copyrighted Data.” That is, if the Government contracts for a specially designed, ostensibly single-purpose software product, it would want to receive Unlimited Rights to the data and software. Unlimited Rights means the Government has the right to use, disclose, reproduce, prepare derivative works, distribute copies to the public, and perform publicly, in any manner and for any purpose, and to have or permit others to do so. That is certainly most favorable to the Government.

However, often a contractor performs under a Government contract using technical data or software developed by the contractor before the Government contract started or otherwise outside of the Government contract. For example, the Government may contract to purchase a commercially available, off-the-shelf software product. Normally, such a product is protected at least by copyright. This is a typical example of Restricted Use Computer Software, which is computer software developed at private expense and that is a trade secret, is commercial or financial, and confidential or privileged, or is copyrighted computer software, including minor modifications of the computer software. In this case, the Government gets no more license than any other commercial purchaser does.

Sometimes, however, the Government contracts for a specific application or modification of pre-existing technology. Limited Rights Data means data, other than computer software, that embody trade secrets or are commercial or financial and confidential or privileged, to the extent that such data pertain to items, components, or processes developed at private expense. The data may include trade secrets that the contractor desires to protect. In this case, for the contractor to protect its rights in privately financed technical data or computer software that it used in the performance of the contract, the contractor must identify the proposed restricted data or computer software and mark each copy of the restricted data or computer software with a Notice having specific language according to the Federal Acquisition Regulation. Essentially, the Notice describes the limits on use of the data or computer software.

Finally, unless otherwise prohibited by the terms of the contract, a contractor may generally assert copyright in a work first produced during the performance of its contract, and hold the Government liable for infringement of a lawfully asserted copyright. The contractor must obtain permission of the Contracting Officer and mark the material it intends to copyright with an appropriate legend that acknowledges the work was produced under Government sponsorship. In this case, the Government retains a broad license in the copyrighted work, but the Government license in computer software does not include the right to distribute it. Failure to mark the material appropriately can allow the Government to acquire unlimited rights to use and distribute the contractor's work.

Bear in mind, regardless of the scope of the Government's rights, the contractor may continue to use the same data or software for its own commercial purposes. In any event, if you transact business with the Government, you need to know which rules apply to your business, what those rules require, and how to abide strictly with those rules, or you may find your rights compromised.

- Jeff Maynard