Intellectual Property Rights in Government Contracts

Date: April 28, 2010

One of the many business concerns for a newly formed company or even for an existing company moving to the Maryland/Virginia area due to BRAC is the protection of intellectual property. Intellectual property is often a hidden or under exploited asset. Since 1980, entities doing business with the U.S. government can elect to retain title to the intellectual property that may be created during the performance of a contract with the government. While the government must typically be granted a license to use the intellectual property, the fact that the private entity can retain actual ownership is a powerful incentive to develop and exploit innovations.
In general, trademarks protect consumer expectations while patents, copyrights, and trade secrets protect inventors, authors, and entrepreneurs.

With regard to trademarks, typically, the government does not want to own the trademark, nor does it control the use of a trademark. A trademark is used to identify to the consumer the source of goods or services. In a government contract, appropriate use of a mark prevents faulty goods from being attributed to a legitimate contractor and avoids harm to the government recipient as well as to the reputation of the contractor.

With regard to patents, there are particular, mandatory requirements in the acquisition regulations to secure rights and title in new technology. As many companies struggle to identify, manage, and protect their intellectual property in a variety of technologies, it is important for the contractor to work with the Contracting Officer and their own artisans to identify and protect their intellectual property developed during the performance of the contract, and to ensure the rights and obligations under the contract are secured. If a contractor determines that a new invention is created during the contract, the contractor must disclose the invention within two months after the inventor disclosed the invention internally, and then the contractor must elect whether or not to retain title to the invention. If the contractor elects to retain title, they must file a patent application within one year of the election. Additionally, the contractor must file interim reports periodically during the performance of the contract. The specification of any U.S. patent application under the contract and the resulting patent must include a statement that the government has certain rights in the invention. The contractor must institute internal program to ensure employee compliance with the acquisition rules at the risk of loss of title to the invention.