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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(0) (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.

Subsection (a) makes the Secretary of Commerce responsible for issuing regulations to implement Title III.

Subsection (b) provides that determinations concerning a Federal employee's promotion of the employee's invention is subject to regulations to be prescribed by the Secretary of Commerce with the concurrence of the Office of Government Ethics and the Attorney General. The intention is to ensure that a Federal employee will not be prohibited from promoting his own invention if consistent with conflict of interests regulations.

TITLE IV-LICENSING OF FEDERALLY-OWNED INVENTIONS Sec. 401. Covered Inventions.

Section 401 provides that Title IV applies to all federally-owned patent rights, including licenses or sublicenses granted or required to be granted by the Government under section 206. However it does not apply to licenses established by the other sections of Title II.

Sec. 402. Exclusive or Partially Exclusive Licenses.

Section 402 sets out terms and conditions under which a Federal agency may grant an exclusive or partially exclusive license.

Subsection (a) provides that an exclusive or partially exclusive domestic license may be granted only after public notice and opportunity for filing written objections and only if the responsible agency determines that such licensing is necessary to achieve practical application of the invention and that the scope of proposed exclusivity is not greater than reasonably necessary.

Subsection (b) provides that an exclusive or partially exclusive foreign license may be granted only after public notice and opportunity for filing written objections and after a determination whether the interests of the Government or of United States industry in foreign commerce will be enhanced.

Subsection (c) prohibits the granting of a license under this section if the responsible agency determines that the grant 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) requires Federal agencies to maintain publicly available, periodically updated records of their determinations to grant exclusive or partially exclusive licenses.

Sec. 403. Minimum Government Rights.

Section 403 sets forth the minimum rights the Government is to have in every exclusive or partially exclusive license. These minimum rights include:

“(1) The right to require from the licensee written reports on the use of the invention

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

“(3) The right to license State, local, or foreign governments to practice the invention or have it practiced for them if the agency determines that reservation of this right would serve the national interest.”.

Sec. 404. March-in Rights.

Section 404 sets forth the basis on which the responsible agency may terminate an exclusive or partially exclusive license.

Subsection (a) sets forth the grounds for such termination:

"(1) If the licensee has not taken and is not expected to take timely and effective action to achieve practical application of the invention in the fields of use affected;

(2) If necessary to protect national security;

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

"(4) If the licensee'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 licensee has failed to comply with the terms of the license.”

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.

Sec. 405. Regulations.

Section 405 makes the Office of Federal Procurement Policy responsible for directing the issuance of regulations specifying the terms and conditions upon which federally-owned patent rights may be licensed. Agencies are permitted to deviate from such regulations on a class basis unless prohibited by the Office of Federal Procurement Policy.

TITLE V-MISCELLANEOUS
Sec. 501. Patent Enforcement Suits and Right of Intervention.

Section 501 provides for enforcement of an exclusive license under the Act by an exclusive licensee without the necessity of joining the United States as a party. The intention is to make the exclusive license the functional equivalent of title within the specified fields of use. However, the Attorney General and the agency that granted the license must be given prompt notice of the suit and served copies of papers as though they were parties to the suit.

Sec. 502. Background Rights.

Section 502 provides that nothing in the Act shall be construed to deprive the owner of any background patent or of rights under such a patent.

Sec. 503. Notice, Hearing, and Jucicial Review.

Subsection (a) requires that agency determinations under sections 201 (failure to submit the reports required by subsection (b) of section 201], 206(a) and 206(c) [Government march-in rights), and 404 (Government march-in rights) must have written reasons and be preceded by public notice and an opportunity for a hearing in which the United States, any agency, and any interested person may participate.

Subsection (b) permits the United States or an adversely affected participant to appeal a subsection (a) determination to the United States Court of Claims within sixty days after it is issued. The Court of Claims is given exclusive jurisdiction to determine the matter de novo, affirming, reversing, or modifying the agency determination.

Sec. 504. Relationship to Other Laws.

Section 504 is intended to remove any implication that the Act provides immunity from the antitrust laws.

Sec. 505 Authority of Federal Agencies.

Subsections (a), (b), (c), (d), (e), and (f) set forth the authority of Federal agencies to protect patent rights at home and abroad in,

"Any invention in which the Government has an interest in order to promote the ue of inventions having significant commercial potential or otherwise advance the national interest;"

To license federally-owned patent rights; to transfer patent rights to and accept transfers of patent rights from other agencies without regard to the property transfer procedures required by the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 471); to withhold publication or release of information disclosing any invention long enough for patent applications to be filed; to promote the licensing of federally-owned patent rights; and to enter into contracts to accomplish the purpose of this section.

Sec. 506. Responsibilities of the Secretary of Commerce.

Section 506 provides the authorities necessary for the Department of Commerce effectively to assist other Federal agencies administer the licensing of federallyowned inventions or to do so entirely by itself based on a transfer of patent rights to a federally-owned invention to the Department of Commerce pursuant to section 505(3).

Paragraph (aX1) authorizes the Secretary of Commerce to coordinate a program to help agencies carry out their authorities under the Act.

Paragraph (a)(2) authorizies the Secretary to publish notices of all federally-owned patent rights available for licensing.

Paragraph (a)(3) authorizes the Secretary to evaluate inventions referred to it by Federal agencies in order to identify those inventions with the greatest commercial potential.

Paragraph (a)(4) authorizes the Secretary to develop and manage a governmentwide program, with private sector participation, to stimulate transfer to the private sector of potentially valuable federally-owned technology.

Paragraph (a)(5) authorizes the Secretary to assist the Federal agencies in seeking and maintaining patent protection in any country, including the payment of fees and costs.

Paragraph (a)(6) authorizes the secretary to consult with the Federal aagencies about areas of science and technology with commercial potential.

Subsection (b) authorizes the appropriation to the Secretary of Commerce of such sums as thereafter may be necessary to enable the Secretary to carry out responsibilities under this section.

Sec. 507. Definitions.

Section 507 sets out the definitions, for purposes of the Act, for the terms "Agency”, “Responsible agency”, “antitrust laws”, “contract”, “contractor”, “Federal employee", "invention”, “made”, “nonprofit organization”, “patent rights”, “practical application”, “small business”, "state", "local”, and “will”.

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