What Defense Innovators Need to Know About Defense Dept.’s Changes to IP Rights

By: Zohra Tejani , Patrick V. Grilli

What You Need To Know

  • Department of Defense (DoD) acquisition programs are adopting a modular approach to system design that would grant DoD greater intellectual property rights to data and computer software.
  • The implications for defense innovators’ product development and intellectual property rights are game-changing.
  • Defense innovation companies should familiarize themselves with new definitions and license rights while fine-tuning their approaches to product development and solicitation response.


The United States Department of Defense’s (DoD) supplement to the Federal Acquisition Regulation (DFARS) requires the DoD to adopt a Modular Open System Approach (MOSA), which is a technical and business strategy for open and adaptable system design. To the maximum extent practicable for relevant modular systems, DoD solicitations and contracts must include a modular design with modular system interfaces.

The changes to the DFARS provide the DoD with greater intellectual property (IP) rights to data and computer software for those modular system interfaces. The modular systems approach is intended to reduce or avoid costs, reduce time for system integration, allow for system upgrades, and increase the opportunity for system interoperability. These changes decrease barriers to entry by non-traditional defense innovation companies if they can deliver on lower cost, on-time, and improved solutions.

Conceptually, the proposed regulations would give DoD visibility and expansive rights to top-level data and code of proprietary modules without revealing or granting rights to the core of the proprietary module. The reality of how the MOSA regulations would be implemented in a system’s architecture and contract terms could play out differently.

While this summary is intended to provide a high-level introduction, defense innovation companies should ensure a deeper understanding of the upcoming changes because they are detailed and nuanced with game-changing implications for product development and intellectual property rights.


To lay the groundwork for the sets of rights DoD will require, the proposed DFARS changes include numerous new and revised definitions. These are:

  • desired modularity
  • interfaces
  • interface implementation data
  • interface implementation software
  • interface specification
  • major system component
  • major system platform
  • modular open system approach
  • modular system
  • modular system interface
  • interface specification
  • interface implementation data
  • interface implementation software

The regulations would revise the definition of form, fit, and function data and add a new definition of form, fit, and function software.

To understand what rights would attach to which data and code, keep in mind that form, fit, function data and software are intended to help identify physically or functionally equivalent items or processes and are higher-level than the interface implementation data and software, which would be much more detailed to help implement an interface.

The new definition of interface specifications would be a subset of form, fit, and function data or software and would merely describe an interface.

License Rights

Expect significant changes to the existing DFARS licensing framework for commercial and non-commercial technical data and computer software, as well as Small Business Innovation Research rights. A few key points include:

  • The government would have unrestricted and unlimited rights to form, fit, and function data and software, respectively, even in connection with commercial computer software.
  • The government would have a negotiable five-year government purpose rights license to interface implementation data and software that were developed at private expense. After the negotiated period, the government would have extensive use and disclosure rights.
  • For these new and revised rights in computer software or technical data developed at exclusively private expense, the proposed regulations would leave room for negotiating appropriate and reasonable compensation.
  • The proposed changes would also revise the definitions of “limited rights” and “restricted rights” to allow for disclosure outside the government in certain circumstances.

Asserting Rights Restrictions

DoD’s protocols for asserting restrictions on rights for developments at private expense—either exclusively private or partially with government funds—would be revised to include some of the newly defined terms and a method for defense innovation companies to articulate any modular system interfaces.

For technical data, the proposed revisions also indicate that a decision by DoD or a determination by a contracting officer to not challenge a restrictive marking or asserted restriction will not foreclose DoD from requiring delivery of that technical data.

Considerations for Defense Innovation Companies

  • Understand the new definitions and license rights.
  • Adopt a “modularity by design” product development approach including factoring widely supported, consensus-based interoperability standards and industry standards.
  • To facilitate responding to solicitations, proactively identify and document form, fit, function data and software, as well as interface implementation data and software.
  • Update product documentation along with commercial terms to reflect DoD’s expected license grants.
  • Plan to negotiate which developments fall within the meaning of the defined terms, the level of modularity, the amount of data and code needed for interfaces, and possibly royalties and compensation.
  • Re-train teams on marking technical data and computer software being delivered to DoD agencies.
  • Consider the impact of the MOSA changes to existing components and software being provided to DoD. Anticipate bilateral contract modifications.
  • Don’t forget to factor in the MOSA terms when subcontracting.


DFARS Case 2021-D005.pdf

DFARS Case 2019–D044.pdf