Published in Aviation Week & Space Technology, May 25, 2017
Republished by permission of Aviation Week & Space Technology
Recently, the U.S. Defense Department stepped up its outreach to commercial technology companies to ensure that its warfighters have access to the latest innovation and capabilities. Based on my experience, U.S. commercial industry enthusiastically supports the department’s aim to deliver innovation that enables warfighters to win at the best possible value for the American taxpayer.
Yet one area that is working against this outreach is that of commercial intellectual property (IP) rights. The Pentagon’s acquisition system is struggling to provide innovative commercial technology at the best value for the U.S. taxpayer while keeping commercial companies viable and interested in defense work.
The crux of the issue is that the Defense Department is overreaching on its demand for unrestricted access to IP for commercially developed items. The reasons cited for this demand range from the need to provide service and support to the need to develop competition.
Commercial companies that deliver leading-edge innovation to the Defense Department are concerned with two critical elements at the core of a commercial business:
- It takes vast sums of internal investment to bring a commercial product to market. Sometimes profit is only generated during the service-and-support phase of the product’s life cycle. In its demand for unrestricted commercial IP, the government dismisses the business case upon which the invention was based and eliminates a company’s ability to continue to invest in leading-edge products and capabilities. When this happens, the basic free-enterprise business model breaks down.
- In some cases, the Defense Department is seeking unrestricted IP rights in order to give it to competing companies to generate more competition. If this happens, the government can simply hand over privately developed IP to companies that have risked nothing to innovate.
The Pentagon often speaks as if it understands the issue. Its Intellectual Property Strategy Guidance of August 2014 suggests an appreciation of the IP data rights challenge. The guidance says:
- “Intellectual Property (IP) is an expression of a new and useful concept that can be legally protected such that the originator (e.g., inventor, author) is granted certain exclusive rights.”
- “Don’t make an unnecessary ‘grab’ for deliverables or additional license rights for ‘Proprietary’ IP.”
Yet recent requests in the Defense Department’s solicitations show a lack of appreciation for the impact its IP data rights requirements would have on commercial businesses.
We understand the need for the department to control some IP. For example, Air Force Lt. Gen. Christopher Bogdan, who runs the F-35 program, has said, “If I have an F-35 on an aircraft carrier out at sea, I can’t call on you to repair that part in Charleston, South Carolina. The Navy has to be able to repair that part on the ship. I need the technical data so I can build the repair capability.”
A fair and equitable solution may require give on both sides. So what’s the answer?
Here are a few recommendations that, if judiciously exercised, would go a long way toward enabling the Pentagon to get the innovative technologies it needs:
Develop licenses specific to the purpose. The government should not ask for blanket IP data rights unless it is willing to pay for them. Acquisition personnel can determine early on what IP they are likely to require. These professionals can then write specific contract language that addresses individual concerns and expectations.
Budget for data rights. The Defense Department does not own commercial data rights if a business has risked its own R&D dollars to develop a product. The government should budget for data rights up front. Paying nothing for valuable IP data rights is not a reasonable expectation.
Train and educate the acquisition workforce. Disconnects between Pentagon senior leadership and the workforce charged with acquiring innovative technologies complicate things. Senior leaders say they understand what IP means to a commercial company’s future, but acquisition personnel are seeking broad IP data rights for free. This discourages commercial companies and nontraditional defense contractors from doing business with the Defense Department.
I believe this issue can be resolved to the satisfaction of both government and industry. When the Defense Department and companies fully understand one another’s needs, a mutually agreeable solution can be reached. The government obtains access to innovation. Companies achieve their business objectives. And innovative solutions can continue to be delivered to the warfighter.
Andy Wolfe/U.S. Navy