The Australian Standard for Defence Contracting (ASDEFCON) suite of tendering and contracting templates are used by the Department of Defence for the acquisition of goods and services. Each ASDEFCON template meets a different procurement need and profile, depending on the size, complexity and nature of the procurement activity.

The ASDEFCON Technical Data / Intellectual Property (TD/IP) framework is a key Defence reform initiative to improve and streamline Defence’s procurement processes. The framework seeks to achieve a more appropriate balance between the TD/IP needs of Defence and the protection of industry’s interests, as well as reflecting the fundamental importance of technical data as a key enabler of capability outcomes.

This article sets out the categories of material, the ownership and licensing regime and attempts to distil complex topics into a brief description of the regime. References within this article are to the ASDEFCON (Strategic Materiel) V3.1 Part 2 Draft Conditions of Contract.

Defence and Industry Intellectual Property Working Group

The new ASDEFCON TD/IP framework was created following the formation of a working group comprising Defence and industry.

Defence industry had previously raised a number of issues on the approach taken in the ASDEFCON suite of contracting templates in relation to Intellectual Property and Technical Data. Defence acknowledged continuing difficulties with the Intellectual Property and Technical Data provisions in the ASDEFCON templates and formed the view that they should be reviewed and recast, with a much greater focus on Technical Data.

As a result, the Defence and Industry Intellectual Property Working Group was formed to provide a forum in which representatives from defence industry and Defence could explore key TD/IP issues and develop practical solutions for their treatment in the ASDEFCON templates.

Old approach

Defence found that the former ASDEFCON approach tended to focus on intellectual property issues to the detriment of commercial issues and technical data. The resulting IP licence was overly broad and a complex mix of background, foreground and third party IP. The following issues were identified:

New approach

The objectives of the new approach are to:

The new approach moves away from categorising IP as foreground, background and third party IP, and rights based on those IP categories, to categorising technical data and software and rights based on those categories.

This is achieved through the adoption within the Contract of key concepts of technical data, software and contract material. The IP provisions within the Contract recognise that technical data and software enable outcomes, with the focus on the technical data and software that is necessary to achieve the outcome and consequently the IP rights for that material. This is a similar approach to that of the US Department of Defense.

The Contract refers to a number of different categories of technical data and software at clauses 5.2 to 5.6. These mutually exclusive categories were developed to assist in the determination of the licensing approach most suitable to a particular item of technical data or software.

There are five default licences that apply to technical data and software, in addition to a category of material called Contract Material (at clause 5.7) which has different licensing rights.

Ownership

The licences complement a revised approach to ownership. The Contract does not seek to change the ownership of any existing IP. For new IP created under the Contract or a subcontract, Defence’s default position reflected in clause 5.1 is that the contractor will be the owner.

If the Commonwealth requires ownership of IP in specific items of technical data or software because a licence would be insufficient to protect the Commonwealth’s interests, an exception exists under clause 5.1.3 to enable the Commonwealth to own newly created IP in specific items identified. The Commonwealth may require ownership for reasons relating to national security and strategic interests associated with the program or a capability’s whole of life requirements.

Right to use

Ownership and licensing is coupled with the key concepts of right to “Use” and right to sublicence.

The right to use is a broad licence to use, reproduce, and modify technical data and software for Defence Purposes. Within clauses 5.2.2(a), 5.3.2(a) and 5.7.1(a), the right to “Use” is coupled with the term “for any Defence Purpose”:

“Defence Purpose” means a purpose related to any of the following:

This broad definition affords Defence a licence for a wide scope of matters. For some categories, the licence for Defence purposes is subject to restrictions, while for the Technical Data and Software category there are no restrictions on “Defence Purposes.”

TDSR

While the provisions relating to IP ownership and licensing for technical data, software and contract material are contained within the Contract, these provisions may be modified by the parties through the Technical Data and Software Rights (TDSR) Schedule.

The TDSR Schedule is not an exhaustive list of all technical data or software to be provided under the Contract or a subcontract. The TDSR Schedule will only list specific technical data or software where a restriction applies to Defence’s rights under the Contract.

The procurement process

Tenderers must provide a draft TDSR Schedule as part of their tender setting out the restrictions required in any resultant Contract.

Significant onus is placed on a tenderer to categorise technical data or software and the restrictions that the tenderer will place on Defence’s use. For example, a tenderer will, in the case of Highly Sensitive TD and Highly Sensitive Software, need to:

Key points for contractors

The method of categorising technical data and software and ascribing IP rights based on those categories is an innovative measure to address the muddled categorising of IP traditionally used in defence contracts. This may provide efficiencies during contract formation and management and more broadly in dealing with IP rights.

The challenge for defence industry is in the categorisation of its own technical data and software and presenting this within the draft TDSR in a tender submission. There is also a requirement to develop and maintain standard wording for use within a Defence tender submission for existing and newly developed material.

The danger for contractors is the failure to adequately identify and label technical data and software within a tender submission. This could result in competitors having access to IP and the Government having overly broad rights beyond what the contractor envisaged. An overly cautious approach may conversely mean that a contractor will be unsuccessful in a tender submission if Defence considers that the restrictions are too great for its purposes.

Opportuna Legal advises that defence industry begins the process of analysing and categorising its products to ascertain which ASDEFCON category applies and what appropriate restrictions should be sought.

Opportuna Legal advises on ASDEFCON and procurement contracts with the Department of Defence. If you need guidance on the TD/IP framework or tender submissions, contact Opportuna Legal.

Images in the original article were provided with the kind permission of the Department of Defence. Source: ASDEFCON Technical Data and Intellectual Property Framework presentation, Department of Defence. Licence: Creative Commons Attribution-NonCommercial-NoDerivatives 4.0.

Anthony Jarvis | Managing Partner, Opportuna Legal

Anthony Jarvis is the Managing Partner of Opportuna Legal, a corporate and commercial law firm based in Perth, Australia. Anthony advises private companies, founders, and boards on M&A, capital markets, corporate governance, and commercial contracts. Anthony advises business owners and family groups on trust structuring, succession planning, and corporate governance.

Contact: reception@opportunalegal.com.au | (08) 6110 3748

This article is general information only and does not constitute legal advice. Readers should obtain professional advice specific to their circumstances before acting on any of the information contained in this article.