Government Purpose Rights in Technical Data and Software Developed with DOD Funding | PilieroMazza PLLC

When you develop technical data or software, in whole or in part, with government funding, it is important to know the scope of data rights that the government will obtain at the outset, both with respect to components that were developed solely at private expense and those that were developed with government funding. However, because technical data and software are often developed with multiple funding sources and are continually updated and improved, it can be difficult to determine these data rights. Below is an overview of key regulations governing data rights in technical data and software developed by government contractors and how mixed funding can impact data rights.

FAR 52.227-14 (Rights in Data – General), DFARS 252.227-7013 (Rights in technical data – Noncommercial items), and DFARS 252.227-7014 (Rights in noncommercial computer software and noncommercial computer software documentation) govern relevant data rights in technical data and software. FAR 52.227-14 applies to agencies outside of the Department of Defense (DOD), while DFARS 252.227-7013 and 252.227-7014 apply to the DOD.

Under each applicable provision, the government will receive unlimited rights in technical data or software that is developed solely using government funds, including funds awarded through a government contract. Alternatively, if technical data or software is developed solely at private expense, the owner of that technical data or software may limit the government’s rights in the applicable technical data or software. While this distinction is sometimes clear, technical data or software is often developed with a combination of private funding and government funding, which is commonly used to support additional development of technical data or software that was previously developed at private expense.

Under FAR 52.227-14, the government will receive unlimited rights in technical data or software developed with mixed funding for a non-DOD agency, which permits the government to use, modify, and disclose technical data in any manner and for any purpose and to have or permit third parties to do so. A grant of unlimited rights to the government can significantly inhibit a contractor’s ability to commercialize technical data or software.

The government, on the other hand, does not obtain unlimited rights in technical data or software developed with mixed funding for the DOD. Instead, under DFARS 252.227-7013 and 252.227-7014, the government will receive more limited “government purpose rights” in technical data or software that pertains to items, components, or processes that were developed with mixed funding for the DOD.

The government will retain these government purpose rights for a five-year period beginning upon execution of the contract that required development of the applicable items, components, or processes. Following that five-year period, the government will obtain unlimited rights in that technical data.

While unlimited rights permit the government to use, modify, and disclose technical data in any manner and for any purpose, government purpose rights only permit the government to use, modify, or disclose the data within the government without restriction and outside the government solely for “government purposes.” “Government purposes” includes any activity in which the government is a party, including cooperative agreements and competitive procurements, but it specifically excludes commercial purposes. As a result, while the government will still have the ability to disclose technical data to other agencies in the government and to third parties for limited purposes, the contractor will retain the sole right to commercialize the technical data or software, which is a significant benefit.

A contractor who intends to commercialize technical data or software to other agencies in the government, including non-DOD agencies, should keep in mind that a grant of government purpose rights will make it difficult to sell or license the technical data or software to other government customers because the government will already have a license to use the technical data or software for government purposes. In that situation, it may make more sense for a contractor to develop technical data or software with private expense, which will permit the contractor to grant the fewest rights in the technical data or software to the government.

To maximize the benefits associated with government purpose rights, prior to entering into a contract with the DOD for further development of technical data or software, the contractor should clearly identify and legend any technical data or software that was developed at private expense at the lowest component level of the technical data or software. This will permit the contractor to (i) assert its ownership rights as early as possible, (ii) avoid granting government purpose rights to technical data or software that was developed solely at private expense, and (iii) identify partially developed components to ensure the government receives government purpose rights, rather than unlimited rights, in the further development the DOD assists in funding.