Party Guests
As the last days of summer are here and end-of-season social events pick up steam there is one
question often put to party hosts that also applies to government-funded Cleantech projects.
Who invited them? In the world of federally-funded R&D, that uninvited guest is none other
than our own Uncle Sam. Like a party guest taking an over-allocation of your finely arranged
lobster claws, Uncle Sam may be entitled to significant rights in your newly developed
intellectual property.
Since strings attached intellectual property contract clauses do not seem to be specifically
included in the DOE ARRA legislation, the distribution of the stimulus money would appear to
follow the same process as ordinary federal agency funding awards. This means that
government funded R&D under ARRA (like ordinarily funded R&D) could saddle the contractor
with an unexpected business partner who has significant rights in any IP developed under the
contract the Federal Government.
DOE procurement contracts are governed primarily by the Federal Acquisition Regulation
(FAR) and are supplemented by the DOE Acquisition Regulation (DEAR). A FAR contract
clause could require an R&D contractor to submit scientific and technical reports and results to
the Government on the status of the research. Unless an exception applies, the data contained in
that report could be subject to broad Government rights, including delivery of the underlying
data. The particular rights that the Government would have in any data or IP developed under
the contract would depend on the type of agreement being used and the agency involved, as each
agency has either a "supplement" to the FAR or its own regulations for agreement clauses
providing agency-specific requirements for the contractual vehicle.
FAR/DEAR contract clauses also provide the Government with rights in inventions developed
under a contract in order to "meet the needs of the Government", although that will rarely
involve taking title in a patent. However, it may be possible for the Government to take title in
an invention developed under the contract if the contractor fails to meet the invention reporting
requirements stated in the contract clauses or for other specific reasons listed in the clauses, such
as march-in rights or a required preference for U.S. industry. Outside of taking title, the
Government may also have a paid-up royalty free world-wide license to use the inventions
developed under the contract on or for its behalf.
The extent of the Government's rights in data and computer software developed under a contract
depends upon the funding for the subject invention. If the software or the data is developed with
Government funds, then under the FAR, the Government would obtain "Unlimited Rights" in
that software or data. Unlimited Rights are the next best thing to title in the data or software.
This means that the Government may "use, disclose, reproduce, prepare derivative works,
distribute copies to the public, and perform publicly and display publicly, in any manner and for
any purpose, and to have or permit others to do so." This could include allowing the data or
software to be used in future procurement activities.
Contractors for Cleantech projects, in fact contractors for all Government involved projects,
should emphasize and confirm that all data and software provided by the Contractor to the
Government is marked properly and in strict accordance with the marking provisions of the
contract. Improper marking of the data or software could result in the Government deeming that
the data or the software was provided to the Government with Unlimited Rights. Other than
Unlimited Rights , there are two other markings possible under the FAR and DEAR,
Restricted Rights (in the case of software) and Limited Rights (in the case of technical data)
for data and software developed with contractor funds. DOD contracts allow a fourth marking
possibility, Government Purpose Rights , for data and software developed with a mix of
Government and contractor funds, but that will not be discussed here. Limited and Restricted
Rights prohibit the Government from using the marked data or software, respectively, for
manufacturing purposes and also prohibit disclosure of the marked data or software outside of
the Government (unless so permitted by the contract). However, the proper Limited and
Restricted Rights markings (as described in the contract clauses) must be strictly adhered to and
specifically placed on the provided software or data for these protections to be effective. Lack of
attention to marking requirements could create an unfavorable outcome for a contractor,
particularly if the software or data contains what would ordinarily be considered by the
contractor to be a trade secret or is otherwise protected.
Like the successful summer event, know how your invited guests will interact with each other.
In the Government contracting world (1) understand the specific DOE contracting regulations
applicable to the funding opportunity, (2) know the type of agreement that structures your
funding relationship and (3) scrutinize the agreement for a clear identification of the restrictions
applicable to the intellectual property and data to be created or enhanced. This is not a subject
that should be left to chance.
Authors:
David Daniel Dzara
Charlotte, NC
K&L Gates
704.331.7517
dan.dzara@klgates.com
James P. O Hare
Boston, MA
K&L Gates
617.261.3219
jim.ohare@klgates.com
Thomas A. Turano
Boston, MA
K&L Gates
617.261.3148
thomas.turano@klgates.com