1. Aerospace Industries Association Intellectual Property Committee Fall 2009 meeting SMC Enabling Clause Holly Emrick Svetz (703) 394-2261 hsvetz@wcsr.com

2. 2 Outline Driving Motivations DFARS provision Aerospace NDA SMC Enabling clause Issues

3. Driving Motivations Avoid misappropriation or infringement lawsuit against support contractor Avoid allegation of conflict of interest against support contractor Avoid potential for every support contractor employee to sign an NDA with every performing contractor and subcontractor Avoid need for support contractor to manage information that could be considered proprietary but not marked Reassure contractor community and Congress that FFRDCs are trustworthy and should be retained as support contractors and not in-sourced 3

4. DFARS 227.7103-7 Use and Non-disclosure Agreement In effect since 1995 without revision "NDA" signed only by support contractor as an entity Exception for contracts containing DFARS 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends Addresses only –Technical data and computer software –Delivered to the Government –Marked as Government Purpose Rights, SBIR Data Rights, Limited Rights, Restricted Rights with special accommodation for Specially Negotiated License Rights Contractor specifically identified as third party beneficiary intended to have right of action against the support contractor 4

5. DFARS 227.7103-7 Rights Granted Government purpose rights or SBIR rights –Support contractor may use, modify, reproduce, release, perform, display, or disclose only for government purposes and not for any commercial purpose Seemingly permits support contractor to transfer from performance of one contract to another unless "specific conditions" are stipulated in an attachment, which is a requirement Limited rights –Support contractor may use, modify, reproduce, release, perform, display, or disclose only as specified in attachment to agreement Restricted rights –Support contractor may use only in performance of Contract No. ___ and shall not enhance, decompile, disassemble, reverse engineer, time share, or use a computer program with more than one computer at a time Special license rights –CO to fill in the blank 5

6. DFARS 227.7103-7 Protections Required Requirements to take measures to protect Covered information received must be destroyed within 30 days after end date of agreement. 6

7. DFARS 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends Rights Granted –Government purpose rights - same treatment –SBIR rights not covered –Limited and Restricted Rights - Support contractor may use, modify, reproduce, perform, or display only in the performance of this contract Protections provided and required –Contractor indemnification - same –Third party beneficiary - same –No protection standard –No destruction or termination 7

8. Aerospace Corp. NDA 8 Executed 14 May 2009 Addresses only –Government, contractor, subcontractor, and supplier proprietary and sensitive information ("Proprietary Information") –"Proprietary Information" - all scientific, engineering, technical, and cost information, including, but not limited to, U.S. Government planning information, competition sensitive information, trade secrets, techniques, drawings, design details, inventions, know-how, processes, apparatus, equipment algorithms, software programs, computer models, future and proposed products and services, research and development, experimental work, specifications, financial information, and marketing plans owned or used by the Disclosing Parties, as well as Limited Rights Data, Restricted Rights Software, and Source Selection Information –Marked "Proprietary," "Confidential," "Competition Sensitive," or marked with words of similar meaning

9. Aerospace Corp. NDA Rights Granted Permits Aerospace to discuss with and disclose to –Relevant Government program office and follow-on program office personnel, including their support contractors –Commanders and directors of the applicable U.S. Government organizations, applicable program element monitors, OSD and staff, applicable service secretaries and staff and U.S. Government auditors –Other U.S. Government program offices Aerospace supports under its AF support contract or any follow-on contract, including their support contractors, commanders, auditors, etc. Which if not disclosed could have adverse effects on the reliability and mission success if Proprietary Information continues to bear the original legend After getting prior written approval from original recipient Government program office Before disclosure to other support contractors, they must have an NDA with the various prime contractors, subcontractors, and suppliers OR the U.S. Government 9

10. Aerospace Corp. NDA Protections Required Requires agreements with its Trustees, officers, employees, contract labor, consultants, and attorneys Requires to take measures to protect Notice if legal process requires disclosure Acknowledges no adequate remedy at law and waives proof of damages or bond Destruction only at request of disclosing party - otherwise kept as archival information 10

11. Aerospace Corp. NDA Additional Terms Expressly states Aerospace obtains no license Contractors make no warranties Supersedes individual employee NDAs for applicable U.S. Government programs Either party may terminate with 30 days notice and terms ends with AF contract and its follow-ons expire California law with federal common law overlay 11

12. SMC Enabling Clause Requires contractor to cooperate with Aerospace –Provide access to technical information and research, development planning data Design and development analyses; test data and results; equipment and process specifications; test and equipment specifications and procedures, parts and quality control procedures, records and data; manufacturing and assembly procedures; and schedule and milestone data; all in their original form or reproduced form and including cost data –Cost data is defined as information associated with the programmatic elements of life cycle (concept, development, production, operations, and retirement of the system/program. As defined, cost data differs from "financial" data, which is defined as information associated with the internal workings of a company or contractor that is not specific to a project or programs." Contractor must include in each subcontract a clause requiring compliance by subcontractor and supplier and succeeding levels of subcontractors and suppliers 12

13. SMC Enabling Clause Rights and Protection Aerospace may –Access technical information (including proprietary information) –Disclose to commander or director of the various DoD organizations it supports and any other U.S. government program office which, if not disclosed to the U.S. Government, could have adverse effects on the reliability and mission success of a U.S. Government program Aerospace must protect the proprietary information of contractors, subcontractors and suppliers in accordance with the NDA 13

14. Issues Entire government space and intelligence community allowed access Coverage varies widely between DFARS, NDA, and Enabling Clause –Information marked with less than Unlimited Rights legends –"Proprietary Information" with 2 definitions in one agreement –"Technical Information" and undefined Proprietary Information No clear coverage of –Commercial item rights information –Programmatic, manufacturing, business information –Private information Endless flow-down requirement No standard for interpretation –California law –FOIA exemption 4 –UTSA 14