27.302 Policy.

(a) Introduction. In accordance with chapter 18 of title 35, U.S.C. (as implemented by 37 CFR part

401), Presidential Memorandum on Government Patent Policy to the Heads of Executive

Departments and Agencies dated February 18, 1983, and Executive Order 12591, Facilitating Access

to Science and Technology dated April 10, 1987, it is the policy and objective of the Government to-

(1) Use the patent system to promote the use of inventions arising from federally supported research

or development;

(2) Encourage maximum participation of industry in federally supported research and development

efforts;

(3) Ensure that these inventions are used in a manner to promote free competition and enterprise

without unduly encumbering future research and discovery;

(4) Promote the commercialization and public availability of the inventions made in the United

States by United States industry and labor;

(5) Ensure that the Government obtains sufficient rights in federally supported inventions to meet

the needs of the Government and protect the public against nonuse or unreasonable use of

inventions; and

(6) Minimize the costs of administering patent policies.

(b) Contractor right to elect title.

(1) Generally, pursuant to 35 U.S.C. 202 and the Presidential Memorandum and Executive order

cited in paragraph (a) of this section, each contractor may, after required disclosure to the

Government, elect to retain title to any subject invention.

(2) A contract may require the contractor to assign to the Government title to any subject invention-

(i) When the contractor is not located in the United States or does not have a place of business

located in the United States or is subject to the control of a foreign government (see 27.303(e)(1)(i));

(ii) In exceptional circumstances, when an agency determines that restriction or elimination of the

right to retain title in any subject invention will better promote the policy and objectives of chapter

18 of title 35, U.S.C. and the Presidential Memorandum;

(iii) When a Government authority, that is authorized by statute or executive order to conduct

foreign intelligence or counterintelligence activities, determines that the restriction or elimination of

the right to retain title to any subject invention is necessary to protect the security of such activities;

(iv) When the contract includes the operation of a Government-owned, contractor-operated facility of

the Department of Energy (DOE) primarily dedicated to the Department’s naval nuclear propulsion

or weapons related programs and all funding agreement limitations under 35 U. S.C. 202(a)(iv) for

agreements with small business concerns and nonprofit organizations are limited to inventions

occurring under the above two programs; or
(v) Pursuant to statute or in accordance with agency regulations.

(3) When the Government has the right to acquire title to a subject invention, the contractor may,

nevertheless, request greater rights to a subject invention (see 27.304-1(c)).

(4) Consistent with 37 CFR part 401, when a contract with a small business concern or nonprofit

organization requires assignment of title to the Government based on the exceptional circumstances

enumerated in paragraph (b)(2)(ii) or (iii) of this section for reasons of national security, the contract

shall still provide the contractor with the right to elect ownership to any subject invention that-

(i) Is not classified by the agency; or

(ii) Is not limited from dissemination by the DOE within 6 months from the date it is reported to the

agency.

(5) Contracts in support of DOE’s naval nuclear propulsion program are exempted from this

paragraph (b).

(6) When a contract involves a series of separate task orders, an agency may structure the contract

to apply the exceptions at paragraph (b)(2)(ii) or (iii) of this section to individual task orders.

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

irrevocable, paid-up license to practice, or have practiced for or on behalf of the United States, any

subject invention throughout the world. The Government may require additional rights in order to

comply with treaties or other international agreements. In such case, these rights shall be made a

part of the contract (see 27.303).

(d) Government right to receive title.

(1) In addition to the right to obtain title to subject inventions pursuant to paragraph (b)(2)(i)

through (v) of this section, the Government has the right to receive title to an invention-

(i) If the contractor has not disclosed the invention within the time specified in the clause; or

(ii) In any country where the contractor-

(A) Does not elect to retain rights or fails to elect to retain rights to the invention within the time

specified in the clause;

(B) Has not filed a patent or plant variety protection application within the time specified in the

clause;

(C) Decides not to continue prosecution of a patent or plant variety protection application, pay

maintenance fees, or defend in a reexamination or opposition proceeding on the patent; or

(D) No longer desires to retain title.

(2) For the purposes of this paragraph, filing in a European Patent Office Region or under the Patent

Cooperation Treaty constitutes election in the countries selected in the application(s).

(e) Utilization reports. The Government has the right to require periodic reporting on how any

subject invention is being used by the contractor or its licensees or assignees. In accordance with 35

U. S.C. 202(c)(5) and 37 CFR part 401, agencies shall not disclose such utilization reports to persons
outside the Government without permission of the contractor. Contractors should mark as

confidential/proprietary any utilization report to help prevent inadvertent release outside the

Government.

(f) March-in rights.

(1) Pursuant to 35 U .S.C. 203, agencies have certain march-in rights that 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 responsible applicants, upon terms that are reasonable under

the circumstances. If the contractor, assignee or exclusive licensee of a subject invention refuses to

grant such a license, the agency can grant the license itself. March-in rights may be exercised only if

the agency determines that this action is necessary-

(i) Because the contractor or assignee has not taken, or is not expected to take within a reasonable

time, effective steps to achieve practical application of the subject invention in the field(s) of use;

(ii) To alleviate health or safety needs that are not reasonably satisfied by the contractor, assignee,

or their licensees;

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

are not reasonably satisfied by the contractor, assignee, or licensees; or

(iv) Because the agreement required by paragraph (g) of this section has neither been obtained nor

waived, or because a licensee of the exclusive right to use or sell any subject invention in the United

States is in breach of its agreement obtained pursuant to paragraph (g) of this section.

(2) The agency shall not exercise its march-in rights unless the contractor has been provided a

reasonable time to present facts and show cause why the proposed agency action should not be

taken. The agency shall provide the contractor an opportunity to dispute or appeal the proposed

action, in accordance with 27.304-1(g).

(g) Preference for United States industry. In accordance with 35 U. S.C. 204, no contractor that

receives title to any subject invention and no assignee of the contractor shall grant to any person the

exclusive right to use or sell any subject invention in the United States unless that 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 this agreement may be waived by the agency upon a showing by the contractor or

assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms

to potential licensees that would be likely to manufacture substantially in the United States or that

under the circumstances domestic manufacture is not commercially feasible.

(h) Special conditions for nonprofit organizations’ preference for small business concerns.

(1) Nonprofit organization contractors are expected to use reasonable efforts to attract small

business licensees (see paragraph (i)(4) of the clause at 52.227-11, Patent Rights-Ownership by the

Contractor). What constitutes reasonable efforts to attract small business licensees will vary with

the circumstances and the nature, duration, and expense of efforts needed to bring the invention to

the market.

(2) Small business concerns that believe a nonprofit organization is not meeting its obligations under

the clause may report the matter to the Secretary of Commerce. To the extent deemed appropriate,
the Secretary of Commerce will undertake informal investigation of the matter, and may discuss or

negotiate with the nonprofit organization ways to improve its efforts to meet its obligations under

the clause. However, in no event will the Secretary of Commerce intervene in ongoing negotiations

or contractor decisions concerning the licensing of a specific subject invention. These investigations,

discussions, and negotiations involving the Secretary of Commerce will be in coordination with other

interested agencies, including the Small Business Administration. In the case of a contract for the

operation of a Government-owned, contractor-operated research or production facility, the Secretary

of Commerce will coordinate with the agency responsible for the facility prior to any discussions or

negotiations with the contractor.

(i) Minimum rights to contractor.

(1) When the Government acquires title to a subject invention, the contractor is normally granted a

revocable, nonexclusive, paid-up license to that subject invention throughout the world. The

contractor’s license extends to any of its domestic subsidiaries and affiliates within the corporate

structure of which the contractor is a part and includes the right to grant sublicenses to the extent

the contractor was legally obligated to do so at the time of contract award. The contracting officer

shall approve or disapprove, in writing, any contractor request to transfer its licenses. No approval

is necessary when the transfer is to the successor of that part of the contractor’s business to which

the subject invention pertains.

(2) In response to a third party’s proper application for an exclusive license, the contractor’s

domestic license may be revoked or modified to the extent necessary to achieve expeditious practical

application of the subject invention. The application shall be submitted in accordance with the

applicable provisions in 37 CFR part 404 and agency licensing regulations. The contractor’s 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 subject invention

reasonably accessible to the public. The license in any foreign country may be revoked or modified

to the extent the contractor, its licensees, or its domestic subsidiaries or affiliates have failed to

achieve practical application in that country. (See the procedures at 27.304-1(f).)

(j) Confidentiality of inventions. Publishing information concerning an invention before a patent

application is filed on a subject invention may create a bar to a valid patent. To avoid this bar,

agencies may withhold information from the public that discloses any invention in which the

Government owns or may own a right, title, or interest (including a nonexclusive license) (see 35 U.

S.C. 205 and 37 CFR part 401). Agencies may only withhold information concerning inventions for a

reasonable time in order for a patent application to be filed. Once filed in any patent office, agencies

are not required to release copies of any document that is a part of a patent application for those

subject inventions. (See also 27.305-4.)

Parent topic: Subpart 27.3 - Patent Rights under Government Contracts