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Clarify Data Rights and Intellectual Property Issues

Data rights are the rights the Postal Service obtains for technical data or computer software that suppliers deliver after completion of a project. Data are recorded information, regardless of form or the medium on which they are recorded. Data in this regard include technical data and computer software, but do not include information incidental to contract management, such as financial, administrative, cost, pricing, or management information.

Intellectual property is the ownership of ideas and control over the tangible or virtual representation of those ideas. It is a product of the intellect that has commercial value, including copyrighted property (such as computer software) and ideational property (such as patents, business methods, and industrial processes). Data rights are intellectual property.

The Postal Service's Motivation on Data Rights and Intellectual Property

The following are reasons for the Postal Service's purchase of intellectual property:

Enhance the competitive purchasing process

Ensure the ability to use, maintain, repair, and modify equipment or products procured under Postal Service contracts

Recoup development costs of, and fund improvements in, Postal Service products and equipment

Develop or enhance products and equipment for Postal Service use

Protect its position in the competitive marketplace

Ensure competition for spare parts

The main motivation of the Purchase/SCM Team when dealing with data rights and intellectual property is to yield a net benefit to the Postal Service. The Purchase/SCM Team must give full consideration to the costs and benefits of the chosen approach. For example, decisions to acquire Postal Service title to patents or unlimited rights to technical data developed by the supplier at private expense must take into account the potential impact on the cost of the contract and the extent to which prospective providers may not wish to part with such rights. Conversely, the Purchase/SCM Team's determinations to take lesser rights must consider the effect on the Postal Service of the exploitation of those rights by the supplier or others. As stated in Provision 8-1: Alternate Intellectual Property Rights Proposals, the Contracting Officer will consider alternate intellectual property rights proposals when determining which supplier's proposal is most favorable to the Postal Service, in accordance with the solicitation's evaluation and award section.

Pursuant to Provision 8-1: Alternate Intellectual Property Rights Proposals, the supplier may propose alternate intellectual property rights arrangements (including licensing arrangements for commercial exploitation of intellectual property developed under the contract), provided that it follows guidelines addressed in the provision.

The Postal Service acquires patent rights, rights in data, and rights in software to the degree necessary to protect its interests. Those rights can include:


Nonexclusive licenses

Unlimited rights or title to technical data and software

Limited rights to technical data and restricted rights in software (may be exclusive or nonexclusive)

Clarifying data rights and intellectual property informs the Postal Service of which suppliers can and will comply with their policies. It also allows the Purchase/SCM Team to start a dialogue with possible suppliers to negotiate acceptable terms in regard to proprietary information. This will allow the contract to be negotiated in a timely manner.

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Defining Data Rights and Intellectual Property

Data rights can be:

Unlimited - possess right to use, disclose, reproduce, prepare derivative works, distribute copies to the public, and perform and display publicly, in any manner and for any purpose, and to have or permit others to do so.

Limited - technical data developed at private expense; license rights restrict use or disclosure by the Postal Service.

Restricted - computer or licensed software developed at private expense if the Postal Service chooses not to pay for title. License rights restrict disclosure by the Postal Service; however, may be copied to transfer computer; copied or transferred for archiving backup; may be modified, adapted, or combined with other computer software (new software then subject to restricted right limitations), disclosed to support services suppliers to prepare modifications (must agree not to disclose to others), and may be transferred to a replacement computer.

Other intellectual property includes:

Copyright - an entity has exclusive rights to reproduce, publish, or sell its original work or authorship (e.g., scripts are protected by copyrights)

Patent - available for the invention or discovery of any new and useful process, machine, manufacture, composition of matter, or any new and useful improvement of them (e.g., a product is protected by a patent).

Trademark - a name, symbol, or other device identifying a product, officially registered, and legally restricted to the use of the owner or manufacturer (e.g., protects the name of a company).

Trade secret - any formula, pattern, device, or compilation of information that is used in a business and that gives it an opportunity to obtain an advantage over competitors who do not know or use it (e.g., protects the Coca-Cola syrup formula)

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Technical Data Rights

Clause 8-6: Rights in Technical Data addresses the Postal Service's rights regarding any data other than computer data. The allocation of rights in any computer programs, databases, and documentation will be determined by Clause 8-9: Rights in Computer Software, except that limited rights data, formatted as computer databases for delivery to the Postal Service, are to be treated as limited rights data under Clause 8-6.

Computer Software Rights

Clause 8-9: Rights in Computer Software addresses the Postal Service's rights regarding computer programs, computer databases, and their documentation. Clause 8-7: Withholding Payment (Technical Data and Computer Software) discusses payment to the supplier by the Postal Service and is used in contracts for both technical data and computer software rights. If the data requirements are not adequately fixed and specified at the time of contracting, Clause 8-8: Additional Data Requirements must also be included in the contract.

Special Works

Special works are literary works, including technical reports, studies, and similar documents; music and dramatic works; and recorded information, regardless of the form or medium on which it may be recorded. Special works can include:

The production of audiovisual works (including motion pictures and television recordings or the preparation of motion picture scripts, musical compositions, sound tracks, translations, adaptations, etc.)

Histories of the Postal Service

Works pertaining to recruiting, morale, training, or career guidance

Surveys of facilities

Works pertaining to the instruction or guidance of Postal Service employees in the discharge of their official duties

Production of technical reports, studies, or similar documents not otherwise covered

A contract for special works must enable the Postal Service to obtain ownership of the copyright for certain works. This is accomplished by contract provisions requiring the supplier to assign copyrights to the Postal Service in those works in which the Postal Service would not otherwise be considered the author. These rights and other related issues are addressed in Clause 8-10: Rights in Data - Special Works.

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Existing Works

Contracts for the purchase of existing works (other than computer programs and audiovisual works), such as books and periodicals, generally require no specific contract coverage for data rights. When reproduction rights are required in such works, specific contract coverage is needed. These issues are addressed in Clause 8-11: Rights in Data - Existing Works.

Patent Rights

With respect to subject inventions (any invention or discovery, whether or not patentable, conceived or first actually reduced to practice in the course of or under a contract), the supplier, in accordance with Clause 8-1: Patent Rights, must furnish the Contracting Officer certain items. Other patent issues (including payment) are also addressed in Clause 8-1.

In accordance with Clause 8-2: Authorization and Consent, the liability of the Postal Service for patent infringement or for the unauthorized use of any patent will be determined by the provisions of any patent indemnity clause included in the contract or in any subcontract under the contract (at any tier) and by any indemnification or warranty (express or implied) otherwise provided by the supplier or subcontractor for similar products or services when supplied to commercial buyers. Clause 8-2: Authorization and Consent also deals with research and development work, supplies and construction, and subcontracts expected to exceed $50,000.

Patent infringements are addressed in Clause 8-3: Notice and Assistance Regarding Patent and Copyright Infringement. Other patent rights are stated in Clause 8-15: Patent Rights Supplier Retention.

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In accordance with Clause 4-1: General Terms and Conditions, paragraph h, Patent Indemnity, the supplier will indemnify (protect against damage, loss, or injury; insure) the Postal Service and its officers, employees, and agents against liability, including costs for actual or alleged direct or contributory infringement of, or inducement to infringe, any United States or foreign patent, trademark, or copyright, arising out of the performance of a contract, provided the supplier is reasonably notified of such claims and proceedings. In addition, Clause 8-4: Patent Indemnity, which may be used in place of paragraph h, requires the supplier to indemnify the Postal Service, its employees, and its agents against liability, including costs and fees, for patent infringement (or unauthorized use) arising from the manufacture, use, or delivery of supplies, the performance of service, the construction or alteration of real property, or the disposal of property by or for the Postal Service, if the supplies, service, or property (with or without relatively minor modifications) have been or are being offered for sale or use in the commercial marketplace by the supplier, except in certain situations. These situations and patent indemnity is further addressed in Clause 8-4.

Indemnification by the supplier solely with respect to certain patents can be waived when these patents are listed in Clause 8-5: Waiver of Indemnity.

Limited and Restricted Rights

The use of private funds for development affects the classification of data rights. If private funds were used, technical data may have to be acquired with limited rights, and computer software may have to be acquired with restricted rights.

In accordance with Provision 8-2: Representation of Rights in Data, the supplier must identify in its proposal the data (including subcontractor-furnished data) that it intends to identify as "limited rights data" or "restricted computer software," or that it does not intend to provide as required. When the data are delivered to the Postal Service, the supplier places on the data the limited rights legend required by Provision 8-2: Representation of Rights in Data. The Postal Service has strict policies on keeping the limited and restricted classification, which include:

Proof that private funds were used

Only certain portions of a product once modified or enhanced are deemed still made from private expense

Submitting correct markings (addressed in Clause 8-16: Postal Service Title in Technical Data and Computer Software)

If these policies are not followed, it is possible for the Postal Service to change the classification to "unlimited." Clause 8-14: Acquisition of Additional Rights in Data addresses unlimited rights, direct license rights, and other rights.

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Royalties and License Fees

Any request for proposals (RFP) that may result in a contract other than a firm-fixed-price contract must include Provision 8-4: Royalty Report with regard to any royalties or license fees that would be paid in connection with the performance of any resulting contract. The Contracting Officer must consult Legal Counsel regarding any royalties or license fees that are excessive or that the Postal Service may not be obligated to pay. When the price of a contract is based in part on a contingency for patent royalties or license fees to be paid by the supplier that the supplier may not actually have to pay, Clause 8-12: Refund of Royalties must be included in the contract.

Repair Parts

As stated in Provision 8-3: Use of Limited Rights Data for Purchasing of Repair Parts and Clause 8-18: Manufacture of Repair Parts, the Postal Service has the unilateral right to use competitive procedures to procure repair parts or assemblies for the equipment or supply items being developed under a contract. If the repair parts or assemblies have been identified as being subject to protection under Provision 8-3: Use of Limited Data Rights for Purchasing of Repair Parts or Clause 8-17: Delivery of Limited Rights and Restricted Computer Software, the Postal Service will obtain a nondisclosure agreement from interested suppliers before releasing any drawings, specifications, or other descriptive documentation suitable for manufacturing or reproducing such repair parts of assemblies.

Professional Services

Contracts for professional consulting, research, technical development, or other specialized support services may require access to Postal Service information. The products of such contracts may not otherwise be covered by other policies and generally have unknown long-term implications; therefore, they require that broad rights in intellectual property flow to the Postal Service. Clause 8-13: Intellectual Property Rights must be included in such contracts; this clause addresses what the supplier agrees to.

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Purchase/SCM Team

The Contracting Officer is the lead on clarifying data rights and intellectual property issues. The Market Analyst and Pricing Analyst aid in determining best value, which dictates certain decisions with data rights and intellectual property. The Law Department's Intellectual Property Law organization, which is responsible for intellectual property matters, must concur (or at least be notified) in most situations when the Contracting Officer chooses alternatives to the Postal Service's standard policies. In addition, the Contracting Officer needs concurrence from the Intellectual Property Counsel when:

Choosing an alternative arrangement to acquire a title to an invention

Soliciting alternate agreements for the purchase of patent rights

Waiving or modifying the right to patent indemnification (indemnification is used to protect against damage or loss)

The Postal Service will protect proprietary business information to the extent required by law and good business practice. The Purchase/SCM Team must understand what data rights and intellectual property are, as well as the Postal Service's authority, responsibility, and policies regarding them. Issues in question must be identified and communicated to the supplier, who will then know which policies, provisions, or clauses will affect them. One issue that must be identified for the suppliers is their responsibility to protect the Postal Service against claims resulting from suppliers' use of data not supplied by the Postal Service.

Before the Postal Service and individual supplier can openly discuss proprietary information, a nondisclosure agreement (NDA), which protects both parties from the loss of intellectual properties and rights, may be necessary. Purchase/SCM Teams must work with the Legal Counsel to draft the NDA. The NDA will require that certain information not be disclosed, except under the terms as described in the NDA, and spells out exactly the information that is deemed proprietary.

Pursuant to Provision 8-2: Representation of Rights in Data, technical data that are limited rights data and restricted computer software that has been identified must be brought to the attention of the Postal Service in the supplier's proposal. Any subsequent supplier claim that further data or software have been identified or developed at private expense must be supported by clear and convincing evidence. Limited rights data and restricted computer software that are properly identified are recognized by the Postal Service, and related language is incorporated into the contract, using Clause 8-17: Delivery of Limited Rights Data and Restricted Computer Software. Once the contract is signed, limited rights data and restricted computer software can be delivered to the Postal Service and will be designated and recognized by a specific legend placed on them.

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