njtc: protecting patents & data in the commercial & government market place

Protecting Patents & Data in the Commercial & Government

Market Place

February 26, 2015

Daniel J. Kelly ● Maria Laccotripe Zacharakis, Ph. D.

INTRODUCTION TO

INTELLECTUAL PROPERTY

2

What is Intellectual Property?

� Intellectual property is a blanket term covering areas of the law dealing with the protection of property which “springs from the mind.”

3

Patents™Trademarks

©Copyrights

Trade Secrets

Types of Intellectual Property

� Patents– Market exclusivity in exchange for public disclosure

� Copyrights– Protect the expression of your ideas

� Trademarks– Protect your goodwill and identity in the marketplace

� Trade Secrets– Keep commercially valuable information from

competitors (if you can do so effectively)

4

Why is Intellectual Property Important?

� Recover the costs of research and

development

� Protect new products from market

competition

– Without protection, new products may be reverse engineered or knocked-off freely

� Patents are valuable assets

– Licensing

– Raising capital

5

What is a patent?

� A patent gives its holder the right to exclude

others from:

– making,

– selling, or

– using the invention.

6

Types of patents

� Utility patents

– cover anything having an actual use – e.g., machines, processes, compositions of matter

� Design patents

– cover ornamental product designs

� Plant patents

– for distinct and new varieties of plants that have been invented or discovered and asexually reproduced.

7

Types of patents

� First Generation patents

– Protect first generation products and platform technology

� Second Generation patents

– Protect where you and your competitors will go once your product hits the market

� Others

– Offensive patents

– FDA Label patents, etc.

8

9

The Journey

of a Patent

Step 1

10

Discovery!

Step 2

Document discovery in lab notebook

11

Step 3

File Invention Disclosure Form with patent committee

12

Step 4

Patent Committee Discussion

�Can invention be commercialized?

�Search for prior art

�Proceed with patent application filing

13

Step 5

Preparation of Patent Application

Meet with patent attorney Draft application Review and edit application

14

Step 6

File application with patent office

15

Step 7

Review of application by patent examiner

16

Step 8

Rebut the position of the examiner

This process goes back and forth several times

17

Step 9

Patent is granted!

18

Requirements for patentability

� Utility

� Novelty

� Non-obviousness/inventive step

� Written description

� Enablement

19

Requirements for patentability: Utility

� Invention must have some useful purpose.

20

Chin putter

Requirements for patentability: Novelty

� Under the America Invents Act, to be eligible for a patent, before the date of filing, the invention cannot have been:

– patented

– described in a publication

– in public use

– on sale or otherwise available to the public

21

Requirements for patentability: Novelty

� There is a 1-year grace period prior to the

application filing date for public disclosures:

– made by an inventor or by a third party who obtained the subject matter from the inventor

– made by a third party after the inventor disclosed the subject matter

22

1-Year Grace Period

23

1 year before filing

Inventor A files patent application

Inventor A publishes invention

Third party publishes invention

This publication is not prior art against Inventor A

Requirements for patentability: Non-obviousness/Inventive Step

� Invention must not have been obvious to one of ordinary skill in the art to which the invention pertains

� TIP: Don’t rely on arguments, plan to obtain data demonstrating unexpected results over the cited art

24

Requirements for patentability:Enablement/Written Description

� Enable any person skilled in the art to make and use the invention

– Examples are the best defense against enablement issues

� The specification must describe the claimed invention

• No new matter can be added after filing

• Problems typically arise when amending the claims

25

Patentable Subject Matter

� Appropriate subject matter includes:

– Drugs and Biologics (e.g., new compounds, prodrugs)

– Formulations (e.g., new forms, carriers)

– Medical Devices (e.g., catheters, bone screws)

– Methods of Treatment (e.g., new regimens or profiles)

– Diagnostics (e.g., urine tests)

– New Designs (e.g., product or packaging design)

� Non-patentable subject matter includes:

– Laws of nature

– Abstract ideas (e.g., mathematical equations)

– Natural phenomena

26

What is an “Invention”?

� An invention exists when…

– Conception is complete, and

– The invention is reduced to practice

• Both can happen at the same time

27

What is an Invention:Conception

� Conception has been held to be complete only when the idea is so clearly defined in the inventor’s mind that only ordinary skill would be necessary to reduce the invention to practice, without extensive research or experimentation

28

What is an Invention:Reduction to practice

� An invention has been reduced to practice

when…

– It has been built or practiced sufficiently to show that it would work as claimed, or

– An enabling patent application has been filed

29

Inventorship

� Only contributors to the conception of the “claimed” invention may be named as inventors.

� Collaborators who merely conduct experiments at the direction of another are not inventors even if the task performed requires skill and creativity.

� However, if a collaborator aids in developing the idea itself or significantly refines the original idea, he should be named as an inventor.

30

Documenting the Invention

� Under the AIA, the US is no longer a “first to invent” system. However, it is still important to

– File invention disclosures

– Maintain a laboratory notebook…

• Documents the inventive process

• Serves as the source of experimental

data for patent claims, patent examples,

proof of concept, etc.

31

Note Keeping

� Recording conception

– Clearly record facts surrounding invention

� Recording continuity

– Clearly note any intervals in research

� Witnessing

– Each page of lab notebook should be:

• signed and dated information was recorded

• signed and dated by a witness on the date information was recorded

32

Note Keeping

� Recording disclosures to others

� Speculation

– Speculation regarding other embodiments of the invention, possible other uses, etc. should be recorded as this will assist in sizing up and fleshing out the invention (speculation could lead to other inventions!)

33

When to File a Patent Application

� The general rule is that one must file a patent application before a non-confidential disclosure is made or before the product is offered for sale.

� A disclosure to a third party without a confidentiality agreement could prevent patent protection in many jurisdictions

– Some jurisdictions have limited grace periods, but the circumstances are very narrow – don’t count on it!

34


� While the US has a limited grace period, don’t count on it

– It does not prevent a competitor from filing a patent application

– You may not be able to get priority in most jurisdictions, and possibly not even in the US, depending on what was disclosed

� Confidentiality/Material Transfer agreements are great, but only get you a breach of contract claim

35

36


� Be careful about what is disclosed at/in:

– Conferences:

• Disclosure during an oral presentation can be a bar to patenting in some countries

• Abstracts (often published or available online) and poster session presentations may be deemed written disclosures

– Grant proposals:

• Once funded, government organizations may publish their abstracts even if you tell them not to

37

Due Diligence

Checklist

Due Diligence Checklist

I. Intellectual Property Portfolio

– Scope and Status

– Inventorship and Ownership

– Formalities

– Foreign Filing

– Priority Contests/Derivation v. First to Invent & First to File

– Other Related Applications in the Portfolio

II. Actual or Threatened Adverse Proceedings Involving 3rd Parties

III. Advice on Freedom-to-Operate

IV. Licensing or other Agreements with 3rd Parties

V. Key Personnel

VI. Data

38

Due Diligence:Intellectual Property Portfolio

� Scope and Status

– This includes…

• A list of all the intellectual property that the target company owns, controls, or has access to that is within the scope of the proposed transaction

• A list of any 3rd party intellectual property covering the target company.

• Access to the complete file histories of all issued patents and pending patent applications owned, controlled, or licensed by the target

39


� Inventorship and Ownership

– Are you aware of…

• Any individual who believes that he or she was incorrectly omitted from inventorship (consultants, outside contractors, etc.)

• Any claim by a third party that believes it has a right of ownership in an application or patent

• Any inventor who has an obligation to assign to a third party

• Any funding arrangements which would give another party an interest in the target company’s portfolio

40


� Formalities

– Account for all documents establishing title-ownership/licensee rights for all the IP owned, controlled or licensed by the target company and establish whether or not…

• The IP documents remain in good standing

• All assignments were filed and recorded

• All filing receipts are in order

• Maintenance and other fees have been paid

• All relevant applications are pending (i.e., not abandoned)

41


� Foreign Filing

– In what jurisdictions have steps been taken to preserve foreign patent rights?

42


� Priority Contests

– Are you aware of existing or potential priority contests involving the claims of the invention?

– In order to assess the outcome of likely priority contests we need the following:

• Evidence of dates of conception and reduction to practice of invention

• Any evidence you have of other parties’ dates of conception and reduction to practice

43


� Priority Contests, cont.

– Questions to answer:

• What can you tell us about the prior art with respect to the claims?

• What can you tell us about any interferences part or presently pending?

• What can you tell us about any European oppositions part or presently pending? Is validity of any of the claims at issue?

44


� Other Related Applications in the Portfolio– If any other applications have been filed which would

support the claims, it should be demanded that these applications and their prosecution histories be viewed.

– In order to assess the patentability of the invention, the following from other applications which disclose the invention are needed:

• Priority documents

• Prosecution files

• All known prior art and copies of any prior art searches

• Summaries of any new data which might be used to support the patentability of the claims

45

Due Diligence:Actual / Threatened Adverse Proceedings

� Actual or Threatened Adverse Proceedings

Involving 3rd Parties

– The following information is required:

• Information regarding any actual or threatened IP lawsuits affecting the patent portfolio

• Information regarding the legal opinions by external counsel regarding the validity of any 3rd party IP rights that might affect the patent portfolio

• Information regarding legal opinions by external or internal counsel regarding whether the activities of any 3rd party infringe or would infringe the subject matter of the patent portfolio

46

Due Diligence:Freedom-to-Operate

� Advice on Freedom to Operate

– Provide information regarding…

• Any potentially dominating patents and, if any, search results, legal opinions, memoranda, and/or presentations to senior management regarding the target company’s freedom to use/test/make their product within the patent portfolio

• Any trademark clearance searches or survey results

47

Due Diligence:Freedom to Operate

� Advice on Freedom-to-Operate, cont.

– Questions to be answered:

• Have you been asked to provide a “freedom to use” opinion with respect to the practice of the target company’s product?

• Have you formed an opinion on whether the practice of the target product would infringe a valid claim of a US patent – can you say why?

• Have you ever sent a letter asserting infringement of a claim of the portfolio?

• Are you aware of any related claims or a third party that would prevent practicing steps of the invention?

48

Due Diligence:License/Other Agreements with 3rd Parties

� License or Other Agreements with 3rd Parties

– Identify all the products in the program – if any products are not being considered for the deal, discuss the relationship of these products

– Have any other third parties licensed and subsequently decided not to pursue this technology; explain why the program ended

49

Due Diligence:License/Other Agreements with 3rd Parties

� License or Other Agreements with Third Parties, cont.

– List licenses or other agreements related to the research, development, manufacture, use or sale of the product, including:

• Exclusive and non-exclusive license agreements

• Joint development agreements or joint venture agreements

• Secrecy/confidentiality agreements

• Manufacturing or supply or other service (e.g. testing) agreements

• Consulting agreements

• Sponsored research agreements

• Material transfer agreements

• Technical assistance agreements needed to provide for transfer of “know-how” as to a product that affects the collaboration

• Distribution agreements

50

Due Diligence:Key Personnel

� Key Personnel

– Provide a list and contact information of all persons involved in the prosecution of the IP portfolio and/or R&D of the compounds within the portfolio with whom we can discuss the proposed transaction.

– Provide documents that establish the obligations of key personnel, including the inventors.

– Indicate whether persons are currently or formerly retained by the target company.

51

Due Diligence:Data

� Data

– Provide the following:

• information, including a list and summary description, of all data relating to completed or ongoing clinical trials, preclinical studies, toxicology profiles, and proposed future publications related to product or its use in any field.

• Any documents and/or information related to the status and ownership of clinical trial data and materials identified above.

– Have any clinical trials (or relevant IP) been funded by 3rd parties, including grants (academic or government)?

52

PATENT RIGHTS UNDER

GOVERNMENT CONTRACTS &

GRANTS

53

GOVERNMENT’S RIGHTS IN INVENTIONS

54

The Bayh-Dole Act – 35 U.S.C. Sections 200-212

� Under Bayh-Dole, passed in 1980, small businesses and nonprofit entities (including universities and research institutions) given right to retain title to inventions developed under Government funding agreements.

55

� Bayh-Dole extended by 1983 Presidential Memorandum to large businesses and for-profit organizations not subject to DOE, NASA and NRC funding agreements.

� DOE, NASA and NRC are given title by statute to any inventions developed under funding agreements between large for-profit businesses and those agencies; patents issued to the United States.

56

Applies to Government Contracts, Grants, and Cooperative Agreements

� A Contractor’s Patent Rights are Governed by Part 27 of the Federal Acquisition Regulation (Title 48 of the CFR) and the Patent Rights Clause (52.227-11).

� A Grantee’s or Funding Recipient’s Patent Rights Are Governed by Title 37 of the Code of Federal Regulations and the Patent Rights clause (Section 401.14).

57

Nature of Government’s Right

� Government gets a nonexclusive, irrevocable, paid-up license to practice or have practiced on its behalf such an invention throughout the world.

58

Fund Recipient Must Act

� Under Bayh-Dole – title can revert to the Government if the grantee/contractor fails to disclose the invention, fails to elect to retain title or fails to file and prosecute a patent application within certain prescribed time periods. Failure to disclose means grantee/contractor loses all rights. Failure to elect title – grantee/contractor still gets license.

59

Definitions

� “Invention” (FAR 27.301; 37 CFR 401.2(c))

– any invention or discovery that is or may be patentable or otherwise protectable under the Patent laws or any novel variety of plant that is or may be protectable under the Plant Variety Protection Act

60

Definitions

� “Subject Invention” (FAR 27.301; 37 CFR401.2(d))

– any invention of the contractor conceived or first actually reduced to practice in the performance of work under a government contract or funding arrangement

61

Funding Recipient’s Right to Elect Title

� Narrow Exceptions to Recipient’s Right to Elect to Retain Title

– Foreign companies

– Exceptional circumstances in furtherance of policy objectives

– National security

– Contracts for government owned R&D or production facilities

FAR 27.302(b)(1)-(4); 37 CFR 401.3(a)

62

Government’s Rights if Recipient Elects Title

� Government License Rights

– Minimum: Nonexclusive, nontransferable, irrevocable, paid-up license to practice, or have practiced for, or on behalf of, the U.S. Government throughout the world

– May have additional rights to sublicense to any foreign government or international organization to effectuate treaties or international agreements

– March-In Rights

63

March-In Rights

Where contractor acquires title, government can require contractor to license, or the government may license to others itself:

– If Contractor has failed to take adequate steps for practical application

– To alleviate health or safety concerns

– To meet requirements for public use

– To meet domestic production preference

35 U.S.C. 203; FAR 27.302(f); 37 CFR 401.6; 14(j)

64

Failed to Take Adequate Steps

� Agencies Permitted to Request Utilization Reports (FAR 27.302; 37 CFR 401(h)).

� NIH requires 12 month reporting on stage of development, date of first commercial sale or use, number and type of licenses, gross income, licensing to small business, status of U.S. manufacturing and identification of any FDA-approved product names.

65

Preference for United States Industry

� A Recipient and Exclusive Assignee Must Agree that Products Embodying Subject Invention be Manufactured Substantially in the United States.

� Waiver is Permitted On Showing of Unsuccessful Attempts or Not Commercially Feasible.

66

If Recipient Declines Title . . .

� Minimum License Rights to Recipient if Government Takes Title (FAR 27.301(i); 37 CFR401.14(e))

– Revocable, nonexclusive, royalty-free license

– Extends to domestic subsidiaries and affiliates

– Includes right to sublicense

– Transferable only with agency approval

– May be revoked or modified by the government to achieve expeditious practical application

67

Procedural Requirements -- Disclosure

� Disclosure in writing (FAR 52.227-11(c); 37 CFR401.14(a)(2))

– Within two months of disclosure by inventor to recipient’s personnel responsible for patent matters

– Must identify inventor, funding vehicle, sufficient technical detail and date of any public disclosure

� Implications of Failure to Disclose

– Forfeiture of all rights

– Potential liability for Government infringement

68

Procedural Requirements – Election to Retain Title

� Recipient must elect in writing to retain title within 2 years of initial disclosure. (FAR 52.227-11(c)(2); 37 CFR 14.401-14(c)(2)).

� Exception for When 35 U.S.C. Section 102(b) 1 Year Statutory Bar Kicks In – Period for Election Can be Accelerated to No More Than 60 Days Prior to End of Statutory Period.

� AIA Changes Statutory Bar Conditions to On-Sale or Public Use Anywhere in World.

69

Procedural Requirements – Filing the Patent Application

� Must File Provisional or NonprovisionalApplication within 1 Year of Election (Nonprovisional must be within 10 months of provisional).

� If Statutory Bar Applies, Must File within Statutory Bar.

� Foreign filings within 10 months of first U.S. application .

� FAR 52.227-11(c)(3); 37 CFR 401.14(c)(3)

70

Effect of AIA “First to File” Rule

� As a Practical Matter Collapses Grace Periods Inherent in Bayh-Dole if Recipient Wants to Avoid Risk of Intervening Prior Art.

71

Inventors and their Recipient Employers

� Recipient must obtain written agreement from its employees to disclose promptly to patent personnel subject inventions to comply with notice requirements.

� Recipient must require all inventors to execute papers necessary to file patent applications and establish the Government’s rights in the inventions.

� NIH: This means an obligation to assign title to federally supported inventions to the Recipient.

� FAR 52.227-11(e)(2); 37 CFR 401.14(F)(2);

72

Special Rule for Non-Profits

� No Assignments in the United States without Approval of the Agency (except orgs with primary function of managing inventions).

� Must Share Royalties with Inventor, including Federal Employee Co-Inventor.

� AIA as of 9/16/12: Not required but should give preference to small business firms as licensees provided they are “equally as likely to bring the invention to practical application” as large businesses.

� FAR 52.227-11(i); 37 CFR 401.14(k).73

Patent Usage on a Government Contract

� A patent holder’s sole remedy for Government use of a patent or use by someone acting for the Government is suit against the Government in the Court of Federal Claims.

28 U.S.C. § 1498

74


� Not considered infringement.

� No injunctions, treble damages, court costs, or attorney fees.

� Government may continue usage of the invention.

� Government only liable for “reasonable and entire compensation,” i.e., a fair licensing fee.

75


� Generally contractors protected from infringement claims if use authorized

– FAR 52.227-1, Authorization and Consent

� Express authorization by Government not always required to protect contractors from infringement claims

– Authorization may be implied, e.g., the contract requires the contractor to use the infringing method

76


� Indemnification

– The Government can require that the contractor indemnify it for infringement (FAR 52.227-3)

– This clause is generally included in contracts for commercial items but excluded from research and development contracts

77

GOVERNMENT RIGHTS IN

DATA UNDER DoD

CONTRACTS

78

GOVERNMENT’S RIGHTS IN DATA

AND COMPUTER SOFTWARE

79

Government Contracts and Trade Secrets Threshold Questions

1) What is being delivered?

2) Who is paying for development?

3) Is the product being delivered, sold, or offered for sale in the commercial marketplace?

80

Underlying Principles Government Trade Secrets in Government Contracts

1) Government never gets to own it

2) Prime contractor gets no rights

3) Commercial development, license, and sale always an option

4) Prohibition of acquisition rights in IP developed at private expense; presumption that commercial products are developed at private expense

81

In the Weeds: DoD World (Now)

� Two Regimes of Trade Secrets– Technical Data

• DFARS subpart 227.71

• DFARS 252.227-7013; 252.227-7015 (TD – Commercial Items)

– Computer Software

• DFARS subpart 227.72

• DFARS 252.227-7014

� Regulations that Dictate Policies and Procedures

� Contract Clauses that Dictate Rights

� FAR Subpart 27.4 “Rights in Data and Copyrights” Does Not Apply

82

Technical Data

� Recorded information of a scientific or technical nature (including computer software documentation) relating to supplies procured by an agency

� Does not include computer software

� 10 U.S.C. § 2302(4);DFARS 252.227-7013

83

Policies and Procedures Governing Technical Data

� DoD to only acquire technical data and rights in technical data necessary to satisfy agency needs

– Deliverables: separate line items and minimum necessary

– Disclosure of technical data with restrictions

– Alternative forms of delivery

– For commercial items, no rights in technical data not customarily given to public

84

Government Rights to Non-Commercial Technical Data

� Rights: Royalty-free, world-wide, non-exclusive, irrevocable license* (DFARS 252.227-7013) *computer software documentation carve-out

– Standard: (1) unlimited rights; (2) government purpose rights; (3) limited rights

� Option: Specially negotiated license rights

– “Government can accept lesser rights in data in return for other consideration” (DFARS 227.7103-5(d))

– Must be enumerated in a License Agreement made part of contract

85

Unlimited Rights (License Right)

� Right to use or disclose technical data

– In any manner

– And for any purpose whatsoever

– And to have others do so

86

Government Purpose Rights (License Right)

� Right to use technical data and computer software in any activity in which the Government is a party, including:– Competitive procurement but not use for commercial purposes

� Limited in duration– 5-year benchmark (negotiable)

• Begins on execution of contract

� Disclosure to third party– Must sign NDA (227.7103-7)

– Covered Government Support Contractor (subject to New Clause 252.227-7025)

– Government gets release

87

Limited Rights (License Rights)

� Right to use, modify, reproduce, release, perform, display, or disclose technical data within the Government

� Cannot be used for manufacture or used by another party

� EXCEPT:– emergency repair and overhaul

– release to Covered Government support contractor (must adhere to new clause 252.227-7025) NEW – definition is narrow: advice/assistance to management of program – not maintenance

– release to foreign government (no detailed mfg data)

– need notice and agreement by third parties on restrictions on further release

88

What Gets Limited Rights Treatment

� Technical data pertaining to any item, component, or process developed exclusively at private expense with the legend

– Developed = workability (analyzed or tested sufficiently to demonstrate to reasonable people skilled in applicable art there is high probability that it will operate as intended; need not be reduced to practice)

– Exclusively = costs not directly allocated to a government contract (including overruns)

– FY 2012 NDAA: IR&D and B&P costs “shall not be considered Federal funds . . .”

89

What Gets Unlimited Rights Treatment

� Technical data pertaining to an item, component, or process developed exclusively with Government funds

– PLUS:• Form fit and function data

• Necessary for installation, operation, maintenance, or training purposes (excludes detailed mfg data)

• Released in past without restrictions

• Technical data produced as an element of contract performance or in connection with contract performance

90

What Gets Government Purpose Rights Treatment

� Technical data that pertains to items, components, or processes developed with mixed funding

– Private expense determinations are to be made at the lowest practicable level (DFARS 227.7103-4(b))

91

Subcontractors (Noncommercial TD)

� Prime instructed to use same clause in subcontracts calling for delivery of TD to Government (252.227-7013)

� Subcontractor permitted to supply data directly to Government

� Prime cannot use power to award contacts as “economic leverage” to obtain rights in TD from subcontractors and or suppliers

92

Policies and Procedures Governing Computer Software

� DoD only to acquire computer software and documentation and rights therein to satisfy agency needs

– Deliverables: Minimum necessary (including number of users)

– Disclosure of computer software with restrictions

– For commercial computer software, acquire under licenses customarily given to public

93

Government Rights to Non-Commercial Computer Software and CS Documentation

� Rights: Royalty-free, world-wide, non-exclusive, irrevocable license (DFARS 252.227-7014)

– Standard: (1) unlimited rights; (2) government purpose rights; (3) restricted rights/limited rights (CS)

� Option: Specially negotiated license rights

– To consider software maintenance philosophy, time and user sharing requirements, and other factors (DFARS 227.7203-5(d))

94

Unlimited Rights in Non-Commercial Software and Documentation

� Software developed exclusively with Government funds

� Documentation required to be delivered under the Contract

� Released in past without restrictions

� Software when limitations expire (e.g., government purpose rights)

95

What Gets Restricted Rights in Noncommercial Computer Software

� Developed exclusively at private expense

– A computer program is developed if it is successfully operated in a computer and tested to demonstrate that a reasonable person skilled in the art that it can reasonably be expected to perform its intended purpose;

– Computer software (other than programs) is developed if it has been tested or analyzed to the extent sufficient to demonstrate to PSKA that it can reasonably be expected to perform its intended purpose

96

Restricted Rights (License Rights)

� Right to use a computer program with one computer at one time; program cannot be accessed by more than one terminal or CPU

� Right to transfer program to another agency if original user destroys all copies of program and provides notice

� Right to minimum number to maintain archives, backup or allow mod

� Right to permit service contractors to use software to diagnose and correct deficiencies, adapt or merge with other programs or respond to “urgent tactical situations” (requires notice and 227.7103-7 NDA or adherence to NEW clause 252.227-7025)

� Right to permit contractors performing emergency repairs or overhauls to use the software when necessary to their work (same notice and NDA requirements)

� Right to permit Covered Government support contractors to use and/or disclose to authorized persons (must adhere to NEW clause 252.227-7025). NEW

97

What Gets Government Purpose Rights Treatment

� Computer software developed with mixed funding

� Source of funds determination

– DFARS 227.7203-4(b)

� To be made at the lowest practicable segregableportion of the software or documentation

� Look to see what subcomponents or subroutines are discreetly identifiable

98

Subcontractors and Non-Commercial Computer Software and Documentation

� Prime contractor instructed to use 252.227-7014 in subcontracts.

� No other clause may be used to enlarge or diminish rights

� Prime expressly instructed not to use “economic leverage” to obtain rights from subs or suppliers

� Primes instructed to disclose and protect subs rights (through id, assertion and delivery processes)

99

The SBIR Data Rights Clause:DFARS 252.227-7018

� Covers both non-commercial technical data and computer software

� Rights: Royalty-free license for Government and support service contractors to use or disclose technical data or computer software generated or developed under contract for any U.S. Government purpose

– Extends from contract award until 5 years after completion of project, then unlimited rights

– Despite broad definition of Government purpose, disclosure to third parties is limited

100

Commercial Computer Software and Documentation

� Commercial items (FAR 2.101) and Commercial Item Acquisition (FAR Part 12)

� Commercial computer software (FAR 2.101 vs. DFARS252.227-7014(a)(1))– Developed or regularly used for non-government purposes

– Sold or offered for sale or license to public

– Minor modifications to meet contract requirements permitted

� Commercial computer software (NO CLAUSE)– To be acquired under licenses customarily provided to the public

unless inconsistent with Federal procurement law or do not otherwise satisfy user needs. DFAR 227.7202 (Different from FAR 52.227-19 governing commercial computer software)

101

Technical Data Pertaining to Commercial Items

� 10 U.S.C. 2320(b)(1) Presumption that commercial items are developed at private expense whether or not a justification is made in response to a challenge notice (NEW -- except major systems, subsystems or components thereof)

� DoD to get technical data customarily provided to the public with the commercial item EXCEPT:

– Form, fit and function data

– Required for repair or maintenance, installation or handling

102

Rights to Technical Data Pertaining to Commercial Items – Clause

� DFAR 252.227-7015 – Gives Government specific license rights – DoD may use, modify, reproduce, release, perform, display or disclose data only within the Government.

� May not be used to manufacture additional quantities of commercial items.

� May not be released without Contractor’s written permission

� Additional rights to be negotiated

� Not a mandatory flow-down for subs

103

Identification of TD and Computer Software (Non-Commercial TD and Computer Software)

� Solicitation provision 252.227-7017

� Requires offerors to identify any technical data for which restrictions, other than copyright, on use, release, or disclosure are asserted and to attach the identifications and assertions in the offer.

� Contract clauses 7013/7014 permits Contractor to make additional assertions if new or inadvertent (before delivery and no material affect on source selection)

104

Marking Requirements (Upon Delivery) –Noncommercial Technical Data and Computer Software

� Deliverables must be marked by prime and subcontractors in order to obtain protection

� May only use legends prescribed in 7013/7014 (Limited Rights, Restricted Rights, GPR Rights, Special License Rights) and Copyright notice

� Computer software transmitted directly from one computer to another shall contain a notice of asserted restrictions

105

Marking – Unjustified and Nonconforming

� Unjustified Markings can be challenged under validation procedures 252.227-7019 (computer software) and 252.227-7037 (TD)

� 252.227-7037 (TD) must be flowed down to all subcontractors

� Nonconforming markings require a 60 day notice to remove or correct – then Government may ignore or remove or correct at Contractor’s expense

106

Maintaining Records

� DFARS Requirement -- Contractor must maintain records sufficient to justify the validity of any markings that assert restrictions and be prepared to furnish to the Contracting Officer a written justification for such restrictive markings in response to a request for information.

107

Identification and Marking of Commercial Computer Software and TD pertaining to Commercial Item

� No clause governing early identification of commercial item TD or computer software

� If a deliverable under solicitation, disclose and append license agreement to proposal

� Mark TD, computer software and computer software documentation with restrictive legends (New clause 227-7025 addresses “commercial restrictive legends”

� 252.227-7019 and 252.227-7037 Validation Process Available (but Presumptions stand)

108

Rights vs. Deliverables

� Data rights clauses establish Government’s license rights – not deliverables

� Government has no right to require TD or computer software unless a deliverable unless the contract has Deferred Ordering (252.227-7027) (3 year window after acceptance) or Deferred Delivery (252.227-7026) (2 year window for pre-designated data) clauses

� FY 2012 NDAA Makes Deferred Ordering Mandatory with a Twist – Technical Data Generated or Utilized in Performance of Contract

� Changes clause is not available

109

Copyright Protection

� Technical data and computer software in object code and source code is subject to copyright protection

� Contractor is copyright owner (includes works by employees)

� Prime gets no copyright interest in works created by subs

� Government under DFARS gets a license coextensive with whatever data rights it obtains

110

Copyright Protection – Unlimited Rights

� Government’s copyright license is coextensive with author’s rights

� DoD IP Guidance instructs COs to not automatically pursue unlimited copyright licenses (GPR should be rule)

� Third party rights up in the air – limited to “use”?

� Contractor can and should “mark” with copyright notice (252.227-7013(f) and 7014(f).

111

Changing Terrain: Proposed DFARSRewrite

� Federal Register Vol. 75, No. 186 (September 27, 2010) (Case No. 2010-D001)

� 60 pages of text

� Comment period over

� Major groups concerned including Aerospace Industry Association and ABA, Public Contract Law Section

� Status: In Limbo

112

Thank You!

Daniel J. [email protected]

617.449.6526

Maria Laccotripe Zacharakis, Ph.D. [email protected]

617.449.6512

113

Source Material

� Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics, Intellectual Property: Navigating Through Commercial Waters (Oct. 15, 2001), available at www.acq.osd.mil/dpap/Docs/intelprop.pdf

114