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(g) Dominating Background Patents. (1) Definitions.

(i) "Background Patents” means a foreign or domestic patent (regardless of its date of issue relative to the date of this contract).

(A) Which the Contractor, but not the Government, has the right to license to others; and

(B) Infringement of which cannot be avoided upon the practice of a Subject Invention or Specified Work Object.

(ii) “Commercial Item" means:

(A) Any machine, manufacture, or composition of matter which, at the time of a request for a license pursuant to this section, is offered for sale or otherwise made available commercially to the public in the regular course of business, at terms reasonable in the circumstances; and

(B) Any process which, at the time of a request for a license, is in commercial use, or is offered for commercial use, so the results of the process or the products produced thereby are or will be accessible to the public at terms reasonable in the circumstances.

(iii) To "practice an invention or patent" means the right of a licensee on his own behalf to make or have made, use or have used, sell or have sold, or otherwise dispose of according to law, any machine, design, manufacture, or composition of matter physically embodying the invention, or to use or have used the process or method comprising the invention.

(iv) "Specified Work Object" means the specific process, method, machine, manufacture, or composition of matter (including relatively minor modifications thereof) which is the subject of the experimental, developmental, or research work performed under this contract.

(2) Contractor agrees that he will make the Background Patent available for use in conjunction with (A) any Subject Invention and (B) any Specified Work Object which is in the field of technology where the work of the contract falls. This may be done:

(i) By making available an embodiment of the Subject Invention or Specified Work Object, which incorporates the invention covered by the Background Patent, as a Commerical Item of reasonable quality, in sufficient quantity, and at reasonable prices to satisfy market needs; or

(ii) By the sale of an embodiment of the Background Patent as a Commercial Item in a form which can be employed in the practice of the Subject Invention or the Speci. fied Work Object or can be so employed with relatively minor modifications or demonstrating to the satisfaction of the Solicitor that a competitive alternative to such an embodiment is offered for sale, or otherwise made available commercially to the public, which is of reasonable quality, in sufficient

quantity, and at reasonable prices to satisfy market needs; or

(iii) By the licensing of the domestic Background Patent at reasonable terms, including reasonable royalties to responsible applicants on their request.

(3)(i) When a license to practice a domestic Background Patent in conjunction with any Subject Invention or any Specified Work Object for the technology where the work of the contract falls is requested, in writing, by a responsible applicant, and such Background Patent is not available as set forth in subparagraphs (g)(2)(i) or (ii) of this clause, the Contractor shall have six (6) months from the date of his receipt of such request to decide whether to make such Background Patent so available. The Contractor shall promptly notify the Contracting Officer, in writing within the said six months, of any such request for a license to practice a Background Patent in conjunction with a Subject Invention or Specified Work Object, which the Contractor or his licensee wishes to attempt to make available as set forth in subparagraphs (g)(2)(i) or (ii) of this clause. The Secretary shall then designate the reasonable time within which the Contractor must make such Background Patent available in reasonable quantity and quality, and at a reasonable price. If the Contractor or his licensee decides not to make such Background Patent so available, or fails to make it available within the time designated by the Secretary or his designee, the Background Patent shall be licensed to a responsible applicant at reasonable terms, including a reasonable royalty, in conjunction with (A) the Specified Work Object, or (B) the Subject Invention; and may be limited by the licensor for practice in the field of technology where the work of the contract falls.

(ii) The Contractor agrees to grant or have granted to a designated applicant, upon the written request of the Government, a nonexclusive license at reasonable terms, including reasonable royalties, under any foreign Background Patent in furtherance of any treaty or agreement between the Government of the United States and a foreign government for the governmental purpose of such foreign government if an embodiment of the Background Patent is not commercially available in that country. Such license may be limited by the licensor to the practice of such Background Patent in conjunction with the Subject Inventions or Specified Work Objects in the field of technology where the work of the contract falls.

(iii) The Contractor agrees it will not seek injunctive relief or other prohibition of the use of the invention in enforcing its rights against any responsible applicant for such license and that it will not join with others

the right to license a patent which would be a Background Patent if owned by the Contractor, but which is not available as the Commercial Item as specified in subparagraphs (g)(2)(i) or (ii) of this clause, and a qualified applicant requests a license under such patent for practice in the field of technology where the work of the contract falls in connection with the use of any Subject Invention or any Specified Work Object, the Contractor shall, at the written request of the Government, recommend to his parent company, or affiliated company, as the case may be, the granting of the requested license on reasonable terms, including reasonable royalties, and actively assist and participate with the Government and such applicant, as to technical matters and in liaison functions between the parties, as may reasonably be required in connection with any negotiations for issuance of such license. For the purpose of this paragraph:

(i) A parent company is one which owns or controls, through direct or indirect ownership of more than 50 percent of the outstanding stock entitled to vote for the election of directors, another company or other entity; and

(ii) Affiliated companies are companies or other entities owned or controlled by the same parent company.

in any such action. It is understood and agreed that the foregoing shall not affect the Contractor's right to injunctive relief or other prohibition of the use of Background Patents in areas not connected with the practice of a Subject Invention or Specified Work Object in the field of technology where the work of the contract falls, or where the Contractor has made available the Commercial Item as set out in subparagraphs (g)(2)(i) or (ii) of this clause.

(4) For use in the field of technology where the work of the contract falls in conjunction with (A) any Specified Work Object, or (B) and Subject Invention, the Contractor agrees to grant to the Government a license under any Background Patent. Such license shall be nonexclusive, nontransferable, royalty-free, and worldwide to practice such patent which is not available as a Commercial Item as specified in subparagraphs (g)(2)(i) or (ii) of this clause for use of the Government in connection with research, development, or demonstration work only. Subject to the royaltyfree license provided for in this subparagraph and to any license provisions set forth elsewhere in this patent clause, or in other contracts or agreements, any royalty charged the Government under such license shall be reasonable and shall give due credit and allowance for the Government's contribution, if any, toward the making, commercial development or enhancement of the invention(s) covered by the Background Patent.

(5) Any license granted under a process Background Patent for use with a specified Work Object may be additionally limited by the Contractor to employment of the Background Patent under conditions and parameters reasonably equivalent to those called for or employed under the contract.

(6) It is understood and agreed that the Contractor's obligation to grant licenses under Background Patent shall be limited to the extent of the Contractor's right to grant the same without breaching any unexpired contract it had entered into prior to this contract or prior to the identification of a Background Patent, or without incurring any obligation to another solely on account of said grant. However, where such obligation is the payment of royalties or other compensations, the Contractor's obligation to license his Background Patent shall continue and the reasonable license terms shall include such payments by the applicant as will at least fully compensate the Contractor under said obligation to another.

(7) On the request of the Contracting Of. ficer, the Contractor shall identify and describe any license agreement which would limit his right to grant a license under any Background Patent.

(8) In the event the Contractor has a parent or an affiliated company, which has

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8 14R-9.109-1 Patent rights follow-up.

It is important that the Government and the contractor know and exercise their rights in inventions conceived or first actually reduced to practice in the course of or under Government contracts in order to ensure their expeditious availability to the public, to enable the Government, the contractor, and the public to avoid unnecessary payment of royalties and to defend themselves against claims and suits for patent infringement. To attain these ends, contracts having Patent Rights clauses should be so administered that:

(c) Ordinarily, inventions and discoveries will be reported on Form DI-1217 (copies of which shall be made available by OWRT) or on such other form that has been approved by OWRT. Reporting of inventions promptly and before the completion of the work under the respective contracts will aid patent clearance. Submission of annual interim reports, where contracts cover an extended period, will also facilitate the disposition of patent matters and expedite the issuance of final patent clearance.

(a) Inventions are identified, disclosed, and reported as required by the contract clauses;

(b) The rights of the Government in such inventions are established;

(c) When appropriate, patent applications are timely filed and prosecuted by the contractor, the inventor, or by the Government as appropriate;

(d) The filing of patent applications is documented by formal instruments such as licenses or assignments; and

(e) Expeditious commercial utilization of such inventions is achieved. § 14R-9.109–2 Follow-up by contractor.

(a) The Patent Rights clause requires contractors to establish and maintain effective procedures to ensure that inventions made under the contract are identified, disclosed, and when appropriate, patent applications filed, and that the Government's rights therein are established and protected. When it is determined after the award of a contract that the contractor or subcontractor may not have a clear understanding of the rights and obligations of the parties under a Patent Rights clause, a post-award ori

ation conference or letter should be used by OWRT to explain these rights and obligations. When reviewing a contractor's procedures, particular attention shall be given to ascertain their effectiveness for identifying and disclosing inventions.

(b) A qualified representative of the contractor shall furnish to the contracting officer interim reports upon request, and upon completion of the contract work, a final report setting forth:

(1) A list of all Subject Inventions made during the reporting period;

(2) A certification that all Subject Inventions have been disclosed or that there were no such inventions, and that the contractor's procedures for identifying and disclosing inventions have been followed throughout the period; and

(3) A list of all subcontracts entered into during the reporting period which contain a Patent Rights clause, together with copies of such subcontracts (if not earlier furnished to OWRT), or a statement that there were no such subcontracts.

§ 14R-9.109-3 Follow-up by Government.

(a) With respect to each contract, subcontract, or other agreement under their jurisdictions, the heads of OWRT's procuring activities are responsible:

(1) For assuring compliance with the provisions of this Part 14R-9 in executing or approving any contracts, subcontracts, other agreement, understandings, or other arrangements, or any supplements thereto. The Solicitor should be consulted to ensure that only authorized departure is made from the requirements set forth in these regulations and that all substantive and procedural rights required by section 9 of the Federal Nonnuclear Energy Research and Development Act of 1974, as cited in section 408 of the Water Research and Development Act of 1978 are obtained;

(2) For transmitting the information furnished by the contractor as requested by the Solicitor;

(3) For reviewing, in consultation with the contractor, subcontractor, or vendor, arrangements for obtaining adequate patent agreements from employees and others performing work under any contract, subcontract, or other agreements containing patent provisions in favor of the Government. (The form of such patent agreement actually in use or proposed for use shall be forwarded for approval to the Solicitor.);

(4) For forwarding a notice of completion or termination of the work and a request for patent clearance to the Solicitor for each contract, subcontract, or other agreement containing

maintain, or follow effective procedures of identifying and disclosing inventions as required by the Patent Rights clause, or fails to correct any deficiency after notice thereof, the contracting officer may require the contractor to make available for examination books, records, and documents relating to inventions in the same field of technology as the contract to enable an agency determination of whether there are such inventions, and may invoke the withholding of payments provision. Further, the contracting officer may invoke the withholding of payments provision if a contractor fails to disclose an invention deemed by OWRT to be a Subject Invention.

patent provisions giving rise to rights in the Government; and

(5) For withholding payments due to contractors in accordance with paragraph (i) of the clause § 14R-9-1075(a) until, in the case of interim reports, a determination has been made in consultation with the Solicitor that existing deficiencies have been correct ed or that delivery of all reports, disclosures, and other information have been made, or, in the case of final reports, receipt of written patent clearance certification from the Solicitor.

(b) Upon receipt of the notice of completion or termination as provided in paragraph (a)(4) of this section, a notice of patent clearance will be issued by the Solicitor when there has been to his best knowledge and belief compliance with the patent provisions.

(c) The Solicitor will assist contracting officers in selecting and negotiating patent provisions, and otherwise assist heads of OWRT's procuring activities, contractors, contracting officer, subcontractors, and vendors in: Reporting of inventions and discoveries; reviewing and providing patent clearance prior to publication or release of reports and proposed techni. cal articles, and prior to public release or disclosure of information regarding scientific and technical developments made in the course of or under the contract; handling claims for patent and copyright infringement; the preparation of certificates to initiate patent clearances; and the handling of other patent matters.

(d) Patent application filing and determination of rights to inventions and discoveries. The Solicitor shall:

(1) Determine whether and where patent protection will be obtained on inventions;

(2) Represent OWRT before domestic and foreign patent offices;

(3) Accept assignments and instru ments confimatory of the Government's rights to inventions; and

(4) Represent OWRT in patent matters not specifically reserved to the Secretary or his designee under these regulations. 8 14R-9.109-4. Remedies.

If a contractor operating under a Patent Rights clause fails to establish,

8 14R-9.109-5 Conveyance of invention

rights acquired by the Government. Whether the Government acquires the entire right, title, and interest in an invention pursuant to a contract or by operation of law, assignments shall be obtained from the inventor to the Government with the consent of the contractor, to perfect or confirm the Government's rights. The form of conveyance of title from the inventor to the contractor must be legally sufficient to convey the rights the contractor is required to convey to the Government.

8 14R-9.109-6 Waivers.

(a) General. The Secretary or his designee may waive all or any part of the rights of the United States (other than certain rights prescribed in paragraph (i) of this section) with respect to any invention or class of inventions made or which may be made by any person or class of persons in the course of or under any contract of OWRT, if it is determined that the interest of the United States and the general public as set forth in the Federal Nonnuclear Energy Research and Development Act of 1974 (42 U.S.C. 5908), and made applicable to OWRT in section 408 of the Water Research and Development Act of 1978, Pub. L. 95-467, will best be served by such waivers. In making such determinations, the Secretary or his designee shall have the following objectives:

(1) Making the benefits of water re- (4) The extent to which the Governsearch, development, and demonstra- ment has contributed to the field of tion programs widely available to the technology to be funded under the public in the shortest practicable time. contract;

(2) Promoting the commercial utili (5) The purpose and nature of the zation of such inventions.

contract, including the intended use of (3) Encouraging participation by pri- the results developed thereunder; vate persons in OWRT's water re (6) The extent to which the contracsearch, development, and demonstra tor has made or will make substantial tion program.

investment of financial resources or (4) Fostering competition and pre technology developed at the contracventing undue market concentration tor's private expense which will director the creation or maintenance of ly benefit the work to be performed other situations inconsistent with the unde the contract; antitrust laws.

(7) The extent to which the field of If it is not possible to attain each of technology to be funded under the these objectives immediately and si contract has been developed at the multaneously for any one waiver de contractor's private expense; termination, the Secretary or his des (8) The extent to which the Governignee will seek to reconcile these ob ment intends to further develop to the jectives in light of the overall purposes point of commercial utilization the reof the patent policy sections of the sults of the contract effort; Federal Nonnuclear Energy Research (9) The extent to which the contract and Development Act of 1974, as made objectives are concerned with the applicable to OWRT in section 408 of public health, public safety, or public the Water Research and Development welfare; Act of 1978. Over time, however, the (10) The likely effect of the waiver application of this waiver policy is ex- on competition and market concentrapected to attain each of these objec- tion; tives. In addition to the patent policies (11) In the case of a nonprofit educaprovided by legislation, and where not tional institution, the extent to which inconsistent therewith, the Solicitor's such institution has a technology waiver determinations will also be transfer capability and program, apguided by the revised Presidential proved by the Secretary or his desigMemorandum and Statement of Gov. nee as being consistent with the appliernment Patent Policy issued August cable policies of this section; and 23, 1971 (36 FR 16887-16892).

(12) The small business status of the (b) Advance waiver. In determining contractor. whether a waiver to the contractor at (c) Waiver of identified inventions. the time of contracting will best serve In determining whether a waiver to the interests of the United States and the contractor or inventor of rights to the general public, the Secretary or an identified invention will best serve his designee shall, as a minimum, spe the interests of the United States and cifically include as considerations the the general public, the Secretary or following:

his designee shall, as a minimum, spe(1) The extent to which the partici- cifically include as considerations the pation of the contractor will expedite the attainment of the purposes of the (1) The extent to which such waiver program;

is a reasonable and necessary incentive (2) The extent to which a waiver of to call forth private risk capital for all or any part of such rights in any or the development and commercializaall fields of technology is needed to tion of such invention; secure the participation of the particu (2) The extent to which the plans, lar contractor;

intentions, and ability of the contrac(3) The extent to which the contrac tor or inventor, will obtain expeditious tor's commercial position may expe commercialization of such invention; dite utilization of the research, devel (3) The extent to which the Governopment, and demonstration program ment has contributed to the field of results;

technology of the invention;

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