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CHAPTER 14R-OFFICE OF SALINE WATER,

DEPARTMENT OF THE INTERIOR

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PART 14R-9-PATENTS AND DATA Sec. 14R-9.000 Scope of part. 14R-9.001 Contracting Officer to con

sult with Solicitor. Subpart 14R-9.1-Inventions and Patents 14R-9.100 Scope of subpart. 14R-9.101 Statutory requirements. 14R-9.101-1 Patent clause requirement. 14R-9.101-2 Definitions. 14R-9.101–2.1 Specified work object. 14R-9.101-2.2 Contractor. 14R-9.101-3 Domestic patent rights. 14R-9.101-4 Exclusion of inventions. 14R-9.101-5 Foreign rights. 14R-9.101-6 Background patents. 14R-9.101-7 Subcontracts. 14R-9.101-8 Reporting of related inven

tions. 14R-9.101-9 Patent clause.

Subpart 14R-9.2-Data 14R-9.200 Scope of subpart. 14R-9.201 Data requirements. 14R-9.202 Data clause.

AUTHORITY: The provisions of this part 14R-9 issued under 5 U.S.C. 1964 ed., sec. 22; sec. 2, Reorganization Plan No. 3 of 1950, 15 F.R. 3174.

SOURCE: The provisions of this Part 14R-9 appear at 36 F.R. 22744, Nov. 30, 1971, unless otherwise noted.

EFFECTIVE DATE: At 36 F.R. 22744 Part 14R-9 was added, effective days after publication. § 14R-9.000 Scope of part.

These regulations and contract clauses set forth the policies of the Office of Saline Water in the area of patents and data.

$ 14R-9.001 Contracting Officer to con

sult with Solicitor. (a) All authority of the Secretary of the Department of the Interior with respect to patent policies and procedures has been delegated to the Solicitor of the Department (Departmental Manual, Part 210, Chapter 2, paragraph 210.2.2A (5)). Therefore, any action under any contract provision required of the contracting officer (or other official having administrative authority over the contract) which affects the disposition of rights in inventions and in the related area of data, shall be taken only after consultation with and approval of the Solicitor of the Department. No modification or alteration of any contract provision in these areas shall be made by the contracting officer without the express written authorization of the Solicitor. Requests for deviation shall be submitted to the Solicitor and the reasons for the actions requested set forth.

(b) The Office of the Solicitor shall be consulted for policies, instructions, and contract clauses concerning inventions, patents, and data for use in contracts which are to be performed outside the United States, its possessions and Puerto Rico. Subpart 14R-9.14 Inventions and

Patents § 14R-9.100 Scope of subpart.

(a) This subpart prescribes contract clauses and instructions which define and implement the policy of the Office of Saline Water of the Department of the Interior with respect to inventions made in the course of or under a contract which in whole or in part is for experimental, developmental or research work.

1 Effective 45 days after publication at 36 F.R. 22744, Nov. 30, 1971.

(b) Definitions of various terms employed in this subpart are to be found in $ 14R-9.101-9. § 14R-9.101 Statutory requirements.

The Department of the Interior is charged with the administration of the Saline Water Act of 1971, Public Law 92-60, wherein the disposition of patent rights in inventions is governed by a specific statutory provision. Section 6(d) states:

All research within the United States contracted for, sponsored, cosponsored, or authorized under authority of this Act, shall be provided for in such 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. This subsection shall not be so construed as to deprive the owner of any background patent relating thereto of such rights as he may have thereunder *

This same language in the earlier Saline Water Act, Public Law 87–295 (42 U.S.C. 1954 (b)) has been interpreted, after a thorough review of the legislative history, as meaning that inventions and resulting patents, etc., arising out of research under the authority of the Act must be made available royalty-free. See Solicitor's Memorandum M-36637 of

ay 7, 1962, 69 I.D. 54 (1962). $ 14R-9.101-1 Patent clause require

ment. All Office of Saline Water contracts which are in-whole or in part for experimental, developmental, or research work shall contain the patent clause set out at $ 14R-9.101-9. § 14R-9.101-2 Definitions.

The definitions of various key terms employed in the regulations and patent clause are set forth in paragraph (a) of § 14R-9.101-9, the patent clause. § 14R-9.101-2.1 Specified work object.

The term "specified work object" relates to the tangible device or specific process upon which the research and development work is being conducted and is in existence or is known prior to the

contract. For example, in a contract for improving the permeability ratio of a reverse osmosis membrane of a stated composition, the membrane that is being experimented with would be the "specified work object". The difference between this term and the objective of the contract is that the latter is the goal sought in the research effort (in this case an improved permeability ratio), whereas the former relates to the material being worked upon. Under the contract provisions, any background patent necessary to the practice of a Specified Work Object for water desalination will be made available either through commercially available embodiments or through licensing as set forth in § 14R-9.101-9 (d).

In some types of research, such as basic research where the primary object is the development of new knowledge as distinct from the improvement of an existing device or process, there may well be no specified work object. In such case the following may be added, with the approval of the Solicitor, to paragraph (g) (12) of § 14R-9.101-9, of the patent clause:

(12) In view of the nature of the research work under this contract, the definition of Specified Work Object given in paragraph (a) (11) of this section is inapplicable in the patent clause. It is agreed, therefore, that all obligations relating to, or flowing from, & Specified Work Object have no force and effect in this patent clause. $ 14R-9.101-2.2 Contractor.

The definition of "Contractor" in the patent clause may in some unusual cases give rise to situations which could cause serious difficulties in contracting. Subject to the approval of the Solicitor, deviations may be made in the definition as are deemed necessary to accommodate the specific problems presented and still attain the main objectives of the Department of the Interior's patent policy as expressed in the regulations. $ 14R-9.101-3 Domestic patent rights.

All patents arising out of R. & D. contracts under the Saline Water Act are required to be made available to the public in the United States royalty-free. This is carried out in paragraph (b) of the patent clause (§ 14R-9.101-9(b)) by hav. ing the Government take title to all inventions made under such contracts. The contractor is granted a royalty-free license under such inventions.

$ 14R-9.101-4 Exclusion of inventions.

(a) Under the terms of the patent clause, an invention is considered made under the contract if it was first conceived or first actually reduced to practice in the course of or under the contract. Where the contractor alleges at the time of contracting that an identified invention was conceived prior to the execution of the contract, and a patent application has been filed or will be filed, he may acquire the right to have the invention excluded from being considered a subject invention even though it is later actually reduced to practice under the contract. The contractor may acquire this right if he can provide evidence sufficient to convince the Contracting Officer that the work actually performed by him had brought the invention to the point of engineering practicality prior to the contract, and an actual reduction to practice under the contract will require no more than routine work. However, data developed in connection with work on the invention in the course of or under the contract are subject to the provisions of the Data clause § 14R-9.202 and the Government has a shop right to practice the invention if it is held not to be a subject invention.

(b) When applicable, the following paragraphs shall be inserted in the contract as paragraph (b) (3) of the patent clause (§ 14R-9.101-9) to cover this aspect:

An invention which has not been actually reduced to practice may be excluded from being considered a Subject Invention even though it is subsequently actually reduced to practice in the course of or under the Contract if :

(1) The Contractor has demonstrated to the Contracting Officer at the time of contracting, or at a time subsequent thereto as set forth in the Schedule, that such invention was described in a patent application or in a suitable documented written disclosure furnished to the Contracting Officer and had been developed to the point of engineering practicality prior to this Contract by laboratory or design work, or both, and

(ii) A subsequent actual reduction to practice under this Contract did not require the exercise of invention or extensive experimentation, and

(iii) A U.S. patent application on said invention is filed prior to the termination of the Contract.

As used herein "extensive experimentation" shall be deemed to have taken place when the labor cost involved under the Contract in making the actual reduction to practice amounts to either (1), 15 or more per

cent of the total labor cost under the Contract, or (2), at least 10,000 dollars.

Upon the Contractor's request and without undue delay, after the actual reduction to practice the circumstances will be reviewed and a determination will be made whether the invention would be considered a Subject Invention. It is agreed that the Government has a shop right to practice, for Governmental purposes, any such invention held not to be a Subject Invention. Any dispute regarding the rights of the parties under this paragraph shall be subject to the Disputes Clause of this contract. § 14R-9.101-5 Foreign rights.

Title to subject invention foreign rights will normally be waived to the Contractor upon his request except when the Government, because of a compelling public interest, determines to retain such rights. § 14R-9.101-6 Background patents.

(a) Statutory provisions concerning background patents. The Act provides generally that nothing contained therein shall be construed as to deprive the owner of any background patent rights. No prohibition against a patent owner agreeing by contract to enter into a license arrangement respecting his background patents is seen therein. However, care must be taken to make sure that such a contract is equitable. Generally speaking, it is the policy of OSW not to require licensing of background patents provided the invention involved therein is available commercially at reasonable prices.

(b) License to the public. Under the Saline Water Act, all patents, information, developments, etc., made under a research and development contract are required to be made available to the public. If the contractor has a dominating background patent, he can, by a restrictive licensing policy inhibit the use of a subject invention by the public, with the result that the Government's expenditure of funds for research intended to benefit the public at large would go for naught. To minimize this possibility, the background provisions in the Patent Rights clause sets forth in $ 14R-9.101-9(d) that dominating background patents will be made available for use for water desalination in conjunction with the results of the research effort. To this end the contractor agrees to grant a license to any responsible applicant on reasonable terms, except where an embodiment of the dominating background patent is commercially available (or will be made so by a speci

fied date) in a form which can be em- (d) Limitations on use of background ployed in the practice of either a subject patent to a process. Where the research invention or the specific subject matter and development work involves the emof the research. In the latter case licens- ployment of a contractor's background ing is not required. The contractor may, patent in a process under parameters of course, grant an unlimited license and conditions different from those under his background patents.

which are employed in his commercial (1) It should be noted that where a process, the requirement to license such contractor employs an embodiment of background patent to the public for use his patent in work on a specific work in conjunction with the specified work object for convenience only, there being object is limited to the conditions and other functionally equivalent substitutes parameters reasonably equivalent to available, he would not be required to those employed in the work under the license the patent for use with the speci- contract. This would avoid the possibilfied work object. Should a subject in- ity of a license being acquired under the vention be made which is dominated

background patent which would enable by such patent, then licensing would be the practice of contractor's commercial required if an embodiment is not com

process, although the work under the mercially available.

contract called for different operating (2) The background requirements are parameters. satisfied if a contractor makes his domi- (e) Antitrust. While agreements purnating background patent available suant to the background and foreign through the commercial sale of a product rights clauses would not in the great in which the background patent, to- majority of cases be violative of the gether with the foreground developments antitrust laws, it may be possible to are joined. However, march-in rights

devise an arrangement thereunder which are reserved to assure availability of the would be in restraint of trade. Accordresults of the research and development ingly, nothing herein is to be construed work.

as relieving any person from the opera(3) Where a contractor's parent or tion of the antitrust laws as regard a affiliated company controls a patent, not specific agreement entered into pura commercial item, which would be back- suant to these regulations and contract ground if held by the contractor, the

provisions. patent clause at $ 14R-9.101-9(d) (8) requires the contractor to aid in securing a

$ 14R-9.101-7 Subcontracts. license for qualified applicants.

Flowdown of patent rights to the Gov(c) License to the Government. (1) ernment in subcontracts is covered by Where the embodiment of a background the patent clause at $ 14R-9.101-9(e). patent is not available commercially, the $ 14R-9.101-8 Reporting of related inGovernment should not be obligated to

ventions. pay royalties to do pilot plant, test bed or test module work in the field of tech- (a) In many cases a contractor connology of the contract using such back

ducts research on his own account parground patents since, if successful, the allel to that conducted under a Governresult of such work will enhance the ment contract during the same period, value of contractor's background.

and sometimes with the same personnel. (2) Since in many cases the purpose In order to enable the Government to of the Government-sponsored research is determine whether or not an invention to further develop a contractor's back- made by the contractor in the field of ground invention, the Government

research contemplated by the contract is should receive some recognition for its

a subject invention, the patent article contribution if it wishes to employ such

provides for reporting, during prescribed invention for any U.S. Government use.

periods, all inventions made by the conAccordingly, the patent clause provides

tractor which are related to the work that the Government will obtain a license

under the contract. Additional informaon such background patent at a reasonable royalty which shall recognize the

tion is to be furnished to the GovernGovernment's contributions toward the

ment on request. Failure to report or to commercial development or enhance- supply the information requested places ment of the patent. Section 14R-9.101-9 on the contractor the duty of going for(d) (4) of the patent clause covers these ward with the evidence under any subseaspects.

quent proceeding.

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