clause have been reported or that no such subcontracts have been awarded.

(3) The contractor shall obtain patent agreements to effectuate the provisions of this clause from all persons in its employ who perform any part of the work under this contract except nontechnical personnel, such as clerical employees and manual laborers.

(4) The contractor agrees tht the Government may duplicate and disclose subject invention disclosures and all other reports and papers furnished or required to be furnished pursuant to this clause. If the contractor is to file a foreign patent application on a subject invention, the Government agrees, upon written request, to use its best efforts to withhold publication of such invention disclosures until the expiration of the time period specified in paragraph (d)(1) of this clause, but in no event shall the Government or its employees be liable for any publication thereof.

(f) Publication.

It is recognized that during the course of the work under this contract, the contractor or its employees may from time to time desire to release or publish information regarding scientific or technical developments conceived or first actually reduced to practice in the course of or under this contract. In order that public disclosure of such information will not adversely affect the patent interests of ERDA or the contractor, patent approval for release or publication shall be secured from patent counsel prior to any such release or publication. (g) Forfeiture of rights in unreported subject inventions.

(1) The contractor shall forfeit to the Government, at the request of the head of the agency or designee, all rights in any subject invention which the contractor fails to report to patent counsel (with notification by patent counsel to the contracting officer) within 6 months after the time the contractor:

(i) Files or causes to be filed a United States or foreign patent application thereon; or

(ii) Submits the final report required by paragraph (e)(2)(ii) of this clause, whichever is later.

(2)

However, the contractor shall not forfeit rights in a subject invention if, within the time specified, in (1)(i) or (1)(iii) of this paragraph (g), the con

tractor:

(i)

prepared a written decision based upon a review of the record that the invention was neither conceived nor first actually reduced to practice in the course of or under the contract delivers the same to patent counsel (with notification by patent counsel to the contracting officer); or

(ii) contending that the invention is not a subject invention the contractor nevertheless discloses the invention and all facts pertinent to this contention to the patent counsel (with notification by patent counsel to the contracting officer); or

(iii) establishes that the failure to disclose did not result from the contracto's fault or negligence.

(3) Pending written assignment of the patent application and patents on a subject invention determined by the head of the agency or designee to be forfeited (such determination to be a final decision under the Disputes clause of this contract), the contractor shall be deemed to hold the invention and the patent applications and patents pertaining thereto in trust for the Government. The forfeiture provi

sion of this paragraph (g) shall be in addition to and shall not supersede other rights and remedies which the Government may have with respect to subject inventions.

(h)

Examination of records relating to inventions.

(1) The contracting officer or his authorized representative, 'until the expiration of 3 years after final payment under this contract, shall have the right to examine any books (including laboratory notebooks), records, document, and other supporting data of the contractor which the contracting officer or his authorized representative reasonably deem pertinent to the discovery or identification of subject inventions or to determine compliance with the requirements of this clause.

(2) The contracting officer or authorized representative shall have the right to examine all books (including laboratory notebooks), records and documents of the contractor relating to the conception or first actual reduction to

practice of inventions in the same field of technology as the work under this contract to determine whether any such inventions are subject inventions, if the contractor refuses or fails to:

(i)

Establish the procedures of paragraph (e)(1)

of this clause; or

(ii) maintain and follow such procedures; or

(iii) correct or eliminate any material deficiency in the procedures within thirty days after the contracting officer notifies the contractor of such a deficiency.

(1) Withholding of payment (not applicable to subcontracts).

(1) Any time before final payment of the amount of this contract, the contracting officer may, if he deems such action warranted, withhold payment until a reserve not exceeding $50,000 or 5 percent of the amount of this contract, whichever is less, shall have been set aside if in his opinion the contractor fails to:

(i) establish, maintain and follow effective procedures for identifying and disclosing subject inventions pursuant to paragraph (e)(1) of this clause; or

(ii) disclose any subject invention pursuant to paragraph (e)(2)(i) of this clause; or

(iii) deliver the interim reports pursuant to paragraph (e)(2)(ii) of this clause; or

(iv) provide the information regarding subcontracts pursuant to paragraph (j)(5) of this clause; or

(v) convey to the Government in an ERDA approved form the title and/or rights of the Government in each subject invention as required by this clause.

(2) The reserve or balance shall be withheld until the contracting officer has determined that the contractor has rectified whatever deficiencies exist and has delivered all reports, disclosures, and other information required by this clause.

(3) Final payment under this contract shall not be made by the contracting officer before the contractor delivers to patent counsel all disclosures of subject inventions and other information required by (e)(2)(i) of this clause, the final report required by (e)(2)(iii) of this clause, and patent counsel has issued a patent clearance certification to the contracting officer.

(4) The contracting officer may, in his discretion, decrease or increase the sums withheld up to the maximum authorized above. If the contractor is a nonprofit organization, the maximum amount that may be withheld under this paragraph shall not exceed $50,000 or 1 percent of the amount of this contract, whichever is less. No amount shall be withheld under this paragraph while the amount specified by this paragraph is being withheld under other provisions of the contract. The withholding of any amount or subsequent payment thereof shall not be construed as a waiver of any rights accruing to the Government under this

contract.

(j) Subcontracts.

(1) For the purpose of this paragraph the term "contractor" means the party awarding a subcontract and the term "subcontractor" means the party being awarded a subcontract, regardless of tier.

(2) Unless otherwise authorized or directed by the contracting officer, the contractor shall include the Patent Rights clause of 41 CFR 9-9.107-5(a) or 41 CFR 9-9.107-6 as appropriate, modified to identify the parties in any subcontract hereunder having as a purpose the conduct of research, development, or demonstration work. In the event of a refusal by a subcontractor to accept this clause, or if in the opinion of the contractor this clause is inconsistent with ERDA's patent policies, the contractor:

(i) shall promptly submit written notice to the contracting officer setting forth reasons for the subcontractor refusal and other pertinent information which may expedite disposition of the matter; and

(3) Except as may be otherwise provided in this clause, the contractor shall not, in any subcontract by using a subcontract as consideraton there for, acquire any rights in its subcontractors's subject invention for the contractor's own use (as distinguished from such rights as may

be required solely to fulfill

the contractor's contract obligations to the Government in the performance of this contract).

(4) All invention disclosures, reports, instruments, and other information required to be furnished by the subcontractor to ERDA, under the provisions of a Patent Rights clause in any subcontract hereunder may, in the discretion of the contracting officer, be furnished to the contractor for transmission to ERDA.

(5) The contractor shall 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 completion. Upon the request of the contracting officer the contractor shall furnish a copy of the subcontract.

(6) The contractor shall identify all subject inventions of the subcontractor 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 Government regarding subject inventions.

(k) Background Patents.

to the

(1) "Background Patent" means a domestic patent covering an invention of 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