Continuing the trend established by the last several National Defense Authorization Acts (“NDAAs”), the FY 2012 NDAA contained several important revisions to intellectual property and technical data rights in Section 815. Thankfully, Section 815 deleted the baffling FY 2011 NDAA provision that purported to give the Government unlimited rights in technical data developed with Independent Research and Development (“IR&D”) funds. Now, even if IR&D costs were partially funded through indirect rate costs, the Government retains only limited rights. Other changes affected by Section 815, however, are not as positive for contractors.
Now, the Government can require delivery of technical data that was generated or used in performance of a contract, even if not a contract deliverable, if the technical data pertains to an item or process at least partially funded by the Government or is “needed for the purpose of procurement, sustainment, modification, or upgrade (including through competitive means) of a major system or subsystem thereof, a weapon system or subsystem thereof, or any noncommercial item or process.”
As to compensation, the contractor is only entitled to the reasonable costs incurred for having “converted and delivered the data in the required form.” Note that the Government may now disclose this technical data to other parties, so long as the other parties agree not to disclose it further and the contractor receives notice.
Section 815 also specifies that when technical data is developed with mixed funding, the Government receives Government Purpose rights, except when negotiation to provide less is in the Government’s best interest. Because the “default” rights received by the Government already is Government Purpose rights, the effect of this change could be minor, depending on how the implementing regulations are worded.
Section 815 extends from 3 years to 6, the amount of time that the Government has to challenge a contractor’s assertions that the Government’s use of technical data is anything less than unlimited rights. But, in any case, the amendment makes clear that even if the Government fails to make such a challenge, it is “not foreclosed from requiring delivery” of such technical data at any time, even if beyond the 6-year period. This new 6-year term will not bar to Government challenge where the Government asserts that the contractor’s assertions are fraudulent.
Interim implementing regulations are expected to be issued in the near future. Given that the Act expands the Government’s reach into contractors’ technical data, the wording of these regulations may be more important than they usually are. In any case, this seems to be yet another sign that Congress has authorized agencies to seek to retain more rights in technical data created by contractors with what Congress interprets as some element of taxpayer funds.