On April 28, 2022, Covington convened experts across our practice groups for the Covington Robotics Forum, which explored recent developments and forecasts relevant to industries affected by robotics. Winslow Taub, Partner in Covington’s Technology Transactions Practice Group, and Jennifer Plitsch, Chair of Covington’s Government Contracts Practice Group, discussed the robotics issues presented in private transactions and government contracts, highlights of which are captured here. A recording of the forum is available here until May 31, 2022.
A business in the robotics space may acquire, develop, and use a variety of technology assets, including specialized hardware, control software, and AI models that depend on large training data sets. Understanding these assets, and the forms of IP protection available for them, is critical when engaging in a transaction the robotics space—whether an M&A transaction, a commercial transaction, or a transaction with the government.
By way of example, in an M&A transaction, the seller may rely on disparate sets of data (including sets of data acquired from its customers) in developing robotics products. Verifying that the seller has sufficient rights to that data is a critical part of diligence. And the data is often processed heavily in order to make it useful for a robotics application. Because data rights are not protectable under patent and copyright laws, it is important to verify that adequate contractual protections are in place to secure exclusive use by the seller.
As another example, in commercial agreements for the deployment of robotics technology, it is important to take special care in negotiating the rights and obligations during the “support” phase of the project, after the solution is put into operation. The technology provider will often require access to data from the production environment in order to fix bugs and improve performance—including sets of production data that can be used to further train the relevant AI models.
The U.S. Government frequently collaborates in the development of specialized technology, or tests or procures finished products from the private sector. The U.S. Government has specialized rules which must be carefully considered when entering into any transaction with the U.S. Government as these rules are often complicated and can impose significant compliance obligations. Collaboration or development agreements should be carefully considered as many standard government procurement requirements do not easily translate to new and emerging technologies.
U.S. Government rights in intellectual property and data related to government agreements should be carefully considered before entering into any U.S. Government agreement or acquiring any technology that has been funded by the U.S. Government. If a company accepts U.S. Government funding to develop robotics technology, there may be significant intellectual property implications if patentable technology is conceived of or for the first time actually reduced to practice in the performance of the government agreement. The inventor will hold the patent, but the U.S. Government will receive a license and potentially greater rights if certain reporting and other requirements are not met. This issue can also arise for companies acquiring already developed technologies that may have been developed with U.S. Government funding as the U.S. Government rights will remain after the transaction.
The U.S. Government also generally obtains unlimited rights in data first produced or delivered in the performance of a U.S. Government contract, and companies should think about what data might be produced or delivered in the course of performance of an agreement with the government, and consider what consequences could result from the U.S. Government receiving the right to use, share and even publish such data. This issue is particularly important in consideration of the potential impact on trade secret protections for data in which the U.S. Government receives unlimited rights.
We will provide additional updates about the topics covered in the 2022 Covington Robotics Forum and other developments related to robotics on our blog. To learn more about our work related to this post, please visit the Technology Industry, Technology Transactions and Government Contracts pages of our web site. For more information on developments related to AI, IoT and connected and automated vehicles, please visit our AI Toolkit and our Internet of Things, Connected and Autonomous Vehicles and Data Privacy and Cybersecurity websites.