Infotech and the Law: FAR changes alter federal rights to commercial technology

Jonathan Cain

On May 28, the Defense and Civilian Acquisition Counsels published a proposal to rewrite of Part 27 of the Federal Acquisition Regulation. Part 27, which describes government interests in patents, copyrights and technical data developed or delivered under contracts with civilian or defense agencies, is the source of more legal questions from suppliers of commercial information technology than any other part of the FAR.

A discussion of the changes, significant and minor, in this proposal would take a great deal more space than this column allows, but a few highlights underscore the fact that many commercial software license and database lease forms will need to be examined and revised.

The explanation accompanying the proposal states that the intention is not to change the policy underlying the rules, but merely to clarify it and remove provisions that no longer reflect the law. However, a close reading of the proposed rules reveals just how difficult it is to clarify a complex set of rules without substantial changes.

Among the most obvious changes is that the FAR would define commercial computer software.

Right now, the FAR defines restricted computer software, or software developed solely with private funds and which is licensed to the government subject to negotiated rights.

The present FAR also contains a policy statement that software acquired as a commercial item should be acquired with the rights customarily granted by the contractor's commercial license, to the extent that such rights are consistent with federal law. But the FAR does not contain much guidance about what minimum rights the government should obtain.

The proposal attempts to draw some new lines. Commercial computer software is any software that has been sold, leased or licensed to the general public, while restricted computer software is not. If it's commercial computer software, then a new clause, FAR 52.227-19, will be inserted in the contract.

This new clause states that, notwithstanding any contrary terms in a standard commercial license, the government will obtain the minimum rights listed in the clause. These include the usual rights to make backup copies and use the software in a backup computer.

They also include rights to modify the software and make derivatives, and the right to disclose and reproduce the software for the use of third party support service contractors.

The clause also requires the contractor to affix a notice to all commercial software deliveries, stating that the government's rights are defined by the contract, not the contractor's commercial license.

Databases are afforded new treatment. The proposal defines databases as a class of technical data, rather than computer software. The definition of limited rights data is expanded.

Under law, limited rights data is technical data that pertains to items, components or processes that were developed at private expense. It does not cover situations where the data itself is the product.

Under the proposal, limited rights data also may include data developed at private expense that embodies trade secrets or are commercial or financial in nature and confidential or privileged. Limited rights data supplied under the specified limited rights notice may not be disclosed outside the government except as specifically authorized by the notice.

Suppliers of commercial software and databases for government use and suppliers of software applications that contain tables of data developed at private expense will need to carefully review their licenses and their delivery documents to ensure that they are not carelessly waiving protections afforded by the new rules.

Jonathan Cain is a member of the law firm Mintz Levin Cohn Ferris Glovsky & Popeo PC in Reston, Va. The opinions expressed in this article are his. He can be reached by e-mail at jcain@mintz.com.

About the Author

Jonathan Cain is a member of law firm Mintz Levin.

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