time and place, so much of said part of the subject royalties as are in excess of the reduced royalties specified in Article 2 hereof.

B. Licensor agrees that, forthwith upon receipt by Licensor on or after the date of this contract of any of the subject royalties, Licensor shall (1) deliver to [name and address of officer or board] a written report signed by Licensor showing the amount and manner of computation of said royalties, and (11) pay to the Treasurer of the United States, at the same time and place, so much of the said subject royalties as are in excess of the reduced royalties specified in Article 2 hereof.

C. Licensor agrees to and does hereby authorize and direct Licensee [or, the licensee named in said license] (i) to deliver to [name and address of officer or board] a written report signed by Licensee showing the amount and manner of computation of that part of the subject royalties which are due for payment by Licensee to Licensor and have not been paid prior to the date of this contract and, (11) to pay to the Treasurer of the United States, at the same time and place, so much of said part of the subject royalties as are in excess of the reduced royalties specified in Article 2 hereof.

D. Licensor agrees to and does hereby authorize and direct Licensee [or, the licensee named in said license], as and when any of the subject royalties fall due for payment to Licensor on or after the date of this contract, (1) to deliver to [name and address of officer or board] a written report signed by Licensee showing the amount and manner of computation of the said subject royalties and (ii) to pay to the Treasurer of the United States, at the same time and place, so much of the said subject royalties as are in excess of the reduced royalties specified in Article 2 hereof.

E. Licensee agrees (1) forthwith to deliver to [name and address of officer or board] a written report signed by Licensee showing the amount and manner of computation of that part of the subject royalties which are due for payment to Licensor and have not been paid prior to the date of this contract and (ii) to pay to the Treasurer of the United States, at the same time and place, so much of said part of the subject royalties as are in excess of the reduced royalties specified in Article 2 hereof.

F. Licensee agrees that, as and when any of the subject royalties fall due for payment to Licensor on or after the date of this contract, licensee shall (1) forthwith deliver to [name and address of officer or board] a written report signed by Licensee showing the amount and manner of computation of the said subject royalties and (ii) pay to the Treasurer of the United States, at the same time and place, so much of the said subject royalties as are in excess of the reduced royalties specified in Article 2 hereof. ARTICLE

price reduction.

Refund of royalties and

G. (a) Licensee agrees (1) to deliver to [name and address of officer or board] a writ

ten report signed by Licensee showing the amount and manner of computation of that part of the subject royalties not heretofore paid to Licensor, which have heretofore accrued or many hereafter accrue in respect of supplies, equipment, materials or parts thereof delivered prior to... 194__

[date when price reduction is to become effective] and (ii) to pay to the Treasurer of the United States, at the same time and place, so much of said part of the subject royalties as are in excess of the reduced royalties specified in Article 2 hereof.

(b) Licensee agrees (1) to reduce the contract price of all supplies, equipment, materials and parts thereof delivered to the Government on and after the date set forth in clause (a) of this Article, to the extent necessary to secure to the Government the full benefit of the reduced royalties specified in Article 2 hereof, and (ii) to pay or credit to the Government, as the Contracting Officer concerned may direct, the amount of such price reduction.

(e) Contract articles providing for release of infringement claims. In preparing royalty, adjustment contracts which contain a definition of the term "said inventions" (see clauses (a) and (b) of 813.1329, Art. 1), the following contract articles are appropriate for release of infringement claims in the cases specified below:

(1) If the license whose royalties are being adjusted is non-exclusive, the following contract article is appropriate whether or not licensee is a party to the contract:

ARTICLE Release of past infringement. Licensor hereby releases ach and every claim and demand which Licensor now has or may hereafter have against the Government, its officers, agents, servants and employees, for infringement of any patent covering the said inventions by reason of the manufacture, use or sale of any article or material or the use of any process prior to the date of this contract or the use or sale thereafter of any article or material so manufactured.

(2) If the license, whose royalties are being adjusted is exclusive, the following contract article is appropriate provided both Licensor and Licensee are parties to the contract:

ARTICLE Release of past infringement. Licensor and Licensee hereby jointly and severally release each and every claim and demand which they or either of them now have or may hereafter have against the Government, its officers, agents, servants and employees, for infringement of any patent covering the said inventions by reason of the manufacture, use or sale of any article or material or the use of any process prior to

the date of this contract or the use or sale thereafter of any article or material so manufactured.

(f) Mandatory contract articles in royalty adjustment agreements executed by the Government. (1) The "Officials not to Benefit" article (§ 803.322) and the "Covenant against Contingent Fees" article (§ 803.323) are required in every royalty adjustment contract which is executed by the Government.

(2) The "Anti-discrimination" article (§ 803.325) is required in contracts executed by the Government except where the performance of the contract does not involve the employment of persons (see subparagraph (8) of § 809.994a (a)).

(3) The "Assignment of Rights" article (§ 803.355) is required if the contract is executed by the Government and provides for payments by the Government aggregating $1,000 or more (see §803.355).

(g) Contracts between the Government, the licensor and the licensee. (1) Where the licensee uses the licensed inventions solely in connection with articles which he sells directly to the Government, and the licensee is party to the contract adjusting the royalties, the contract shall (unless the Director otherwise directs) provide that the future benefits of the royalty adjustment shall inure to the Government in the form of a corresponding price reduction. In such case the appropriate contract articles are articles A and G of paragraph (d).

(2) Where the licensee uses the licensed inventions solely in connection with articles which he sells to contractors or subcontractors for the Government, the contract may provide either (a) for price reduction (using articles A and G of paragraph (d), the latter suitably modified in subclause (b) thereof to provide that the price reduction applies to deliveries "to contractors and subcontractors for the Government"), or (b) to effect running recapture from licensee of excess royalties (using articles A, E and F of paragraph (d).

(3) If licensee uses the licensed inventions in part in connection with articles which he sells directly to the Government and in part in connection with articles which he sells to contractors and subcontractors for the Government, the contract may provide either (i) for segregation by licensee of the two aspects of his business, with price reduction applied to

the first-mentioned part and running recapture from licensee of excess royalties applied to the second-mentioned part, or (ii) for running recapture from licensee of excess royalties in respect of both parts without price reduction or segregation. In such cases the appropriate contract articles are those mentioned in subparagraphs (1) and (2) above, suitably modified as circumstances require.

(4) Attention is called to the provisions of paragraphs (e) and (f) relating to release of infringement claims and mandatory articles in royalty adjustment contracts to which both the licensee and the Government are party.

(h) Contracts between the Government and the licensor which are not executed by the licensee. (1) Where the excessive portion of the future royalties is to be refunded by the licensor, and the licensee is not a party to the contract, the appropriate contract articles are articles A and B of paragraph (d).

(2) Where the excessive portion of future royalties is to be refunded by the licensee, and the licensee is not a party to the contract, the appropriate contract articles are articles A, C and D of paragraph (d).

(3) Contracts executed by the Government and the licensor, and not executed by the licensee, are not appropriate where the license is exclusive and a release of past infringement claims is to be obtained, since an exclusive licensee should join in giving such a release.

(4) Attention is called to the provisions of paragraph (f) relating to the use of mandatory articles in royalty adjustment contracts to which the Government is a party.

(i) Unilateral agreements executed by licensor alone. Voluntary adjustments of royalty may be informally and expeditiously accomplished by a form of unilateral agreement executed by the licensor alone and not by the licensee or the Government. Such agreements may be prepared using War Department Contract Form No. 29 as a basis, subject to the following modifications:

(1) The preamble and "Now, Therefore" clauses should be rewritten in form appropriate to a unilateral agreement.

(2) The first "Whereas" clause of § 813.1329 should be modified to substitute the name and address of licensee in place of the word "Licensee".

(3) The second and third "Whereas" clauses of § 813.1329 should be used without substantial change. It is advisable to recite (as in the third "Whereas" clause) that licensor has requested the Secretary of War to forebear from giving notice under the Act, in order that there will be consideration for the licensor's promise.

(4) The fourth "Whereas" clause of § 813.1329 should be omitted.

(5) In § 813.1329, Art. 3 the appropriate articles would be those specified in subparagraphs (1) or (2) of paragraph (h).

(6) The provisions of § 813.1329, Articles 5 and 7 should be omitted.

(7) Provision should be made at the foot of the contract for execution by licensor alone.

(j) Action required when royalties have been voluntarily adjusted. When royalties chargeable to the War Department have been voluntarily adjusted with the participation of any delegate, he or the chief of the technical service concerned shall promptly report the adjustment to the Director. Such report is required whether or not the United States is party to any contract in connection therewith, and whether or not the Director's approval is required for such contract. The report shall include:

(1) A memorandum of facts (in triplicate), containing so far as practicable and appropriate the information listed in § 811.1112 (aa) and, in addition, a statement of:

(i) The nature and extent of the adjustment.

(ii) Estimated benefits to the Government.

(iii) Methods proposed for supervision or control of the Government's interest. (iv) Future action contemplated.

(2) Sufficient copies of the agreement for distribution by the Director to interested agencies (a total number equal to the number of licensors and licensees, plus three).

(3) Three copies of the withdrawal of notice (if a notice had previously been given) and three copies (one duly executed by the licensor) of the consent and release specified in subparagraph (3) of § 811.1112 (i).

(4) If the adjustment is embodied in a contract executed on behalf of the Government and requiring approval of the

Director, the contract shall be transmitted in form ready for signature by the Director accompanied by the recommendations of the delegate or technical service having the matter in hand.

(k) Copies to the Chief, Patents Division, Office of The Judge Advocate General. In the case only of an adjustment which is embodied in a contract executed on behalf of the Government and requiring approval of the Director, a copy of each document required in that case by paragraph (j) to be transmitted to the Director, shall be forwarded to the Chief, Patents Division, Office of The Judge Advocate General, concurrently with the transmittal of the originals thereof to the Director.

(1) Numbering and distribution. (1) It is unnecessary to number royalty adjustment agreements, notwithstanding the provisions of § 803.309.

(2) The executed original of every royalty adjustment agreement (whether or not executed by the Government) will be forwarded to the Chief, Audit Division, Room 506, General Accounting Office, Washington 25, D. C., under the following conditions:

(i) If such agreement provides that the Government is to make or receive the payment of an amount determinable at the time of the execution of the contract (such as, for example, refund of royalties already accrued or received), the agreement will be forwarded immediately.

(ii) If such agreement provides that the Government is to make or receive the payment of money upon the happening of or in an amount which is contingent upon a future event (such as, for example, refund of royalties to accrue or to be received), the agreement will be forwarded immediately or upon the happening of any event which requires the payment or receipt of moneys under the agreement.

(3) If such an agreement contains any provision granting to the Government an interest (such as an assignment or license) in or under patents or applications for patents, the agreement is required by Executive Order No. 9424, February 18, 1944, to be recorded in the United States Patent Office. Such recording will be carried out in the manner provided in paragraph 4 of AR 25-10. An agreement providing for a waiver of royalties under existing private licenses,

even for a limited time, is subject to the foregoing.

(4) If a royalty adjustment agreement contains provisions such as to require both that it be forwarded to the General Accounting Office (subparagraph (2) above) and that it be recorded in the Patent Office (subparagraph (3) above), and the War Department has in its possession no more than one executed original thereof, such original shall first be transmitted for recording in the Patent Office (in compliance with paragraph 4 of AR 25-10) with a request that it be returned, and upon return thereof said original shall then be forwarded to the General Accounting Office. Hereafter the representative of the War Department shall, if possible, secure an executed original and an executed duplicate original of all documents required to be forwarded under subparagraph (2) and recorded under subparagraph (3) above, and the executed duplicate original shall be used for complying with paragraph 4 of AR 25–10. [Proc. Reg. 11, C 39, Aug. 4, 1944, 9 F.R. 9592, and C 40, Aug. 31, 1944, 9 F.R. 10955]

§ 811.1114 Agreements in settlement and compromise after an order is made and before suit against the United States has been instituted. (See 811.1112 (g).)

(a) Approval required. Every agreement in settlement and compromise of a claim against the United States accruing in consequence of the making of an order under the Act is subject to the approval of the Director.

(b) Submission for approval. (1) The contract in an appropriate number of copies each executed by all necessary parties and by a delegate on behalf of the United States, shall be transmitted to the Director ready for execution by him, accompanied by a report containing:

(i) A full statement of all relevant facts and circumstances, and

(ii) The recommendations of the chief or deputy chief of the originating technical service that the contract be approved.

(2) One copy of the proposed agreement and of the report accompanying the same shall be forwarded to the Chief, Patents Division, Office of The Judge Advocate General, concurrently with the transmittal of the originals thereof to the Director.

(c) Numbering and distribution. (See § 811.1113 (1).) [Proc. Reg. 11, C 39, Aug. 4, 1944, 9 F.R. 9594, and C 40, Aug. 31, 1944, 9 F.R. 109561

Subpart C-Litigation and Related
Matters

§ 811.1120 Procedure for handling litigation involving cost-plus-a-fixed-fee contractors-(a) General. It is of the utmost importance that The Judge Advocate General be promptly notified of the institution of all suits in which the interests of the United States are involved including all suits against costplus-a-fixed-fee contractors and subcontractors. This will make it possible to take steps to remove suits instituted in state courts to the federal courts and to take all other steps necessary to protect the interests of the Government. Likewise it is essential that the information furnished be full and complete and not fragmentary.

(b) Procedure. The following procedure is prescribed with respect to litigation involving cost-plus-a-fixed-fee contractors and subcontractors:

(1) Such contractors should be advised immediately upon receipt of process in any action filed against them to furnish a copy of all papers to the contracting officer or appropriate War Department representative. This will be in addition to any similar requirement of any outstanding insurance policy.

(2) Teletype, radio, or telegraphic notification of such suit should be sent immediately to The Judge Advocate General, Washington, D. C., by the War Department representative in charge of the project or activity out of which the suit arises, giving all pertinent facts concerning the suit. In the usual case, these facts will include the court in which the suit has been filed, the names of parties to the suit, the date of service of process, a statement of the alleged cause of action, the amount sued for, the date on which answer to the suit must be filed, a statement of the principal defense to the suit which the defendant may raise, and a statement as to whether the amount sued for is fully covered by insurance and if so, whether or not the insurance carrier will accept full responsibility for the defense of the suit.

(3) Copies in triplicate of all suit papers and a statement of available facts

will be forwarded immediately to The Judge Advocate General, Washington, D. C. If a board of inquiry is convened to investigate, or acts on the case, copies of all reports of the board's proceedings and findings will be included in the papers transmitted. Since The Judge Advocate General, has the duty of maintaining all War Department legal liaison with the Department of Justice and other Government departments, the chief of the technical service concerned, upon request of The Judge Advocate General, will immediately transmit to his office any information in his possession that may be requested. Requests for Government representation will not be made to the Department of Justice by War Department field representatives but will be made directly to The Judge Advocate General. Violations of this well-established War Department policy have caused confusion and prevented proper co-ordination in the handling of litigation with the Department of Justice.

(4) The agreement for representation to be signed by the cost-plus-a-fixed-fee contractor or other defendant, three copies of which will be forwarded to The Judge Advocate General, Washington, D. C.. will read as follows:

The undersigned hereby requests the Attorney General of the United States to designate counsel to defend on behalf of the undersigned the action entitled

altered or increased; it is further agreed that such representation will not be construed as a waiver or estoppel of any rights which any interested party may have under said contract.

(c) Procedure to determine legal position to be taken in suits based upon the Fair Labor Standards Act of 1938. (1) In order that any differences of opinion between the War or Navy Departments and the Department of Labor as to the legal position which should be taken by the Government in suits against costplus-a-fixed-fee contractors based upon the Fair Labor Standards Act may be resolved, the War Department. the Navy Department, the Department of Labor and the Department of Justice have entered into the following agreement as to the administrative procedures to be followed to determine the position to be taken by the Government in such suits:

MEMORANDUM OF AGREEMENT ON UNIFORM ADMINISTRATIVE PROCEDURES

1. Purposes: The procedures herein outlined are provided in order to:

(a) Secure in the disposition of litigated claims settled and uniform application of the Fair Labor Standards Act to the types of work performed by cost-plus-a-fixed-fee contractors.

(b) Obtain either an effective and economical defense by the Department of Justice against claims under the Fair Labor Standards Act, or the quick payment of such claims, depending upon whether such claims are determined pursuant to these procedures to be valid or invalid; and

(c) Establish a method for handling claims which is fair and equitable in protection of the claimant, the United States, and the cost-plus-a-fixed-fee contractor.

2. Definitions: For purposes of this agreement, the term

(a) "Contracting Agency" means the War Department, or the Navy Department, as the case may be.

Contractor"

(b) "Cost-Plus-a-Fixed-Fee means a contractor who has entered into a contract with a contracting agency, acting in its own behalf, or in behalf of the United States, pursuant to which the contracting agency, or the United States, is obligated to pay the labor costs of the work performed under the contract.

(c) "Claim" means a suit based upon the Fair Labor Standards Act for additional payments for work performed for a cost-plus-afixed-fee contractor; and the term "claimant" means a person by whom or on whose behalf such suit is instituted.

3. Prompt Investigation, Determination, and Payment of a Valid Claim: Claims will be immediately investigated by the contracting agency. If in the judgment of the contracting agency the claim should be paid, the United States Attorney will be promptly notified and he will effect settlement of the claim and disposition of the suit. If such is not the judgment of the contracting agency, the claim, together with the contracting agency's recommendation and report of the investigation, will be referred to the appropriate regional office of the Wage and Hour Division for such further and prompt investigation as may be necessary, and for determination. Contemporary or joint investigations will be held by both agencies when found feasible.

4. Review of Determination of the Regional Office of the Wage and Hour Division: Within ten days after notice of the determination of the regional office of the Wage and Hour Division, the contracting agency may, if dissatisfied with, and unwilling to settle on the basis of the determination of the regional office of the Wage and Hour Division, appeal to the Wage and Hour Administrator for his final determination of the claim. If part or the whole of the claim is found valid by the Administrator, the United States Attorney will effect settlement of the claim and dispo