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firmatory of all rights granted to the Government under such clause.

The contractor agrees that the Government is not estopped at any time to contest the enforceability, validity, or scope of or title to the patent application identified above or any patent resulting therefrom.

It is understood and agreed that this document does not preclude the Government from asserting rights under the provisions of said contract or of any other agreement between the Government and the Contractor, or any other rights of the Government with respect to each of the above-identified inventions.

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(c) A contractor disclosing a Subject Invention pursuant to paragraph (c) (1) (i) of the clause in § 9.107-5(a) may, under paragraph (h) of said clause (or the alternate paragraph (h) in § 9.1075(c)), not later than three months after making such a disclosure, request greater rights than the license reserved to the contractor in paragraph (b) of said clause. Therefore, in the administration of these clauses the contractor shall not be required to execute an assignment until this three-month period has expired, and then usually only if the Government intends to file a patent application. [32 F.R. 529, Jan. 18, 1967, as amended at 35 F.R. 6833, Apr. 30, 1970]

§ 9.109-5 Register of Government rights in inventions.

(a) Licenses, assignments, or other documents evidencing any rights of the Government in inventions shall be reviewed by the Departments 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 Departmental 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.

[32 F.R. 530, Jan. 18, 1967]

§ 9.110 Reporting of royalties-anticipated or paid.

(a) (1) The term "royalties," as used in this subpart, 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 Govproper, or inconsistent with rights which ernment contracts are excessive, imthe Government may possess in particular inventions, patents, or patent applications, the Departments shall require royalty information and reports as prescribed below. See § 9.112 for action to be taken to reduce or eliminate excessive or improper royalties.

(3) Royalty information should not be required in formally advertised contracts. When it is expected that work may be performed in the United States, its possessions, or Puerto Rico, any solicitation which may result in a negotiated contract for which royalty information is desired, or for which cost or pricing data are obtained under § 3.8073 of this chapter, shall contain a special provision substantially as follows:

ROYALTY INFORMATION (1961 AUGUST)

When the response to this solicitation contains costs or charges for royalties totaling more than $250, the following information shall be furnished with the offer, proposal, or quotation on each separate item of royalty or license fee:

(1) Name and address of licensor;
(ii) Date of license agreement;

(iii) Patent numbers, patent application serial numbers or other basis on which the royalty is payable;

(iv) Brief description, including any part or model numbers of each contract item or component on which the royalty is payable; (v) Percentage or dollar rate of royalty per unit;

(vi) Unit price or contract item;
(vii) Number of units; and

(viii) Total dollar amount of royalties. DD Form 783, Royalty Report, is approved for use in furnishing the above information. In addition, if specifically requested by the contracting officer prior to execution of the contract, a copy of the current license agreement and identification of applicable claims of specific patents shall be furnished.

(b) If the work is to be performed in the United States, its possessions or Puerto Rico, then upon receipt of an offer, proposal, or quotation which includes a charge for royalties, the contracting officer shall, prior to award of the contract, forward the information called for by paragraph (a) of this section to the office having cognizance of patent matters for the procuring activity concerned. The cognizant office shall promptly advise the contracting officer of appropriate action. The contracting officer shall then take action with respect to such royalties, with due regard to all pertinent factors relating to the proposed procurement.

(c) Where subcontract work is to be performed in the United States, its possessions, or Puerto Rico, the contracting officer, when considering approval of a subcontract, shall require the same information and take the same action with respect to such subcontracts in relation to royalties as required for prime contracts under paragraph (b) of this section. However, approval need not be withheld pending receipt of advice in regard to such royalties from the office having cognizance of patent matters.

(d) (1) In negotiated contracts to be performed outside the United States, its possessions and Puerto Rico, regardless of the place of delivery, the clause set forth below shall be included. See § 16.806 for an approved form for optional use by contractors in submitting the required report.

REPORTING OF ROYALTIES (FOREIGN) (OCTOBER 1966)

(a) If this contract is in an amount which exceeds fifty thousand U.S. dollars ($50,000), the Contractor shall report in writing to the Contracting Officer during the performance of this contract the amount of royalties paid or to be paid by the Contractor directly to others in the performance of this contract The Contractor shall also (1) furnish in writing any additional information relating to such royalties as may be requested by the Contracting Officer, and (ii) insert a provision similar to this clause in any subcontract hereunder which involves an amount in excess of the equivalent of fifty thousand U.S. dollars ($50,000).

(b) The term "royalties" as used herein 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) The contracting officer shall forward a copy of each positive royalty re

port received in accordance with the clause in subparagraph (1) of this paragraph to the office having cognizance of patent matters for the procuring activity concerned.

[32 F.R. 530, Jan. 18,1967, as amended at; 34 F.R. 9278, June 12, 1969]

§ 9.111 Refund of royalties.

When a fixed-price-type contract is negotiated under circumstances which make it questionable whether or not substantial amounts of royalties will have to be paid by the contractor or his subcontractors, such royalties may be included in the target or contract price, with provision made in the contract that the Government will be reimbursed the amount of such royalties if they are not paid. Such circumstances might include, for example, either a pending antitrust action by the Government or pending or prospective litigation challenging the validity of a patent or patents or the enforceability of an agreement upon which the contractor or subcontractor bases the asserted obligation to pay the royalties to be included in the target or contract price. In the event the contracting officer determines that a refund of royalties clause should be included, the following clause shall be used in firm fixed-price contracts. It shall be appropriately modified for use in incentive contracts.

REFUND OF ROYALTIES (FEBRUARY 1968)

(a) The contract price includes certain amounts for royalties payable by the Contractor or subcontractor or both, which amounts have been reported to the Contracting Officer.

(b) The term "royalties" as used in this clause refers to any costs or charges in the nature of royalties, license fees, patent or license amortization costs, or the like, for the use or for rights in patents and patent applications in connection with the performance of this contract or any subcontract hereunder.

(c) The Contractor shall furnish to the Contracting Officer, before final payment under this contract, a statement of royalties paid or required to be paid in connection with the performance of this contract and subcontracts hereunder together with the reasons therefor.

(d) The Contractor will be compensated for royalties reported under (c) above only to the extent that such royalties were included in the contract price and are determined by the Contracting Officer to be properly chargeable to the Government and allocable to the contract. Therefore, to the extent that any royalties which are included

in the contract price are not in fact paid by the Contractor or are determined by the Contracting Officer not to be properly chargeable to the Government and allocable to the contract, the contract price shall be reduced. Repayment or credit to the Government shall be made as the Contracting Officer directs.

(e) If, at any time within three (3) years subsequent to final payment under this contract, the Contractor for any reason is relieved in whole or in part from the payment of the royalties included in the final contract price as adjusted pursuant to paragraph (d) above, the Contractor shall promptly notify the Contracting Officer of that fact and shall reimburse the Government in a corresponding amount.

(f) The substance of this clause, including this paragraph (f), shall be included in any subcontract in which the amount of royalties reported during negotiation of the subcontract exceeds two hundred and fifty dollars ($250).

[32 F.R. 530, Jan. 18, 1967, as amended at 33 F.R. 7400, May 18, 1968]

§ 9.112

Adjustment of royalties.

(a) If at any time the contracting officer has reason to believe that any royalties paid, or to be paid, under an existing or prospective contract or subcontract are inconsistent with Government rights, excessive, or otherwise improper, he shall promptly report the facts to the office having cognizance of patent matters for the procuring activity concerned. The cognizant office shall review the royalties thus reported and such royalties as are reported under §§ 9.110 and 9.111. In coordination with the contracting officer, the cognizant office shall:

(1) Take prompt action to protect the Government against payment of royalties on supplies or services (i) with respect to which the Government has a royalty-free license, or (ii) at a rate in excess of the rate at which the Government is licensed, or (iii) when the royalties in whole or in part otherwise constitute an improper charge; and

(2) In appropriate cases obtain a refund pursuant to a "Refund of Royalties" clause or enter into negotiation for a reduction of royalties.

(b) For guidance in evaluating information furnished pursuant to § 9.110 and paragraph (a) of this section, see §§ 15.205-36 and 15.309-33 of this chapter. Also see 15.107 of this chapter regarding advance understandings on particular cost items, including royalties. [32 F.R. 531, Jan. 18, 1967]

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(b) "Limited rights" means rights to use, duplicate, or disclose technical data, in whole or in part, by or for the Government, with the express limitation that such technical data shall not, without the written permission of the party furnishing such technical data, be released or disclosed in whole or in part outside the Government, used in whole or in part by the Government for manufacture, or used by a party other than the Government, except for:

(1) Emergency repair or overhaul work only, by or for the Government, where the item or process concerned is not otherwise reasonably available to enable timely performance of the work: Provided, That the release or disclosure thereof outside the Government shall be made subject to a prohibition against further use, release or disclosure; or

(2) Release to a foreign government, as the interest of the United States may require, only for information or evaluation within such government or for emergency repair or overhaul work by or for such government under the conditions of subparagraph (1) of this paragraph.

(c) "Unlimited rights" means rights to use, duplicate, or disclose technical data in whole or in part, in any manner and for any purpose whatsoever, and to have or permit others to do so.

[30 F.R. 6969, May 25, 1965, as amended at 34 F.R. 17897, Nov. 5, 1969]

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(a) Government's interest in technical data. The Government has extensive needs for many kinds of technical data. Its needs may well exceed those of private commercial customers. For defense purposes millions of separate equipment and supply items, ranging from standard to unique types, must be acquired, operated, and maintained, often at points remote from the source of supply. Functions requiring varied kinds of technical data include training of personnel, overhaul and repair, cataloging, standardization, inspection and quality control, packaging, and logistics operations. Data resulting from research and development contracts must be obtained, organized and disseminated to many different users. Finally, the Government must make technical data widely available in the form of contract specifications in order to obtain competition among its suppliers, and thus further economy in Government procurement.

(b) Contractors' interest in technical data. Commercial organizations have a valid economic interest in data they have developed at their own expense for competitive purposes. Such data, particularly technical data which discloses details of design or manufacture, is often closely held because its disclosure to competitors could jeopardize the competitive advantage it was developed to provide. Public disclosure of such technical data can cause serious economic hardship to the originating company.

(c) The balancing of interests. It is apparent that there is no necessary correlation between the Government's need for technical data and its contractors' economic interests therein. However, in balancing the Government's requirements for technical data against the contractor's interest in protecting his data, it should be recognized that there may be a considerable identity of interest. This is particularly true in the case of innovative contractors who can best be encouraged to develop at private expense items of military usefulness where their rights in such items are scrupulously protected. It is equally important that the Government foster successful contractual relationships and encourage a ready flow of data essential to Government needs by confining its acquisitions of

technical data to cases of actual need. Certainly the Government must not be barred from bargaining and contracting to obtain such technical data as it needs, even though that data may normally not be disclosed in commercial practice. Moreover, when the Government pays for research and development work which produces new knowledge, products or processes, it has an obligation to foster technological progress through wide dissemination of the new and useful information derived from such work and where practicable to provide competitive opportunities for supplying the new products and utilizing the new processes. At the same time, acquiring, maintaining, storing, retrieving, and distributing technical data in the vast quantities generated by modern technology is costly and burdensome for the Government. For this reason alone, it would be necessary to control closely the extent and nature of data procurement. Such control is also necessary to insure Goverment respect for its contractors' economic interest in technical data relating to their privately developed items. The policies and procedures of this subpart are framed in the light of these considerations.

[30 F.R. 6969, May 25, 1965, as amended at 33 F.R. 7400, May 18, 1968]

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(a) General. It is the policy of the Department of Defense to acquire only such data and rights therein as are essential to meet Government needs.

(b) Unlimited rights. Technical data in the following categories, when specified in any contract as being required for delivery, or subject to order under the contract, shall be acquired with unlimited rights:

(1) Technical data resulting directly from performance of experimental, developmental, or research work which was specified as an element of performance in a Government contract or subcontract;

(2) Technical data necessary to enable others to manufacture end-items, components and modifications, or to enable them to perform processes, when the end-items, components, modifications or processes have been, or are being, developed under Government contracts or subcontracts in which experimental, developmental or research work was specified as an element of contract performance, except technical data pertaining to

processes de

items, components or veloped at private expense;

(3) Technical data constituting corrections or changes to Government-furnished data;

(4) Technical data pertaining to enditems, components or processes which was prepared for the purpose of identifying sources, size, configuration, mating and attachment characteristics, functional characteristics, and performance requirements ("form, fit and function" data, e.g., specification control drawings, catalog sheets, envelope drawings, etc.);

(5) Manuals or instructional materials prepared for installation, operation, maintenance or training purposes; and

(6) Other technical data which has been, or is normally furnished without restriction by a contractor or subcontractor.

(c) Limited rights. Except as provided in paragraph (b) of this section, technical data pertaining to items, components or processes developed at private expense will be acquired with limited rights if ordered.

(It should be clearly understood that the above statement of policy is a recital of rights to be acquired in certain categories of data if the data is called for under the contract. Neither the foregoing statement of data rights policy, nor its implementing paragraph (b) (1) and (2) of the Basic Data clause in § 9.203(b), establishes data requirements for a particular contract. It should also be noted that data pertaining to items, components or processes developed at private expense may be called for, required, or otherwise furnished under paragraph (b) (1), (3), (4), (5) and (6) of this section and, as such, it will be acquired with unlimited rights. Contract clauses and the schedule establish the form and type of data to be furnished; the categories into which such delivered data fall, determine the rights to be obtained by the Government to use or publish such data.)

(d) Predetermination of rights in data. (1) (1) When the Government needs data with unlimited rights, any data which the offeror intends to deliver with limited rights pursuant to paragraph (c) of this section should be identified prior to contrct award, if feasible, and an agreement with respect thereto shall be incorporated in the contract. This procedure is called predetermination of rights in data.

(ii) The procedure may be initiated by the contracting officer or an offeror during the negotiation of a negotiated contract. In order to be productive, the

procedure should apply only to that data for which rights may practicably be identified. Although the agreement may also cover data to be delivered with unlimited rights, in no case shall the procedure be used to require the contractor to furnish, with unlimited rights, data which he is entitled to furnish with limited rights under the policy in paragraph (c) of this section. The contracting officer shall consult his counsel as fully as possible in determining whether to use the procedure and in connection with the various steps of the procedure.

(2) Any agreements reached shall be incorporated in the Schedule of the contract directly or by reference and shall describe specifically the data which may be furnished with limited rights pursuant to paragraph (c) of this section. The contracting officer may, however, review the data asserted to be limited rights data to determine whether to invoke the procedures of paragraph (g) of this section to negotiate to purchase unlimited rights in any of the data, or adopt some alternative such as to:

(i) Delete or modify the requirement for the data in which the Government would need unlimited rights if it were ordered, or

(ii) Modify the specifications so as not to require or permit the use of the item, component or process covered by the limited rights data, or

(iii) Include a contractual option to acquire unlimited rights.

(3) When the predetermination of rights in data procedure is to be used, include the following provision in the Request for Proposals.

PREDETERMINATION OF RIGHTS IN DATA
(AUGUST 1969)

(a) The offeror is requested to identify in his proposal which of the below listed data (including those to be furnished in whole or in part by a subcontractor) when delivered, may be marked with a restrictive legend of the kind quoted in paragraph (b) of the "Rights in Technical Data" clause of this Solicitation. This identification need not be made as to data which relate to standard commercial items which are manufactured by more than one source of supply.

(The Solicitation should list here that data or portions thereof with respect to which the Government proposes use of the predetermination procedure. Data which clearly comes within paragraph (b) (1) of "Rights in Technical Data" clause and would therefore be acquired with unlimited rights should not be listed.)

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(b) Limited rights data may be identified as such, pursuant to (a) above only if it

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