ages from anyone (including the Government under 28 U.S.C. 1498(b)) for the economic injury already sustained. In the case of trade secrets, the owner's rights are governed by the contractual relationship between him and the person to whom he discloses it (28 U.S.C. 1498 does not apply to trade secrets).

§ 12-9.107-350 DOT policy on data, patent rights, and recovery of developmental costs.

It is DOT policy in negotiating contracts under which the Government pays a part or all of the costs of research or development, to acquire for the benefit of the United States, rights to data and patent rights, based on the criteria set forth in the Presidential Memorandum and Statement of Government Patent Policy, and to recover the Government's contribution toward such research and development through royalties to the Government upon commercial exploitation of the products developed.

§ 12-9.107-450 Patent Rights clauses.

Use of Patent Rights clauses in contracts is governed by FPR 1-9.107 and § 12-9.107-451. Contracting Officers shall consult Patent Counsel for advice and interpretation of these sections.

§ 12-9.107-451 Pre-award Patent Rights Documentation Checklist.

In addition to the procedures of FPR 1-9.107-4, the "Preaward Patent Rights Documentation Checklist" set forth below shall be used in determining the appropriate Patent Rights clause to be incorporated in a request for proposals in procurements involving experimental, developmental, or research work. The Checklist shall be made a part of the contract file.

(Authorized for Local Reproduction) PRE-AWARD PATENT RIGHTS DOCUMENTATION CHECKLIST

Procurement Identification:
Purpose of Proposed Procurement:

1. Is a principal purpose of the proposed contract, either by itself or as one of a series of directly related contracts, to create, develop or improve an end item intended for

If "Yes", identify the end item and cite applicable regulation. (See FPR 1-9.1073(a)(1).)

3. Is a principal purpose of the contract exploration into a field directly concerned with public health, public safety, or public welfare (as distinguished from items predominantly of military concern)?2 (See FPR 1-9.107-3(a)(2).) Yes -No

If "Yes", identify such principal purpose of the contract and briefly describe its relationship to the public health, or public safety, or public welfare.

4. Is the contract for procurement in a field of science or technology in which there has been little significant experience outside of work funded by the Government? 3 (See FPR 1-9.107-3(a)(3).) Yes -No

If "Yes", briefly describe such field.

5. Is the contract for procurement in a field of science or technology in which the Government has been the principal developer of the field? (See FPR 1-9.107-3(a)(3).) Yes-No

If "Yes", briefly describe such field.

6. If the answer to either 4 or 5 is "Yes", would the contractor be likely to get a preferred or dominant commercial position in that field if he were permitted to acquire title to inventions made under the contract? (See FPR 1-9.107-3(a)(3).) Yes --No

mental, developmental or research work at that facility? (See FPR 1-9.107-3(a)(4)(i). Yes- - No

8. Does the contract require the contractor to coordinate and direct the work of others (as distinguished from the normal contractor-subcontractor relationship)

which might result in a potential organizational conflict of interest? (See FPR 19.107-3(a)(4)(ii).) Yes No

If "Yes", explain briefly why such a potential conflict of interest is considered to exist.

(Typed Name, Office and Signature of Person Completing This Form)

The Patent Rights Acquisition by the Government Clause, FPR 1-9.107-5(a), will will not be used in the solicita

tion. (Give reasons for determination.)

(Typed Name and Signature of Contracting Officer or Representative)

§ 12-9.150 Background patents (license). (a) Insert the clause set forth in § 12-7.150-12 in all contracts requiring a "Patents Rights-Acquisition by the Government" or "Patent Rights-Deferred" clause (either long or short form).

(b) Insert the clause in supply contracts when the Department buys the product for test or evaluation purposes and where, as a result of the government's efforts, a commercial market for the product may be created or enhanced.

(c) The clause need not be used in supply contracts:

(1) Where the product to be tested (or evaluated) is substantially complete for the commercial purpose for which it is being tested (or evaluated),

or

(2) Where the prospective contractor's monetary contribution to the program resulting in the development of the hardware is substantially greater than the Government's monetary contribution, or

(3) Where the commercial market for the product existed prior to, or will not be created primarily as a result of, the Government's test or evaluation.

(d) The Contracting Officer may alter the clause to suit a particular situation. However, any such alteration must accord with DOT policy requir

ing, whenever investment of public funds in a program which may create or enhance the market for a product required in the interest of public health, safety, or welfare, that the Government receive assurance that the product will be available at reasonable prices, and in sufficient quantity and quality to meet the public needs. To this end, the contractor must agree to license the manufacture and sale of any such product under any patents under which he has the right to grant such licenses, such license to be restricted to use on products to which the contract relates.clause to the court from which the injunction is sought. § 12-9.151 Authorization and consent.

(a) Under 28 U.S.C. 1498, any suit for infringement of a United States patent based on the manufacture or use by or for the United States of an invention described in and covered by a patent of the United States by a contractor or by a subcontractor (including lower-tier subcontractors) can be maintained only against the Government in the Court of Claims and not against the contractor or subcontractor, in those cases where the Government has authorized or consented to the manufacture or use of the patented invention. Accordingly, to insure that work by a contractor or subcontractor under a Government contract may not be enjoined by reason of patent infringement, authorization and consent shall be given as herein provided. The liability of the Government for damages in any such suit against it may, however, ultimately be borne by the contractor or subcontractor in accordance with the terms of any patent indemnity clause also included in the contract, and an authorization and consent clause does not detract from any patent indemnification commitment by the contractor or subcontractor. Therefore, both a patent indemnity clause and an authorization and consent clause may be included in the same contract.

(b) Contracts shall not include any provision whereby the Government expressly agrees to indemnify the contractor against liability for patent infringement.

or

or

(a) When prohibited by § 12–9.151(c);

(b) In contracts for experimental, developmental, or research work in which the clause of § 12-9.151-(2) is required.

§ 12-9.151-2 Authorization and consent in contracts for research and development.

Greater latitude in the use of patented inventions may be necessary in a contract for experimental, developmental, or research work than in a contract for supplies. Unless prohibited by § 12-9.151(c), the clause set forth in § 12-7.350-2 of this chapter shall be included in all contracts calling exclusively for experimental, developmental, or research work, and may be included in contracts calling for both supplies and experimental, developmental, or research work where the latter work is a primary purpose of the contract. In all other contracts for both supplies and experimental, developmental, or research work, the Authorization and Consent clause cited in 12-9.151-1 shall be used. If the clause set forth in § 12-7.350-2 of this chapter is included in a contract, the clause cited in § 12-9.151-1 shall not be included.

§ 12-9.152 Patent indemnification of Government by contractor.

In order that the Government may be reimbursed for liability for patent infringement arising out of or resulting from the performance of construction contracts or contracts for supplies which normally are or have been sold or offered for sale to the public in the commercial open market or which are the same as such supplies with a rela

tively minor modification thereof, a clause providing for indemnification of the Government is to be included in such contracts in accordance with the instructions set forth below. A patent indemnity clause shall not be used in contracts:

(a) Where the Authorization and Consent clause of § 12-9.151-2 applicable to research and development contracts is authorized, except that in contracts calling also for supplies of the kind described above, a patent indemnity clause may be used with respect to such supplies;

(b) Where the contract is for supplies which clearly are not or have not been sold or offered for sale to the public in the commercial open market. However, even in the foregoing instance, a patent indemnity clause may be included where (1) in the case of contracts to be awarded by formal advertising it is desired to obtain an indemnity as to specific components or spare parts so sold or offered for sale, in which case the clause shall be modified pursuant to § 12-9.152-1(b); or (2) in the case of contracts to be awarded either by formal advertising or negotiation, a patent owner contends that the prospective procurement would infringe his patent and the low bidder or offeror is willing to indemnify the Government as to such patent either (i) without increase in price on the basis that the patent is invalid or not infringed, or (ii) for other good reasons;

(c) Where both performance and delivery are to be outside the United States, its possessions, or Puerto Rico, unless the contract indicates that the supplies are ultimately to be shipped into the United States, its possessions, or Puerto Rico, in which case the 12instructions of §§ 12-9.152-1 or 9.152-3 are applicable; or

(d) Where the contract is for an amount of $10,000 or less, except that, as a matter of administrative convenience, the clause need not be deleted where it is a part of a standard form being used for contracts of $10,000 or less, since it is self-deleting as to such contracts.

§ 12-9.152-1 Patent-indemnification in formally advertised contracts—commercial status predetermined.

(a) Except as prohibited by § 129.152, the clause set forth in § 127.151-1(a) of this chapter is appropriate in formally advertised construction contracts and shall be included in formally advertised contracts for supplies when it has been determined in advance of issuing the invitation for bids that the supplies (or such supplies apart from relatively minor modifications to be made thereto) normally are or have been sold or offered for sale by any supplier to the public in the commercial open market.

(b) Where a supply contract calls in part for specific components or spare parts which normally are or have been sold or offered for sale by any supplier to the public in the commercial open market, or such items with relatively minor modifications, the Patent Indemnity clause of paragraph (a) of this section shall be modified by adding to the end of the clause either of the following sentences:

The foregoing shall not apply to the following: (Specifically identify the items to be excluded from the Patent Indemnity clause.)

or

The foregoing shall apply only to the following: (Specifically identify the items to which the Patent Indemnity clause applies.)

§ 12-9.152-2 Patent indemnification in negotiated contracts.

(a) A patent indemnity clause is not required to be included in negotiated contracts, but may be included (1) in negotiated construction contracts, (2) as authorized in § 12-9.152(b)(2), and (3) in negotiated contracts for supplies where such supplies normally are or have been sold or offered for sale to the public in the commercial open market, or are such supplies with relatively minor modifications made thereto. Ordinarily, the contracting officer, in consultation with the contractor, should be able to determine whether the supplies being purchased normally are on sale or have been sold or offered for sale to the public in the commercial open market.

(b) Subject to the foregoing and to the prohibitions in § 12-9.152, the clause set forth in § 12-9.152-1(a) is approved for use in negotiated contracts for construction work or supplies.

(c) Where a supply contract calls in part for specific components or spare parts which normally are or have been sold or offered for sale to the public in the commercial open market, or such items with relatively minor modifications, the patent indemnity clause of § 12-9.152-1(a) shall be modified by adding to the end of the clause either of the following sentences:

The foregoing shall not apply to the following: (Specifically identify the items to be excluded from the Patent Indemnity clause.)

or

The foregoing shall apply only to the following: (Specifically identify the items to which the Patent Indemnity clause applies.)

§ 12-9.152-3 Waiver of indemnity by the Government.

In the event that it is desired to exempt one or more specified United States patents from the patent indemnity clause of § 12-9.152-1, authority shall first be obtained from the head of the agency and the clause set forth in § 12-7.151-1(b) shall be included in the contract, in addition to the patent indemnity clause.

§ 12-9.153 Notice and assistance.

The Government should be notified by the contractor of all claims of infringement in connection with the performance of a Government contract which come to the contractor's attention. The contractor should also assist the Government, to the extent of evidence and information in the possession of the contractor, in connection with any suit against the Government, or any claims against the Government made before suit has been instituted, on account of any alleged patent or copyright infringement arising out of or resulting from the performance of the contract. Accordingly, the clause set forth in FPR 1-7.103-4 shall be included in all contracts in excess of $10,000 for supplies, construction, or experimental, developmental, or re

the

search work: Provided, That clause shall not be included in contracts:

(a) Where both performance and delivery are to be outside the United States, its possessions, or Puerto Rico, unless the contract indicates that the supplies are ultimately to be shipped into the United States, its possessions, or Puerto Rico; or

(b) Of $10,000 or less, except that as a matter of administrative convenience, the clause need not be deleted when it is a part of a standard form being used for such contracts, since it is self-deleting.

§ 12-9.154 Classified contracts.

Unauthorized disclosure of classified subject matter, whether in patent applications or resulting from the issuance of a patent, may be a violation of 18 U.S.C. 791 et seq. (Espionage and Censorship) and related statutes and may be contrary to the interests of national security. Accordingly, the clause set forth in § 12-7.151-2 of this chapter shall be included in every classified contract and every contract which covers or is likely to cover classified subject matter.

§ 12-9.154-1 Classified

tracting officer's duties.

contracts-con

(a) Upon receipt from the contractor of a patent application, not yet filed, which has been submitted by the contractor in compliance with paragraphs (a) or (b) of the clause in § 12-9.154, the contracting officer shall ascertain the proper security classification of the patent application. Upon a determination that the application contains classified material, the contracting officer shall inform the contractor of any instructions deemed necessary or advisable relating to transmittal of the application to the U.S. Patent Office in accordance with procedures in the Department of Defense Industrial Security Manual for Safeguarding Classified Information. If the material is classified "Secret" or higher, the contracting officer shall make every effort to notify the contractor of the determination within 30 days pursuant to paragraph (a) of the clause.

(b) In the case of all applications filed under the provisions of this para

graph, the contracting officer, upon receiving the application serial number, the filing date, and the information furnished by the contractor under paragraph (d) of the clause, shall promptly submit that information to personnel having cognizance of patent matters in order that necessary steps may be taken to insure the security of the application.

(c) A request for the approval referred to in paragraph (c) of the clause in § 12-9.154 must be considered and acted upon promptly in order to avoid the loss of valuable patent rights of the Government or the contractor.

§ 12-9.155 Register of Government rights in inventions.

(a) Licenses, assignments, or other documents evidencing any rights of the Government in inventions shall be reviewed to assure that each such document fully confirms the rights to which the Government is entitled.

(b) The original and a copy of each such document shall be forwarded to the activity designated by administration regulations for receiving such documents. This latter activity shall forward the originals of all licenses, assignments, or other documents evidencing any rights of the Government in or under any patents or applications for patents to the Commissioner of Patents for recording in accordance with Executive Order No. 9424 of February 18, 1944.

§ 12-9.156 Reporting of royalties—anticipated or paid.

(a)(1) The term "royalties", as used in this section, refers to any costs or charges in the nature of royalties, license fees, patent or license amortization costs, or the like, for the use of or for rights in patents or patent applications.

(2) To determine whether royalties anticipated or actually paid under Government contracts are excessive, improper, or inconsistent with rights which the Government may possess in particular inventions, patents, or patent applications, the Department shall require royalty information and reports as prescribed below. See § 129.158 for action to be taken to reduce