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Data Rights

DAU GLOSSARY DEFINITION

Strategy to identify and manage the full spectrum of IP (e.g., technical data and computer software deliverables, patented technologies, and appropriate license rights) from program inception and throughout the life cycle. The IP Strategy will describe how program management will assess program needs for, and acquire competitively when possible, IP deliverables and associated license rights needed for competitive, affordable acquisition and sustainment over the life cycle. The IP Strategy is updated throughout the life cycle, summarized in the Acquisition Strategy, and in the Life-Cycle Sustainment Plan during the Operations and Support Phase. Program management is responsible for evaluating and implementing open systems architectures, where cost effective, and implementing a consistent IP Strategy. This approach integrates technical requirements, contracting mechanisms, and legal considerations to support continuous multiple competitive alternatives throughout the life cycle.

Alternate Definition
Data Rights is a shorthand way to refer to the Government's license rights in two major categories of valuable intellectual property:
  1. Technical Data includes any recorded information of a scientific or technical nature (e.g., product design or maintenance data, computer databases, and computer software documentation).
  2. Computer Software includes executable code, source code, code listings, design details, processes, flow charts, and related material.
    Only under very unique circumstances does the Government acquire title to or ownership of technical data or computer software developed under DoD contracts – even if the Government funded 100% of the development. Instead, the Government acquires a license to use, release, or disclose that technical data or computer software to persons who are not Government employees. Therefore, the DoD often negotiates over license rights and not ownership of technical data or computer software to be delivered under a contract.
General Information

Data Rights for technical data and computer software fall into eight categories:

 

  • Unlimited Rights. Developed exclusively at Government expense, and certain types of data (e.g., Form, Fit, and Function data [FFF]; Operation, Maintenance, Installation, and Training [OMIT]). These rights involve the right to use, modify, reproduce, display, release, or disclose technical data in whole or in part, in any manner, and for any purpose whatsoever, and to have or authorize others to do so.
  • Government Purpose Rights. This right involves the right to use, duplicate, or disclose technical data for Government purposes only, and to have or permit others to do so for Government purposes only. Government purposes include competitive procurement, but do not include the right to permit others to use the data for commercial purposes.
  • Limited Rights. A limited rights agreement permits the Government to use proprietary technical data in whole or in part. It also means that the Government has to obtain the expressed permission of the party providing the technical data to release it, or disclose it, outside the Government.
  • Restricted Rights. Developed exclusively at private expense.
  • Specifically Negotiated License Rights. This right pertains whenever the standard license arrangements are modified to the mutual agreement of the contractor and the Government. In this case, the exact terms are spelled out in a specific license agreement unique to each application.
  • Small Business Innovative Research (SBIR) Data Rights. All technical data or computer software generated under a SBIR contract. Government users cannot release or disclose outside the Government except to Government support contractors.
  • Commercial Technical Data License Rights. Applies to technical data related to commercial items (developed at private expense). Managed in the same manner as Limited Rights.
  • Commercial Computer Software Licenses. Applies to any commercial computer software or software documentation. Managed as specified in the commercial license offered to the public.

 

When analyzing data rights issues, it is important to first identify precisely the item, component, or process underlying the data delivered to the Government. This discipline is particularly important and helpful when mixed Government and private funding are involved in the development. For example, a particular item, component, or process may have been developed originally at private expense. Subsequently, an addition to that item, component, or process may have been directly financed by the Government. Correctly analyzed, the contractor should be able to retain proprietary rights (i.e., delivering data with limited rights) in the underlying item, component, or process while delivering to the Government unlimited rights for additions. This break-out or segregation of items, components, or processes developed at private expense from related items, components, or processes developed with Government funding is sometimes referred to as the doctrine of "segregability." DFARS directs that the source of funds determination be made at any practical sub-item or subcomponent level or any segregable portion of a process.

 

Source of Funding Category Development Effort Finance Basis
Government Expense Direct charge to a Government contract
Private Expense An indirect charge, including Independent Research and Development (IR&D) and Bid and Proposal (B&P), profit, any cost charged to non-Government contract
Mixed Funding Non-segregable combination of direct charge to Government contract and one or more other financing bases.

 

With data rights, it’s important to consider a proper balance between the Government and the contractor. Few issues strike at the core of contractor profitability as much as do those related to rights in technical data and computer software. The competitive advantage represented by technical know-how, trade secrets, or unique designs is translatable directly into profits. Contractors go to great lengths to protect whatever competitive advantage is attained. In Government contracting, competitive advantage can easily evolve into sole-source monopoly. Contractor ownership of critical technology, manufacturing techniques, or cost-saving procedures can eliminate effective competition. The balancing of a contractor’s rights in valuable technology and know-how and the Government’s need to obtain effective competition in its procurement is governed, in large part, by the DFARS clauses. These regulations, and the contract clauses they prescribe, provide a mechanism by which a proper balance may be struck.

 

Please contact and consult with your legal department when dealing with data rights, since this topic covers many complex laws, policies, and regulations.