Preserving protections for core IPs solves government concerns about vendor lock while encouraging innovation for defense contractors

Shyam Sankar is the Chief Technology Officer of Palantir Technologies. Caitlin Dohrman is the Chief Executive Officer of Tangram Flex. Madeline Zimmerman is a Department of Defense Deployment Strategist at Palantir Technologies. THE MILITARY’S INSISTENCE ON OWNING COMMERCIAL INTELLECTUAL PROPERTY IS LIMITING INNOVATION; War On The Rocks;

Data rights is a broad category that refers to both a company’s intellectual property and ownership of government data. While ownership of government data is self-explanatory, for software firms, intellectual property refers to the proprietary source code needed to recreate the software. Enterprise software-as-a-service companies are not advocating to own customer data, believing that the U.S. government should always exclusively own its data. Instead, disagreements between government and industry tend to revolve around rights to commercially financed and owned intellectual property. It is critical that the Department of Defense be able to own and access its data for many reasons, including preparedness and the execution of war, the sustainment and improvement of existing capability, senior leader decision support, and more. As the 2020 Department of Defense Data Strategy explains, “DoD data is a high interest commodity,” and it “must be made available for use by all authorized individuals and non-person entities through appropriate mechanisms.” While the department’s requirement to exclusively own its data is both reasonable and necessary, the claim to commercial intellectual property is more complex and controversial. Within the department, there is a general view that owning, not renting, a new capability or system — through requiring unlimited rights and government purpose rights requirements — will help avoid vendor lock with specific software providers and improve the interoperability of software-based systems. This term refers both to the government being locked into using a specific vendor (and therefore being susceptible to price extortion), as well as being locked in to a given vendor’s architecture that is not interoperable with the government’s current or future investments. For example, the Department of Defense’s 2022 State of Competition in the Industrial Base concluded, “If a component or subsystem becomes vendor-locked, the process for acquiring, supporting, and upgrading the overarching system or subsystem can be subject to the pressure of that vendor lock, because the overall support for that system depends on the exclusive IP rights governing a critical subsystem or component.” While the department’s fear of vendor-lock tends to focus on software providers (versus hardware providers), the concern is universal. After all, the production of a plane, tank, or ship can include substantial vendor-lock as the government does not have the opportunity to switch providers until there is a new class of that platform. Simply put, vendor-lock is the opposite of interoperability: It limits competition for government contracts, increasing costs; it undermines the government’s ability to engage in flexible modification and sustainment when software updates are needed, or during times of rapid change in requirements; and it ultimately prevents the government from acquiring the best new technologies. What Does Industry Want Out of Data Rights? While commercial software companies do not seek ownership over government data, the request by government buyers for unlimited rights and government purpose rights requirements on core commercial intellectual property is a difficult proposition. However, this preference is not related to commercial providers seeking to create vendor lock-in or undermine interoperability. In fact, we advocate that industry consent to unlimited rights or government purpose rights on non-core intellectual property, including all derivative logic, models, analysis, interface control documents, application programming interfaces to other government systems, and computer software configuration items. Commercial software companies object to the sweeping terms stipulated in unlimited rights and government purpose rights because protection of core intellectual property — typically built with independent research and development dollars or outside funding like venture capital — is central to their ability to remain a viable company. If companies had to give up their intellectual property every time they sold to a customer, whether government or commercial, they would struggle to remain in business as it would be too easy for competitors to copy their product for free. American tech companies don’t want their intellectual property stolen by China, and they also don’t want to turn it over to the U.S. government as the price of entry to provide national security capabilities.