2024: The FAR, Federal Acquisition Regulations - Part 27

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1. 2024 Webinar Series The FAR: Federal Acquisition Regulations Understand the rules of the federal contracting game - and play to win ! J Schaus & Associates, WASHINGTON DC – [email protected]

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15. 2024 Webinar Series THE FAR THE FAR – PART 27 J Schaus & Associates, WASHINGTON DC – [email protected]

16. 2024 Webinar Series THE FAR FAR PART # 27: Patents, Data, and Copyrights SPEAKER: Zach Jacobson FIRM: Seyfarth Shaw LLP EMAIL: zjacobson@ s eyfarth.com J Schaus & Associates, WASHINGTON DC – [email protected]

17. Agenda FAR Part 27 prescribes the policies, procedures, solicitation provisions, and contract clauses pertaining to patents , data , and copyrights . Today’s Topics – Subpart 27.1 – General Subpart 27.2 – Patents and Copyrights Subpart 27.3 – Patents Rights under Government Contracts Subpart 27.4 – Rights in Data and Copyrights Subpart 27.5 – Foreign License and Technical Assistance Agreements J Schaus & Associates, WASHINGTON DC – [email protected]

18. Common Contractor Proprietary Interests 1. Patents : right to exclude others from making, using, or selling the invention . Processes, machines, articles for manufacture, and compositions of matter. 2. Copyrights : exclusive right to copy, modify, perform, display, or distribute the work . Original, creative works fixed in a tangible medium of expression. 3. Trade Secrets : right to control the disclosure and use of information through contracts and nondisclosure agreement and protection against theft or misappropriation but not independent creation or discovery. Any information having commercial value by being kept secret. J Schaus & Associates, WASHINGTON DC – [email protected]

19. FAR Part 27 – Balancing Policy Objectives 1. Economic Growth : encourage the commercial use of inventions. 2. Patents Regime : refuse to award to contractors on basis of patent infringement. 3. Commercial Products/Services : indemnify the Government against liability. 4. Private Investment : recognize the rights in data developed at private expense. 5. Copyright Regime : require contractors to obtain permission from owners. J Schaus & Associates, WASHINGTON DC – [email protected]

20. Subpart 27.2 - Patents and Copyrights This subpart prescribes policies and procedures with respect to – Patent and copyright infringement liability ; Royalties ; Security requirements for patent applications containing classified subject matter ; Patented technology under trade agreements. J Schaus & Associates, WASHINGTON DC – [email protected]

21. Patent and Copyright Infringement L iability Under law, the exclusive remedy for patent or copyright infringement by or on behalf of the Government is a suit for monetary damages against the Government in the Court of Federal Claims. There is no injunctive relief available . See 28 U.S.C. 1498. The Government may authorize use and manufacture of inventions described in or covered by U.S. patents in performing a government contract. See FAR 52.227-1. The Government requires notice and assistance from its contractors regarding any claims for patent or copyright infringement. See FAR 52.227-2. The Government may require a contractor to reimburse it for liability arising out of a contract for commercial products or commercial services. See FAR 52.227-3. J Schaus & Associates, WASHINGTON DC – [email protected]

22. Patent and Copyright Infringement L iability – FAR Clauses 52.227-1, Authorization and Consent. 52.227-2, Notice and Assistance Regarding Copyright Infringement. 52.227-3, Patent Indemnity. 52.227-4, Patent Indemnity – Construction Contracts. 52.227-5, Waiver of Indemnity. J Schaus & Associates, WASHINGTON DC – [email protected]

23. Royalties Reporting – Prospective contractors must furnish royalty information. FAR 27.202-1. Notice – The Government should furnish prospective offerors with notice of any existing royalties. The solicitation should also require offerors to indicate whether a patent owner or a licensee. FAR 27.202-2. Adjustment – The contracting officer may negotiate a reduction of royalties and/or demand a refund i f at any time the contracting officer believes that any royalties paid, or to be paid, under a contract or subcontract are inconsistent with Government rights, excessive, or otherwise improper. FAR 27.202- 3; s ee FAR 31.205-37 and 31.109. Refund – The Government will pay the contractor royalties and will recover royalties not paid by the contractor if the royalties were included in the contractor’s fixed price. FAR 27.202-4. J Schaus & Associates, WASHINGTON DC – [email protected]

24. Royalties FAR Provisions and Clauses 52.227-6, Royalty Information. 52.227-7, Patents – Notice of Government Licensee 52.227-9, Refund of Royalties. J Schaus & Associates, WASHINGTON DC – [email protected]

25. Security requirements for patent applications containing classified subject matter Unauthorized disclosure of classified subject matter, whether in patent applications or resulting from the issuance of a patent, may be a violation of 18 U.S.C. 792, et seq. (Chapter 37-Espionage and Censorship), and related statutes, and may be contrary to the interests of national security. The clause at FAR 52.227-10, Filing of Patent Applications-Classified Subject Matter, which should appear in in all classified solicitations and contracts, requires that the contracting officer ascertain the proper security classification of the patent application and instruct the contractor on how to transmit the application to the United States Patent Office. J Schaus & Associates, WASHINGTON DC – [email protected]

26. Subpart 27.3 – Patent Rights under Government Contracts Inventions made in the performance of work under a Government contract or subcontract for experimental, developmental, or research work. Definitions : Invention means any invention or discovery that is or may be patentable. Made means the conception or first actual reduction to practice of the invention. Reduction to practice means to manufacture (product), to practice (process), or to operate (system) under such conditions as to establish that the invention is being utilized and that its benefits are available to the public on reasonable terms. Subject invention means any invention of the contractor made in the performance of work under a Government contract. J Schaus & Associates, WASHINGTON DC – [email protected]

27. FAR 27.302 – Government Policy Promote the use of inventions arising from federally supported research; Encourage industry participation in federally supported research and development; Promote competition and enterprise without unduly encumbering future research; Encourage the commercialization and public availability of U.S. inventions; Ensure that the Government obtains sufficient rights in federally supported inventions and protects the public against nonuse or unreasonable use of inventions; and Minimize the costs of administering patent policies. J Schaus & Associates, WASHINGTON DC – [email protected]

28. Contractor Right to Elect Title Generally, contractors may, after required disclosure to the Government, elect to retain title to any subject invention, unless – Contractor is not in the United States or is subject to foreign government control; Necessary to protect foreign intelligence or counterintelligence activities; Contract is for operation of DOE GOCO facility for nuclear propulsion or weapons; Under “exceptional circumstances” to better promote the policy and objectives; or Pursuant to statute or in accordance with agency regulations. See FAR 27.302(b). J Schaus & Associates, WASHINGTON DC – [email protected]

29. Government Right to License and Title License Rights – The Government shall have at least a nonexclusive, nontransferable, irrevocable, paid-up license to practice, or have practiced for or on behalf of the United States, any subject invention throughout the world. Title Rights – the Government has the right to receive title to an invention if the contractor has not disclosed the invention, elected to retain rights, and filed a patent protection application within the time specified in the clause, or has not continued prosecution of patent application or no longer desires to retain title. When the Government acquires title to a subject invention, the contractor is normally granted a revocable, nonexclusive, paid-up license to that subject invention throughout the world. See FAR 27.302(c) and (d). J Schaus & Associates, WASHINGTON DC – [email protected]

30. March- In Rights If the contractor refuses to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to the agency for the subject invention, the agency can grant the license itself. March-in rights may be exercised - If the contractor has not taken steps to achieve practical application; To alleviate health or safety needs not reasonably satisfied by the contractor; To meet public use requirements not reasonably satisfied by the contractor; or Because the resulting products are not manufactured substantially in the U.S. The contractor will be provided a reasonable time to present facts and show cause why the proposed agency action should not be taken and have an opportunity to appeal. See FAR 27.302(f). J Schaus & Associates, WASHINGTON DC – [email protected]

31. Patent Rights FAR Clauses 52.227-11, Patent Rights-Ownership by the Contractor. 52.227-13, Patent Rights-Ownership by the Government. J Schaus & Associates, WASHINGTON DC – [email protected]

32. Subpart 27.4 – Rights in Data and Copyrights Definitions : 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. Form, fit, and function data means data relating to items , components , or processes that are sufficient to enable physical and functional interchangeability, and data identifying source, size, configuration, mating and attachment characteristics, functional characteristics, and performance requirements. For computer software, it means data identifying source, functional characteristics, and performance requirements, but not the source code, algorithms, processes, formulas, and flow charts of the software. J Schaus & Associates, WASHINGTON DC – [email protected]

33. Subpart 27.4 – Rights in Data and Copyrights 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 permit others to do so. Limited rights means the rights of the Government in limited rights data as set forth in a Limited Rights Notice . Limited rights data means data, other than computer software , that embody trade secrets or are commercial or financial and confidential or privileged , to the extent that such data pertain to items, components, or processes developed at private expense , including minor modifications . J Schaus & Associates, WASHINGTON DC – [email protected]

34. Subpart 27.4 – Rights in Data and Copyrights Restricted rights means the rights of the Government in restricted computer software as set forth in a Restricted Rights Notice . Restricted computer software means 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 , including minor modifications of the computer software. J Schaus & Associates, WASHINGTON DC – [email protected]

35. Balancing Policies Agencies require data to – Obtain competition among suppliers; Fulfill reporting requirements; Ensure appropriate utilization of publicly-funded research and development; and Meet other programmatic and/or legal requirements and acquisition needs. Contractors – May have proprietary interests in data in need of protection. J Schaus & Associates, WASHINGTON DC – [email protected]

36. FAR 27.403 – Data Rights All contracts that require data to be produced, furnished, acquired, or used in meeting contract performance requirements, must contain terms that delineate the respective rights and obligations of the Government and the contractor regarding the use , reproduction , and disclosure of that data. Data rights clauses do not specify the type , quantity or quality of data that is to be delivered, but only the respective rights of the Government and the contractor regarding the use, disclosure, or reproduction of the data. J Schaus & Associates, WASHINGTON DC – [email protected]

37. Unlimited Rights Data Except for copyrighted works, the Government requires unlimited rights in the following: Data first produced in the performance of a contract (except minor modifications); Form, fi t, and function data delivered under the contract; Instructional and training materials for installation, operation, and maintenance of items, components, or processes delivered under the contract; All other data delivered other than limited rights data or restricted computer software. See FAR 27.404-2. J Schaus & Associates, WASHINGTON DC – [email protected]

38. Limited Rights Data The contractor protects qualifying limited rights data and restricted computer software by withholding the data from the Government. To obtain delivery to the Government, the contract or contracting officer may – identify and specify the data to be delivered; or specifically identify the data to be delivered with limited rights. Agencies shall not, without permission of the contractor, use limited rights data for purposes of manufacture or disclose the data outside the Government except as set forth in the Limited Rights Notice. Acceptable uses – support contractors; evaluation by contractors; emergency work See FAR 27.404-2. J Schaus & Associates, WASHINGTON DC – [email protected]

39. Restricted Computer Software The contractor protects qualifying limited rights data and restricted computer software by withholding the data from the Government. To obtain delivery to the Government, the contract or contracting officer may – identify and specify the computer software to be delivered; or specifically identify the computer software to be delivered with restricted rights. Agencies shall not, without permission of the contractor, use or reproduce, or disclose outside of the Government, restricted computer software except as set forth under the Restricted Rights Notice ( see Alternate III of the clause at 52.227-14 at para. (g)(4)). Any additions to, or limitations on, the restricted rights set forth in the Restricted Rights Notice shall be expressly stated in the contract . See FAR 27.404-2. J Schaus & Associates, WASHINGTON DC – [email protected]

40. Restricted Computer Software T he restricted computer software may be – Used or copied for use with the computers for which it was acquired; Used or copied for use with a backup computer; Reproduced for safekeeping (archives) or backup purposes; Modified, adapted, or combined with other restricted computer software; Disclosed to and reproduced for use by support service contractors; and Used or copied for use with a replacement computer. These rights will automatically apply unless different rights are specified in the contract. J Schaus & Associates, WASHINGTON DC – [email protected]

41. Copyrighted Works Data first produced in the performance of a contract – The contractor must obtain permission of the contracting officer prior to asserting rights via written request that identifies the data and the intended dissemination . The contracting officer should grant the request, unless the data – ( i ) consists of an agency report; (ii) is intended for internal Government use only; (iii) is of the type publicly distributed by the agency; (iv) should be limited in distribution for national interest; or (v) should be distributed without restriction. The contractor grants the Government a paid-up nonexclusive, irrevocable, worldwide license to reproduce, prepare derivative works, distribute to the public (other than computer software), perform publicly and display publicly by or on behalf of the Government, for all data first produced in the performance of a contract. FAR 27.404-3. J Schaus & Associates, WASHINGTON DC – [email protected]

42. Copyrighted Works Data not first produced in the performance of a contract – Contractors shall not deliver any data that is not first produced under the contract without either – ( i ) Acquiring for or granting to the Government a copyright license for the data; or (ii) Obtaining permission from the contracting officer to do otherwise. In either case, the contractor must affix the applicable copyright notices of 17 USC § 401 or 402, and, in the case of the former, acknowledgment of Government sponsorship, (including the contract number) to data when it asserts copyright in data. Failure to do so could result in such data being treated as unlimited rights data . J Schaus & Associates, WASHINGTON DC – [email protected]

43. Unauthorized, Omitted, or Incorrect Markings Unauthorized marking of data The Government may return the data or cancel or ignore the markings. To cancel or ignore, the Government will make a written inquiry to the contractor requesting written justification to substantiate the markings within 60 days . If the contractor fails to respond, the Government may cancel or ignore. If the contractor responds, the Government will consider the response. Contracting officer will issue a written decision as to the authorization of the markings. Contractor has 90 days to file suit in a court of competent jurisdiction. See FAR 27.404-5. J Schaus & Associates, WASHINGTON DC – [email protected]

44. Unauthorized, Omitted, or Incorrect Markings Omitted or incorrect marking of data All unmarked delivered data will presumptively have been delivered with unlimited rights . The Government assumes no liability for disclosure, use, or reproduction. To the extent the data has not been disclosed without restriction outside the Government, the contractor may, within 6 months (or longer for good cause shown), request permission to have the omitted limited rights or restricted rights notices. The contractor must – ( i ) identify the data; (ii) show omission was inadvertent; (iii) establish that the proposed notice is authorized, and (iv) acknowledge no government liability with respect to any prior disclosure or use. Corrections generally made at the contractor’s expense. J Schaus & Associates, WASHINGTON DC – [email protected]

45. FAR 27.405-3 Commercial Computer Software Other than in GSA’s Multiple Award Schedule contracts, no required FAR clause exists. Commercial computer software shall be acquired under licenses customarily provided to the public to the extent the license is consistent with Federal law and otherwise satisfies the Government’s needs. The clause at 52.227-19, Commercial Computer Software License, may be used when there is any confusion as to whether the Government’s needs are satisfied or whether a customary commercial license is consistent with Federal law. If greater or lesser rights than the minimum rights identified in the clause at 52.227-19 are needed, they shall be negotiated and set forth in the contract. J Schaus & Associates, WASHINGTON DC – [email protected]

46. FAR 27.405-3 Commercial Computer Software If the contract incorporates, makes reference to, or uses a vendor’s standard commercial lease, license, or purchase agreement, it is part of the contract. Any inconsistencies in a vendor’s standard commercial agreement shall be addressed in the contract and the contract terms shall take precedence over the vendor’s standard commercial agreement. If a prime contractor acquires restricted computer software from a subcontractor (at any tier) as a separate acquisition for delivery to or for use on behalf of the Government, the contracting officer may approve any additions to, or limitations on the restricted rights in the Restricted Rights Notice in a collateral agreement. J Schaus & Associates, WASHINGTON DC – [email protected]

47. FAR 27.406-2 Additional Data Requirements In some contracting situations, such as experimental, developmental, research, or demonstration contracts, it may not be feasible to ascertain all the data requirements at contract award. The clause at 52.227-16, Additional Data Requirements, may be used to enable the subsequent ordering by the contracting officer of additional data first produced or specifically used in the performance of these contracts as the actual requirements become known. The clause shall normally be used in solicitations and contracts involving experimental, developmental, research or demonstration work. J Schaus & Associates, WASHINGTON DC – [email protected]

48. FAR 27.407 Rights to Technical Data in Successful Proposals The clause at 52.227-23, Rights to Proposal Data (Technical), allows the Government to acquire unlimited rights to technical data in successful proposals. Pursuant to the clause, the prospective contractor is afforded the opportunity to specifically identify pages containing technical data to be excluded from the grant of unlimited rights. J Schaus & Associates, WASHINGTON DC – [email protected]

49. Data Rights FAR Provisions and Clauses 52.227-14, Rights in Data-General. 52.227-15, Representation of Limited Rights Data and Restricted Computer Software. 52.227-16, Additional Data Requirements. 52.227-19, Commercial Computer Software License. 52.227-23, Rights to Proposal Data (Technical). If the contract is a Small Business Innovation Research (SBIR) contract, it should include the clause at 52.227-20, Rights in Data-SBIR Program in all Phase I, Phase II, and Phase III contracts awarded under the Small Business Innovation Research Program established pursuant to 15 U.S.C. § 638. J Schaus & Associates, WASHINGTON DC – [email protected]

50. 2024 Webinar Series THE FAR FAR PART # 27: Patents, Data, and Copyrights SPEAKER: Zach Jacobson FIRM: Seyfarth Shaw LLP EMAIL: zjacobson@ s eyfarth.com J Schaus & Associates, WASHINGTON DC – [email protected]

51. 2024 Webinar Series THE FAR Please subscribe to our YouTube Channel for Gov Con Content Uploads including THESE WEBINARS! https://www.youtube.com/@jenniferschaus/videos J Schaus & Associates, WASHINGTON DC – [email protected]

52. 2024 Webinar Series The FAR: Federal Acquisition Regulations THANK YOU FOR JOINING US! J Schaus & Associates, WASHINGTON DC – [email protected]