Army Takes On IP Rights Conundrum.

• Author: Harper, Hannah
• Position: NDIA Policy Points

* "Enabling Modernization Through the Management of Intellectual Property," the Army's new policy, tries to balance the government's priority to maintain U.S. military competitive advantage by leveraging advanced American technologies while also allowing inventors and companies to fairly benefit from their intellectual work.

Both the government and the defense industry strive to provide warfighters with the best capabilities, but the government must act in the best interest of taxpayers and the defense industry in the best interest of corporate shareholders. The tension between controlling costs and increasing revenues creates a battle over who benefits from IP.

The legal protections surrounding IP establish boundaries and terms for its use. Protections, like trademarks, patents, copyrights and trade secrets, give entrepreneurs the legal security necessary to earn a return on their investments, making them a lucrative asset.

Industry faces two major challenges when selling intellectual property to the government. The first stems from the government's rights to use, modify, adapt, disseminate, reproduce or disclose IP. The government's rights in these scenarios directly depend on how much funding it provided for development.

Under some circumstances--falling under the right to disclose or disseminate--the government may share acquired data with third parties. These third parties sometimes include direct competitors of the IP-generating company.

The second challenge concerns the protection of exclusionary rights inherent to IP. The Bayh-Dole Act requires government contractors to disclose inventions derived from federal funding, leaving contractors vulnerable to a government decision to exercise its "march-in" rights. Under the act, when a contractor breaches their obligation to commercialize a patent, the government may effectively seize control of the intellectual property and grant licenses to third parties. Although the government reportedly has never exercised this option, contractors worry about being the first victim.

The government also faces significant intellectual property challenges. The biggest of these challenges is "vendor lock," which occurs when vendor-controlled IP precludes competition for sustainment or upgrade contracts. When the government fails to obtain the rights to certain key parts of a new capability's intellectual property, it loses the ability to work with other contractors to drive better sustainment deals or...