[Federal Register Volume 60, Number 41 (Thursday, March 2, 1995)]
[Rules and Regulations]
[Pages 11812-11825]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4611]




[[Page 11811]]

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Part IV





Department of Energy





_______________________________________________________________________



48 CFR Parts 927, 952 and 970



Acquisition Regulation; Updating of Patent Regulations; Final Rule

Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules 
and Regulations 
[[Page 11812]] 

DEPARTMENT OF ENERGY

48 CFR Parts 927, 952 and 970

RIN 1991-AA23


Acquisition Regulation; Updating of Patent Regulations

AGENCY: Department of Energy (DOE).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Department today amends the Department of Energy 
Acquisition Regulation (DEAR) to base the DOE patent regulations on the 
Federal Acquisition Regulation (FAR) patent regulations at Subpart 27.2 
and the associated FAR patent clauses at 52.227 to the extent that the 
FAR coverage is consistent with the DOE statutory patent requirements.

EFFECTIVE DATE: April 3, 1995.

FOR FURTHER INFORMATION CONTACT:

Robert M. Webb, Procurement Policy Division (PR-121), U.S. Department 
of Energy, 1000 Independence Avenue, SW., Washington, D.C. 20585, (202) 
586-8264
Sue Palk, Office of the Assistant General Counsel for Intellectual 
Property (GC-42), U.S. Department of Energy, 1000 Independence Avenue, 
SW., Washington, D.C. 20585, (202) 586-2802

SUPPLEMENTARY INFORMATION:

I. Background
    A. Discussion
    B. Disposition of comments
II. Procedural Requirements
    A. Regulatory Review
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act
    E. Review Under Executive Order 12612
    F. Review Under Executive Order 12778

I. Background

A. Discussion

    The proposed rule was published on March 29, 1994, at 59 FR 14593 
(1994). It was intended to amend the Department of Energy Acquisition 
Regulation to reflect the changes to DOE's statutory patent policy, 
arising out of the Atomic Energy Act of 1954, as amended, 42 U.S.C. 
2011 et seq., and the Federal Non-Nuclear Energy Research and 
Development Act, 42 U.S.C. 5901 et seq., necessitated by the Bayh-Dole 
Act of 1980 and the Trademark Clarification Act of 1984. The rule is 
based on patent provisions at FAR 27.3 and FAR 52.227, varying to the 
extent necessary to fulfill DOE statutory and programmatic duties.
    Six sets of comments were received. Of those one was from a private 
citizen, one was from a private organization, and four were from 
current DOE management and operating contractor organizations.

B. Disposition of Comments

    Two commenters question the relationship of this rulemaking to 
DOE's contract reform initiative. This rulemaking, as stated in the 
preamble to the proposed rule is intended to update the DOE coverage of 
patent rights and to bring DOE's regulations on the subject more in 
line with the provisions of the Federal Acquisition Regulation (FAR). 
DOE believes this rulemaking is overdue and must be carried to 
completion. Any final developments of the Contract Reform Initiative 
that will affect patent rights will be reflected in a subsequent 
rulemaking.
    One commenter questions the Department's ability to ``issue 
independent technical data clauses which are deviations from those 
clauses published in the FAR.'' This rulemaking is directed to DOE's 
patent regulations, not its technical data regulations. The special 
status for DOE's patent coverage is statutory and was discussed in 
detail in the preamble to the proposed rule for this rulemaking. No 
change has been made.
    The same commenter has questioned the inclusion of 
``demonstration'' with research and development in establishing the 
scope of this regulation, while another has requested that the term be 
defined to distinguish the term from ``research and development'' to 
clarify the different rights that may accrue. As explained in the 
proposed rule, ``research, development, and demonstration'' is the 
statutory scope for the Department's patent policy and has been 
incorporated into this rulemaking. The second commenter requested a 
definition of ``demonstration'' predicated upon an assumption that 
different rights may accrue. This is not the case. We believe that the 
term ``demonstration,'' particularly in light of its statutory basis, 
to be sufficiently clear. Therefore, neither change has been made.
    One commenter suggests that the regulations at 927.300 and 927.302 
refer to financial assistance transactions. The DEAR controls the award 
and administration in DOE of procurement contracts, the purposes of 
which are described in Public Law 95-224. It does not control the award 
or administration of either grants or cooperative agreements, 
assistance transactions, as the purposes of those terms are described 
in the same public law. For the Department of Energy, the regulations 
governing assistance transactions are contained at 10 CFR part 600. For 
this reason, we have made not made the suggested change. The 
regulations governing patents for assistance instruments will be the 
subject of a separate rulemaking.
    A commenter noted that at the new 927.300 the reference to the 
regulations that control DOE's granting of waivers of its ownership of 
inventions should be corrected to reflect that the location and content 
of those is not being affected by this rulemaking and will continue to 
exist at 41 CFR 9-9.1 of the old Department of Energy Procurement 
Regulations (DOE PR) until they are made the subject of their own 
rulemaking. A change has been made to the first sentence of 927.300(b). 
That same commenter suggests that the restatement of DOE policy 
concerning the granting of waivers at 927.300(b) and (c) be deleted. We 
believe those provisions are descriptive of the policy and yet make it 
clear that the controlling regulations are located elsewhere. 
Therefore, we have retained those provisions, modified as described 
above. We deleted the second sentence of 927.300(a) as unnecessary.
    One commenter suggests that ``Government'' be substituted for 
``DOE'' in the first sentence of 927.302(a). We have chosen to make a 
change using the phrase ``the United States, as represented by DOE,''.
    The same commenter states that the statement of the authorities of 
the Assistant General Counsel for Technology Transfer and Intellectual 
Property that were contained at 9-9.109-3(d) of the DOE PR should be 
retained. We agree and have added them at 927.302(d).
    Another commenter requests the addition of the phrase ``or is 
unable to meet these market demands within a reasonable time'' be added 
to the description of circumstances at 927.302(b) in which DOE would 
exercise its rights to require licensing of background patents to third 
parties on reasonable terms and conditions. The statement at 927.302(b) 
is merely descriptive, and, in fact, describes the substantial 
considerations in the Government's application for licensing of third 
parties. The terms of paragraph (k) of the clause at 952.227-13 
control, and provide the contractor the opportunity to demonstrate to 
the Department's satisfaction that either the current market situation 
is satisfactory or can be made so in a reasonable time. We have not 
made a change, believing that the current sentence is descriptive. Any 
additional discussion would [[Page 11813]] require additional 
clarification, adding to the complexity of a provision that is merely 
descriptive, not regulatory.
    A commenter has suggested revision of the third sentence of 
927.302(c) to correct ambiguities in the listing of types of contracts 
for which the Government's rights in background patents may not be 
appropriate. We have made changes to the sentence that accomplish the 
intended purpose.
    One commenter has noted that the clause at FAR 52.227-12, 
appropriately modified may suffice as a patent rights clause in a 
contract for which DOE has granted an advance waiver of its title. That 
may be the case. We have modified section 927.303(b) to reflect that 
possibility while maintaining the prohibition against the use of the 
clause generally.
    One commenter objects to the inclusion at 952.227-9 of the Refund 
of Royalties clause in place of a clause of the same name in the FAR. 
The commenter suggests the use of a supplemental provision and, along 
with a second commenter, questions the authority of DOE to publish this 
clause where there is already a FAR provision. As explained in the 
preamble to the proposed rule, this clause is the FAR clause at 52.227-
9 with the addition of sentences to assure the recognition of royalties 
deriving from technical data and copyrighted material and a disclaimer. 
The purpose of this clause and the FAR clause upon which it is based is 
to prevent the Government's paying royalties relating to a form of 
intellectual property to which it already has a license, perhaps 
royalty free. We have acted to expand the FAR provision to include all 
forms of intellectual property and to assure a continuing right to 
challenge the validity of intellectual property giving rise to the 
royalty. We believe these concerns to be of significant importance to 
DOE with its expansive technological mission. No entity is hurt by the 
minor changes to the FAR clause, except a firm that may today be in a 
position to acquire royalties from a Government contractor for use of 
technical data or copyrighted material to which the Government already 
has a license. We have retained the clause as it is in the proposed 
rule.
    The second commenter says that the clause ``is unclear on whether 
costs paid for technical assistance and transfer of know how are 
subject to repayment when the information transferred is not protected 
by a valid patent, copyright, or otherwise qualifies for intellectual 
property protections.'' We disagree. This clause in either of its forms 
is premised upon the payment of what is commonly recognized as a 
royalty or license fee. In order for a royalty to be paid the payee 
must recognize a proprietary right in the property. If no such basis 
exists, a royalty would not be paid. The types of costs would be 
subject to the clause only to the extent that they are part of a 
royalty agreement and could be classified as a royalty. We have made no 
change.
    We have deleted the phrase ``in the performance of work'' from the 
definition of ``subject invention'' as it appears in the clause at 
952.227-13 to conform more closely to the statutory language. We have 
altered the definition of ``patent counsel'' in that clause to mean the 
patent counsel responsible for patent administration under the specific 
contract, rather than Headquarters Patent Counsel.
    One commenter objects to the use of the word ``consultation'' in 
paragraph (b)(2) of the clause at 952.227-13 expressing the obligations 
of an employee prior to that employee's asserting an interest in a 
subject invention. The previous DOE clause allowed an employee-inventor 
to request greater rights after acquiring the authorization of the 
contractor-employer. Since the promulgation of the previous DOE clause, 
Bayh-Dole was enacted, offering this right to employee-inventors upon 
consultation with their small business or nonprofit employers. The FAR 
in the clause at 52.227-13 for use with large, profit-making companies 
has reflected this change.
    The proposed rule language was premised upon the FAR language. 
Bayh-Dole and the FAR reflect an interest in maximizing the 
commercialization of inventions under Government contracts in these 
circumstances in which the contractor-employer has chosen not to pursue 
a request for greater rights in a subject invention. We can identify no 
DOE interest that demands that the employee-inventor acquire the 
permission of his employer. The contractor-employer can control this 
situation by fashioning an employment agreement to protect its 
interest. Such an agreement, not this clause, will control what form 
the employee-inventor's ``consultation'' takes. We have made no change.
    One commenter has suggested that paragraph (e)(2) of the clause at 
952.227-13 include a recognition of a statutory premise ``that a 
reported invention will be deemed to have been made in the manner 
specified in Section (a) (1) and (2) of 42 U.S.C. 5908 unless the 
contractor contends in writing when the invention is reported that it 
was not so made.'' We agree and have made the change.
    A commenter opposes the Government's acquisition of rights in 
background patents in paragraph (k) of the clause at 952.227-13(k) and 
as described at 927.302(b), stating that ``it could be argued that the 
DOE is vesting itself with the power to take the property of others 
without paying valid compensation.'' The commenter suggests that ``[i]f 
the DOE requires such rights, it can negotiate to purchase them like 
any contracting party, or (sic) in the alternative, it may utilize its 
rights under FAR 52.227-1 ``Authorization and Consent.'' We disagree. 
First, the inclusion of paragraph (k) represents the acquisition of an 
inchoate right which goes to the heart of the involvement of public 
funds in the particular project at a time in which the parties are at 
an equal bargaining position. These rights provide DOE only a 
nonexclusive and royalty free license ``for the purposes of practicing 
a subject of this contract by or for the Government in research, 
development, and demonstration work only.'' Furthermore, DOE can demand 
that the contractor license third parties to its background patents 
only under a limited set of circumstances ``on terms that are 
reasonable under the circumstances.'' Should, in fact, the contractor 
be put in a monopolistic position in the market place as a result of 
the research, development, or demonstration of the contract with DOE 
and should that contractor choose not to meet market demand, DOE would 
be in a compromised bargaining position. Without the rights provided 
for in paragraph (k), DOE or any third party would have to pay dearly 
to acquire these background rights even though Federal taxpayer funds 
would have played a meaningful part in the contractor's market 
position. We have made no change.
    Additionally, we have reviewed the proposed clause at 952.227-13 
after having reflected the comments received and have made technical 
changes necessary to accurately reflect DOE's statutory patent policy 
and to enhance the smooth operation of the clause. We believe that the 
only changes of any significance, both occurring in the definition of 
``subject invention,'' are required by DOE's statute, i.e., adding the 
phrase ``in the course of or'' before ``under this contract'' and 
deleting the ``provided'' clause that runs to the end of that 
definition. The first of these causes that definition to accurately 
reflect the statutory scope, and the second is necessary to reflect the 
breadth of that statutory scope.
    We have added a definition of Patent Counsel and substituted that 
office for the Secretary of Energy where receipt of 
[[Page 11814]] communication occurs in the text of the clause. We have 
also added a definition of DOE patent waiver regulations and used that 
term where appropriate in the text of the clause. We deleted the 
definition of the Head of contracting agency and used Secretary of 
Energy where appropriate throughout the clause.
    In several places in the clause the proposed clause used the word 
``retain'' in the context of the greater rights determination. We have 
used more specific terms depending upon the context to reflect the 
contractor's right to ``request'' greater rights or the Department's 
having ``granted'' the contractor greater rights.
    In the third sentence of paragraph (b)(2)(i), we have substituted a 
definite condition for the application of the minimum rights flowing to 
the Government under paragraph (c) upon its granting a request for 
waiver in place of ``normally.''
    At paragraph (b)(2)(ii) we have substituted a time certain, two 
months after filing the patent application, rather than ``upon 
request'' for the contractor's providing identifying information 
relating to the application. We have also edited that subparagraph to 
grammatically reflect the separate duties with regard to a patent 
application and issuance of the patent. In order to assure that a 
contractor's patent application not expire for failure to prosecute we 
have added new subparagraph (b)(2)(iii) requiring notice by the 
contractor should it decide not to prosecute. The subparagraph (iii) of 
the proposed rule has been redesignated as subparagraph (iv).
    We have substituted the term ``subparagraphs(c)(1)'' for 
``subdivisions'' in subparagraph (c)(1)(iii). The former reference 
added unnecessarily to the opportunity for misinterpretation.
    At paragraph (d)(4)(vi) we have corrected a reference for the 
duration of the time period for DOE's not publishing invention 
disclosures relating to an application for foreign patent rights by 
providing for that time period to be determined by the DOE patent 
counsel. At subparagraph (d)(4)(vii), we have corrected a mistaken 
reference in the first sentence with the phrase ``in a timely manner.'' 
We have added as the penultimate sentence of paragraph (e)(2) a 
description of the report called for. At paragraph (e)(5) we have 
corrected a reference that is in error in the FAR clause, i.e, ``FAR 
27.302(j)'' in place of ``FAR 27.302(i).''
    Finally, with regard to the clause, at paragraph (g)(3), we have 
substituted the obligation of acquiring an affirmative patent clearance 
before final payment in lieu of ``past due confirmatory instruments.''
    A commenter questions the provision at 970.2702(b) that describes 
the right of management and operating contractors, not small businesses 
or nonprofit entities, to request advance waivers and waivers in 
identified inventions. He suggests that this premise makes this a 
``significant regulatory action.'' We disagree. These rights have 
existed throughout the history of DOE's statutory patent policy. We 
have made an attendant change in the last sentence of this subsection 
substituting ``42 U.S.C. 5908'' for ``927.300.''
    The same commenter has suggested the insertion of the word 
``nonprofit'' in the first sentence of 970.2702(e) describing Bayh-Dole 
rights of DOE management and operating contractors. We have made the 
change.
    Two commenters question the provisions of 970.2703 and the 
provisions of paragraph (m) of the clause at 970.5204-XX, relating to 
the transfer of title and reservation of income from licensing of 
subject inventions for the benefit of the laboratory, rather than the 
contractor. Both note that Bayh-Dole vests title in the nonprofit or 
educational entities and suggest that the provisions do not comply with 
the law where DOE employs such an entity to manage and operate one of 
its facilities. This provision merely reflects the reality of 
provisions of DOE's management and operating contracts in the interplay 
between patent provisions and technology transfer. That reality takes 
into account the special position of DOE's management and operating 
contractors as was recognized in Bayh-Dole. We have made no change at 
either place.
    One commenter questions 970.2795(c), saying that it should be 
revised ``to indicate that the limitations on the use of contractor 
employees only apply to those contractor employees assigned to, and 
working at the DOE facility.'' This provision verbatim existed before 
this rulemaking at 970.2701(d). An underlying premise of DOE's 
management and operating contracts is that the organization is 
independent of its corporate body. The workforce is dedicated to the 
work and is located at the DOE facility. This provision is written to 
that reality, and must remain that way to prevent any unintended 
restriction on its application. No change has been made.

II. Procedural Requirements

A. Regulatory Review

    Today's regulatory action has been determined not to be a 
``significant regulatory action'' under Executive Order 12866, 
``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993). 
Accordingly, today's action was not subject to review under the 
Executive Order by the Office of Information and Regulatory Affairs.

B. Review Under the Regulatory Flexibility Act

    This final rule was reviewed under the Regulatory Flexibility Act 
of 1980, Public Law 96-354, which requires preparation of a regulatory 
flexibility analysis for any rule which is likely to have significant 
economic impact on a substantial number of small entities. DOE 
certifies that this rule will not have a significant economic impact on 
a substantial number of small entities and, therefore, no regulatory 
flexibility analysis has been prepared.

C. Review Under the Paperwork Reduction Act

    No new information collection or recordkeeping requirements are 
imposed by this final rulemaking. Accordingly, no OMB clearance is 
required by the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et 
seq.).

D. Review Under NEPA

    The DOE has concluded that promulgation of this rule would not 
represent a major Federal action having significant impact on the human 
environment under the National Environmental Policy Act (NEPA) of 1969 
(42 U.S.C. 4321, 4331-4335, 4341-4347 (1976)), the Council on 
Environmental Quality regulations (40 CFR Parts 1500-1508), or the DOE 
guidelines (10 CFR Part 1021), and, therefore, does not require an 
environmental impact statement or an environmental assessment pursuant 
to NEPA.

E. Review Under Executive Order 12612

    Executive Order 12612, 52 FR 41685 (October 30, 1987), requires 
that regulations, rules, legislation, and any other policy actions be 
reviewed for any substantial direct effects on States, on the 
relationship between the national Government and the States, and in the 
distribution of power and responsibilities among various levels of 
Government. If there are sufficient substantial direct effects, then 
the Executive Order requires preparation of a federalism assessment to 
be used in all [[Page 11815]] decisions involved in promulgating and 
implementing a policy action.
    Today's final rule will revise certain policy and procedural 
requirements. However, DOE has determined that none of the revisions 
will have a substantial direct effect on the institutional interests or 
traditional functions of States.

F. Review Under Executive Order 12778

    Section 2 of Executive Order 12778 instructs each agency to adhere 
to certain requirements in promulgating new regulations and reviewing 
existing regulations. These requirements, set forth in sections 2(a) 
and (b)(2), include eliminating drafting errors and needless ambiguity, 
drafting the regulations to minimize litigation, providing clear and 
certain legal standards for affected conduct, and promoting 
simplification and burden reduction. Agencies are also instructed to 
make every reasonable effort to ensure that the regulation: Specifies 
clearly any preemptive effect, effect on existing Federal law or 
regulation, and retroactive effect; describes any administrative 
proceedings to be available prior to judicial review and any provisions 
for the exhaustion of such administrative proceedings; and defines key 
terms. This final rule will have no preemptive effect, will not have 
any effect on existing Federal laws, and will only clarify the existing 
regulations on this subject. The revised clauses will apply only to 
contracts which would be awarded after the effective date of the final 
rule, and, thus, have no retroactive effect. Therefore, DOE certifies 
that this final rule meets the requirements of sections 2 (a) and (b) 
of Executive Order 12778.

List of Subjects in 48 CFR Parts 927, 952, 970

    Government procurement, Patents.

    For the reasons set out in the preamble, Chapter 9 of Title 48 of 
the Code of Federal Regulations is amended as set forth below.

    Issued in Washington, D.C., on February 16, 1995.
Richard H. Hopf,
Deputy Assistant Secretary for Procurement and Assistance Management.

PART 927--PATENTS, DATA, AND COPYRIGHTS

    1. The authority citation for part 927 continues to read as 
follows:

    Authority: Sec. 644 of the Department of Energy Organization 
Act, Pub. L. 95-91 (42 U.S.C. 7254); Sec. 148 of the Atomic Energy 
Act of 1954, as amended (42 U.S.C. 2168); Federal Nonnuclear Energy 
Research and Development Act of 1974, sec. 9 (42 U.S.C. 5908); 
Atomic Energy Act of 1954, as amended, sec. 152 (42 U.S.C. 2182); 
Department of Energy National Security and Military Applications of 
Nuclear Energy Authorization Act of 1987, as amended, sec. 3131(a) 
(42 U.S.C. 7261a.)

    2. Subpart 927.2 is added to read as follows:

Subpart 927.2--Patents

Sec.
927.200  Scope of subpart.
927.201  Authorization and consent.
927.201-1  General.
927.206  Refund of royalties.
927.206-1  General.
927.206-2  Clause for refund of royalties.
927.207  Classified contracts.
927.207-1  General.

Subpart 927.2--Patents


927.200  Scope of subpart.

    When consulting 48 CFR part 27, subpart 27.2 of the FAR, consider 
``research, development, and demonstration'' to replace the phrase 
``research and development'' or ``R&D,'' for the purposes of DOE 
actions.


927.201  Authorization and consent.


927.201-1  General.

    In certain contracting situations, such as those involving 
research, development, or demonstration projects, consideration should 
be given to the impact of third party-owned patents covering technology 
that may be incorporated in the project which patents may ultimately 
affect widespread commercial use of the project results. In such 
situations, Patent Counsel shall be consulted to determine what 
modifications, if any, are to be made to the utilization of the 
Authorization and Consent and Patent Indemnity provisions or what other 
action might be deemed appropriate.


927.206  Refund of royalties.


927.206-1  General.

    The clause at 952.227-9, Refund of Royalties, obligates the 
contractor to inform DOE of the payment of royalties pertaining to the 
use of intellectual property, either patent or data related, in the 
performance of the contract. This information may result in 
identification of instances in which the Government already has a 
license for itself or others acting in its behalf or the right to 
sublicense others. Also, there may be pending antitrust actions or 
challenges to the validity of a patent or the proprietary nature of the 
data, or the contractor may be able to gain unrestricted access to the 
same data through other sources. In such situations the contractor may 
avoid the payment of a royalty in its entirety or may be charged a 
reduced royalty.


927.206-2  Clause for refund of royalties.

    The contracting officer shall insert the clause at 952.227-9, 
Refund of Royalties, in solicitations and contracts for experimental, 
research, developmental, or demonstration work or other solicitations 
and contracts in which the contracting officer believes royalties will 
have to be paid by the contractor or a subcontractor of any tier.


927.207  Classified contracts.


927.207-1  General.

    Unauthorized disclosure of classified subject matter, whether in a 
patent application or resulting from the issuance of a patent, may be a 
violation of the Atomic Energy Act of 1954, as amended, other laws 
relating to espionage and national security, and provisions of the 
proposed contract pertaining to disclosure of information.

    3. Section 927.300 is revised to read as follows:


927.300  General.

    (a) One of the primary missions of the Department of Energy is the 
use of its procurement process to ensure the conduct of research, 
development, and demonstration leading to the ultimate 
commercialization of efficient sources of energy. To accomplish its 
mission, DOE must work in cooperation with industry in the development 
of new energy sources and in achieving the ultimate goal of widespread 
commercial use of those energy sources. To this end, Congress has 
provided DOE with the authority to invoke an array of incentives to 
secure the commercialization of new technologies developed for DOE. One 
such important incentive is provided by the patent system.
    (b) Pursuant to 42 U.S.C. 2182 and 42 U.S.C. 5908, DOE takes title 
to all inventions conceived or first actually reduced to practice in 
the course of or under contracts with large, for-profit companies, 
foreign organizations, and others not beneficiaries of Pub. L. 96-517. 
Regulations dealing with Department's authority to waive its title to 
subject inventions, including the relevant statutory objectives, exist 
at 41 CFR 9-9.109. Pursuant to that section, DOE may waive the 
Government's patent rights in appropriate situations at the time of 
contracting to encourage industrial participation, foster commercial 
utilization and competition, and make the benefits of DOE activities 
widely available to the public. In [[Page 11816]] addition to 
considering the waiver of patent rights at the time of contracting, DOE 
will also consider the incentive of a waiver of patent rights upon the 
reporting of an identified invention when requested by such entities or 
by the employee-inventor with the permission of the contractor. These 
requests can be made whether or not a waiver request was made at the 
time of contracting. Waivers for identified inventions will be granted 
where it is determined that the patent waiver will be a meaningful 
incentive to achieving the development and ultimate commercial 
utilization of inventions. Where DOE grants a waiver of the 
Government's patent rights, either at the time of contracting or after 
an invention is made, certain minimum rights and obligations will be 
required by DOE to protect the public interest.
    (c) Another major DOE mission is to manage the nation's nuclear 
weapons and other classified programs, where research and development 
procurements are directed toward processes and equipment not available 
to the public. To accomplish DOE programs for bringing private industry 
into these and other special programs to the maximum extent permitted 
by national security and policy considerations, it is desirable that 
the technology developed in these programs be made available on a 
selected basis for use in the particular fields of interest and under 
controlled conditions by properly cleared industrial and scientific 
research institutions. To ensure such availability and control, the 
grant of waivers in these programs may necessarily be more limited, 
either by the imposition of field of use restrictions or national 
security measures, than in other DOE programs.
    4. Section 927.302 is added to read as follows:


927.302  Policy.

    (a) Except for contracts with organizations that are beneficiaries 
of Public Law 96-517, the United States, as represented by DOE, shall 
normally acquire title in and to any invention or discovery conceived 
or first actually reduced to practice in the course of or under the 
contract, allowing the contractor to retain a nonexclusive, revocable, 
paid-up license in the invention and the right to request permission to 
file an application for a patent and retain title to any ensuing patent 
in any foreign country in which DOE does not elect to secure patent 
rights. DOE may approve the request if it determines that such approval 
would be in the national interest. The contractor's nonexclusive 
license may be revoked or modified by DOE only to the extent necessary 
to achieve expeditious practical application of the invention pursuant 
to any application for and the grant of an exclusive license in the 
invention to another party.
    (b) In contracts having as a purpose the conduct of research, 
development, or demonstration work and in certain other contracts, DOE 
may need to require those contractors that are not the beneficiaries of 
Public Law 96-517 to license background patents to ensure reasonable 
public availability and accessibility necessary to practice the subject 
of the contract in the fields of technology specifically contemplated 
in the contract effort. That need may arise where the contractor is not 
attempting to take the technology resulting from the contract to the 
commercial marketplace, or is not meeting market demands. The need for 
background patent rights and the particular rights that should be 
obtained for either the Government or the public will depend upon the 
type, purpose, and scope of the contract effort, impact on the DOE 
program, and the cost to the Government of obtaining such rights.
    (c) Provisions to deal specifically with DOE background patent 
rights are contained in paragraph (k) of the clause at 952.227-13. That 
paragraph may be modified with the concurrence of Patent Counsel in 
order to reflect the equities of the parties in particular contracting 
situations. Paragraph (k) should normally be deleted for contracts with 
an estimated cost and fee or price of $250,000 or less and may not be 
appropriate for certain types of study contracts; for planning 
contracts; for contracts with educational institutions; for contracts 
for specialized equipment for in-house Government use, not involving 
use by the public; and for contracts the work products of which will 
not be the subject of future procurements by the Government or its 
contractors.
    (d) The Assistant General Counsel for Technology Transfer and 
Intellectual Property shall:
    (1) Make the determination that whether reported inventions are 
subject inventions under the patent rights clause of the contract;
    (2) Determine whether and where patent protection will be obtained 
on inventions;
    (3) Represent DOE before domestic and foreign patent offices;
    (4) Accept assignments and instruments confirmatory of the 
Government's rights to inventions; and
    (5) Represent DOE in patent, technical data, and copyright matters 
not specifically reserved to the Head of the Agency or designee.
    5. Section 927.303 is added to read as follows:


927.303  Contract clauses.

    (a) In solicitations and contracts for experimental, research, 
developmental, or demonstration work (but see (FAR) 48 CFR 27.304-3 
regarding contracts for construction work or architect-engineer 
services), the contracting officer shall include the clause:
    (1) At 952.227-13, Patent Rights Acquisition by the Government, in 
all such contracts other than those described in paragraphs (a)(2) and 
(a)(3) of this section;
    (2) At 952.227-11, Patent Rights by the Contractor (Short Form), in 
contracts in which the contractor is a domestic small business or 
nonprofit organization as defined at (FAR) 48 CFR 27.301, except where 
the work of the contract is subject to an Exceptional Circumstances 
Determination by DOE; and
    (3) At 970.5204-71 or 970.5204-72, as discussed in 970.27, Patent, 
Data, and Copyrights, in contracts for the management and operation of 
DOE laboratories and production facilities.
    (b) DOE shall not use the clause at (FAR) 48 CFR 52.227-12 except 
in situations where patent counsel grants a request for advance waiver 
and supplies the contracting officer with that clause with appropriate 
modifications. Otherwise, in instances in which DOE grants an advance 
waiver or waives its rights in an identified invention, contracting 
officers shall consult with patent counsel for the appropriate clause.
    6. Section 927.304 is added to read as follows:


927.304  Procedures.

    Where the contract contains the clause at 952.227-11 and the 
contractor does not elect to retain title to a subject invention, DOE 
may consider and, after consultation with the contractor, grant 
requests for retention of rights by the inventor subject to the 
provisions of 35 U.S.C. 200 et seq. This statement is in lieu of (FAR) 
48 CFR 27.304-1(c).

PART 952--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    7. The authority citation for part 952 continues to read as 
follows:

    Authority: 42 U.S.C. 7254; 40 U.S.C. 486(c).

    8. Subsection 952.227-9 is added to read as follows: 
[[Page 11817]] 


952.227-9  Refund of Royalties.

    As prescribed in 927.206-2, insert the following clause:

Refund of Royalties (MAR 1995)

    (a) The contract price includes certain amounts for royalties 
payable by the Contractor or subcontractors or both, which amounts 
have been reported to the Contracting Officer.
    (b) The term ``royalties'' as used in this clause refers to any 
costs or charges in the nature of royalties, license fees, patent or 
license amortization costs, or the like, for the use of or for 
rights in patents and patent applications in connection with 
performing this contract or any subcontract here-under. The term 
also includes any costs or charges associated with the access to, 
use of, or other right pertaining to data that is represented to be 
proprietary and is related to the performance of this contract or 
the copying of such data or data that is copyrighted.
    (c) The Contractor shall furnish to the Contracting Officer, 
before final payment under this contract, a statement of royalties 
paid or required to be paid in connection with performing this 
contract and subcontracts hereunder together with the reasons.
    (d) The Contractor will be compensated for royalties reported 
under paragraph (c) of this clause, only to the extent that such 
royalties were included in the contract price and are determined by 
the Contracting Officer to be properly chargeable to the Government 
and allocable to the contract. To the extent that any royalties that 
are included in the contract price are not, in fact, paid by the 
Contractor or are determined by the Contracting Officer not to be 
properly chargeable to the government and allocable to the contract, 
the contract price shall be reduced. Repayment or credit to the 
Government shall be made as the Contracting Officer directs. The 
approval by DOE of any individual payments or royalties shall not 
prevent the Government from contesting at any time the 
enforceability, validity, scope of, or title to, any patent or the 
proprietary nature of data pursuant to which a royalty or other 
payment is to be or has been made.
    (e) If, at any time within 3 years after final payment under 
this contract, the Contractor for any reason is relieved in whole or 
in part from the payment of the royalties included in the final 
contract price as adjusted pursuant to paragraph (d) of this clause, 
the Contractor shall promptly notify the Contracting Officer of that 
fact and shall reimburse the Government in a corresponding amount.
    (f) The substance of this clause, including this paragraph (f), 
shall be included in any subcontract in which the amount of 
royalties reported during negotiation of the subcontract exceeds 
$250.

(End of clause)

    9. Subsection 952.227-11 is added to read as follows:


952.227-11  Patent rights--retention by the contractor (short form).

    As prescribed in 927.303(a), insert the following clause:

PATENT RIGHTS--RETENTION BY THE CONTRACTOR (SHORT FORM) (MAR 1995)

    (a) Definitions.
    (1) Invention means any invention or discovery which is or may 
be patentable or otherwise protectable under title 35 of the United 
States Code, or any novel variety of plant which is or may be 
protected under the Plant Variety Protection Act (7 U.S.C. 2321, et 
seq.).
    (2) Made when used in relation to any invention means the 
conception of first actual reduction to practice of such invention.
    (3) Nonprofit organization means a university or other 
institution of higher education or an organization of the type 
described in section 501(c)(3) of the Internal Revenue Code of 1954 
(26 U.S.C. 501(c)) and exempt from taxation under section 501(a) of 
the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit 
scientific or educational organization qualified under a state 
nonprofit organization statute.
    (4) Practical application means to manufacture, in the case of a 
composition or product; to practice, in the case of a process or 
method; or to operate, in the case of a machine or system; and, in 
each case, under such conditions as to establish that the invention 
is being utilized and that its benefits are, to the extent permitted 
by law or Government regulations, available to the public on 
reasonable terms.
    (5) Small business firm means a small business concern as 
defined at section 2 of Public Law 85-536 (15 U.S.C. 632) and 
implementing regulations of the Administrator of the Small Business 
Administration. For the purpose of this clause, the size standards 
for small business concerns involved in Government procurement and 
subcontracting at 13 CFR 121.3-8 and 13 CFR 121.3-12, respectively, 
will be used.
    (6) Subject invention means any invention of the contractor 
conceived or first actually reduced to practice in the performance 
of work under this contract, provided that in the case of a variety 
of plant, the date of determination (as defined in section 41(d) of 
the Plant Variety Protection Act, 7 U.S.C. 2401(d)) must also occur 
during the period of contract performance.
    (7) Agency licensing regulations and agency regulations 
concerning the licensing of Government-owned inventions mean the 
Department of Energy patent licensing regulations at 10 CFR part 
781.
    (b) Allocation of principal rights. The Contractor may retain 
the entire right, title, and interest throughout the world to each 
subject invention subject to the provisions of this clause and 35 
U.S.C. 203. With respect to any subject invention in which the 
Contractor retains title, the Federal Government shall have a 
nonexclusive, nontransferable, irrevocable, paid-up license to 
practice or have practiced for or on behalf of the United States the 
subject invention throughout the world.
    (c) Invention disclosure, election of title, and filing of 
patent application by Contractor. (1) The Contractor will disclose 
each subject invention to the Department of Energy (DOE) within 2 
months after the inventor discloses it in writing to Contractor 
personnel responsible for patent matters. The disclosure to DOE 
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 DOE, the Contractor will promptly 
notify that agency of the acceptance of any manuscript describing 
the invention for publication or of any on sale or public use 
planned by the Contractor.
    (2) The Contractor will elect in writing whether or not to 
retain title to any such invention by notifying DOE within 2 years 
of disclosure to DOE. However, in any case where publication, on 
sale or public use has initiated the l-year statutory period wherein 
valid patent protection can still be obtained in the United States, 
the period for election of title may be shortened by DOE to a date 
that is no more than 60 days prior to the end of the statutory 
period.
    (3) The Contractor will file its initial patent application on a 
subject invention to which it elects to retain title within 1 year 
after election of title or, if earlier, prior to the end of any 
statutory period wherein valid patent protection can be obtained in 
the United States after a publication, on sale, or public use. The 
Contractor will file patent applications in additional countries or 
international patent offices within either 10 months of the 
corresponding initial patent application or 6 months from the date 
permission is granted by the Commissioner of Patents and Trademarks 
to file foreign patent applications where such filing has been 
prohibited by a Secrecy Order.
    (4) Requests for extension of the time for disclosure, election, 
and filing under subparagraphs (c)(l), (2), and (3) of this clause 
may, at the discretion of the agency, be granted.
    (d) Conditions when the Government may obtain title. The 
Contractor will convey to the Federal agency, upon written request, 
title to any subject invention--
    (1) If the Contractor fails to disclose or elect title to the 
subject invention within the times specified in paragraph (c) of 
this clause, or elects not to retain title; provided, that DOE may 
only request title within 60 days after learning of the failure of 
the Contractor to disclose or elect within the specified times.
    (2) In those countries in which the Contractor fails to file 
patent applications within the times specified in 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. [[Page 11818]] 
    (3) In any country in which the Contractor decides not to 
continue the prosecution of any application for, to pay the 
maintenance fees on, or defend in reexamination or opposition 
proceeding on, a patent on a subject invention.
    (e) Minimum rights to Contractor and protection of the 
Contractor right to file. (1) The Contractor will retain a 
nonexclusive royalty-free license throughout the world in each 
subject invention to which the Government obtains title, except if 
the Contractor fails to disclose the invention within the times 
specified in paragraph (c) of this clause. The Contractor's license 
extends to its domestic subsidiary and affiliates, if any, within 
the corporate structure of which the Contractor is a party and 
includes the right to grant sublicenses of the same scope to the 
extent the Contractor was legally obligated to do so at the time the 
contract was awarded. The license is transferable only with the 
approval of the Federal agency, except when transferred to the 
successor of that part of the Contractor's business to which the 
invention pertains.
    (2) The Contractor's domestic license may be revoked or modified 
by DOE to the extent necessary to achieve expeditious practical 
application of subject invention pursuant to an application for an 
exclusive license submitted in accordance with applicable provisions 
at 37 CFR part 404 and agency licensing regulations. This license 
will not be revoked in that field of use or the geographical areas 
in which the Contractor has achieved practical application and 
continues to make the benefits of the invention reasonably 
accessible to the public. The license in any foreign country may be 
revoked or modified at the discretion of DOE to the extent the 
Contractor, its licensees, or the domestic subsidiaries or 
affiliates have failed to achieve practical application in that 
foreign country.
    (3) Before revocation or modification of the license, DOE will 
furnish the Contractor a written notice of its intention to revoke 
or modify the license, and the Contractor will be allowed 30 days 
(or such other time as may be authorized by DOE for good cause shown 
by the Contractor) after the notice to show cause why the license 
should not be revoked or modified. The Contractor has the right to 
appeal, in accordance with applicable regulations in 37 CFR part 404 
and agency regulations concerning the licensing of Government owned 
inventions, any decision concerning the revocation or modification 
of the license.
    (f) Contractor action to protect the Government's interest. (1) 
The Contractor agrees to execute or to have executed and promptly 
deliver to DOE all instruments necessary to (i) establish or confirm 
the rights the Government has throughout the world in those subject 
inventions to which the Contractor elects to retain title, and (ii) 
convey title to DOE when requested under paragraph (d) of this 
clause and to enable the government to obtain patent protection 
throughout the world in that subject invention.
    (2) The Contractor agrees to require, by written agreement, its 
employees, other than clerical and nontechnical employees, to 
disclose promptly in writing to personnel identified as responsible 
for the administration of patent matters and in a format suggested 
by the Contractor each subject invention made under contract in 
order that the Contractor can comply with the disclosure provisions 
of paragraph (c) of this clause, and to execute all papers necessary 
to file patent applications on subject inventions and to establish 
the Government's rights in the subject inventions. This disclosure 
format should require, as a minimum, the information required by 
subparagraph (c)(1) of this clause. The Contractor shall instruct 
such employees, through employee agreements or other suitable 
educational programs, on the importance of reporting inventions in 
sufficient time to permit the filing of patent applications prior to 
U.S. or foreign statutory bars.
    (3) The Contractor will notify DOE of any decision not to 
continue the prosecution of a patent application, pay maintenance 
fees, or defend in a reexamination or opposition proceeding on a 
patent, in any country, not less than 30 days before the expiration 
of the response period required by the relevant patent office.
    (4) The Contractor agrees to include, within the specification 
of any United States patent application and any patent issuing 
thereon covering a subject invention, the following statement, 
``This invention was made with Government support under (identify 
the contract) awarded by the United States Department of Energy. The 
Government has certain rights in the invention.''
    (g) Subcontracts. (1) The Contractor will include this clause, 
suitably modified to identify the parties, in all subcontracts, 
regardless of tier, for experimental, developmental, or research 
work to be performed by a small business firm or domestic nonprofit 
organization. The subcontractor will retain all rights provided for 
the Contractor in this clause, and the Contractor will not, as part 
of the consideration for awarding the subcontract, obtain rights in 
the subcontractor's subject inventions.
    (2) The contractor shall include in all other subcontracts, 
regardless of tier, for experimental, developmental, demonstration, 
or research work the patent rights clause at 952.227-13.
    (3) In the case of subcontracts, at any tier, DOE, 
subcontractor, and the Contractor agree that the mutual obligations 
of the parties created by this clause constitute a contract between 
the subcontractor and DOE with respect to the matters covered by the 
clause; provided, however, that nothing in this paragraph is 
intended to confer any jurisdiction under the Contract Disputes Act 
in connection with proceedings under paragraph (j) of this clause.
    (h) Reporting on utilization of subject inventions. The 
Contractor agrees to submit, on request, periodic reports no more 
frequently than annually on the utilization of a subject invention 
or on efforts at obtaining such utilization that are being made by 
the Contractor or its licensees or assignees. Such reports shall 
include information regarding the status of development, date of 
first commercial sale or use, gross royalties received, by the 
Contractor, and such other data and information as DOE may 
reasonably specify. The Contractor also agrees to provide additional 
reports as may be requested by DOE in connection with any march-in 
proceeding undertaken by that agency in accordance with paragraph 
(j) of this clause. As required by 35 U.S.C. 202(c)(5), DOE agrees 
it will not disclose such information to persons outside the 
Government without permission of the Contractor.
    (i) Preference for United States industry. Notwithstanding any 
other provision of this clause, the Contractor agrees that neither 
it nor any assignee will grant to any person the exclusive right to 
use or sell any subject invention in the United States unless such 
person agrees that any product embodying the subject invention or 
produced through the use of the subject invention will be 
manufactured substantially in the United States. However, in 
individual cases, the requirement for such an agreement may be 
waived by DOE upon a showing by the Contractor or its assignee that 
reasonable but unsuccessful efforts have been made to grant licenses 
on similar terms to potential licensees that would be likely to 
manufacture substantially in the United States or that under the 
circumstances domestic manufacture is not commercially feasible.
    (j) March-in rights. The Contractor agrees that, with respect to 
any subject invention in which it has acquired title, DOE has the 
right in accordance with the procedures in 37 CFR 401.6 and any 
supplemental regulations of the agency to require the Contractor, an 
assignee or exclusive licensee of a subject invention to grant a 
nonexclusive, partially exclusive, or exclusive license in any field 
of use to a responsible applicant or applicants, upon terms that are 
reasonable under the circumstances, and, if the Contractor, 
assignee, or exclusive licensee refuses such a request, DOE has the 
right to grant such a license itself if DOE determines that--
    (1) Such action is necessary because the Contractor or assignee 
has not taken, or is not expected to take within a reasonable time, 
effective steps to achieve practical application of the subject 
invention in such field of use;
    (2) Such action is necessary to alleviate health or safety needs 
which are not reasonably satisfied by the Contractor, assignee, or 
their licensees;
    (3) Such action is necessary to meet requirements for public use 
specified by Federal regulations and such requirements are not 
reasonably satisfied by the Contractor, assignee, or licensees; or
    (4) Such action is necessary because the agreement required by 
paragraph (i) of this clause has not been obtained or waived or 
because a licensee of the exclusive right to use or sell any subject 
invention in the United States is in breach of such agreement.
    (k) Special provisions for contracts with nonprofit 
organizations. If the Contractor is a nonprofit organization, it 
agrees that--
    (1) Rights to a subject invention in the United States may not 
be assigned without the approval of the Federal agency, except where 
such assignment is made to an [[Page 11819]] organization which has 
as one of its primary functions the management of inventions; 
provided, that such assignee will be subject to the same provisions 
as the Contractor;
    (2) The Contractor will share royalties collected on a subject 
invention with the inventor, including Federal employee co-inventors 
(when DOE deems it appropriate) when the subject invention is 
assigned in accordance with 35 U.S.C. 202(e) and 37 CFR 401.10;
    (3) The balance of any royalties or income earned by the 
Contractor with respect to subject inventions, after payment of 
expenses (including payments to inventors) incidental to the 
administration of subject inventions will be utilized for the 
support of scientific research or education; and
    (4) It will make efforts that are reasonable under the 
circumstances to attract licensees of subject inventions that are 
small business firms, and that it will give a preference to a small 
business firm when licensing a subject invention if the Contractor 
determines that the small business firm has a plan or proposal for 
marketing the invention which, if executed, is equally as likely to 
bring the invention to practical application as any plans or 
proposals from applicants that are not small business firms; 
provided, that the Contractor is also satisfied that the small 
business firm has the capability and resources to carry out its plan 
or proposal. The decision whether to give a preference in any 
specific case will be at the discretion of the contractor. However, 
the Contractor agrees that the Secretary of Commerce may review the 
Contractor's licensing program and decisions regarding small 
business applicants, and the Contractor will negotiate changes to 
its licensing policies, procedures, or practices with the Secretary 
of Commerce when that Secretary's review discloses that the 
Contractor could take reasonable steps to more effectively implement 
the requirements of this subparagraph (k)(4).
    (l) Communications.
    (1) The contractor shall direct any notification, disclosure, or 
request to DOE provided for in this clause to the DOE patent counsel 
assisting the DOE contracting activity, with a copy of the 
communication to the Contracting Officer.
    (2) Each exercise of discretion or decision provided for in this 
clause, except subparagraph (k)(4), is reserved for the DOE Patent 
Counsel and is not a claim or dispute and is not subject to the 
Contract Disputes Act of 1978.
    (3) Upon request of the DOE Patent Counsel or the contracting 
officer, the contractor shall provide any or all of the following:
    (i) A copy of the patent application, filing date, serial number 
and title, patent number, and issue date for any subject invention 
in any country in which the contractor has applied for a patent;
    (ii) A report, not more often than annually, summarizing all 
subject inventions which were disclosed to DOE individually during 
the reporting period specified; or
    (iii) A report, prior to closeout of the contract, listing all 
subject inventions or stating that there were none.

(End of clause)

    10. Subsection 952.227-13 is added to read as follows:


952.227-13  Patent Rights--Acquisition by the Government.

    As prescribed at 927.303(c), insert the following clause:

PATENT RIGHTS--ACQUISITION BY THE GOVERNMENT (MAR 1995)

    (a) Definitions.
    Invention, as used in this clause, means any invention or 
discovery which is or may be patentable or otherwise protectable 
under title 35 of the United States Code or any novel variety of 
plant that is or may be protectable under the Plant Variety 
Protection Act (7 U.S.C. 2321, et seq.).
    Practical application, as used in this clause, means to 
manufacture, in the case of a composition or product; to practice, 
in the case of a process or method; or to operate, in the case of a 
machine or system; and, in each case, under such conditions as to 
establish that the invention is being utilized and that its benefits 
are, to the extent permitted by law or Government regulations, 
available to the public on reasonable terms.
    Subject invention, as used in this clause, means any invention 
of the Contractor conceived or first actually reduced to practice in 
the course of or under this contract.
    Patent Counsel, as used in this clause, means the Department of 
Energy Patent Counsel assisting the procuring activity.
    DOE patent waiver regulations, as used in this clause, means the 
Department of Energy patent waiver regulations in effect on the date 
of award of this contract.
    Agency licensing regulations and applicable agency licensing 
regulations, as used in this clause, mean the Department of Energy 
patent licensing regulations at 10 CFR part 781.
    (b) Allocations of principal rights.
    (1) Assignment to the Government. The Contractor agrees to 
assign to the Government the entire right, title, and interest 
throughout the world in and to each subject invention, except to the 
extent that rights are retained by the Contractor under subparagraph 
(b)(2) and paragraph (d) of this clause.
    (2) Greater rights determinations. (i) The Contractor, or an 
employee-inventor after consultation with the Contractor, may 
request greater rights than the nonexclusive license and the foreign 
patent rights provided in paragraph (d) of this clause on identified 
inventions in accordance with the DOE patent waiver regulations. A 
request for a determination of whether the Contractor or the 
employee-inventor is entitled to acquire such greater rights must be 
submitted to the Patent Counsel with a copy to the Contracting 
Officer at the time of the first disclosure of the invention 
pursuant to subparagraph (e)(2) of this clause, or not later than 8 
months thereafter, unless a longer period is authorized in writing 
by the Contracting Officer for good cause shown in writing by the 
Contractor. Each determination of greater rights under this contract 
shall be subject to paragraph (c) of this clause, unless otherwise 
provided in the greater rights determination, and to the 
reservations and conditions deemed to be appropriate by the 
Secretary of Energy or designee.
    (ii) Within two (2) months after the filing of a patent 
application, the Contractor shall provide the filing date, serial 
number and title, a copy of the patent application (including an 
English-language version if filed in a language other than English), 
and, promptly upon issuance of a patent, provide the patent number 
and issue date for any subject invention in any country for which 
the Contractor has been granted title or the right to file and 
prosecute on behalf of the United States by the Department of 
Energy.
    (iii) Not less than thirty (30) days before the expiration of 
the response period for any action required by the Patent and 
Trademark Office, notify the Patent Counsel of any decision not to 
continue prosecution of the application.
    (iv) Upon request, the Contractor shall furnish the Government 
an irrevocable power to inspect and make copies of the patent 
application file.
    (c) Minimum rights acquired by the Government.
    (1) With respect to each subject invention to which the 
Department of Energy grants the Contractor principal or exclusive 
rights, the Contractor agrees as follows:
    (i) The Contractor hereby grants to the Government a 
nonexclusive, nontransferable, irrevocable, paid-up license to 
practice or have practiced each subject invention throughout the 
world by or on behalf of the Government of the United States 
(including any Government agency).
    (ii) The Contractor agrees that with respect to any subject 
invention in which DOE has granted it title, DOE has the right in 
accordance with the procedures in the DOE patent waiver regulations 
to require the Contractor, an assignee, or exclusive licensee of a 
subject invention to grant a nonexclusive, partially exclusive, or 
exclusive license in any field of use to a responsible applicant or 
applicants, upon terms that are reasonable under the circumstances, 
and if the Contractor, assignee, or exclusive licensee refuses such 
a request, DOE has the right to grant such a license itself if it 
determines that--
    (A) Such action is necessary because the Contractor or assignee 
has not taken, or is not expected to take within a reasonable time, 
effective steps to achieve practical application of the subject 
invention in such field of use;
    (B) Such action is necessary to alleviate health or safety needs 
which are not reasonably satisfied by the Contractor, assignee, or 
their licensees;
    (C) Such action is necessary to meet requirements for public use 
specified by Federal regulations and such requirements are not 
reasonably satisfied by the Contractor, assignee, or licensees; or
    (D) Such action is necessary because the agreement required by 
paragraph (i) of this clause 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 such agreement. 
[[Page 11820]] 
    (iii) The Contractor agrees to submit on request periodic 
reports no more frequently than annually on the utilization of a 
subject invention or on efforts at obtaining such utilization of a 
subject invention or on efforts at obtaining such utilization that 
are being made by the Contractor or its licensees or assignees. Such 
reports shall include information regarding the status of 
development, date of first commercial sale or use, gross royalties 
received by the Contractor, and such other data and information as 
DOE may reasonably specify. The Contractor also agrees to provide 
additional reports as may be requested by DOE in connection with any 
march-in proceedings undertaken by that agency in accordance with 
subparagraph (c)(1)(ii) of this clause. To the extent data or 
information supplied under this section is considered by the 
Contractor, its licensee, or assignee to be privileged and 
confidential and is so marked, the Department of Energy agrees that, 
to the extent permitted by law, it will not disclose such 
information to persons outside the Government.
    (iv) The Contractor agrees, when licensing a subject invention, 
to arrange to avoid royalty charges on acquisitions involving 
Government funds, including funds derived through a Military 
Assistance Program of the Government or otherwise derived through 
the Government, to refund any amounts received as royalty charges on 
a subject invention in acquisitions for, or on behalf of, the 
Government, and to provide for such refund in any instrument 
transferring rights in the invention to any party.
    (v) The Contractor agrees to provide for the Government's paid-
up license pursuant to subparagraph (c)(1)(i) of this clause in any 
instrument transferring rights in a subject invention and to provide 
for the granting of licenses as required by subparagraph (c)(1)(ii) 
of this clause, and for the reporting of utilization information as 
required by subparagraph (c)(1)(iii) of this clause, whenever the 
instrument transfers principal or exclusive rights in a subject 
invention.
    (2) Nothing contained in this paragraph (c) shall be deemed to 
grant to the Government any rights with respect to any invention 
other than a subject invention.
    (d) Minimum rights to the Contractor. (1) The Contractor is 
hereby granted a revocable, nonexclusive, royalty-free license in 
each patent application filed in any country on a subject invention 
and any resulting patent in which the Government obtains title, 
unless the Contractor fails to disclose the subject invention within 
the times specified in subparagraph (e)(2) of this clause. The 
Contractor's license extends to its domestic subsidiaries and 
affiliates, if any, within the corporate structure of which the 
Contractor is a part and includes the right to grant sublicenses of 
the same scope to the extent the Contractor was legally obligated to 
do so at the time the contract was awarded. The license is 
transferable only with the approval of DOE except when transferred 
to the successor of that part of the Contractor's business to which 
the invention pertains.
    (2) The Contractor's domestic license may be revoked or modified 
by DOE to the extent necessary to achieve expeditious practical 
application of the subject invention pursuant to an application for 
an exclusive license submitted in accordance with applicable 
provisions in 37 CFR part 404 and agency licensing regulations. This 
license will not be revoked in that field of use or the geographical 
areas in which the Contractor has achieved practical applications 
and continues to make the benefits of the invention reasonably 
accessible to the public. The license in any foreign country may be 
revoked or modified at the discretion of DOE to the extent the 
Contractor, its licensees, or its domestic subsidiaries or 
affiliates have failed to achieve practical application in that 
foreign country.
    (3) Before revocation or modification of the license, DOE will 
furnish the Contractor a written notice of its intention to revoke 
or modify the license, and the Contractor will be allowed 30 days 
(or such other time as may be authorized by DOE for good cause shown 
by the Contractor) after the notice to show cause why the license 
should not be revoked or modified. The Contractor has the right to 
appeal, in accordance with applicable agency licensing regulations 
and 37 CFR part 404 concerning the licensing of Government-owned 
inventions, any decision concerning the revocation or modification 
of its license.
    (4) The Contractor may request the right to acquire patent 
rights to a subject invention in any foreign country where the 
Government has elected not to secure such rights, subject to the 
conditions in subparagraphs (d)(4)(i) through (d)(4)(vii) of this 
clause. Such request must be made in writing to the Patent Counsel 
as part of the disclosure required by subparagraph (e)(2) of this 
clause, with a copy to the DOE Contracting Officer. DOE approval, if 
given, will be based on a determination that this would best serve 
the national interest.
    (i) The recipient of such rights, when specifically requested by 
DOE, and three years after issuance of a foreign patent disclosing 
the subject invention, shall furnish DOE a report stating:
    (A) The commercial use that is being made, or is intended to be 
made, of said invention, and
    (B) The steps taken to bring the invention to the point of 
practical application or to make the invention available for 
licensing.
    (ii) The Government shall retain at least an irrevocable, 
nonexclusive, paid-up license to make, use, and sell the invention 
throughout the world by or on behalf of the Government (including 
any Government agency) and States and domestic municipal 
governments, unless the Secretary of Energy or designee determines 
that it would not be in the public interest to acquire the license 
for the States and domestic municipal governments.
    (iii) If noted elsewhere in this contract as a condition of the 
grant of an advance waiver of the Government's title to inventions 
under this contract, or, if no advance waiver was granted but a 
waiver of the Government's title to an identified invention is 
granted pursuant to subparagraph (b)(2) of this clause upon a 
determination by the Secretary of Energy that it is in the 
Government's best interest, this license shall include the right of 
the Government to sublicense foreign governments pursuant to any 
existing or future treaty or agreement with such foreign 
governments.
    (iv) Subject to the rights granted in subparagraphs (d)(1), (2), 
and (3) of this clause, the Secretary of Energy or designee shall 
have the right to terminate the foreign patent rights granted in 
this subparagraph (d)(4) in whole or in part unless the recipient of 
such rights demonstrates to the satisfaction of the Secretary of 
Energy or designee that effective steps necessary to accomplish 
substantial utilization of the invention have been taken or within a 
reasonable time will be taken.
    (v) Subject to the rights granted in subparagraphs (d)(1), (2), 
and (3) of this clause, the Secretary of Energy or designee shall 
have the right, commencing four years after foreign patent rights 
are accorded under this subparagraph (d)(4), to require the granting 
of a nonexclusive or partially exclusive license to a responsible 
applicant or applicants, upon terms reasonable under the 
circumstances, and in appropriate circumstances to terminate said 
foreign patent rights in whole or in part, following a hearing upon 
notice thereof to the public, upon a petition by an interested 
person justifying such hearing:
    (A) If the Secretary of Energy or designee determines, upon 
review of such material as he deems relevant, and after the 
recipient of such rights or other interested person has had the 
opportunity to provide such relevant and material information as the 
Secretary or designee may require, that such foreign patent rights 
have tended substantially to lessen competition or to result in 
undue market concentration in any section of the United States in 
any line of commerce to which the technology relates; or
    (B) Unless the recipient of such rights demonstrates to the 
satisfaction of the Secretary of Energy or designee at such hearing 
that the recipient has taken effective steps, or within a reasonable 
time thereafter is expected to take such steps, necessary to 
accomplish substantial utilization of the invention.
    (vi) If the contractor is to file a foreign patent application 
on a subject invention, the Government agrees, upon written request, 
to use its best efforts to withhold publication of such invention 
disclosures for such period of time as specified by Patent Counsel, 
but in no event shall the Government or its employees be liable for 
any publication thereof.
    (vii) Subject to the license specified in subparagraphs (d) (1), 
(2), and (3) of this clause, the contractor or inventor agrees to 
convey to the Government, upon request, the entire right, title, and 
interest in any foreign country in which the contractor or inventor 
fails to have a patent application filed in a timely manner or 
decides not to continue prosecution or to pay any maintenance fees 
covering the invention. To avoid forfeiture of the patent 
application or patent, the contractor or inventor shall, not less 
than 60 days before the expiration period for any action required by 
any patent office, notify the Patent Counsel of such failure or 
decision, and deliver to the Patent Counsel, the executed 
instruments necessary for the conveyance specified in this 
paragraph. [[Page 11821]] 
    (e) Invention identification, disclosures, and reports. (1) The 
Contractor shall establish and maintain active and effective 
procedures to assure that subject inventions are promptly identified 
and disclosed to Contractor personnel responsible for patent matters 
within 6 months of conception and/or first actual reduction to 
practice, whichever occurs first in the performance of work under 
this contract. These procedures shall include the maintenance of 
laboratory notebooks or equivalent records and other records as are 
reasonably necessary to document the conception and/or the first 
actual reduction to practice of subject inventions, and records that 
show that the procedures for identifying and disclosing the 
inventions are followed. Upon request, the Contractor shall furnish 
the Contracting Officer a description of such procedures for 
evaluation and for determination as to their effectiveness.
    (2) The Contractor shall disclose each subject invention to the 
DOE Patent Counsel with a copy to the Contracting Officer within 2 
months after the inventor discloses it in writing to Contractor 
personnel responsible for patent matters or, if earlier, within 6 
months after the Contractor becomes aware that a subject invention 
has been made, but in any event before any on sale, public use, or 
publication of such invention known to the Contractor. The 
disclosure to DOE 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 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 DOE, the Contractor 
shall promptly notify Patent Counsel of the acceptance of any 
manuscript describing the invention for publication or of any on 
sale or public use planned by the Contractor. The report should also 
include any request for a greater rights determination in accordance 
with subparagraph (b)(2) of this clause. When an invention is 
disclosed to DOE under this paragraph, it shall be deemed to have 
been made in the manner specified in Sections (a)(1) and (a)(2) of 
42 U.S.C. 5908, unless the Contractor contends in writing at the 
time the invention is disclosed that is was not so made.
    (3) The Contractor shall furnish the Contracting Officer the 
following:
    (i) Interim reports every 12 months (or such longer period as 
may be specified by the Contracting Officer) from the date of the 
contract, listing subject inventions during that period, and 
certifying that all subject inventions have been disclosed (or that 
there are not such inventions) and that the procedures required by 
subparagraph (e)(1) of this clause have been followed.
    (ii) A final report, within 3 months after completion of the 
contracted work listing all subject inventions or certifying that 
there were no such inventions, and listing all subcontracts at any 
tier containing a patent rights clause or certifying that there were 
no such subcontracts.
    (4) The Contractor agrees to require, by written agreement, its 
employees, other than clerical and nontechnical employees, to 
disclose promptly in writing to personnel identified as responsible 
for the administration of patent matters and in a format suggested 
by the Contractor each subject invention made under contract in 
order that the Contractor can comply with the disclosure provisions 
of paragraph (c) of this clause, and to execute all papers necessary 
to file patent applications on subject inventions and to establish 
the Government's rights in the subject inventions. This disclosure 
format should require, as a minimum, the information required by 
subparagraph (e)(2) of this clause.
    (5) The Contractor agrees, subject to FAR 27.302(j), that the 
Government may duplicate and disclose subject invention disclosures 
and all other reports and papers furnished or required to be 
furnished pursuant to this clause.
    (f) Examination of records relating to inventions.
    (1) The Contracting Officer or any authorized representative 
shall, until 3 years after final payment under this contract, have 
the right to examine any books (including laboratory notebooks), 
records, and documents of the Contractor relating to the conception 
or first actual reduction to practice of inventions in the same 
field of technology as the work under this contract to determine 
whether--
    (i) Any such inventions are subject inventions;
    (ii) The Contractor has established and maintains the procedures 
required by subparagraphs (e) (1) and (4) of this clause;
    (iii) The Contractor and its inventors have complied with the 
procedures.
    (2) If the Contracting Officer learns of an unreported 
Contractor invention which the Contracting Officer believes may be a 
subject invention, the Contractor may be required to disclose the 
invention to DOE for a determination of ownership rights.
    (3) Any examination of records under this paragraph will be 
subject to appropriate conditions to protect the confidentiality of 
the information involved.
    (g) Withholding of payment (This paragraph does not apply to 
subcontracts). (1) Any time before final payment under this 
contract, the Contracting Officer may, in the Government's interest, 
withhold payment until a reserve not exceeding $50,000 or 5 percent 
of the amount of this contract, whichever is less, shall have been 
set aside if, in the Contracting Officer's opinion, the Contractor 
fails to--
    (i) Convey to the Government, using a DOE-approved form, the 
title and/or rights of the Government in each subject invention as 
required by this clause.
    (ii) Establish, maintain, and follow effective procedures for 
identifying and disclosing subject inventions pursuant to 
subparagraph (e)(1) of this clause;
    (iii) Disclose any subject invention pursuant to subparagraph 
(e)(2) of this clause;
    (iv) Deliver acceptable interim reports pursuant to subparagraph 
(e)(3)(i) of this clause; or
    (v) Provide the information regarding subcontracts pursuant to 
subparagraph (h)(4) of this clause.
    (2) Such reserve or balance shall be withheld until the 
Contracting Officer has determined that the Contractor has rectified 
whatever deficiencies exist and has delivered all reports, 
disclosures, and other information required by this clause.
    (3) Final payment under this contract shall not be made before 
the Contractor delivers to the Contracting Officer all disclosures 
of subject inventions required by subparagraph (e)(2) of this 
clause, and acceptable final report pursuant to subparagraph 
(e)(3)(ii) of this clause, and the Patent Counsel has issued a 
patent clearance certification to the Contracting Officer.
    (4) The Contracting Officer may decrease or increase the sums 
withheld up to the maximum authorized above. No amount shall be 
withheld under this paragraph while the amount specified by this 
paragraph is being withheld under other provisions of the contract. 
The withholding of any amount or the subsequent payment thereof 
shall not be construed as a waiver of any Government rights.
    (h) Subcontracts.
    (1) The contractor shall include the clause at 48 CFR 952.227-11 
(suitably modified to identify the parties) in all subcontracts, 
regardless of tier, for experimental, developmental, demonstration, 
or research work to be performed by a small business firm or 
domestic nonprofit organization, except where the work of the 
subcontract is subject to an Exceptional Circumstances Determination 
by DOE. In all other subcontracts, regardless of tier, for 
experimental, developmental, demonstration, or research work, the 
contractor shall include this clause (suitably modified to identify 
the parties). The contractor shall not, as part of the consideration 
for awarding the subcontract, obtain rights in the subcontractor's 
subject inventions.
    (2) In the event of a refusal by a prospective subcontractor to 
accept such a clause the Contractor--
    (i) Shall promptly submit a written notice to the Contracting 
Officer setting forth the subcontractor's reasons for such refusal 
and other pertinent information that may expedite disposition of the 
matter; and
    (ii) Shall not proceed with such subcontract without the written 
authorization of the Contracting Officer.
    (3) In the case of subcontracts at any tier, DOE, the 
subcontractor, and Contractor agree that the mutual obligations of 
the parties created by this clause constitute a contract between the 
subcontractor and DOE with respect to those matters covered by this 
clause.
    (4) The Contractor shall promptly notify the Contracting Officer 
in writing upon the award of any subcontract at any tier containing 
a patent rights clause by identifying the subcontractor, the 
applicable [[Page 11822]] patent rights clause, the work to be 
performed under the subcontract, and the dates of award and 
estimated completion. Upon request of the Contracting Officer, the 
Contractor shall furnish a copy of such subcontract, and, no more 
frequently than annually, a listing of the subcontracts that have 
been awarded.
    (5) The contractor shall identify all subject inventions of the 
subcontractor of which it acquires knowledge in the performance of 
this contract and shall notify the Patent Counsel, with a copy to 
the contracting officer, promptly upon identification of the 
inventions.
    (i) Preference United States industry. Unless provided 
otherwise, no Contractor that receives title to any subject 
invention and no assignee of any such Contractor shall grant to any 
person the exclusive right to use or sell any subject invention in 
the United States unless such person agrees that any products 
embodying the subject invention will be manufactured substantially 
in the United States. However, in individual cases, the requirement 
may be waived by the Government 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.
    (j) Atomic energy.
    (1) No claim for pecuniary award of compensation under the 
provisions of the Atomic Energy Act of 1954, as amended, shall be 
asserted with respect to any invention or discovery made or 
conceived in the course of or under this contract.
    (2) Except as otherwise authorized in writing by the Contracting 
Officer, the Contractor will obtain patent agreements to effectuate 
the provisions of subparagraph (e)(1) of this clause from all 
persons who perform any part of the work under this contract, except 
nontechnical personnel, such as clerical employees and manual 
laborers.
    (k) Background Patents. (1) Background Patent means a domestic 
patent covering an invention or discovery which is not a subject 
invention and which is owned or controlled by the Contractor at any 
time through the completion of this contract:
    (i) Which the contractor, but not the Government, has the right 
to license to others without obligation to pay royalties thereon, 
and
    (ii) Infringement of which cannot reasonably be avoided upon the 
practice of any specific process, method, machine, manufacture, or 
composition of matter (including relatively minor modifications 
thereof) which is a subject of the research, development, or 
demonstration work performed under this contract.
    (2) The Contractor agrees to and does hereby grant to the 
Government a royalty-free, nonexclusive license under any background 
patent for purposes of practicing a subject of this contract by or 
for the Government in research, development, and demonstration work 
only.
    (3) The Contractor also agrees that upon written application by 
DOE, it will grant to responsible parties, for purposes of 
practicing a subject of this contract, nonexclusive licenses under 
any background patent on terms that are reasonable under the 
circumstances. If, however, the Contractor believes that exclusive 
rights are necessary to achieve expeditious commercial development 
or utilization, then a request may be made to DOE for DOE approval 
of such licensing by the Contractor.
    (4) Notwithstanding subparagraph (k)(3) of this clause, the 
contractor shall not be obligated to license any background patent 
if the Contractor demonstrates to the satisfaction of the Secretary 
of Energy or designee that:
    (i) A competitive alternative to the subject matter covered by 
said background patent is commercially available or readily 
introducible from one or more other sources; or
    (ii) The Contractor or its licensees are supplying the subject 
matter covered by said background patent in sufficient quantity and 
at reasonable prices to satisfy market needs, or have taken 
effective steps or within a reasonable time are expected to take 
effective steps to so supply the subject matter.
    (l) Publication. It is recognized that during the course of the 
work under this contract, the Contractor or its employees may from 
time to time desire to release or publish information regarding 
scientific or technical developments conceived or first actually 
reduced to practice in the course of or under this contract. In 
order that public disclosure of such information will not adversely 
affect the patent interests of DOE or the Contractor, patent 
approval for release of publication shall be secured from Patent 
Counsel prior to any such release or publication.
    (m) Forfeiture of rights in unreported subject inventions. (1) 
The Contractor shall forfeit and assign to the Government, at the 
request of the Secretary of Energy or designee, all rights in any 
subject invention which the Contractor fails to report to Patent 
Counsel within six months after the time the Contractor:
    (i) Files or causes to be filed a United States or foreign 
patent application thereon; or
    (ii) Submits the final report required by subparagraph 
(e)(2)(ii) of this clause, whichever is later.
    (2) However, the Contractor shall not forfeit rights in a 
subject invention if, within the time specified in subparagraph 
(m)(1) of this clause, the Contractor:
    (i) Prepares a written decision based upon a review of the 
record that the invention was neither conceived nor first actually 
reduced to practice in the course of or under the contract and 
delivers the decision to Patent Counsel, with a copy to the 
Contracting Officer; or
    (ii) Contending that the invention is not a subject invention, 
the Contractor nevertheless discloses the invention and all facts 
pertinent to this contention to the Patent Counsel, with a copy to 
the Contracting Officer; or
    (iii) Establishes that the failure to disclose did not result 
from the Contractor's fault or negligence.
    (3) Pending written assignment of the patent application and 
patents on a subject invention determined by the Secretary of Energy 
or designee to be forfeited (such determination to be a final 
decision under the Disputes clause of this contract), the Contractor 
shall be deemed to hold the invention and the patent applications 
and patents pertaining thereto in trust for the Government. The 
forfeiture provision of this paragraph (m) shall be in addition to 
and shall not supersede other rights and remedies which the 
Government may have with respect to subject inventions.

(End of clause)


952.227-71  [Removed and Reserved]

    11. Section 952.227-71 is removed and reserved.

PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS

    12. The authority citation for Part 970 continues to read as 
follows:

    Authority. Sec. 161 of the Atomic Energy Act of 1954 (42 U.S.C. 
2201), sec. 644 of the Department of Energy Organization Act, Pub. 
L. 95-91 (42 U.S.C. 7254), sec. 201 of the Federal Civilian Employee 
and Contractor Travel Expenses Act of 1985 (41 U.S.C. 420) and sec. 
1534 of the Department of Defense Authorization Act, 1986, Pub. L. 
99-145 (42 U.S.C. 7256a), as amended.

    13. Revise Section 970.2701 to read as follows:


970.2701  General.

    This subpart applies to negotiation of patent rights and rights in 
technical data provisions for the Department of Energy contracts for 
the management and operation of its research and development and 
production facilities.
    14. Revise 970.2702 to read as follows:


970.2702  Patent rights.

    (a) Whenever a contract has as a purpose, the design, construction, 
or operation of a Government-owned research, development, demonstration 
or production facility, it is necessary that the Government be accorded 
certain rights with respect to further use of the facility by or on 
behalf of the Government upon termination of the contract, including 
the right to make, use, transfer, or otherwise dispose of all articles, 
materials, products, or processes embodying inventions or discoveries 
used or embodied in the facility regardless of whether or not conceived 
or first actually reduced to practice under or in the course of such a 
contract. Thus, both versions of the patent rights clause for 
management and operating contracts contain a facilities license.
    (b) In the case of contractors operating and managing DOE research 
and development or production facilities, that are not the 
beneficiaries of Public [[Page 11823]] Law 96-517, the Department is 
statutorily obligated to take title to inventions conceived or first 
actually reduced to practice in the performance of the contracts. Here, 
as in all other circumstances in which the Department takes title to 
inventions by statute, the contractors may request a waiver at the time 
of contracting for a class of inventions or during contract performance 
for identified inventions. DOE includes the considerations at 42 U.S.C. 
5908 in its determination as to whether to approve the request.
    (c) While no contractor that manages and operates a DOE research 
and development or production facility is a small business, several 
have historically been nonprofit organizations. As such, they are the 
beneficiaries of the Bayh-Dole Act (35 U.S.C. 200 et seq., as amended) 
and, therefore, receive the right to retain title to inventions 
conceived or first actually reduced to practice in the performance of 
their contracts with the Department, except in areas of technology 
covered by Exceptional Circumstances Determinations made by DOE or of 
nuclear weapons and naval nuclear propulsion. In these latter two 
areas, the contractor may request that the Department waive its title 
and, therefore, subject to the exceptions identified below, may be 
granted title to inventions conceived or first actually reduced to 
practice in the performance of its contract with the Department.
    (d) DOE has exercised statutory authority granted under 35 U.S.C. 
202(a)(ii) and 202(a)(iv). In accordance with 35 U.S.C. 202(a)(ii), DOE 
has issued several Exceptional Circumstances Determinations pursuant to 
which DOE nonprofit management and operating contractors have no right 
to elect title to inventions conceived or first actually reduced to 
practice in the course of or under their contracts within covered areas 
of technology. However, those contractors may be given some lesser 
property right in an invention within limits set by DOE in a particular 
Exceptional Circumstances Determination so that the contractor can 
effectively assist with a mission of DOE, such as technology transfer. 
As new technologies evolve, DOE may issue additional Exceptional 
Circumstances Determinations, as appropriate.
    (e) In accordance with 35 U.S.C. 202(a)(iv), the Department of 
Energy has exempted its weapons related and naval nuclear propulsion 
programs from the broad Bayh-Dole right of its nonprofit management and 
operating contractors to elect title to inventions conceived or first 
actually reduced to practice in the course of or under their contracts. 
The effect of this exemption is that, if the contractors want to 
acquire title, they must request title to covered inventions. DOE may 
then grant the request subject to a case-by-case determination that the 
contractor has met all procedural requirements unilaterally set by DOE 
to insure that all national security concerns of DOE relating to the 
contractor's use of an invention in either of these two areas for 
commercialization have been met.
    15. Section 970.2703 is added to read as follows:


970.2703  Technology transfer.

    The National Competitiveness Technology Transfer Act of 1989 
(NCTTA) (Pub. L. 101-189) established technology transfer as a mission 
for Government-owned, contractor-operated laboratories, including 
weapons production facilities, and authorizes those laboratories to 
negotiate and award cooperative research and development agreements 
with public and private entities for purposes of conducting research 
and development and transferring technology to the private sector. In 
implementing the NCTTA, DOE has negotiated technology transfer clauses 
with the contractors managing and operating its laboratories. Those 
technology transfer clauses must be read in concert with the patent 
rights clause required by this subpart. Thus, each management and 
operating contractor holds title to subject inventions for the benefit 
of the laboratory or facility being managed and operated by that 
contractor.
    16. Section 970.2704 is added to read as follows:


970.2704  Patent clauses.

    (a) Contracting officers shall insert the clause at 970.5204-71 in 
all management and operating contracts with nonprofit organizations.
    (b) Contracting officers shall insert the clause at 970.5204-72 in 
all management and operating contracts with profit-making entities.
    17. Add section 970.2705, and section 970.2706, as follows:


970.2705  Rights in technical data--general.

    (a) A management and operating contractor's obligations for 
protection of information and data received from DOE and other 
contractors or subcontractors, and for the contractor's private use of 
contract data first produced in the performance of the contract, are 
set forth in paragraph (b)(2) of each Rights in Technical Data clause 
in 952.227. That subparagraph provides that the contractor may, subject 
to patent, security, or other provisions of the contract, use for its 
private purposes, contract data it first produces in the performance of 
the contract, provided that the contractor has met its data 
requirements (e.g., delivery of data in the form of progress or status 
reports specified to be delivered) as of the date of private use of 
such data. It is not necessary that a ``Final Report'' be submitted in 
order to privately use data if all required progress and interim 
reports and other technical data then due have been delivered. 
Paragraph (b)(2) of each Rights in Technical Data clause in 952.227 
further provides that technical or other data received by the 
contractor in the performance of the contract must be held in 
confidence by the contractor in accordance with restrictions 
accompanying the data.
    (b) Contractors should be aware that technical information which is 
reported to DOE by DOE contractors may be disseminated by DOE to 
others, subject to the restrictions included in the ``Rights to 
Technical Data'' clause.
    (c) Employees of contractors operating DOE facilities may not be 
used to assist in the preparation of a proposal or bid for the 
performance of private commercial services similar or related to those 
being performed under the DOE contract unless such employee has been 
separated, with DOE approval, from performance of work under the DOE 
contract for such period as the Head of the Contracting Activity or 
designee shall direct consistent with the purpose of this section.
    (d) Contractors operating DOE facilities and performing services as 
a part of their contract work for other Government agencies or private 
organizations should not be permitted to utilize information which is 
furnished by such customers for their own private activities unless it 
is generally available to others, or unless the customer authorizes 
such use.


970.2706  Rights in technical data--procedures.

    (a) General. It is essential that DOE maintain continuity in its 
programs which are implemented by contracts for the operation of 
Government-owned facilities. Contract data first produced or 
specifically used in the performance of such contracts must be 
considered as integral to and remaining with the facility or plant 
after termination of such contracts and thus available to DOE and its 
future contractors for the continued use of the facility or plant. 
However, it is recognized that these contracts by their nature cannot 
always be subject to one set of prescribed contract provisions which 
will always [[Page 11824]] apply. Accordingly, the Rights in Technical 
Data-Facility clause set forth in 952.227-78 is to be used as a basic 
or minimal clause which may be modified or expanded with the 
concurrence of Patent Counsel to meet particular contract situations.
    (b) Whenever a contract has as a purpose the operation of a 
Government-owned research or production facility, the clause set forth 
at 952.227-78 shall normally be included in the contract. Inasmuch as 
this clause secures to the Government ownership, access to, and, if 
requested, delivery of all technical data first produced in the 
performance of the contract and access to and delivery of technical 
data which are specifically used in the performance of the contract, 
there is no need to include the Additional Technical Data Requirements 
Clause of 952.227-73.
    (c) Subcontracting. Unless otherwise directed by the contracting 
officer, the contractor shall be required to follow the policy and 
procedures of 927.402-1, 927.402-2, and 927.402-3 and shall employ the 
provisions of the Additional Technical Data Requirements clause of 
952.227-73 and the Rights in Technical Data (Long Form) clause of 
952.227-75, where appropriate, except in subcontracts for the design of 
special production plants or facilities or specially designed equipment 
for facilities or plants, in which instances contractors shall include 
the provisions of the Rights in Technical Data--Facility clause of 
952.227-78.
    (d) Optional clause--Limited rights in proprietary data. In 
contracts where it is determined that delivery of proprietary data is 
necessary with limited rights in the Government, the Rights in 
Technical Data clause of this section shall be supplemented by the 
additional paragraph (e), set forth in 952.227-79. Paragraph (e) 
provides that technical data may be specified in the contract as being 
excluded from the delivery requirements thereof. Alternatively, 
paragraph (e) may be limited or made applicable to only those classes 
of proprietary data determined as being necessary for delivery with 
limited rights. In addition, when furnishing proprietary data with the 
limited rights legend, paragraphs (a), (b) and (c) of 952.227-79 may be 
modified as follows. When proprietary data is to be furnished only for 
evaluation, paragraph (a) of the limited rights legend shall be used, 
and paragraphs (b) and (c), if otherwise inapplicable, may be deleted. 
When there is a programmatic requirement that proprietary data be 
disclosed to other DOE contractors only for information or use in 
connection with work performed under their contracts, paragraph (b) of 
the limited rights legend shall be used, and paragraphs (a) and (c) may 
be deleted if otherwise inapplicable. In either of the foregoing 
examples, the contractor may, if it can show the possibility of a 
conflict of interest because of disclosure of such data to certain 
contractors or evaluators, exclude contractors or evaluators from 
paragraph (a) or (b). If the data is required solely for emergency 
repair or overhaul, paragraph (c) of the limited rights legend shall be 
retained, and paragraphs (a) and (b) may, unless otherwise applicable, 
be deleted. In the event that it is determined that all of the 
paragraphs (a), (b) and (c) of the limited rights legend are to be 
deleted, the word ``none'' shall be inserted in the legend after the 
colon (:).
    (e) For contracts involving access to certain categories of DOE-
owned restricted data, as set forth in 10 CFR Part 725, see 927.402-
1(h).
    18. Subsection 970.5204-71 is added to read as follows:


970.5204-71  Patent Rights--Nonprofit Management and Operating 
Contractors.

    As prescribed at 970.2703, insert the clause at 952.227-11, Patent 
Rights-Retention by the Contractor (Short Form) with the following 
changes:

PATENT RIGHTS-NONPROFIT MANAGEMENT AND OPERATING CONTRACTORS (MAR 1995)

    1. Replace subparagraph (e)(1) with the following: (e)(1) The 
contractor may request the right to reserve a revocable, 
nonexclusive, royalty-free license throughout the world in each 
subject invention to which the Government obtains title, except if 
the contractor fails to disclose the invention within the times 
specified in paragraph (c) of this clause. When DOE approves such 
reservation, the contractor's license will extend to its domestic 
subsidiaries and affiliates, if any, within the corporate structure 
of which the contractor is a party and includes the right to grant 
sublicenses of the same scope to the extent the contractor was 
legally obligated to do so at the time the contract was awarded. The 
license is transferable only with the approval of DOE, except when 
transferred to the successor of that part of the contractor's 
business to which the invention pertains.
    2. Add the following paragraphs (m) and (n): (m) Transfer to 
successor contractor. (1) In the event of termination or expiration 
of this contract, the contractor shall transfer any unexpended 
balance of income received relating to intellectual property, in 
accordance with instructions from the contracting officer, to a 
successor contractor, or in the absence of a successor contractor, 
to such other entity as designated by the contracting officer. The 
contractor shall also transfer title, as one package, in all patents 
and patent applications, license agreements, accounts containing 
royalty revenues from such license agreements, including equity 
positions in third-party entities, and other intellectual property 
that arose under the performance of this contract, to the successor 
contractor or to the Government, as directed by the contracting 
officer.
    (2) The Government agrees that the recipient of such title shall 
assume any remaining obligations and liabilities in connection with 
the patents and patent applications.
    (n) Facilities license. In addition to the rights of the parties 
with respect to inventions or discoveries conceived or first 
actually reduced to practice in the course of or under this 
contract, the contractor agrees to and does hereby grant to the 
Government an irrevocable, nonexclusive, paid-up license in and to 
any inventions or discoveries regardless of when conceived or 
actually reduced to practice or acquired by the contractor at any 
time through completion of this contract and which are incorporated 
or embodied in the construction of the facility or which are 
utilized in the operation of the facility or which cover articles, 
materials, or products manufactured at the facility (1) to practice 
or have practiced by or for the Government at the facility, and (2) 
to transfer such license with the transfer of that facility. The 
acceptance or exercise by the Government of these rights shall not 
prevent the Government at any time from contesting the 
enforceability, validity or scope of, or title to, any rights or 
patents herein licensed.

(End of clause)

    19. Subsection 970.5204-72 is added to read as follows:


970.5204-72  Patent Rights--Profit-Making Management and Operating 
Contractors

    As prescribed at 970.2703, insert the clause at 952.227-13, Patent 
Rights-Retention by the Government, with the following changes:

PATENT RIGHTS--PROFIT-MAKING MANAGEMENT AND OPERATING CONTRACTORS (MAR 
1995)

    1. Add the following paragraphs (j) and (k):
    (j) Transfer to successor contractor. (1) In the event of 
termination or expiration of this contract, the contractor shall 
transfer any unexpended balance of income received relating to 
intellectual property, in accordance with instructions from the 
contracting officer, to a successor contractor, or in the absence of 
a successor contractor, to such other entity as designated by the 
contracting officer. The contractor shall also transfer title, as 
one package, in all patents and patent applications, license 
agreements, accounts containing royalty revenues from such license 
agreements, including equity positions in third-party entities, and 
other intellectual property that arose under the performance of this 
contract, to the successor contractor or to the Government, as 
directed by the contracting officer.
    (2) The Government agrees that the recipient of such title shall 
assume any remaining obligations and liabilities in connection with 
the patents and patent applications.
    (k) Facilities License. In addition to the rights of the parties 
with respect to [[Page 11825]] inventions or discoveries conceived 
or first actually reduced to practice in the course of or under this 
contract, the contractor agrees to and does hereby grant to the 
Government an irrevocable, nonexclusive, paid-up license in and to 
any inventions or discoveries regardless of when conceived or 
actually reduced to practice or acquired by the contractor at any 
time through completion of this contract and which are incorporated 
or embodied in the construction of the facility or which are 
utilized in the operation of the facility or which cover articles, 
materials, or products manufactured at the facility (1) to practice 
or have practiced by or for the Government at the facility, and (2) 
to transfer such license with the transfer of that facility. The 
acceptance or exercise by the Government of these rights shall not 
prevent the Government at any time from contesting the 
enforceability, validity or scope of, or title to, any rights or 
patents herein licensed.

(End of clause)

[FR Doc. 95-4611 Filed 3-1-95; 8:45 am]
BILLING CODE 6450-01-P