Morrison Foerster’s Government Contracts Insights provides our in-depth analysis of developments and trends impacting government contracting. Through Insights, our attorneys offer a real-time assessment of the statutory, regulatory, legal, and business-related developments and trends that are shaping the industry. We also examine a full array of non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Morrison Foerster’s nationally recognized Government Contracts and Public Procurement practice represents the world’s leading companies in the aerospace and defense, intelligence, cybersecurity, information technology, financial and professional services, education, healthcare, infrastructure, and logistics support sectors. We are enlisted to address our clients’ most complex and important legal issues. Our work includes contract and subcontract negotiation and other transactional matters, business and regulatory compliance counseling, internal investigations, bid protests, and a wide array of enforcement and litigation matters. Our clients range from Fortune 50 companies to small and medium-sized companies just entering the public sector. We advise both U.S. and non-U.S. companies involved in municipal, state, federal, and non-U.S. procurement matters.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Tina is Co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She represents a wide variety of government contractors including information technology, defense, biotechnology, and pharmaceutical companies, with a focus on general contract counseling and compliance, particularly concerning intellectual property, and cybersecurity matters and federal grant funding.Tina counsels contractors on compliance with federal, state and local acquisition and ethics regulations and with the evolving myriad of requirements pertaining to data security and cybersecurity. She has been involved with numerous internal investigations and compliance reviews, and with mandatory and voluntary disclosures to agencies, and litigation of False Claims Act matters.Tina routinely advises clients concerning:<ul><li>Prime-subcontractor relationships</li><li>Sources of supply and country of origin requirements</li><li>Price reductions and price reporting issues</li><li>Organizational conflicts of interest</li><li>Safeguarding of intellectual property and other proprietary interests</li><li>Licensing and data rights issues</li><li>Handling of classified materials and controlled unclassified information</li><li>Agency suspension and debarment proceedings</li></ul>She also assists clients with due diligence and other activities related to the acquisition of government contracting concerns, and with the drafting and negotiation of teaming agreements, subcontracts, licensing agreements, and cooperative research and development agreements. She also assists clients applying for federal grants (including SBIR and STTR agreements), and those who seek to obtain other transactional authority agreements, as well as those competing for state and local government work.Tina’s litigation experience includes government contracts claims litigation in federal courts and before boards of contract appeals, bid protests before the Government Accountability Office and the Court of Federal Claims, and complex disputes in federal courts, including civil fraud and False Claims Act litigation and reverse Freedom of Information Act litigation.Prior to joining Morrison Foerster, Tina worked at another large national firm and as a trial attorney in the Office of the General Counsel of the Navy, Navy Litigation Office.<h4>Representative Experience</h4><ul><li>Negotiation of largest CHIPS Act federal funding agreement between multinational semiconductor corporation and U.S. Department of Commerce.</li><li>Negotiated prime contract and major subcontracts related to the Department of Energy’s next generation supercomputer program, including extensive IP rights negotiations and negotiation of associated patent rights waivers.</li><li>Negotiated series of other transaction authority agreements with DARPA and associated subcontracts with more than a dozen research universities on behalf of a firm biotech client, including complex IP rights allocations and material transfer agreements.</li><li>Assist clients with FedRAMP authorization process and with development of license agreements for software products sold to federal, state and local government agencies.</li><li>Cyber incident response counseling to some of the largest companies and organizations impacted by security incidents.</li><li>Advises clients on Bayh-Dole reporting of inventions and IP strategies for contracts and grants.</li><li>Conducts due diligence for major government contract mergers and acquisitions.</li></ul>

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Our government contracts and procurement attorneys counsel businesses on legal and compliance issues encountered when doing business with government entities.

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Tina is co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She counsels a wide variety of government contractors on compliance with federal acquisition and ethics regulations. She drafts and negotiates contracts on their behalf and has been involved with numerous internal investigations and compliance reviews, and with bid protest, contract claims, and False Claims Act litigation. She also advises on M&A transactions involving government contractors.

Tina D. Reynolds

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters. He has represented both protesters and awardees in scores of protests before the Government Accountability Office, the Court of Federal Claims, and procuring agencies, in acquisitions ranging from small business procurements to multibillion-dollar contracts of global significance. His representative protest matters span the aerospace sector, the Intelligence Community, base operations and logistics, healthcare, nuclear and environmental work, and information technology and software acquisitions. His protests have included both classified and unclassified programs. In addition to prevailing in published decisions, Jim has also secured favorable corrective action on behalf of clients in a wide variety of protests that were resolved without a published decision.Jim’s work also focuses on disputes over cost allowability and compliance with the Cost Accounting Standards, and he has appeared before the Armed Services and Civilian Boards of Contract Appeals, in size and status protests before Small Business Administration (SBA) area offices, and appeals before the SBA Office of Hearings and Appeals. Jim regularly counsels clients on contract interpretation, organizational conflicts of interest, and small business compliance.Jim graduated with high honors from the George Washington University Law School, where he focused his studies on federal procurement law, was a member of the Law Review, and interned with the General Services Administration’s suspension and debarment office. Jim also holds a degree in theology magna cum laude from the Pontifical Gregorian University in Rome and a bachelor’s degree in classical languages and literature summa cum laude from the University of Kentucky, where he graduated Phi Beta Kappa.

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Jim maintains an active practice in bid protests before the Government Accountability Office and contracting agencies and counsels clients in contract disputes and compliance obligations.

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office. Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters.

James Tucker

<div style="margin-bottom: 15px;" class="videoWrapper"><iframe class="sticky-video" title="Meet Alex Ward, Government Contracts Practice Co-Chair" src="https://www.youtube-nocookie.com/embed/TkliwdSlTaQ?rel=0" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen="1" title="iframe"></iframe></div>J. Alex Ward is co-chair of Morrison Foerster’s Government Contracts and Public Procurement group. His practice covers a full range of government contracts matters, including investigations, bid protests, claims, general litigation, corporate transactions, and counseling. Alex strives in all matters is to provide his clients the highest level of efficient and effective representation.Alex represents contractors in internal and external investigations, disclosures to the government, and qui tam litigation, with great success in reducing or eliminating his clients’ exposure through active engagement with the government. His work in this area includes obtaining numerous declinations and dismissals of False Claims Act cases in their earliest stages, sparing his clients the cost, risk, and exposure of litigation.He has also served as lead counsel in dozens of bid protests involving military and civilian agency procurements of a wide range of products and services, including all manner of pre- and post-award protests in the GAO, the U.S. Court of Federal Claims, and state tribunals, as well as appeals to the U.S. Court of Appeals for the Federal Circuit and size protest appeals before the SBA’s Office of Hearings and Appeals.Alex handles all aspects of the claims process, from the initial assessment and drafting of requests for equitable adjustment through litigation in the Boards of Contract Appeals and the Court of Federal Claims. Alex’s practice also covers the full gamut of other controversies confronting government contractors, including prime-sub, teaming partner, employer-employee, competitor, and indemnification disputes. His litigation work also includes a wide variety of pro bono engagements, in which he has represented both individual and institutional clients in matters ranging from immigration and criminal defense to sustainable procurement and protection of the environment.Prior to joining the firm, Alex served in the U.S. Army as a commissioned officer and an Assistant to the General Counsel of the Army responsible for civil works and international matters, and as a clerk for judges on the U.S. Courts of Appeals for the Armed Forces and the D.C. Circuit. He is a member of the Boards of the Morrison & Foerster Foundation and the Chesapeake Bay Foundation and of Law360’s Government Contracts Editorial Board.

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Alex is co-chair of Morrison Foerster’s Government Contracts and Public Procurement practice. His practice covers a full range of government contracts matters, including bid protests, claims, investigations, corporate transactions, and counseling.

J. Alex Ward

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Morrison Foerster’s Government Contracts Insights blog provides an in-depth analysis of news, developments, and trends impacting government contracting and procurement. Through Insights, attorneys from our nationally recognized Government Contracts and Public Procurement practice will offer a real-time assessment of the statutory, regulatory, legal, and business-related developments that are shaping the industry. This blog will also examine a full array of U.S. and non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Read about our <a href="http://govcon.mofo.com/editors/">Authors</a>.Never miss a post. Subscribe to get real-time updates.

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James A. Tucker

Telesto: Another Call For Clarity In Other Transactions Protest Jurisdiction

Strengthening the American Drone Industrial Base

Bid Protest Spotlight: Jurisdiction, Price Range, Late-Is-Late

Trump Issues Executive Order on Cybersecurity Rolling Back Some Prior Policies and Introducing New Ones

GAO Reaffirms Agencies’ Discretion to Award Sole-Source SBIR Phase III Contracts (Even to a Successor-in-Interest)

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Two other transaction (OT) bid protests this year – first Raytheon and now Telesto – create an open split within the Court of Federal Claims over the scope of its jurisdiction, highlighting complex hurdles OT protesters must clear out of the gate. In this month’s Nash & Cibinic Report, we discuss Telesto and offer insights on how best to navigate the developing case law.Read the <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blt0466fd77c758148b/686ea627588d46b11f83a03e/250709-telesto-another-call-for-clarity.pdf" target="_blank">article</a>.

Locke Bell is a partner in the firm’s Government Contracts & Public Procurement practice.

Locke Bell

Jim Tucker is of counsel in Morrison & Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.
Jim’s practice runs the gamut of litiga

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Associate

Tori Dalcourt Angle is an associate in the Government Contracts practice in Morrison Foerster’s Washington, D.C. office.
Tori advises clients on various government contract matters, including both pre

Victoria Dalcourt Angle

Victoria Angle

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Telesto: Another Call For Clarity In Other Transactions Protest Jurisdiction

New DCMA Defective Pricing Pilot Team Will Possess Audit Resolution Authority

Intellectual Property

Locke Bell and Thomas Lee published an article in Thomson Reuters Briefing Papers that examines the implications of the FlightSafety International, Inc. v. Secretary of the Army decision, which prohibits commercial markings that limit the government's contractual license rights. The authors also provide guidelines for contractors to navigate these new requirements effectively.Read the <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blt9cf25be5f167a0c6/68127382733c4a088f32b29d/250425-marking-commercial-technical-data-after.pdf" target="_blank">full article</a>.

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Thomas Lee

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The Data Rights Black Hole:  DOD Lobbies Congress to Eliminate Proprietary Rights in Your Most Valuable Trade Secrets — Your Detailed Manufacturing and Process Data

Marking Commercial Technical Data After Flight Safety

Marking Commercial Technical Data After FlightSafety

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Marking Commercial Technical Data After FlightSafety

Supreme Court Removes “Substantial Competitive Harm” Requirement for Contractors Seeking to Protect Confidential Information from Release Under FOIA

Tina is a partner in Morrison & Foerster’s Government Contracts practice. She represents a wide variety of government contractors including information technology, defense, biotechnology, and pharmace

Tina Reynolds

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Daisuke Gatanaga is an associate in the Technology Transactions Group of Morrison & Foerster’s Tokyo office.
Mr. Gatanaga earned his J.D. from Stanford Law School in 2017, where he served as an Execut

Daisuke Alexander Gatanaga

Daisuke Gatanaga

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Presented as part of its effort to lower what it views as excessive prices for prescription drugs, the Biden administration on December 7, 2023, announced the release of a proposed framework to expand the use of government “march-in” authority under the Bayh-Dole Act. 

Biden Administration Proposes Novel Use of Price as Justification for Agency Exercise of March-In Rights for Government-Funded Inventions

A new Biden administration Executive Order proposes to enforce more rigorously U.S. manufacturing requirements attendant to federally funded inventions. While the aim of the Executive Order is to support domestic manufacturing and jobs, the policy could have the unintended effect of discouraging U.S. company participation in federally funded research and development activities.

Biden Executive Order Has Potential to Discourage U.S. Company Participation in Federal Research

Federal Procurement

What do you really know about the data and software rights your engineers may well be giving up every day through Integrated Data Environments, Integrated Products Teams, the Cloud and such? Probably not enough, suggests Jay DeVecchio in an article for The Government Contractor discussing the hidden risks posed by daily interactions with the government on activities bearing innocuous acronyms (IPT, IDE, SaaS, DAL), and by increasingly aggressive contract “H” Clauses: “During the past several years, industry has seen various legislative and regulatory pushes by the Department of Defense (DOD) to acquire more and broader rights in technical data and all forms of computer software. Some of this will come to fruition soon in the form of long-awaited revisions to the Defense Federal acquisition Regulation Supplement data rights clauses.”Jay cautioned: “But we do not have to await the effects of those pending developments, because subtle (or unrecognized) risks already exist and are increasing, in the familiar form of routine collaboration with DOD as well as more aggressive and burdensome ‘H’ clauses in solicitations and contracts.” Read the <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blt971c4f9f307d7c4a/6399f866f4ded87be85c114c/221207-unrecognized-and-overt-pressure-on-contractors-data.pdf">full article</a>.

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THE GOVERNMENT CONTRACTOR: Unrecognized and Overt Pressure on Contractors' Data and Software Rights: Risks Posed by H Clauses, Innocuous Acronyms (IPT, IDE, SaaS, DAL), and The Cloud

What do you really know about the data and software rights your engineers may well be giving up every day through Integrated Data Environments, Integrated Products Teams, the Cloud and such? Probably not enough, suggests Jay DeVecchio in an article for The Government Contractor discussing the hidden risks posed by daily interactions with the government on activities bearing innocuous acronyms (IPT, IDE, SaaS, DAL)

THE GOVERNMENT CONTRACTOR: Unrecognized and Overt Pressure on Contractors' Data and Software Rights: Risks Posed by H Clauses, Innocuous Acronyms (IPT, IDE, SaaS, DAL), and The Cloud

The Federal Circuit handed a substantial victory to Bitmanagement Software GMBH last week, finding the U.S. Navy had infringed the company’s copyright by installing its three-dimensional visualization software on hundreds of thousands of government computers without using license-tracking software to monitor and limit the number of simultaneous users.  The court’s <a href="https://www.cafc.uscourts.gov/sites/default/files/opinions-orders/20-1139.OPINION.2-25-2021_1739332.pdf">decision</a> is significant, not only in affirming the lower court’s finding that an implied-in-fact license existed between the government and Bitmanagement despite no privity of contract between the two (who transacted through a reseller), but also in taking the further step of holding the Navy to a key condition of that license, one the Navy failed to meet, with the potential for a hefty damages award to the software vendor.The case arose out of the Navy’s purchases, between 2006 and 2012, of just more than 100 “seat” (i.e., single computer) licenses in Bitmanagement’s “BS Contact Geo” software.  The software, provided in both a desktop executable form and as a web browser plugin, enables a user to visualize geographic information by rendering realistic terrain and city models and allowing the user to position virtual objects using geographic coordinates.  After the Navy had trouble managing its individual seat licenses, the parties agreed to a floating license structure that allowed the Navy deploy the software to all computers across the Navy Marine Corps Intranet (“NMCI”), but required the Navy to use a license management software to monitor and limit the number of simultaneous users.  The Navy did not do so, at least for the web browser plugin, and from July 2013 through at least September 2016, the program remained available for use on 429,604 government computers without limitation.Bitmanagement filed suit in the U.S. Court of Federal Claims seeking compensation for copyright infringement under 28 U.S.C. § 1498(b). The Claims Court denied the claim, finding an implied-in-fact license for the Navy’s copying based on several direct email exchanges between the parties.  On appeal, the Federal Circuit agreed an implied-in-fact license existed, and further that implied-in-fact license was not precluded by the express contracts between the government and Bitmanagement’s reseller, which (according to the court) “do not capture or reflect the discussions that occurred between the Navy and Bitmanagement directly.”  In a concurring opinion, Judge Newman weighed in even more favorably for Bitmanagement, adding that she would have overturned the Claims Court’s finding of an implied-in-fact license, as “there plainly was no mutual intent that Bitmanagement would abandon its commercial purpose and grant the Navy unlimited free licenses to copy and use” the software.But it was not enough, according to both the majority and concurrence, for the Navy to show an implied-in-fact license existed; the court also must determine whether the Navy’s conduct breached that license.  Furthermore, for purposes of copyright infringement claims, the court had to determine whether the breach was simply a covenant (e.g., an obligation to pay), in which case Bitmanagement’s relief sounded only in contract, or if the breach violated a condition precedent to the limiting the scope of the license itself.  The Federal Circuit found the facts developed below to be sufficient to hold, as a matter of law, the implied license was conditioned on the Navy’s use of Flexera to limit, from the time of copying, the number of simultaneous users of the program.  The court found this limitation “critical to the basic functioning of the deal,” and noted “[w]ithout tracking, the Navy would have no basis to purchase more licenses and, consequently, Bitmanagement would have had no reason to enter into the implied-in-fact license.”  Because the Navy had failed to abide by that condition of the license, its copying constituted copyright infringement, according to the court, which vacated and remanded the case to the Claims Court to determine appropriate damages.On that point, the Federal Circuit went on to offer some guidance.  In a footnote to its conclusion and remand order, the court suggested Bitmanagement’s damages should be based on the Navy’s actual excess usage of BS Contact GEO, as determined by a “hypothetical negotiation” in which the Navy, as the party in breach, “bears the burden of proving its actual usage . . . and the extent to which any of it fell within the bounds of any existing license.”  Even though the court suggested Bitmanagement could not claim damages for every copy made, only those used beyond the scope of the license, the damages framework the court outlined should be reassuring in some regards to commercial software providers selling to the federal government.  Unique security restrictions often make it very difficult, if not impossible, to monitor and audit the government’s use of software in the same way one would a commercial customer, hindering an aggrieved contractor’s ability to prove its breach damages with the same specificity a court or board would normally expect in other cases.  This framing more equitably places that burden of proof on the government, who is better positioned to gather evidence and whose breach itself might have, in some cases, compounded these evidentiary shortcomings.As we have previously written on this blog, commercial software companies have many reasons to be cautious when selling to the federal government, whether due to an inability to rely on one’s established and trusted licensing terms, or the various practical barriers to enforcing even legally permissible terms.  These concerns often lead companies to engage the government through resellers, which in turn creates even more issues of enforceability between the software manufacturer and its government end user.  The Federal Circuit’s decision in Bitmanagement does not resolve these concerns, but its endorsement of the implied-in-fact license that might arise between a software provider and the government, and the obligations it places on the government to observe and abide by such licenses, are, without a doubt, promising developments for software companies supporting the federal government.

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U.S. Navy Breached Implied-In-Fact Software License, Federal Circuit Decides in Bitmanagement

U.S. Congress Introduces Bill that Would Require Mandatory 24 Hour Cyber Breach Notification for Government Agencies, Contractors, and Operators of Critical Infrastructure

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The Federal Circuit handed a substantial victory to Bitmanagement Software GMBH last week, finding the U.S. Navy had infringed the company’s copyright by instal

U.S. Navy Breached Implied-In-Fact Software License, Federal Circuit Decides in Bitmanagement

Protests & Litigation

Federal contractors received some good news from the Federal Circuit this holiday season.  The court held, in Boeing Co. v. Secretary of Air Force, that the Department of Defense (DoD) Federal Acquisition Regulation Supplement (DFARS) data rights clauses do not prohibit a contractor from applying its own proprietary markings to technical data in addition to the government-specific markings prescribed by the clauses.  This is true, according to the court, even for technical data describing technologies the government has paid the contractor to develop, i.e., “unlimited rights data.”  The decision marks a victory for contractors seeking to leverage their intellectual property rights in such data in the commercial marketplace or in the government supply chain, but the decision’s true impact remains to be seen on remand to the Armed Services Board of Contract Appeals.The DFARS data rights clauses—most prominently, DFARS 252.227-7013 for noncommercial technical data and DFARS 252.227-7014 for noncommercial computer software—establish strict marking procedures contractors must follow to protect their proprietary interests in data delivered to the government.  Failure to apply the exact legends in the clauses can have drastic consequences, including wide distribution and loss of trade secret protection.  But there has long been disagreement within the government and industry about whether additional markings may be applied.  The DFARS legends address the government’s rights, but what about other parties that might get hold of the data?In Boeing, contractors finally have an answer, at least from the Federal Circuit.  According to the court, the plain language of the DFARS clauses demonstrates their marking instructions apply “only in situations when a contractor seeks to assert restrictions on the government’s rights,” not the rights of others outside the government.  Thus, a proprietary legend addressed to third parties is fine, so long as it does not seek to restrict the government’s rights.But when does a third-party legend begin to encroach on the government’s license rights?  That next logical question—easily the most interesting in this case, and certainly the one with the most practical impact—the court left open, instructing the Board to address it through fact-finding on remand.  The facts in Boeing set a prime stage for this analysis; explaining why requires some brief table-setting.Looking only to contracts with DoD, and setting aside specially negotiated licenses (preferred by statute but less often used), the government typically receives one of three licenses in noncommercial technical data: limited rights, government purpose rights, or unlimited rights.  Noncommercial software follows a similar model, but swaps “limited rights” for “restricted rights”; the rights include in the latter are tailored to software, but both essentially mean the government is prohibited from distributing technical data or software to third parties outside the government.  With government purpose rights, it can do so for any government purpose (e.g., soliciting new systems or replacements from your competitors), and with unlimited rights, it can do so “in any manner and for any purpose whatsoever” and—importantly, here—“have or authorize others to do so,” too.  As a result, the scope of the government’s license has significant bearing on a contractor’s ability to exclude others from receiving and using its data and, in turn, the contractor’s ability to maintain those data as trade secrets.Trade secrets are often the most valuable intellectual property interests a contractor has in its technical data and software.  Although varying some by jurisdiction, a trade secret is typically defined by two key elements: (1) deriving independent economic value for not being generally known or readily ascertainable by others, and (2) being subject to reasonable efforts to maintain secrecy.  Thus, constraining the government to limited or restricted rights is critical to maintaining an enforceable trade secret, and many courts have acknowledged the government’s having unlimited rights in data likely destroys any trade secret therein.<a href="#_ftn1" name="_ftnref1">[1]</a>  In fact, the Board, in its decision below, finding Boeing’s proprietary marking was not authorized, noted that, because “the government is under no obligation to protect the confidentiality of [unlimited rights] data and can give it to whomever it chooses or even publish it on the Department’s website,” Boeing “does not possess a trade secret in such technical data.”  (ASBCA Nos. 61387, 61388)  The Federal Circuit’s decision does not contradict or overturn this rule, at least expressly; the court, perhaps intentionally, does not once mention trade secrets.This does not mean a contractor does not possess some proprietary interest in unlimited rights data.  Courts repeatedly have affirmed that “unlimited” rights are not “exclusive” rights,<a href="#_ftn2" name="_ftnref2">[2]</a> and the government’s unlimited rights in data do not divest a contractor of its ability to use or to license others to use the data.<a href="#_ftn3" name="_ftnref3">[3]</a>  But the scope of the proprietary interest, and a contractor’s ability to enforce it in court, are far from clear and often very fact-specific.Returning to Boeing, the technical data at issue (deliverables related to Boeing’s work on the F-15 Eagle Passive/Active Warning Survivability System) were indisputably unlimited rights data.  As a result, the government has “rights to use, modify, reproduce, perform, display, release, or disclose [the] technical data in whole or in part, in any manner, and for any purpose whatsoever, and to have or authorize others to do so.”  Boeing did not dispute these rights, and claimed its proprietary marking—which states “Non-U.S. Government recipients may use and disclose [the data] only as authorized by Boeing or the U.S. Government”—does not seek to restrict them.  The government disagreed, arguing the marking restricts the government’s rights by requiring express government authorization for distribution of data, which the government argued would be “highly burdensome on the Government and, therefore [would be] inconsistent with its unlimited rights.”Given the breadth of an unlimited rights license—which includes, for example, not only a right to disclose data to others, but also to authorize others to further disclose the data “for any purpose whatsoever”—it may be difficult for contractors to craft proprietary legends that do not encroach on the government’s rights, at least where unlimited rights data are involved.  The legend at issue in Boeing seems to toe about as close to that line as possible, and it will be very interesting to see where the Board lands on remand.  Its ultimate decision will affect not only contractors in Boeing’s position, but those throughout the supply chain who seek to support their government customers without getting entangled in costly litigation over third-party intellectual property rights.As we continue to monitor this case on remand, contractors should in the meantime remind their employees of two important rules:<ul><li>Always mark technical data and software in strict accordance with the rules in the DFARS (or FAR if contracting with a civilian agency); and</li><li>Take care in using others’ data only as authorized, whether based on the legends printed on the data or express directions from your customer.</li></ul><a href="#_ftnref1" name="_ftn1">[1]</a> See, e.g., L-3 Commc’ns Westwood Corp. v. Robichaux, 2008 WL 577560, at *7 (E.D. La. Feb. 29, 2008) (“The Court finds that because plaintiff provided the government with unlimited rights to all of the source codes at issue, they are no longer trade secrets.”); Conax Fla. Corp. v. United States, 824 F.2d 1124, 1128 (D.D.C. 1987) (“[I]f the drawings belong to the government without limitation, [plaintiff] has no trade secrets to be protected.”); HiRel Connectors, Inc. v. United States, 2005 WL 4958589, at *4 (C.D. Cal. Jan. 4, 2005) (“The Government’s unlimited right to use form, fit, and function data in any way it wished establishes that as a matter of law, such information cannot be protected as a trade secret.”).<a href="#_ftnref2" name="_ftn2">[2]</a> Regents of Univ. of Colo. v. KDI Precision Prods., Inc., 488 F.2d 261, 264 (10th Cir. 1973).<a href="#_ftnref3" name="_ftn3">[3]</a> Northrop Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1044 (9th Cir. 1983) (unlimited rights “were neither sole nor exclusive and did not divest [the contractor] of the residual right to continue to use the technology itself and to share it with other private parties”); see also FAR 52.227-14(d)(1).

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The Federal Circuit, in Boeing, Backs Contractors’ Proprietary Markings, but Leaves Open an Important Question on Scope

DOD Proposes Enhanced Debriefing Regulations

Federal contractors received some good news from the Federal Circuit this holiday season.  The court held, in Boeing Co. v. Secretary of Air Force, that the Dep

The Federal Circuit, in Boeing, Backs Contractors’ Proprietary Markings, but Leaves Open an Important Question on Scope

Defense

MoFo partner Tina Reynolds, senior counsel Jay DeVecchio, and associate Locke Bell will be presenting an upcoming FedPubs 3-part webinar series on intellectual property rules and regulations in government contracting. The series will provide an overview of the key principles governing the allocation of rights in technical data, computer software, and patents. Attendees will learn the most common misunderstandings about who owns the rights to data; how to license commercial software; and key strategies to protect patents in government contract work.Dates and times for the sessions are as follows:<ul><li>June 16, 2020, 12-1PM EST – <a href="https://www.fedpubseminars.com/FPSOnline/WebinarSeries/Session/Intellectual-Property-Series-Taking-the-Mystery-Out-of-Rights-in-Technical-Data-2020/?id=320">Taking the Mystery Out of Rights in Technical Data</a>, presented by Jay DeVecchio</li><li>June 23, 2020, 12-1PM EST – <a href="https://www.fedpubseminars.com/FPSOnline/WebinarSeries/Session/Intellectual-Property-Series-Rights-in-Computer-Software-Made-Easy-2020/?id=321">Rights in Computer Software Made Easy</a>, presented by Jay DeVecchio</li><li>June 30, 2020, 12-1PM EST – <a href="https://www.fedpubseminars.com/FPSOnline/WebinarSeries/Session/Intellectual-Property-Series-Patents-Invention-Reporting-and-IP-Considerations-for-Grants-and-Other-Types-of-Agreements-2020/?id=322">Patents, Invention Reporting, and IP Considerations for Grants and Other Types of Agreements</a>, presented by Tina Reynolds and Locke Bell</li></ul>This series is designed anyone looking to protect their IP when selling to or working with the Government, both beginners and experienced practitioners alike.Click <a href="https://www.fedpubseminars.com/FPSOnline/WebinarSeries/Intellectual-Property-Series-2020/?id=67">here </a>to register for the 3-part series.

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FedPubs Intellectual Property Series (June 16-30)

FedPubs Intellectual Property Series (June 16-30)

MoFo partner Tina Reynolds, senior counsel Jay DeVecchio, and associate Locke Bell will be presenting an upcoming FedPubs 3-part webinar series on intellectual 

Data Rights

A long time ago in a galaxy far, far away, the Department of Defense (“DOD”) and industry came together after more than seven years of discussions and created a rational, logical, and fair constellation of regulations and laws governing the DOD’s and contractors’ rights in technical data and computer software.  These were, and essentially remain, the 1995 “data rights” regulations and clauses of DFARS Subparts 227.71 and .72, as well as the principal statute they implement, 10 USC §2320.  For almost two decades there was calm, with private technology development thriving and the government’s real needs met.  Then disturbances began to appear in the force.DOD agencies and programs began aggressively to pursue increased delivery of and rights in technical data and software.  This included evaluating contractors more favorably if they gave up their data rights; ad hoc contract clauses to gain unlimited rights in software, contrary to law; attempting to create a perpetual right for deferred ordering of data the government forgot to identify, and therefore you could not price; and trying last year to erode key due process protections against DOD data rights challenges.All bad enough, but nothing compared to what DOD now is lobbying for in the 2021 National Defense Authorization Act (“NDAA”).  DOD wants to be able to give your most closely held trade secrets — i.e., all your detailed manufacturing and process data — to your most vicious competitors.  Here is the exception DOD is pitching to Congress in 10 USC §2320 to eliminate limited rights in your most essential technical data for items, components, or process that you developed entirely at private expense:[T]he United States may release or disclose technical data to persons outside the Government, or permit the use of technical data by such persons, if—(i) such release, disclosure, or use—(IV) is a release, disclosure, or use of detailed manufacturing or process data necessary for operation, maintenance (including depot-level maintenance, repair, and overhaul), installation, training, airworthiness determinations, testing and evaluation, or accident or incident investigations.  [10 USC 2320 (a)(2)(D)(i)(IV)(emphasis added).]Read that again:  We all know that DOD procuring activities think just about everything is necessary for operation, maintenance, installation and training (“OMIT”), but the law currently forbids DOD from getting anything other than limited rights for data necessary for OMIT that comprise “detailed manufacturing or process data” developed at private expense.  That prohibition disappears with this language, which goes even beyond OMIT to include testing and evaluation, as well as the airworthiness and investigations pretext DOD is advancing for this proposal.This is the exception that will swallow the rule.  It is the data rights black hole that will consume the well balanced design of the 1995 regulations.  It is a guaranteed disincentive to creative development and to doing business with the government.  And it is contrary to rationality, logic, and fairness, which is a nice way of saying it is stupid.  That is a fact, not an opinion, and here is why.Let us all proceed from two fundamental, logical, and irrefutable principals:  First, if you developed an item or process in the privacy of your garage, tapping into your 401(k) account and without being paid to do it under a government prime contract or subcontract, you would have absolutely no doubt about who had rights of use and ownership in the item or process and its technical data.  Without hesitation you (and the courts) would say that you — not any agency of the federal government — own it, have the greatest rights in it and its associated technical data, and can elect to hold it as a proprietary trade secret without fear of confiscation by the government.  Why? Because it was exclusively your time, talent, and money that developed the thing and its technical data, not the government’s.  The same necessarily is true in these United States if a corporation rather than a natural person does the development exclusively at its private expense.Second, the most important technical data associated with your hard work are those data that reveal how the item is made or the process works.  These are the detailed manufacturing or process data — e.g., drawings, specifications, formulae, tolerances, and process sheets — that describe the steps, sequences, and conditions of manufacturing, processing, or assembly used to produce an item or component or to perform a process.There is no rational, much less logical or fair, way to dispute these points.Although the Congress of the United States does some unique things, it rarely defies rationality, logic, and fairness, at least not all at once.  Congress also generally accommodates DOD’s legitimate needs.  That is why when Congress codified, in 10 USC §2320, the DOD’s rights in technical data, Congress vested government contractors with the right to limit the government’s use of technical data developed at private expense and, in particular, expressly constrained the government’s use of detailed manufacturing and process data; but Congress also recognized the DOD’s legitimate need for technical data necessary for operation, maintenance, installation, and training.  Here was Congress’ elegant solution.  10 USC §2320(a)(2)(B) protects contractor rights in private development but provides appropriate exceptions to those rights:Except as provided in subparagraphs (C), (D), and (G), in the case of an item or process that is developed by a contractor or subcontractor exclusively at private expense, the contractor or subcontractor may restrict the right of the United States to release or disclose technical data pertaining to the item or process to persons outside the government or permit the use of the technical data by such persons.Of the three exceptions, “(C)” is relevant here.  Specifically for OMIT, the statute at 2320(a)(2)(C)(iii) provides that the ability to restrict the government’s rights does not apply to technical data that are:necessary for operation, maintenance, installation, or training (other than detailed manufacturing or process data, including such data pertaining to a major system component).  [Emphasis added.]Since 1995, this statutory arrangement — with its expressly carved-out protection for detailed manufacturing or process data — has been reflected in the DOD’s technical data regulations.  DFARS 252.227-7013(b)(1)(v); 227.7103-5(a)(5).  In turn, the DFARS clause addressing “Rights in technical data — noncommercial items,” 252.227‑7013(a)(6), defines detailed manufacturing or process data as:technical data that describe the steps sequences and conditions of manufacturing, processing or assembly used by the manufacturer to produce an item or component or to perform a process.In recent years, the Department of Defense, regrettably, has not been daunted by rationality, logic, or fairness, at least when it comes to acquiring ever broader data rights.  DOD consistently tries — under one guise or another — to erode or evade those obvious, irrefutable, fundamental principles with which we started.  This is certainly true with respect to OMIT data.In 2018, for example, we saw the Air Force unsuccessfully try to enforce unique contract “H” clauses seeking unlimited rights in OMIT data that encompass computer software.  Those clauses were contrary to law, because the statute’s exception for OMIT data does not apply to software, and there is no exception in the regulations for unlimited rights in OMIT software.  DFARS 252.227-7014(b)(1).  See <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blt2c0bf810562b69b6/627318cf0d4d8e1d7f10f362/180117-air-force-omit-data.pdf">The Government Contractor FEATURE COMMENT: Data Rights Assault: What In The H (clause) Is Going On Here? Air Force Overreaching On OMIT Data</a>.When those Air Force clauses were challenged in a bid protest, the agency backtracked, sending  a letter to all offerors clarifying that its clauses did not require contractors to give up more than limited or restricted rights in OMIT data.  With this obstacle gone, the GAO denied the protest, correctly noting the Air Force could require delivery of OMIT data, because delivery is not covered by the data rights clauses (a point commonly misunderstood), and the Air Force was not seeking more than limited rights in the data, consistent with the regulations and statute.  See Sikorsky: What the GAO Said and Did Not Say About Soliciting Data Rights.Now, the DOD wants to avoid the OMIT data rights issue entirely by rewriting the statute, although its reason is an unvarnished pretext tied to aircraft.  This is the DOD’s pitch to Congress:DOD has a substantial inventory of manned and unmanned aircraft that must be maintained in an airworthy condition, including a growing inventory of “commercial derivative aircraft (CDA).”  For civil aircraft, Title 14 of the Code of Federal Regulations (Federal Aviation Administration (FAA) Regulations) requires that original equipment manufacturers (OEMs) provide airworthiness maintenance data, known as Instructions for Continued Airworthiness (ICA), to owners and maintainers. . . . This provision is intended to enable the release, disclosure or use of operation, maintenance, installation or training data, including ICA data, that is detailed manufacturing or process data to commercial maintenance, repair, and overhaul firms, seeking to compete for DoD maintenance and repair work, including depot-level maintenance . . .Even if there was a need for ICA data, a point hardly established by DOD, the DOD’s explanation goes dramatically beyond FAA data, and dramatically beyond OMIT as currently defined, without any rationale or support whatsoever.  DOD does not even try, but rather expands the derogation of existing rights without reasons or reason:In addition, this provision would enable DoD to share detailed manufacturing or process data with firms seeking to compete for contracts to support engineering analysis, testing and evaluation, training, airworthiness determinations, and data necessary to conduct accident or incident investigations.But none of the supposed FAA concern is the focus of the proposed amendment itself, which is essentially unconstrained.  Once again, here is the proposal’s language, permitting an override of your limited rights for:a release, disclosure, or use of detailed manufacturing or process data necessary for operation, maintenance (including depot-level maintenance, repair, and overhaul), installation, training, airworthiness determinations, testing and evaluation, or accident or incident investigations.The black hole swallows everything.Ah, but the DOD would say it is proposing safeguards, explaining: “the person to whom the data is released or disclosed is subject to a prohibition on the further release, disclosure, or use of such data and the owner of the data is notified of such release, disclosure or use.”  Well, that surely will seem like a good bargain to your shareholders, until they think about it for a New York minute.  Translation:  Any of your competitors now can get access to your most closely held technical data they’ve been trying to figure out for years, compete against you with it, be awarded contracts they never could before using technology you alone developed and paid for, while destroying your market value; but fear not, you will be notified so that you can somehow monitor everything they do and be free to sue them if they use your formerly proprietary data for some non‑DOD project even though you no longer have a trade secret.  Comforting, isn’t it?Every contractor with any significant portfolio of proprietary data needs to challenge this irrational, illogical, unfair, and unsupported assault on its business.  Otherwise, as someone in a galaxy far, far away wisely observed:“Once you start down the dark path, forever will it dominate your destiny.”

The Data Rights Black Hole: DOD Lobbies Congress to Eliminate Proprietary Rights in Your Most Valuable Trade Secrets — Your Detailed Manufacturing and Process Data

A long time ago in a galaxy far, far away, the Department of Defense (“DOD”) and industry came together after more than seven years of discussions and created a