[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR27.302]



[Page 515-519]

 

            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM

 

                CHAPTER 1--FEDERAL ACQUISITION REGULATION

 

PART 27_PATENTS, DATA, AND COPYRIGHTS--Table of Contents

 

          Subpart 27.3_Patent Rights Under Government Contracts

 

Sec. 27.302  Policy.



    (a) Introduction. The policy of this section is based on Chapter 18 

of title 35, U.S.C. (Pub. L. 95-517, Pub. L. 98-620, 37 CFR part 401), 

the Presidential Memorandum on Government Patent Policy to the Heads of 

Executive Departments and Agencies dated February 18, 1983, and 

Executive Order 12591, which provides that, to the extent permitted by 

law, the head of each Executive Department and agency shall promote the 

commercialization, in accord with the Presidential Memorandum, of 

patentable results of federally funded research by granting to all 

contractors, regardless of size, the title to patents made in whole or 

in part with Federal funds, in exchange for royalty-free use by or on 

behalf of the Government. The objectives of this policy are to use the 

patent system to promote the utilization of inventions arising from 

federally supported research or development; to encourage maximum 

participation of industry in federally supported research and 

development efforts; to ensure that these inventions are used in a 

manner to promote free competition and enterprise; to promote the 

commercialization and public availability of the inventions made in the 

United States by United States industry and labor; to ensure that the 

Government obtains sufficient



[[Page 516]]



rights in federally supported inventions to meet the needs of the 

Government and protect the public against nonuse or unreasonable use of 

inventions; and, to minimize the costs of administering policies in this 

area.

    (b) Contractor right to elect title. Under the policy set forth in 

paragraph (a) of this section, each contractor may, after disclosure to 

the Government as required by the patent rights clause included in the 

contract, elect to retain title to any invention made in the performance 

of work under the contract. To the extent an agency's statutory 

requirements necessitate a different policy, or different procedures 

and/or contract clauses to effectuate the policy set forth in paragraph 

(a) of this section, such policy, procedures, and clauses shall be 

contained in or expressly referred to in that agency's supplement to 

this subpart. In addition, a contract may provide otherwise (1) when the 

contractor is not located in the United States or does not have a place 

of business located in the United States or is subject to the control of 

a foreign-government (see 27.303(c)), (2) in exceptional circumstances 

when it is determined by the agency that restriction or elimination of 

the right to retain title in any subject invention will better promote 

the policy and objectives of Chapter 18 of title 35, U.S.C. and the 

Presidential Memorandum, (3) when it is determined by a Government 

authority which is authorized by statute or Executive order to conduct 

foreign intelligence or counterintelligence activities that the 

restriction or elimination of the right to retain title to any subject 

invention is necessary to protect the security of such activities, or 

(4) when the contract includes the operation of a Government-owned, 

contractor-operated facility of the Department of Energy primarily 

dedicated to the Department's naval nuclear propulsion or weapons 

related programs and all funding agreement limitations under 35 U.S.C. 

202(a)(iv) for agreements with small business firms and nonprofit 

organizations are limited to inventions occurring under the above two 

programs.

    In the case of small business firms and nonprofit organizations, 

when an agency justifies and exercises the exception at subparagraph 

(b)(2) of this section on the basis of national security, the contract 

shall provide the contractor with the right to elect ownership to any 

invention made under such contract as provided by the clause at 52.227-

11, Patent Rights--Retention by the Contractor (Short Form), if the 

invention is not classified by the agency within 6 months of the date it 

is reported to the agency, or within the same time period the Department 

of Energy (DOE) does not, as authorized by regulation, law or Executive 

order or implementing regulations thereto, prohibit unauthorized 

dissemination of the invention. Contracts in support of DOE's naval 

nuclear propulsion program are exempted from this paragraph. When a 

contract involves a series of separate task orders, an agency may apply 

the exceptions at subparagraph (b) (2) or (3) of this section to 

individual task orders, and it may structure the contract so that 

modified patent rights clauses will apply to the task order even though 

the clause at 52.227-11 is applicable to the remainder of the work. In 

those instances when the Government has the right to acquire title at 

the time of contracting, the contractor may, nevertheless, request 

greater rights to an identified investion (see 27.304-1(a)). The right 

of the contractor to retain title shall, in any event, be subject to the 

provisions of paragraphs (c) through (g) of this section.

    (c) Government license. The Government shall have at least a 

nonexclusive, nontransferable, irrevocable, paid-up license to practice, 

or have practiced for or on behalf of the United States, any subject 

invention throughout the world; and may, if provided in the contract 

(see Alernative I of the applicable patent rights clause), have 

additional rights to sublicense any foreign government or international 

organization pursuant to existing treaties or agreements identified in 

the contract, or to otherwise effectuate such treaties or agreements. In 

the case of long term contracts, the contract may also provide (see 

Alternate II) such rights with respect to treaties or agreements to be 

entered into by the Government after the award of the contract.



[[Page 517]]



    (d) Government right to receive title. (1) The Government has the 

right to receive title to any invention if the contract so provides 

pursuant to a determination made in accordance with subparagraph (b) 

(1), (2), (3), or (4) of this section. In addition, to the extent 

provided in the patent rights clause, the Government has the right to 

receive title to an invention--

    (i) If the contractor has not disclosed the invention within the 

time specified in the clause;

    (ii) In any country where the contractor does not elect to retain 

rights or fails to elect to retain rights to the invention within the 

time specified in the clause;

    (iii) In any country where the contractor has not filed a patent 

application within the time specified in the clause;

    (iv) In any country where the contractor decides not to continue 

prosecution of a patent application, pay maintenance fees, or defend in 

a reexamination or opposition proceeding on the patent; and/or

    (v) In any country where the contractor no longer desires to retain 

title.

    (2) For the purposes of this paragraph, election or filing in a 

European Patent Office Region or under the Patent Cooperation Treaty 

constitutes election or filing in any country covered therein to meet 

the times specified in the clause, provided that the Government has the 

right to receive title in those countries not subsequently designated by 

the contractor.

    (e) Utilization reports. The Government shall have the right to 

require periodic reporting on the utilization or efforts at obtaining 

utilization that are being made by the contractor or its licensees or 

assignees. Such reporting by small business firms and nonprofit 

organizations may be required in accordance with instructions as may be 

issued by the Department of Commerce. Agencies should protect the 

confidentiality or utilization reports which are marked with 

restrictions to the extent permitted by 35 U.S.C. 205 or other 

applicable laws and 37 CFR part 401. Agencies shall not disclose such 

utilization reports to persons outside the Government without permission 

of the contractor. Contractors will continue to provide confidential 

markings to help prevent inadvertent release outside the agency.

    (f) March-in rights. (1) With respect to any subject invention in 

which a contractor has acquired title, contracts provide that the agency 

shall have the right (unless provided otherwise in accordance with 

27.304-1(f)) to require the contractor, an assignee, or exclusive 

licensee of a subject invention to grant a nonexclusive, partially 

exclusive, or exclusive license in any field of use to a responsible 

applicant or applicants, upon terms that are reasonable under the 

circumstances, and if the contractor, assignee, or exclusive licensee 

refuses such request, to grant such a license itself, if the agency 

determines that such action is necessary--

    (i) Because the contractor or assignee has not taken, or is not 

expected to take within a reasonable time, effective steps to achieve 

practical application of the subject invention in such field of use;

    (ii) To alleviate health or safety needs which are not reasonably 

satisfied by the contractor, assignee, or their licensees;

    (iii) To meet requirements for public use specified by Federal 

regulations and such requirements are not reasonably satisfied by the 

contractor, assignee, or licensees; or

    (iv) Because the agreement required by paragraph (g) below has 

neither been obtained nor waived, or because a licensee of the exclusive 

right to use or sell any subject invention in the United States is in 

breach of its agreement obtained pursuant to paragraph (g) below.

    (2) This right of the agency shall be exercised only after the 

contractor has been provided a reasonable time to present facts and show 

cause why the proposed agency action should not be taken, and afforded 

an opportunity to take appropriate action if the contractor wishes to 

dispute or appeal the proposed action, in accordance with 27.304-1(g).

    (g) Preference for United States industry. Unless provided otherwise 

in accordance with 27.304-1(f), contracts provide that no contractor 

which receives title to any subject invention and no



[[Page 518]]



assignee of any such contractor shall grant to any person the exclusive 

right to use or sell any subject invention in the United States unless 

such person agrees that any products embodying the subject invention or 

produced through the use of the subject invention will be manufactured 

substantially in the United States. However, in individual cases, the 

requirement for such an agreement may be waived by the agency upon a 

showing by the contractor or assignee that reasonable but unsuccessful 

efforts have been made to grant licenses on similar terms to potential 

licensees that would be likely to manufacture substantially in the 

United States or that under the circumstances domestic manufacture is 

not commercially feasible.

    (h) Small business preference. (1) Nonprofit organization 

contractors are expected to use efforts that are reasonable under the 

circumstances to attract small business licensees. They are also 

expected to give small business firms that meet the standard outlined in 

the clause at 52.227-11, Patent Rights--Retention by the Contractor 

(Short Form), a preference over other applicants for licenses. What 

constitutes reasonable efforts to attract small business licensees will 

vary with the circumstances and the nature, duration, and expense of 

efforts needed to bring the invention to the market. Subparagraph (k)(4) 

of the clause is not intended, for example, to prevent nonprofit 

organizations from providing larger firms with a right of first refusal 

or other options in inventions that relate to research being supported 

under long-term or other arrangements with larger companies. Under such 

circumstances, it would not be reasonable to seek and to give a 

preference to small business licensees.

    (2) Small business firms that believe a nonprofit organzations is 

not meeting its obligations under the clause may report their concerns 

to the Secretary of Commerce. To the extent deemed appropriate, the 

Secretary of Commerce will undertake informal investigation of the 

concern, and, if appropriate, enter into discussions or negotiations 

with the nonprofit organization to the end of improving its efforts in 

meeting its obligations under the clause. However, in no event will the 

Secretary of Commerce intervene in ongoing negotiations or contractor 

decisions concerning the licensing of a specific subject invention. All 

the above investigations, discussions, and negotiations of the Secretary 

of Commerce will be in coordinations with other interested agencies, 

including the Small Business Administration; and in the case of a 

contract for the operation of a Government-owned, contractor-operated 

research or production facility, the Secretary of Commerce will 

coordinate with the agency responsible for the facility prior to any 

discussions or negotiations with the contractor.

    (i) Minimum rights to contractor. (1) When the Government acquires 

title to a subject invention, the contractor is normally granted a 

revocable, nonexclusive, royalty-free license to that invention 

throughout the world. The contractor's license extends to its domestic 

subsidiaries and affiliates, if any, within the corporate structure of 

which the contractor is a part and includes the right to grant 

sublicenses of the same scope to the extent the contractor was legally 

obligated to do so at the time the contract was awarded. The license is 

transferable only with the approval of the contracting officer except 

when transferred to the successor of that part of the contractor's 

business to which the invention pertains.

    (2) The contractor's domestic license may be revoked or modified to 

the extent necessary to achieve expeditious practical application of the 

subject invention pursuant to an application for an exclusive license 

submitted in accordance with the applicable provisions in the Federal 

Property Management Regulations and agency licensing regulations. This 

license will not be revoked in that field of use or the geographical 

areas in which the contractor has achieved practical application and 

continues to make the benefits of the invention reasonably accessible to 

the public. The license in any foreign country may be revoked or 

modified to the extent the contractor, its licensees, or its domestic 

subsidiaries or affiliates



[[Page 519]]



have failed to achieve practical application in that country. See the 

procedures at 27.304-1(e).

    (j) Confidentiality of inventions. The publication of information 

disclosing an invention by any party before the filing of a patent 

application may create a bar to a valid patent. Accordingly, 35 U.S.C. 

205 and 37 CFR part 40 provide that Federal agencies are authorized to 

withhold from disclosure to the public information disclosing any 

invention in which the Federal Government owns or may own a right, 

title, or interest (including a nonexclusive license) for a reasonable 

time in order for a patent application to be filed. Furthermore, Federal 

agencies shall not be required to release copies of any document which 

is part of an application for patent filed with the United States Patent 

and Trademark Office or with any foreign patent office. The Presidential 

Memorandum on Government Patent Policy specifies that agencies should 

protect the confidentiality of invention disclosures and patent 

applications required in performance or in consequence of awards to the 

extent permitted by 35 U.S.C. 205 or other applicable laws.



[49 FR 12974, Mar. 30, 1984, as amended at 50 FR 1743, Jan. 11, 1985; 50 

FR 52429, Dec. 23, 1985; 51 FR 2665, Jan. 17, 1986; 54 FR 25063, June 

12, 1989 and 55 FR 25525, June 21, 1990; 62 FR 40237, July 25, 1997]