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Updates to the SBIR/STTR Data Rights: Key Regulations and Strategies

On December 18, 2024, the Defense Department (DOD) officially released its Final Rule (Rule) that revises the Defense Federal Acquisition Regulation Supplement (DFARS). This amendment is a crucial step in implementing the data rights aspects of the Small Business Administration’s (SBA) Small Business Innovation Research (SBIR) Program and the Small Business Technology Transfer (STTR) Program, as outlined in the Policy Directive.

Effective Date and Immediate Implications

The new Rule takes effect on January 17, 2025. To ensure that government contractors fully protect their data rights under the SBIR/STTR programs, they must adopt several key practices. Contractors should:

1. Carefully Review Contracts: Scrutinize all contracts and subcontracts to ascertain which version of the SBIR/STTR data rights clause is applicable to their specific agreements.
2. Assert Data Rights: Actively claim data rights for any technical data and computer software developed or generated during Phases I, II, and III of the SBIR/STTR contracts or subcontracts.
3. Proper Marking: Ensure that such data and software are clearly marked with the appropriate restrictive legends as mandated.

Major Amendments within the Rule

The Rule initiates a significant update to DFARS 252.227-7018, which serves as the principal contract clause for the SBIR/STTR Program. Notably, the data protection period has been altered from a prior five-year term—which had the possibility of indefinite extensions—to a singular, non-extendable period lasting 20 years. This change is pivotal for contractors as it clearly defines the timeframe during which the government cannot claim ownership over the data.

Furthermore, once this 20-year data protection period expires, the government gains perpetual Government Purpose Rights, contrasting the previously applicable Unlimited Rights. The Rule also clarifies that all technical data or computer software developed under any Phase of an SBIR/STTR contract falls under the definition of SBIR/STTR data.

Negotiation Insights and Restriction Clarifications

The Rule explicitly states that while parties may negotiate special license rights, such negotiations can only occur post-contract award. Importantly, the government is forbidden from making the negotiation of these specialized licenses a condition for the contract award. This enhances the protection of contractors’ intellectual properties and prevents unnecessary barriers in acquiring contracts.

Moreover, an important addition to DFARS is the new section 227.7104-1. This section prohibits contracting officers from compelling offerors to relinquish their SBIR/STTR data rights or from unfairly rejecting offerors based solely on the existing restrictions of these rights. However, the government may still use information from offerors’ responses to evaluate how proposed restrictions may influence the government’s ability to use or disclose technical data and computer software, aligning with SBIR/STTR offeror guidelines.

The Path Forward: New Contracts and Data Rights Management

With the Rule’s effective date fast approaching on January 17, 2025, all newly issued contracts and subcontracts will need to incorporate the new DFARS clause. It is crucial to note that the data protection period for SBIR/STTR data is determined by the version of DFARS 252.227-7018 that is incorporated in the relevant contract. If older contracts include previous versions of DFARS 252.227-7018, those protections will stand.

Given these changes, contractors must diligently evaluate their contracts and subcontracts to ascertain which version of the SBIR/STTR data rights clause applies. To maximize the protection of their data rights, contractors are encouraged to assert SBIR/STTR data rights for all applicable technical data and computer software developed during Phases I, II, and III. Properly marking such data with the mandated restrictive legends, as outlined in the DFARS, remains a key practice to secure their interests.

How AI legalese decoder Can Help

Navigating the intricacies of legal regulations can be complex, especially with frequent updates like those seen in the DOD’s amendments. AI legalese decoder offers crucial assistance by simplifying legal jargon and making it more understandable for contractors. It can help stakeholders quickly interpret the new Rule and comprehend its implications, ensuring informed decision-making.

With tools to analyze contracts, identify key clauses, and suggest best practices for compliance, AI legalese decoder empowers contractors to safeguard their interests. By using this technology, contractors can ensure they meet the regulatory requirements and protect their SBIR/STTR data rights effectively. Thus, utilizing AI legalese decoder not only streamlines the understanding of these updates but also enhances strategic planning for future contracts and negotiations.

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