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(b) After notice under the act has been given (but before an order is made). In any of the manners above set forth provided, in addition, the notice is withdrawn in the manner provided in § 811.1112-9 (a).

§ 811.1113-2 Delegate not to prejudice the Government's rights. Where prior to the making of an order the licensor voluntarily agrees to reduce the rates or amounts of any royalties which are charged or chargeable to the War Department, and the Government does not execute the agreement which effects such reduction, the delegate or technical service having the matter in hand shall not, in correspondence or otherwise, purport to agree that the Secretary of War or the head of any other department or agency of the Government will for any period forbear to exercise his powers under the act.

§ 811.1113-3 Voluntary adjustments executed by the Government. (a) Contracts which effect a voluntary adjustment of royalties may, provided no order has been made under the act and under the conditions stated in the following subparagraphs, be executed on behalf of the United States. Such contracts may be prepared in substantial conformity with War Department Contract Form No. 29 (see § 813.1329 hereof). The following paragraphs apply whether or not that form is used.

(b) If entered into before a notice under the act has been given, such contract (1) may include as parties (in addition to the United States) either the licensor alone, or the licensor and all licensees materially affected, (2) shall be executed on behalf of the United States by a delegate having authority in the matter, and (3) does not require approval of the Director except where that approval is expressly required by paragraphs (d), (e) or (f) below or by § 811.1113-7 (a). If the contract is with licensor alone, the provisions of § 811.1113-8 apply; if the contract is with licensor and licensee(s), the provisions of § 811.1113-7 apply.

(c) If entered into after a notice under the act has been given (but before an order is made), such contract is subject to the provisions of paragraph (b) above, and in addition shall contain or be accompanied by a signed consent or release substantially conforming to the form thereof set forth in § 811.1112-9

(a), unless the Director has authorized a deviation from or omission of the same.

(d) No such contract shall, without the approval of the Director, contain any provision which would prejudice or impair in any way the right of the head of any department or agency of the Government to make other or further adjustment of the rate or amount of royalties specified in the original license or in the contract adjusting the royalties (see article 6 in § 813.1329).

(e) There is no power in the Secretary of War or any of his delegates to bind the head of any department of the Government other than the War Department to forbear from further adjusting the rates or amounts of royalties which are charged or chargeable to such other departments than the War Department. If such contract provides that no further adjustment of the rates or amounts of royalties will be made for any specified period after the date of the contract, the contract must be executed by or on behalf of the head of each department or agency to which such royalties may be charged or chargeable, must be approved in behalf of the War Department by the Director, and may be approved by him provided the total amount of royalties which will be charged to the War Department or to all departments or agencies thus bound is a fixed amount or an amount determinable at the time the contract is executed, and there is reason to believe that such amount is not and will not become unreasonable or excessive.

(f) The Director may exempt from renegotiation all royalties to be collected pursuant to the terms of such contract, in cases among others where the profits to be derived from the contract can be determined with reasonable certainty at the time of execution thereof in behalf of the Government and in the opinion of the Director the royalties to be retained by the licensor will not yield excessive profits to him. (See § 812.1205–5 (a)). In requesting the Director's approval of such a contract, the delegate shall state the profits to be derived from the contract by the licensor, his conclusion that such profits will not be excessive and his reasons for such conclusion.

§ 811.1113-4 Contract articles providing for royalty, refund or price reduction. (a) It is contemplated that, in the use of War Department Contract Form No. 29, the royalty adjustment would ordinarily

take effect as of some convenient past date (for example, the beginning of one of the quarterly royalty periods provided in the license) and that the adjustment will apply to all government royalties accruing since that date. Provision is made in Form No. 29 for a definition of the term "subject royalties" in such manner that, when the agreed past date is inserted in one of the definitions forming a part of the contract (see especially subparagraphs (e) and (f) of § 813.1329, Art. 1), the term "subject royalties" may then be used in other articles of the contract without repeating the definition. The contract articles appearing below are intended for use only when accompanied by the definitions set forth in § 813.1329, Art. 1, with an agreed date inserted.

(b) The following contract articles providing for royalty refund or price reduction, when accompanied by the definitions of terms used therein as set forth in Article 1 of § 813.1329, are appropriate for use in the manner set forth in §§ 811.1113-7 to 811.1113-9 below:

ARTICLE

Refund of royalties.

A. Licensor agrees (1) forthwith to deliver to [name and address of officer or board] a written report signed by Licensor showing the amount and manner of computation of that part of the subject royalties which have prior to the date of this contract been received by Licensor 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. 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 (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.

C. Licensor agrees to and does hereby authorize and direct Licensee [or, the licensee named in said license] (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 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, (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.

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 written 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.

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(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.

§ 811.1113-5 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:

(a) If royalties being paid under a nonexclusive license are being adjusted the following contract article is appropriate whether or not licensee is a party to the contract:

ARTICLE

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

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

ARTICLE-----

Release of 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 by or for the Government of any patent covering the said inventions by reason of the manufacture, use, sale or other disposition of any article or material or the use of any process prior to the date of and during the period of this contract or the use, sale or other disposition thereafter of any article or material manufactured or contracted for prior to the date of and during the period of this contract. [Proc. Reg. 11, C 52, Oct. 11, 1945, 10 F.R. 13183]

§ 811.1113-6 Mandatory contract articles in royalty adjustment agreements executed by the Government. (a) 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.

(b) 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 § 809.985 (h)).

(c) 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). [Proc. Reg. 11, revised to Aug. 10, 1945, 10 F.R. 10645, as amended by C 52, Oct. 11, 1945, 10 F.R. 13183]

§ 811.1113-7 Contracts between the Government, the licensor and the licensee. (a) 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 § 811.1113-4.

(b) 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 (1) for price reduction (using articles A and G of § 811.1113-4, 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 (2) to effect running recapture from licensee of excess royalties (using articles A, E and F of § 811.1113-4.

(c) 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 (1) 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 (2) 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 paragraphs (a) and (b) above, suitably modified as circumstances require.

(d) Attention is called to the provisions of §§ 811.1113-5 and 811.1113-6 relating to release of infringement claims and mandatory articles in royalty ad

justment contracts to which both the licensee and the Government are party.

§ 811.1113-8- Contracts between the Government and the licensor which are not executed by the licensee. (a) 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 § 811.1113-4.

(b) 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 § 811.1113-4.

(c) 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.

(d) Attention is called to the provisions of § 811.1113-6 relating to the use of mandatory articles in royalty adjustment contracts to which the Government is a party.

§ 811.1113-9 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 modifilcations:

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

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

(c) 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.

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

(e) In § 813.1329, Art. 3 the appropriate articles would be those specified in paragraphs (a) or (b) of § 811.1113-8. (f) The provisions of § 813.1329, Articles 5 and 7 should be omitted.

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

§ 811.1113-10 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:

(a) A memorandum of facts (in triplicate), containing so far as practicable and appropriate the information listed in § 811.1112-27 and, in addition, a statement of:

(1) The nature and extent of the adjustment.

(2) Estimated benefits to the Government.

(3) Methods proposed for supervision or control of the Government's interest. (4) Future action contemplated.

(b) 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).

(c) 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 § 811.1112-9 (c).

(d) 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.

§ 811.1113-11 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 § 811.1113-10 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.

§ 811.1113-12 Numbering and distribution. (a) It is unnecessary to number royalty adjustment agreements, notwithstanding the provisions of § 803.309.

(b) 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:

(1) 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.

(2) 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.

(c) 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.

(d) If a royalty adjustment agreement contains provisions such as to require both that it be forwarded to the General Accounting Office (paragraph (b) above) and that it be recorded in the Patent Office (paragraph (c) 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 paragraph (b) and recorded under paragraph (c) above, and the executed duplicate original shall be used for complying with paragraph 4 of AR 25-10.

§ 811.1114 Agreements in settlement and compromise after an order is made and before suit against the United States has been instituted. (See § 811.1112–7.)

§ 811.1114-1 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.

§ 811.1114-2 Submission for approval. (a) 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:

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

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

(b) 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.

§ 811.1114-3 Numbering and distribution. (See § 811.1113-12.)

§ 811.1115 Investigation of, and licenses, assignments and releases eliminating claims for, the unauthorized use of inventions.1

§ 811.1115-1 Applicable statutes. (a) The act of June 25, 1910 as amended (35 U.S.C. 68, 94) (hereinafter called "the Act of 1910") provides that wherever an

1 Section 811.1115 to 811.1115-22, inclusive, became effective December 12, 1944.

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