Working with Government

• Author: David J. Rikkers
• Profession: Raytheon Company
• Pages: 151-167

C09 09/02/2011 12:54:27 Page 151

CHAPTER 9

Working with Government

David J. Rikkers

Raytheon Company

As a purchaser of goods and services an d as a source of funding for innovative

efforts, the U.S. government offers many opportunities for companies.

1

The gov-

ernment is a large consumer of many of the same commercial goods and services

purchased by other companies. In order to maximize the return when spending the

taxpayer dollar, the government typically purchases according to the generally com-

mercially available terms of each good or service. This allows the government to

benefit from commercially available products and leverage commercial market com-

petition that sets prices and terms. When the existing, commercial-off-the-shelf

(COTS) alternatives are unable to meet the government’s needs, the government

may solicit proposals in order to determine one or more sources to develop a custom

solution. In some cases, the development efforts funded by the government have not

only established a solution to the government need, but also led to technology suc-

cessfully adopted for nongovernment applications.

Examples of commercial successes based on earlier gov ernment-funded devel-

opment efforts include the microwave oven, semiconductors, and the global posi-

tioning system (GPS). While radar research in the 1940s was directed to finding

enemy aircraft, the ability to use a c omponent of a radar system to cook fo od was

discovered by Percy Spencer of Raytheon, resulting in Raytheon Company’s success-

ful product launch of the first microwave oven, the Amana Radarange. Technology

in semiconductors, a foundational aspect of electronics today, were developed by

AT&T Bell Labs, Fairchild Semiconductor and others. The GPS is another example of

a government-funded effort that has resulted in much commercial success.

This chapter addresses some major themes of intellectual property (IP) aspects

of working with the government. It is important to note that this discussion should

be viewed as an illustrative guide only, as the legal issues with any specific interac-

tion with the government are driven by a variety of factors. As with any transaction,

the contract between the parties is important. However, when working with the gov-

ernment, many regulations, including government branch or agency-specific clauses,

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as well as various statutory provisions, often impose additional requirements. The

content and manner in which some of these regulatory provisions are enforced can

and have changed over time. Advice of counsel to ensure an appropriate under-

standing of the specific situation is always recommended.

The Big Picture

IP rights of interest to the government can be driven in part by factors not prevalent

among most commercial consumers. This can lead to the government’s desiring ac-

cess to more IP than a typical commercial customer. These factors can include rela-

tively short commercial product cycles compared to anticipated government use

of the item; multiyear procurements of the same products, or large time gaps, even

multiple years, between such purch ases; need for interoperability amo ng products

purchased by different parts of the government; unusual uses such as for hostile mili-

tary environments or space exploration. Other aspects of the government’s interests

include long-term maintenance of the items it procures, the training of operators and

maintainers, the option to improve the item or change it to work with different items.

Turning now to the contractor, in addition to being selected by the government

to be a supplier, the contractor’s interests include a sustainable business model. This

usually includes maximizing its return on investments, producing innovations that

distinguish its products and solutions in the marketplace. Importantly, this can re-

quire avoiding a loss of effective control of its IP, such as by the government’s having

such extensive licenses or ownership rights that would enable the government to

make more of the contractor’s product, or an improvement of the product, with no

involvement by the contractor.

The government’s acquisition policies have varied over the decades, with signifi-

cant variations in the scope of IP rights sought by the government. The trend has

swung from the government’s owning the rights to the government’s obtaining a li-

cense to only the rights it needs, enabling the contractor to better commercialize and

benefit from the technology. Currently, the emphasis is again swingin g back in the

direction of increasing government ri ghts in the IP at the expense of a contractor’s

ability to protect its ideas and innovation s from being freely used and modified by

competitors.

The government’s regulatory ap proach has traditionally pro vided a reward for

private investment by allowing the contractors to prevent the corresponding techni-

cal data and software from being disclosed and used by other competitors. However,

if the government had funded the development, the government had the option to

freely share the resulting technical data or software of which it had taken delivery.

However, with many development projects, the government is now commonly

seeking very broad rights, including rights sufficient to enable any government con-

tractor to compete directly against the company that privately fu nded the develop-

ment, using any or all of the technical data and software for free. This is likely to

both reduce willingness to work with the government and reduce private investment

in areas of unique interest to the governm ent, to the detriment of the government.

The government is additionally no w dividing procurement program s requiring de-

velopment into smaller portions, to prov ide additional opportunities for sharin g of

152 Intellectual Property Operations and Implementation