[Code of Federal Regulations]
[Title 37, Volume 1]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 37CFR404.5]

[Page 696-697]
 
              TITLE 37--PATENTS, TRADEMARKS, AND COPYRIGHTS
 
  CHAPTER IV--ASSISTANT SECRETARY FOR TECHNOLOGY POLICY, DEPARTMENT OF 
                                COMMERCE
 
PART 404_LICENSING OF GOVERNMENT OWNED INVENTIONS--Table of Contents
 
Sec. 404.5  Restrictions and conditions on all licenses granted under 
this part.

    (a)(1) A license may be granted only if the applicant has supplied 
the Federal agency with a satifactory plan for development or marketing 
of the invention, or both, and with information about the applicant's 
capability to fulfill the plan.
    (2) A license granting rights to use or sell under a federally owned 
invention in the United States shall normally be granted only to a 
licensee who agrees that any products embodying the invention or 
produced through the use of the invention will be manufactured 
substantially in the United States.
    (b) Licenses shall contain such terms and conditions as the Federal 
agency determines are appropriate for the protection of the interests of 
the Federal Government and the public and are not in conflict with law 
or this part. The following terms and conditions apply to any license:
    (1) The duration of the license shall be for a period specified in 
the license agreement, unless sooner terminated in accordance with this 
part.
    (2) The license may be granted for all or less than all fields of 
use of the invention or in specified geographical areas, or both.
    (3) The license may extend to subsidiaries of the licensee or other 
parties if provided for in the license but shall be nonassignable 
without approval of the Federal agency, except to the successor

[[Page 697]]

of that part of the licensee's business to which the invention pertains.
    (4) The licensee may provide the license the right to grant 
sublicenses under the license, subject to the approval of the Federal 
agency. Each sublicense shall make reference to the license, including 
the rights retained by the Government, and a copy of such sublicense 
shall be furnished to the Federal agency.
    (5) The license shall require the licensee to carry out the plan for 
development or marketing of the invention, or both, to bring the 
invention to practical application within a period specified in the 
license, and to continue to make the benefits of the invention 
reasonably accessible to the public.
    (6) The license shall require the licensee to report periodically on 
the utilization or efforts at obtaining utilization that are being made 
by the licensee, with particular reference to the plan submitted.
    (7) Licenses may be royalty-free or for royalties or other 
consideration.
    (8) Where an agreement is obtained pursuant to Sec. 404.5(a)(2) 
that any products embodying the invention or produced through use of the 
invention will be manufactured substantially in the United States, the 
license shall recite such agreement.
    (9) The license shall provide for the right of the Federal agency to 
terminate the license, in whole or in part, if:
    (i) The Federal agency determines that the licensee is not executing 
the plan submitted with its request for a license and the licensee 
cannot otherwise demonstrate to the satisfaction of the Federal agency 
that it has taken or can be expected to take within a reasonable time 
effective steps to achieve practical application of the invention;
    (ii) The Federal agency determines that such action is necessary to 
meet requirements for public use specified by Federal regulations issued 
after the date of the license and such requirements are not reasonably 
satisfied by the licensee;
    (iii) The licensee has willfully made a false statement of or 
willfully omitted a material fact in the license application or in any 
report required by the license agreement; or
    (iv) The licensee commits a substantial breach of a covenant or 
agreement contained in the license.
    (10) The license may be modified or terminated, consistent with this 
part, upon mutual agreement of the Federal agency and the licensee.
    (11) Nothing relating to the grant of a license, nor the grant 
itself, shall be construed to confer upon any person any immunity from 
or defenses under the antitrust laws or from a charge of patent misuse, 
and the acquisition and use of rights pursuant to this part shall not be 
immunized from the operation of state or Federal law by reason of the 
source of the grant.