United States: Data Rights Under Government Contracts

Determination of data rights under contracts with the federal government is primarily governed by FAR Subpart 27.4. Although data rights regulations are rather complex, contractors who perform technical contracts must have at least a basic knowledge of how rights to data relating to their contracts are allocated between themselves and the government.

Definitions

The following definitions apply to data rights provisions in the FAR:

"Data" is defined as recorded information, regardless of the form or media on which it may be recorded. The term includes technical data and computer software. It does not include contract administration or management information. FAR 27.401.

"Form, fit and function data" means data relating to items, components, or processes that are sufficient to enable physical and functional interchangeability, and data identifying source, size, configuration, mating and attachment characteristics, functional characteristics, and performance requirements. For computer software it means data identifying source, functional characteristics, and performance requirements, but not the source code, algorithms, processes, formulas, and flow charts of the software. Id.

defined as 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, including minor modifications. Id.

"Restricted computer software" 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. Id.

"Unlimited rights" means the rights of the government to 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. Id.

Policy

To carry out their missions and programs, federal agencies acquire or obtain access to many kinds of data produced during or used in the performance of their contracts. FAR 27.402(a). The government nonetheless recognizes that contractors may have proprietary interests in data. To prevent compromising these interests, agencies must protect proprietary data from unauthorized use and disclosure. Such protection is also necessary to encourage contractors to bring innovative concepts to government programs. In light of these considerations, agencies are instructed to balance the government's needs with the contractor's legitimate proprietary interests. FAR 27.402(b).

All federal contracts that require data to be produced, furnished, acquired, or used in performing a contract must include terms delineating the respective rights and obligations of the government and the contractor regarding the use, reproduction, and disclosure of that data. The contract shall also specify the data to be delivered. FAR 27.403.

Basic Rights in Data Clause

Generally, a contract should contain only one data rights clause. If more than one such clause is deemed necessary, the contract must distinguish the portion of performance to which each clause pertains. FAR 27.409(a). The basic data rights clause is set forth at FAR 52.227-14 entitled Rights in Data – General. This clause is to be inserted in all contracts under which it is contemplated that data will be produced, furnished, or acquired under the contract. This clause shall not, however, be included in the following contracts: (1) for production of special works, (2) for acquisition of existing data, (3) small business innovation research contracts, (4) contracts to be performed outside the United States, (5) for architectural/engineering services or construction contracts, (6) for management or operation of a government-owned facility for research and development or production work, and (7) contracts involving cosponsored research and development in which a clause providing for less than unlimited rights has been authorized. FAR 27.409(b)(1).

The basic allocation of rights provided for by the general data rights clause in FAR 52.227-14 states that, subject to certain conditions and exceptions set forth elsewhere in the clause, the government has unlimited rights in—

(1) Data first produced in the performance of the contract;

(2) Form, fit, and function data delivered under the contract;

(3) Data delivered under the contract that constitute manuals or instructional and training material for installation, operation, or routine maintenance and repair of items, components, or processes delivered or furnished for use under the contract; and

(4) All other data delivered under the contract unless provided otherwise for limited rights data or restricted computer software. FAR 52.227-14(b)(1).

On the other hand, subject to certain conditions and exceptions set forth elsewhere in the general data rights clause, contractors have the right to —

(1) Assert copyright in data first produced in the performance of the contract;

(2) Use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the contractor in the performance of the contract;

(3) Substantiate the use of, add, or correct limited rights, restricted rights, or copyright notices and to take other appropriate action to remedy canceled or omitted marking of data; and

(4) Protect from unauthorized disclosure and use those data that are limited rights data or restricted computer software. FAR 52.227-14(b)(2).

The general data rights clause in FAR 52.227-14, along with other data rights clauses in FAR Part 52 and the data rights policies and procedures in FAR Subpart 27.4, include a multitude of other provisions that allocate data rights between the government and contractors (including subcontractors). How these rights will be determined depends on both the nature of the contract and the nature of the data.

Assess Risks to Data Before Entering Contract

Contractors considering an offer to perform a technical contract for the federal government should not submit a proposal until they have undertaken a risk assessment of data rights. This detailed analysis requires a two-part evaluation. First, the contractor needs to ascertain the data that may be used in doing work under the contract or produced in the course of that work. Second, the contractor must carefully review the data rights clause the government intends to insert in the contract and determine how that clause applies to the data relating to that contract. Contractors who fail to understand potential adverse claims to its data rights before contracting with the government may inadvertently lose valuable intellectual property and/or fail to price the contract appropriately.

Originally Published by: pacanm.org

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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