The provisions of the Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS) can be merciless, and nowhere is their brutality more evident than in the context of IP marking requirements. A contractor can do absolutely everything else right ‒ develop its product at private expense, draw up airtight licenses, and place everyone the contracting officer has ever known on notice about the government’s restricted rights ‒ yet still end up inadvertently surrendering IP rights to the government because of missing or faulty markings. For this reason, it is imperative that government contractors come up with a list of standard practices relating to the marks that they put on their intellectual property-related products before delivering them to the government.
Just how ruthless is the FAR when it comes to marking up your deliverables? Under FAR 52.227-14(f)(1), “Data delivered to the Government without any restrictive markings shall be deemed to have been furnished with unlimited rights.” The DFARS isn’t much gentler; DFARS 7103-10 and 7203-10 state that technical data and software “delivered or otherwise provided under a contract without restrictive markings shall be presumed to have been delivered with unlimited rights and may be released or disclosed without restriction.”
When it comes to the proposal stage, the DFARS is actually harsher than the FAR; DFARS 252.227-7016(e) requires that contractors identify in their proposals any data that will be shared with the government with less than unlimited rights. If you don’t, you will forfeit your right to prevent the government from using that information in any way they see fit. Not to be outdone, when it comes to unsolicited proposals, FAR 15.609(b) requires that you mark both the proposal’s title page and every single other page on which proprietary information appears, or you’ll risk granting the government the unlimited right to use and disclose that information. Courts have held that a failure to mark in this manner creates an absolute bar to recovery against the government for unsanctioned use.
But wait, it gets better: when it comes to the FAR and DFARS, being close is not good enough. Unless you mark your deliverables exactly as the regulations demand, the government has the option of ignoring nonconforming marks altogether if you cannot justify the variation.
There is a ray of hope for contractors who mis-mark or fail to mark, however ‒ so long as they have a friendly contracting officer. Under FAR 27.404-5(b)(i) and DFARS 227.7103-10(c)(2) and 227.7203-10(c)(2), contractors have six months during which they can seek to correct their marking mistakes. So long as you can meet certain minimal requirements, the CO can choose to allow the correction. CO’s can even extend the 6-month window at their discretion (under the DFARS) or for good cause (under the FAR), but of course it is best to avoid marking mistakes altogether to keep from being stuck dangling at the mercy of the government.
Developing a standard procedure when it comes to marking can save a lot of headaches down the line. Procedures will vary from one company to another, but be sure to include the following points:
- MARK EVERYTHING – Companies have lost rights by failing to mark even tiny microchips with the required language. Everything from source code to boot screens to storage containers should bear the marks required by the FAR or DFARS. When in doubt, mark it up.
- DON’T GET CREATIVE ‒ The FAR is extremely specific about the wording required to satisfy its marking requirements. Don’t second guess the text or try to beef it up or slim it down ‒ word-for-word is the name of the game.
- MAKE YOUR MARKS NOTICEABLE ‒ Some DFARS provisions, like DFARS 252.227-7013(f)(1) explicitly require that items be “conspicuously and legibly mark[ed].” To avoid the government’s inadvertently overlooking your marks, make sure that they stand out as much as possible.
- WATCH OUT FOR FORMAT CHANGES ‒ In an age when documents change from paper copies to Word documents to .pdf’s in an instant, make sure that you aren’t relying on headers and footers ‒ or even worse, rubber or printer stamps ‒ when it comes to your marks. Letting an unmarked duplicate slip through the cracks because it found its way to the government as a soft copy instead of a hard copy can lead to a totally unnecessary shell game.
- READ YOUR CONTRACT ‒ The FAR and DFARS vary in small, but important ways when it comes to marking requirements. If you are less familiar with one or the other, exercise double caution to ensure that you understand and hit all of the necessary requirements when it comes to placing your marks.
These basics will give you a strong position from the outset, though nothing substitutes for consultation with legal counsel who are familiar with your business and deliverables. Just a little bit of extra caution on the front end can save you from having to ask your CO for forgiveness later in the game.
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