Professional Documents
Culture Documents
502
Department of Commerce § 401.2
made primarily for educational pur- set out in § 401.16 for approval for con-
poses. Certain sections also provide sistency with this part before they are
guidance for the administration of submitted to the Office of Management
funding agreements which predate the and Budget (OMB) for review under Ex-
effective date of this part. In accord- ecutive Order 12291 or, if no submission
ance with 35 U.S.C. 212, no scholarship, is required to be made to OMB, before
fellowship, training grant, or other their submission to the FEDERAL REG-
funding agreement made by a Federal ISTER for publication.
agency primarily to an awardee for (f) In the event an agency has out-
educational purposes will contain any standing prime funding agreements
provision giving the Federal agency that do not contain patent flow-down
any rights to inventions made by the provisions consistent with this part or
awardee. earlier Office of Federal Procurement
(c) The march-in and appeals proce- Policy regulations (OMB Circular A–124
dures in §§ 401.6 and 401.11 shall apply to or OMB Bulletin 81–22), the agency
any march-in or appeal proceeding shall take appropriate action to ensure
under a funding agreement subject to that small business firms or nonprofit
Chapter 18 of Title 35, U.S.C., initiated organizations that are subcontractors
after the effective date of this part under any such agreements and that
even if the funding agreement was exe- received their subcontracts after July
cuted prior to that date. 1, 1981, receive rights in their subject
(d) At the request of the contractor, inventions that are consistent with
a funding agreement for the operation Chapter 18 and this part.
of a government-owned facility which (g) This part is not intended to apply
is in effect on the effective date of this to arrangements under which nonprofit
part shall be promptly amended to in- organizations, small business firms, or
clude the provisions required by others are allowed to use government-
§§ 401.3(a) unless the agency determines owned research facilities and normal
that one of the exceptions at 35 U.S.C. technical assistance provided to users
202(a)(i) through (iv) § 401.3(a)(8) of those facilities, whether on a reim-
through (iv) of this part) is applicable bursable or nonreimbursable basis.
and will be applied. If the exception at This part is also not intended to apply
§ 401.3(a)(iv) is determined to be appli- to arrangements under which sponsors
cable, the funding agreement will be reimburse the government or facility
promptly amended to include the pro- contractor for the contractor employ-
visions required by § 401.3(c). ee’s time in performing work for the
(e) This regulation supersedes OMB sponsor. Such arrangements are not
Circular A–124 and shall take prece- considered ‘‘funding agreements’’ as
dence over any regulations dealing defined at 35 U.S.C. 201(b) and § 401.2(a)
with ownership of inventions made by of this part.
small businesses and nonprofit organi-
zations which are inconsistent with it. § 401.2 Definitions.
This regulation will be followed by all As used in this part—
agencies pending amendment of agency (a) The term funding agreement means
regulations to conform to this part and any contract, grant, or cooperative
amended Chapter 18 of Title 35. Only agreement entered into between any
deviations requested by a contractor Federal agency, other than the Ten-
and not inconsistent with Chapter 18 of nessee Valley Authority, and any con-
Title 35, United States Code, may be tractor for the performance of experi-
made without approval of the Sec- mental, developmental, or research
retary. Modifications or tailoring of work funded in whole or in part by the
clauses as authorized by § 401.5 or §401.3, Federal government. This term also in-
when alternative provisions are used cludes any assignment, substitution of
under § 401.3(a)(1) through (4), are not parties, or subcontract of any type en-
considered deviations requiring the tered into for the performance of ex-
Secretary’s approval. Three copies of perimental, developmental, or research
proposed and final agency regulations work under a funding agreement as de-
supplementing this part shall be sub- fined in the first sentence of this para-
mitted to the Secretary at the office graph.
503
§ 401.3 37 CFR Ch. IV (7-1-97 Edition)
(b) The term contractor means any under a state nonprofit organization
person, small business firm or non- statute.
profit organization which is a party to (i) The term Chapter 18 means Chap-
a funding agreement. ter 18 of Title 35 of the United States
(c) The term invention means any in- Code.
vention or discovery which is or may (j) The term Secretary means the As-
be patentable or otherwise protectable sistant Secretary of Commerce for
under Title 35 of the United States Technology Policy.
Code, or any novel variety of plant
(k) The term electronically filed means
which is or may be protectable under
any submission of information trans-
the Plant Variety Protection Act (7
U.S.C. 2321 et seq.). mitted by an electronic or optical-elec-
(d) The term subject invention means tronic system.
any invention of a contractor con- (l) The term electronic or optical-elec-
ceived or first actually reduced to tronic system means a software-based
practice in the performance of work system approved by the agency for the
under a funding agreement; provided transmission of information.
that in the case of a variety of plant, (m) The term patent application or
the date of determination (as defined ‘‘application for patent’’ includes a
in section 41(d) of the Plant Variety provisional or nonprovisional U.S. na-
Protection Act, 7 U.S.C. 2401(d)) must tional application for patent as defined
also occur during the period of con- in 37 CFR 1.9 (a)(2) and (a)(3), respec-
tract performance. tively, or an application for patent in a
(e) The term practical application foreign country or in an international
means to manufacture in the case of a patent office.
composition of product, to practice in (n) The term initial patent application
the case of a process or method, or to means a nonprovisional U.S. national
operate in the case of a machine or sys- application for patent as defined in 37
tem; and, in each case, under such con- CFR 1.9(a)(3).
ditions as to establish that the inven-
tion is being utilized and that its bene- [52 FR 8554, Mar. 18, 1987, as amended at 60
fits are, to the extent permitted by law FR 41812, Aug. 14, 1995]
or government regulations, available
to the public on reasonable terms. § 401.3 Use of the standard clauses at
(f) The term made when used in rela- § 401.14.
tion to any invention means the con- (a) Each funding agreement awarded
ception or first actual reduction to to a small business firm or nonprofit
practice of such invention. organization (except those subject to 35
(g) The term small business firm means U.S.C. 212) shall contain the clause
a small business concern as defined at found in § 401.14(a) with such modifica-
section 2 of Pub. L. 85–536 (15 U.S.C. tions and tailoring as authorized or re-
632) and implementing regulations of quired elsewhere in this part. However,
the Administrator of the Small Busi- a funding agreement may contain al-
ness Administration. For the purpose ternative provisions—
of this part, the size standards for
(1) When the contractor is not lo-
small business concerns involved in
cated in the United States or does not
government procurement and sub-
have a place of business located in the
contracting at 13 CFR 121.5 will be
United States or is subject to the con-
used.
(h) The term nonprofit organization trol of a foreign government; or
means universities and other institu- (2) In exceptional circumstances
tions of higher education or an organi- when it is determined by the agency
zation of the type described in section that restriction or elimination of the
501(c)(3) of the Internal Revenue Code right to retain title to any subject in-
of 1954 (26 U.S.C. 501(c) and exempt vention will better promote the policy
from taxation under section 501(a) of and objectives of Chapter 18 of Title 35
the Internal Revenue Code (26 U.S.C. of the United States Code; or
501(a)) or any nonprofit scientific or (3) When it is determined by a gov-
educational organization qualified ernment authority which is authorized
504
Department of Commerce § 401.3
505
§ 401.4 37 CFR Ch. IV (7-1-97 Edition)
that any individual determination or claim the contract may be issued with
pattern of determinations is contrary the patent rights provision proposed by
to the policies and objectives of this the agency; however, should the final
chapter or otherwise not in conform- decision be in favor of the contractor,
ance with this chapter, the Secretary the funding agreement will be amended
shall so advise the head of the agency accordingly and the amendment made
concerned and the Administrator of the retroactive to the effective date of the
Office of Federal Procurement Policy funding agreement.
and recommend corrective actions. (b)(1) A contractor may appeal a de-
(g) To assist the Comptroller General termination by providing written no-
of the United States to accomplish his tice to the agency within 30 working
or her responsibilities under 35 U.S.C. days from the time it receives a copy of
202, each Federal agency that enters the agency’s determination, or within
into any funding agreements with non- such longer time as an agency may
profit organizations or small business specify in its regulations. The contrac-
firms shall accumulate and, at the re- tor’s notice should specifically identify
quest of the Comptroller General, pro- the basis for the appeal.
vide the Comptroller General or his or (2) The appeal shall be decided by the
her duly authorized representative the head of the agency or by his/her des-
total number of prime agreements en- ignee who is at a level above the person
tered into with small business firms or who made the determination. If the no-
nonprofit organizations that contain tice raises a genuine dispute over the
the patent rights clause in this part or material facts, the head of the agency
under OMB Circular A–124 for each fis- or the designee shall undertake, or
cal year beginning with October 1, 1982. refer the matter for, fact-finding.
(h) To qualify for the standard
(3) Fact-finding shall be conducted in
clause, a prospective contractor may
accordance with procedures established
be required by an agency to certify
by the agency. Such procedures shall
that it is either a small business firm
be as informal as practicable and be
or a nonprofit organization. If the
consistent with principles of fundamen-
agency has reason to question the sta-
tus of the prospective contractor as a tal fairness. The procedures should af-
small business firm, it may file a pro- ford the contractor the opportunity to
test in accordance with 13 CFR 121.9. If appear with counsel, submit documen-
it questions nonprofit status, it may tary evidence, present witnesses and
require the prospective contractor to confront such persons as the agency
furnish evidence to establish its status may rely upon. A transcribed record
as a nonprofit organization. shall be made and shall be available at
cost to the contractor upon request.
§ 401.4 Contractor appeals of excep- The requirement for a transcribed
tions. record may be waived by mutual agree-
(a) In accordance with 35 U.S.C. ment of the contractor and the agency.
202(b)(4) a contractor has the right to (4) The official conducting the fact-
an administrative review of a deter- finding shall prepare or adopt written
mination to use one of the exceptions findings of fact and transmit them to
at § 401.3(a) (1) through (4) if the con- the head of the agency or designee
tractor believes that a determination promptly after the conclusion of the
is either contrary to the policies and fact-finding proceeding along with a
objectives of this chapter or con- recommended decision. A copy of the
stitutes an abuse of discretion by the findings of fact and recommended deci-
agency. Paragraph (b) of this section sion shall be sent to the contractor by
specifies the procedures to be followed registered or certified mail.
by contractors and agencies in such (5) Fact-finding should be completed
cases. The assertion of such a claim by within 45 working days from the date
the contractor shall not be used as a the agency receives the contractor’s
basis for withholding or delaying the written notice.
award of a funding agreement or for (6) When fact-finding has been con-
suspending performance under an ducted, the head of the agency or des-
award. Pending final resolution of the ignee shall base his or her decision on
506
Department of Commerce § 401.5
the facts found, together with any ar- the remaining paragraph or paragraphs
gument submitted by the contractor, should be renumbered appropriately.
agency officials or any other informa- (b) Agencies should complete para-
tion in the administrative record. In graph (l), ‘‘Communications’’, at the
cases referred for fact-finding, the end of the clauses at § 401.14 by des-
agency head or the designee may reject ignating a central point of contact for
only those facts that have been found communications on matters relating to
to be clearly erroneous, but must ex- the clause. Additional instructions on
plicitly state the rejection and indicate communications may also be included
the basis for the contrary finding. The in paragraph (l).
agency head or the designee may hear (c) Agencies may replace the itali-
oral arguments after fact-finding pro- cized words and phrases in the clauses
vided that the contractor or contrac- at § 401.14 with those appropriate to the
tor’s attorney or representative is particular funding agreement. For ex-
present and given an opportunity to ample, ‘‘contracts’’ could be replaced
make arguments and rebuttal. The de- by ‘‘grant,’’ ‘‘contractor’’ by ‘‘grant-
cision of the agency head or the des- ee,’’ and ‘‘contracting officer’’ by
ignee shall be in writing and, if it is ‘‘grants officer.’’ Depending on its use,
unfavorable to the contractor shall in- ‘‘Federal agency’’ can be replaced ei-
clude an explanation of the basis of the ther by the identification of the agency
decision. The decision of the agency or or by the specification of the particular
designee shall be made within 30 work- office or official within the agency.
ing days after fact-finding or, if there (d) When the agency head or duly au-
was no fact-finding, within 45 working thorized designee determines at the
days from the date the agency received time of contracting with a small busi-
the contractor’s written notice. A con- ness firm or nonprofit organization
tractor adversely affected by a deter- that it would be in the national inter-
mination under this section may, at est to acquire the right to sublicense
any time within sixty days after the foreign governments or international
determination is issued, file a petition organizations pursuant to any existing
in the United States Claims Court, treaty or international agreement, a
which shall have jurisdiction to deter- sentence may be added at the end of
mine the appeal on the record and to paragraph (b) of the clause at § 401.14 as
affirm, reverse, remand, or modify as follows:
appropriate, the determination of the
This license will include the right of the
Federal agency.
government to sublicense foreign govern-
ments, their nationals, and international or-
§ 401.5 Modification and tailoring of
ganizations, pursuant to the following trea-
clauses.
ties or international agreements:
(a) Agencies should complete the
————————.
blank in paragraph (g)(2) of the clauses
at § 401.14 in accordance with their own The blank above should be completed
or applicable government-wide regula- with the names of applicable existing
tions such as the Federal Acquisition treaties or international agreements,
Regulation. In grants and cooperative agreements of cooperation, memoranda
agreements (and in contracts, if not in- of understanding, or similar arrange-
consistent with the Federal Acquisi- ments, including military agreements
tion Regulation) agencies wishing to relating to weapons development and
apply the same clause to all sub- production. The above language is not
contractors as is applied to the con- intended to apply to treaties or other
tractor may delete paragraph (g)(2) of agreements that are in effect on the
the clause and delete the words ‘‘to be date of the award but which are not
performed by a small business firm or listed. Alternatively, agencies may use
domestic nonprofit organization’’ from substantially similar language relating
paragraph (g)(1). Also, if the funding the government’s rights to specific
agreement is a grant or cooperative treaties or other agreements identified
agreement, paragraph (g)(3) may be de- elsewhere in the funding agreement.
leted. When either paragraph (g)(2) or The language may also be modified to
paragraphs (g) (2) and (3) are deleted, make clear that the rights granted to
507
§ 401.6 37 CFR Ch. IV (7-1-97 Edition)
the foreign government, and its nation- (3) After payment of patenting costs, li-
als or an international organization censing costs, payments to inventors, and
may be for additional rights beyond a other expenses incidental to the administra-
tion of subject inventions, the balance of any
license or sublicense if so required by royalties or income earned and retained by
the applicable treaty or international the contractor during any fiscal year on sub-
agreement. For example, in some ex- ject inventions under this or any successor
clusive licenses or even the assignment contract containing the same requirement, up
of title in the foreign country involved to any amount equal to five percent of the
might be required. Agencies may also budget of the facility for that fiscal year,
modify the language above to provide shall be used by the contractor for scientific
research, development, and education con-
for the direct licensing by the contrac- sistent with the research and development
tor of the foreign government or inter- mission and objectives of the facility, includ-
national organization. ing activities that increase the licensing po-
(e) If the funding agreement involves tential of other inventions of the facility. If
performance over an extended period of the balance exceeds five percent, 75 percent
time, such as the typical funding of the excess above five percent shall be paid
agreement for the operation of a gov- by the contractor to the Treasury of the
United States and the remaining 25 percent
ernment-owned facility, the following shall be used by the contractor only for the
language may also be added: same purposes as described above. To the ex-
The agency reserves the right to unilater- tent it provides the most effective tech-
ally amend this funding agreement to identify nology transfer, the licensing of subject in-
ventions shall be administered by contractor
specific treaties or international agreements
employees on location at the facility.
entered into or to be entered into by the gov-
ernment after the effective date of this fund- (h) If the contract is for the oper-
ing agreement and effectuate those license or ation of a government-owned facility,
other rights which are necessary for the gov- agencies may add the following at the
ernment to meet its obligations to foreign
end of paragraph (f) of the clause at
governments, their nationals and inter-
national organizations under such treaties or § 401.14(a):
international agreements with respect to (5) The contractor shall establish and
subject inventions made after the date of the maintain active and effective procedures to
amendment. ensure that subject inventions are promptly
identified and timely disclosed and shall sub-
(f) Agencies may add additional sub- mit a description of the procedures to the
paragraphs to paragraph (f) of the contracting officer so that the contracting offi-
clauses at § 401.14 to require the con- cer may evaluate and determine their effec-
tractor to do one or more of the follow- tiveness.
ing: [52 FR 8554, Mar. 18, 1987, as amended at 60
(1) Provide a report prior to the FR 41812, Aug. 14, 1995]
close-out of a funding agreement list-
ing all subject inventions or stating § 401.6 Exercise of march-in rights.
that there were none. (a) The following procedures shall
(2) Provide, upon request, the filing govern the exercise of the march-in
date, patent application number and rights of the agencies set forth in 35
title; a copy of the patent application; U.S.C. 203 and paragraph (j) of the
and patent number and issue date for clause at § 401.14.
any subject invention in any country (b) Whenever an agency receives in-
in which the contractor has applied for formation that it believes might war-
a patent. rant the exercise of march-in rights,
(3) Provide periodic (but no more fre- before initiating any march-in proceed-
quently than annual) listings of all ing, it shall notify the contractor in
subject inventions which were dis- writing of the information and request
closed to the agency during the period informal written or oral comments
covered by the report. from the contractor as well as informa-
(g) If the contract is with a nonprofit tion relevant to the matter. In the ab-
organization and is for the operation of sence of any comments from the con-
a government-owned, contractor-oper- tractor within 30 days, the agency
ated facility, the following will be sub- may, at its discretion, proceed with the
stituted for paragraph (k)(3) of the procedures below. If a comment is re-
clause at § 401.14(a): ceived within 30 days, or later if the
508
Department of Commerce § 401.6
agency has not initiated the procedures tual agreement of the contractor and
below, then the agency shall, within 60 the agency. Any portion of the march-
days after it receives the comment, ei- in proceeding, including a fact-finding
ther initiate the procedures below or hearing that involves testimony or evi-
notify the contractor, in writing, that dence relating to the utilization or ef-
it will not pursue march-in rights on forts at obtaining utilization that are
the basis of the available information. being made by the contractor, its as-
(c) A march-in proceeding shall be signee, or licensees shall be closed to
initiated by the issuance of a written the public, including potential licens-
notice by the agency to the contractor ees. In accordance with 35 U.S.C.
and its assignee or exclusive licensee, 202(c)(5), agencies shall not disclose
as applicable and if known to the agen- any such information obtained during
cy, stating that the agency is consider- a march-in proceeding to persons out-
ing the exercise of march-in rights. The side the government except when such
notice shall state the reasons for the release is authorized by the contractor
proposed march-in in terms sufficient (assignee or licensee).
to put the contractor on notice of the (f) The official conducting the fact-
facts upon which the action would be finding shall prepare or adopt written
based and shall specify the field or findings of fact and transmit them to
fields of use in which the agency is con- the head of the agency or designee
sidering requiring licensing. The notice promptly after the conclusion of the
shall advise the contractor (assignee or fact-finding proceeding along with a
exclusive licensee) of its rights, as set recommended determination. A copy of
forth in this section and in any supple- the findings of fact shall be sent to the
mental agency regulations. The deter- contractor (assignee or exclusive li-
mination to exercise march-in rights censee) by registered or certified mail.
shall be made by the head of the agen- The contractor (assignee or exclusive
cy or his or her designee. licensee) and agency representatives
(d) Within 30 days after the receipt of will be given 30 days to submit written
the written notice of march-in, the arguments to the head of the agency or
contractor (assignee or exclusive li- designee; and, upon request by the con-
censee) may submit in person, in writ- tractor oral arguments will be held be-
ing, or through a representative, infor- fore the agency head or designee that
mation or argument in opposition to will make the final determination.
the proposed march-in, including any (g) In cases in which fact-finding has
additional specific information which been conducted, the head of the agency
raises a genuine dispute over the mate- or designee shall base his or her deter-
rial facts upon which the march-in is mination on the facts found, together
based. If the information presented with any other information and writ-
raises a genuine dispute over the mate- ten or oral arguments submitted by the
rial facts, the head of the agency or contractor (assignee or exclusive li-
designee shall undertake or refer the censee) and agency representatives,
matter to another official for fact-find- and any other information in the ad-
ing. ministrative record. The consistency of
(e) Fact-finding shall be conducted in the exercise of march-in rights with
accordance with the procedures estab- the policy and objectives of 35 U.S.C.
lished by the agency. Such procedures 200 shall also be considered. In cases re-
shall be as informal as practicable and ferred for fact-finding, the head of the
be consistent with principles of fun- agency or designee may reject only
damental fairness. The procedures those facts that have been found to be
should afford the contractor the oppor- clearly erroneous, but must explicitly
tunity to appear with counsel, submit state the rejection and indicate the
documentary evidence, present wit- basis for the contrary finding. Written
nesses and confront such persons as the notice of the determination whether
agency may present. A transcribed march-in rights will be exercised shall
record shall be made and shall be avail- be made by the head of the agency or
able at cost to the contractor upon re- designee and sent to the contractor (as-
quest. The requirement for a tran- signee of exclusive licensee) by cer-
scribed record may be waived by mu- tified or registered mail within 90 days
509
§ 401.7 37 CFR Ch. IV (7-1-97 Edition)
510
Department of Commerce § 401.12
511
§ 401.13 37 CFR Ch. IV (7-1-97 Edition)
(b) A Federal agency will not require should also be followed in connection
the licensing of third parties under any with similar approvals that may be re-
such provision unless the agency head quired under Institutional Patent
determines that the use of the inven- Agreements, other patent rights
tion by others is necessary for the clauses, or waivers that predate Chap-
practice of a subject invention or for ter 18 of Title 35, United States Code.
the use of a work object of the funding (c) The President’s Patent Policy
agreement and that such action is nec- Memorandum of February 18, 1983,
essary to achieve practical application states that agencies should protect the
of the subject invention or work object. confidentiality of invention disclosure,
Any such determination will be on the patent applications, and utilization re-
record after an opportunity for an ports required in performance or in
agency hearing. The contractor shall consequence of awards to the extent
be given prompt notification of the de- permitted by 35 U.S.C. 205 or other ap-
termination by certified or registered plicable laws. The following require-
mail. Any action commenced for judi- ments should be followed for funding
cial review of such determination shall agreements covered by and predating
be brought within sixty days after no- this part 401.
tification of such determination. (1) To the extent authorized by 35
U.S.C. 205, agencies shall not disclose
§ 401.13 Administration of patent to third parties pursuant to requests
rights clauses. under the Freedom of Information Act
(a) In the event a subject invention is (FOIA) any information disclosing a
made under funding agreements of subject invention for a reasonable time
more than one agency, at the request in order for a patent application to be
of the contractor or on their own ini- filed. With respect to subject inven-
tiative the agencies shall designate one tions of contractors that are small
agency as responsible for administra- business firms or nonprofit organiza-
tion of the rights of the government in tions, a reasonable time shall be the
the invention. time during which an initial patent ap-
(b) Agencies shall promptly grant, plication may be filed under paragraph
unless there is a significant reason not (c) of the standard clause found at
to, a request by a nonprofit organiza- § 401.14(a) or such other clause may be
tion under paragraph (k)(2) of the used in the funding agreement. How-
clauses prescribed by either OMB Cir- ever, an agency may disclose such sub-
cular A–124 or OMB Bulletin 81–22 inas- ject inventions under the FOIA, at its
much as 35 U.S.C. 202(c)(7) has since discretion, after a contractor has elect-
been amended to eliminate the limita- ed not to retain title or after the time
tion on the duration of exclusive li- in which the contractor is required to
censes. Similarly, unless there is a sig- make an election if the contractor has
nificant reason not to, agencies shall not made an election within that time.
promptly approve an assignment by a Similarly, an agency may honor a
nonprofit organization to an organiza- FOIA request at its discretion if it
tion which has as one of its primary finds that the same information has
functions the management of inven- previously been published by the inven-
tions when a request for approval has tor, contractor, or otherwise. If the
been necessitated under paragraph agency plans to file itself when the
(k)(1) of the clauses prescribed by ei- contractor has not elected title, it
ther OMB Circular A–124 or OMB Bul- may, of course, continue to avail itself
letin 81–22 because the patent manage- of the authority of 35 U.S.C. 205.
ment organization is engaged in or (2) In accordance with 35 U.S.C. 205,
holds a substantial interest in other or- agencies shall not disclose or release
ganizations engaged in the manfacture for a period of 18 months from the fil-
or sale of products or the use of proc- ing date of the patent application to
esses that might utilize the invention third parties pursuant to requests
or be in competition with embodiments under the Freedom of Information Act,
of the invention. As amended, 35 U.S.C. or otherwise, copies of any document
202(c)(7) no longer contains this limita- which the agency obtained under this
tion. The policy of this subsection clause which is part of an application
512
Department of Commerce § 401.14
for patent with the U.S. Patent and the discretion to delay publication for
Trademark Office or any foreign patent additional periods of time.
office filed by the contractor (or its as- (5) Nothing in this paragraph is in-
signees, licensees, or employees) on a tended to limit the authority of agen-
subject invention to which the contrac- cies provided in 35 U.S.C. 205 in cir-
tor has elected to retain title. This pro- cumstances not specifically described
hibition does not extend to disclosure in this paragraph.
to other government agencies or con- [52 FR 8554, Mar. 18, 1987, as amended at 60
tractors of government agencies under FR 41812, Aug. 14, 1995]
an obligation to maintain such infor-
mation in confidence. § 401.14 Standard patent rights
(3) A number of agencies have poli- clauses.
cies to encourage public dissemination (a) The following is the standard pat-
of the results of work supported by the ent rights clause to be used as specified
agency through publication in govern- in § 401.3(a).
ment or other publications of technical
Patent Rights (Small Business Firms and
reports of contractors or others. In rec- Nonprofit Organizations)
ognition of the fact that such publica-
tion, if it included descriptions of a (a) Definitions
subject invention could create bars to (1) Invention means any invention or dis-
obtaining patent protection, it is the covery which is or may be patentable or oth-
policy of the executive branch that erwise protectable under Title 35 of the Unit-
agencies will not include in such publi- ed States Code, or any novel variety of plant
cation programs copies of disclosures which is or may be protected under the Plant
of inventions submitted by small busi- Variety Protection Act (7 U.S.C. 2321 et seq.).
(2) Subject invention means any invention of
ness firms or nonprofit organizations, the contractor conceived or first actually re-
pursuant to paragraph (c) of the stand- duced to practice in the performance of work
ard clause found at § 401.14(a), except under this contract, provided that in the case
that under the same circumstances of a variety of plant, the date of determina-
under which agencies are authorized to tion (as defined in section 41(d) of the Plant
release such information pursuant to Variety Protection Act, 7 U.S.C. 2401(d))
FOIA requests under paragraph (c)(1) of must also occur during the period of contract
performance.
this section, agencies may publish such
(3) Practical Application means to manufac-
disclosures. ture in the case of a composition or product,
(4) Nothing in this paragraph is in- to practice in the case of a process or meth-
tended to preclude agencies from in- od, or to operate in the case of a machine or
cluding in the publication activities system; and, in each case, under such condi-
described in the first sentence of para- tions as to establish that the invention is
graph (c)(3), the publication of mate- being utilized and that its benefits are, to
the extent permitted by law or government
rials describing a subject invention to regulations, available to the public on rea-
the extent such materials were pro- sonable terms.
vided as part of a technical report or (4) Made when used in relation to any in-
other submission of the contractor vention means the conception or first actual
which were submitted independently of reduction to practice of such invention.
the requirements of the patent rights (5) Small Business Firm means a small busi-
provisions of the contract. However, if ness concern as defined at section 2 of Pub.
L. 85–536 (15 U.S.C. 632) and implementing
a small business firm or nonprofit or-
regulations of the Administrator of the
ganization notifies the agency that a Small Business Administration. For the pur-
particular report or other submission pose of this clause, the size standards for
contains a disclosure of a subject in- small business concerns involved in govern-
vention to which it has elected title or ment procurement and subcontracting at 13
may elect title, the agency shall use CFR 121.3–8 and 13 CFR 121.3–12, respectively,
reasonable efforts to restrict its publi- will be used.
(6) Nonprofit Organization means a univer-
cation of the material for six months
sity or other institution of higher education
from date of its receipt of the report or or an organization of the type described in
submission or, if earlier, until the con- section 501(c)(3) of the Internal Revenue Code
tractor has filed an initial patent ap- of 1954 (26 U.S.C. 501(c) and exempt from tax-
plication. Agencies, of course, retain ation under section 501(a) of the Internal
513
§ 401.14 37 CFR Ch. IV (7-1-97 Edition)
Revenue Code (25 U.S.C. 501(a)) or any non- tions in additional countries or international
profit scientific or educational organization patent offices within either ten months of
qualified under a state nonprofit organiza- the corresponding initial patent application
tion statute. or six months from the date permission is
granted by the Commissioner of Patents and
(b) Allocation of Principal Rights Trademarks to file foreign patent applica-
The Contractor may retain the entire right, tions where such filing has been prohibited
title, and interest throughout the world to by a Secrecy Order.
each subject invention subject to the provi- (4) Requests for extension of the time for
sions of this clause and 35 U.S.C. 203. With disclosure, election, and filing under sub-
respect to any subject invention in which the paragraphs (1), (2), and (3) may, at the discre-
Contractor retains title, the Federal govern- tion of the agency, be granted.
ment shall have a nonexclusive, nontransfer-
able, irrevocable, paid-up license to practice (d) Conditions When the Government May
or have practiced for or on behalf of the Obtain Title
United States the subject invention through- The contractor will convey to the Federal
out the world. agency, upon written request, title to any
(c) Invention Disclosure, Election of Title subject invention—
and Filing of Patent Application by Con- (1) If the contractor fails to disclose or elect
tractor title to the subject invention within the
times specified in (c), above, or elects not to
(1) The contractor will disclose each subject retain title; provided that the agency may
invention to the Federal Agency within two only request title within 60 days after learn-
months after the inventor discloses it in ing of the failure of the contractor to disclose
writing to contractor personnel responsible or elect within the specified times.
for patent matters. The disclosure to the (2) In those countries in which the contrac-
agency shall be in the form of a written re- tor fails to file patent applications within
port and shall identify the contract under the times specified in (c) above; provided,
which the invention was made and the inven- however, that if the contractor has filed a
tor(s). It shall be sufficiently complete in patent application in a country after the
technical detail to convey a clear under- times specified in (c) above, but prior to its
standing to the extent known at the time of receipt of the written request of the Federal
the disclosure, of the nature, purpose, oper- agency, the contractor shall continue to re-
ation, and the physical, chemical, biological tain title in that country.
or electrical characteristics of the invention.
(3) In any country in which the contractor
The disclosure shall also identify any publi-
decides not to continue the prosecution of
cation, on sale or public use of the invention
any application for, to pay the maintenance
and whether a manuscript describing the in-
fees on, or defend in reexamination or oppo-
vention has been submitted for publication
sition proceeding on, a patent on a subject
and, if so, whether it has been accepted for
invention.
publication at the time of disclosure. In ad-
dition, after disclosure to the agency, the (e) Minimum Rights to Contractor and
Contractor will promptly notify the agency of Protection of the Contractor Right to File
the acceptance of any manuscript describing
the invention for publication or of any on (1) The contractor will retain a nonexclu-
sale or public use planned by the contractor. sive royalty-free license throughout the
(2) The Contractor will elect in writing world in each subject invention to which the
whether or not to retain title to any such in- Government obtains title, except if the con-
vention by notifying the Federal agency with- tractor fails to disclose the invention within
in two years of disclosure to the Federal the times specified in (c), above. The contrac-
agency. However, in any case where publica- tor’s license extends to its domestic subsidi-
tion, on sale or public use has initiated the ary and affiliates, if any, within the cor-
one year statutory period wherein valid pat- porate structure of which the contractor is a
ent protection can still be obtained in the party and includes the right to grant sub-
United States, the period for election of title licenses of the same scope to the extent the
may be shortened by the agency to a date contractor was legally obligated to do so at
that is no more than 60 days prior to the end the time the contract was awarded. The li-
of the statutory period. cense is transferable only with the approval
(3) The contractor will file its initial patent of the Federal agency except when transferred
application on a subject invention to which to the sucessor of that party of the contrac-
it elects to retain title within one year after tor’s business to which the invention per-
election of title or, if earlier, prior to the end tains.
of any statutory period wherein valid patent (2) The contractor’s domestic license may
protection can be obtained in the United be revoked or modified by the funding Fed-
States after a publication, on sale, or public eral agency to the extent necessary to
use. The contractor will file patent applica- achieve expeditious practical application of
514
Department of Commerce § 401.14
the subject invention pursuant to an applica- porting inventions in sufficient time to per-
tion for an exclusive license submitted in ac- mit the filing of patent applications prior to
cordance with applicable provisions at 37 U.S. or foreign statutory bars.
CFR part 404 and agency licensing regula- (3) The contractor will notify the Federal
tions (if any). This license will not be re- agency of any decisions not to continue the
voked in that field of use or the geographical prosecution of a patent application, pay
areas in which the contractor has achieved maintenance fees, or defend in a reexamina-
practical application and continues to make tion or opposition proceeding on a patent, in
the benefits of the invention reasonably ac- any country, not less than thirty days before
cessible to the public. The license in any for- the expiration of the response period re-
eign country may be revoked or modified at quired by the relevant patent office.
the discretion of the funding Federal agency (4) The contractor agrees to include, within
to the extent the contractor, its licensees, or the specification of any United States patent
the domestic subsidiaries or affiliates have applications and any patent issuing thereon
failed to achieve practical application in covering a subject invention, the following
that foreign country. statement, ‘‘This invention was made with
(3) Before revocation or modification of the government support under (identify the con-
license, the funding Federal agency will fur- tract) awarded by (identify the Federal agen-
nish the contractor a written notice of its in- cy). The government has certain rights in
tention to revoke or modify the license, and the invention.’’
the contractor will be allowed thirty days (or
such other time as may be authorized by the (g) Subcontracts
funding Federal agency for good cause shown (1) The contractor will include this clause,
by the contractor) after the notice to show suitably modified to identify the parties, in
cause why the license should not be revoked all subcontracts, regardless of tier, for exper-
or modified. The contractor has the right to imental, developmental or research work to
appeal, in accordance with applicable regula- be performed by a small business firm or do-
tions in 37 CFR part 404 and agency regula- mestic nonprofit organization. The sub-
tions (if any) concerning the licensing of contractor will retain all rights provided for
Government-owned inventions, any decision the contractor in this clause, and the contrac-
concerning the revocation or modification of tor will not, as part of the consideration for
the license. awarding the subcontract, obtain rights in
the subcontractor’s subject inventions.
(f) Contractor Action to Protect the (2) The contractor will include in all other
Government’s Interest subcontracts, regardless of tier, for experi-
(1) The contractor agrees to execute or to mental developmental or research work the
have executed and promptly deliver to the patent rights clause required by (cite section
Federal agency all instruments necessary to of agency implementing regulations or FAR).
(i) establish or confirm the rights the Gov- (3) In the case of subcontracts, at any tier,
ernment has throughout the world in those when the prime award with the Federal
subject inventions to which the contractor agency was a contract (but not a grant or co-
elects to retain title, and (ii) convey title to operative agreement), the agency, sub-
the Federal agency when requested under contractor, and the contractor agree that
paragraph (d) above and to enable the gov- the mutual obligations of the parties created
ernment to obtain patent protection by this clause constitute a contract between
throughout the world in that subject inven- the subcontractor and the Federal agency
tion. with respect to the matters covered by the
(2) The contractor agrees to require, by clause; provided, however, that nothing in
written agreement, its employees, other this paragraph is intended to confer any ju-
than clerical and nontechnical employees, to risdiction under the Contract Disputes Act
disclose promptly in writing to personnel in connection with proceedings under para-
identified as responsible for the administra- graph (j) of this clause.
tion of patent matters and in a format sug-
(h) Reporting on Utilization of Subject
gested by the contractor each subject inven-
Inventions
tion made under contract in order that the
contractor can comply with the disclosure The Contractor agrees to submit on request
provisions of paragraph (c), above, and to periodic reports no more frequently than an-
execute all papers necessary to file patent nually on the utilization of a subject inven-
applications on subject inventions and to es- tion or on efforts at obtaining such utiliza-
tablish the government’s rights in the sub- tion that are being made by the contractor or
ject inventions. This disclosure format its licensees or assignees. Such reports shall
should require, as a minimum, the informa- include information regarding the status of
tion required by (c)(1), above. The contractor development, date of first commerical sale
shall instruct such employees through em- or use, gross royalties received by the con-
ployee agreements or other suitable edu- tractor, and such other data and information
cational programs on the importance of re- as the agency may reasonably specify. The
515
§ 401.14 37 CFR Ch. IV (7-1-97 Edition)
contractor also agrees to provide additional cause a licensee of the exclusive right to use
reports as may be requested by the agency in or sell any subject invention in the United
connection with any march-in proceeding States is in breach of such agreement.
undertaken by the agency in accordance with
paragraph (j) of this clause. As required by 35 (k) Special Provisions for Contracts with
U.S.C. 202(c)(5), the agency agrees it will not Nonprofit Organizations
disclose such information to persons outside
If the contractor is a nonprofit organiza-
the government without permission of the
tion, it agrees that:
contractor.
(1) Rights to a subject invention in the
(i) Preference for United States Industry United States may not be assigned without
the approval of the Federal agency, except
Notwithstanding any other provision of where such assignment is made to an organi-
this clause, the contractor agrees that neither zation which has as one of its primary func-
it nor any assignee will grant to any person tions the management of inventions, pro-
the exclusive right to use or sell any subject vided that such assignee will be subject to
inventions in the United States unless such the same provisions as the contractor;
person agrees that any products embodying
(2) The contractor will share royalties col-
the subject invention or produced through
lected on a subject invention with the inven-
the use of the subject invention will be man-
tor, including Federal employee co-inventors
ufactured substantially in the United States.
(when the agency deems it appropriate) when
However, in individual cases, the require-
the subject invention is assigned in accord-
ment for such an agreement may be waived
ance with 35 U.S.C. 202(e) and 37 CFR 401.10;
by the Federal agency upon a showing by the
(3) The balance of any royalties or income
contractor or its assignee that reasonable but
earned by the contractor with respect to sub-
unsuccessful efforts have been made to grant
ject inventions, after payment of expenses
licenses on similar terms to potential licens-
(including payments to inventors)
ees that would be likely to manufacture sub-
incidential to the administration of subject
stantially in the United States or that under
inventions, will be utilized for the support of
the circumstances domestic manufacture is
scientific research or education; and
not commerically feasible.
(4) It will make efforts that are reasonable
(j) March-in Rights under the circumstances to attract licensees
of subject invention that are small business
The contractor agrees that with respect to firms and that it will give a preference to a
any subject invention in which it has ac- small business firm when licensing a subject
quired title, the Federal agency has the right invention if the contractor determines that
in accordance with the procedures in 37 CFR the small business firm has a plan or pro-
401.6 and any supplemental regulations of posal for marketing the invention which, if
the agency to require the contractor, an as- executed, is equally as likely to bring the in-
signee or exclusive licensee of a subject in- vention to practical application as any plans
vention to grant a nonexclusive, partially or proposals from applicants that are not
exclusive, or exclusive license in any field of small business firms; provided, that the con-
use to a responsible applicant or applicants, tractor is also satisfied that the small busi-
upon terms that are reasonable under the ness firm has the capability and resources to
circumstances, and if the contractor, as- carry out its plan or proposal. The decision
signee, or exclusive licensee refuses such a whether to give a preference in any specific
request the Federal agency has the right to case will be at the discretion of the contrac-
grant such a license itself if the Federal agen- tor. However, the contractor agrees that the
cy determines that: Secretary may review the contractor’s licens-
(1) Such action is necessary because the
ing program and decisions regarding small
contractor or assignee has not taken, or is
business applicants, and the contractor will
not expected to take within a reasonable
negotiate changes to its licensing policies,
time, effective steps to achieve practical ap-
procedures, or practices with the Secretary
plication of the subject invention in such
when the Secretary’s review discloses that
field of use.
the contractor could take reasonable steps to
(2) Such action is necessary to alleviate
implement more effectively the reqirements
health or safety needs which are not reason-
of this paragraph (k)(4).
ably satisfied by the contractor, assignee or
their licensees; (l) Communication
(3) Such action is necessary to meet re-
quirements for public use specified by Fed- (Complete According to Instructions at
eral regulations and such requirements are 401.5(b))
not reasonably satisfied by the contractor, as-
signee or licensees; or (b) When the Department of Energy
(4) Such action is necessary because the (DOE) determines to use alternative
agreement required by paragraph (i) of this provisions under § 401.3(a)(4), the stand-
clause has not been obtained or waived or be- ard clause at § 401.14(a), of this section,
516
Department of Commerce § 401.15
shall be used with the following modi- plied, except that the Department of
fications unless a substitute clause is Energy is authorized to process de-
drafted by DOE: ferred determinations either in accord-
(1) The title of the clause shall be ance with its waiver regulations or this
changed to read as follows: Patent section. A contractor requesting great-
Rights to Nonprofit DOE Facility Opera- er rights should include with its re-
tors quest information on its plans and in-
(2) Add an ‘‘(A)’’ after ‘‘(1)’’ in para- tentions to bring the invention to prac-
graph (c)(1) and add subparagraphs (B) tical application. Within 90 days after
and (C) to paragraph (c)(1) as follows: receiving a request and supporting in-
(B) If the subject invention occurred under formation, or sooner if a statutory bar
activities funded by the naval nuclear pro- to patenting is imminent, the agency
pulsion or weapons related programs of DOE, should seek to make a determination.
then the provisions of this subparagraph In any event, if a bar to patenting is
(c)(1)(B) will apply in lieu of paragraphs imminent, unless the agency plans to
(c)(2) and (3). In such cases the contractor file on its own, it shall authorize the
agrees to assign the government the entire
contractor to file a patent application
right, title, and interest thereto throughout
the world in and to the subject invention ex- pending a determination by the agen-
cept to the extent that rights are retained by cy. Such a filing shall normally be at
the contractor through a greater rights de- the contractor’s own risk and expense.
termination or under paragraph (e), below. However, if the agency subsequently
The contractor, or an employee-inventor, refuses to allow the contractor to re-
with authorization of the contractor, may tain title and elects to proceed with
submit a request for greater rights at the the patent application under govern-
time the invention is disclosed or within a
reasonable time thereafter. DOE will process
ment ownership, it shall reimburse the
such a request in accordance with procedures contractor for the cost of preparing
at 37 CFR 401.15. Each determination of and filing the patent application.
greater rights will be subject to paragraphs (b) If the circumstances of concerns
(h)–(k) of this clause and such additional which originally led the agency to in-
conditions, if any, deemed to be appropriate voke an exception under § 401.3(a) are
by the Department of Energy. not applicable to the actual subject in-
(C) At the time an invention is disclosed in vention or are no longer valid because
accordance with (c)(1)(A) above, or within 90
days thereafter, the contractor will submit a
of subsequent events, the agency
written statement as to whether or not the should allow the contractor to retain
invention occurred under a naval nuclear title to the invention on the same con-
propulsion or weapons-related program of ditions as would have applied if the
the Department of Energy. If this statement is standard clause at § 401.14(a) had been
not filed within this time, subparagraph used originally, unless it has been li-
(c)(1)(B) will apply in lieu of paragraphs censed.
(c)(2) and (3). The contractor statement will (c) If paragraph (b) is not applicable
be deemed conclusive unless, within 60 days
thereafter, the Contracting Officer disagrees
the agency shall make its determina-
in writing, in which case the determination tion based on an assessment whether
of the Contracting Officer will be deemed its own plans regarding the invention
conclusive unless the contractor files a will better promote the policies and ob-
claim under the Contract Disputes Act with- jectives of 35 U.S.C. 200 than will con-
in 60 days after the Contracting Officer’s de- tractor ownership of the invention.
termination. Pending resolution of the mat- Moreover, if the agency is concerned
ter, the invention will be subject to subpara- only about specific uses or applications
graph (c)(1)(B).
of the invention, it shall consider leav-
(3) Paragraph (k)(3) of the clause will ing title in the contractor with addi-
be modified as prescribed at § 401.5(g). tional conditions imposed upon the
contractor’s use of the invention for
§ 401.15 Deferred determinations. such applications or with expanded
(a) This section applies to requests government license rights in such ap-
for greater rights in subject inventions plications.
made by contractors when deferred de- (d) A determination not to allow the
termination provisions were included contractor to retain title to a subject
in the funding agreement because one invention or to restrict or condition its
of the exceptions at § 401.3(a) was ap- title with conditions differing from
517
§ 401.16 37 CFR Ch. IV (7-1-97 Edition)
those in the clause at § 401.14(a), unless to the Assistant Secretary of Commerce for
made by the head of the agency, shall Technology Policy at sec. 3(g) of DOO 10–18.
be appealable by the contractor to an SOURCE: 50 FR 9802, Mar. 12, 1985, unless
agency official at a level above the per- otherwise noted.
son who made the determination. This
appeal shall be subject to the proce- § 404.1 Scope of part.
dures applicable to appeals under This part prescribes the terms, condi-
§ 401.11 of this part. tions, and procedures upon which a fed-
erally owned invention, other than an
§ 401.16 Electronic filing. invention in the custody of the Ten-
Unless otherwise requested or di- nessee Valley Authority, may be li-
rected by the agency, censed. It supersedes the regulations at
(a) The written report required in 41 CFR Subpart 101–4.1. This part does
(c)(1) of the standard clause in not affect licenses which (a) were in ef-
§ 401.14(a) may be electronically filed; fect prior to July 1, 1981; (b) may exist
(b) The written election required in at the time of the Government’s acqui-
(c)(2) of the standard clause in sition of title to the invention, includ-
§ 401.14(a) may be electronically filed; ing those resulting from the allocation
and of rights to inventions made under
(c) The close-out report in (f)(1) and Government research and development
the information identified in (f)(2) and contracts; (c) are the result of an au-
(f)(3) of § 401.5 may be electronically thorized exchange of rights in the set-
filed. tlement of patent disputes; or (d) are
otherwise authorized by law or treaty.
[60 FR 41812, Aug. 14, 1995]
§ 404.2 Policy and objective.
§ 401.17 Submissions and inquiries.
It is the policy and objective of this
All submissions or inquiries should subpart to use the patent system to
be directed to Director, Technology promote the utilization of inventions
Competitiveness Staff, Office of Tech- arising from federally supported re-
nology Policy, Technology Administra- search or development.
tion, telephone number 202–482–2100,
Room H4418, U.S. Department of Com- § 404.3 Definitions.
merce, Washington, DC 20230. (a) Federally owned invention means
[60 FR 41812, Aug. 14, 1995] an invention, plant, or design which is
covered by a patent, or patent applica-
PART 404—LICENSING OF GOV- tion in the United States, or a patent,
patent application, plant variety pro-
ERNMENT OWNED INVENTIONS tection, or other form of protection, in
a foreign country, title to which has
Sec.
404.1 Scope of part.
been assigned to or otherwise vested in
404.2 Policy and objective. the United States Government.
404.3 Definitions. (b) Federal agency means an executive
404.4 Authority to grant licenses. department, military department, Gov-
404.5 Restrictions and conditions on all li- ernment corporation, or independent
censes granted under this part. establishment, except the Tennessee
404.6 Nonexclusive licenses. Valley Authority, which has custody of
404.7 Exclusive and partially exclusive li- a federally owned invention.
censes. (c) Small business firm means a small
404.8 Application for a license.
business concern as defined in section 2
404.9 Notice to Attorney General.
404.10 Modification and termination of li- of Pub. L. 85–536 (15 U.S.C. 632) and im-
censes. plementing regulations of the Adminis-
404.11 Appeals. trator of the Small Business Adminis-
404.12 Protection and administration of in- tration.
ventions. (d) Practical application means to
404.13 Transfer of custody. manufacture in the case of a composi-
404.14 Confidentiality of information. tion or product, to practice in the case
AUTHORITY: 35 U.S.C. 206 and the delegation of a process or method, or to operate in
of authority by the Secretary of Commerce the case of a machine or system; and,
518