Anyone who uses the intellectual property of another without proper authorization is said to have ‘infringed’ the property. In addition to the traditional categories of intellectual property protections, government procurement regulations provide a layer of rights and obligations known as “data rights.” These regulations describe the rights that the government may obtain to two types of data, computer software and technical data, delivered or produced under a government contract. For example, if the government wants to minimize its costs of having supercomputers developed exclusively for government use, it could waive its rights in order to spur commercial development. These also include projects that affect safety and security. Both industry and agency officials covered by our review had concerns about the effectiveness and the efficiency of successfully negotiating contracts with intellectual property issues. These concerns include a lack of good planning and expertise within the government and industry’s apprehensions over certain government rights to data and inventions as well as the government’s ability to protect proprietary data. Some companies mentioned specific instances in which they delayed or declined participation in government contracts. Most agency officials said that intellectual property issues were at times hotly contested and could become the subject of intense negotiations. While agency officials indicated that problems related to intellectual property rights may have limited access to particular companies, they did not raise or cite specific instances where the agency was unable to acquire needed technology. Specifically, agencies could promote greater use of the flexibilities already available to them. The exceptional circumstances determination allows the pharmaceutical companies to retain the intellectual property rights to any discoveries coming out of these tests, rather than the performer of the tests.
What GAO Found

Improperly defined intellectual property rights in a government contract can result in the loss of an entity's critical assets or limit the development of applications critical to public health or safety. Conversely, successful contracts can spur economic development, innovation, and growth, and dramatically improve the quality of delivered goods and services. Contracting for intellectual property rights is difficult. The stakes are high, and negotiating positions are frequently ill-defined. Moreover, the concerns raised must be tempered with the understanding that government contracting can be challenging even without the complexities of intellectual property rights. Further, contractors often have reasons for not wanting to contract with the government, including concerns over profitability, capacity, accounting and administrative requirements, and opportunity costs. Within the commercial sector, companies identified a number of specific intellectual property concerns that affected their willingness to contract with the government. These included perceived poor definitions of what technical data is needed by the government, issues with the government's ability to protect proprietary data adequately, and unwillingness on the part of government officials to exercise the flexibilities available concerning intellectual property rights. Some of these concerns were on perception rather than experience, but, according to company officials, they nevertheless influence decisions not to seek contracts or collaborate with federal government entities. Agency officials shared many of these concerns. Poor upfront planning and limited experience/expertise among the federal contracting workforce were cited as impediments. Although agency officials indicated that intellectual property rights problems may have limited access to particular companies, they did not cite specific instances where the agency was unable to acquire needed technology. Agency officials said that improved training and awareness of the flexibility already in place as well as a better definition of data needs on individual contracts would improve the situation.