DoD IP policy requires statutory change- software rights fall under ‘copyright’

Royce Kneece Michael Lippitz Christina Patterson; Department of Defense Access to Intellectual Property for Weapon Systems Sustainment; Institute For Defense Analysis

Before 1984, data rights pertaining to DOD contracts were not explicitly stated in statute, but mandated in regulation. That changed in 1984 with the Defense Procurement Reform Act, which included specific rights in technical data and procedures to validate the rights claimed by contractors. Those provisions became §2320 and §2321 of 10 U.S.C. and DOD was mandated to develop regulations to implement them.10 These regulations and subsequent statutes have changed frequently in attempts to achieve an appropriate balance between private rights in IP and the government’s needs to operate and maintain its weapons systems. With the vast advances in technology, particularly the expanded use of commercial components and technology in DOD systems, stimulated by the “dual use” policies of the early 1990s, IP issues have become much more hotly contested because of the high value of technology-related data and software. Thus, industry has put pressure on DOD and Congress to limit the appetite for rights to IP data and software generated or used in DOD contracts. Sections 2320 and 2321 of 10 U.S.C. that are most relevant to IP and technical data rights are discussed below and presented more fully in Appendix E. They address rights to technical data and prescribe a process for restricting and challenging restrictions on technical data rights. In addition, four sections of Title 10, §2460, §2464, §2466 and §2474, also summarized in Appendix E, are focused on requirements for certain organic core maintenance and repair capabilities to be maintained by the government through its depots, the percentage of depot-level maintenance and repair that can be performed by non-government personnel, and a categorization of depots that enable, among other things, public private partnerships that do not count against restrictions on the percentage of depot-level maintenance and repair that can be performed by non-government personnel. These latter sections have relevance to the focus of Chapter 3, which is a review of “Department of Defense practices related to the procurement, management, and use of IP rights to facilitate competition in sustainment of weapon systems throughout their life-cycle,” as called for by Subsection (a)(1)(B) of §875 of the FY 2016 NDAA.11 From the perspective of the sustainment of defense weapon systems, the IP of greatest interest is in two areas: (1) technical data and (2) computer software. In turn, “technical data (TD)” is defined (DFARS 222.227(a)(15) ) as … recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information.12 Technical data generally falls in the IP category of “trade secrets,” while computer software is covered under “copyright.”13 Title 10 U.S.C. §2320 addresses “Rights in Technical Data” and §2321 addresses “Validation of Proprietary Data Restrictions,” both of which are translated into the Federal Acquisition Regulations (FAR) and the Defense Federal Acquisition Regulations Supplement (DFARS).14 DOD requires IP data on the systems acquired for two basic reasons: (1) sustainment of systems, including maintenance, procurement of repair parts and components, and software updates, and (2) reprocurement. The demands for technical data and software and associated rights for these two purposes differ substantially. Sustaining maintenance requires maintenance manuals, drawings, parts lists and suppliers, software test equipment and standards, etc. On the other hand, if DOD wants reprocurements to be competitive, complete technical data packages (TDPs) that allow equipment to be manufactured from specifications is required. In fact, some maintenance activities may require design and manufacturing data in order to fabricate or reengineer parts that cannot be obtained from a supplier (or if it is more economical to do so). In recognition of these needs, §2320 defines DOD’s data rights based on the following principles:15  Only the minimum necessary data and rights should be obtained.  The government has licensing rights to all IP data and software developed with government funds or delivered under a government-funded contract. The type of license granted to the government depends on the circumstances under which the data were developed or provided.  Government rights are “limited” (data) or “restricted” (software) for commercial items and for technologies developed exclusively at private expense; however, even in those cases, the government has unlimited rights to data needed for operation and maintenance of the equipment, and data related to “form, fit and function (FFF)” of components. “Limited” or “restricted” means that the data or software may be used only by the government itself.  When a component or technology used in a government contract was developed partially at private expense and partially at government expense, less-than unlimited rights are granted. These are called “government purpose rights.”  For commercial items, the government’s rights are generally the same as those granted to commercial customers (with some exceptions).