https://crsreports.congress.gov
April 22, 2022
Intellectual Property and Technical Data in DOD Acquisitions
The Department of Defense (DOD) relies extensively on
the organizations that comprise the defense industrial base
(DIB). These entities provide the products and services that
enable DOD’s business operations and warfighting
capabilities. In some situations, DOD must also consider
the need to obtain intellectual property (IP) and technical
data rights in order to operate and maintain the capabilities
it acquires. IP rights have grown in importance to DOD as
U.S. defense research and development (R&D) spending as
a share of global R&D spending has declined—and IP
rights are also increasingly important to DIB entities who
rely on their portfolios of developed IP to generate profits
from their R&D investments. Observers such as the
Government Accountability Office (GAO) have said that
DOD has not always been consistent in its acquisition and
licensing of IP developed at private expense in the past,
resulting in “reduced mission readiness and surging
sustainment costs” in some instances. In recognition of
these trends, Congress has directed DOD to take a number
of actions to improve policies and processes for how DOD
acquires IP.
Intellectual Property
IP is described broadly as a work or invention that (1) is the
product of the human intellect and (2) is protected from
certain unauthorized use. Four types of IP protected by
federal law are patents, copyrights, trademarks, and trade
secrets. These federal laws (and, in some cases, state laws)
seek to encourage innovation by providing legal protections
for the creation or invention of unique ideas or products. A
patent, for example, is a written instrument issued by the
U.S. Patent and Trademark Office (see Title 35 of the U.S.
Code) that describes an invention and grants the inventor(s)
the exclusive right to make, use, import, and sell the
invention within the United States for a period of up to 20
years.
Within the context of defense acquisitions, the Bayh-Dole
Act of 1980 (P.L. 96-517) governs patent rights for
inventions made with federal support. Congress passed the
Bayh-Dole Act in part to address concerns about the
commercialization of technology developed with public
funds. Under Bayh-Dole, a federal contractor may elect to
retain the patent rights for a federally funded invention,
giving the contractor exclusive rights in the invention
during the patent’s term. In exchange, the contractor must
provide the federal agency with a free government-use
license. Although the Bayh-Dole Act only applies to federal
contractors that are nonprofit organizations or small
businesses, procurement regulations have applied Bayh-
Dole’s allocation of patent rights to all federal contractors,
regardless of size.
IP and Technical Data
A subset of IP issues with particular importance for DOD
are data rights, an umbrella term for DOD’s rights to the
technical data, computer software, and computer software
documentation developed under DOD contract. Technical
data, as defined by 10 U.S.C. §3013, includes “information
... of a scientific or technical nature (including computer
software documentation) relating to supplies procured by an
agency ... and does not include computer software or
financial, administrative, cost or pricing, or management
data or other information incidental to contract
administration.” For DOD applications, technical data is
considered to be information describing or related to a
contractor-built item needed in order to be able to install,
operate, maintain, repair, or replace that item at a later date.
A right to use information is separate from ownership of
that information. In federal contracting, companies
generally retain ownership, or title, to technical data and
convey a license to use that data to the federal government.
IP rights with respect to technical data generally refers to
authorization granted by the contractor for DOD to engage
in activities that require accessing or modifying the
underlying IP. During the contracting process, DOD
program managers must assess a program’s future IP-
related activities. If IP such as technical data is deemed
necessary for the future acquisition, modification, upgrade,
or sustainment of the program, DOD must often make
trade-offs amongst factors such as negotiating for access to
those deliverables and associated licenses, or contracting
with the IP holder to perform required work at a later date.
10 U.S.C. §3771 specifies how technical data license rights
are established in the DOD contracting process. With some
exceptions, those rights depend on who paid for the
development of the item in question – the federal
government or private entities:
Where an item or process was developed by a contractor
or subcontractor exclusively through federal funding,
the United States is granted unlimited rights to “use
technical data pertaining to the item or process” or
“release or disclose the technical data to persons outside
the government or permit the use of the technical data
by such persons.” Under the Small Business Act (P.L.
85-536), small businesses retain technical data rights for
contracts awarded under the Small Business Innovation
Research (SBIR) and Small Business Technology
Transfer Research (STTR) programs “for a period of not
less than 4 years.”
Where an item or process was developed by a contractor
exclusively through private funding, the contractor may
restrict DOD from releasing or disclosing associated
technical data. Exceptions to this rule are set forth in 10
U.S.C. §3771, and include technical data related to form,
