that such action will best serve the public interest. Greater rights than a nonexclusive license may be acquired by the contractor after the invention has been identified, where the invention when made in the course of or under the contract is not a primary object of the contract: Provided, The acquisition of such greater rights is consistent with the intent of this section and is a necessary incentive to call forth private risk capital and expense to bring the invention to the point of practical application.

(b) Category II. In other situations, where the purpose of the contract is to build upon existing knowledge or technology to develop information, products, processes, or methods for use by the Government, and the work called for by the contract is in a field of technology in which the contractor has acquired technical competence (demonstrated by factors such as know-how, experience, and patent position) directly related to an area in which the contractor has an established nongovernmental commercial position, the contractor shall normally acquire the principal or exclusive rights throughout the world in and to any resulting inventions, subject to the Government's acquiring at least an irrevocable nonexclusive royalty-free license throughout the world for governmental purposes.

(c) Category III. Where the commercial interests of the contractor are not sufficiently established to be covered by the criteria specified in paragraph (b) of this section, the final determination of rights shall be made by the contracting officer after the invention has been identified, in a manner deemed most likely to serve the public interest as expressed in this Policy Statement (see § 9.107-2 and other paragraphs of this section), taking particularly into account the intentions of the contractor to bring the invention to a point of commercial application and the guidelines of paragraph (a) of this section: Provided, That in the special situations set forth in § 9.107-4 (c) (2), the contractor may acquire at the time of contracting greater rights than a nonexclusive license. In any case, the Government shall acquire at least a nonexclusive royalty-free license throughout the world for Governmental purposes.

(d) In the Category II and Category III situations, when two or more potential contractors are judged to have presented proposals of equivalent merit,

willingness to grant the Government principal or exclusive rights in resulting inventions will be an additional factor in the evaluation of the proposals. In no event will contractors be asked to state their willingness to grant the Government principal or exclusive patent rights prior to a determination that proposals of equivalent merit have been presented.

(e) Where the principal or exclusive (except as against the Government) rights in an invention remain in the contractor, he should agree to provide written reports at reasonable intervals, when requested by the Government, on the commercial use that is being made or is intended to be made of inventions made under Government contracts.

(f) Where the principal or exclusive (except as against the Government) rights in an invention remain in the contractor, unless the contractor, his licensee, or his assignee has taken effective steps within three years after a patent issues on the invention to bring the invention to the point of practical application or has made the invention available for licensing royalty-free or on terms that are reasonable in the circumstances, or can show cause why he should retain the principal or exclusive rights for a further period of time, the Government shall have the right to require the granting of a license to an applicant on a nonexclusive royalty-free basis.

(g) Where the principal or exclusive (except as against the Government) rights to an invention are acquired by the contractor, the Government shall have the right to require the granting of a license to an applicant royalty-free or on terms that are reasonable in the circumstances to the extent that the invention is required for public use by gov. ernmental regulations or as may be necessary to fulfill health needs, or for other public purposes stipulated in the contract.

(h) Where the Government may acquire the principal rights and does not elect to secure a patent in a foreign country, the contractor may file and retain the principal or exclusive foreign rights subject to retention by the Government of at least a royalty-free license for governmental purposes and on behalf of any foreign government pursuant to any existing or future treaty or agreement with the United States.

[29 F.R. 9755, July 21, 1964, as amended at 30 F.R. 6003, Apr. 29, 1965]

consultation

(a) After appropriate with legal, patent, and technical advisors, the contracting officer shall determine whether the Government or the contractor should acquire the principal or exclusive rights (hereafter these rights are referred to as "title") to any or all inventions made in the course of or under each contract and shall fully document the contract file to support his determination. The basic considerations and policy set forth above shall govern the making of this determination.

(b) Category I: Where the contracting officer determines that proposed experimental, developmental, or research work falls within Category I set forth in 9.107-3(a), the Patent Rights X (Title) clause set forth in § 9.107-5(a) shall be included in the contract. (However, in exceptional circumstances, the contractor may acquire greater rights than a nonexclusive license at the time of contracting if the Secretary certifies that such action will best serve the public interest.) The contracting officer shall consider the following in making his determination.

(1) In the situation in subparagraph (1) in § 9.107-3(a), a principal purpose of the contract or a series of related contracts must be research or development work on an end item (a product or process) either (i) intended for use in the civilian economy, or (ii) which the general public will be required by governmental regulation to use. End items of this nature would most likely be found in the field of Civil Defense.

(2) In the situation in subparagraph (2) in § 9.107-3(a), a principal purpose of the contract must be directly concerned with the public health or public welfare (e.g., drugs, medical instruments, water desalinization, and weather modification or control), and not solely items of only military application.

(3) Under subparagraph (3) in 9.107-3 (a), the contract must be for an end product in a field of science or technology in which, at the time the contract is entered into, there has been little or no significant experience except for work funded by the Government or where the Government has been the principal developer. If the contracting officer determines that the proposed contract is in such a field of science or technology, he then shall determine whether the contractor would likely get a pre

ferred or dominant commercial position in that field if he were permitted to acquire title to inventions made under the contract. It would be inequitable to other commercial manufacturers or sources to permit a contractor to acquire such a preferred or dominant commercial position based principally upon work funded by the Government.

(4) Under subparagraph (4) (i) in § 9.107-3 (a), a contract for the operation of a Government-owned production facility must call for experimental, developmental, or research work at such a facility. In subparagrph (4) (ii) in § 9.107-3 (a) the words "coordinating and directing the work of others" do not refer to the normal prime contractorsubcontractor relationship, but refer instead to a relationship in which a potential organizational conflict-of-interest exists. See § 1.113-2 of this chapter. (c) Category II: Where the contracting officer determines that proposed experimental, developmental, research work does not fall within Category I but does fall within Category II set forth in § 9.107-3(b) or within the special situations set forth in subparagraph (2) of this paragraph, the Patent Rights (License) clause set forth in $ 9.107-5(b) shall be included (except when greater rights are acquired by the Government pursuant to § 9.107-3(d)).

or

such

(1) In determining whether work falls within Category II, the contracting officer shall first determine whether the work is in a field of technology directly related to an area in which the contractor has an "established nongovernmental commercial position." In making this determination, the contracting officer should recognize that the ultimate goal of the policy is to move inventions into the stream of commerce through domestic sales or exports or through domestic and foreign licensing programs. Therefore, to be considered as having an established nongovernmental commercial position, the contractor should ordinarily:

(i) Be known in the trade as a manufacturer or source of products or services in the area involved;

(ii) Be regularly engaged in the sale or licensing, whether domestic or foreign, of such products or services to the general public (including business concerns); to both the general public including business concerns and the U.S. Government, or to foreign governments;

and

This subpart prescribes contract clauses and instructions which define and implement the policy of the Department of Defense with respect to

(a) Inventions made in the course of experimental, developmental, or research work performed under Government contracts;

(b) Patent infringement liability resulting from work performed by or for the Government;

(c) Royalties payable in connection with the performance of Government contracts;

(d) Security requirements covering patent applications containing classified subject matter filed by contractors. [29 F.R. 14833, Oct. 31, 1964]

§ 9.101 § 9.102

[Reserved]

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) Any provision whereby the Government expressly agrees to indemnify the contractor against liability for patent infringement shall not be included in a contract.

(c) An authorization and consent clause shall not be used in contracts where both complete performance and delivery are to be outside the United States, its possessions, or Puerto Rico. [29 F.R. 14833, Oct. 31, 1964]

§ 9.102-1 Authorization and consent in contracts for supplies.

The contract clause set forth below may be included in all contracts for supplies (including construction work), except:

(a) When prohibited by § 9.102(c); or (b) In contracts for experimental, developmental, or research work in which the clause of § 9.102-2 is required. AUTHORIZATION AND CONSENT (MAR. 1964)

The Government hereby gives its authorization and consent (without prejudice to any rights of indemnification) for all use and manufacture, in the performance of this contract or any part hereof or any amendment hereto or any subcontract hereunder (including any lower-tier subcontract), of any invention described in and covered by a patent of the United States (1) embodied in the structure or composition of any article the delivery of which is accepted by the Government under this contract, or (ii) utilized in the machinery, tools, or methods the use of which necessarily results from compliance by the Contractor or the using subcontractor with (a) specifications or written provisions now or hereafter forming a part of this contract, or (b) specific written instructions given by the Contracting Officer directing the manner of performance. The entire liability to the Government for infringement of a patent of the United States shall be determined solely by the provisions of the indemnity clauses, if any, included in this contract or any subcontract hereunder (including any lower-tier subcontract), and the Government assumes liability for all other infringement to the extent of the authorization and consent hereinabove granted. [29 F.R. 6932, May 27, 1964, as amended at 29 F.R. 14833, Oct. 31, 1964]

§ 9.102-2 Authorization and consent in contracts for research or develop

ment.

Greater latitude in the use of patented inventions may be necessary in a con

tract for experimental, developmental, or research work than in a contract for supplies. Unless prohibited by § 9.102 (c), the clause set forth below 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 of § 9.102-1 shall be used. If the clause set forth below is included in a contract, the clause in § 9.102-1 shall not be included. AUTHORIZATION AND CONSENT (JAN. 1961)

The Government hereby gives its authorization and consent for all use and manufacture of any invention described in and covered by a patent of the United States in the performance of this contract or any part hereof or any amendment hereto or any subcontract hereunder (including any lowertier subcontract).

[26 F.R. 2613, Mar. 28, 1961, as amended at 29 F.R. 14833, Oct. 31, 1964]

§ 9.103 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 relatively 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:

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 § 9.103-1(b); or (2) in the case of contracts to be awarded either by formal advertising (see § 2.407-8 of this chapter) 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 instructions of § 9.1031 or § 9.103-3 are applicable; or

(d) Where the contract is for an amount of $5,000 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 $5,000 or less, since it is selfdeleting as to such contracts.

[29 F.R. 14834, Oct. 31, 1964]

§ 9.103-1 Patent indemnification in formally advertised contracts-commercial status predetermined.

(a) Except as prohibited by § 9.103 the clause set forth below 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.

PATENT INDEMNITY (SEPTEMBER 1964)

If the amount of this contract is in excess of $5,000, the Contractor shall indemnify the

Government and its officers, agents, and employees against liability, including costs, for infringement of any United States letters patent (except letters patent issued upon an application which is now or may hereafter be kept secret or otherwise withheld from issue by order of the Government) arising out of the manufacture or delivery of supplies or out of construction, alteration, modification, or repair of real property (hereinafter referred to as "construction work") under this contract, or out of the use or disposal by or for the account of the Government of such supplies or construction work. The foregoing indemnity shall not apply unless the Contractor shall have been informed as soon as practicable by the Government of the suit or action alleging such Infringement, and shall have been given such opportunity as is afforded by applicable laws, rules, or regulations to participate in the defense thereof; and further, such indemnity shall not apply to: (1) An infringement resulting from compliance with specific written instructions of the Contracting Officer directing a change in the supplies to be delivered or in the materials or equipment to be used, or directing a manner of performance of the contract not normally used by the Contractor; (11) an infringement resulting from addition to, or change in, such supplies or components furnished or construction work performed which addition or change was made subsequent to delivery or performance by the Contractor; or (iii) a claimed infringement which is settled without the consent of the Contractor, unless required by final decree of a court of competent jurisdiction.

(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) (Sept. 1964)

or

The foregoing shall apply only to the following:

(Specifically identify the items to which the Patent Indemnity clause applies) (Sept. 1964)

[29 F.R. 14834, Oct. 31, 1964, as amended at 30 F.R. 1743, Feb. 9, 1965]

§ 9.103-3 Patent indemnification in negotiated contracts.

A patent indemnity clause is not required to be included in negotiated contracts, but may be included, first, in negotiated construction contracts, second, as authorized in § 9.103(b) (2), and third, in negotiated contracts for supplies where such supplies normally are or have been sold or offered for sale by the contractor 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 by the contractor to the public in the commercial open market.

(a) Subject to the foregoing and to the prohibitions in § 9.103, the clause set forth in § 9.103-1(a) is approved for use in negotiated contracts for construction work or supplies.

(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 the contractor to the public in the commercial open market, or such items with relatively minor modifications, the patent indemnity clause of § 9.103-1 (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) (SEPT. 1964)

or

The foregoing shall apply only to the following:

(Specifically identify the items to which the Patent Indemnity clause applies) (SEPT. 1964)

[29 F.R. 14834, Oct. 31, 1964]

§ 9.103-4 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 9.103-1, authority shall first be obtained from the Secretary concerned or his authorized representative, and the following clause shall be includ