[Code of Federal Regulations]

[Title 37, Volume 1]

[Revised as of July 1, 2006]

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

[CITE: 37CFR401.14]



[Page 708-712]

 

              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 

BUSINESS FIRMS UNDER GOVERNMENT GRANTS, CONTRACTS, AND COOPERATIVE 

AGREEMENTS--Table of Contents

 

Sec.  401.14  Standard patent rights clauses.



    (a) The following is the standard patent rights clause to be used as 

specified in Sec.  401.3(a).



    Patent Rights (Small Business Firms and Nonprofit Organizations)



                             (a) Definitions



    (1) Invention means any invention or discovery which is or may be 

patentable or otherwise protectable under Title 35 of the United States 

Code, or any novel variety of plant which is or may be protected under 

the Plant Variety Protection Act (7 U.S.C. 2321 et seq.).

    (2) Subject invention means any invention of the contractor 

conceived or first actually reduced to practice in the performance of 

work under this contract, provided that in the case of a variety of 

plant, the date of determination (as defined in section 41(d) of the 

Plant Variety Protection Act, 7 U.S.C. 2401(d))



[[Page 709]]



must also occur during the period of contract performance.

    (3) Practical Application means to manufacture in the case of a 

composition or product, to practice in the case of a process or method, 

or to operate in the case of a machine or system; and, in each case, 

under such conditions as to establish that the invention is being 

utilized and that its benefits are, to the extent permitted by law or 

government regulations, available to the public on reasonable terms.

    (4) Made when used in relation to any invention means the conception 

or first actual reduction to practice of such invention.

    (5) Small Business Firm means a small business concern as defined at 

section 2 of Pub. L. 85-536 (15 U.S.C. 632) and implementing regulations 

of the Administrator of the Small Business Administration. For the 

purpose of this clause, the size standards for small business concerns 

involved in government procurement and subcontracting at 13 CFR 121.3-8 

and 13 CFR 121.3-12, respectively, will be used.

    (6) Nonprofit Organization means a university or other institution 

of higher education or an organization of the type described in section 

501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c) and 

exempt from taxation under section 501(a) of the Internal Revenue Code 

(25 U.S.C. 501(a)) or any nonprofit scientific or educational 

organization qualified under a state nonprofit organization statute.



                   (b) Allocation of Principal Rights



    The Contractor may retain the entire right, title, and interest 

throughout the world to each subject invention subject to the provisions 

of this clause and 35 U.S.C. 203. With respect to any subject invention 

in which the Contractor retains title, the Federal government shall have 

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

practice or have practiced for or on behalf of the United States the 

subject invention throughout the world.



    (c) Invention Disclosure, Election of Title and Filing of Patent 

                        Application by Contractor



    (1) The contractor will disclose each subject invention to the 

Federal Agency within two months after the inventor discloses it in 

writing to contractor personnel responsible for patent matters. The 

disclosure to the agency shall be in the form of a written report and 

shall identify the contract under which the invention was made and the 

inventor(s). It shall be sufficiently complete in technical detail to 

convey a clear understanding to the extent known at the time of the 

disclosure, of the nature, purpose, operation, and the physical, 

chemical, biological or electrical characteristics of the invention. The 

disclosure shall also identify any publication, on sale or public use of 

the invention and whether a manuscript describing the invention has been 

submitted for publication and, if so, whether it has been accepted for 

publication at the time of disclosure. In addition, after disclosure to 

the agency, the Contractor will promptly notify the agency of the 

acceptance of any manuscript describing the invention for publication or 

of any on sale or public use planned by the contractor.

    (2) The Contractor will elect in writing whether or not to retain 

title to any such invention by notifying the Federal agency within two 

years of disclosure to the Federal agency. However, in any case where 

publication, on sale or public use has initiated the one year statutory 

period wherein valid patent protection can still be obtained in the 

United States, the period for election of title may be shortened by the 

agency to a date that is no more than 60 days prior to the end of the 

statutory period.

    (3) The contractor will file its initial patent application on a 

subject invention to which it elects to retain title within one year 

after election of title or, if earlier, prior to the end of any 

statutory period wherein valid patent protection can be obtained in the 

United States after a publication, on sale, or public use. The 

contractor will file patent applications in additional countries or 

international patent offices within either ten months of the 

corresponding initial patent application or six months from the date 

permission is granted by the Commissioner of Patents and Trademarks to 

file foreign patent applications where such filing has been prohibited 

by a Secrecy Order.

    (4) Requests for extension of the time for disclosure, election, and 

filing under subparagraphs (1), (2), and (3) may, at the discretion of 

the agency, be granted.



           (d) Conditions When the Government May Obtain Title



    The contractor will convey to the Federal agency, upon written 

request, title to any subject invention--

    (1) If the contractor fails to disclose or elect title to the 

subject invention within the times specified in (c), above, or elects 

not to retain title; provided that the agency may only request title 

within 60 days after learning of the failure of the contractor to 

disclose or elect within the specified times.

    (2) In those countries in which the contractor fails to file patent 

applications within the times specified in (c) above; provided, however, 

that if the contractor has filed a patent application in a country after 

the times specified in (c) above, but prior to its receipt of the 

written request of the Federal agency, the contractor shall continue to 

retain title in that country.

    (3) In any country in which the contractor decides not to continue 

the prosecution of



[[Page 710]]



any application for, to pay the maintenance fees on, or defend in 

reexamination or opposition proceeding on, a patent on a subject 

invention.



(e) Minimum Rights to Contractor and Protection of the Contractor Right 

                                 to File



    (1) The contractor will retain a nonexclusive royalty-free license 

throughout the world in each subject invention to which the Government 

obtains title, except if the contractor fails to disclose the invention 

within the times specified in (c), above. The contractor's license 

extends to its domestic subsidiary and affiliates, if any, within the 

corporate structure of which the contractor is a party 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 

Federal agency except when transferred to the sucessor of that party of 

the contractor's business to which the invention pertains.

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

the funding Federal agency 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 

applicable provisions at 37 CFR part 404 and agency licensing 

regulations (if any). 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 at the discretion of the 

funding Federal agency to the extent the contractor, its licensees, or 

the domestic subsidiaries or affiliates have failed to achieve practical 

application in that foreign country.

    (3) Before revocation or modification of the license, the funding 

Federal agency will furnish the contractor a written notice of its 

intention to revoke or modify the license, and the contractor will be 

allowed thirty days (or such other time as may be authorized by the 

funding Federal agency for good cause shown by the contractor) after the 

notice to show cause why the license should not be revoked or modified. 

The contractor has the right to appeal, in accordance with applicable 

regulations in 37 CFR part 404 and agency regulations (if any) 

concerning the licensing of Government-owned inventions, any decision 

concerning the revocation or modification of the license.



       (f) Contractor Action to Protect the Government's Interest



    (1) The contractor agrees to execute or to have executed and 

promptly deliver to the Federal agency all instruments necessary to (i) 

establish or confirm the rights the Government has throughout the world 

in those subject inventions to which the contractor elects to retain 

title, and (ii) convey title to the Federal agency when requested under 

paragraph (d) above and to enable the government to obtain patent 

protection throughout the world in that subject invention.

    (2) The contractor agrees to require, by written agreement, its 

employees, other than clerical and nontechnical employees, to disclose 

promptly in writing to personnel identified as responsible for the 

administration of patent matters and in a format suggested by the 

contractor each subject invention made under contract in order that the 

contractor can comply with the disclosure provisions of paragraph (c), 

above, and to execute all papers necessary to file patent applications 

on subject inventions and to establish the government's rights in the 

subject inventions. This disclosure format should require, as a minimum, 

the information required by (c)(1), above. The contractor shall instruct 

such employees through employee agreements or other suitable educational 

programs on the importance of reporting inventions in sufficient time to 

permit the filing of patent applications prior to U.S. or foreign 

statutory bars.

    (3) The contractor will notify the Federal agency of any decisions 

not to continue the prosecution of a patent application, pay maintenance 

fees, or defend in a reexamination or opposition proceeding on a patent, 

in any country, not less than thirty days before the expiration of the 

response period required by the relevant patent office.

    (4) The contractor agrees to include, within the specification of 

any United States patent applications and any patent issuing thereon 

covering a subject invention, the following statement, ``This invention 

was made with government support under (identify the contract) awarded 

by (identify the Federal agency). The government has certain rights in 

the invention.''



                            (g) Subcontracts



    (1) The contractor will include this clause, suitably modified to 

identify the parties, in all subcontracts, regardless of tier, for 

experimental, developmental or research work to be performed by a small 

business firm or domestic nonprofit organization. The subcontractor will 

retain all rights provided for the contractor in this clause, and the 

contractor will not, as part of the consideration for awarding the 

subcontract, obtain rights in the subcontractor's subject inventions.

    (2) The contractor will include in all other subcontracts, 

regardless of tier, for experimental developmental or research work the 

patent rights clause required by (cite section of agency implementing 

regulations or FAR).



[[Page 711]]



    (3) In the case of subcontracts, at any tier, when the prime award 

with the Federal agency was a contract (but not a grant or cooperative 

agreement), the agency, subcontractor, and the contractor agree that the 

mutual obligations of the parties created by this clause constitute a 

contract between the subcontractor and the Federal agency with respect 

to the matters covered by the clause; provided, however, that nothing in 

this paragraph is intended to confer any jurisdiction under the Contract 

Disputes Act in connection with proceedings under paragraph (j) of this 

clause.



           (h) Reporting on Utilization of Subject Inventions



    The Contractor agrees to submit on request periodic reports no more 

frequently than annually on the utilization of a subject invention or on 

efforts at obtaining such utilization that are being made by the 

contractor or its licensees or assignees. Such reports shall include 

information regarding the status of development, date of first 

commerical sale or use, gross royalties received by the contractor, and 

such other data and information as the agency may reasonably specify. 

The contractor also agrees to provide additional reports as may be 

requested by the agency in connection with any march-in proceeding 

undertaken by the agency in accordance with paragraph (j) of this 

clause. As required by 35 U.S.C. 202(c)(5), the agency agrees it will 

not disclose such information to persons outside the government without 

permission of the contractor.



                (i) Preference for United States Industry



    Notwithstanding any other provision of this clause, the contractor 

agrees that neither it nor any assignee will grant to any person the 

exclusive right to use or sell any subject inventions 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 

Federal agency upon a showing by the contractor or its 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 commerically feasible.



                           (j) March-in Rights



    The contractor agrees that with respect to any subject invention in 

which it has acquired title, the Federal agency has the right in 

accordance with the procedures in 37 CFR 401.6 and any supplemental 

regulations of the agency 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 a request the Federal agency has the right to 

grant such a license itself if the Federal agency determines that:

    (1) Such action is necessary 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.

    (2) Such action is necessary to alleviate health or safety needs 

which are not reasonably satisfied by the contractor, assignee or their 

licensees;

    (3) Such action is necessary to meet requirements for public use 

specified by Federal regulations and such requirements are not 

reasonably satisfied by the contractor, assignee or licensees; or

    (4) Such action is necessary because the agreement required by 

paragraph (i) of this clause has not been obtained or waived or because 

a licensee of the exclusive right to use or sell any subject invention 

in the United States is in breach of such agreement.



    (k) Special Provisions for Contracts with Nonprofit Organizations



    If the contractor is a nonprofit organization, it agrees that:

    (1) Rights to a subject invention in the United States may not be 

assigned without the approval of the Federal agency, except where such 

assignment is made to an organization which has as one of its primary 

functions the management of inventions, provided that such assignee will 

be subject to the same provisions as the contractor;

    (2) The contractor will share royalties collected on a subject 

invention with the inventor, including Federal employee co-inventors 

(when the agency deems it appropriate) when the subject invention is 

assigned in accordance with 35 U.S.C. 202(e) and 37 CFR 401.10;

    (3) The balance of any royalties or income earned by the contractor 

with respect to subject inventions, after payment of expenses (including 

payments to inventors) incidential to the administration of subject 

inventions, will be utilized for the support of scientific research or 

education; and

    (4) It will make efforts that are reasonable under the circumstances 

to attract licensees of subject invention that are small business firms 

and that it will give a preference to a small business firm when 

licensing a subject invention if the contractor determines that the 

small business firm has a plan or proposal for marketing the invention 

which, if executed, is equally as likely to bring the invention to 

practical application as any plans



[[Page 712]]



or proposals from applicants that are not small business firms; 

provided, that the contractor is also satisfied that the small business 

firm has the capability and resources to carry out its plan or proposal. 

The decision whether to give a preference in any specific case will be 

at the discretion of the contractor. However, the contractor agrees that 

the Secretary may review the contractor's licensing program and 

decisions regarding small business applicants, and the contractor will 

negotiate changes to its licensing policies, procedures, or practices 

with the Secretary when the Secretary's review discloses that the 

contractor could take reasonable steps to implement more effectively the 

reqirements of this paragraph (k)(4).



                            (l) Communication



    (Complete According to Instructions at 401.5(b))



    (b) When the Department of Energy (DOE) determines to use 

alternative provisions under Sec.  401.3(a)(4), the standard clause at 

Sec.  401.14(a), of this section, shall be used with the following 

modifications unless a substitute clause is drafted by DOE:

    (1) The title of the clause shall be changed to read as follows: 

Patent Rights to Nonprofit DOE Facility Operators

    (2) Add an ``(A)'' after ``(1)'' in paragraph (c)(1) and add 

subparagraphs (B) and (C) to paragraph (c)(1) as follows:



    (B) If the subject invention occurred under activities funded by the 

naval nuclear propulsion or weapons related programs of DOE, then the 

provisions of this subparagraph (c)(1)(B) will apply in lieu of 

paragraphs (c)(2) and (3). In such cases the contractor agrees to assign 

the government the entire right, title, and interest thereto throughout 

the world in and to the subject invention except to the extent that 

rights are retained by the contractor through a greater rights 

determination or under paragraph (e), below. The contractor, or an 

employee-inventor, with authorization of the contractor, may submit a 

request for greater rights at the time the invention is disclosed or 

within a reasonable time thereafter. DOE will process such a request in 

accordance with procedures at 37 CFR 401.15. Each determination of 

greater rights will be subject to paragraphs (h)-(k) of this clause and 

such additional conditions, if any, deemed to be appropriate by the 

Department of Energy.

    (C) At the time an invention is disclosed in accordance with 

(c)(1)(A) above, or within 90 days thereafter, the contractor will 

submit a written statement as to whether or not the invention occurred 

under a naval nuclear propulsion or weapons-related program of the 

Department of Energy. If this statement is not filed within this time, 

subparagraph (c)(1)(B) will apply in lieu of paragraphs (c)(2) and (3). 

The contractor statement will be deemed conclusive unless, within 60 

days thereafter, the Contracting Officer disagrees in writing, in which 

case the determination of the Contracting Officer will be deemed 

conclusive unless the contractor files a claim under the Contract 

Disputes Act within 60 days after the Contracting Officer's 

determination. Pending resolution of the matter, the invention will be 

subject to subparagraph (c)(1)(B).



    (3) Paragraph (k)(3) of the clause will be modified as prescribed at 

Sec.  401.5(g).

    (c) As prescribed in Sec.  401.3, replace (b) of the basic clause 

with the following paragraphs (1) and (2):



    (b) Allocation of principal rights. (1) The Contractor may retain 

the entire right, title, and interest throughout the world to each 

subject invention subject to the provisions of this clause, including 

(2) below, and 35 U.S.C. 203. With respect to any subject invention in 

which the Contractor retains title, the Federal Government shall have a 

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

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

invention throughout the world.

    (2) If the Contractor performs services at a Government owned and 

operated laboratory or at a Government owned and contractor operated 

laboratory directed by the Government to fulfill the Government's 

obligations under a Cooperative Research and Development Agreement 

(CRADA) authorized by 15 U.S.C. 3710a, the Government may require the 

Contractor to negotiate an agreement with the CRADA collaborating party 

or parties regarding the allocation of rights to any subject invention 

the Contractor makes, solely or jointly, under the CRADA. The agreement 

shall be negotiated prior to the Contractor undertaking the CRADA work 

or, with the permission of the Government, upon the identification of a 

subject invention. In the absence of such an agreement, the Contractor 

agrees to grant the collaborating party or parties an option for a 

license in its inventions of the same scope and terms set forth in the 

CRADA for inventions made by the Government.



[52 FR 8554, Mar. 18, 1987, as amended at 69 FR 17301, Apr. 2, 2004]