In May 2025, the Department of Defense (DOD) released its Intellectual Property Guidebook (Guidebook), providing contractors with invaluable insights into how DOD handles Intellectual Property (IP) and data rights in government contracts. In this final installment of PilieroMazza’s blog series, we dive into data rights assertions, data rights marking requirements, and data rights disputes and challenges. Visit this link to access Parts 1-3 in this series.
Data Rights Assertions and Marking Requirements
A contractor must identify any Technical Data (TD) or Computer Software (CS) that it asserts should be furnished to the government with restrictions on use, release, or disclosure. Specifically, contractors must identify the TD or CS to be furnished with restrictions, the asserted data rights category, the basis for the assertion, and the name of the person asserting the restriction. Under certain circumstances, contractors may identify other assertions after contract award.
Contractors may assert restrictions on TD or CS to be delivered to the government by using the appropriate marking or legend prescribed by the Defense Federal Acquisition Regulation Supplement (DFARS). It is critical that contractors properly assert and mark their data rights since the government presumes that TD or CS provided without the appropriate marking or legend was delivered with unlimited rights. While a contractor who fails to properly mark TD or CS may later request permission to insert conforming and justified markings, this request must contain several items required by the DFARS and generally be made within 6 months after furnishing the TD or CS.
Data Rights Disputes and Challenges
The government has the right to review, verify, challenge, and validate restrictive markings, and assertions made by contractors. If the contracting officer determines that a marking is unjustified or nonconforming, it may ignore, correct, or strike that marking. For example, the government could take such action if a contractor were to place a Limited Rights legend on TD that was developed exclusively at the government’s expense (i.e., an unjustified marking) or if a contractor were to insert a Government Purpose Rights legend on TD that did not follow the format authorized by the contract (i.e., a nonconforming marking).
A contracting officer may challenge the validity of a contractor’s asserted restrictions by sending a written notice that:
- states the specific grounds for challenging the asserted restriction;
- requires a response within 60 days justifying and providing sufficient evidence as to the current validity of the asserted restriction; and
- states that failure to respond to the challenge notice may result in issuance of a final decision.
It is therefore imperative that contractors must maintain sufficient records to justify the validity of their asserted data rights restrictions, as required by the DFARS, in order to rebut any potential challenges.
Any response by a contractor to a challenge notice is considered a claim under the Contracts Disputes Act. Despite the contracting officer generally being required to issue a final decision within 60 days, the Guidebook advises that these challenges can take longer due to the procedural rules and complex analysis and arguments that often require subject matter expertise.
The government will honor asserted restrictions following its final decision for certain periods of time to allow a contractor to appeal the final decision to either the relevant Board of Contract Appeals or the U.S. Court of Federal Claims. If a contractor timely appeals the final decision, the government must honor the asserted restrictions until final disposition. The government could be on the hook for the contractor’s fees and other expenses incurred by the contractor in defending the data rights challenge if the government’s challenge is found not to be in good faith. On the flip side, if the asserted restriction is found not to be substantially justified, the contractor may be liable for the government’s costs incurred to review the restriction as well as other expenses incurred in making the challenge. The Guidebook cautions that although these procedures may be invoked prior to contract award, the government should avoid challenging asserted restrictions prior to a competitive contract award unless resolution of the assertion is essential.
Conclusion
It is critical that contractors timely assert data rights and properly mark TD or CS delivered to the government with the appropriate legend. Contractors must be vigilant and maintain sufficient records to justify the validity of their asserted data rights restrictions and be prepared to defend any data rights challenges lodged by the government. And if the government challenges an assertion, the contractor should be prepared to defend that assertion not only before the contracting officer but also before the relevant forum.
If you have questions regarding data rights, the Guidebook, or intellectual property, please contact Cy Alba, Jacqueline Unger, Daniel Figuenick, Abigail Finan, or another member of PilieroMazza’s Government Contracts or Intellectual Property & Technology Rights practice groups.[1]
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If you’re seeking practical insights to gain a competitive edge by understanding the government’s compliance requirements, tune into PilieroMazza’s podcasts: GovCon Live!, Clocking in with PilieroMazza, and Ex Rel. Radio.
[1] Special thanks to Lauren Aguilar, a paralegal in PilieroMazza’s Government Contracts Group, who assisted with this blog.
