Data Rights and the Government Contractor: An Introduction and Unlimited Data Rights

Ask any attorney, and there’s a good chance they’d agree with this statement: Intellectual property is a particularly complex area of law. Dealing with property rights in things that don’t physically exist, unsurprisingly, can result in a lot of confusion. Couple this with the labyrinthine regulations and rules concerning government contracts and procurements, and even the most experienced contractor can be left confused with a pounding headache.

To help clear up these murky waters, this post will be the first in a series of posts reviewing some of the basics of intellectual property rules in government contracts. We will start by going over data rights, as perhaps no subject in this field is more difficult than dealing with data rights. While I think we’re getting to the point in history where we can stop referring to computers and the internet as a novel technology (The internet as we know it is over thirty years old!), the law around data rights is still relatively new and rough around the edges. In this post, we will review the general concept and the rules regarding “unlimited rights” in data.

A caveat before we begin: It is worth noting that, while many people associate “data” with computers, and for good reason, data can come from any number of sources and exist in many different forms of media. We generally discuss data rights in terms of computer data as it is the most pressing matter, but, unless the rule specifically refers to computer data, the rules of rights in such data are not dependent on the medium. As I noted above, intellectual property is a highly complex area of law. While this series will hopefully give you a decent basic understanding of how it applies to government contracts so you know what to look for, this is general guidance. If you have a specific concern about a certain matter, you should contact an attorney that specializes in intellectual property or government contracts. With that out of the way, let’s begin.

General Overview

FAR 52.227-14 states “data” “means recorded information, regardless of form or the media on which it may be recorded. The term includes technical data and computer software. The term does not include information incidental to contract administration, such as financial, administrative, cost or pricing, or management information.” This differs from patent and copyrights. Patents are intellectual property rights in an invention or discovery itself, per 35 U.S.C. § 101. Copyright is a property right in the particular way in which something is expressed or communicated, such as a book or recording, but doesn’t cover the underlying information itself, per 17 U.S.C. § 102. Data is basically that underlying information.

Contrary to what many seem to think, the government does not have a policy of trying to take ownership in data rights regardless of the situation.  FAR 27.102 notes that “[t]he Government recognizes rights in data developed at private expense, and limits its demands for delivery of that data. When such data is delivered, the Government will acquire only those rights essential to its needs.” Admittedly, the cynic might observe that what is “essential” to the government’s needs is a matter of interpretation, but, in our experience, this policy is generally taken seriously. That said, the prudent contractor should never take the agency’s word alone on what effect the provisions of a solicitation or contract have on data rights. Even assuming the contracting officer means well, as is most often the case, COs are human and can be mistaken as to what the terms of a contract can mean or are required for a procurement. We are dealing with a very complex area of law after all. So always give the provisions on data rights a fair glance.

There are three general classes of rights that the government will assert for data under a government contract. They are “unlimited rights,” “limited rights,” and “restricted computer software.” There is an additional class, “government purpose rights,” which we will address later. However, that class is only for Department of Defense procurements, so for now, we’ll focus on the others first.

Unlimited Rights

The most straightforward of the classes is “unlimited rights,” and, for the most part, it’s what it says on the label. “Unlimited rights means the rights of the Government to use, disclose, reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, in any manner and for any purpose, and to have or permit others to do so.” FAR 27.401. In effect, if the government has unlimited rights in data, it is the owner (or at least co-owner) of that data. It can do whatever it wants with it. If you see the words “unlimited rights” regarding data (or really in any context in a contract), that should set off alarm bells.

However, just because the government is asking for unlimited rights in data does not mean they are making a mistake. FAR 27.404-1 notes that such rights are appropriate for:

  • Data first produced in the performance of a contract (unless it is simply “minor modifications to data that are limited rights data or restricted computer software”);
  • Form, fit, and function data delivered under contract;
  • Data for manuals or training material for installing, operating, maintaining items or processes delivered under a contract (outside of those included with restricted computer software); and
  • All data delivered under the contract that isn’t limited rights data or restricted computer software.

At first glance, that last part may seem to swallow up all the others, but, the other parts help COs determine if limited rights or restricted computer software should be applied. Let’s break these down.

Data First Produced in the Performance of a Contract

“Data first produced in the performance of a contract” is really what it sounds like it is: if the data did not exist until the contractor started performing on the contract, and it comes from that performance of the contract, it is data first produced in the performance of a contract. See Ervin & Assocs., Inc. v. United States, 59 Fed. Cl. 267, 295 (2004), aff’d, 120 F. App’x 353 (Fed. Cir. 2005). This makes sense, as often this data is precisely what the government is trying to obtain with the procurement. Even if it is incidental, it is clearly tied to the procurement, as it wouldn’t have been produced had the contract not been made. The language is mostly unqualified too: if it’s produced in performing a contract, it’s the government’s data.

There is the “minor modifications” exception, but unfortunately, there has been incredibly little said on it. It requires the data in question to be limited rights data or restricted computer software to begin with, and reason suggests it covers cosmetic changes, corrections to bugs, and other such changes.

Form, fit, and function data

Helpfully, this sort of data is defined by FAR 52.227-14. Less helpfully, the definition is fairly jargony. Form, fit, and function data is really just data that defines characteristics of a part. One administrative decision noted it “is data which depicts the configuration and mating dimensions, function, and performance and qualification requirements. This data is often less detailed engineering data.” Ingersoll-Rand Co.-Reconsideration, B-230101 (June 16, 1988). One example is the dimensions and mass of say, a nail or screw. For computers, it’s the sort of stuff you need to know to operate software or troubleshoot a problem, such as what operating systems the software works on. Generally, you don’t need to worry much about this data. It’s the data that helps define the data.

Data Delivered Under the Contract (except restricted computer software) Constituting Manuals or Instructional Material

This class of data is straight forward: Your instruction manuals, how-to sheets, troubleshooting guides, things of that nature. Basically, if it gives the government guidance on how to use something you provided them or how to maintain or repair it, it falls under this category.

All Other Data Unless Provided Otherwise

This is the catch-all and the part you need to be most aware of: Unless the data in question is provided for as limited rights data or restricted computer software, the Government gets unlimited rights to it. There are requirements to follow to make sure your data is recognized by the government as limited rights data or restricted computer software, and failure to do so means the Government treats the data as theirs. For example: “Data delivered to the Government without any restrictive markings shall be deemed to have been furnished with unlimited rights. The Government is not liable for the disclosure, use, or reproduction of such data.”

In the next post, we will explore this matter more in depth: What is limited rights data and, more importantly, how do I protect it?

Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919.

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