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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 (ii) 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

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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)ü) of the Patent Rights clause in 89-9.1073(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 89-9.107-5(a) as follows:

This license shall include the right of the Government to sublicense foreign govern

ments pursuant to any treaty or agreement with such foreign governments. (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 89-9.107-5(a) as follows:

This license shall include the right of the Government to sublicense foreign govern-
ments pursuant to any treaty or agreement with such foreign governments if the
Head of the Agency or designee determines after the invention has been identified

that it would be in the national interest to acquire this right. (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 89-9.107-4(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 89-9.107-5(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. (1) 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

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placed with the following paragraph (c)(1), and paragraphs (c)(2) and (c)(3) of 89–9.107-5(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 con

tractor'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 89-9.107-4(1), 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 89-9.107-5(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 89-9.107-5(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 DOE, either in whole or in part, only to the extent necessary to achieve expeditious practical application of the subject invention under DOE's published licensing regulations (10 CFR 781), and only to the extent an exclusive license is actually granted. This sublicense shall not be revoked in that field of use and/or geographical areas in which the contractor, or its sublicensee, has brought the invention to the point

actical application and continues to make the benefits of the invention reason-
ably accessible to the public, or is expected to do so within a reasonable time.

(c)(3) Revocation procedures.
Before modification or revocation of any sublicense pursuant to paragraph

this clause, DOE shall furnish the contractor and the sublicensee written
notice of its intention to modify or revoke the sublicense, and the contractor and
the sublicensee shall be allowed 30 days, or such longer period as may be allowed
by the Patent Counsei (with noufication by Patent Counsel to the Contracting Offi-
cer) for good cause shown in usiang hy the contractor or the sublicensee, after such
notice to show cause why the sublicense should not be modified or revoked. The

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contractor or the sublicensee shall have the right to appeal in accordance with 10
CFR 781, any decision concerning the modification or revocation of the sublicense.

(h) Facilities license. The following paragraph will be included as paragraph (n) of the Patent Rights (long form) clause in each contract having as purpose the design, construction, or operation of a Government-owned research, development, demonstration, or production facility. The scope of the license in the following paragraph may, in appropriate situations, be expanded to cover similar facilities.

(n) Facilities license.

In addition to the rights of the parties with respect to inventions or discoveries conceived or first actually reduced to practice in the course of or under this contract, the contractor agrees to and does hereby grant to the Government an irrevocable, nonexclusive paid-up license in and to any inventions or discoveries regardless of when conceived or actually reduced to practice or acquired by the contractor, which are owned or controlled by the contractor at any time through completion of this contract and which are incorporated or embodied in the construction of the facility or which are utilized in the operation of the facility or which cover articles, materials, or products manufactured at the facility (1) to practice or to have practiced by or for the Government at the facility, and (2) to transfer such license with the transfer of that facility. The acceptance or exercise by the Government of the aforesaid rights and license shall not prevent the Government at any time from contesting the enforceability, validity or scope of, or title to, any rights or patents herein licensed.

89-9.107-6 Clause for domestic contracts (short form).

The following clause may be used instead of the clause of 89-9.107-5(a) in contracts for basic or applied research where the contractor is a nonprofit or educational institution and in special situations including consultant contracts. This clause shall not be used in long term consultancy arrangements for work in DOE programs providing opportunities for specialized work experience at DOE-owned facilities for scientific, engineering, and other employees of private firms and institutions engaged in civilian applications of atomic energy. In such instances consult Patent Counsel. Also, this clause is not to be used in contracts calling for the operation of Government-owned facilities, or contracts in which an advance waiver has been granted, or other special contracts such as those for the conduct of major long-term continuing programs or basic agreements providing for the assignment of new tasks from time to time by mutual agreement.

PATENT RIGHTS (SHORT FORM) (a) Definitions.

(1) “Subject invention" means any invention or discovery of the contrac-
tor conceived or first actually reduced to practice in the course of performance of
or under this contract, and includes any art, method, process, machine, manufacture,
design, or composition of matter, or any new and useful improvement thereof, or
any variety of patents, whether patented or unpatented, under the patent laws of
the United States of America or any foreign country

(2) “Patent Counsel" means the DOE Patent Counsel assisting the procur-
ing activity.
· (b) Invention disclosures and reports.

(1) The contractor shall furnish the Patent Counsel (with notification by
Patent Counsel to the Contracting Officer):

(i) A written report containing full and complete technical information concerning each subject invention within 6 months after conception or first actual reduction to practice but in any event prior to any on sale, public use, or public disclosure of such invention known to the contractor. The report shall identify the contract and inventor and shall be sufficiently complete in technical detail and appropriately illustrated by sketch or diagram 10 convev to one skilled in the art to which the invention pertains, clear understanding of the nature, purpose, operation, and to the extent known, the physical, chemical, biological, or electrical char

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acteristics of the invention;

(ii) Upon request, but not more than annually, interim reports on a DOE-approved form listing subject inventions for that period and certifying that all subject inventions have been disclosed or that there were no such inventions;

and

(iii) A final report on a DOE-approved form within 3 months after completion of the contract work listing all subject inventions and certifying that all subject inventions have been disclosed or that there were no such inventions.

(2) The contractor agrees that the Government may duplicate and disclose subject invention disclosures and all other reports and papers furnished or required to be furnished pursuant to the contract.

(c) Allocation of principal rights.

(1) Assignment to the Government.

The contractor agrees to assign to the Government the entire right, title, and interest throughout the world in and to each subject invention, except to the extent that rights are retained by the contractor under paragraphs (c)(2) and (d) of this clause.

(2) Greater rights determination.

The contractor, or the employee-inventor with authorization of the con-
· tractor, may request greater rights than the nonexclusive license and the foreign pa-

tent rights provided in paragraph (d) of this clause on identified inventions in
accordance with the procedure and criteria of 41 CFR 89-9.109-6. A request for
a determination of whether the contractor or the employee-inventor is entitled to
retain such greater rights must be submitted to the Patent Counsel (with notification
by Patent Counsel to the Contracting Officer) at the time of the first disclosure of
the invention pursuant to paragraph (b)(1) of this clause or not later than 9 months
after conception or first actual reduction to practice, whichever occurs first, or such
longer period as may be authorized by the Patent Counsel (with notification by Pa-
tent Counsel to the Contracting Officer) for good cause shown in writing by the
contractor. The information to be submitted for a greater rights determination is
specified in 41 CFR 89-9.109-6(e).

(d) Minimum rights to the contractor.

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 title. Revocation shall be in accordance with the procedure of paragraphs (c)(2) and (3) of the clause in 41 CFR 89-9.107-5(a). The contractor also has the right to request foreign rights in accordance with the procedures of paragraph (c)(4) of the clause in 41 CFR 89-9.107-5(a).

(e) Employee and subcontractor agreements.

Unless otherwise authorized in writing by the Contracting Officer, the contractor shall:

(1) Obtain patent agreements to effectuate the provisions of the Patent Rights clause from all persons who perform any part of the work under this contract except nontechnical personnel, such as clerical employees and manual laborers.

(2) Unless otherwise authorized or directed by the Contracting Officer, the contractor shall include the Patent Rights clause of 41 CFR 89-9.107-5(a) or 41 CFR 89-9.107-6, as appropriate, modified to identify the parties in any subcontract hereunder having as a purpose the conduct of research, development, or demonstration work; and

(3) Promptly notify the Contracting Officer in writing upon the award of any subcontract containing a Patent Rights clause by identifying the subcontractor, the work to be performed under the subcontract, and the dates of award and estimated complction. Upon the request of the Contracting Officer, the contractor shall furnish a copy of the subcontract to such requester.

(0) 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 inventions or discovery made or conceived in the course of or under this contract.

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