Frankenstein's Monster: Data Rights Changes Adopted In The National Defense Authorization Act For Fiscal Year 2011

A great deal of discussion has transpired regarding recent legislation that reportedly could alter significantly the established “follow-the-funds” test used for the allocation of intellectual property rights in data developed under a government contract. The legislation involved is a provision of the National Defense Authorization Act for Fiscal Year 2011 (the “Act”), signed into law on January 7, 2011. In particular, Section 824 of the Act provides “Guidance Relating to Rights in Technical Data” and, more importantly, amends Section 2320(a) of Title 10 of the United States Code, the provision that defines the allocation of rights in intellectual property under Government contracts.

Unfortunately, the amendment adopted in the bill is clearly flawed. The provision, read literally, makes no sense. Depending on what Congress actually intended to impose, the change is either a major “sea change” in the way rights in data are to be allocated, or it is merely a refinement and expansion of current law dealing with de mimimis activities. Many are raising alarms regarding the potential impact of the change, and such concern may be warranted. On the other hand, consideration of the legislative history leading to the provision suggests that only a modest change was intended but was transmogrified to something akin to Frankenstein's monster in the reconciliation of the House and Senate versions of the Act.

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