By Arthur Shaffer

      In today’s economic marketplace, the government is as much a large consumer of goods and services as many large corporations. Many businesses routinely target various governmental entities as part of their marketing and business plans. However, when it comes to intellectual property, some businesses are wary of working with the government for fear that by doing so they may compromise their company’s intellectual property rights and, therefore, their competitive advantage.

      The term “intellectual property” identifies various types of intangible property rights, including copyrights, patents and trade secrets. Creators and innovators are granted the economic benefits of their intellectual creations for a limited time. Our country’s founding fathers recognized that failure to offer some type of protection could discourage innovation and society in general would suffer.

      The Law and Procurement
      Modern laws related to federal procurement were generally developed in favor of the government, which generally has broad rights with regard to ownership of privately developed intellectual property. For example, the government may acquire an interest in a company’s intellectual property through its eminent domain powers, taking the property rights from the individual or company under a compulsory license, while compensating the owner with a reasonable payment under Title 28 §1498. Additionally, the government may seek a voluntary license, or purchase the developer’s interest outright.

      Innovations and Patents
      If government funding is used in the development of an innovation, the government may claim a right to the developed technology pursuant to the Bayh-Dole Act. However, under the Bayh-Dole Act, the developer is presumed to own all patent rights to inventions developed with government funded research. Through the Bayh-Dole Act, along with other various contracting innovations, the government now generally recognizes the need to keep intellectual property rights with the developer, limiting the ownership requirements of the government to the scope of its actual needs. Thus, if a company has appropriate protections in place and knowledgeable legal counsel, it can negotiate with the government just as it would with any private client, preserving the company’s intellectual property rights. 

      Ownership Provisions
      While the Bayh-Dole Act provides a presumption of ownership by the developer, certain requirements must be met, including a notice and reporting provision. Prior to entering into an agreement, a notice may be necessary to maintain the developer’s rights. If trade secret protection is going to be maintained, care may be required to ensure that the agreement includes certain terms related to such protection. In addition, all intellectual property must be prominently marked, and the company must identify what materials are considered proprietary. If a company does not follow the notice and reporting provisions, it does so at the risk of losing its proprietary and competitive advantage when working with the government.

      Learn the Rules
      While contracting with the government can be lucrative, familiarity with the relevant regulations and statutes may help avoid some of the pitfalls associated with government contracts. Ultimately, companies need to be proactive to maintain ownership of their competitive and proprietary innovations. 
      
      
      
Arthur Shaffer is with the Intellectual Property Center. You can reach him at (816) 363-1555 or .