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Less is More: Encouraging Greater Competition in Computer Software Procurement by Simplifying the DFARS Licensing Scheme

"Unduly confusing," "daunting," "onerous," and "counter-intuitive" are all terms that describe the Department of Defense's (DoD) regulations regarding intellectual property (IP) rights in computer software. Practitioners and academics have assailed the Defense Federal Acquisition Regulations Supplement (DFARS) provisions regarding IP rights in software as being too difficult for contractors to understand and being too protective of government interests. This confusing maze of regulations has discouraged small, non-traditional companies - the type of companies that generate the groundbreaking technology most sought after by the DoD - from entering the federal marketplace. This paper examines the current DFARS software IP rights scheme and provides a roadmap for further reform. Part II analyzes the history of software development and the historical regulations governing DoD's procurement of software. Part III examines the current DFARS provisions governing rights in software. Even after two congressionally mandated rewrites, the DFARS retains the protectionist character of Cold War era IP regulations. Part IV examines the viewpoints of the stakeholders in government-procured software. Contractors view intellectual property as the "crown jewel" of corporate assets. Moreover, DoD often does not need the extensive rights that these regulations confer. Finally, Part V suggests a way to encourage non-traditional firms to enter the government marketplace. The current standard licenses for software are are too broad and grant the Government rights that it does not need. Reformed DFARS clauses should confer rights through negotiation and establish, as the maximum the Government can demand, a level of rights equal to the current government purpose rights license. Such a reform would alleviate the fears many companies have that the Government will pawn off their "crown jewels."