Data Rights and the Government Contractor: Restricted Computer Software

After going over limited data rights in our last post on intellectual property in government contracts, it is only natural we discuss the similar but distinct concept of restricted computer software. As we noted in the limited data rights post, this only concerns contracts regulated by FAR, or, in other words, non-Department of Defense contracts. If you’re dealing with the Department of Defense, the Defense Acquisition Regulation Supplement (DFARS) applies. DFARS has similar provisions but also differs in meaningful ways. We’ll discuss DFARS at a later post.

The phrases “limited data rights” and “restricted computer software” are very similar in meaning. The difference is that the latter concerns computer software developed at private expense and that is a trade secret, is commercial or financial and confidential or privileged, or is copyrighted computer software (along with minor modifications to such software). FAR 52.227-14. If you recall our discussion on limited rights, with the exception of copyrighted computer software, there is no difference here between restricted computer software and limited data rights except that the former covers computer software specifically.

It is worth noting that “computer software” for FAR 52.227-14 only means the actual computer programs and any recordings that would let someone produce or otherwise create the computer program. Manuals, installation instructions, and operating instructions are not computer software. Computer databases (the data saved in the database) are not computer software. Think of it like this: You make a spreadsheet on Excel. The spreadsheet and the information on it are regular data subject to limited data rights if that applies. Excel *itself* is the computer program that can actually be restricted computer software. The information on the spreadsheet cannot be restricted computer software as it isn’t even computer software.

Computer software developed at private expense that is a trade secret or is commercial/financial and confidential is easy to understand; it’s much like data that have limited data rights. But there remains the question of what makes computer software copyrighted, for copyright in a copyrightable work is established automatically when the work is made. 17 U.S.C. § 102. Does this mean that all computer software, when it is made, is restricted computer software? Not quite.

Like limited data rights, whether the software was first produced in performance of a contract or not matters. If the software was made in performance of a contract, the contractor must get the contracting officer’s permission before asserting any rights in the software. See FAR 27.404-3 and 52.227-14. The contractor must then affix an applicable copyright notice (almost always you’ll use 17 U.S.C. § 401 and the famous “©” symbol) and acknowledge the government’s sponsorship (including contract number). Failure to affix this notice can result in the government getting unlimited rights to the software, so do not forget to do it! Even then, the Government still is granted “a paid-up, nonexclusive, irrevocable, worldwide license in such copyrighted computer software to reproduce, prepare derivative works, and perform publicly and display publicly” per FAR 52.227-14. However, the government may not distribute the work to the public, which is a major limitation on the government’s rights in the software.

That all said, it should be noted with the above that the contracting officer is not required to grant such permission. FAR 27.404-3 provides that the contracting officer should generally grant permission, unless the data in question consists of an agency report, is intended primarily for internal use by the government, is data the agency itself distributes to the public, the “government determines that limitation on distribution of the data is in the national interest,” or the “government determines that the data should be disseminated without restriction.” Those last two reasons obviously grant the government wide berth in determining what to do, and so whether a contractor’s copyright is recognized for data made during and for a specific contract is basically at the contracting officer’s discretion.

When the software wasn’t made specifically during performance of a contract, the contractor obviously has stronger rights. In most cases, if the normal 52.227-14 clause is present, the contractor is supposed to withhold the software from the contracting officer, that is, not even give the officer access. The contractor may also just identify the software with the above-mentioned notices and grant the government a license like it would for software made in performance of the contract. Granted, it is unclear why a contractor would do such voluntarily, but it is allowed. Of course, sometimes the government needs the software, but the contractor doesn’t want to grant that very broad license. In that case, the government may insert Alternate III of FAR 52.227-14.

Under Alternate III, the contractor must still initially withhold the software from the CO. The CO then must make a written request for the software. The contractor then will affix a restricted rights notice, the language of which is provided in the clause. Use this language verbatim. With the restricted rights provision, the government may only: use or copy the software for use with the computers for which the software was required, use or copy for use with a backup computer, reproduced for backup purposes, modified (provided that such modified software is also subject to the same restricted rights), disclosed to and reproduced for use by support service subcontractors (so that way the government’s IT personnel can help if something goes haywire), and use the software with a replacement computer. Nothing more. Obviously, it is ideal for contractors to have this Alternate III clause apply to their contracts.

You may have noticed this all is fairly similar to “limited data rights” and, to be sure, it is. But software gets a little extra protection that non-software data does not, primarily in that the government cannot distribute it to the public, provided one follows the above procedures. Next, we will look at how DFARS treats limited data rights and restricted computer software, as they approach it a bit differently.

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