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The President's Policy provides guidance as to basic policies to be followed by executive agencies with respect to inventions or discoveries made in the course of their awards. The provisions set forth in this subpart are intended to implement the National Science Foundation Act in accordance with the basic guidelines and philosophy of the President's Policy. § 25-9.103 Procedures for selection of

contract clauses. (a) Except as provided in paragraphs (b) and (c) of this section, all Foundation contracts shall contain the following clause: PATENT RIGHTS-OPTION IN THE GOVERNMENT

(a) Definitions.

(1) "Subject Invention" means any invention or discovery of the Contractor conceived or first actually reduced to practice in the course 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 plant, which is or may be patentable under the Patent Laws of the United States of America, or any foreign country.

(2) "Contract” means any contract, agreement, grant, or other arrangement, or subcontract entered into with or for the benefit of the Government where a purpose of the contract is the conduct of experimental, developmental, or research work.

(3) "States and domestic municipal governments" means the States of the United States, the District of Columbia, Puerto Rico, the Virginia Islands, American Samoa, Guam, the Trust Territory of the Pacific Islands, and any political subdivision and agencies thereof.

(4) "Government agency” includes an executive department, independent commission, board, office, agency, administration, authority, Government corporation, or other Government establishment of the executive branch of the Government of the United States of America.

(5) "To the point of practical application" means to manufacture in the case of a composition or product, to practice in the case of a process, or to operate in the case of a machine and under such conditions as to establish that the invention is being worked and that its benefits are reasonably accessible to the public.

(6) "Foundation" means the National Science Foundation.

(b) Disposition of principal rights-(1) Assignment to the Government. The Contractor agrees to assign to the Government when requested, 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 Con

tractor under paragraphs (b)(2) and (d) of this clause.

(2) Greater Rights Determinations. The Contractor, or the employee-inventor with authorization of the Contractor, may retain greater rights than the nonexclusive license provided in paragraph (d) of this clause in accordance with the procedure and criteria of 41 CFR 25–9.104. A request for a determination as to whether the Contractor or the employee-inventor is entitled to retain such greater rights must be submitted to the Foundation at the time of the first disclosure of the invention pursuant to par&graph (e) (2) (1) of this clause, or not later than 3 months thereafter or such longer period as may be authorized by the Foundation for good cause shown in writing by the Contractor. The information to be submitted for a greater rights determination is specified in 41 CFR 25–9.104. Each determination of greater rights under this contract normally shall be subject to paragraph (c) of this clause and to such reservations and conditions as may be deemed to be appropriate by the Foundation.

(c) Minimum rights granted to the Government. With respect to each Subject Invention to which the Contractor retains principal or exclusive rights, the contractor:

(1) Hereby grants to the Government a nonexclusive, nontransferable, paid-up license to make, use, and sell each Subject Invention throughout the world by or on behalf of the Government of the United States (including any Government agency), States and domestic municipal governments, unless the Director of the Foundation determines after the invention has been identified that it would not be in the public interest to acquire the license for States and domestic municipal governments;

(2) Agrees to grant, upon request of the Government, a license on terms that are reasonable under the circumstances to responsible applicants;

(i) Unless the Contractor, his licensee, or his assignee demonstrates to the Government that effective steps have been taken within 3 years after a patent issued on such invention to bring the invention to the point of practical application or that the invention has been made available for licensing royalty-free or on terms that are reasonable in the circumstances, or can show cause why the principal or exclusive rights should be retained for a further period of time; or

(ii) To the extent that the invention is required for public use by governmental regulations or as may be necessary to fulfill public health or safety needs, or for other public purposes stipulated in this contract;

(3) Shall submit written reports at reasonable intervals, upon request of the Government, during the term of the patent on the Subject Invention regarding

(1) The commercial use that is being made or is intended to be made of such invention; and

(11) The steps taken by the Contractor or his transferee to bring the invention to the point of practical application or to make the invention available for licensing;

(4) Agrees to refund any amounts received as royalty charges on any Subject Invention in procurements for or on behalf of the Government and to provide for that refund in any instrument transferring rights to any party in the invention; and

(5) Agrees (i) to provide for the Government's paid-up license pursuant to paragraph (c) (1) of this clause in any instrument transferring rights in a Subject Invention and (ii) to provide for the granting of licenses as required by (c) (2) of this clause and for the reporting of utllization Information as required by paragraph (c)(3) of this clause whenever the instrument transfers principal or executive rights in any Subject Invention.

(d) Minimum rights to the Contractor. (1) The Contractor reserves a revocable, nonexclusive, paid-up license in each patent application, filed in any country on & 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 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 the Foundation except when transferred to the successor of that part of the Contractor's business to which the invention pertains.

(2) The Contractor's nonexclusive domestic license retained pursuant to paragraph (d) (1) of this clause may be revoked or modified by the Foundation, either in whole or in part, as to the United States, its territories and possessions, Puerto Rico, and the District of Columbia to the extent necessary to achieve expeditious practical application of the Subject Invention under 41 CFR 101-4.103–3 pursuant to an application for exclusive license submitted in accordance with 41 CFR 101-4-104-3. This license shall not be revoked in that field of use and or the geographical areas in which the Contractor has brought the invention to the point of practical application and continues to make the benefits of the invention reasonably accessible to the public. The Contractor's nonexclusive license in any foreign country reserved pursuant to paragraph (d) (1) of this clause may be revoked or modified, either in whole or in part, in the discretion of the Foundation to the extent the Contractor or his domestic subsidiaries or affiliates have failed to achieve the practical application of the invention in that foreign country.

(3) Before modification or revocation of the license, pursuant to paragraph (d) (2) of this clause, the Foundation shall furnish to the Contractor a written notice of its intention to modify or revoke the license and the Contractor shall be allowed 30 days (or such longer period as may be authorized by the Foundation for good cause shown in writing by the Contractor) after such notice to show cause why the license should not be modified or revoked.

(e) Invention identification, disclosure and reports. (1) The Contractor shall establish and maintain active and effective procedures to assure that Subject Inventions are promptly identified and timely disclosed. These procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of Subject Inventions and records which show that the procedures for identifying and disclosing the inventions are followed. Upon request, the Contractor shall furnish to the Contracting Officer a description of such procedures so that he may evaluate and determine their effectiveness.

(2) The Contractor shall furnish to the Contracting Officer:

(i) A complete disclosure of each Subject Invention, within 6 months after conception or first actual reduction to practice, whichever occurs first in the course of or under the contract, but in any event prior to any sale, public use, or publication of such invention known to the Contractor. The disclosure shall identify the contract and inventor and be sufficiently complete in technical detail and appropriately illustrated by sketch or diagram to convey to one skilled in the art to which the invention pertains a clear understanding of the nature, purpose, operation, and, to the extent known, the physical, chemical, biological, or electrical characteristics of the invention;

(i) Interim reports at least every 12 months from the date of the contract listing Subject Inventions for that period and certifying that;

(A) The Contractor's procedures for identifying and disclosing Subject Inventions as required by this paragraph (e) have been followed throughout the reporting period; and

(B) All Subject Inventions have been disclosed or that there are no such inventiores; and

(111) An acceptable final report, within 3 months after completion of the contract work, listing all Subject Inventions certifying that there were no such inventions.

(3) The Contractor shall obtain patent agreements to effectuate the provisions of this clause from all persons in his employ who perform any part of the work under this contract except nontechnical personnel,

or

66-014–76-7

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such clerical employees and manual laborers.

(4) 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 this clause.

(f) Forfeiture of rights in unreported subject inventions. (1) Unless excused by the Foundation, the contractor shall forfeit to the Government all rights on any Subject Invention which he fails to report to the Contracting Officer at or prior to the time he:

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

(11) Submits the final report required by paragraph (e) (2) (111) of this clause, whichever is later.

(2) However, the contractor shall not forfeit rights in & Subject Invention 11, within the time specified in (1) (1) or (11) of this clause, the Contractor:

(1) Prepared a written decision based upon & review of the record that the invention was neither conceived nor first actually reduced to practice in the course of or under the contract; or

(11) Contending that the invention is not & Subject Invention, he nevertheless discloses the invention and all facts pertinent to his contention to the Contracting Officer; or

(111) Establishes that the failure to disclose did not result from his fault or negligence.

(3) Pending written assignment of the patent applications and patents on a Subject Invention determined by the Contracting Officer to be forfeited (such determination to be a final decision under the Disputes Clause), the Contractor shall be deemed to hold the intention and the patent applications and patents pertaining thereto in trust for the Government. The forfeiture provision of this paragraph (1) shall be in addition to and shall not supersede other rights and remedies which the Government may have with respect to Subject Inventions.

(g) Examination of records relating to inventions. (1) The Contracting Officer or his authorized representative shall, until the expiration of 3 years after final payment under this contract, have the right to examine any books, records, documents, and other supporting data of the Contractor which the Contracting Officer reasonably deems pertinent to the discovery of identification of Subject Inventions or to determine compliance with the requirements of this clause.

(2) The Contracting Officer shall have the right to review all 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:

(1) Establish the procedures of paragraph (e) (1) of this clause; or

(ii) Maintain and follow such procedures, or;

(111) Correct or eliminate any material deficiency in the procedures within thirty (30) days after the Contracting Officer notifies the Contractor of such a deficiency.

(h) Withholding of payments. (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 it in his opinion the Contractor fails to:

(1) Establish, maintain, and follow effective procedures for identifying and disclosing Subject Inventions pursuant to paragraph (e) (1) of this clause; or

(11) Disclose any Subject Invention pursuant to paragraph (e) (2) (1) of this clause; or

(iii) Deliver the interim reports pursuant to paragraph (e) (2) (11) of this clause; or

(iv) Provide the information regarding subcontracts pursuant to paragraph (1) (5) of this clause.

The reserve or balance shall be retained 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.

(2) Final payment under this contract shall not be made before the Contractor delivers to the Contracting Officer all disclosures of Subject Inventions required by paragraph (e) (2) (1) of this clause and the final report required by (e) (2) (111) of this clause.

(3) The Contracting Officer may, in his discretion, decrease or increase the sums withheld up to the maximum authorized above. 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 acruing to the Government under this contract.

(i) 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) The Contractor shall, unless otherwise authorized or directed by the Government Contracting Officer, include this Patent Rights clause, modified to identify the parties in any subcontract hereunder, if a purpose of the subcontract is for the conduct of experimental, developmental or research work. In the event of refusal by a Subcontractor to accept this clause, or if in the opinion of the Contractor this clause is inconsistent with the policy set forth in the President's Policy, the Contractor:

(1) Shall promptly submit written notice to the Government Contracting Officer setting forth reasons for the Subcontractor's refusal and other pertinent information

which may expedite disposition of the mat- the President's Policy, such provisions ter; and

may also be negotiated at the time of (11) Shall not proceed with the subcon

award with educational or other nontract without the written authorization of the Government Contracting Officer.

profit or not-for-profit institutions hav(3) The Conractor shall not, in any sub

ing a demonstrated capability for effeccontract or by using a subcontract as consid- tive patent management; provided that eration therefor, acquire any rights in his in such cases the provisions shall norSubcontractor's Subject Invention for his

nally include the features described in 45 own use (as distinguished from such rights

CFR 650.8 (c). as may be required solely to fulfill his con

(2) In negotiating such special protract obligations to the Government in the performance of his contract).

visions, Section 12(a) of the National (4) All invention disclosures, reports, in- Science Foundation Act, as amended, and struments, and other information required the President's Policy will be followed. to be furnished by the Subcontractor to the

(3) In the case of negotiations involvGovernment Contracting Officer under the

ing contracts falling within section 1(b) provisions of a Patent Rights clause in any

of the President's Policy, the clause at subcontract hereunder may, in the discretion of the Government Contracting Officer, be

paragraph (a) of this section shall be furnished to the Contractor for transmission

used, except that the name of the clause to the Government Contracting Officer. shall be changed to "PATENT RIGHTS

(5) The Contractor shall identify all Sub- OPTION IN THE CONTRACTOR,” paraJect Inventions of the Subcontractor of

graph (b) of that clause shall be replaced which he acquires knowledge in the perform

by the following paragraph (b), and the ance of this contract and shall notify the

following paragraphs (j) and (k) shall be Government Contracting Officer promptly upon the identification of the inventions.

added: (6) It is understood that the Government is a third party beneficiary of any subcon

(b) Disposition of principal rights. (1) The tract clause granting rights to the Govern

Contractor may retain the entire right, title, ment in Subject Inventions, and the Con- and interest throughout the world or in any tractor hereby assigns to the Government

country thereof in and to each Subject all rights that he would have to enforce the Invention disclosed pursuant to paragraph Subcontractor's obligations for the benefit of (e) (2) (1) of this clause, subject to the rights the Government with respect to Subject In- obtained by the Government in paragraph ventions. The Contractor shall not be obli

(c) of this clause. The Contractor shall in. gated to enforce the agreements of any Sub- clude with each Subject Invention disclosure contractor hereunder relating to the obliga- an election as to whether he will retain the tions of the Subcontractor to the Govern

entire right, title, and interest in the invenment in regard to Subject Inventions.

tion throughout the world or any country

thereof. (b) Except (1) when paragraph (c) of

(2) Subject to the license specified in parathis section applies, or (2) where the

graph (d) of this clause, the Contractor contract will be subject to an Institu

agrees to convey to the Government, upon tional Patent Agreement pursuant to 45

request, the entire domestic right, title, and CFR 650.8, all contracts which are with interest in any Subject Invention when the nonprofit or not-for-profit organizations Contractor: (including educational institutions) shall (1) Does not elect under paragraph (b) (1) contain the clause at 45 CFR 650.4(b).

of this clause to retain such rights; or

(11) Falls to have a United States patent apHowever, in the case of such contracts

plication filed on the invention in accordance for the operation of National Research

with paragraph (1) of this cause, or decides Centers or similar facilities other pro

not to continue prosecution of such applicavisions may be negotiated with the ap- tion; or proval of the General Counsel; provided (111) At any time, no longer desires to rethat such provisions shall be consistent tain title. with section 1(a) (4) of the President's (3) Subject to the license specified in paraPolicy.

graph (d) of this clause, the contractor (c) (1) At the request of a prospective

agrees to convey to the Government, upon re

quest, the entire right, title, and interest in contractor, special provisions other than

any Subject Invention in any foreign country those provided in paragraphs (a) and if the Contractor: (b) of this section may be negotiated (1) Does not elect under paragraph (b) (1) where the award falls within section 1

of this clause to retain such rights in the (b) of the President's Policy or where

country; or

(11) Fails to have a patent application filed exceptional circumstances as set forth

in the country on the invention in acin section 1(a) of the President's Policy cordance with paragraph (k) of this clause, exist. In accordance with section 1(c) of or decides not to continue prosecution or to

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pay any maintenance fees covering the in- required by the Patent Office, notify the vention. To avoid forfeiture of the patent ap- Foundation of any decision not to continue plication or patent, the Contractor shall

prosecution of the application and deliver to notify the Contracting Officer not less than the Foundation executed instruments grantsixty (60) days before the expiration period ing the Government a power of attorney. for any action required by the foreign patent (3) For each Subject Invention in which office.

the Contractor initially elects not to retain (4) A conveyance requested pursuant to principal domestic rights, the Contractor paragraph (b) (2) or (3) of this clause shall shall inform the Contracting Officer promptly be made by delivering to the Contracting in writing of the date and identity of Oficer duly executed instruments (prepared any sale, public use, or publication of such by the Government) and such other papers invention which may constitute a statutory as are deemed necessary to vest in the Gov- bar under 35 U.S.C. 102, which was authorernment the entire right, title, and interest ized by or known to the Contractor, or to enable the Government to apply for and any contemplated action of this nature. prosecute patent applications covering the (k) Filing of foreign patent applications. invention in this or the foreign country, re- (1) With respect to each Subject Invention spectively, or otherwise establish its owner- in which the Contractor elects to retain ship in such invention.

rights in a foreign country pursuant to paragraph (b) (1) of this clause, the Contractor

shall have a patent application filed on the (1) Filing of domestic patent applications.

invention in such country, in accordance (1) With respect to each Subject Invention

with applicable statutes and regulations, and in which the Contractor elects to retain do

within one of the following periods; mestic rights pursuant to paragraph (b) of

(1) Eight months from the date of a corthis clause, the Contractor shall have a do

responding United States application filed mestic patent application filled within 6

by or on behalf of the Contractor; or if such months after submission of the invention

an application is not filed, 6 months from disclosure pursuant to paragraph (e) (2) (i)

the date the invention is submitted in a disof this clause, or such longer period as may

closure pursuant to paragraph (©) (2) (1) of be approved by the Contracting Officer for this clause; good cause shown in writing by the Con

(ii) Six months from the date a license is tractor. With respect to the invention, the

granted by the Commissioner of Patents to Contractor shall promptly notify the con

file foreign applications where such filing has tracting Officer of any decision not to file

been prohibited by security reasons; or an application.

(iii) Such longer period as may be approved (2) For each Subject Invention on which a

by the Contracting Oficer. patent application is filed by or on behalf of

(2) The Contractor shall notify the Conthe Contractor, the Contractor shall:

tracting Officer promptly of each foreign ap(1) Within 2 months after such filing, or

plication Aled and, upon written request, within 2 months after submission of the in

shall furnish an English version of such forvention disclosure if the patent application

eign application without additional compenpreviously had been filed, deliver to the Con

sation. tracting Officer a copy of the application as filed including the filing date and serial (4) In all other cases falling within number;

this paragraph (c), the “PATENT (ii) Include the following statement, ap- RIGHTS-OPTION IN THE GOVERNpropriately completed, in the second para

MENT" clause prescribed at 8 25–9.103 graph of the specification of the application

(a) shall be used with appropriate modiand any patents issued on a Subject Invention. "The Government has rights in this in

fications of that clause so as to allow the vention pursuant to Contract No.

(or

Contractor to obtain greater rights than Grant No. ------) awarded by the National a non-exclusive license as to all or Science Foundation."

specific inventions. These modifications (111) Within 6 months after filling the appli- should reflect the requirements of paracation or within 6 months after submission graph (c) (1) of this section, if applicable, of the invention disclosure if the applica

and, in addition, particularly where tion has been filed previously, deliver to the

the contract would fall within section Contracting Officer a duly executed and approved Instrument on a form specified by the

1(a)(1)-(4) of the President's Policy, Government fully confirmatory of all rights consideration should be given to includto which the Government is entitled, and ing provisions to ensure that research reprovide the agency an irrevocable power to

sults are made available to the public in Inspect and make copies of the patent appll

accordance with the policy set forth in cation filed;

$ 25–9.106. (iv) Provide the Contracting Officer with & copy of the patent within 2 months after

(5) The inclusion of special provisions & patent issues on the application, and

in a contract in accordance with this (v) Not less than 30 days before the expi- section, other modifications of the ration of the response period for any action clauses prescribed by this subpart, or the

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