On May 1, 2025, the Department of Defense (DOD) released its much-anticipated Intellectual Property (IP) Guidebook (Guidebook). The Guidebook is a must-read for defense contractors who are looking to protect their IP when doing business with DOD, and who want to better understand the ins-and-outs of IP and data rights in government contracts. We agree with DOD that this Guidebook will “aid the Department’s acquisition professionals in development, execution, and management of effective IP Strategies that support all functional areas’ requirements and objectives across program life cycle.” This blog is the first in a series where PilieroMazza breaks down some of the Guidebook’s fundamental concepts and provides key insights and practical advice for defense contractors.
DOD IP Guidebook
The Federal Circuit noted in a recent decision that data rights in government contracting can be “unduly complex.”[1] Thanks to the authors of the Guidebook, the DOD’s IP Cadre, data rights just became much more comprehensible for government contractors. The Guidebook walks DOD acquisition professionals through the implementation of laws and regulations addressing IP, while also explaining the legal and operational challenges in acquiring IP and associated rights. The Guidebook also recognizes the unique interplay between DOD’s need to be good stewards of taxpayer dollars with industry’s right to receive just compensation for their development and innovative work for DOD. In turn, this promotes greater partnership between DOD and industry, which is welcome news. Simply put, the Guidebook is an indispensable resource for government contractors and provides crucial information regarding how DOD approaches IP in procurements.
Four Key Building Blocks of IP Acquisitions
There are four common types of IP: (1) patents, (2) trademarks, (3) copyrights, and (4) trade secrets. Generally, the entity that creates the IP is the sole owner of the IP. It is rare that the government takes ownership of the IP created under a government contract. Even if the contractor grants the government “unlimited rights” in the IP, the government does not own the IP, it simply receives a license. This license, referred to as “data rights,” describes the government’s rights in copyrights and trade secrets, and does not cover patent or trademark rights.
To help better understand these concepts, the Guidebook breaks IP acquisitions into four key building blocks:
- the source of the IP (e.g., technical know-how, technical data (TD), inventions, computer software (CS));
- the legal protection over the IP (e.g., patent, copyright, trade secret, trademark);
- the license agreement governing the parties’ rights to the IP (e.g., unlimited rights, government purpose rights, restricted rights, limited rights, specially negotiated rights, Small Business Innovation Research (SBIR)/Small Business Technology Transfer (STTR) data rights); and
- the transaction involving the IP (e.g., a contract for a deliverable containing IP, typically TD or CS).
The Guidebook expands on each of these building blocks throughout in a comprehensible way, giving examples and scenarios of each. Understanding these IP building blocks allows any government contractor to not only comply with their DOD contracts and protect their IP from unauthorized use, but also allows them to secure a more favorable return on investment (ROI).
Contractors pour considerable time and resources into developing processes, systems, and software for the government. Data rights provide contractors with certain protections from unauthorized use by the government of their IP outside the rights granted under the contract. Moreover, data rights provide contractors with opportunities to secure a fair and reasonable ROI for their IP. That return can come in several different forms depending on individual values, strategies, goals, and objectives. Contractors who understand the IP building blocks and the significance of ROI can flourish in DOD contracting and transform a seemingly scary topic into a competitive advantage over other firms.
IP and Competition
The Guidebook addresses the use of IP to enable competition and suggests “including IP rights as part of competitive source selection evaluation to acquire the data, CS, and associated rights needed for future competition.” The Guidebook warns DOD acquisition professionals that “[w]hen the Government does not have the data, CS, and rights to enable competition, the program becomes forced into a sole-source situation,” also known as vendor lock, and emphasizes the need to prevent this situation.
Ultimately, vendor lock occurs because of poor IP acquisition planning and strategy, which leads to higher (non-competitive) prices, limits technology insertion from other sources, reduces incentive for innovation, and weakens the government’s assurance of receiving the best value. According to the Guidebook, vendor lock can be avoided by recognizing and planning for the “impact of restrictive IP rights” and by using “competitive pressure” and “market power.” The Guidebook emphasizes balance between obtaining “sufficient IP rights to enable sustainment while [also] incentivizing innovation and cost effectiveness in the defense industrial base.” Lastly, the Guidebook recognizes that the “lack of competition may limit the ability to compete for technology insertions” and suggests utilizing a modular open system approach (MOSA) with modular system interfaces (MSI).
Standard DFARS Data Rights
The Guidebook helps acquisition professionals by breaking down various standard Defense Federal Acquisition Regulation Supplement (DFARS) license rights (e.g., “data rights”), providing easy-to-follow definitions. These rights include: (1) Unlimited Rights; (2) Government Purpose Rights; (3) Limited Rights; (4) Restricted Rights; (5) Specially Negotiated License Rights; and (6) SBIR/STTR Data Rights. The applicable data rights category depends on whether you are talking about non-commercial or commercial TD, or non-commercial or commercial CS, and documentation. Moreover, the specific data rights the government receives will also depend on the funding source of the IP in question. These topics, as well as others, will be discussed in more detail in Part 2 of this blog series.
Conclusion
The topic of data rights can be complex, but it doesn’t need to be. The much-anticipated release of the Guidebook is fantastic news for defense contractors as it offers comprehensive insights into how DOD will acquire IP in the future.
Stay tuned for Part 2 of this blog series, where PilieroMazza breaks down standard DFARS data rights, special categories of data (such as Operations, Maintenance, Installation and Training (OMIT) data), how the funding source for non-commercial TD and CS impacts the data rights the government receives, and the doctrine of segregability and modular licensing.
If you have questions regarding data rights or the Guidebook, please contact Cy Alba, Jacqueline Unger, Joseph Loman, Daniel Figuenick, Abigail Finan, or another member of PilieroMazza’s Government Contracts or Intellectual Property & Technology Rights practice groups.[2]
[1] FlightSafety Int’l Inc. v. Sec’y of the Air Force, 130 F.4th 926, 931 (Fed. Cir. 2025).
[2] Special thanks to Lauren Aguilar, a paralegal in PilieroMazza’s Government Contracts Group, who assisted with researching and drafting this blog.
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