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CHAPTER 14R-OFFICE OF SALINE WATER,
DEPARTMENT OF THE INTERIOR1
AUTHORITY: The provisions of this Part 14R-9 issued under 5 U.S.C. 1964 ed., sec. 22; sec. 2, Reorganization Plan No. 3 of 1950, 15 F.R. 3174.
SOURCE: The provisions of this Part 14R-9 appear at 36 F.R. 22744, Nov. 30, 1971, unless otherwise noted.
EFFECTIVE DATE: At 36 F.R. 22744 Part 14R-9 was added, effective 45 days after publication.
§ 14R-9.000 Scope of part.
These regulations and contract clauses set forth the policies of the Office of Saline Water in the area of patents and data.
§ 14R-9.001 Contracting Officer to consult with Solicitor.
(a) All authority of the Secretary of the Department of the Interior with respect to patent policies and procedures has been delegated to the Solicitor of the Department (Departmental Manual, Part 210, Chapter 2, paragraph 210.2.2A (5)). Therefore, any action under any contract provision required of the contracting officer (or other official having administrative authority over the contract) which affects the disposition of rights in inventions and in the related area of data, shall be taken only after consultation with and approval of the Solicitor of the Department. No modification or alteration of any contract provision in these areas shall be made by the contracting officer without the express written authorization of the Solicitor. Requests for deviation shall be submitted to the Solicitor and the reasons for the actions requested set forth.
(b) The Office of the Solicitor shall be consulted for policies, instructions, and contract clauses concerning inventions, patents, and data for use in contracts which are to be performed outside the United States, its possessions and Puerto Rico.
Subpart 14R-9.1-Inventions and Patents
1 Effective 45 days after publication at 36 F.R. 22744, Nov. 30, 1971.
Interior with respect to inventions made in the course of or under a contract which in whole or in part is for experimental, developmental or research work.
(b) Definitions of various terms employed in this subpart are to be found in § 14R-9.101-9.
§ 14R-9.101 Statutory requirements.
The Department of the Interior is charged with the administration of the Saline Water Act of 1971, Public Law 92-60, wherein the disposition of patent rights in inventions is governed by a specific statutory provision. Section 6(d) states:
All research within the United States contracted for, sponsored, cosponsored, or authorized under authority of this Act, shall be provided for in such manner that all information, uses, products, processes, patents, and other developments resulting from such research developed by Government expenditure will (with such exceptions and limitations, if any, as the Secretary may find to be necessary in the interest of national defense) be available to the general public. This subsection shall not be so construed as to deprive the owner of any background patent relating thereto of such rights as he may have thereunder *
This same language in the earlier Saline Water Act, Public Law 87-295 (42 U.S.C. 1954 (b)) has been interpreted, after a thorough review of the legislative history, as meaning that inventions and resulting patents, etc., arising out of research under the authority of the Act must be made available royalty-free. See Solicitor's Memorandum M-36637 of May 7, 1962, 69 I.D. 54 (1962). § 14R-9.101-1
Patent clause require
All Office of Saline Water contracts which are in whole or in part for experimental, developmental, or research work shall contain the patent clause set out at § 14R-9.101-9.
§ 14R-9.101-2 Definitions.
The definitions of various key terms employed in the regulations and patent clause are set forth in paragraph (a) of § 14R-9.101-9, the patent clause.
§ 14R-9.101-2.1 Specified work object.
The term "specified work object" relates to the tangible device or specific process upon which the research and development work is being conducted and is in existence or is known prior to the
contract. For example, in a contract for improving the permeability ratio of a reverse osmosis membrane of a stated composition, the membrane that is being experimented with would be the "specified work object". The difference between this term and the objective of the contract is that the latter is the goal sought in the research effort (in this case an improved permeability ratio), whereas the former relates to the material being worked upon. Under the contract provisions, any background patent necessary to the practice of a Specified Work Object for water desalination will be made available either through commercially available embodiments or through licensing as set forth in § 14R-9.101-9 (d).
In some types of research, such as basic research where the primary object is the development of new knowledge as distinct from the improvement of an existing device or process, there may well be no specified work object. In such case the following may be added, with the approval of the Solicitor, to paragraph (g) (12) of § 14R-9.101-9, of the patent clause:
(12) In view of the nature of the research work under this contract, the definition of Specified Work Object given in paragraph (a) (11) of this section is inapplicable in the patent clause. It is agreed, therefore, that all obligations relating to, or flowing from, a Specified Work Object have no force and effect in this patent clause.
The definition of "Contractor" in the patent clause may in some unusual cases give rise to situations which could cause serious difficulties in contracting. Subject to the approval of the Solicitor, deviations may be made in the definition as are deemed necessary to accommodate the specific problems presented and still attain the main objectives of the Department of the Interior's patent policy as expressed in the regulations.
§ 14R-9.101-3 Domestic patent rights. All patents arising out of R. & D. contracts under the Saline Water Act are required to be made available to the public in the United States royalty-free. This is carried out in paragraph (b) of the patent clause (§ 14R-9.101-9(b)) by having the Government take title to all inventions made under such contracts. The contractor is granted a royalty-free license under such inventions.
§ 14R-9.101-4 Exclusion of inventions.
(a) Under the terms of the patent clause, an invention is considered made under the contract if it was first conceived or first actually reduced to practice in the course of or under the contract. Where the contractor alleges at the time of contracting that an identified invention was conceived prior to the execution of the contract, and a patent application has been filed or will be filed, he may acquire the right to have the invention excluded from being considered a subject invention even though it is later actually reduced to practice under the contract. The contractor may acquire this right if he can provide evidence sufficient to convince the Contracting Officer that the work actually performed by him had brought the invention to the point of engineering practicality prior to the contract, and an actual reduction to practice under the contract will require no more than routine work. However, data developed in connection with work on the invention in the course of or under the contract are subject to the provisions of the Data clause § 14R-9.202 and the Government has a shop right to practice the invention if it is held not to be a subject invention.
(b) When applicable, the following paragraphs shall be inserted in the contract as paragraph (b)(3) of the patent clause (§ 14R-9.101-9) to cover this aspect:
An invention which has not been actually reduced to practice may be excluded from being considered a Subject Invention even though it is subsequently actually reduced to practice in the course of or under the Contract if:
(1) The Contractor has demonstrated to the Contracting Officer at the time of contracting, or at a time subsequent thereto as set forth in the Schedule, that such invention was described in a patent application or in a suitable documented written disclosure furnished to the Contracting Officer and had been developed to the point of engineering practicality prior to this Contract by laboratory or design work, or both, and
(ii) A subsequent actual reduction to practice under this Contract did not require the exercise of invention or extensive experimentation, and
(iii) A U.S. patent application on said invention is filed prior to the termination of the Contract.
As used herein "extensive experimentation" shall be deemed to have taken place when the labor cost involved under the Contract in making the actual reduction to practice amounts to either (1), 15 or more per
cent of the total labor cost under the Contract, or (2), at least 10,000 dollars.
Upon the Contractor's request and without undue delay, after the actual reduction to practice the circumstances will be reviewed and a determination will be made whether the invention would be considered a Subject Invention. It is agreed that the Government has a shop right to practice, for Governmental purposes, any such invention held not to be a Subject Invention. Any dispute regarding the rights of the parties under this paragraph shall be subject to the Disputes Clause of this Contract.
Title to subject invention foreign rights will normally be waived to the Contractor upon his request except when the Government, because of a compelling public interest, determines to retain such rights.
§ 14R-9.101-6 Background patents.
(a) Statutory provisions concerning background patents. The Act provides generally that nothing contained therein shall be construed as to deprive the owner of any background patent rights. No prohibition against a patent owner agreeing by contract to enter into a license arrangement respecting his background patents is seen therein. However, care must be taken to make sure that such a contract is equitable. Generally speaking, it is the policy of OSW not to require licensing of background patents provided the invention involved therein is available commercially at reasonable prices.
(b) License to the public. Under the Saline Water Act, all patents, information, developments, etc., made under a research and development contract are required to be made available to the public. If the contractor has a dominating background patent, he can, by a restrictive licensing policy inhibit the use of a subject invention by the public, with the result that the Government's expenditure of funds for research intended to benefit the public at large would go for naught. To minimize this possibility, the background provisions in the Patent Rights clause sets forth in § 14R-9.101-9 (d) that dominating background patents will be made available for use for water desalination in conjunction with the results of the research effort. To this end the contractor agrees to grant a license to any responsible applicant on reasonable terms, except where an embodiment of the dominating background patent is commercially available (or will be made so by a speci
fied date) in a form which can be employed in the practice of either a subject invention or the specific subject matter of the research. In the latter case licensing is not required. The contractor may, of course, grant an unlimited license under his background patents.
(1) It should be noted that where a contractor employs an embodiment of his patent in work on a specific work object for convenience only, there being other functionally equivalent substitutes available, he would not be required to license the patent for use with the specified work object. Should a subject invention be made which is dominated by such patent, then licensing would be required if an embodiment is not commercially available.
(2) The background requirements are satisfied if a contractor makes his dominating background patent available through the commercial sale of a product in which the background patent, together with the foreground developments are joined. However, march-in rights are reserved to assure availability of the results of the research and development work.
(3) Where a contractor's parent or affiliated company controls a patent, not a commercial item, which would be background if held by the contractor, the patent clause at § 14R-9.101-9(d) (8) requires the contractor to aid in securing a license for qualified applicants.
(c) License to the Government. (1) Where the embodiment of a background patent is not available commercially, the Government should not be obligated to pay royalties to do pilot plant, test bed or test module work in the field of technology of the contract using such background patents since, if successful, the result of such work will enhance the value of contractor's background.
(2) Since in many cases the purpose of the Government-sponsored research is to further develop a contractor's background invention, the Government should receive some recognition for its contribution if it wishes to employ such invention for any U.S. Government use. Accordingly, the patent clause provides that the Government will obtain a license on such background patent at a reasonable royalty which shall recognize the Government's contributions toward the commercial development or enhancement of the patent. Section 14R-9.101-9 (d) (4) of the patent clause covers these aspects.
(d) Limitations on use of background patent to a process. Where the research and development work involves the employment of a contractor's background patent in a process under parameters and conditions different from those which are employed in his commercial process, the requirement to license such background patent to the public for use in conjunction with the specified work object is limited to the conditions and parameters reasonably equivalent to those employed in the work under the contract. This would avoid the possibility of a license being acquired under the background patent which would enable the practice of contractor's commercial process, although the work under the contract called for different operating parameters.
(e) Antitrust. While agreements pursuant to the background and foreign rights clauses would not in the great majority of cases be violative of the antitrust laws, it may be possible to devise an arrangement thereunder which would be in restraint of trade. Accordingly, nothing herein is to be construed as relieving any person from the operation of the antitrust laws as regard a specific agreement entered into pursuant to these regulations and contract provisions.
(a) In many cases a contractor conducts research on his own account parallel to that conducted under a Government contract during the same period, and sometimes with the same personnel. In order to enable the Government to determine whether or not an invention made by the contractor in the field of research contemplated by the contract is a subject invention, the patent article provides for reporting, during prescribed periods, all inventions made by the contractor which are related to the work under the contract. Additional information is to be furnished to the Government on request. Failure to report or to supply the information requested places on the contractor the duty of going forward with the evidence under any subsequent proceeding.