Defense primes use ITAR data rights to lock startups out of their own technology improvements

When a startup subcontracts to a defense prime (Lockheed, Raytheon, Northrop), the prime's contract often includes data rights clauses that give the prime unlimited rights to the startup's technical data delivered under the contract. The startup built the core technology with venture capital, but the prime claims derivative data rights on any improvements made during the contract. Startups that push back on data rights lose the subcontract. This persists because primes have procurement leverage (they control the relationship with the government customer), startup founders rarely have defense contracting attorneys on retainer during the subcontract negotiation, and the FAR data rights framework is ambiguous enough that primes routinely claim broader rights than the regulation intends.