INFOTECH AND THE LAW

How Valuable Is the Contractor's Copyright?

Devon Hewitt

In one of my first columns for Washington Technology, I addressed whether contractors have any rights in technology developed under government contracts. I explained that, although any technology developed with government funds will be provided to the government
with "unlimited rights," contractors generally retain copyright in any work authored by them, regardless of the source of funds.

In other words, a contractor may typically claim ownership in the data created in connection with a government contract and use it for the contractor's commercial purposes. But does retaining copyright in a government-funded work really have any commercial value for a contractor? The answer is: It depends.

Under the data rights regulations for civilian and defense agencies, the government takes unlimited rights in any data, including technical drawings, computer software and computer software documentation, developed in connection with a contract that it funds. Under defense procurement regulations, the contractor retains copyright in a work created under a defense contract, and the defense agency takes a copyright license that is identical to the government's unlimited rights in the work.

Under the government's unlimited rights, it may use, modify, reproduce, perform, display, release or disclose the data for any purpose, "and to have or authorize others to do so."

It is this last phrase that creates the conundrum. Read plainly, the
phrase "and to have or authorize others to do so" suggests that defense agencies have the authority to allow others to use the data for any purpose. Accordingly, a defense agency may give data ? to which a contractor has a copyright ? to a contractor's competitor and allow that contractor to use the data for whatever purpose it chooses, including competing in the commercial marketplace with the contractor that created the data.

For example, suppose a government agency has one contractor develop software that allows the government to search all foreign periodicals with a single query from any computer workstation in the agency. As part of this contract, the contractor provides the government with all the software that comprises the system as well as any associated training manuals and maintenance data. Because the government paid for the development of this search system, it has unlimited rights to it.

Now suppose that after the contract has been completed, the same agency decides to develop the system further, perhaps by having the system also translate into English all documents responsive to a particular search.

As part of this new contract, which happens to be awarded to a new contractor, the new contractor receives all the source code developed under the first contract. Not only can the new contractor upgrade the software to the government's revised specifications, the new contractor also can use the first contractor's work to produce an identical foreign periodical search system.

The new contractor then can enter a new market or otherwise reap advantages in any competition for such a search system in the commercial marketplace or perhaps with another federal agency.

In this scenario, the original contractor's retention of copyright in the work is not really worth that much.

Surprisingly, civilian agencies provide contractors with greater protection in this regard. The FAR, the regulatory authority for civilian agency procurement, states that if a contractor establishes a claim to copyright in work created under a civilian contract with federal funds, the contractor must grant the agency a copyright license.

But the scope of the government's copyright license in works created under civilian contracts is more limited than rights afforded the government in unlimited rights. Specifically, the copyrighted data is restricted to use by the government and others acting on its behalf, and for purposes by or on behalf of the government.

Thus, under civilian contracts in which a contractor claims copyright in government-funded work, the government does not appear to have the authority to release unlimited rights data to a contractor's competitor and allow that competitor to use it for commercial, as well as government, purposes.

There are some legal and practical steps a contractor can take to protect unlimited distribution of its copyrighted data by the defense agencies. In certain research contracts, the contractor can request that alternate language be used for the standard data rights clause, in which language prevents the defense agencies from releasing technical data to the public if the contractor notifies the agency that it intends to "publish for sale" technical data developed under a defense contract.

A contractor also could object to the release of certain data pursuant to a Freedom of Information Act (FOIA) request made to a defense agency. FOIA allows anyone to request disclosure of an agency record. Most defense agencies, however, do not include computer software, source code or object code in the definition of agency record.

A contractor also can take steps that may limit the use a competitor may make of copyrighted data disclosed to it by the government. A contractor can affix a copyright notice on all unlimited rights data delivered to the government. The notice will advise third parties receiving the data that the copyright is held by another contractor, not the government. This may deter the third party from using the data for its benefit.

The contractor also can attempt to reach an agreement with the
government about disclosure of unlimited rights data to third parties that is not inconsistent with the broad rights granted the government in unlimited rights data. For example, the contractor can insist that the data be provided as government furnished information (GFI) to a third party under a contract and that the GFI must be returned once the contract is completed.

Where data rights are concerned, often the best defense is to be on the offense.

Devon Hewitt is a partner of government practices at ShawPittman in McLean, Va. She can be reached at devon.hewitt@shawpittman.com.

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