Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Proposed Rules 35 

DEPARTMENT OF COMMERCE 

National Institute of Standards and 

Technology 

37 CFR Parts 401 and 404 

[Docket No.: 201207–0327] 

RIN 0693–AB66 

Rights to Federally Funded Inventions 

and Licensing of Government Owned 

Inventions 

AGENCY: National Institute of Standards 

and Technology (NIST), United States 

Department of Commerce. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The National Institute of 

Standards and Technology (NIST) 

requests comments on proposed 

revisions to regulations that would 

further the Return on Investment (ROI) 

Initiative for Unleashing American 

Innovation. The proposed revisions to 

‘‘Rights to Inventions Made by 

Nonprofit Organizations and Small 

Business Firms under Government 

Grants, Contracts, and Cooperative 

Agreements’’ and ‘‘Licensing of 

Government-Owned Inventions’’ make 

technical corrections; reorganize certain 

subsections; remove outdated and/or 

unnecessary sections; institute a 

reporting requirement on Federal 

agencies; and provide clarifications on 

definitions, communications, scope of 

march-in rights, filing of provisional 

patent applications, electronic filing, the 

purpose of royalties on government 

licenses, and the processes for granting 

exclusive, co-exclusive and partially 

exclusive licenses and for appeals. NIST 

intends to hold a webinar regarding the 

proposed changes and information on 

that webinar will be available to the 

public at https://www.nist.gov/tpo/ 

bayh-dole. 

DATES: 

For Comments: Comments must be 

received no later than April 5, 2021. 

For Public Webinar: Details about 

accessing the public webinar will be 

made available via the Technology 

Partnerships Office website at http://

www.nist.gov/tpo/bayh-dole. 

ADDRESSES: Submit your comments, 

identified by docket identification (ID) 

number: 201207–0327, through the 

Federal e-Rulemaking Portal: http://

www.regulations.gov (search using the 

docket number). Follow the online 

instructions for submitting comments. 

Identify the document by docket ID 

number and other identifying 

information (subject heading, Federal 

Register date and page number). See 

SUPPLEMENTARY INFORMATION for file 

formats and other information about 

electronic filing. All submissions, 

including attachments and other 

supporting materials, will become part 

of the public record and subject to 

public disclosure. NIST reserves the 

right to publish relevant comments 

publicly, unedited and in their entirety. 

Personal information, such as account 

numbers or Social Security numbers, or 

names of other individuals, should not 

be included. Do not submit confidential 

business information, or otherwise 

proprietary, sensitive or protected 

information. Comments that contain 

profanity, vulgarity, threats, or other 

inappropriate language or content will 

not be posted or considered. 

For Public Webinar: Details about 

accessing the public webinar will be 

made available via the Technology 

Partnerships Office website at http://

www.nist.gov/tpo/bayh-dole. 

FOR FURTHER INFORMATION CONTACT: 

Courtney Silverthorn, via email: 

courtney.silverthorn@nist.gov or by 

telephone at 301–975–4189. 

SUPPLEMENTARY INFORMATION: 

I. General Information 

Does this action apply to me? 

This action may be of interest to you 

if you are an educational institution, 

company, or nonprofit organization, 

especially one that has received or 

would like to receive Federal funding 

for scientific research and development. 

II. Statutory Framework 

These proposed rule revisions are 

promulgated under the University and 

Small Business Patent Procedures Act of 

1980, Public Law 96–517 (as amended), 

codified at title 35 of the United States 

Code (U.S.C.) 200 et seq., commonly 

known as the ‘‘Bayh-Dole Act’’ or 

‘‘Bayh-Dole,’’ which governs rights in 

inventions made with Federal 

assistance. The Bayh-Dole Act obligates 

nonprofit organizations and small 

business firms (‘‘contractors’’), and large 

businesses, as directed by Executive 

Order 12591, to disclose each ‘‘subject 

invention’’ (that is, each invention 

conceived or first actually reduced to 

practice in the performance of work 

under a funding agreement, 35 U.S.C. 

201(e)) within a reasonable time after 

the invention becomes known to the 

contractor, 35 U.S.C. 202(c)(1), and 

permits contractors to elect, within a 

reasonable time after disclosure, to 

retain title to a subject invention, 35 

U.S.C. 202(a). Under certain defined 

‘‘exceptional’’ circumstances, Bayh-Dole 

permits the Government to restrict or 

eliminate the contractor’s right to elect 

to retain title, 35 U.S.C. 202(a), 202(b), 

and under such circumstances, rights 

vest in the Government. 

The Secretary of Commerce has 

delegated to the Director of NIST the 

authority to promulgate implementing 

regulations. Regulations implementing 

35 U.S.C. 200 through 204 are codified 

at 37 CFR part 401, ‘‘Rights to 

Inventions Made by Nonprofit 

Organizations and Small Business Firms 

under Government Grants, Contracts, 

and Co-operative Agreements,’’ and 

apply to all Federal agencies, 37 CFR 

401.1(b). These regulations govern all 

subject inventions under Bayh-Dole, 37 

CFR 401.2(d), even if the Federal 

Government is not the sole source of 

funding for either the conception or the 

reduction to practice, 37 CFR 401.1(a). 

Regulations implementing 35 U.S.C. 

208, specifying the terms and conditions 

upon which federally owned 

inventions, other than inventions 

owned by the Tennessee Valley 

Authority, may be licensed on a 

nonexclusive, partially exclusive, or 

exclusive basis, are codified at 37 CFR 

part 404, ‘‘Licensing of Government 

Owned Inventions.’’ 

Bayh-Dole and its implementing 

regulations require Federal funding 

agencies to employ certain ‘‘standard 

clauses’’ in funding agreements awarded 

to contractors, except under certain 

specified conditions; 37 CFR 401.3. 

Through these standard clauses, set 

forth at 37 CFR 401.14(a), contractors 

are obligated to take certain actions to 

properly manage subject inventions. 

These actions include disclosing each 

subject invention to the Federal agency 

within two months after the contractor’s 

inventor discloses it in writing to 

contractor personnel responsible for 

patent matters, 37 CFR 401.14(c)(1); 

electing in writing whether or not to 

retain title to any subject invention by 

notifying the Federal agency within two 

years of disclosure, 37 CFR 401.14(c)(2); 

filing an initial patent application on a 

subject invention as to which the 

contractor elects to retain title within 

one year after election, 37 CFR 

401.14(c)(3); executing and promptly 

delivering to the Federal agency all 

instruments necessary to establish or 

confirm the rights the Government has 

throughout the world in those subject 

inventions to which the contractor 

elects to retain title, 37 CFR 401.14(f)(1); 

requiring, by written agreement, the 

contractor’s employees to disclose 

promptly in writing each subject 

invention made under contract, 37 CFR 

401.14(f)(2); notifying the Federal 

agency of any decision not to continue 

the prosecution of a patent application, 

37 CFR 401.14(f)(3); and including in 

the specification of any U.S. patent 

36 Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Proposed Rules 

1 ‘‘Request for Information Regarding Federal 

Technology Transfer Authorities and Process’’ 

published in the Federal Register on May 1, 2018 

(83 FR 19052). 

2San Jose, California, May 17, 2018; Denver, 

Colorado, May 21, 2018; Oak Lawn, Illinois, May 

29, 2018; NIST Campus Gaithersburg, Maryland, 

June 14, 2018. 

applications and any patent issuing 

thereon covering a subject invention, a 

statement that the invention was made 

with Government support under the 

grant or contract awarded by the Federal 

agency, and that the Government has 

certain rights in the invention, 37 CFR 

401.14(f)(4). 

In addition, a contractor is obligated 

to include the requirements of the 

standard clauses in any subcontracts 

under the contractor’s award, 37 CFR 

401.14(g); to submit periodic reports as 

requested 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, 

37 CFR 401.14(h); and to agree that 

neither the contractor 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, 37 

CFR 401.14(i), subject to waiver. 

Bayh-Dole and its implementing 

regulations also specify certain 

conditions applicable to licenses 

granted by Federal agencies in any 

federally owned invention. The 

implementing regulations include 37 

CFR 404.5, which sets forth restrictions 

and conditions applicable to all Federal 

agency licenses, 37 CFR 404.6, which 

addresses requirements pertaining to 

nonexclusive licenses, and 37 CFR 

404.7, which addresses requirements 

pertaining to exclusive and partially 

exclusive licenses. 

Pursuant to authority delegated to it 

by the Secretary of Commerce, NIST is 

providing notice to the public of a 

proposed rulemaking to revise Parts 401 

and 404 of Title 37 of the Code of 

Federal Regulations which address 

rights to inventions made under 

Government grants, contracts, and 

cooperative agreements, and licensing of 

government owned inventions. NIST is 

seeking public comments on the 

proposed amendments. Brief 

explanations of the proposed changes 

are included below; the full text of 37 

CFR part 401 is available at https://

www.gpo.gov/fdsys/pkg/CFR-2010- 

title37-vol1/pdf/CFR-2010-title37-vol1- 

part401.pdf and the full text of 37 CFR 

part 404 is available at https://

www.gpo.gov/fdsys/granule/CFR-2004- 

title37-vol1/CFR-2004-title37-vol1- 

part404. 

III. Return on Investment Initiative 

In 2018, NIST undertook a large-scale 

stakeholder engagement effort to inform 

the development of the Lab-to-Market 

Cross Agency Priority (CAP) goal, part 

of the 2018 President’s Management 

Agenda. The Lab-to-Market CAP goal’s 

stated purpose is to ‘‘. . .improve the 

transition of federally funded 

innovations from the laboratory to the 

marketplace by reducing the 

administrative and regulatory burdens 

for technology transfer and increasing 

private sector investment in later-stage 

research and development (R&D); 

develop and implement more effective 

partnering models and technology 

transfer mechanisms for Federal 

agencies; and enhance the effectiveness 

of technology transfer by improving the 

methods for evaluating the ROI and 

economic and national security impacts 

of federally funded R&D, and using that 

information to focus efforts on 

approaches proven to work.’’ 

Beginning in April 2018, NIST 

utilized a number of avenues to seek 

input from the public on ways to 

improve federal technology transfer and 

the commercialization of federally 

funded inventions. These included a 

Request for Information that NIST 

published in the Federal Register,1 four 

public meetings,2 a summit hosted by 

NIST, extensive consultations with 

interagency working groups responsible 

for technology transfer issues, and 

multiple stakeholder engagement 

sessions. These public inputs, as well as 

an extensive literature review of 

government and academic publications 

on federal technology transfer, 

ultimately informed NIST Special 

Publication 1234: Return on Investment 

Initiative To Advance the President’s 

Management Agenda, Final Green 

Paper. 

The Green Paper described 15 

findings from NIST’s stakeholder 

engagement process that may have the 

potential to ‘‘unleash American 

innovation’’ and advance the goals of 

Lab-to-Market through regulatory or 

legislative changes, updates to policy 

and guidance, and the development of 

new tools and services. In addition to 

the overall Lab-to-Market strategy to 

‘‘Identify regulatory impediments and 

administrative improvements in Federal 

technology transfer policies and 

practices’’ (which supports the 

Administration’s stated goal to 

streamline and reduce regulatory 

burdens), seven of the Green Paper’s 15 

findings noted potential changes to the 

Bayh-Dole implementing regulations 

that could improve compliance, 

enhance a contractor’s ability to 

commercialize subject inventions, and 

increase the return on investment of 

Federal funding through new goods and 

services to the public. Four of those 

seven findings are considered in this 

notice of proposed rulemaking (NPRM 

or proposed rule). 

As part of the overall streamlining 

effort in this proposed rule, some 

outdated or redundant text has been 

proposed for removal. This includes 

§§ 401.1(a), 401.1(c), 401.1(d), 401.1(f), 

401.3(g), 401.8, 401.11(a), 401.11(b)(5), 

401.13(b) and 404.4. Other text has been 

moved or substantially reincorporated 

into new sections in the proposed rule 

as follows: § 401.5(f) moved to 

§ 401.14(c)(1) and (3); §§ 401.7 and 

401.14(m) incorporated into 

§§ 401.14(k)(4) through (6); § 401.13(a) 

moved to § 401.14(c)(6); § 401.15 

incorporated into § 401.9; § 401.16 

moved to § 401.14(m); § 404.2 

incorporated into § 404.1(b); and § 404.4 

incorporated into § 404.5(g). 

In addition to these changes and 

technical corrections throughout the 

regulation, the proposed revisions to 37 

CFR part 401 will: 

(1) Clarify in § 401.1 the scope of the 

regulation and applicability to large 

businesses unless otherwise directed by 

statute, and remove the outdated 

requirement for multiple copies of 

agency regulations to be submitted to 

the Secretary prior to OMB review. 

(2) Update the definitions of 

electronically filed and electronic 

system in § 401.2(k) and (l) to remove 

outdated references to ‘‘optical 

electronic system’’. 

(3) Update the definitions of patent 

application and initial patent 

application in § 401.2(m) and (n) to 

encompass U.S. provisional and nonprovisional applications, applications 

filed in a foreign country or 

international patent office directly, PCT 

applications, and applications for Plant 

Variety Protection certificates. 

(4) Update § 401.5(a) to reflect that 

modifications to paragraph § 401.14(g) 

are no longer needed due to the 

applicability of 37 CFR part 401 to all 

businesses regardless of size pursuant to 

E.O. 12591. 

(5) Revise § 401.5(b) for clarity by 

removing the ambiguity of 

‘‘instructions’’ to the agency versus 

‘‘instructions’’ to the contractor. 

(6) Revise the existing text at 

§ 401.6(b) [new § 401.6(a)(1)] to clarify 

the informal agency consultation 

process with the contractor prior to the 

exercise of march-in rights, and increase 

the allowable time frame an agency has 

Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Proposed Rules 37 

to respond to the contractor following 

the informal consultation from 60 days 

to 120 days. 

(7) Clarify § 401.6 to include a 

provision that march-in rights shall not 

be exercised by an agency exclusively 

on the basis of business decisions of a 

contractor regarding the pricing of 

commercial goods and services arising 

from the practical application of the 

invention. 

(8) Revise § 401.9 to clarify the 

statutory authority and process for 

assigning rights to an employee/ 

inventor, and to clarify said employee/ 

inventor’s responsibilities under 37 CFR 

part 401 when receiving an assignment 

of rights to a subject invention made 

under a funding agreement, and 

incorporate streamlined text from 

§ 401.15 to clarify the process by which 

a contractor may make a request for 

greater rights in an invention when the 

funding agreement contains an alternate 

provision in accordance with 

§ 401.3(a)(2), and remove the 

requirement for an agency to reimburse 

the contractor for the costs of filing a 

patent application while a greater rights 

request is under review. 

(9) Revise § 401.13 to streamline the 

text and clarify the confidentiality of 

contractor submissions made under 

§ 401.14(c) as it relates to Freedom of 

Information Act requests, copies of 

documents filed with a patent office, 

and agency policies on public 

dissemination of results supported by 

agency funding programs. 

(10) Revise § 401.14(c)(3) to clarify the 

procedures for filing more than one 

provisional patent application on a 

disclosed subject invention. 

(11) Revise § 401.14(d) to add a new 

paragraph permitting agencies, at their 

discretion, to release the contractor from 

the requirement to waive title to the 

agency after one of the conditions in 

§ 401.14(d) has occurred. 

(12) Revise § 401.14(k) to streamline 

the requirements for small business 

considerations into a single section by 

incorporating language from §§ 401.7 

and 401.14(m). 

(13) Move the electronic filing 

requirements from § 401.16 into the 

standard clause at § 401.14; update the 

requirements to include that if the 

patent information and periodic reports 

in § 401.14(c)(3) and/or the close-out 

report § 401.14(c)(1) are required by an 

agency, they will be electronically filed 

unless otherwise directed by the agency; 

and permit other written notices to be 

electronically transmitted between the 

contractor and the agency. 

(14) Implement a requirement [new 

§ 401.16] for federal agencies to report 

annually on activities under 37 CFR part 

401, including the number of subject 

inventions reported, the number of 

patent applications filed on reported 

subject inventions, the number of issued 

patents on subject inventions, the 

number of requests made and granted 

for extensions of time under 

§ 401.14(c)(5), the number of subject 

inventions to which title has been 

conveyed to the Government, the 

number of requests made and granted 

for a waiver of the preference for U.S. 

industry requirement, and the number 

of requests for assignment of invention 

rights. 

(15) Remove the telephone number for 

the Interagency Edison service center so 

that contact information can be updated 

in a timelier fashion via the iEdison 

website. 

This proposed rulemaking does not 

address government assignment to 

contractor of rights in invention of 

government employee (§ 401.10) or 

licensing of background rights to third 

parties (§ 401.12). 

In addition to the aforementioned 

streamlining changes and technical 

corrections throughout the regulation, 

the proposed revisions to 37 CFR part 

404 will: 

(1) Revise § 404.1 to clarify that 

licensing royalties are not considered an 

augmentation of appropriated funds. 

(2) Revise § 404.2 to clarify the link 

between establishing patent license 

financial terms and the goal of 

promoting commercial use, by noting 

that the government may consider 

licensing payments as a means to ensure 

commercialization by the licensee and 

thus promote the practical application 

of a subject invention. 

(3) Streamline § 404.7 by removing 

duplicative sections and revising the 

paragraph to align the process for 

granting exclusive, co-exclusive and 

partially exclusive licenses with the 

requirements of 35 U.S.C. 209 as it 

pertains to the required information and 

publication site for a notice of intent to 

grant an exclusive license, the 

requirement to consider the interests of 

the Federal Government or United 

States industry in foreign commerce 

before granting an exclusive license on 

a foreign patent application or patent, 

and the additional provisions that apply 

to exclusive licenses beyond the 

requirements of § 404.5. 

(4) Revise § 404.10 to remove the 

requirement that a Federal agency notify 

sublicensees of an intent to modify or 

terminate a license. 

(5) Revise § 404.11 to clarify who has 

standing to appeal the grant, denial, 

modification, or termination of a license 

by limiting a claim of damage by the 

agency’s granting of an exclusive license 

to that which denies a party the 

opportunity to promote the 

commercialization of an invention, and 

by requiring all agencies to establish 

procedures for considering appeals. 

This proposed rulemaking does not 

address definitions (§ 404.3), 

nonexclusive licenses (§ 404.6), 

application for a license (§ 404.8), 

protection and administration of 

inventions (§ 404.12), or transfer of 

custody (§ 404.13). 

IV. Request for Comments 

NIST is requesting comments about 

37 CFR parts 401 and 404 of the BayhDole regulations. We have included 

some questions that you might consider 

as you develop your comments: 

1. Are there any changes to these 

regulations, consistent with current law, 

that you or your organization think 

would accelerate the transfer of 

federally funded research and 

technology to entrepreneurs, or 

otherwise strengthen the Nation’s 

innovation system? 

2. Are there specific revisions to the 

language in § 401.14(b) that could help 

clarify the existing scope of the 

Government Use License for owners and 

licensees working to achieve practical 

application of subject inventions? 

3. Are there provisions within 37 CFR 

part 401 or 404 that are inconsistent 

with, or otherwise affected by, changes 

in the patent laws under the LeahySmith America Invents Act, Public Law 

112–29, or that Act’s implementing 

regulations? 

When submitting comments, 

remember to: 

i. Identify the document by docket ID 

number and other identifying 

information (subject heading, Federal 

Register date and page number). 

ii. Please organize your comments by 

referencing the specific question you are 

responding to or the relevant section 

number in the proposed regulatory text. 

iii. Explain why you agree or disagree; 

suggest alternatives and substitute 

language for your requested changes. 

iv. Describe any assumptions and 

provide any technical information and/ 

or data that you used. 

v. Provide specific examples to 

illustrate your concerns and suggest 

alternatives. 

vi. Explain your views as clearly as 

possible. 

vii. All submissions, including 

attachments and other supporting 

materials, will become part of the public 

record and subject to public disclosure. 

NIST reserves the right to publish 

relevant comments publicly, unedited 

and in their entirety. Personal 

information, such as account numbers 

38 Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Proposed Rules 

or Social Security numbers, or names of 

other individuals, should not be 

included. Do not submit confidential 

business information, or otherwise 

proprietary, sensitive or protected 

information. Comments that contain 

profanity, vulgarity, threats, or other 

inappropriate language will not be 

considered. 

viii. Make sure to submit your 

comments by the comment period 

deadline identified. 

ix. The following formats are 

preferred for comment submissions: 

.doc or .docx, .pdf, and .txt. 

V. References 

1. National Institute of Standards and 

Technology (2019). Unleashing 

American Innovation: Return on 

Investment Initiative to Advance the 

President’s Management Agenda, Final 

Green Paper. NIST Special Publication 

1234, retrieved from: https://

www.nist.gov/unleashing-americaninnovation/green-paper. 

2. Copan, W. and Kratsios, M. (2019). Lab to 

Market: Cross Agency Priority Goal 

Quarterly Progress Update, December 

2019. Retrieved from: https://

www.performance.gov/CAP/action_

plans/dec_2019_Lab_to_Market.pdf. 

3. Additional Actions Needed to Improve 

Licensing of Patented Laboratory 

Inventions (2018). GAO–18–327, 

Retrieved from: https://www.gao.gov/ 

assets/700/692961.pdf. 

4. National Institute of Standards and 

Technology (2019). Federal Laboratory 

Technology Transfer, Fiscal Year 2016 

Summary Report to the President and 

the Congress. Retrieved from: https://

www.nist.gov/tpo/reports-andpublications. See ‘‘Federal Licenses’’ 

table on page 8. 

5. Federal Laboratory Consortium for 

Technology Transfer (2013). Technology 

Transfer Desk Reference. Retrieved from: 

https://federallabs.org/media/ 

publication-library/flc-technologytransfer-desk-reference. 

VI. Statutory and Executive Order 

Reviews 

Executive Order 12866 

This rulemaking is a significant 

regulatory action under Executive Order 

12866. This rulemaking, however, is not 

an ‘‘economically significant’’ 

regulatory action under section 3(f)(1) of 

the Executive order, as it does not have 

an effect on the economy of $100 

million or more in any one year, and it 

does not have a material adverse effect 

on the economy, a sector of the 

economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local, or tribal 

governments or communities. 

Executive Order 13132 

This proposed rule does not contain 

policies with federalism implications as 

defined in Executive Order 13132. 

Executive Order 13771 

This final rule is considered to be an 

E.O. 13771 deregulatory action. The 

proposed regulation is deregulatory in 

that it is removing duplicative text and 

streamlining and/or reducing regulatory 

burdens, all at no additional cost. 

The proposed regulation: (1) Updates 

the definitions of patent application and 

initial patent application in § 401.2(m) 

and (n) to encompass U.S. provisional 

and non-provisional applications, 

applications filed in a foreign country or 

international patent office directly, PCT 

applications, and applications for Plant 

Variety Protection certificates, which 

reduces patent filing burdens for 

recipients of federal funding by 

providing additional options to fulfill 

the regulation’s filing requirements. (2) 

Clarifies § 401.6 to include a provision 

that march-in rights shall not be 

exercised by an agency exclusively on 

the basis of business decisions of a 

contractor regarding the pricing of 

commercial goods and services arising 

from practical application of the 

invention, which limits the 

government’s use of this provision and 

provides additional certainty to 

licensees. (3) Moves the electronic filing 

requirements from § 401.16 into the 

standard clause at § 401.14; update the 

requirements to include that if the 

patent information and periodic reports 

in § 401.14(c)(3) and/or the close-out 

report § 401.14(c)(1) are required by an 

agency, they will be electronically filed 

unless otherwise directed by the agency; 

and permit other written notices to be 

electronically transmitted between the 

contractor and the agency, which 

reduces the burden on recipients of 

federal funding to complete and submit 

paper forms. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

requires the preparation and availability 

for public comment of ‘‘an initial 

regulatory flexibility analysis’’ which 

will ‘‘describe the impact of the 

proposed rule on small entities.’’ (5 

U.S.C. 603(a)). Section 605 of the RFA 

allows an agency to certify a rule, in lieu 

of preparing an analysis, if the proposed 

rulemaking is not expected to have a 

significant economic impact on a 

substantial number of small entities. 

The Chief Counsel for Regulation of 

the Department of Commerce certified 

to the Chief Counsel for Advocacy of the 

Small Business Administration (SBA) 

that this rulemaking, if adopted, would 

not have a significant economic impact 

on a substantial number of small 

entities. The factual basis for this 

determination is as follows: 

A description of this proposed rule, 

why it is being considered, and the 

objectives of this proposed rule are 

contained in the preamble and in the 

SUMMARY section of the preamble. The 

statutory basis for this proposed rule is 

provided by 35 U.S.C. 200–212. The 

Bayh-Dole Act and its implementing 

regulations apply to all small business 

firms and nonprofit organizations that 

have entered into a Federal funding 

agreement, as defined in 35 U.S.C. 201, 

and express a policy to ‘‘encourage 

maximum participation of small 

business firms in federally supported 

research and development efforts; to 

promote collaboration between 

commercial concerns and nonprofit 

organizations, including universities; 

[and] to ensure that inventions made by 

nonprofit organizations and small 

business firms are used in a manner to 

promote free competition and enterprise 

without unduly encumbering future 

research and discovery.’’ 35 U.S.C. 200. 

For small business firms and nonprofit 

organizations that deal with the 

Government in areas of technology 

development, the Bayh-Dole 

implementing regulations make it easier 

to participate in federally-supported 

programs by guaranteeing the protection 

of the intellectual property they create. 

This proposed rule, if implemented, 

would predominantly make technical 

changes and clarifications, remove 

outdated material, and streamline the 

regulation, and is not anticipated to 

have any quantifiable economic impact 

with respect to small entities. Several 

proposed changes would reduce 

administrative burdens and increase the 

ability of small entities to fulfill 

regulatory requirements through 

electronic submissions, while clarifying 

the confidentiality of said submissions 

so as to not affect the ability to seek 

patent protection on a subject invention. 

The proposed change to the definition 

of an ‘‘initial patent application’’ 

expands the applications by which a 

contractor can fulfil the filing 

requirement of the regulation, providing 

additional flexibility for small entities. 

Proposed revisions to 37 CFR 401.6 

provide additional clarity on the scope 

of the Government’s march-in rights, 

while the proposed revision to 37 CFR 

401.14(d) provides an avenue for an 

agency to release a small entity from the 

requirement to convey title to the 

Government if they have taken 

corrective actions after failing to meet a 

Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Proposed Rules 39 

regulatory requirement—these revisions 

will all increase the ability for a small 

entity to more effectively attract outside 

funding for their inventions. Proposed 

revisions to 37 CFR 401.9 and § 401.15 

will clarify the process by which small 

entities and sole proprietors may 

request title to their inventions when 

not otherwise automatically granted title 

by the funding agreement. While the 

requirements for small business 

considerations in licensing have been 

significantly streamlined, the proposed 

revision greatly increases the clarity of 

these requirements while not affecting 

any of the statutory requirements that a 

contractor must fulfill with regard to 

small entities. Finally, revisions to 37 

CFR 404.7 will make it easier for small 

entities to seek exclusive, co-exclusive, 

or partially exclusive licenses. 

The information provided above 

supports a determination that this 

proposed rule would not have a 

significant economic impact on a 

substantial number of small entities. 

Because this rulemaking, if 

implemented, is not expected to have a 

significant economic impact on any 

small entities, an initial regulatory 

flexibility analysis is not required and 

none has been prepared. 

Paperwork Reduction Act 

This proposed rule contains no new 

collection of information subject to the 

Paperwork Reduction Act, 44 U.S.C. 

3501 et seq. 

National Environmental Policy Act 

This proposed rule will not 

significantly affect the quality of the 

human environment. Therefore, an 

environmental assessment or 

Environmental Impact Statement is not 

required to be prepared under the 

National Environmental Policy Act of 

1969. 

List of Subjects in 37 CFR Parts 401 and 

404 

Inventions and patents, Laboratories, 

Research and development, Science and 

technology, Technology transfer. 

For the reasons stated in the 

preamble, the National Institute of 

Standards and Technology proposes to 

amend 37 CFR parts 401 and 404 as 

follows: 

PART 401—RIGHTS TO INVENTIONS 

MADE BY NONPROFIT 

ORGANIZATIONS AND SMALL 

BUSINESS FIRMS UNDER 

GOVERNMENT GRANTS, 

CONTRACTS, AND COOPERATIVE 

AGREEMENTS 

■ 1. The authority citation for 37 CFR 

part 401 continues to read as follows: 

Authority: 35 U.S.C. 206; DOO 30–2A. 

■ 2. Revise § 401.1 to read as follows: 

§ 401.1 Scope. 

(a) This part implements 35 U.S.C. 

200 through 204 and is applicable to 

any funding agreement with a nonprofit 

organization or small business firm as 

defined by 35 U.S.C. 201, except for an 

agreement made primarily for 

educational purposes under 35 U.S.C. 

212. This part also applies to any 

funding agreement with business firms 

regardless of size in accordance with 

section 1, paragraph (b)(4) of Executive 

Order 12591, as amended by Executive 

Order 12618, unless directed otherwise 

pursuant to NASA or DOE vesting 

statutes. 

(b) This regulation supersedes OMB 

Circular A–124 and shall take 

precedence over any regulations or 

other guidance dealing with ownership 

of inventions made by businesses and 

nonprofit organizations which are 

inconsistent with it. 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 § 401.5 or 401.3, when 

alternate provisions are used under 

§ 401.3(a)(1) through (6), are not 

considered deviations requiring the 

Secretary’s approval. 

(c) This part is not intended to apply 

to arrangements under which nonprofit 

organizations, small business firms, or 

others are allowed to use governmentowned 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 

§ 401.2(a). 

■ 3. Amend § 401.2 by revising the 

introductory text and paragraphs (k) 

through (o) to read as follows: 

§ 401.2 Definitions. 

In addition to the definitions in 35 

U.S.C. 201, as used in this part— 

* * * * * 

(k) The term electronically filed 

means any submission of information 

transmitted by an electronic system. 

(l) The term electronic system means 

a software-based system approved by 

the agency for the transmission of 

information. 

(m) The term patent application or 

‘‘application for patent’’ may be the 

following: 

(1) A United States provisional 

application as defined in 37 CFR 

1.9(a)(2) and filed under 35 U.S.C. 

111(b); or 

(2) A United States nonprovisional 

application as defined in 37 CFR 

1.9(a)(3) and filed under 35 U.S.C. 

111(a); or 

(3) A patent application filed in a 

foreign country or an international 

patent office; or 

(4) A patent application filed under 

the Patent Cooperation Treaty as 

defined in 37 CFR 1.9(b) which 

designates the United States; or 

(5) An application for a Plant Variety 

Protection certificate. 

(n) The term initial patent application 

means, as to a given subject invention: 

(1) The first United States provisional 

application as defined in 37 CFR 

1.9(a)(2) and filed under 35 U.S.C. 

111(b); or 

(2) The first United States 

nonprovisional application as defined 

in 37 CFR 1.9(a)(3) and filed under 35 

U.S.C. 111(a); or 

(3) The first patent application filed in 

a foreign country or an international 

patent office; or 

(4) The first patent application filed 

under the Patent Cooperation Treaty as 

defined in 37 CFR 1.9(b) which 

designates the United States; or 

(5) The first application for a Plant 

Variety Protection certificate. 

(o) The term statutory period means 

the one-year period before the effective 

filing date of a claimed invention in a 

patent application during which 

exceptions to prior art exist per 35 

U.S.C. 102(b) as amended by the LeahySmith America Invents Act, Public Law 

112–29. 

§ 401.3 [Amended] 

■ 4. Amend § 401.3 as follows: 

■ a. Remove ‘‘§ 401.5(g)’’ and add in its 

place ‘‘§ 401.5(f)’’ in paragraph (c)(3); 

■ b. Remove ‘‘of Commerce’’ from the 

fourth sentence of paragraph (f); and 

■ c. Remove paragraph (g) and 

redesignate paragraphs (h) and (i) as 

paragraphs (g) and (h). 

40 Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Proposed Rules 

§ 401.4 [Amended] 

■ 5. Amend § 401.4 as follows: 

■ a. Remove ‘‘35 U.S.C. 202(b)(4)’’ and 

add in its place ‘‘35 U.S.C. 202(b)(3)’’ in 

the first sentence of paragraph (a); and 

■ b. Remove ‘‘United States Claims 

Court’’ and add in its place ‘‘United 

States Court of Federal Claims’’ in the 

last sentence of paragraph (b)(6). 

■ 6. Amend § 401.5 as follows: 

■ a. Revise paragraphs (a) and (b); 

■ b. Remove paragraph (f) and 

redesignate paragraphs (g) and (h) as 

paragraphs (f) and (g); 

■ c. Revise the newly redesignated 

paragraph (g). 

The revisions read as follows: 

§ 401.5 Modification and tailoring of 

clauses. 

(a) Agencies should complete the 

blank in paragraph (g)(2) of the clauses 

at § 401.14 in accordance with their own 

or applicable government-wide 

regulations such as the Federal 

Acquisition Regulation. If the funding 

agreement is a grant or cooperative 

agreement, paragraph (g)(3) of the clause 

may be deleted. 

(b) Agencies should complete 

paragraph (l) of the clause in § 401.14, 

‘‘Communication’’ by designating a 

central point of contact for 

communications on matters relating to 

the clause. Agencies may also include 

additional information on 

communications in paragraph (l) of the 

clause in § 401.14. 

* * * * * 

(g) If the contract is for the operation 

of a government-owned facility, 

agencies may add paragraph (f)(6) to the 

clause at § 401.14 with the following 

text: 

The contractor shall establish and 

maintain active and effective procedures 

to ensure that subject inventions are 

promptly identified and timely 

disclosed and shall submit a description 

of the procedures to the contracting 

officer so that the contracting officer 

may evaluate and determine their 

effectiveness. 

■ 7. Amend § 401.6 as follows: 

■ a. Remove the period from the end of 

paragraph (a) introductory text and add 

in its place a colon; 

■ b. Add paragraphs (a)(1) through (7); 

■ c. Redesignate paragraph (b) as 

paragraph (a)(1) and revise the newly 

redesignated paragraph (a)(1); 

■ d. Redesignate paragraphs (c) and (d) 

as paragraphs (a)(2) and (3); 

■ e. Redesignate paragraph (e) as 

paragraph (a)(4) and revise the newly 

redesignated paragraph (a)(4); 

■ f. Redesignate paragraphs (f) through 

(h) as paragraphs (a)(5) through (7) 

respectively; 

■ g. Redesignate paragraph (i) as 

paragraph (b); 

■ h. Redesignate paragraph (j) as 

paragraph (c) and revise the newly 

redesignated paragraph (c); 

■ i. Redesignate paragraph (k) as 

paragraph (d); 

■ j. Add a new paragraph (e); 

■ k. Redesignate paragraph (l) as 

paragraph (f). 

The revisions and additions read as 

follows: 

§ 401.6 Exercise of march-in rights. 

(a) * * * 

(1) Whenever an agency receives 

information that it believes might 

warrant the exercise of march-in rights, 

before initiating any march-in 

proceeding, it shall notify the contractor 

in writing (including electronic means) 

of the information and request an 

informal consultation and information 

relevant to the matter with the 

contractor to understand the nature of 

the issue and consider possible actions 

other than exercising march-in rights. In 

the absence of response from the 

contractor to the agency request for 

informal consultation within 30 days, 

the agency may, at its discretion, 

proceed with the procedures below. If 

informal consultation occurs within 30 

days, or later if the agency has not 

initiated the procedures below, then the 

agency shall, within 120 days after 

informal consultation, either notify the 

contractor of the initiation of the 

procedures below with a summary of 

the efforts taken, or notify the 

contractor, in writing, that it will not 

pursue march-in rights on the basis of 

the available information. 

(2) A march-in proceeding shall be 

initiated by the issuance of a written 

notice by the agency to the contractor 

and its assignee or exclusive licensee, as 

applicable and if known to the agency, 

stating that the agency is considering 

the exercise of march-in rights. The 

notice shall state the reasons for the 

proposed march-in in terms sufficient to 

put the contractor on notice of the facts 

upon which the action would be based 

and shall specify the field or fields of 

use in which the agency is considering 

requiring licensing. The notice shall 

advise the contractor (assignee or 

exclusive licensee) of its rights, as set 

forth in this section and in any 

supplemental agency regulations. The 

determination to exercise march-in 

rights shall be made by the head of the 

agency or his or her designee. 

(3) Within 30 days after the receipt of 

the written notice of march-in, the 

contractor (assignee or exclusive 

licensee) may submit in person, in 

writing, or through a representative, 

information or argument in opposition 

to the proposed march-in, including any 

additional specific information which 

raises a genuine dispute over the 

material facts upon which the march-in 

is based. If the information presented 

raises a genuine dispute over the 

material facts, the head of the agency or 

designee shall undertake or refer the 

matter to another official for factfinding. 

(4) Fact-finding shall be conducted in 

accordance with the procedures 

established by the agency. Such 

procedures shall be as informal as 

practicable and be consistent with 

principles of fundamental fairness. The 

procedures should afford the contractor 

the opportunity to appear with counsel, 

submit documentary evidence, present 

witnesses and confront such persons as 

the agency may present. A transcribed 

record shall be made and shall be 

available at cost to the contractor upon 

request. The requirement for a 

transcribed record may be waived by 

mutual agreement of the contractor and 

the agency. Any portion of the marchin proceeding, including a fact-finding 

hearing that involves testimony or 

evidence relating to the utilization or 

efforts at obtaining utilization that are 

being made by the contractor, its 

assignee, or licensees shall be closed to 

the public, including potential 

licensees. In accordance with 35 U.S.C. 

202(c)(5), agencies shall not disclose 

any such information obtained during a 

march-in proceeding to persons outside 

the government except when such 

release is authorized by the contractor 

(assignee or licensee) or otherwise 

required by law. 

(5) The official conducting the factfinding shall prepare or adopt written 

findings of fact and transmit them to the 

head of the agency or designee promptly 

after the conclusion of the fact-finding 

proceeding along with a recommended 

determination. A copy of the findings of 

fact shall be sent to the contractor 

(assignee or exclusive licensee) by 

registered or certified mail. The 

contractor (assignee or exclusive 

licensee) and agency representatives 

will be given 30 days to submit written 

arguments to the head of the agency or 

designee; and, upon request by the 

contractor oral arguments will be held 

before the agency head or designee that 

will make the final determination. 

(6) In cases in which fact-finding has 

been conducted, the head of the agency 

or designee shall base his or her 

determination on the facts found, 

together with any other information and 

written or oral arguments submitted by 

the contractor (assignee or exclusive 

licensee) and agency representatives, 

Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Proposed Rules 41 

and any other information in the 

administrative record. The consistency 

of the exercise of march-in rights with 

the policy and objectives of 35 U.S.C. 

200 shall also be considered. In cases 

referred for fact-finding, the head of the 

agency or designee may reject only 

those facts that have been found to be 

clearly erroneous, but must explicitly 

state the rejection and indicate the basis 

for the contrary finding. Written notice 

of the determination whether march-in 

rights will be exercised shall be made by 

the head of the agency or designee and 

sent to the contractor (assignee of 

exclusive licensee) by certified or 

registered mail within 90 days after the 

completion of fact-finding or 90 days 

after oral arguments, whichever is later, 

or the proceedings will be deemed to 

have been terminated and thereafter no 

march-in based on the facts and reasons 

upon which the proceeding was 

initiated may be exercised. 

(7) An agency may, at any time, 

terminate a march-in proceeding if it is 

satisfied that it does not wish to exercise 

march-in rights. 

(b) The procedures of this part shall 

also apply to the exercise of march-in 

rights against inventors receiving title to 

subject inventions under 35 U.S.C. 

202(d) and, for that purpose, the term 

‘‘contractor’’ as used in this section 

shall be deemed to include the inventor. 

(c) An agency determination 

unfavorable to the contractor (assignee 

or exclusive licensee) shall be held in 

abeyance pending the exhaustion of 

appeals or petitions filed under 35 

U.S.C. 203(b). 

(d) For purposes of this section the 

term exclusive licensee includes a 

partially exclusive licensee. 

(e) March-in rights shall not be 

exercised exclusively based on the 

business decisions of the contractor 

regarding the pricing of commercial 

goods and services arising from the 

practical application of the invention. 

(f) Agencies are authorized to issue 

supplemental procedures not 

inconsistent with this part for the 

conduct of march-in proceedings. 

§ § 401.7 and 401.8 [Removed and 

Reserved] 

■ 8. Remove and reserve §§ 401.7 and 

401.8. 

■ 9. Revise § 401.9 as follows: 

§ 401.9 Contractor and contractor 

employee inventor requests for rights in 

inventions. 

(a) Agencies shall allow a contractor 

to request greater rights in an invention, 

including a request to return title to an 

invention to the contractor, when the 

funding agreement contains alternate 

provisions in accordance with 

§ 401.3(a)(2): 

(1) The agency shall consider if the 

circumstances which originally led the 

agency to invoke an exception under 

§ 401.3(a) are currently valid and 

applicable to the actual subject 

invention. 

(i) The agency shall provide the 

contractor the opportunity to submit 

information on its plans and intentions 

to bring the subject invention to 

practical application pursuant to 35 

U.S.C. 200. 

(ii) The agency shall assess whether 

government ownership of the invention 

will better promote the policies and 

objectives of 35 U.S.C. 200 than the 

plans and intentions submitted by the 

contractor. 

(iii) The agency shall consider 

whether to allow the standard clause at 

§ 401.14 to apply with additional 

conditions imposed upon the 

contractor’s use of the invention for 

specific uses or applications, or with 

expanded government license rights in 

such uses or applications. 

(2) The agency shall reply to the 

contractor with its determination within 

90 days after receiving a request and any 

supporting information from the 

contractor. If a bar to patenting is sooner 

than 90 days from receipt of a request, 

the agency may either file a patent 

application on the subject invention or 

authorize the contractor to file a patent 

application at its own risk and expense. 

(3) The Department of Energy is 

authorized to process deferred 

determinations either in accordance 

with its waiver regulations or this 

section. 

(b) Pursuant to 35 U.S.C. 202(d), a 

contractor is required to obtain approval 

from a funding Agency before assigning 

rights to a subject invention made under 

a funding agreement to an employee/ 

inventor. When an employee/inventor 

retains rights to a subject invention 

made under a funding agreement, either 

the Agency or the contractor must 

ensure compliance by the employee/ 

inventor with at least those conditions 

that would apply under paragraphs (b), 

(d), (f)(4), (h), (i), and (j) of the clause 

at § 401.14. 

■ 10. Amend § 401.11 as follows: 

■ a. Remove paragraph (a); 

■ b. Redesignate paragraph (b) as 

paragraph (a); 

■ c. Revise the newly redesignated 

paragraphs (a)(1) through (4); 

■ d. Remove newly redesignated 

paragraph (a)(5); 

■ e. Redesignate paragraphs (c) through 

(e) as paragraphs (b) through (d), 

respectively, and revise the newly 

redesignated paragraphs (b) through (d). 

The revisions read as follows: 

§ 401.11 Appeals. 

(a) * * * 

(1) A refusal to grant an extension 

under paragraph (c)(5) of the standard 

clause at § 401.14. 

(2) A request for a conveyance of title 

under paragraph (d)(1) of the standard 

clause at § 401.14. 

(3) A refusal to grant a waiver under 

paragraph (i) of the standard clause at 

§ 401.14. 

(4) A refusal to approve an assignment 

under paragraph (k)(1) of the standard 

clause at § 401.14. 

(b) Each agency shall establish and 

publish procedures under which any of 

the agency actions listed in paragraph 

(a) of this section may be appealed to 

the head of the agency or designee. 

Review at this level shall consider both 

the factual and legal basis for the actions 

and its consistency with the policy and 

objectives of 35 U.S.C. 200–206. 

(c) Appeals procedures established 

under paragraph (b) of this section shall 

include administrative due process 

procedures and standards for factfinding at least comparable to those set 

forth in § 401.6(a)(4) through (6) 

whenever there is a dispute as to the 

factual basis for an agency request for a 

conveyance of title under paragraph (d) 

of the standard clause at § 401.14, 

including any dispute as to whether or 

not an invention is a subject invention. 

(d) To the extent that any of the 

actions described in paragraph (a) of 

this section are subject to appeal under 

the Contract Dispute Act, the 

procedures under the Act will satisfy 

the requirements of paragraphs (b) and 

(c) of this section. 

■ 11. Revise § 401.13 to read as follows: 

§ 401.13 Confidentiality of contractor 

submissions. 

Pursuant to 35 U.S.C. 202(c)(5) and 

205, the following procedures shall 

govern confidentiality of documents 

submitted under paragraph (c) of the 

standard clause found at § 401.14: 

(a) Agencies shall not disclose to third 

parties pursuant to requests under the 

Freedom of Information Act (FOIA) any 

information disclosing a subject 

invention during the time which an 

initial patent application may be filed 

under paragraph (c) of the standard 

clause found at § 401.14 or such other 

clause in the funding agreement. This 

prohibition does not apply to 

information that has previously been 

published by the inventor, contractor, or 

otherwise. 

(b) Agencies shall not disclose or 

release, pursuant to requests under the 

Freedom of Information Act or 

42 Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Proposed Rules 

otherwise, copies of any document 

which is part of an application for 

patent with the U.S. Patent and 

Trademark Office or any foreign patent 

office filed by the contractor (or its 

assignees, licensees, or employees) on a 

subject invention to which the 

contractor has elected to retain title. 

This prohibition does not extend to 

disclosure to other government agencies 

or contractors of government agencies 

under an obligation to maintain such 

information in confidence. This 

prohibition does not apply to 

documents published by the U.S. Patent 

and Trademark Office or any foreign 

patent office. 

(c) When implementing policies that 

encourage public dissemination of the 

results of work supported by the agency 

through government publications or 

other publications of technical reports, 

agencies shall not include copies of 

documents submitted by contractors 

pursuant to § 401.14(c) when a 

contractor notifies the agency that a 

particular report or other submission 

contains a disclosure of a subject 

invention to which it has elected title or 

may elect title, or such publication 

could create a statutory bar to obtaining 

patent protection. 

■ 12. Amend § 401.14 as follows: 

■ a. Revise paragraphs (a)(2) and (7), 

and (c)(1) and (3); 

■ b. Add paragraph (c)(6); 

■ c. Revise paragraph (d); 

■ d. Remove ‘‘sucessor’’ and add in its 

place ‘‘successor’’ in the final sentence 

of paragraph (e)(1); 

■ e. Revise paragraph (f)(3); 

■ f. Remove ‘‘incidential’’ and add in its 

place ‘‘incidental’’ in paragraph (k)(3); 

■ g. Revise paragraph (k)(4); 

■ h. Add paragraphs (k)(5) and (6); 

■ i. Add paragraph (m). 

The revisions read as follows: 

§ 401.14 Standard patent rights clauses. 

* * * * * 

(a) * * * 

(2) Subject invention means any 

invention of a contractor conceived or 

first actually reduced to practice in the 

performance of work under a funding 

agreement; 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)) must also occur 

during the period of contract 

performance. An invention that is 

conceived and reduced to practice 

without the use of any federal funds is 

not considered a subject invention. 

* * * * * 

(7) The term statutory period means 

the one-year period before the effective 

filing date of a claimed invention in a 

patent application during which 

exceptions to prior art exist per 35 

U.S.C. 102(b) as amended by the LeahySmith America Invents Act, Public Law 

112–29. 

* * * * * 

(c) * * * 

(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. If required by the 

Federal agency, the contractor will 

provide periodic (but no more 

frequently than annual) listings of all 

subject inventions which were disclosed 

to the agency during the period covered 

by the report, and will provide a report 

prior to the close-out of a funding 

agreement listing all subject inventions 

or stating that there were none. 

* * * * * 

(3)(i) 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. Subject to the grant of an 

extension by an agency under paragraph 

(c)(5) of this clause, if the contractor 

files a provisional application as its 

initial patent application, it shall file a 

non-provisional application within 10 

months of the filing of the provisional 

application. 

(ii) Each provisional application filed 

following the initial patent application 

must contain additional written 

description of the subject invention not 

previously disclosed in a patent 

application. The contractor shall file or 

notify the government that they do not 

intend to file a non-provisional 

application within 10 months of the last 

filed provisional application that is 

consistent with this section. 

(iii) The contractor will file patent 

applications in additional countries or 

international patent offices within either 

ten months of the first filed patent 

application or six months from the date 

permission is granted by the 

Commissioner of Patents to file foreign 

patent applications where such filing 

has been prohibited by a Secrecy Order. 

(iv) If required by the Federal agency, 

the contractor will provide the filing 

date, patent application number and 

title; a copy of the patent application; 

and patent number and issue date for 

any subject invention in any country in 

which the contractor has applied for a 

patent. 

* * * * * 

(6) In the event a subject invention is 

made under funding agreements of more 

than one agency, at the request of the 

contractor or on their own initiative the 

agencies shall designate one agency as 

responsible for administration of the 

rights of the government in the 

invention. 

(d) Conditions When the Government 

May Obtain Title 

(1) A Federal agency may require the 

contractor to convey title to the Federal 

agency of any subject invention— 

(i) If the contractor fails to disclose or 

elect title to the subject invention 

within the times specified in paragraph 

(c) of this clause, or elects not to retain 

title. 

(ii) In those countries in which the 

contractor fails to file patent 

applications within the times specified 

in paragraph (c) of this clause; provided, 

however, that if the contractor has filed 

a patent application in a country after 

the times specified in paragraph (c) of 

this clause, but prior to its receipt of the 

written request of the Federal agency, 

the contractor shall continue to retain 

title in that country. 

(iii) In any country in which the 

contractor decides not to continue the 

prosecution of any non-provisional 

patent application for, to pay a 

maintenance, annuity or renewal fee on, 

or to defend in a reexamination or 

opposition proceeding on, a patent on a 

subject invention. 

(2) A Federal agency, at its discretion, 

may waive the requirement for the 

contractor to convey title to any subject 

invention. 

* * * * * 

(f) * * * 

(3) For each subject invention, the 

contractor will, no less than 60 days 

Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Proposed Rules 43 

prior to the expiration of the statutory 

deadline, or 60 days prior to the date if 

401.14(c)(5) applies, notify the Federal 

agency of any decision. 

* * * * * 

(k) * * * 

(4) It will make efforts that are 

reasonable under the circumstances to 

attract licensees of subject inventions 

that are small business firms and that, 

when appropriate, it will give a 

preference to a small business firm 

when licensing a subject invention; 

(5) The Federal agency 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 Federal agency when the Federal 

agency’s review discloses that the 

contractor could take reasonable steps to 

more effectively implement the 

requirements of paragraph (k)(4) of this 

clause; and 

(6) The Federal agency may take into 

consideration concerns presented by 

small businesses in making such 

determinations in paragraph (k)(5) of 

this clause. 

* * * * * 

(m) Electronic Filing 

(a) Unless otherwise requested or 

directed by the Federal agency— 

(1) The written disclosure required in 

(c)(1) of this clause shall be 

electronically filed; 

(2) The written election required in 

(c)(2) of this clause shall be 

electronically filed; and 

(3) If required by the agency to be 

submitted, the close-out report in 

paragraph (c)(1) of this clause and the 

patent information and periodic 

reporting identified in paragraph (c)(3) 

of this clause shall be electronically 

filed. 

(b) Other written notices required in 

this clause may be electronically 

delivered to the agency or the contractor 

through an electronic database used for 

reporting subject inventions, patents, 

and utilization reports to the funding 

agency. 

§ 401.15 [Removed and Reserved] 

■ 13. Remove and reserve § 401.15. 

■ 14. Revise § 401.16 to read as follows: 

§ 401.16 Federal agency reporting 

requirements. 

Federal agencies will report annually 

to the Secretary of Commerce on data 

pertaining to reported subject 

inventions under a funding agreement, 

including— 

(a) Number of subject inventions 

reported to the Federal Agency; 

(b) Patent applications filed on subject 

inventions; 

(c) Issued patents on subject 

inventions; 

(d) Number of requests and number of 

requests granted for extension of the 

time for disclosures, election, and filing 

per 37 CFR 401.14(c)(5); 

(e) Number of subject inventions 

conveyed to the Government in 

accordance with 37 CFR 401.14(d); 

(f) Number of waivers requested and 

waivers granted per 37 CFR 401.14(i); 

and 

(g) Number of requests for assignment 

of invention rights. Such information 

will be received by the Secretary no 

later than the last day of October of each 

year. 

§ 401.17 [Amended] 

■ 15. Amend § 401.17 by removing the 

phrase ‘‘, telephone (301) 435–1986’’ 

before the final period of the paragraph. 

PART 404—LICENSING OF 

GOVERNMENT OWNED INVENTIONS 

■ 16. The authority citation for 37 CFR 

part 404 continues to read as follows: 

Authority: 35 U.S.C. 207–209, DOO 30– 

2A. 

■ 17. Revise § 404.1 to read as follows: 

§ 404.1 Scope of part. 

(a) This part prescribes the terms, 

conditions, and procedures upon which 

a federally owned invention, other than 

an invention in the custody of the 

Tennessee Valley Authority, may be 

licensed. This part does not affect 

licenses which: 

(1) Were in effect prior to April 7, 

2006; 

(2) May exist at the time of the 

Government’s acquisition of title to the 

invention, including those resulting 

from the allocation of rights to 

inventions made under Government 

research and development contracts; 

(3) Are the result of an authorized 

exchange of rights in the settlement of 

patent disputes, including interferences; 

or 

(4) Are otherwise authorized by law 

or treaty, including 35 U.S.C. 202(e), 35 

U.S.C. 207(a)(3) and 15 U.S.C. 3710a, 

which also may authorize the 

assignment of inventions. Although 

licenses on inventions made under a 

cooperative research and development 

agreement (CRADA) are not subject to 

this regulation, agencies are encouraged 

to apply the same policies and use 

similar terms when appropriate. 

Similarly, this should be done for 

licenses granted under inventions where 

the agency has acquired rights pursuant 

to 35 U.S.C. 207(a)(3). 

(b) Royalties collected pursuant to 

this part are not intended as an 

alternative to appropriated funding or as 

an alternative funding mechanism. 

■ 18. Revise § 404.2 to read as follows: 

§ 404.2 Policy and objective. 

It is the policy and objective of this 

subpart to promote the results of 

federally funded research and 

development through the patenting and 

licensing process. In negotiating 

licenses, the Government may consider 

payments under a licensing agreement 

as a means for promoting the practical 

application of a subject invention and as 

a method to ensure commercialization 

by the licensee. 

§ 404.4 [Removed and Reserved] 

■ 19. Remove and reserve § 404.4. 

§ 404.5 [Amended] 

■ 20. Amend § 404.5 by removing 

‘‘§ 404.5(a)(2)’’ from paragraph (b)(8)(iv) 

and adding in its place ‘‘35 U.S.C. 

209(b)’’. 

■ 21. Revise § 404.7 to read as follows: 

§ 404.7 Exclusive, co-exclusive, and 

partially exclusive licenses. 

(a) Exclusive, co-exclusive or partially 

exclusive licenses may be granted on 

Government owned inventions, only if: 

(1) Notice of a prospective license, 

identifying the invention at a minimum, 

has been published and responses, if 

any, reviewed in accordance with 35 

U.S.C. 209. The agency, in its discretion, 

may include other information as 

appropriate; 

(2) After expiration of the public 

notice period and consideration of any 

written objections received in 

accordance with 35 U.S.C. 209(e), the 

Federal agency has determined that: 

(i) The public will be served by the 

granting of the license, as indicated by 

the applicant’s intentions, plans and 

ability to bring the invention to the 

point of practical application or 

otherwise promote the invention’s 

utilization by the public; 

(ii) The proposed scope of exclusivity 

is not greater than reasonably necessary 

to provide the incentive for bringing the 

invention to practical application, as 

proposed by the applicant, or otherwise 

to promote the invention’s utilization by 

the public; and 

(iii) Exclusive, co-exclusive or 

partially exclusive licensing is a 

reasonable and necessary incentive to 

call forth the investment capital and 

expenditures needed to bring the 

invention to practical application or 

otherwise promote the invention’s 

utilization by the public; 

(3) The Federal agency has 

determined that the grant of such a 

license will not tend substantially to 

44 Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Proposed Rules 

lessen competition or create or maintain 

a violation of the Federal antitrust laws; 

(4) The Federal agency has given first 

preference to any small business firms 

submitting plans that are determined by 

the agency to be within the capability of 

the firms and as having equal or greater 

likelihood as those from other 

applicants to bring the invention to 

practical application within a 

reasonable time; and 

(5) In the case of an invention covered 

by a foreign patent application or 

patent, the interests of the Federal 

Government or United States industry 

in foreign commerce will be enhanced. 

(b) In addition to the provisions of 

§ 404.5, the following terms and 

conditions apply to exclusive, coexclusive and partially exclusive 

licenses: 

(1) The license shall be subject to the 

irrevocable, royalty-free right of the 

Government of the United States to 

practice or have practiced the invention 

on behalf of the United States and on 

behalf of any foreign government or 

international organization pursuant to 

any existing or future treaty or 

agreement with the United States. 

(2) The license shall reserve to the 

Federal agency the right to require the 

licensee to grant sublicenses to 

responsible applicants, on reasonable 

terms, when necessary to fulfill health 

or safety needs. 

(3) The license shall be subject to any 

licenses in force at the time of the grant 

of the exclusive, co-exclusive or 

partially exclusive license. 

(4) The license may grant the licensee 

the right to take any suitable and 

necessary actions to protect the licensed 

property, on behalf of the Federal 

Government. 

(c) Federal agencies shall maintain a 

record of determinations to grant 

exclusive, co-exclusive or partially 

exclusive licenses. 

§ 404.10 [Amended] 

■ 22. Amend § 404.10 by removing ‘‘and 

any sublicensee of record’’. 

■ 23. Revise paragraphs (a) introductory 

text, (a)(3), and (b) to read as follows: 

§ 404.11 Appeals. 

(a) The following parties may appeal 

to the agency head or designee any 

decision or determination concerning 

the grant, denial, modification, or 

termination of a license: 

* * * * * 

(3) A person who timely filed a 

written objection in response to the 

notice required by § 404.7 and who can 

demonstrate to the satisfaction of the 

Federal agency that such person may be 

damaged by the agency action due to 

being denied the opportunity to 

promote the commercialization of the 

invention. 

(b) The Federal agency shall establish 

appropriate procedures for considering 

appeals under paragraph (a) of this 

section. 

■ 24. Revise § 404.14 to read as follows: 

§ 404.14 Confidentiality of information. 

35 U.S.C. 209(f) requires that any plan 

submitted pursuant to § 404.8(a)(8) and 

any report required by 35 U.S.C. 

209(d)(2) shall be treated as commercial 

or financial information obtained from a 

person and privileged and confidential 

and not subject to disclosure under 5 

U.S.C. 552. 

Kevin Kimball, 

Chief of Staff. 

[FR Doc. 2020–27581 Filed 12–31–20; 8:45 am] 

BILLING CODE 3510–13–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Parts 0 and 64 

[EB Docket No. 20–374; FCC 20–174; FRS 

17331] 

Pallone-Thune Telephone Robocall 

Abuse Criminal Enforcement and 

Deterrence Act (TRACED Act) 

AGENCY: Federal Communications 

Commission. 

ACTION: Proposed rule. 

SUMMARY: In this document, the 

Commission proposes rules to 

implement the Pallone-Thune 

Telephone Robocall Abuse Criminal 

Enforcement and Deterrence Act 

(TRACED Act) to streamline the process 

by which private entities may submit 

information to the Commission about 

violations of the Communications Act. 

DATES: Comments are due on or before 

February 3, 2021 and reply comments 

are due on or before February 18, 2021. 

ADDRESSES: You may submit comments, 

identified by EB Docket No. 20–374, by 

any of the following methods: 

• Electronic Filers: Comments may be 

filed electronically using the internet by 

accessing the ECFS: http://apps.fcc.gov/ 

ecfs/. 

• Paper Filers: Parties who choose to 

file by paper must file an original and 

one copy of each filing. If more than one 

docket or rulemaking number appears in 

the caption of this proceeding, filers 

must submit two additional copies for 

each additional docket or rulemaking 

number. 

Filings can be sent by hand or 

messenger delivery, by commercial 

overnight courier, or by first-class or 

overnight U.S. Postal Service mail. All 

filings must be addressed to the 

Commission’s Secretary, Office of the 

Secretary, Federal Communications 

Commission. 

• Commercial overnight mail (other 

than U.S. Postal Service Express Mail 

and Priority Mail) must be sent to 9050 

Junction Drive, Annapolis Junction, MD 

20701. 

• U.S. Postal Service first-class, 

Express, and Priority mail must be 

addressed to 45 L Street NE, 

Washington, DC 20554. 

• Effective March 19, 2020, and until 

further notice, the Commission no 

longer accepts any hand or messenger 

delivered filings. This is a temporary 

measure taken to help protect the health 

and safety of individuals, and to 

mitigate the transmission of COVID–19. 

See FCC Announces Closure of FCC 

Headquarters Open Window and 

Change in Hand-Delivery Policy, Public 

Notice, DA 20–304 (March 19, 2020), 

https://www.fcc.gov/document/fcccloses-headquarters-open-window-andchanges-hand-delivery-policy. 

People with Disabilities: Contact the 

FCC to request reasonable 

accommodations (accessible format 

documents, sign language interpreters, 

CART, etc.) by email: FCC504@fcc.gov 

or phone: 202–418–0530 or TTY: 202– 

418–0432. 

FOR FURTHER INFORMATION CONTACT: For 

additional information on this 

proceeding, contact Daniel Stepanicich 

of the Telecommunications Consumers 

Division, Enforcement Bureau, at 

Daniel.Stepanicich@fcc.gov or (202) 

418–7451. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Notice of 

Proposed Rulemaking, FCC 20–174, EB 

Docket No. 20–374, adopted and 

released on December 8, 2020. The full 

text of this document is available for 

public inspection online at https://

docs.fcc.gov/public/attachments/FCC20-174A1.pdf. To request this document 

in accessible formats for people with 

disabilities (e.g., Braille, large print, 

electronic files, audio format, etc.) or to 

request reasonable accommodations 

(e.g., accessible format documents, sign 

language interpreters, CART, etc.), send 

an email to FCC504@fcc.gov or call the 

FCC’s Consumer and Governmental 

Affairs Bureau at (202) 418–0530 

(voice), (202) 418–0432 (TTY). 

Synopsis 

1. In this Notice of Proposed 

Rulemaking, the Federal 

Communications Commission 

(Commission) proposes to implement