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

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
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 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 contractoremployer. Since the promulgation of the

previous DOE clause, Bayh-Dole was

enacted, offering this right to employeeinventors 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. BayhDole 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 employeeinventor’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
11814 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

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 BayhDole. 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
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 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
11816 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

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:
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 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.
11818 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

(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
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 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 coinventors (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.
11820 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

(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.
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 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
11822 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

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 royaltyfree, 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
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 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 BayhDole 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
11824 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

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 Governmentowned 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 RightsRetention 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 RightsRetention 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
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 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