Intellectual Property Rights, Subcontractors and the DoD

For R&D companies, intellectual property (IP) is the bread and butter of the company.  Without the IP, the company’s future isn’t as bright.  The most difficult thing for companies, who are doing innovative things, isn’t the R&D, it is the protection of what comes out of the R&D.

Protection can become particularly interesting when the Department of Defense is your customer.  If you are an R&D company, there are probably a few things happening all at once. You are probably investing your own R&D funds into innovations, you are probably subcontracting some specific work out and you are probably looking to the government for grant seed money and contract money to garner profit.  Most likely all of these things are happening in one big mixed bag.

So how best does an R&D company protect their precious IP with so many hands in the pot?  Segregation.  The first step is to make sure the money funding the R&D (that is developing IP) is tracked separately.  The government (DoD particularly) determines what rights they have to your IP  based upon the funding source from which the IP was developed.    Without the segregation, it is highly difficult to assert your right to your IP  when the government is asking for their unlimited rights.

The second step is CYA.  This is particularly true with subcontractors. The rights to data under a government contract flow right through the prime contractor from a subcontractor to get to the government.    Therefore, the prime must assert rights to data under DFARS 252.227-7017 (for example) on behalf of their sub.  Therefore, the prime should be proactive in obtaining the correct certifications and representations from subcontractors. Without such certifications, a prime can be left holding the bag or open to suit if they are required to deliver a subs’ data to the government and the sub disagrees with such delivery.

Retaining rights to data under government contracts is possible.  Successful R&D and growth as a commercial company is doable with government funding and teaming.  However, a company needs to put IP protection first on the list of things to review before, during and after the project.

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About Stephanie Amend

Stephanie is the Principal and CEO of Arrowhead Solutions, LLC, a solutions firm specializing in assisting established small businesses be successful government contractors.

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