Getting Your Rights “Right”

PROTECTING NASA INTELLECTUAL PROPERTY

RIGHTS

Randy Heald: KSC Patent Counsel(P) 321-867-7214

E-mail: Randall.M.Heald@nasa.gov

PRESENTATION OVERVIEW

• Introduction:– What is IP?– Origin of IP Rights– Why is IP important?– Types of intellectual property

• Identifying Government IP rights

WHAT IS INTELLECTUAL PROPERTY?

• Property Right: One or more rights of ownership, which may include the right to exclude others

• Intellectual: A creation or an idea

• Intellectual Property is primarily concerned with the right to exclude others from use of author’s /inventor’s intellectual creation or invention

ORIGINS OF INTELLECTUAL PROPERTY

• Constitution (Article 1, Section 8) Grants Congress the power to . . . – promote the progress of science and useful

arts by securing, for limited times, to authors and inventors, the exclusive right to their respective writings and discoveries.

EXAMPLES OF INTELLECTUAL EXAMPLES OF INTELLECTUAL PROPERTY PROPERTY

• Software• Methods of manufacture• A work of art• Proprietary technology• Customer and market information• A symbol or name for a product

PROTECTABLE INTELLECTUAL PROPERTY

• PATENTS:

– Inventions, patent applications, NOT MERE IDEAS

• COPYRIGHTS:

– Contractor generated software acquired by government

– No copyright in government employee creation

• TRADEMARKS:

– Government symbols used in interstate commerce

PROTECTABLE INTELLECTUAL PROPERTY Cont:

• TRADE SECRET– Commercial: Confidential, proprietary, commercial value,

subject to non-disclosure agreement.

– Government: Limited rights, restricted rights, government purpose rights, developed at private expense (including IR&D), joint development

In government contracting, FAR 52.227-14 and DFARS 252.227-13-15 determine government and contractor’s rights in deliverable technical data and/or non-commercial computer software

REQUIREMENTS FOR OBTAINING PATENT

New Useful

Unobvious??

DEFINITIONS

• Invention: Any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code. FAR 52.227-11. Complete invention includes conception and reduction to practice.

• Subject invention: Any invention of the contractor conceived or first actually reduced to practice in the performance of work under this contract. FAR 52.227-11

PATENT:DEFINITION

• 20 year grant to exclude others from making, using and/or selling the claimed invention

• There is no grant of a right to use the invention• Validity of a patent may be challenged during the

term of the patent grant• Patent only protects what appears in the claims• Expanded coverage for business methods• “Anything under the sun made by man”

STATUTORY PATENT CLASSES

MachineProcess

Article of Manufacture

Composition of Matter

PATENTABILITY

Prior art

No unexpected result = No patent

Unpatentable improvement

PATENTABILITY

T=1/64”

PATENTABLEIMPROVEMENT

HUNDREDS OFHOURS

T=1/32”

PRIOR ART

ONE HOUR

Edison Patent no. 223,898, Nov. 4, 1879

GOVERNMENT PATENT CLAUSES

FAR 52.227-11 Patent Rights-Retention by contractor (Short Form)-small business

FAR 52.227-12 Patent Rights-Retention by contractor (Long Form)-large business

NASA Specific Patent Clause:

NSF 1852.227-70 New Technology clause-large business

LOSS OF PATENT RIGHTS

• Statutory Bar:

– Utility or provisional patent application must be filed before public disclosure to protect “foreign patent rights.”

– Utility or provisional patent application must be filed within 1 year of publication of enabling disclosure of invention to protect US patent rights.

– Utility or provisional patent application must be filed within one year of when invention is in regular use within NASA to protect foreign and US patent rights. Regardless of public disclosure.

RIGHTS IN DATA

• FAR-52.227-14-Rights in Data General

• Use in solicitations / contracts (Non DOD) if it is contemplated that data will be produced, furnished, or acquired under the contract, unless the contract is:

– For the acquisition of Existing Works (see 52.227-18)– To be performed outside the U.S.– For architect-engineer services or construction– An SBIR (see 52.227-20)– Cosponsored R&D (see 27.408 & 18-27.408)

• Purpose: Outlines various rights and obligations to data first produced in the performance of the contract. It is not a clause that identifies the delivery of data, only the rights that attach thereto.

• DOD has its own clauses

RIGHTS IN DATACONTINUED:

• DATA DELIVERED UNDER CONTRACT– Deliverable Data

• RFP should identify and request delivery of technical data determined to be needed by Agency.

• Proposers required to indicate whether any such deliverable data is proprietary (i.e., pre-existing trade secret) and will be delivered with less than “unlimited rights.”

• Data pertaining to items, components or process which have been or will be developed exclusively with government funds must be delivered with unlimited rights which permit unrestricted use, disclosure, reproduction, and distribution to the public.

RIGHTS IN DATACOMMERCIAL ITEMS:

• FAR 52.212-4 “Contract Terms and Conditions - Commercial Items”

• The technical data paragraph 52.212-4 assumes that the Government will acquire only the technical data and the rights in that data which is customarily provided to the public.

• The CO shall presume that data delivered under a contract for commercial items was developed exclusively at private expense; however, CO may obtain unlimited rights in technical data developed exclusively with Federal funds.

COPYRIGHTDEFINITION:

• EXCLUSIVE GRANT to creator(s) of “original works of authorship” for life of author + 90 years of specific rights, including the right to:

•

– Prepare copiesPrepare derivative works

– Distribute copies or phonorecords– Perform publicly– Display publicly; and– Perform publicly by digital audio transmission (sound recordings)

• to

•

COPYRIGHTABLE OR NOT?:

• What are examples of things that are and are not copyrightable?

– Pure facts are NOT, but the order they are put in might be

• Phone books in alphabetical order are NOT. Facts in a natural order do not arise to the requisite level of originality

– Algorithms are NOT– Pictures of public things ARE, but you can always

take your own picture

COPYRIGHTABLE OR NOT?:CONTINUED:

• Works of Authorship Including:– literary works;– musical works, including words;– dramatic works, including music;– pantomimes and choreographic works;– pictorial, graphic and sculptural works;– motion pictures and other audiovisual works;– sound recordings; and– architectural works

TRADEMARKS

• Obtainable for any word, name, symbol, or device or any combination thereof

• It must distinguish goods from those manufactured by others

• Even colors by themselves have been given trademark protection

• The Government has several trademarks• Renewable for an indefinite period of time• 1999 Trademark Amendment Act

Contractor Perspective of Intellectual Property Issues

By:Frank W. Kenniasty, Esq.

Senior CounselHarris Corporation

Overview

• Data Rights

• Patents

• Trade Secrets

Data Rights

• Government often wants to own all data rights.• Which rights?

– Source code for software.– Ability to modify and create derivative works.– Design and manufacturing drawings.

• Reasons:– “We paid for it.”– “We need a second source.”– “We may need to make changes.”

Data Rights

• Did Government actually pay for data?– Look at contract deliverables.– Examine data rights clauses.– Review if contractor developed IP at its own

expense (IR&D, B&P).– Determine if IP is commercial with minor

changes requested by Government

Data Rights

• Examples:– Harris OS Comet Software

• Prime Contractors objected to assertion of IP rights.

– Digital Map Software• Government and Primes initially objected.

– MET Software• Government actually turned over IP rights

Data Rights

• Whither Open Source Software?– Usually requires freedom to copy and

distribute source code.

• Pros:– No monopoly.– Available for research.

• Cons:– No incentive for innovation.– Poor business model.

Patents

• Government requires notice of invention.– See Campbell Plastics Engineering, Fed. Cir.

No. 03-1512, 11/10/04.

• Government may not understand Authorization and Consent. FAR 52.227-1.– Infringement suit must be brought against

Government in Court of Federal Claims. 28 USC §1498(a).

• Indemnification may be an issue.

Trade Secrets

• What are contractor trade secrets?– Proposals.– Design data.– Pricing data.

• Problems:– Government gives to competitors.– Documents not properly marked.

Summary

• Government and Contractor may have competing interest regarding intellectual property rights.

• Need to understand rights.

• Laws and DoD policy promotes retention of contractor IP rights.

Government Perspective of Intellectual Property Issues

[Perspective on Software and Technical Data from DoD]

By:Eliot Abolafia

Patent AttorneyNAVAIR Orlando TSD

Government Drivers for IP Rights

• Maintain Sufficient Industrial Supplier Base– Includes military and the U.S. industrial base

• Retain Minimum Necessary Rights (should be for life-cycle of the acquisition)– Probably most important consideration to the

ultimate government customer– Balanced against pressure to get the job done

• Respect Contractor IP (Policy and Law)– Shift in R&D Spending

• Technology Transfer (Policy and Law)

Contractor Drivers for IP Rights – from the Government Perspective

• By Size– Large Contractors (Original Design and Manufacture,

System Integrators, Can maintain IP monopoly through numerous bottlenecks)

– Small Niche Players (Usually Innovators, IP is a greater percentage of company assets, Look to IP for greatest leverage)

– Middle Tier - Teams Comprising Contractors generally with Market Power and Small Contractors with Technology

Other Differentiators

• By Target Market (True commercial players,Government is major customer)

• By Supply Chain (manufacturer, Integrator, outsourcer etc.)Intellectual Property may be acquired by

purchase or internally developed

• Each Contractor has a different Competitive Strategy

Shift in the IP Paradigm

• Shift in Procurement Away from Tangible “Brick and Mortar” Deliverables to:

• Software (which includes firmware)

• Databases

• Patented Technology

• Know how

Resulting in a Shift in the Government Practices

• From Cost Based Model to Negotiating Space– DoD IP Guide– Attempts to use Other Transactions Authority– Increased use of specially negotiated

licensing agreements

• Increase Reliance on Commercial Items

Example - Regulatory tools that Enable Negotiation

• Specially Negotiated License Agreements – DFARS 252.227-7013(b)(4); 252.227-7014(b)(4); 252.227-7018(b)(5)

• Express Policy

Many in Government and Industry are Operating in the Old Paradigm

• IP rights allocation purely a source-of-funds model (Appeal of Bell Helicopter Textron, ASBCA No. 21192)

Negotiation takes on new importance

Factors Favoring the Contractor

• Increasing use of performance specifications• Ownership of Intellectual Property confers Bargaining

power on the Contractor• Presumptions favoring Contractor assertion of

commercial items and proprietary data• Control of the structure and selection of subcontractors• After delivery, the Government will probably require

contractors for maintenance and updates• Due Process Associated with Validation of Restrictive

markings• Available $$$ are often known upfront

Example: Commercial Computer Software DFARS 252.227-7014

Commercial computer software means software developed or regularly used for nongovernmental purposes which-

(i) Has been sold, leased, or licensed to the public(ii) Has been offered for sale, lease, or license to the

public(iii) Has not been offered, sold, leased, or licensed to the

public but will be available for commercial sale, lease, or license in time to satisfy the delivery requirements of this contract; or

(iv) Satisfies a criterion expressed in paragraph (i) (ii), or (iii) of this clause and would require only minor modification to meet the requirements of this contract

Factors Favoring Government

• Position as the buyer with multiple offerors• If the $$$ are not spent within the designated

period they are lost• Inherent powers to infringe while liable for

reasonable royalty• Greater understanding of the needs of the

procurement and determination of life cycle• The ability to default to the cost based

framework

Factors Favoring both the Contractor and Government

• The scope of software and technical data rights can be limited through negotiation

• A restrictive marking system is in place to protect those limitations

• Intellectual property is divisible and can be designed to maximize utility

• The DFARS provides standard clauses to reflect the intent of the parties

DFARS Example

• Commercial Computer Software shall be acquired under licenses customarily provided to the public unless such licenses are inconsistent with Federal procurement law or do not otherwise satisfy user needs.

• Offerors shall not be required to”– Furnish information not customarily provided to the

public– Allows a transfer of rights mutually agreed upon.

Is the current paradigm sufficient for cost-wise efficient operations?

• The Government’s power in an acquisition has decreased while the position of contractors has increased resulting in a better balance

• But Industry and Government are still not all that happy.

If the results are not what are expected then WHY NOT?

An Example during Contract Formation -Organizational

• The Government operates within an environment of conflicting goals and with less than compete information– Program Managers

• Technical Merit of the Offer not equal to the IP rights

– Ultimate Users• Satisfaction or Optimization

– Contracts• Process, Full and Open Competition

– Legal• The contract reflects the deal and meets legal requirements

An Example during Contract Performance

• The Government has delegated too much authority for decision-making to the Contractor, and

• The Government does not get what it expected because the Contractor is now claiming rights that were unanticipated during contract formation. (e.g., software not included in the offer through inadvertence.)

A Few Recommendations for Government

• Do not permit contractors to make unilateral decisions whether to develop or incorporate intellectual property

• Broaden Contract Requirements to capture all legitimate intellectual property rights

• Always review deliverables to verify claimed rights

• Always keep records of government intellectual contributions and insist upon those rights in the resulting intellectual property.

A Recommendation for Everyone

• Do not settle for ambiguous contract (agreement) language in the hopes of a favorable interpretation later. See, Appeal of Ship Analytics International, Inc., ASBCA No. 50914 (2001).

– Define data and software rights clearly.– Eliminate inconsistencies within the contract.– To the maximum extent define IP deliverables, in

particular the form of the deliverable– Understand how the IP is integrated with other IP

and with the tangible deliverables

Government Perspective of Intellectual Property Issues

• Questions??