§ 598.103-50 Indemnification of Contractor by the Government. No provision whereby the Government expressly agrees to indemnify the Contractor against liability for patent infringement shall be included in any contract. Ordinarily, any demands of a Contractor in this respect can be satisfied by the modification or elimination of the patent indemnity clause (when authorized by § 9.103 of this title and § 598.103) and insertion of the authorization and consent clause (§ 9.102-1 or § 9.102-2 of this title).

§ 598.104 Notice and assistance. For proper action to be taken by Contracting Officers or others with respect to reports, received by them, of claims of patent infringement asserted against a Contractor or a subcontractor, see § 598.105-53.

§ 598.105 Processing of infringement claims. The policy of the Department of the Army, applicable statutes, administrative requirements, procedures, and other pertinent information in connection with investigation and disposition of "such claims" as defined in § 598.050 (c), and contracts or agreements in settlement of such claims, including suggested contract forms and mandatory and suggested articles to be used in such contracts are set forth below. The following are applicable statutes:

(a) Mutual Security Act. Section 506 of the Mutual Security Act of 1954 (22 U. S. C. 1758) provides that whenever in the furnishing of any assistance under the act (1) use within the United States, without authorization of the owner, is made of a patented invention, or (2) damage to the owner results from disclosure of "information" as defined in section 506 by reason of acts of the United States, the exclusive remedy shall be by suit against the United States for reasonable and entire compensation for unauthorized use of disclosure. The head of the furnishing agency is authorized before suit is instituted to enter into agreements settling claims brought under this section.

(b) Invention Secrecy Act. Title 35, U. S. Code, sections 181-188 (sometimes referred to as the Invention Secrecy Act), provide for the withholding of the grant of a patent through the issuance of a secrecy order, for such time as the national interest requires, in those cases where the patent application discloses an invention the publication of which would

be detrimental to the national security of the United States. Section 183 authorizes the Department which caused the issuance of the order to enter into an agreement with the owner of an application, which except for the secrecy order would issue as a patent, in full settlement for the damage caused by the secrecy order and/or the use of the invention by the Government, resulting from his disclosure. If full settlement cannot be effected, the head of the Department concerned may award and pay a sum not exceeding 75 percent of the sum considered to be just compensation for the damage and/or use. Section 183 also provides for suit by the owner of the application for an amount which when added to the award would constitute just compensation for the damage and/or use. The act further provides that a patent owner who does not apply administratively for compensation is given the right to sue in the Court of Claims for just compensation for the damage caused by reason of the secrecy order and/or use by the Government of the invention resulting from his disclosure.

(c) Title 10, U. S. Code, section 2386. Title 10 U. S. Code, Section 2386, provides that:

Funds appropriated for a military department available for making or procuring supplies may be used to acquire any of the following if the acquisition relates to supplies or processes produced or used by or for, or useful to, that department:

(1) Copyrights, patents, and applications for patents.

(2) Licenses under copyrights, patents and applications for patents.

(3) Designs, processes, and manufacturing data.

(4) Releases, before suit is brought, for past infringement of patents.

In connection with acquistion of releases for past infringement of patents mentioned in the quoted language, the basic statutory provision dealing with infringement by or for the Government is Title 28, U. S. Code, Section 1498. This section provides that whenever an invention described in and covered by a patent of the United States is, without license or other right, used or manufactured by the United States, or by any person, firm, or corporation for the United States and with its authorization or consent, the patent owner's remedy shall be by suit against the United States in the Court of Claims for the recovery of his reasonable and entire compensation for such use or manufacture. The

statute also provides that a Government employee shall have the right to bring such a suit against the Government except where he was in a position to order, influence, or induce use of the invention by the Government. The statute also provides that it shall not confer a right of action on any patentee or his assignee with respect to any invention discovered or invented by a person while in the employment or service of the United States, where the invention was related to the official functions of the employee, in cases in which such functions included research and development, or in the making of which Government time, materials, or facilities were used. [Paragraph (c) amended, 22 F. R. 3175, May 4, 1957]

§ 598.105-50 General policy. In order to maintain the good will of United States industry, to encourage invention and the development of scientific arts related to national defense, to dispose of past and avoid future infringement of privately owned rights in inventions and under United States letters patent, and to avoid litigation and attendant nonproductive time, it is the policy of the Department of the Army to settle claims for compensation for past infringement of such rights, and also to obtain necessary rights with respect to such inventions in view of contemplated Department procurement, where it is in the Government's interest to do so and when such rights can be obtained at not more than fair value. To this end, an investigation of each such claim shall be made in accordance with the instructions and procedures set forth in §§ 598.105-53 thru 598.105-57. If any patent upon which such a claim is based is found to be infringed, valid, and enforceable, and it is deemed advisable by the Designee, efforts to settle such claim, before suit against the United States has been instituted, shall be made in accordance with §§ 598.105-58 thru 598.105-62. ordination with the Departments of the Navy and Air Force in the processing and final disposition of each such claim shall be effected by the Chief, Patents Division.

Co

§ 598.105-51 Authority-(a) Acquisition of releases of past infringement and licenses. By virtue of 10 U. S. C. 2386 (text set forth in § 598.105 (c)), the Department of the Army is authorized to acquire certain patents and other rights. The following are hereby authorized to

make acquisitions in accordance with 10 U. S. C. 2386:

(1) Deputy Chief of Staff for Logistics.

(2) Chief, Procurement Division, Office of the Deputy Chief of Staff for Logistics.

(3) Chief, Contracts Branch, Office of the Deputy Chief of Staff for Logistics. (4) Chiefs of technical services. (5) Designees of any of the foregoing.

(b) Claims under Mutual Security Acts. The chiefs of the technical services and others have been delegated authority to enter into agreements in settlement of claims asserted under section 517 of the Mutual Security Act of 1951, and section 506 of the Mutual Security Act of 1954.

[22 F. R. 3175, May 4, 1957] Prior Amendments

1956: 21 F. R. 4287, June 9.

§ 598.105-52 Duties of designees-(a) Duties. Each Designee is charged with the duty of taking appropriate action, on behalf of the Department of the Army, with respect to each such claim pertaining to the procurement responsibility of his service promptly after knowledge of the claim is brought to his attention. Such action includes the following:

(1) Acknowledging in writing receipt of the communication in which such claim is asserted. An authorized form of acknowledgment is set forth in § 598.105-54.

(2) Requiring the representative of the claimant to file in duplicate a Notice of Appearance in the form prescribed by § 583.1 (b) of this chapter.

(3) Requesting clearance within 30 days from the Chief, Patents Division, to investigate and settle each such claim pursuant to § 598.105–55, inclosing a copy of the communication in which such claim was asserted or reported.

[Subparagraph (3) amended, 21 F. R. 10013, Dec. 18, 1956]

(4) Investigating each such claim upon clearance from the Chief, Patents Division, and, if deemed appropriate, settling the same pursuant to §§ 598.10558 thru 598.105-62.

(5) Making the required distribution of each contract of settlement or partial settlement of such claim pursuant to § 598.105-62.

(6) Preparing and transmitting to the Chief, Patents Division, a final report with respect to each such claim in which no settlement is effected, pursuant to § 598.105-56.

(b) Action by representative. The action indicated in paragraph (a) of this section, and wherever referred to in § 598.105, may be performed by an authorized representative of the Designee, except for the execution of contracts pursuant to paragraph (a) (4) of this section.

§ 598.105-53

Reporting of claims. Any officer, or employee of a technical service shall submit promptly to the chief legal or patent officer in his service (a) any communication received by him asserting such a claim, and (b) any report of such a claim received by him from a Contractor in accordance with § 9.104 of this title. (Notice and Assistance.) All communications asserting such claims received by others shall be sent to the Chief, Patents Division.

§ 598.105-54 Correspondence with claimant. No Designee shall concede in writing, addressed to any claimant, potential claimant, or the representative of either, the merit or value of such claim, except so far as such concession may be embodied in an agreement executed in settlement of such claim in accordance with this subpart. (See Part 518 of this chapter and § 598.105-63). Upon receipt of a notice of infringement, the Designee shall acknowledge such receipt. The following form letter is authorized for this purpose:

[Letterhead of Designee]

---)

dated

19, stating that United States Letters Patent No. granted (date of patent), to (patentee's full name), of (city and State), for "(title of invention)," is (are) infringed by (item or process) allegedly being used by the Department of the Army, has been referred to this office for necessary action and direct reply.

The matter presented in your letter will be carefully investigated and you will be informed of the Department of the Army's conclusions upon completion of the investigation.

To aid in the investigation, it is requested that you furnish this office as promptly as possible the following:

(1) The names and addresses of licensees, if any.

(2) Copies of license agreements.

(3) Brief statement of any litigation in which the patent(s) have been or are now involved.

(4) List of all notices of infringement which you have sent to alleged infringers of the patent (except the alleged infringers included in your statement of litigation), including but not limited to any other departments and agencies of the Government.

[(5) Two executed copies of the inclosed Notice of Appearances, required of any person appearing in a representative capacity before the Department of the Army in a matter involving a claim against the United States.] 1

[(6) An identification of the equipment or operation alleged to constitute infringement.] 2

Sincerely yours,

[Signature of Designee or representative]

CODIFICATION: In § 598.105-54 the letter and footnotes thereto were amended to read as set forth above, 21 F. R. 10013, Dec. 18, 1956.

§ 598.105-55 Clearance to investigate. (a) Within 30 days after receipt of a notice or report of such a claim the Designee shall request in writing from the Chief, Patents Division, clearance to investigate and settle the claim. So far as practicable, one Designee shall represent the Department of the Army in the investigation and settlement of each such claim. The Chief, Patents Division, may grant clearance to a Designee to investigate and settle claims, even though notice and request for clearance was not originated by such Designee.

[Paragraph (a) amended, 21 F. R. 10013, Dec. 18, 1956]

(b) Each request for clearance shall be submitted in quadruplicate and shall include the following:

(1) The name and address of each claimant or prospective claimant.

(2) The name and address of each Contractor and subcontractor who is believed, to the extent disclosed by a cursory search in the headquarters of the Designee, to have performed the alleged infringing acts.

(3) The number and date of each patent, and the serial number and filing date of each patent application involved.

(4) Description of the alleged infringing subject matter in sufficient detail to

1 For use where claim is asserted by a representative of the claimant.

For use where this information has not previously been furnished.

permit other procuring activities to determine whether they have an interest in the matter.

(5) A copy of the communication from the claimant, if any.

(6) A copy of the Notice of Appearance required by § 598.105-52 (a) (2).

(c) The Chief, Patents Division, upon receipt of the request for clearance, shall determine, so far as indicated by his files, the Government Register of Patent Rights, and the Department of Justice, whether the Department of the Army or any other department or agency has investigated or settled, or received a report or notice of, a claim pertaining to the same subject matter and whether a Government license may be involved, and shall then grant such clearance in writing as appears proper.

(d) When clearance has been granted, the Designee shall proceed in accordance with § 598.105-52 (a) (4) through (6).

(e) The Chief, Patents Division, shall send copies of the request for clearance and of the clearance to the chief patent or legal officer of each technical service having a probable interest in the matter. Each such officer shall promptly investigate the procurement in his service and report to the Designee to whom clearance has been issued of the interest, if any, of his service in the matter and of any pertinent information available. (Negative reports should be made if applicable.) A positive report shall include a description (with drawings where necessary), of the procured materiel sufficient to enable the Designee to determine whether the procurement constitutes infringement under such claim, together with the officer's opinion on the question of infringement and the reasons therefor. The Chief, Patents Division, also shall notify the Departments of Navy and Air Force of each such claim and request those Departments to notify the Designee (with informational copies to the Chief, Patents Division) of any pertinent information available to them. No claim shall be settled or final report rendered (pursuant to § 598.105-56) until reports are received by the Designee from each chief patent or legal officer notified of the clearance, unless adequate explanation is presented.

§ 598.105-56 Final report by designee where no settlement of claim is made. A final report (in duplicate) of the results

of the investigation made on behalf of

the Department, including recommendations and conclusions of the Designee, shall be made by him to the Chief, Patents Division, with respect to each such claim (whether or not such claim is covered by an indemnity agreement) in which settlement is believed to be inadvisable, or the Designee has been unable to settle upon terms deemed reasonable by him. A copy of the final report shall be forwarded by the Designee to the chiefs of the chiefs of the interested technical services at this time.) Each such report shall be dated and clearly marked "Final Report," and shall include so far as applicable and practicable the following information:

(a) Numbers and dates of all contracts and subcontracts for procurement of the item in question, together with the name and address of each Contractor and subcontractor concerned, and the text of each Contractor's agreement, if any, to indemnify the Government against liability for infringement, or a statement that there is no such indemnity agreement. This information shall include contracts of any other technical service concerned.

(b) Extent and dates of alleged infringement.

(c) The text of any contract clause granting (or if there is no such clause any other information relating to) authorization and consent by the Government to the manufacture or use of the article, material, design, or process upon which such claim is based.

(d) Copies of patents alleged to be infringed.

(e) Result of title search in the Patent Office Assignment Records and examination of the Government Register or Patent Rights.

(f) A full and complete disclosure of the alleged infringing device, material, design or process (including detailed description thereof, together with drawings, sketches, photographs, and specimens in proper cases) sufficient to determine whether infringement is present. (g) Report of date and extent of searches, if any, in each of the following categories:

(1) Prior art patents and publications. (2) Pending applications filed by the service conducting the investigation. (3) Prior public uses.

(h) Copies of any prior art patents and publications, and full and complete

description (and where practicable, a drawing, sketch, photograph, or specimen) of any prior uses relied upon by the Designee.

(i) Statement of the extent to which royalties, if any, have been adjusted by the Department. (See § 9.111 of this title and § 598.111.)

(j) Statement as to whether or not the inventor or patent owner was a Government employee in a position to order, influence, or induce use of the invention by the Government.

(k) Statement as to whether or not the invention was made during the time the inventor was in the employment or service of the Government, and if so, a description of the inventor's official functions at the time and a statement as to whether Government time, materials, or facilities were used.

(1) Names and addresses of prospective witnesses (fact and expert) and, where pertinent to validity or infringement, signed statements of witnesses. Where a witness refuses to sign a statement, a statement of the interviewing officer setting forth the facts which the witness may be expected to state if called to testify.

(m) Conclusions regarding infringement (with respect to all departmental procurements involved) and reasons therefor.

(n) Conclusions regarding validity and reasons therefor, unless the Designee's conclusions given under paragraph (m) of this section are that in his opinion there is no infringement.

(0) Conclusions regarding the Government's liability, the estimated money value of the claim, and an estimate of future procurement involving possible increase of the claim.

(p) Summary of unsuccessful negotiations for settlement, if any.

(q) Recommendations.

§ 598.105-57 Action and authority of the Chief, Patents Division. (a) The Chief, Patents Division, shall coordinate and expedite the processing of such claims and may request status reports from the Designees for this purpose.

(b) The Chief, Patents Division, shall review each final report and, where such claim was asserted in a communication, shall write a letter to the claimant or his representative (with copies to the Designee and chiefs of interested technical

services) stating the final conclusions of the Department.

(c) Upon reviewing the final report, the Chief, Patents Division, shall prepare a supplemental report (and send a copy to the Designee) stating any conclusions supplemental to those stated in the final report, if such supplemental report is deemed advisable, and stating any conclusions which differ from those of the Designee, with recommendations of appropriate action.

(d) When final action has been taken on behalf of the Department, the Chief, Patents Division, shall so advise the Attorney General.

§ 598.105-58 Available procedure for settlement of claims and procurement of invention and patent rights. (a) The Designee to whom the claim has been cleared may, subject to the availability of appropriations and allotments of funds in his service, settle such claims in accordance with these paragraphs, by execution of a contract or release and license, or release and assignment.

(b) No contract shall be made which includes a release of such claim, or a license, which will inure to the benefit of a Contractor who has agreed to indemnify the Government (§ 9.103 of this title and § 598.103) by releasing or discharging such Contractor in whole or in part from his obligation of indemnity. unless such Contractor is made a party to the contract and appropriate arrangements are made to the end that the Contractor shall pay all money consideration flowing to the claimant or potential claimant which is attributable to that part of the release or license which benefits the Contractor.

§ 598.105-59 Settlement with foreign claimants. No contract of settlement of patent infringement liability or other liability for use of inventions shall be made with a national of a government which is within the scope of the Mutual Defense Assistance program, without first obtaining the written approval of the Chief, Patents Division.

§ 598.105-60 Fiscal procedures. (a) An agreement to pay a fixed amount for the purchase of a paid up license and release or an assignment and release, or a release either by way of lump sum payment or an amount determinable at the time of execution of the contract, is subject to the provision that allotment of funds made for supplies will not be