§ 9.206

Contracts to be performed outside the United States.

(a) Except as otherwise provided in § 6.501 of this chapter, § 9.204-2 or § 9.205, the clause set forth below shall be included in all contracts under which (1) technical data, including reports, drawings, blueprints, or other data is specified to be delivered to the Government, and (2) the work is to be performed outside the United States, its possessions, and Puerto Rico, regardless of the place of delivery.

RIGHTS IN TECHNICAL DATA (FOREIGN)

(OCTOBER, 1966)

The U.S. Government may duplicate use, and disclose in any manner for its purposes, including delivery to other governments for the furtherance of mutual defense of the U.S. Government and other governments, all or any part of the technical data including reports, drawings, blueprints, and other data specified to be delivered by the Contractor to the U.S. Government under this contract.

(b) When the contractor is a foreign government, the above clause shall be modified by substituting the name of the foreign government for "Contractor." [32 F.R. 532, Jan. 18, 1967]

§ 9.207 Data Withholding of payment. [27 F.R. 6136, June 29, 1962] § 9.207-1 General.

Timely delivery of required data is particularly important for competitive procurement of follow-on quantities of the contract items and of items broken out from an assembly or equipment. The clauses set forth in § 9.207–2 are designed to insure timely delivery of complete and current data. The clauses provide for a withholding of ten percent (10%) of the contract price, but the contracting officer may specify a lesser amount in the schedule if circumstances warrant. To insure effective enforcement of the clause, a case-by-case determination shall be made by the contracting officer after considering all pertinent factors, including whether the failure to make timely delivery, in accordance with the delivery schedule as originally provided or as modified, arises out of causes beyond the control and without the fault or negligence of the contractor.

[27 F.R. 6136, June 29, 1962]

(a) The following clause shall be inserted in all fixed-price contracts (except those not exceeding $10,000 or with educational institutions) containing the clause set forth in § 9.203(b).

TECHNICAL DATA-WITHHOLDING OF PAYMENT (OCTOBER 1966)

If "Technical Data" (as defined in the clause of this contract entitled "Rights in Technical Data"), or any part thereof, is not delivered within the time specified by this contract or is deficient upon delivery (including having restrictive markings not specifically authorized by this contract), the Contracting Officer may, until such data is delivered or deficiencies are corrected, withhold payment to the Contractor of ten percent (10%) of the contract price unless a lesser withholding is specified in the Schedule. Payments shall not be withheld nor any other action taken pursuant to this clause where the Contractor's failure to make timely delivery or to deliver such data without deficiencies arises out of causes beyond the control and without the fault or negligence of the Contractor within the meaning of the clause hereof entitled "Default." The withholding of any amount or subsequent payment thereof to the Contractor shall not be construed as a waiver of any rights accruing to the Government under this contract.

(b) The following clause shall be used in all cost-reimbursement type contracts (except contracts with educational institutions) containing the clause set forth in § 9.203(b).

TECHNICAL DATA-WITHHOLDING OF PAYMENT (OCTOBER 1966)

If "Technical Data" (as defined in the clause of this contract entitled "Rights in Technical Data"), or any part thereof, is not delivered within the time specified by this contract or is deficient upon delivery (including having restrictive markings not specifically authorized by the contract), the Contracting Officer may, until such data is delivered or deficiencies are corrected, withhold payment due the Contractor on account of allowable costs and fixed fee, of ten percent (10%) of the contract price, unless a lesser withholding is specified in the Schedule. Payments shall not be withheld nor any other action taken pursuant to this clause where the Contractor's failure to make timely delivery or to deliver such data without deficiencies arises out of causes beyond the control and without the fault or negligence of the Contractor within the meaning of the clause hereof entitled "Excusable Delays." The withholding of any amount or subsequent payment thereof to the Contractor shall not be construed as a waiver of any rights accruing to the Government under this contract.

[32 F.R. 532, Jan. 18, 1967]

In furtherance of the Mutual Security Program, or for other national defense purposes, the Government may undertake to develop or encourage the development of, foreign additional sources of supply. The development of such sources may be accomplished by an agreement, often called a foreign licensing agreement or technical assistance agreement, wherein a domestic concern, referred to in this part as a "primary source", agrees to furnish to a foreign concern or government, herein referred to as a "second source," foreign patent rights; technical assistance in the form of data, know-how, trained personnel of the primary source, instruction and guidance of the personnel of the second source, jigs, dies, fixtures, or other manufacturing aids; and such other assistance, information, rights, or licenses as are needed to enable the second source to produce particular supplies or perform particular services. Agreements calling for one or more of the foregoing may be entered into between the primary source and the Government, a foreign government, or a foreign concern. The consideration for providing such foreign licenses and technical assistance may be in the form of a lump sum payment, or payments for each item manufactured by the second source, or both, an agreement to exchange data and patent rights on improvements made to the article service, capital stock transactions, or any combination of these. The primary source's bases for computing such consideration may include actual cost, charges for the use of patents, data, or know-how reflecting the primary source's investment in development and engineering and production techniques, and the primary source's "price" for setting up a second source. Such agreements often refer to the compensation to be paid as a royalty or license fee whether or not patent rights are involved.

or

It is Government policy not to pay in connection with its contracts, and not to allow to be paid in connection with contracts made with funds derived through

or

the Military Assistance Program otherwise through the U.S. Government, charges for use of patents in which it holds a royalty-free license or charges for data which it has a right to use and disclose to others, or which is in the public domain, or which the Government has acquired without restriction upon its use and disclosure to others. This policy shall be applied by the Departments (a) in negotiating contract prices for foreign license and technical assistance contracts (§ 9.302) or supply contracts with second sources (§ 9.303), and (b) in commenting on such agreements when they are referred to the Department of Defense by the Department of State pursuant to section 414 of the Mutual Security Act of 1954 as amended (22 U.S.C. 1934) and the International Traffic in Arms Regulations (see § 9.304). [32 F.R. 532, Jan. 18, 1967]

§ 9.302

Foreign license and technical assistance agreements between the Government and domestic concerns.

(a) Contracts between the Government and a primary source to provide technical assistance or patent rights to a second source for the manufacture of supplies or performance of services shall, to the extent practicable, specify the rights in patents and data and any other rights to be supplied to the second source. Each contract shall provide, in connection with any separate agreement between the primary source and the second source for patent rights or technical assistance relating to the articles or services involved in the contract, that

(1) The primary source and his subcontractors shall not make, on account of any purchases by the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government, any charge to the second source for (i) royalties or amortization for patents or inventions in which the Government holds a royalty-free license, or (ii) data which the Government has the right to possess, use, and disclose to others, or (iii) any technical assistance provided to the second source for which the Government has paid under a contract between the Government and the primary source;

and

(2) The separate agreement between the primary and second source shall (i) include a statement referring to the

contract between the Government and the primary source, and (ii) conform to the requirements of the International Traffic in Arms Regulations (see § 9.304).

(b) The following factors, among others, shall be considered in negotiating the price to be paid the primary source under contracts within paragraph (a) of this section.

(1) The actual cost of providing data, personnel, manufacturing aids, samples, spare parts, etc.;

(2) The extent to which the Government has contributed to the development of the supplies or services, and to the methods of manufacture or performance, through past contracts for research and development or for manufacture of the supplies or performance of the services; and

(3) The Government's patent rights and rights in data relating to the supplies or services and to the methods of manufacture or of performance.

[25 F.R. 14252, Dec. 31, 1960, as amended at 32 F.R. 533, Jan. 18, 1967]

§ 9.303 Supply contracts between the Government and a foreign govern

(a) Shall obtain from the second source a detailed statement (see § 9.110 (a) (3)) of royalties, license fees, and other compensation paid or to be paid to a primary source (or any of his subcontractors) for patent rights, rights in data, and other technical assistance provided to the second source, including identification and description of such patents, data and technical assistance; and

(b) Shall not accept or allow charges which in effect are (1) for royalties or amortization for patents or inventions in which the Government holds a royalty-free license, or (2) for data which the Government has a right to possess, use, and disclose to others, or (3) for any technical assistance provided to the second source for which the Government has paid under a contract between the Government and a primary source. [32 F.R. 533, Jan. 18, 1967]

Pursuant to section 414 of the Mutual Security Act of 1954, as amended (22 U.S.C. 1934), the Department of State controls the exportation of data relating to articles designated in the U.S. Munitions List as arms, ammunition, or munitions of war. (The Munitions List and pertinent procedures are set forth in the International Traffic in Arms Regulations, 22 CFR et seq.) Before authorizing such exportation, the Department of State generally requests comments from the Department of Defense. On request of the office of the Assistant Secretary of Defense (International Security Affairs), each Military Department shall submit comments thereon as the basis for a Department of Defense reply to the Department of State. Such comments shall be prepared in the light of the following excerpt from the International Traffic in Arms Regulations.

§ 124.04 Required provisions in agreements. (a) Manufacturing license or technical assistance agreements should define in precise terms the following:

(1) The equipment and technology involved;

(2) The scope of the information to be furnished;

(3) The period of duration of the agreement;

(4) Statement of ownership of equipment and special tools involved which would be made available in connection with the agreement. In lieu of inclusion as an integral part of the agreement, the applicant may submit this information in the form of an attachment or enclosure to the agreement submitted for review.

(b) (1) It is the policy of the United States Government not to pay or allow to be paid in connection with purchases made with Mutual Security Program funds, a charge for patent rights in which it holds a royalty-free license, or for technical data which it has a right to use and disclose to others for purposes of the Mutual Security Program, or which are in the public domain, or with respect to which it has been placed in possession without restriction upon their use and disclosure to others. Reasonable charges for reproduction, handling, mailing, and other similar administrative costs do not fall within this policy.

(2) Pursuant to the above policy (subparagraph (1) of this paragraph) agreements shall be written in such a way as to provide that (1) purchases of items by or

for the United States Government, or with funds derived through the Mutual Security Program, will not include a charge (a) for technical data in the possession of the United States Government, or in which the United States Government has a right to possession, and regarding which there is no prohibition against use by the United States Government and disclosure to others and (b) for royalties or amortization for patents or inventions in which the United States Governinent holds a royalty-free license; and (ii) the license rights transferred by such agreements will be subject to existing rights of the United States Government. [27 F.R. 8874, Sept. 6, 1962, as amended at 32 F.R. 533, Jan. 18, 1967]

§ 9.304-2 Review of agreements.

(a) In reviewing foreign license and technical assistance agreements between primary and second sources, the Military Department concerned shall, insofar as its interests are involved, indicate whether the agreement meets the requirements of section 124.04 of the International Traffic in Arms Regulations (see § 9.3041) or in what respects it is deficient. Paragraphs (b) through (g) of this section provide general guidance.

(b) When it is reasonably anticipated that the Government will procure from the second source the supplies or services involved in the agreement, or that Military Assistance Program funds will be provided for the procurement of supplies or services, the following guidance applies.

(1) If the agreement specifies a reduction in charges thereunder, with respect to purchases by or for the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government, in recognition of the Government's rights in patents and data, the Department concerned shall evaluate the amount of the reduction to determine whether it is fair and reasonable in the circumstances, before indicating its approval.

(2) If the agreement does not specify any reduction in charges or otherwise fails to give recognition to the Government's rights in the patents or data involved, approval shall be conditioned upon amendment of the agreement to reflect a reduction, evaluated by the Department concerned as acceptable to the Government, in any charge thereunder with respect to purchases made by or for the Government or by others with funds derived through the Military

Assistance Program or otherwise through the Government, in accordance with section 124.04 (b) of the International Traffic in Arms Regulations.

(3) If the agreement provides that no charge is to be made to the second source for data or patent rights to the extent of the Government's rights, the Department concerned shall evaluate the acceptability of the provision before indicating its approval.

(4) If time or circumstances do not permit the evaluation called for in subparagraphs (1), (2), or (3) of this paragraph, the guidance in paragraph (c) of this section shall be followed.

(c) When it is not reasonably anticipated that the Government will purchase from the second source the supplies or services involved in the agreement nor that Military Assistance Program funds will be provided for the purchase of the supplies or services, then the following guidance applies.

(1) If the agreement provides for charges to the second source for data or patent rights, it may suffice to fulfill the requirements of section 124.04 (b), quoted above, insofar as the Department of Defense is concerned if:

(i) The agreement requires the second source to advise the primary source when he has knowledge of any purchase made or to be made from him by or for the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government;

(ii) The primary source separately agrees with the Government that upon such advice to him from the second source or from the Government or otherwise as to any such a purchase or prospective purchase, he will negotiate with the Department concerned an appropriate reduction in his charges to the second source in recognition of any Government rights in patents or data; and

(iii) The agreement between the primary and second sources further provides that in the event of any such purchase and resulting reduction in charges, the second source shall pass on this reduction to the Government by giving the Government a corresponding reduction in the purchase price of the article or service.

(2) If the agreement provides that no charge is to be made to the second source for data or patent rights to the extent

to which the Government has rights, the Department concerned shall:

(i) Evaluate the acceptability of the provision before indicating its approval;

or

(ii) Explicitly condition its approval on the right to evaluate the acceptability of the provision at a later time.

(d) When there is a technical assistance agreement between the primary source and the Government related to the agreement between the primary and second sources that is under review, the latter agreement shall reflect the arrangements contemplated with respect thereto by the Government's technical assistance agreement with the primary

source.

(e) Every agreement shall provide that any license rights transferred under the agreement are subject to existing rights of the Government.

(f) In connection with every agreement referred to in paragraph (b) of this section, a request shall be made to the primary source (1) to identify the patents, data, and other technical assistance to be provided to the second source by the primary source or any of his subcontractors, (2) to identify any such patents and data in which, to the knowledge of the primary source, the Government may have rights, and (3) to segregate the charges made to the second source for each such category or item of patents, data, and other technical assistance. Reviewing personnel shall verify this information or, where the primary source does not furnish it, obtain such information from Governmental sources so far as practicable.

(g) The Department concerned shall make it clear that its approval of any agreement does not necessarily recognize the propriety of the charges or the amounts thereof, or constitute approval of any of the business arrangements in the agreement, unless the Department expressly intends by its approval to commit itself to the fairness and reasonableness of a particular charge or charges. In any event, a disclaimer should be made to charges or business terms not affecting any purchase made by or for the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government. [32 F.R. 533, Jan. 18, 1967, as amended at 32 F.R. 4260, Mar. 18, 1967]

The procedures set forth herein will be followed, where applicable, in copyright infringement claims.

§ 9.404 Requirements for filing an administrative claim for patent infringement.

(a) A patent infringement claim for compensation, asserted against the United States under any of the applicable statutes cited in § 9.402, must be actually communicated to and received by a department, agency, organization, office, or field establishment within the Department of Defense. Claims must be in writing and should include the following:

(1) An allegation of infringement; (2) A request for compensation, either expressed or implied;

(3) A citation of the patent or patents alleged to be infringed;

(4) A sufficient designation of the alleged infringing item or process to permit identification, giving the military or commercial designation, if known, to the claimant;