government contracts and your intellectual property
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GOVERNMENT CONTRACTS AND YOUR INTELLECTUAL PROPERTY
SPACE CITY CHAPTER
DAVID A. BOLTON
ASSOCIATE GENERAL COUNSEL
UNITED SPACE ALLIANCE, LLC
NCMA MEMBER
David.A.Bolton@usa-spaceops.com
February 18, 2010
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Agenda
What is intellectual property?
Types of intellectual property
52.227-14 Rights in Data—General
Data and Clauses
Software License Agreement Considerations
Indemnification and infringement
Proprietary Information Exchange Agreements
The prime contract?
Questions?
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What is Intellectual Property (IP)?
Intellectual property refers to creations of the mind: inventions, literary and
artistic works, and symbols, names, images, and designs used in commerce
Intellectual property is divided into two categories:
Industrial property, which includes inventions (patents), trademarks, and
industrial designs
Copyright, which includes literary and artistic works such as novels, poems
and plays, films, musical works, artistic works such as
drawings, paintings, photographs and sculptures, and architectural designs
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Types of Intellectual Property
Patent - A grant of a property right by the Government to an inventor which allows the inventor ―to exclude others from making, using, or selling the invention.‖
Trademarks - Anything used in the marketplace to distinguish goods or services of one source from those of other sources. Typically, it is a word or symbol
Copyright - A form of protection provided by U.S. law giving exclusive rights to authors of ―original works or authorship‖ fixed in any tangible medium of expression
Trade Secrets - A formula, a device, or other information that is secret and gives a commercial advantage over competitors who do not know or use it
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Patents
Provisional patent:
A provisional patent application lasts one year and allows filing without any
formal patent claims, oath or declaration, or any information disclosure
(prior art) statement
It provides the means to establish an early effective filing date in a non-
provisional patent application
It also allows the term "Patent Pending" to be applied
Utility patent:
Patent applications filed after June 8, 1995—20 years from effective filing
date
Patent owner given the right to prevent others from making, using, offering
for sale, selling, or importing the claimed invention within the U.S.
Patent Process
Engage Outside Counsel
Counsel Interviews Inventor
Counsel Opinion
Invention Patentable $2K - $4K
Direct Charge
Invention Conceived Or Reduced
To Practice
Decision To Seek Patent
Seek NASA Waiver Of Invention
Rights
Waiver Received
Notify NASA of Invention NTR
IRAD
Invention Conceived Or Reduced
To Practice
Decision - Seek Patent Protection
Provisional Patent
Utility Patent
Patent Process
Utility Patent
Twenty Year Protection
Inventor/Counsel Prepare Patent $10K -
$20K
File Patent $1.5K
Office Actions Received From Examiner
Patent Issued $1K
Pay Maintenance Fees
Abandon Utility Patent 3.5 Years $1K
7.5 Years $2.3K
11.5 Years $3.8K
Counsel Confers With Inventor Filing
Amendments $2K - $4K Per Action
Provisional Patent
One Year Protection
Inventor/Counsel Prepare
Patent $4K - $8K
File Patent $1K
File Utility Patent?
Patent Issued
Yes
No
Abandon Provisional Patent
No Yes
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Defensive Publication
A defensive publication, or defensive disclosure, is an intellectual property
strategy used to prevent another party from obtaining a patent on a product,
apparatus or method for instance.
The strategy consists in disclosing an enabling description and/or drawing of the
product, apparatus or method so that it enters the public domain and becomes
prior art.
Therefore, the defensive publication of perhaps otherwise patentable information
may work to defeat the novelty of a subsequent patent application.
One reason why companies decide to use defensive publication over patents is
cost.
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Patent Clauses
52.227-1 Authorization and Consent (Alt I for R&D)
52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement
52.227-3 Patent Indemnity
52.227-11 Patent Rights - Retention by the Contractor
1852.227-70 New Technology
1852.227-72 Designation of New Technology Representative and Patent
Representative
1852.227-71 Requests for Waiver of Rights to Inventions
1852.227-84 Patent Rights Clauses
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Copyright
Copyright protection
Occurs upon creation
Lasts for the life of the author plus 70 years
For ―works for hire,‖ lasts 95 years from publication or 120 years from creation, whichever expires first
Copyright registration
Not required
Copyright ownership resides with:
Author
Employer when work for hire
Can you put a Dilbert cartoon on a slide presentation?
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Copyright
FAR 52.227-14, as modified by NFS 1852.227-14, allows NASA to control copyright in work created under a NASA contract
Prior written permission of Contracting Officer is required to assert copyright
data means recorded information, regardless of form or the media on which it may be recorded
includes information of a scientific or technical nature
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Work For Hire
A work made for hire is an exception to the general rule that the person who actually creates a work is the legally recognized author of that work
According to copyright law in the United States if a work is "made for hire", the employer—not the employee—is considered the legal author
The incorporated entity serving as an employer may be a corporation, an organization, or an individual
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Trademark
Provide protection for words or symbols or combination used by manufacturer or merchant to identify source of goods
Become effective when used on goods in commerce
Protection lasts indefinitely
If properly used
If renewed
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Trade Secret
A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers
is the subject of reasonable efforts to maintain its secrecy
The formula for Coca-Cola® is a famous trade secret
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52.227-14 Rights in Data—General
(b) Allocation of rights.
(1) Except as provided in paragraph (c) of this clause, the Government shall
have unlimited rights in—
(i) Data first produced in the performance of this contract;
(ii) Form, fit, and function data delivered under this contract;
(iii) Data delivered under this contract (except for restricted computer
software) 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 this
contract; and
(iv) All other data delivered under this contract unless provided otherwise
for limited rights data or restricted computer software in accordance with
paragraph (g) of this clause.
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52.227-14 Rights in Data—General
(h) Subcontracting. The Contractor shall obtain from its subcontractors all
data and rights therein necessary to fulfill the Contractor‘s obligations to the
Government under this contract.
If a subcontractor refuses to accept terms affording the Government those
rights, the Contractor shall promptly notify the Contracting Officer of the refusal
and shall not proceed with the subcontract award without authorization in
writing from the Contracting Officer.
Without Alternates II and III in the contract, the Government should only
receive unlimited rights data
With Alternates II and/or III in the contract, the Government gets limited rights
data and/or restricted computer software
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52.227-14 Rights in Data—General
Alternate I (Dec 2007). As prescribed in 27.409(b)(2), substitute the following definition for ―limited rights data‖ in paragraph (a) of the basic clause: ―Limited rights data‖ means data, other than computer software, developed at private expense that embody trade secrets or are commercial or financial and confidential or privileged.
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52.227-14 Rights in Data—General
Alternate II (Dec 2007). As prescribed in 27.409(b)(3), insert the following paragraph (g)(3) in the basic clause:
(g)(3) Notwithstanding paragraph (g)(1) of this clause, the contract may identify and specify the delivery of limited rights data, or the Contracting Officer may require by written request the delivery of limited rights data that has been withheld or would otherwise be entitled to be withheld. If delivery of that data is required, the Contractor shall affix the following ―Limited Rights Notice‖ to the data and the Government will treat the data, subject to the provisions of paragraphs (e) and (f) of this clause, in accordance with the notice:
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52.227-14 Rights in Data—General
Alternate III (Dec 2007). As prescribed in 27.409(b)(4), insert the following paragraph (g)(4) in the basic clause:
(g)(4)(i) Notwithstanding paragraph (g)(1) of this clause, the contract may identify and specify the delivery of restricted computer software, or the Contracting Officer may require by written request the delivery of restricted computer software that has been withheld or would otherwise be entitled to be withheld. If delivery of that computer software is required, the Contractor shall affix the following ―Restricted Rights Notice‖ to the computer software and the Government will treat the computer software, subject to paragraphs (e) and (f) of this clause, in accordance with the notice:
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52.227-14 Rights in Data—General
Contractor has right to:
use, release to others, reproduce, distribute, or publish data first produced or specifically used by contractor in performance of a contract except computer software and as otherwise specified
contractor may not copyright, publish or release to others any computer software first produced in performance of contract without CO‘s prior written permission
contractor is allowed to publish and copyright scientific and technical articles based on data first produced in performance of a contract not subject to other restrictions
52.227-14 (d) (3) If the Contractor receives or is given access to data necessary for the performance of this contract that contain restrictive markings, the Contractor shall treat the data in accordance with such markings unless specifically authorized otherwise in writing by the Contracting Officer.
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52.227-14 Rights in Data—General
Government Purpose License – Copyrighted Work
For material other than software: can reproduce, prepare derivative works, distribute to the public, perform or display publicly, by or on behalf of the Government
Release the work outside the Government for governmental purposes
• May provide data to another contractor for performance of a government contract
Software: can reproduce, prepare derivative works, perform or display publicly, but not distribute to the public
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52.227-14 Rights in Data—General
52.227-14 (h) Subcontracting. The Contractor shall obtain from its
subcontractors all data and rights therein necessary to fulfill the Contractor‘s
obligations to the Government under this contract. If a subcontractor refuses to
accept terms affording the Government such rights, the Contractor shall
promptly notify the Contracting Officer of the refusal and shall not proceed with
the subcontract award without authorization in writing from the Contracting
Officer.
Does the subcontractor grant the prime rights to its IP?
Substitute Contractor for the Government?
Or the right to pass the rights to the Government
Any right to the prime should extinguish
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Data
Definition
Recorded information, regardless of form or the media on which it may be
recorded
The term includes technical data and computer software
Does not include information incidental to contract administration, such as
financial, administrative, cost or pricing, or management information
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Data
Representation of Limited Rights Data and Restricted Computer software
(52.227-15)
REPRESENTATION CONCERNING DATA RIGHTS
Offeror has reviewed the requirements for the delivery of data or software
and states (offeror check appropriate block)--
[] None of the data proposed for fulfilling such requirements qualifies as
limited rights data or restricted computer software.
[] Data proposed for fulfilling such requirements qualify as limited rights data
or restricted computer software and are identified as follows:
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Data Clauses
52.227-14 Rights in Data-General
52.227-15 Representation of Limited Rights Data and Restricted Computer Software
52.227-16 Additional Data Requirements
52.227-17 Rights in Data-Special Works
52.227-19 Commercial Computer Software-Restricted Rights
52.227-20 Rights in Data - Program Small Business Innovation Research
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Data Clauses
52.227-21 Technical Data Declaration, Revision, and Withholding of Payment-Major Systems
52.227-23 Rights to Proposal Data (Technical)
1852.227-86 Commercial Computer Software-Licensing
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Software License Agreement Considerations
Rights Granted Under the License
Exclusive vs. non-exclusive
• primarily an issue for custom-made software
Revocable vs. irrevocable
Right to use the user manual and related documentation
Term of License
Perpetual or defined time period
Renewal rights and terms
In-house vs. hosted (ASP) model
Data security concerns
ITAR concerns
Data Center security concerns
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Software License Agreement Considerations
Scope of License
License internal operations only?
Number of users – named users/concurrent users and variations
Number of sites/number of computers
Copying rights/backup
Use by subsidiaries and affiliates
Right to modify and combine with other products/who owns modifications?
Prohibited uses
Transferability and Sublicensing Restrictions
Typically, license may not be assigned, transferred, sublicensed or pledged
Typically, licensees may not use the software for third party training, commercial time sharing, rental, or service bureau use
Restrictions on the use at a particular location?
Ability to transfer to the Government?
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Software License Agreement Considerations
Right to Source Code
Does licensee need to obtain or have access to source code?
How practical even if obtained?
Stability of licensor
Source code escrow and alternatives
Limitations on when source code could be accessed or used
Updating the source code available to the licensee
Ownership of the Software
Express statement that licensor owns and retains all title, copyright, and other proprietary rights in the software and documentation
Limiting access of employees, consultants, or third party
Representation of licensor as to ownership of the software
Ownership issues with respect to licensee modifications
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Software License Agreement Considerations
Maintenance
Term
Fee - cap
Implementation
Technical assistance – Call Center
Updates – left and right of the decimal point (version.update)
Bug fixes
Payment Provisions
Schedule of payments
Discounts
Payments linked to licensee accepting test of the software
Late fees
Shipping charges
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Indemnification
An indemnity is a promise by one party to take financial responsibility for damages that the other may suffer as a result of the first party‘s breach
Often related to infringement of intellectual property rights of a third party and breach of warranty
Such indemnities often give the indemnifying party the right to control the defense of a litigation by a third party against one or both parties to the agreement
The indemnified party will be required to cooperate with the indemnifying party in defending the action
Methods of indemnity include:
Payment of cash
Repairs
Replacement
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Infringement Indemnification
The Clause: Infringement Indemnity: Seller hereby indemnifies Buyer, its successors, assigns, agents, customers, and users of any work product and/or Articles against loss, damage, or liability, including costs and expenses and attorneys’ fees, which may be incurred on account of any suit, claim, judgment, or demand involving infringement or alleged infringement of any intellectual property rights in the manufacture, use, or disposition of any Work Product hereunder, provided Buyer shall notify Seller of any suit instituted against it, and to the full extent of its ability to do so, shall permit Seller to participate in the defense of same or to make settlement in respect thereto. Buyer does not grant indemnity to Seller for infringement of any intellectual property rights, including patent, trademark, copyright, trade secret, trade mark, mask works, or data rights.
Claim?
Page 33
Proprietary Information Exchange Agreements (PIEA)
A PIEA, also called a non-disclosure agreement (NDA), a confidential disclosure agreement (CDA), confidentiality agreement or secrecy agreement, is a legal contract between at least two parties that outlines confidential materials or knowledge the parties wish to share with one another for certain purposes, but wish to restrict from generalized use
PIEAs are commonly signed when two companies are considering doing business together and need to understand the processes or intellectual property used in one another's businesses solely for the purpose of evaluating the potential business relationship
NDAs can be mutual, meaning both parties are restricted in their use of the materials provided, or they can only restrict a single party
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Proprietary Information Exchange Agreements (PIEA)
Suggestion - Reject a seller‘s request to make the confidentiality mutual and ask the seller to describe the types of confidential or proprietary information they anticipate providing
Suggestion - Supersede the PIEA by the Purchase Order/Subcontract
• cut and paste the agreed to language and necessary clauses from the PIEA
Note that technical data/computer software developed at private expense should be handled as Limited Rights Data/Restricted Computer Software under FAR 52.227-14, Rights in Data – General, and not under a separate confidentiality provision
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Proprietary Information Exchange Agreements (PIEA)
Residuals - Residuals are provisions inserted into PIAs that exclude from the definition of ‗confidential information‘, information which the employee of the receiving party has retained in his or her unaided memory
The clause was first introduced by IBM
The Clause - The Recipient may disclose and use the ideas, concepts, know-how and techniques related to Recipient‘s business activities which are contained in the Discloser‘s Information and retained in the memories of Recipient‘s employees who have had access to the Information pursuant to this Agreement
Acceptable? - In practice this type of provision diminishes the contractual obligations of the receiving party to maintain confidentiality and should therefore be resisted
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Proprietary Information Exchange Agreements (PIEA)
Alternative - The originating party accepts that the employees of the receiving party during the exchange of information may develop their knowledge, skill and experience as it relates to information technology. The subsequent use by such employees of such knowledge, skill and experience in the ordinary course of business with the receiving party does not constitute a breach of this Agreement.
The right to use such knowledge, skill and experience, as described in the above sentence, does not include the right to disclose: (i) the source of such knowledge, skill and experience, (ii) any financial, statistical, business or personnel information or data, (iii) any product, service, technique or process information or data related to the manner in which or how the originating party conducts its business, or (iv) business plans of the originating party.
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Proprietary Information Exchange Agreements (PIEA)
Equitable Remedies - Equitable remedies are distinguished from "legal" remedies (which are available to a successful claimant as of right) by the discretion of the court to grant them
The Clause - The Parties acknowledge that money damages would not be sufficient remedy for any breach of this Agreement by either Party and that the non-breaching Party shall be entitled to equitable relief, including injunction and specific performance, as a remedy for any such breach. Such remedies shall not be deemed exclusive remedies for breach, but shall be in addition to all other remedies available at law or equity to the non-breaching Party.
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Proprietary Information Exchange Agreements
Acceptable?
An injunction is an order of a court requiring a person, corporation, or government entity to stop doing something and refrain from doing something in the future
Injunctions are issued, only "when the remedy at law is inadequate."
The party seeking the relief must show that they will suffer irreparable harm and the award of money damages would be inadequate
• This clause relieves the party from having to show these two elements
They must still show a breach of the agreement however
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Proprietary Information
The Clause: Confidential or Proprietary Information: Seller shall keep confidential and otherwise protect from disclosure all information obtained from Buyer in connection with this Order and identified as confidential or proprietary. Unless otherwise expressly authorized herein or by Buyer, Seller shall use such information, and any other information provided by Buyer thereunder, only in the performance of and for the purpose of this Order. (a) Upon Buyer‘s request, and in any event upon the completion, or cancellation of this Order, Seller shall return all such information to Buyer or make such other disposition thereof as directed by Buyer. In all subcontracts and purchase orders issued by Seller for performance of work related to this Order, Seller shall, with the prior written approval of Buyer, be permitted to disclose Buyer information under the same obligations as are contained in this clause. (b) Seller shall be liable to Buyer for any loss of the information. (c) Any information which Seller may disclose to Buyer with respect to the design, manufacture, sale, or use of the articles covered by this Order shall be deemed to have been disclosed as part of the consideration for this Order, and Seller shall not assert any claim against Buyer by reason of Buyer‘s use thereof. (d) The ownership of any information disclosed by a party hereunder shall remain in that party.
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The Prime Contract?
Know what‘s in the prime contract
Responsibilities
Obligations
Requirements
Flow-downs
Data rights
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Questions?
“To be sure, all market economies require a rule of law to function--laws of
contracts…Even today, much of business is transacted on parties'
undocumented verbal agreements. We take this for granted and rarely
pause to ponder how unusual this practice is.”
Remarks by Chairman Alan Greenspan – Commencement address to the
Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania
May 15, 2005
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