How can a topic loaded with emotions or financial futures or both be so boring? Mention data rights to almost any Contracting professional and watch his eyes glaze over. To be fair, the same is true of most Acquisition professionals, not just those working in Contracting. To be really fair, it’s a small minority of the population who cares at all.
In my 31 years in this career field, I don’t think I ever came across anyone, other than a handful of lawyers, who truly understood intellectual property. Sure, you can regurgitate definitions from the FAR and quote them back in warrant boards or explain the data rights chart in your Acquisition Strategy briefing, but for the most part, it’s only words. The average person who doesn’t create and own Intellectual Property just doesn’t get it, and they’re too excited about their unauthorized download of Game of Thrones or the free popular diet book pdf in their Facebook secret group to be sensitive to what it means to own a copyright or a trademark.
The Devaluation of Intellectual Property
If you can’t pick it up with your hands and smell it or lick it, it’s hard to put a value on it. It’s ideas and vision and process, not wood and iron and bone. I once sat next to an author at a fundraiser for a literacy book signing and witnessed some of her biggest fans pleading with her for a free copy of her 400-page non-fiction guide, of which she made a whopping 10% of the cover price in royalties, and that was above the norm. They spent an hour at her table, not buying the book that was the sum of her knowledge on the subject, but trying to get her to teach it to them for free. They didn’t understand why she wouldn’t just give it them. She inquired about a package one held in her arms, a rather large hand-made musical instrument purchased from a nearby booth, and upon hearing the amount the new owner had proudly paid for a tangible item, the author explained that she would need to sell 1500 copies of her book (her knowledge) to buy the instrument. They still didn’t understand–one took tools to make and the other took only her mind. The product of her mind and the value of what she could teach them was something they thought should be free to everyone as it didn’t require the use of “materials” to manufacture, other than cost of paper and ink. To them, any type of knowledge should be freely given, including the time to develop it and share it.
If that example seems simplistic, the Acquisition community has not been much better in understanding intellectual property. It’s a hot button for me, and I’ve noticed in ways I don’t expect others to.
I’ve seen the Acquisition pendulum swing back and forth over the years in regard to the Government insisting on owning data rights in contracts–across the board, no exceptions. I’ve seen leaders, including ones I otherwise admired, insist that “We always get data rights” whether it made sense or not. All it takes is a couple of unwieldy and over-priced sole source contracts where Acquisition leaders swear up and down that things would be better if only they had competition, and there is some truth in that. So the next thing they want to do is insist on rights to a Contractor’s intellectual property, whether the Government actually uses it or not so they can do with it what they want. Less common, in my experience, has been to insist on Government Purpose License Rights in order to compete a follow-on. In some cases, it makes sense to encourage more competition–and overall, I believe that competition is a wondrous thing–but in other cases, the Government just seems greedy. I’ve seen times when the Government had no intention of either attempting to buy the rights or to develop the product further. Some end-users aren’t at all interested in data rights because if the product is no longer useful or a better one comes along, they’ll move on to a different solution without wasting funds on data rights. Acquisition of data rights should in my opinion be on a case-by-case basis as opposed to one-data-rights-decision-to-rule-them-all.
As a former Contracting Officer, I wholeheartedly support looking thoroughly at data rights as part of setting an Acquisition Strategy. That does not mean checking a box on a chart that says, “Yes! We want Unlimited Rights!” It’s not a black or white proposition, and there are many shades of aubergine and maroon when it comes to determining what’s best for all parties and how data rights are written into the contract or Other Transaction.
“Ridiculous” Prices for Data Rights
I completely understand why private industry innovators are reluctant to work with the Federal Government when it comes to data rights. I understand the reason for the lack of trust. Why would an innovator ever want to give up their creation? Sure, everyone has their price, but I can’t remember the last time that the Government wanted to pay it, just to get competition. Yes, ask the Contractor for an estimate so the J&A can be properly vetted, and then go back and 1. tell the Contractor that “Unwilling to give up data rights at any price” is not acceptable and next 2. subsequently tell the Contractor that “$1B” is not a serious response. But pay it? No. I don’t recall ever seeing it, though I did see it come close on a solitary occasion for a few hundred thousand. If there was any Data Rights Contract Line Item that we paid, I cannot recall it. Contractors would explain that they could make far more money commercializing that intellectual property or that they’d put far too much of their own resources into developing something themselves to allow the Government to give it away to their competitors. That’s not raw emotions speaking–that’s business. That’s keeping your business in business. That’s watching out for your financial future.
I myself have intellectual property that I would not sell to the Government, a defense contractor, or an employer for $1M. At $3M and having a good idea at how to invest that, I would begin to consider it. If your eyes glaze over at the mention of data rights or intellectual property, then that statement probably sounds a bit greedy but that intellectual property is the sum of my life’s work. It’s what I’ve developed on my own time while other people watched TV or … had social lives. To give up rights to that particular intellectual property would mean that I could never use it again. It would be the end of my career, and I’d truly be retired from Rapid Acquisition. The price I put on it might seem ridiculous to someone who wants it and values it but doesn’t want to pay for it, but to me, its usefulness equates to how I might feed and shelter myself for the next 30+ years of life, not to mention value to my heirs. If I gave up rights to that intellectual property, then I would be out of this career field. For good.
You see, unlike most of Acquisition colleagues, I really do understand data rights and intellectual property. I was told that my OGE 450 was THE most complicated of all the procurement integrity disclosures because I had over 30 pages of copyrights before Legal Counsel let me bundle them into a few lines. I’ve been a story teller since I was three years old, and the first novel I published–under a pen name–hit #5 on a bestseller list. I’ve been published many times under my own name and others, both fiction and non-fiction, but I am indeed an obscure author because I have always put my Acquisition career ahead of my other passion and, at least for the time being, I will continue to do so. But that doesn’t mean I’m willing to give away what I have created out of nothing.
Unless you’re an artist or maybe a software developer or an inventor, you probably don’t understand the emotions behind creating intellectual property, even if you do understand the financial aspects. In fact, you may be happy to give away stories you write on the internet just for the applause. Creating intellectual property is a bit like playing God. You form your creation out of nothing. It’s something of an intellectual conversation with yourself, trying out different scenarios and solutions to expand and give form to something that didn’t exist before. It’s what I call god-spark, or lightning-seed, that fully formed becomes walking-lightning. The thought forms that you manifest out of nothingness–like Capt Kirk or Darth Vader or Buffy–become known and measurable and sometimes real to you, with fierce feelings for them. These are the children of your mind. Creating intellectual property is the fire in the belly, the kick inside. If you don’t like our intellectual property, then we take it personally because it’s a direct reflection of who we are and what goes on inside our heads. But if you do like it and like it enough that you want it for free?
Reverse Engineering, Piracy, and Theft
A few years back, I sat in a conference room with about 75 colleagues. The meeting was led by a colonel and he was angry. I had been brought in because I had a reputation as a renegade in Contracting, so everyone was certain I could find a solution. The problem was, the colonel had an ongoing sole source contract and he wanted data rights. He was unhappy with the costs, and rightfully so. We all knew the Contractor was charging something that didn’t fit “fair and reasonable” and when we’d asked for a ROM to buy data rights, we’d been handed an exorbitant estimate that told us what they expected to make from the Government if we continued to buy their product sole source, and then some. I didn’t blame the colonel for being angry, but when he asked me if I could write a contract with a competitor to reverse engineer the product so he could compete the product, he received a quick and firm “No way” from a Contracting Officer who normally said, “We can’t do it that way, but let’s try this instead.” He was used to hearing “No” from Contracting Officers but not for the reason I gave.
I know I stunned everyone in the room when I blurted out, “Absolutely not! Another Contracting Officer may be willing to, but that crosses ethical lines for me.”
What no one else in that room knew was that I had a little book–about 30 pages, non-fiction–under a pen name, and though ebooks weren’t overwhelmingly popular at that time, I made enough money monthly from that one project to pay for my eldest child’s monthly college expenses. The week before that meeting, my income from that book dropped to less than $15 a month and never recovered. The copy-protected version available on Amazon had been pirated. Someone had taken my intellectual property and put it up on a “free ebook” site. They weren’t making money off of it, so they excused it as fair game, but then I wasn’t making money off of it either. As a result, I couldn’t afford to write a sequel to it so the fans were disappointed and I could no longer rely on income from that project to pay college bills. Just that quickly, all the work I had put into that one book and all the knowledge I’d come by the hard way was gone.
To me, reverse engineering a product to avoid paying for the rights to those processes and trade secrets is theft, just as pirating a book is theft. This was not an adversary’s work to be stolen–this was one of our own. That contractor’s product was never reverse engineered, by the way. The popular opinion was, “If Lorna won’t do it, there must be something bad wrong.” Maybe I would have felt a little different if I hadn’t dealt with my own pirates, but I do understand why some Contractors don’t trust the Government with their intellectual property–it’s their livelihood, their financial present and future.
The Challenge Ahead
As we move forward into this new era of Other Transaction Authority and various innovative tools, plus a more creative mindset than we’ve seen in two decades, we need to remember that when the Government says “Data Rights” or “Intellectual Property,” someone out there has put their life force, mental energy, and opportunity cost to create other revenue into that product. Though the Government needs the results of a lot of intellectual property, it’s not necessary in many cases for the Government, a defense contractor, or an employer to claim rights to that intellectual property, to do what they want with it and to distribute it as they wish. There are deals that can be worked out, solutions that can be tweaked, and teamwork that can get us to where we need to be. But as long as the Government insists on holding an innovator’s data rights without a deeper look or deeper discussion for whether that’s an appropriate strategy and as long as Acquisition officials don’t really and truly understand intellectual property and it’s financial if not emotional value, we all lose.
c 2018 Lorna Tedder
- Rapid Acquisition Consultant
- Recently retired Contracting Officer, unlimited AFMC warrant 1991-2018
- Nationally recognized Innovation Thought Leader in Government acquisition
- Rapid acquisition teacher, both FAR and non-FAR based contracting
- Master brain-stormer and advisor to program offices across the DoD
- Expert in developing junior and mid-level personnel to become innovators in Government acquisition
- 3 decades of first-hand experience and success with Other Transactions, Oral Proposals, 10 USC 2373, Broad Agency Announcements, unique pricing arrangements, Price Based Acquisition, Award Without Discussion, streamlined source selections, multiple award IDIQs, UCAs, waivers, omnibus tool creation, Quick Reaction Capability teams, and strategic sourcing
- Do you need help? Would you like me to spend a couple of days teaching your Government team how to use innovative contracting methods? Message me on LinkedIn or my contact page.