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(i) Section 4 of the Helium Act Amendments of 1960 (50 U.S.C. 167b; 74 Stat. 920) is amended by striking out the following: "Provided, however, That all research contracted for, sponsored, cosponsored, or authorized under authority of this Act shall be provided for in such a manner that all information, uses, products, processes, patents, and other developments resulting from such research developed by Government expenditure will (with such exceptions and limitations, if any, as the Secretary may find to be necessary in the interest of national defense) be available to the general public: And provided further, That nothing contained herein shall be construed as to deprive the owner of any background patent relating thereto to such rights as he may have thereunder." and by inserting instead a period.

(j) Section 32 of the Arms Control and Disarmament Act of 1961 (22 U.S.C. 2572; 75 Stat. 634) is repealed.

(k) Subsection (e) of Section 302 of the Appalachian Regional Development Act of 1965 (40 U.S.C. App. 302(e); 79 Stat. 5) is repealed.

(1) Except for paragraph (1), section 9 of the Federal Nonnuclear Energy Research and Development Act of 1974 (42 U.S.C. 5901; 88 Stat. 1878) is repealed.

(m) Section 5(i) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831d(i); 48 Stat. 61), is amended by striking both proviso clause at the end.

(0) Section 5(d) of the Consumer Product Safety Act (15 U.S.C. 2054(d); 88 Stat. 1211), is repealed.

(p) Section 3 of the Act of April 5, 1944 (30 U.S.C. 323; 58 Stat. 191), is repealed. (q) The Resources Conservation and Recovery Act of 1976 (90 Stat. 2795) is amended

(1) By repealing section 8001(c)(3) (42 U.S.C. 6981(c)(3); 90 Stat. 2831); and

(2) By striking out, in section 8004(c)(2) (42 U.S.C. 6984(c)(2)) the second sentence, "notwithstanding section 6881(c)(3) of this titel,."

(r) Section 12 of the Electric and Hybrid Vehicle Research, Development, and Demonstration Act of 1976 (15 U.S.C. 2511;— Stat. —) is repealed.

(s) Paragraph (r) of Section 19 of the Federal Nonnuclear Energy Research and Development Act of 1974, Public Law 93-577, as amended, Public Law 95-238, is repealed; subparagraph (g)4 of said Section 19 is amended by striking "under section 9 of this Act" in the first sentence.

(t) Section 112(d)(2) of Public Law 95-39 enacted on June 3, 1977, is amended by striking "shall be governed by the provisions of Section 9 of the Federal Nonnuclear Energy Research and Development Act of 1974 and".

(u) Section 408 of the Water Research and Development Act of 1978 (42 U.S.C. 7879; 92 Stat. 1316) is repealed.

EFFECTIVE DATE

Sec. 509. This Act will take effect on the first day of the seventh month beginning after its enactment. Implementing regulations may be issued earlier.

SECTION-BY-SECTION ANALYSIS

TITLE I-POLICY

Sec. 101. Findings.

Section 101 states the finds of the Congress; namely, that:

"(1) Inventions that result from federally sponsored or supported research and development constitute a valuable national resource;

"(2) Federal policy on allocation of patent rights in such inventions should stimulate innovation, should meet the needs of the Government, should foster competition, should recognize the equities of Government contractors and Federal employee-inventors, and should provide small businesses and educational institutions with special incentives to participate in Federal research and development programs and to commercialize resulting inventions; and

"(3) The public interest would be advanced if greater efforts were made to promote commercial use of new technology that results from federally sponsored or supported research and development.'

Sec. 102. Purpose.

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Section 102 states the purposes of this Act which are responsive to the directive of Title I, Section 101(c) of P.L. 94-282, The National Science and Technology Policy, Organization and Priorities Act of 1976 that:

"Federal patent policies should be developed based on uniform principles, which have as their objective the preservation of incentives for technological innovation and the application or procedures which will continue to assure the full use of beneficial technology to serve the public."

The purposes of the Act are:

"(1) To establish an effective Federal system for management and use of inventions that result from federally sponsored or supported research and development; "(2) To allocate patent rights in inventions that result from federally sponsored or supported research and development in ways that—

(A) Stimulate innovation,

(B) Encourage participation of all qualified contractors,

(C) Foster competition,

(D) Reduce administrative burdens on Federal agencies and their contractors, (E) Promote widespread public use of inventions made with public support, and (F) Provide special incentives to small businesses and nonprofit organizations; "(3) To allocate equitably patent rights in Federal employee inventions;

"(4) To provide for domestic and foreign patenting of federally-owned inventions and licensing of federally-owned patent rights, with the objective of strengthening the Nation's economy and expanding its domestic and foreign markets; and "(5) To amend or repeal inconsistent laws."

TITLE II-CONTRACT INVENTIONS

Sec. 201. "Contract Inventions"; Reporting.

Section 201 defines "contract inventions" and sets forth a contractor's responsibility with regard to a contract invention.

Subsection (a) defines "contract inventions" as "inventions made in the course of or under Federal contracts."

Subsection (b) requires that all contractors provide the responsible Federal agency with timely reports on each contract invention containing complete technical information about the information and a list of each country, if any, in which the contractor elects to file a patent application. In addition, unless the contractor is a small business or nonprofit organization, contractors must list each field of use in which the contractor intends to commercialize the invention or otherwise achieve public use of the invention, e.g., by actively licensing it. Each selected field of use is to be described "with sufficient particularity to" distinguish those fields of use selected by the contractor from those fields of use left to the Government. The Government is prohibited from publishing or releasing these reports until the earlier of one year from receipt of all of the required information or the contractor has had a reasonable time to file a patent application; the Government may so withhold such information contained in other records or reports.

The field of use selection process intended to be undertaken unilaterally by the contractor without the need for negotiation with any Federal agency and only after an invention is made and reported to the Government. The standard of precision expected is that associated with normal business practice. The aim is for the contractor to indicate those fields of use in which it is interested commerically so that the Govenment can promote the commercialization of any unselected fields determined to be potentially valuable.

The temporary prohibition on publishing or releasing contractor reports is necessary in order to avoid the possible forfeiture of patent protection in some countries. Subsection (c) provides for the responsible agency's depriving a contractor who fails to file the reports required by subsection (b) of any or all the rights it otherwise would have under Title II.

Sec. 202. Allocation of Rights-Small Business and Nonprofit Organizations. Subsection (a) provides for the acquisition of title to contract inventions by contractors which are either a small business or a nonprofit organization. They would acquire title in each country listed under section (b)(2) of section 201 in which they filed a patent application within a reasonable time; their title would be subject to the Government's minimum rights under section 204 and to march-in rights under section 206.

Subsection (b) provides for acquisition of title to contract inventions by the Government in each country in which a small business or nonprofit organization elects not to file a patent application or fails to file within a reasonable time.

Sec. 203. Allocation of Rights-Other Contractors.

Subsection (a) provides for the acquisition of title by the Government to all contract inventions not made by a small business or nonprofit organization.

Subsection (b) provides for the contractor to receive an exclusive license in each field of use described under subsection (b) of section 201 in each country listed under that subsection in which it files a patent application within a reasonable time. The contractor's license is subject to the Government's minimum rights under section 205 and march-in rights under section 206.

Subsection (c) provides that the contractor will acquire its exclusive license by operation of law ninety days after providing the responsible agency with all the information required by subsection (b) of section 301 unless the agency earlier notifies the contractor of a determination under subsection (d) of this section with respect to any field of use. In that case, the contractor would acquire an exclusive license by operation of law in all other selected fields of use, if any.

Subsection (d) sets forth the basis for an agency determination that a contractor will not receive an exclusive license in a selected field of use.

The contractor will not acquire an exclusive license in any field of use if the responsible agency determines that the contractor's possession of such a license— (1) Would be contrary to the requirements of the agency's mission;

(2) Would impair national security; or

(3) Would violate the Federal antitrust laws if the receipt by the contractor of such a license were deemed an acquisition of assets of another corporation.

Subsection (d) is intended to be permissive. An agency is not required to undertake any determination, perhaps preferring to await actual experience under the exclusive license to see whether circumstances then justify exercise of a march-in right reserved by section 206. Further to reduce administrative burdens and to increase the security of the contractor in its knowledge that it will receive exclusive rights in the invention, the scope of the agency's inquiry underlying this determination is limited. The agency's review should focus on those unforseen circumstances of which it has become aware since the time of contracting that now require it to deny the contractor an exclusive license in a particular field of use. The contractor should not be denied an exclusive license solely on the basis of facts that were known or reasonably foreseeable by the agency at the time of contracting. If such facts do exist at the time of contracting, the agency normally will deviate from the standard patent rights clause so that the contractor will know at that time that it will not receive an exclusive license to practice a forthcoming invention in a particular field of use.

Subsection (e) provides that, whenever an agency determines that a contractor will not receive an exclusive license in any field of use, it must include in its determination written reasons, and that the contractor has the right of appeal de novo to the United States Court of Claims within sixty days after the determination is issued. The Court of Claims is given exclusive jurisdiction to affirm, reverse, or modify the agency determination. Specifically included is the authority to order the responsible agency to issue an exclusive license to the contractor.

Subsection (f) permits the responsible agency to grant the contractor title to any contract invention in any foreign country in which the contractor agrees to file a patent application, provided the agency determines that the national interest would not be affected adversely.

Sec. 204. Contractor License.

Subsection 204 automatically grants a nonexclusive, royalty free license to each contractor complying with subsection (b) of section 201 to practice the contract invention in all countries in which it neither receives title under subsection (a) of section 202 nor receives an exclusive license under subsection (b) of section 203. This nonexclusive contractor license may be revoked by the Government only to the extent necessary to grant an exclusive license under Title IV. It is expected that, so long as the contractor is working the invention under its nonexclusive license, there would be no occasion to grant an exclusive license, and, therefore, no need to revoke the contractor's exclusive license.

Sec. 205. Minimum Government Rights.

Subsection (a) sets forth the minimum rights the Government has in every contract invention, unless waived under the authority of section 207. These minimum rights include:

"(1) The right to require from the contractor written reports on the use of the invention,

"(2) A royalty-free worldwide license to practice the invention or have it practiced for the Government, and

"(3) The right to license or sublicense State, local, or foreign governments to practice the invention or have it practiced for them, if the agency detemines at the time of contracting that acquisition of this right would serve the national interest." Subsection (b) requires that, whenever the Government has rights in a contract invention, notice of those rights are to be included in each patent application and patent on the invention.

Sec. 206. March-in Rights.

Section 206 sets forth the basis on which the responsible agency may terminate the contractor's title or exclusive rights with respect to one or more fields of use in

any patent on a contract invention; may require the contractor to grant appropriate license or sublicenses; or, if necessary, may grant such licenses or sublicenses itself. Subsection (a) sets the grounds for exercise of the Government's march-in rights: (1) If the contractor has not taken and is not expected to take timely and effective action to achieve practical application of the invention in one or more of the fields of use selected;

(2) If necessary to protect the national security;

(3) If necessary to meet requirements for public use specified by Federal regulation;

(4) If the contractor's rights in the invention would violate the Federal antitrust laws if the receipt by the contractor of those rights were deemed an acquisition of assets by another corporation; or

(5) If the contractor has failed to comply with the reporting requirements of this Act. The Government may march-in only in a field of use which gives rise to one or more of the situations described in the above five paragraphs. The fact that a contractor's behavior does not give rise to such a situation with respect to some field of use will not prevent the Government from marching-in in another field of use. Subsection (b) permits the responsible agency to exercise its march-in rights either on its own initiative or in response to a petition from an interested person justifying such action. Agency failure to initiate a march-in proceeding in response to a petition is not a determination appealable to the United States Court of Claims under section 503.

Subsection (c) enables an agency to specify reasonable licensing terms whenever, in exercise of its march-in rights, it requires a contractor to grant, or itself grants, a license or sublicense.

Sec. 207. Deviation and Waiver.

Section 207 permits Federal agencies, to further an agency's mission or the public interest, to deviate from any standard patent rights clause issued under section 209, acquiring more or fewer rights to a contract invention.

Subsection (a) authorizes deviations either on a class basis in accordance with regulations to be issued under section 209, or, unless prohibited by those regulations, under regulations issued by an agency itself. Case-by-case deviations are permitted when authorized by the head of an agency or a designee, and described in the Federal Register.

Subsection (b) forbids waiver under any circumstances of the national security and antitrust march-in rights reserved by sections 206(a)(2), 206(a)(4), and 206(c) [which provides for agency-set licensing terms in the event the Government requires licensing as a march-in remedy].

Subsection (c) forbids waiver of sections 203(a) [Government acquisition of title to contract inventions not made by small businesses or nonprofit organizations] and 206(a)(1) [Government march-in right for noncommercialization], except (1) in contracts involving a substantial contribution of resources by the contractor or (2) where a contractor whose participation is necessary to the successful accomplishment of an agency mission will not participate under the standard patent rights clause.

Sec. 208. Transfer of Rights to Contractor Employees.

Section 208 authorizes a contractor's employee-inventor to receive some or all of the contractor's rights to a contract invention if the responsible agency and the contractor approve. The corresponding obligations of the contractor under Title II then become the obligations of the employee.

Sec. 209. Regulations and Standard Patent Rights Clause.

Section 209 requires the Office of Federal Procurement Policy to direct the issuance of regulations implementing Title III, including the establishment of a standard patent rights clause or clauses.

TITLE III-INVENTIONS OF FEDERAL EMPLOYEES

Sec. 301. Employee Inventions.

Section 301 defines "employee inventions" as inventions made by Federal employees.

Sec. 302. Reporting of Inventions.

Section 302(a) requires that a Federal employee report to the employee's agency all inventions made while an employee of that agency. The Government is prohibited from publishing or releasing these reports until the earlier of one year after their receipt of the final disposition of rights under this Title.

Sec. 303. Criteria for the Allocation of Rights.

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Section 303 establishes the criteria for allocation of invention rights between the Government and its employee-inventor. Basically, the allocation depends upon the relationship of the invention to the employee's work and the use of Government

resources.

Paragraph (1) provides for Government acquisition of all invention rights if the invention bears a direct relation to the duties of the employee-inventor or was made in consequence of the employee's employment.

Paragraph (2) provides that, where the invention neither bears a direct relation to the employee's duties nor was made in consequence of the employee's employment, but was made with a contribution of Federal resources, the employee may receive all rights in the invention subject to a nonexclusive royalty-free worldwide license to the Government to practice the invention or have it practiced for the Government as well as to sublicense State, local, or foreign governments if acquisition of this right would serve the national interest.

Paragraph (3) permits the Government to waive to the employee its rights under paragraph (1) of this section, subject to the Government license described in paragraph (2) of this section.

Paragraph (4) requires the Government to acquire all rights in any invention if the national security might be impaired should the employee-inventor receive rights to it, notwithstanding the provisions of paragraphs (2) or (3) of this section.

Paragraph (5) entitles an employee-inventor to all rights in an invention made by the employee not covered by paragraphs (1), (2), or (3) of this section.

Paragraph (6) permits the Government to enter into agreements allocating rights in inventions resulting from research and development to which other parties have contributed substantially, notwithstanding paragraph (1) of this section.

Sec. 304. Presumptions.

Section 304 establishes rebuttable presumptions for the application of the criteria set forth in section 303.

Subsection (a) sets out employee duties which establish a rebuttable presumption that an invention falls within the criteria of paragraph (1) of section 303. Thus, for example, if an employee is assigned to conduct research and development work, it is presumed that the Government will have the right to title in any invention made. Subsection (b) establishes a rebuttable presumption that an invention made by an employee whose duties fall outside those listed in paragraph (a) of this section falls within the criteria of paragraph (2) of section 303, reserving to the employee title to an employee-invention subject to certain license rights in the Government. Sec. 305. Review of Agency Determinations.

Section 305 provides for the review of Federal agency determinations regarding the respective rights of the Government and a Federal employee-inventor in situations in which the agency determines not to acquire all rights in an invention or where an agrieved employee-inventor requests review. The review is to be conducted according to regulations issued under section 309.

Sec. 306. Reassignment of Rights.

Section 306 establishes a right in the Government to adjust the rights acquired from a Federal employee-inventor on the basis of evidence that the granting of greater rights to the employee-inventor is necessary to correct an inequitable allocation of rights.

Sec. 307. Incentive Awards Program.

Subsection (a) provides Federal agencies the right to establish an incentive awards program which is intended to monetarily recognize Federal employee-inventors, stimulate innovative creativeness, and encourage disclosures of inventions which in turn will enhance the possibility of utilization through the Federal licensing program established under Title IV.

Subsection (b) sets forth the criteria for making an award.

Subsections (c), (d), and (e) establish the procedures for making awards of different amounts.

Subsection (f) provides that acceptance of a cash reward constitutes an agreement by the employee-inventor that any use by the Government of an invention for which an award is made does not form the basis of a further claim of any nature against the Government by the recipient, his heirs, or assigns.

Subsection (g) requires that an award should be paid from the fund or appropriation of the agency primarily benefitting.

Sec. 308. Income Sharing from Patent Licenses.

Section 308 authorizes Federal agencies to share income from licensing the Government's patent rights with the employee-inventor.

Sec. 309. Regulations.

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