PROCUREMENT REGULATIONS contract obligations to the Government in the performance of this contract). (5) The contractor shall promptly notify the Contracting Officer in writ- (6) The contractor shall identify all subject inventions of the subcontraċtor of which it acquires knowledge in the performance of this contract and shall notify the Patent Counsel (with notification by Patent Counsel to the Contracting Officer) promptly upon the identification of the inventions. (7) It is understood that the Government is third party beneficiary of any subcontract clause granting rights to the Government in subject inventions, and the contractor hereby assigns to the Government all rights that the contractor would have to enforce the subcontractor's obligations for the benefit of the Government with respect to subject inventions. The contractor shall not be obligated to enforce the agreements of any subcontractor hereunder relating to the obligations of the subcontractor to the Government regarding subject inventions. (k) Background Patents. (1) "Background Patent" means a domestic patent covering an invention or discovery which is not a subject invention and which is owned or controlled by the contractor at any time through the completion of this contract: (i) Which the contractor, but not the Government, has the right to license to others without obligation to pay royalties thereon, and (ii) Infringement of which cannot reasonably be avoided upon the practice of any specific process, method, machine, manufacture or composition of matter (including relatively minor modificatons thereof) which is a subject of the research, development, or demonstration work performed under this contract. (2) The contractor agrees to and does hereby grant to the Government a royalty-free, nonexclusive, license under any background patent for purposes of practicing a subject of this contract by or for the Government in research, development, and demonstration work only. (3) The contractor also agrees that upon written application by DOE, it will grant to responsible parties for purposes of practicing a subject of this contract, nonexclusive licenses under any background patent on terms that are reasonable under the circumstances. If, however, the contractor believes that exclusive or partially exclusive rights are necessary to achieve expeditious commercial development or utilization, then a request may be made to DOE for DOE approval of such licensing by the contractor. (4) Nothwithstanding the foregoing paragraph (k)(3), the contractor shall not be obligated to license any background patent if the contractor demonstrates to the satisfaction of the Head of the Agency or designee that: (i) a competitive alternative to the subject matter covered by said background patent is commercially available or readily introducible from one or more other sources; or (ii) the contractor or its licensees are supplying the subject matter covered by said background patent in sufficient quantity and at reasonable prices to satisfy market needs, or have taken effective steps or within a reasonable time are expected to take effective steps to so supply the subject matter. (1) Atomic energy. (1) No claim for pecuniary award or compensation under the provisions of the Atomic Energy Act of 1954, as amended, shall be asserted by the contractor or its employees with respect to any invention or discovery made or conceived in the course of or under this contract. (2) Except as otherwise authorized in writing by the Contracting Officer, the contractor will obtain patent agreements to effectuate the provisions of para 9-9.107-5 9-9.107-5 U. S. DEPARTMENT OF ENERGY graph (1)(1) who perform any part of the work under this contract, except nontechni- (m) Limitation of rights. Nothing contained in this patent rights clause shall be deemed to give the Government any rights with respect to any invention other than a subject invention except as set forth in the Patent Rights clause of this contract with respect to background patents and the facilities license. (b) Licenses in contractor background patents. (1) It will normally be the case that a contractor qualified to perform work under a DOE contract will have developed a degree of expertise in the general field of activity to which the contract relates. Accordingly, it will not be unusual for a prospective contractor to have an established patent position relating to the general field of work to be performed under the contract and to have ongoing research and development programs in that general field which could result in patentable inventions. Because the contractor is obligated to apply its best efforts to accomplishing the objectives of the contract work, it is to be expected that inventions owned or controlled by the contractor at any time during the contract period may be utilized in connection with the work performed under the contract. If such inventions are or become the subject of a patent, such patented inventions may control a subject of the contract. (2) It is usually the case that at the time the contract is negotiated, such inventions, if any, of the contractor are not known to the Government and may not be known to the contractor either. Use by the contractor of such inventions in connection with the contract work does not necessarily result in a need for rights in those inventions by the Government or others. However, failure of DOE to obtain limited rights on behalf of the Government and/or third parties in a narrow class of those inventions, defined as "background patents," could frustrate the objectives of DOE to promptly make the benefits of its programs widely available to the public and to promote the commercial utilization of the technology developed or demonstrated under DOE programs. Therefore, it is DOE's policy to obtain limited license rights in background patents on a basis that is reasonable under the circumstances of the particular contract and takes into account the relative equities of the contractor, the Government and the general public. (3) Paragraph (k) of the Patent Rights clause of §9-9.107-5 (a) sets out the background patent provisions that will be appropriate for many DOE contracting situations by balancing the needs of DOE programs with the equities of the contractor. This clause obtains a paid-up, nonexclusive license for the Government for research, development, and demonstration work only and thus includes any use of the background patents under DOE programs where research, development, or demonstration work is being conducted. The clause also requires the contractor to license responsible parties on reasonable terms at the request of DOE in the field of technology specifically contemplated in the contract effort. The background patent provisions, however, are only applicable insofar as infringement of the patents cannot reasonably be avoided in order to utilize the results of the contract work for these purposes. Additionally, the clause is not effective if the contractor can demonstrate to the satisfaction of the Head of the Agency or designee that commercial alternatives are available or readily introducible from one or more sources, or that the contractor or its licensees are supplying the market in sufficient quantities and at reasonable prices or have taken effective steps, or within a reasonable time are expected to take effective steps, to so supply the market. In determining whether to request such licensing, DOE will recognize the need, where appropriate, to limit licensing to preserve the commercialization incentives provided by the patent, and also to meet the needs of the public for early availability of the technology. (4) Subparagraph (k)(1) defines those inventions which will fall within the definition of what constitutes a background patent, while subparagraphs (k)(2) and (k)(3) define the scope or field of use of any license granted. Although DOE, as stated in paragraph (3), controls the requesting of licenses to responsible parties, the final resolution of questions regarding the scope PROCUREMENT REGULATIONS 9-9.107-5 of such licenses and the terms thereof, including reasonable royalties, are then left to the negotiation of the parties with final resolution of the issues being made by a court of competent jurisidiction if necessary. In subparagraph (k)(4), the decision not to apply the licensing requirement of subparagraph (k)(3), however, is subject to the final decision of the Head of the Agency or designee. The final authority of DOE in these decisions is required because the determinations are dependent in substantial part on the requirement of DOE's specific mission. (5) Balancing of the respective equities in particular contracting situations, however, may require that paragraph (k) be modified. Paragraph (k) should normally be deleted for contracts under $250,000 and may not be appropriate in certain types of study contracts, planning contracts, contracts with educational institutions, and contracts for specialized equipment for in-house Government use or not intended for further procurement by the Government or for use by the public. Except for the deletion of paragraph (k) in contracts under $250,000 as permitted in this paragraph (5), deletions or modifications of paragraph (k) as set forth in this section are to be made with the advice of Patent Counsel. (6) On the other hand, there will be situations where the equities between the Government and the contractor, or anticipated Government needs, would require that rights be obtained for either the Government or for the public greater than those set forth in paragraph (k). For example, where (i) the contribution of the Government towards the development and/ or commercialization of the background patent is substantially greater than that of the contractor, (ii) it is expected that the Government may be involved in special long-term projects, or (iii) the Government may require substantial production, procurement or utilization for purposes outside of research, development, and demonstration, it may be necessary to obtain greater rights. In such situations, consideration should be given to extending the Government's rights beyond research, development, and demonstration work, or to adjust royalties (that may be due by the Government) to reflect the Government's contribution. Such adjustment could take the form of (i) credit to be given the Government based upon its contribution through the contract, or (ii) a royalty based upon the relative contributions of the contractor and the Government. Consideration could also be given to utilizing the relative contributions in determining reasonable royalties to be charged to others. (7) Similarly, it may be necessary to obtain greater rights for the public in the contractor's background patents where, for example, the contractor's background patents cover the basic technology intended to be developed under the contract effort, rather than components or products or processes which are ancillary thereto. In such cases, subparagraph (4) might also be appropriate where the future market for the subject of the contract will be very large and there are presently only a few suppliers available. (8) It may also be appropriate to modify the rights acquired by paragraph (k) where the contractor's background patent rights were of primary importance in granting the contractor a waiver. For example, if the contractor was permitted to retain exclusive rights to subject inventions based upon the consideration that both foreground and background inventions would be licensed at reasonable royalties, then paragraph (k) should be modified. The modification may be made applicable to the fields of technology, inventions, or other aspects of the contract. Concomitant with such modification, the licensing obligations for subject inventions should also be modified to be compatible therewith. In such cases, the definition of "background patent" should be broadened to include all patents useful in the practice of a subject of the contract, and subparagraph (k)(4) should be deleted or appropriately modified. (9) The application of paragraph (k) is limited to the practice of any specific process, method, or machine, manufacture, or composition of matter which is a subject of research, development, or demonstration work performed under the contract, otherwise referred to as "subject of this contract" in subparagraphs (2) and (3). The expression "a subject of this contract" is intended to limit the licensing required in paragraph (k) to the fields of technology specifically contemplated in the contract effort. During negotiations, when the subject matter of the contract is known, a more specific statement of the fields of technology intended to be covered 9-9.107-5 U.S. DEPARTMENT OF ENERGY may be substituted for the expression “subject of this contract.” For example, the application of paragraph (k) may be limited to the generation of electric power utilizing coal-derived fuels, to high-temperature, gas cooled reactors, or other specified fields of technology of interest to DOE programs. (10) The considerations and statements in the foregoing paragraphs (1)-(9) also apply to the negotiation, application, and inclusion of background patent rights provisions in subcontracts. (c) License for the States and domestic municipal governments. When the Head of the Agency or designee determines at the time of contracting that it would not be in the public interest to acquire a paid-up license in subject inventions for States and domestic municipal governments, paragraph (c)(4)(ii) of the Patent Rights clause in §9-9.107– 5(a) shall be replaced with the following paragraph: (ii) The Government shall retain at least an irrevocable, nonexclusive, paid-up license to make, use, and sell the invention throughout the world by or on behalf of the Government of the United States (including any Government agency). (d) Right to sublicense foreign governments. (1) When the Head of the Agency or designee determines at the time of contracting that it would be in the national interest to acquire the right to sublicense foreign governments pursuant to any treaty or agreement, a sentence shall be added to the end of paragraph (c)(4)(ii) of the Patent Rights clause in §9-9.107-5(a) as follows: This license shall include the right of the Government to sublicense foreign govern- (2) When the Head of the Agency or designee wishes to reserve the right to make the determination to sublicense foreign governments pursuant to any treaty or agreement until after the invention has been identified, a sentence shall be added to the end of paragraph (c)(4)(ii) of the Patent Rights clause in §9-9.107-5(a) as follows: This license shall include the right of the Government to sublicense foreign govern- (e) License rights (upon request) to contractor (revocable). When the Head of the Agency or designee determines at the time of contracting that the contractor may, subject to the provisions of §9-9.107-4(a)(7) (involving access to restricted data), reserve a revocable, nonexclusive, paid-up license in subject inventions, only upon a request by the contractor for the retention of such a license, paragraph (c)(1) of this clause in $9-9.107-5(a) shall be replaced with the following paragraph (c)(1): (c)(1) The contractor may reserve upon request a revocable, nonexclusive, paid-up license in each patent application filed in any country on a subject invention and any resulting patent in which the Government acquires the title. The license shall extend to the contractor's domestic subsidiaries and affiliates, if any, within the corporate structure of which the contractor is a part and shall include the right to grant sublicenses of the same scope to the extent the contractor was legally obligated to do so at the time the contract was awarded. The license shall be transferable only with approval of DOE except when transferred to the successor of that part of the contractor's business to which the invention pertains. (f) License rights to contractor (irrevocable). When the Head of the Agency or designee determines at the time of contracting that the contractor may reserve an irrevocable, nonexclusive, paid-up license in the inventions resulting from the contract, paragraph (c)(1) of the Patent Rights clause of §9-9.107-5(a) shall be re PROCUREMENT REGULATIONS 9-9.107-5 placed with the following paragraph (c)(1), and paragraphs (c)(2) and (c)(3) of §9-9.107-5(a) and references thereto shall be cancelled: (c)(1) The contractor reserves an irrevocable, nonexclusive, paid-up license in each patent application filed in any country on a subject invention and any resulting patent in which the Government acquires the title. The license shall extend to the contractor's domestic subsidiaries and affiliates, if any, within the corporate structure of which the contractor is a part and shall include the right to grant sublicenses of the same scope to the extent the contractor was legally obligated to do so at the time the contract was awarded. The license shall be transferable only with approval of DOE except when transferred to the successor of that part of the contractor's business to which the invention pertains. (g) Contractor sublicense (revocable). (1) When the Head of the Agency or designee determines at the time of contracting that, as indicated in §9-9.107-4(f), it would be in the interests of the Government to permit a contractor having the right to retain a revocable, nonexclusive license in a subject invention to have the further right to grant one or more sublicensees a revocable license of the same scope, the following paragraph may be substituted for paragraph (c)(1) of the Patent Rights clause in §9-9.107-5(a): (c)(1) The contractor reserves a revocable, nonexclusive paid-up license in each patent application filed in any country on a subject invention and any resulting patent in which the Government acquires the title. The license shall extend to the contractor's domestic subsidiaries and affiliates, if any, within the corporate structure of which the contractor is a part and shall include the right to grant revocable, nonexclusive sublicenses of the same scope. The license shall be transferable only with approval of DOE except when transferred to the successor of that part of the contractor's business to which the invention pertains. (2) Where the contractor has been granted the right to retain an irrevocable, nonexclusive license in a subject invention, and it is determined as in (g)(1) above to leave in the contractor the right to grant one or more revocable sublicenses thereunder, the following three paragraphs will be substituted for paragraphs (c)(1), (c)(2), and (c)(3) of the Patent Rights clause in §9-9.107-5(a): (c)(1) Contractor license. The contractor reserves an irrevocable, nonexclusive, paid-up license in each patent application filed in any country on a subject invention and any resulting patent in which the Government acquires title. The license shall extend to the contractor's domestic subsidiaries and affiliates, if any, within the corporate structure of which the contractor is a part and shall include the right to grant revocable, nonexclusive sublicenses which are revocable under the same terms and conditions as set forth in paragraphs (c)(2) and (3) of this clause. The license shall be transferable only with approval of DOE except when transferred to the successor of that part of the contractor's business to which the invention pertains. (c)(2) Revocation limitations. Any sublicense granted by the contractor may be revoked or modified by Before modification or revocation of any sublicense pursuant to paragraph |