**6. Patent Licenses**

**A. Policy for Awarding Licenses**

The Federal Technology Transfer Act of 1986 (FTTA) made technology
transfer a responsibility of all Federal laboratory scientists and
engineers. It empowered each agency to give the Director of
Government-owned Government-operated (GOGO) laboratories the authority
to enter into Cooperative Research and Development Agreements (CRADAs)
with industry, universities, State and other Federal agencies and
negotiate licensing agreements.

Additionally, it allowed Federal laboratories to make advance agreements
with large and small companies on the title to and the licensing of
inventions resulting from the CRADAs with those laboratories. Also, the
law permits Directors of GOGO laboratories to negotiate licensing
agreements for inventions, or waive and grant rights to others for
inventions and intellectual property made at their laboratories.

In 1993, the USGS formalized its CRADA process with policy and Survey
Manual provisions relating to the form and content of a CRADA (see SM
Chapter 500.20). These guidelines are prepared to supplement the CRADA
policy and provide consistency in the formulation of standards involving
licenses, waivers to and the granting of intellectual property, and
rights produced under a collaborative agreement. These licensing
considerations are also appropriate to independently produced USGS
intellectual property.

Among the components considered by USGS in licensing, granting, or
waiving rights are:

> 1\) the nature of the prior government investment,
>
> 2\) the relative position, capability and commitment of the industrial
> partner,
>
> 3\) the scope of the commercial license needed to effectively transfer
> technology, and
>
> 4\) considerations of what is in the public interest.

These guidelines can be augmented by direct legal assistance from the
Department\'s Solicitor\'s Office or help from the Business Development
Branch.

**B. Background**

In the typical CRADA each party to the agreement brings existing
technology and know-how to the collaboration as well as a commitment for
future effort. This pre-existing expertise is called Background
Intellectual Property. On the industrial side this expertise may be
evidenced by proprietary know-how, trade secrets, patents, patent
applications, or copyrights and on the Government side this expertise
may be non-copyrighted data, technology know-how, show-how, patents, and
patent applications.

The intellectual property developed during a CRADA and detailed in the
Statement of Work can be solely developed (by one party) or it may be
jointly developed (two or more of the parties). Solely developed
technology belongs to the creating party unless the parties in the CRADA
have negotiated different terms and conditions.

If the technology developed under a CRADA is jointly created, each party
shares ownership in the developed technology. A joint owner is generally
free to license or commercialize all the jointly created intellectual
property without accounting to the other joint owner(s). In order to
modify the rights connected with joint ownership the parties must enter
into a specific agreement that changes these terms.

**C. Licenses**

A license is an agreement that allows one party to use another\'s
intellectual property, trademark, copyright, etc. Typically a license
gives the licensee the right to make, use and sell or have made for its
own purposes a particular product or process. A license could also give
the licensee the right to sublicense others to make, use, sell and
utilize the product. Usually, licenses involve royalty payments, annual
maintenance fees, and sometimes the costs of patents or copyright.

Licenses can be negotiated in patented inventions, invention
applications, show-how, know-how, trademarks, and in copyrights.
Although the Government cannot apply for copyright directly it can
license copyrights assigned to it by others. Also, it may negotiate for
royalty payments as part of a CRADA with a collaborator by allowing the
collaborator to take title to copyrights in exchange for copyright
royalties.

Under USGS guidelines each prospective licensee is expected to complete
a business plan, outlining its commercialization plan for the identified
USGS technology. Following is a list of the different types of licenses
that can be offered and factors to be considered when deciding which
type to use. However, the USGS reserves the right to modify these
factors on a case-by-case basis as the public interest or equities
warrant.

The following types of license are listed in order of most popular use:

> [Non-Exclusive Licenses]{.underline} may be appropriate for
> CRADA-generated or other USGS technology when:
>
> • USGS has contributed the majority of the technology or science used
> in the collaboration;
>
> • the technology has already been licensed to others on a
> non-exclusive basis;
>
> • the identified USGS technology is only a small percentage of the
> industrial participant\'s total product or application;
>
> • the technology is considered to be pre-competitive and it is
> determined by USGS that allowing many companies to have access better
> serves public\'s interest;
>
> • where a non-exclusive license is all that is necessary to accomplish
> an industrial partner\'s objective, and the grant of a non-exclusive
> license does not jeopardize the commercial potential of a total
> technical area.
>
> [Limited Exclusive Licenses]{.underline} in defined fields of use or
> applications may be granted by the USGS when:
>
> • The industrial participant has provided a substantial collaborative
> effort for the research (greater than 40%).
>
> • The existing technology will require a major investment beyond the
> research stage for final commercialization.
>
> • The nature of the technology or market is such that without the
> protection from competition afforded by exclusivity, there is
> insufficient incentive for a company to commercialize the technology.
>
> • The industrial participant has such a marketing or distribution
> presence in the primary markets that this is seen as the key to
> reaching the broadest consumer base and thus presents the broadest
> technology transfer opportunity.
>
> • The industrial participant has unique capabilities not available to
> other industry applicants.
>
> • The industrial participant has a track record of either developing
> new products or is a recognized expert in the identified application.
>
> • The industrial participant is willing to subsidize some portion of
> the costs of the patents.
>
> • When the industrial participant is willing to execute a commercial
> license agreement which is in the public interest and includes product
> liability, due diligence, and march-in provisions.
>
> [Co-Exclusive Licenses]{.underline} are licenses granted to several
> different companies for the same similar applications. The USGS may
> choose to negotiate this type of license when:
>
> • There is a sizable cost-share, or in-kind commitment by the
> industrial entities for the project.
>
> • The development costs for the technology are beyond the scope of a
> single company or the CRADA participant.
>
> • The CRADA participant does not need total exclusivity or because of
> its size and resources could not commercialize throughout the U.S. for
> the foreseeable future.
>
> • The market for the technology is not yet developed and the fact that
> a number of suppliers will be able to support the technology may make
> it more attractive for potential customers.
>
> • The nature of the technology or market are such that without the
> protection from competition afforded by some measure of exclusivity,
> there is not sufficient incentive for a company to commercialize the
> technology, yet without multiple participants, market penetration
> cannot reach optimal levels.
>
> • Multiple companies, as well as the USGS, have developed background
> technology which is complimentary to the CRADA technology.
>
> • USGS had a greater background technology position than any single
> licensee in the technology and this position was developed at
> considerable tax payer expense.
>
> • Each company will agree to execute an appropriate license containing
> royalty rates, march-in rights and product liability.
>
> [An Exclusive License]{.underline} in all fields of use is the
> broadcast type of license. The USGS generally will not negotiate this
> type of license unless the public interest is clearly advanced by such
> an agreement. However, for an industrial participant to be considered
> for such a license it would have to satisfy the considerations set
> forth in the above Limited Exclusive Licenses section, as well as
> accept a license with the following terms and conditions:
>
> • The exclusive licensee would be required to pledge a best efforts
> (not just reasonable efforts) to commercialize the invention as well
> as provide a development and commercialization plan that measure these
> efforts.
>
> • The USGS would have the right, after giving notice to the licensee
> to take remedial action and allowing time for those actions, to
> terminate or render nonexclusive any license granted if:
>
> 1\) the licensee was not engaged in reasonable research, development
> trials, manufacturing, marketing, sublicensing, or other activities
> necessary to expedite the commercial dissemination of the licensed
> invention;
>
> 2\) the licensee could not satisfy health and safety requirements for
> the manufacture of any product;
>
> 3\) the licensee was in bankruptcy; or
>
> 4\) there was an assignment of substantially all the assets which
> negated other legal requirements of the license (e.g. export control).
>
> • The USGS for certain enumeration situations would reserve the right
> to require the licensee to grant sublicenses to responsible applicants
> in other fields of use.
>
> • The proposed exclusive licensee must agree not to unreasonably deny
> future CRADA collaborator requests for sublicenses and cross license
> rights, when the derivative rights are necessary to further additional
> proposed CRADAs with the USGS.

**D. Rights to Sublicense**

The right to sublicense is another incidence of ownership that can be
included at the CRADA stage or in any final license agreement. This is a
valuable right for the licensee. If sublicensing rights are negotiated
with a CRADA partner then the USGS should insure that it obtains a
royalty on sublicense sales and that any product liability protection
required for the Government in the original license are passed through
to the second tier of licensees.

**E. License Applications**

A potential licensee may apply for a license to government-owned
intellectual property. A sample license application may be found as Form
12 of this section. The Government generally follows careful selection
procedures, outlined in 37 CFR 404, as supplemented by 10 CFR 781
(invention only), when choosing a licensee. Some selection guidelines
include the following:

> o The potential licensee must present plans and intentions to
> commercialize the invention.
>
> o Often, non-exclusive licenses are preferred over exclusive licenses,
> but there are also provisions for limited exclusive licenses and
> co-exclusive licenses.
>
> o For exclusive licenses, a notice of availability and an opportunity
> for the public to comment are required. This may take the form of an
> advertisement placed in the [Federal Register]{.underline}.
>
> o Licensing may apply to patented inventions, copyrights, and
> trademarks.
>
> o The Government can license copyrights assigned to it by others and
> negotiate royalty payments as part of a CRADA, but can not apply
> directly for copyrights.

Once a licensee has been selected and terms are negotiated and agreed
upon, a formal written licensing agreement is executed. A sample
application and agreement may be found as Form 12 in this chapter.

**F. Private Sector Invention Licensing to the Government**

Patent rights clauses contained in R&D contracts and CRADAs permit the
Government to obtain a paid-up, non-exclusive, royalty‑free, worldwide
license (Government-Use License) in all subject inventions developed
under a FAR-controlled contract or CRADA action. Also, large businesses
will usually be required to license background patents to the Government
for practicing a subject of the contract. Research and development
contracts for permanent installation of equipment at a laboratory
require a background license to the facility.

**G. Copyrights**

A copyright is an exclusive right granted by the U.S. Government to the
authors, composers, artists, or their assignees for the life of the
individual plus 50 years, to copy, exhibit, distribute, or perform their
works. As with patent rights, these rights go to the individual creating
the work, unless provisions are made to the contrary. Copyrights can
cover written works, art, musical compositions, and computer software.

A copyright exists when the work is created. The law no longer requires
the work to be marked with a copyright notice, but it is still a good
idea to do so. Registration of copyrights with the Federal Government is
optional and can be done at any time during the life of the copyright.
Registration also permits using the Federal court system to prosecute
those who infringe on the copyright and provides certain mandatory
Federal damages against those convicted of infringement. Registration
may be recommended if software is the subject of a license agreement.

By law, the Federal Government cannot obtain copyright protection for
works of Federal employees created during their jobs. However, the
Government is not precluded from receiving and holding copyrights
transferred to it by assignment, bequest, or otherwise. The copyrighted
works of GOCO employees are generally regarded as works for hire and the
copyrights are, therefore, owned by the GOCO employer.

Computer software developed by Federal inventors may be protected by a
patent. But these cases are rare, and the software must fall into patent
eligibility criteria (see section 5A of this chapter).

**H. Trademarks/Service marks**

A trademark is a work, name, symbol, device, letter, numeral, or
picture, or any combination of them, in any form or arrangement that is
used by a party to identify the origin of goods. A Service mark
identifies the origin of services. Trademarks and Service marks must be
individually identifiable and distinguishable from those of others
offering similar goods or services, and are appropriate only if their
use is not prohibited by legislative enactment or by another public
policy.

Trademarks and Service marks assure the buyer of the authenticity of a
product or service and imply that the seller has exercised some
standards of quality associated with the mark. A person may establish a
trademark simply by using it in interstate commerce, i.e., the good must
be marked and must be sold across state lines. Like copyrights,
trademarks and Service marks may also be registered.

The Federal Government and its laboratories may apply for trademarks and
Service marks. At the DOI, this is simply a matter of filing for the
mark through the Office of the Solicitor, paying a fee, and registering
the mark with the U.S. Patent and Trademarks Office.