Protecting Intellectual Property and Data Rights in Federal Aerospace and Defense Contracts

Intellectual property and data rights are among the most technically complex and financially consequential issues in federal aerospace and defense contracting. When companies deliver technical data or computer software developed in whole or in part with government funding—or in collaboration with national laboratories—the allocation of rights can significantly affect both current contract performance and future commercial opportunities.

Understanding the governing rules, anticipating challenges, and planning strategically is essential for protecting proprietary technology while meeting contractual obligations.

Key DFARS Clauses Governing Technical Data and Computer Software Rights

The primary regulations governing data rights in Department of Defense contracts are found in the Defense Federal Acquisition Regulation Supplement (DFARS). Two clauses are particularly important:

•           DFARS 252.227-7013 — Rights in Technical Data—Other Than Commercial Products and Commercial Services

•           DFARS 252.227-7014 — Rights in Other Than Commercial Computer Software and Other Than Commercial Computer Software Documentation

These clauses establish the default categories of government rights, which generally include unlimited rights, government purpose rights, and limited or restricted rights, depending on the source of funding and the nature of the development. The specific rights granted depend on whether items, components, processes, or software were developed exclusively at private expense, exclusively with government funds, or with mixed funding.

Contractors must properly identify and assert restrictions on government rights — typically through an assertions table submitted with the offer before award, together with specific restrictive markings applied to the data at delivery. Failure to do so can result in the government receiving broader rights than intended.

Challenges When Technology Has Roots in National Lab Work or Prior Government Funding

Many aerospace and defense technologies originate from or are refined through work with national laboratories or under prior government-funded contracts. This creates several recurring challenges:

•           Determining the funding source and development history of specific data or software can be difficult, especially when multiple contracts or cooperative research agreements are involved.

•           Government purpose rights (typically lasting five years from execution of the contract or other instrument that required the development) eventually convert to unlimited rights, which can limit a company’s ability to control dissemination of the technology.

•           When technology is developed under cooperative research and development agreements (CRADAs) or other arrangements with national labs, the allocation of rights between the lab, the government, and the contractor can be complex and sometimes inconsistent across agreements.

•           Marking and assertion requirements must be handled carefully to avoid inadvertently granting the government broader rights than necessary.

These issues are particularly acute in directed energy, advanced sensors, and software-defined systems, where foundational work often occurs in government-funded environments.

Strategies for Protecting Proprietary Information While Complying with Contract Requirements

Effective protection requires proactive planning throughout the contract lifecycle:

•           Conduct a thorough data rights assessment early in the proposal and capture phase to identify which elements were developed at private expense.

•           Use precise markings and assertions tables that comply with DFARS requirements while clearly delineating restricted or limited rights data.

•           Negotiate specifically negotiated license rights when standard categories do not adequately protect commercial interests (subject to regulatory limits).

•           Maintain detailed records of development funding and intellectual contribution to support assertions if challenged.

•           Implement internal controls to prevent inadvertent disclosure of proprietary data beyond what is contractually required.

Companies that treat data rights management as a strategic function—rather than a purely administrative task—consistently achieve better outcomes.

Planning for Future Commercialization and Follow-on Opportunities

Data rights decisions made during a government contract can have long-term commercial implications. Key considerations include:

•           Structuring development efforts to maximize privately funded portions where possible, thereby preserving limited or restricted rights.

•           Anticipating the expiration of government purpose rights and planning for the transition to unlimited rights.

•           Considering how data rights will affect teaming arrangements, joint ventures, or future sales to commercial or international customers.

•           Evaluating the impact of data rights on follow-on production contracts or sustainment work, where the government may seek broader rights than were granted during the prototype phase.

Forward planning helps companies preserve the ability to commercialize technology developed under government contracts while still meeting mission requirements.

Common Disputes and Lessons from Recent Cases

Disputes over data rights frequently arise regarding the scope of “technical data,” the validity of restrictive markings, and the government’s ability to challenge assertions. Two notable decisions illustrate important principles:

•           In The Boeing Co. v. Secretary of the Air Force (Federal Circuit, 2020), the court confirmed that contractors may mark technical data delivered with unlimited rights using protective legends that restrict third-party use, provided the legend does not improperly limit the government’s own rights.¹

•           In Raytheon Co. v. United States (Court of Federal Claims, 2022), the court emphasized that only information “of a scientific or technical nature” qualifies as technical data under DFARS 252.227-7013, helping contractors defend non-technical proprietary information from government claims of broader rights.²

These cases underscore the importance of precise drafting, proper marking, and maintaining strong documentation to support data rights positions.

References

1.         The Boeing Co. v. Secretary of the Air Force, 983 F.3d 1321 (Fed. Cir. 2020).

2.         Raytheon Co. v. United States, No. 19-883C, 2022 WL 2353085 (Fed. Cl. June 15, 2022).