Protecting IP in Government Contracts

The laws and regulations that dictate the rights the federal government receives in a contractor’s software and technical data are complicated. They differ depending on whether the contract is with a defense agency or a civilian agency, and whether the procurement is commercial or non-commercial.

Historically, the government has received the same rights as the general public when purchasing commercial items. Although the distinction between commercial and non-commercial acquisitions remains important, recent changes in the rules applicable to Department of Defense (DoD) contracts have blurred the line. These changes reflect a trend towards expanded government rights in contractor IP and increased administrative burdens on contractors.

Contractors, particularly those less familiar with public contracts, must be wary of the risks presented by these changes and informed as to how to mitigate them. Otherwise they may surrender rights unnecessarily.

Subcontractors that provide slightly modified commercial components as contributions to a larger whole are most vulnerable.

The longstanding statutory presumption has been that commercial items are developed exclusively at private expense, and that contractors retain all rights. This presumption was partially reversed by the 2007 and 2008 National Defense Authorization Acts. The contractor now has the burden of demonstrating development at private expense.

The author lists some best practices to mitigate risk. Among them is keeping close track of your development cycle. An item is “developed” when it exists and is workable. Try to reach this point prior to accepting any government funds.