Colorado Springs, CO, June 15, 2026 (GLOBE NEWSWIRE) —
In the world of federal contracting forming a winning team yields success. Small and medium-sized businesses often find that they cannot win large projects on their own and large businesses often leverage technical expertise found in small companies to entice contract awards. Regardless of their size companies frequently decide to pool their resources, technical expertise, and past performance records to pursue complex government solicitations. This joint approach is usually governed by a teaming agreement.
While these arrangements are common in the defense and technology sectors, they often yield unique legal issues that differ significantly from other forms of business partnerships. If you don’t approach these joint efforts with a clear strategy, you may find that your most valuable innovations are at risk.
At Martensen, we recognize that these agreements are sometimes necessary for growth. However, we also know that many businesses enter these arrangements without completely understanding the long-term consequences for their intellectual property (IP). Protecting your rights calls for an in-depth understanding of how collaborating on government contracts intersects with patent, copyright, and trade secret laws.
Defining the Nature of Teaming Agreements
It is important to understand what a teaming agreement represents in a legal sense. Unlike a joint venture, which generally involves the creation of a separate legal entity, a teaming agreement is a preliminary arrangement between two or more existing companies. In most cases, one company acts as the prime or lead contractor while the others tentatively serve as subcontractors. Together, they submit a proposal to a government agency with the hope of being awarded a specific contract.
One of the most critical things to realize is that these documents are often considered an agreement to agree. This means they are not always legally enforceable with respect to works share should the lead contractor be awarded a contract.
The document describes how the parties will cooperate during the proposal phase, but it does not always guarantee that the subcontractor will receive a work share if the prime contractor wins the award. Because the prime contractor ultimately chooses what information to include in the final proposal, the subcontractor has a limited amount of control over the process.
The Risks of Strategic Alliances in Government Contracts
Because teaming agreements are often used in the context of government contracts, they carry risks that you do not typically see in the purely commercial sector. One of the primary dangers is an asymmetrical lack of exclusivity.
A prime contractor might be talking to multiple potential partners and indeed offer in their proposal different alternatives for the government to consider, yet they often require a smaller company to only be engaged in their proposal. They often want to have a lock on the expertise that a smaller company brings to the table. But if you have shared sensitive technical data during the proposal phase without the proper protections, you might have little recourse if the prime contractor moves forward without you. It is a delicate balance to know how much to share to assist in gaining a contract award yet not so much as to allow the contract to proceed without you.
Additionally, the costs associated with preparing a proposal can be substantial. And while the cost may be ‘equally shared’ between the prime and the team member, the impact of the cost given the size differential may be significant. Parties must decide upfront who is responsible for these expenses and not over obligate oneself. In many situations, a subcontractor may invest significant time and money into a project only to find that the relationship dissolves before a contract is awarded or any revenue is generated. Without a clear and enforceable agreement, you may find yourself in a position where you have contributed important insights to a winning proposal but have no way to claim your share of the project.
Clearly identifying pre and post award obligations is an important aspect of any teaming agreement. Ideally a subcontractor’s post award workshare should be clearly and meaningfully defined. For example, certain tasks areas or deliverables can be assigned, geography constraints, functional programs or even value. The general clause, “negotiate in good faith” is a path to nowhere.
Similarly, control is often overlooked. Who has the final word in what is included in the proposal should be identified in the teaming agreement as should how can have communications with the customer.
Critical Intellectual Property Issues
When companies collaborate on technical projects, the question of who owns or controls the resulting innovations is always a major point of contention. The teaming agreement should address ownership of pre-existing IP, jointly developed proposal materials, inventions, software, data deliverables, licenses to the prime and government, residual knowledge, return/destruction obligations, and restrictions on using the subcontractor’s solution if the prime proceeds without the subcontractor. If the agreement is not carefully drafted, the default rules of law may result in shared ownership, which can be disastrous for a growing business.
There are several ways that these arrangements may impair the value of your assets, including:
- Loss of exclusivity. When you share ownership of an intellectual property asset, you lose the ability to prevent the other party from using or licensing that asset.
- Enforcement barriers. A co-owner may be able to block you from taking legal action against an infringer, especially if every owner is required to join a lawsuit for it to move forward.
- Complicated diligence. Shared ownership makes it much harder for investors or potential buyers to evaluate your company because they want to see clear and exclusive rights to technology.
- Trade secret dilution. If multiple parties have access to a trade secret, the risk of it being leaked or lost increases significantly, which can destroy its legal protection.
- Future competition. Your teaming partner today could be acquired by a direct competitor tomorrow, which could give that competitor access to your proprietary methods.
- Fragmented patent prosecution. Coordinating the filing and maintenance of patents becomes very difficult when multiple parties have a say in the process.
Why Joint Ownership Is Rarely the Best Solution in Government Contracts
Many businesses assume that sharing ownership of new projects is the fairest way to handle a collaboration. In practice, however, joint ownership of intellectual property is often a recipe for disaster, especially in government contracts.
This is particularly true for patents and copyrights. Joint owners can often use an invention or copyrighted material without the consent of the other owners. This may cause a situation where your partner is effectively competing against you with your own technology.
Often, a better option is to have one party retain ownership of the core intellectual property while the other party receives a structured license that defines exactly how they can use the technology.
Get Help in Addressing Intellectual Property and Collaboration in Government Contracts
Operating at the complex intersection of business, law, and technology demands a legal team that understands the distinct pressures of the federal marketplace. Our attorneys at Martensen have decades of collective experience in these areas. We don’t just look at the technical language of a contract. We also consider how that contract fits into your overall business goals.
Whether you are a prime contractor looking to secure a specialized subcontractor or a small business trying to protect your innovations in a teaming arrangement, our attorneys can provide the guidance you need to stay competitive. We assist clients with IP strategy, licensing contracts, and government contract concerns to ensure that their assets are secure.
Protecting your intellectual property is essential for long-term success in a crowded and complicated market. If you have questions about how a teaming agreement might impact your rights when working under a government contract, contact us today to discuss your situation.
About Martensen IP
At the intersection of business, law and technology, Martensen understands the tools of IP. Martensen knows the business of IP. We understand the tech market, especially when the government is a customer, and we know how to plan, assess, and adjust. Patents, trademarks, copyrights, trade secrets, licenses are our tools. https://www.martensenip.com
Martensen IP Media Contact
Mike Martensen | Founder
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