[Code of Federal Regulations] [Title 37, Volume 1] [Revised as of July 1, 2005] From the U.S. Government Printing Office via GPO Access [CITE: 37CFR401.1] [Page 689-692] TITLE 37--PATENTS, TRADEMARKS, AND COPYRIGHTS CHAPTER IV--ASSISTANT SECRETARY FOR TECHNOLOGY POLICY, DEPARTMENT OF COMMERCE PART 401_RIGHTS TO INVENTIONS MADE BY NONPROFIT ORGANIZATIONS AND SMALL Sec. 401.1 Scope. -------------------------------------------------------------------- Part Page 401 Rights to inventions made by nonprofit organizations and small business firms under Government grants, contracts, and cooperative agreements.................. 691 404 Licensing of Government owned inventions.... 707 [[Page 691]] BUSINESS FIRMS UNDER GOVERNMENT GRANTS, CONTRACTS, AND COOPERATIVE AGREEMENTS--Table of Contents Sec. 401.1 Scope. 401.2 Definitions. 401.3 Use of the standard clauses at Sec. 401.14. 401.4 Contractor appeals of exceptions. 401.5 Modification and tailoring of clauses. 401.6 Exercise of march-in rights. 401.7 Small business preference. 401.8 Reporting on utilization of subject inventions. 401.9 Retention of rights by contractor employee inventor. 401.10 Government assignment to contractor of rights in invention of government employee. 401.11 Appeals. 401.12 Licensing of background patent rights to third parties. 401.13 Administration of patent rights clauses. 401.14 Standard patent rights clauses. 401.15 Deferred determinations. 401.16 Electronic filing. 401.17 Submissions and inquiries. Authority: 35 U.S.C. 206 and the delegation of authority by the Secretary of Commerce to the Assistant Secretary of Commerce for Technology Policy at sec. 3(g) of DOO 10-18. Source: 52 FR 8554, Mar. 18, 1987, unless otherwise noted. (a) Traditionally there have been no conditions imposed by the government on research performers while using private facilities which would preclude them from accepting research funding from other sources to expand, to aid in completing or to conduct separate investigations closely related to research activities sponsored by the government. Notwithstanding the right of research organizations to accept supplemental funding from other sources for the purpose of expediting or more comprehensively accomplishing the research objectives of the government sponsored project, it is clear that the ownership provisions of these regulations would remain applicable in any invention ``conceived or first actually reduced to practice in performance'' of the project. Separate accounting for the two funds used to support the project in this case is not a determining factor. (1) To the extent that a non-government sponsor established a project which, although closely related, falls outside the planned and committed activities of a government-funded project and does not diminish or distract from the performance of such activities, inventions made in performance of the non-government sponsored project would not be subject to the conditions of these regulations. An example of such related but separate projects would be a government sponsored project having research objectives to expand scientific understanding in a field and a closely related industry sponsored project having as its objectives the application of such new knowledge to develop usable new technology. The time relationship in conducting the two projects and the use of new fundamental knowledge from one in the performance of the other are not important determinants since most inventions rest on a knowledge base built up by numerous independent research efforts extending over many years. Should such an invention be claimed by the performing organization to be the product of non-government sponsored research and be challenged by the sponsoring agency as being reportable to the government as a ``subject invention'', the challenge is appealable as described in Sec. 401.11(d). (2) An invention which is made outside of the research activities of a government-funded project is not viewed as a ``subject invention'' since it cannot be shown to have been ``conceived or first actually reduced to practice'' in performance of the project. An obvious example of this is a situation where an instrument purchased with government funds is later used, without interference with or cost to the government-funded project, in making an invention all expenses of which involve only non-government funds. (b) This part inplements 35 U.S.C. 202 through 204 and is applicable to all Federal agencies. It applies to all funding agreements with small business firms and nonprofit organizations executed after the effective date of this part, except for a funding agreement [[Page 692]] made primarily for educational purposes. Certain sections also provide guidance for the administration of funding agreements which predate the effective date of this part. In accordance with 35 U.S.C. 212, no scholarship, fellowship, training grant, or other funding agreement made by a Federal agency primarily to an awardee for educational purposes will contain any provision giving the Federal agency any rights to inventions made by the awardee. (c) The march-in and appeals procedures in Sec. Sec. 401.6 and 401.11 shall apply to any march-in or appeal proceeding under a funding agreement subject to Chapter 18 of Title 35, U.S.C., initiated after the effective date of this part even if the funding agreement was executed prior to that date. (d) At the request of the contractor, a funding agreement for the operation of a government-owned facility which is in effect on the effective date of this part shall be promptly amended to include the provisions required by Sec. Sec. 401.3(a) unless the agency determines that one of the exceptions at 35 U.S.C. 202(a)(i) through (iv) Sec. 401.3(a)(8) through (iv) of this part) is applicable and will be applied. If the exception at Sec. 401.3(a)(iv) is determined to be applicable, the funding agreement will be promptly amended to include the provisions required by Sec. 401.3(c). (e) This regulation supersedes OMB Circular A-124 and shall take precedence over any regulations dealing with ownership of inventions made by small businesses and nonprofit organizations which are inconsistent with it. This regulation will be followed by all agencies pending amendment of agency regulations to conform to this part and amended Chapter 18 of Title 35. Only deviations requested by a contractor and not inconsistent with Chapter 18 of Title 35, United States Code, may be made without approval of the Secretary. Modifications or tailoring of clauses as authorized by Sec. 401.5 or Sec. 401.3, when alternative provisions are used under Sec. 401.3(a)(1) through (4), are not considered deviations requiring the Secretary's approval. Three copies of proposed and final agency regulations supplementing this part shall be submitted to the Secretary at the office set out in Sec. 401.16 for approval for consistency with this part before they are submitted to the Office of Management and Budget (OMB) for review under Executive Order 12291 or, if no submission is required to be made to OMB, before their submission to the Federal Register for publication. (f) In the event an agency has outstanding prime funding agreements that do not contain patent flow-down provisions consistent with this part or earlier Office of Federal Procurement Policy regulations (OMB Circular A-124 or OMB Bulletin 81-22), the agency shall take appropriate action to ensure that small business firms or nonprofit organizations that are subcontractors under any such agreements and that received their subcontracts after July 1, 1981, receive rights in their subject inventions that are consistent with Chapter 18 and this part. (g) This part is not intended to apply to arrangements under which nonprofit organizations, small business firms, or others are allowed to use government-owned research facilities and normal technical assistance provided to users of those facilities, whether on a reimbursable or nonreimbursable basis. This part is also not intended to apply to arrangements under which sponsors reimburse the government or facility contractor for the contractor employee's time in performing work for the sponsor. Such arrangements are not considered ``funding agreements'' as defined at 35 U.S.C. 201(b) and Sec. 401.2(a) of this part.