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 Government 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 re... duction in charges thereunder, with respect to purchases by or for the Govern... ment or by others with funds derived through the Military Assistance Program or otherwise through the Government, in recognition of the Government's right 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;

(5) A designation of at least one claim of each patent alleged to be infringed; or (6) As an alternative to subparagraphs (4) and (5) of this paragraph, a certification that the claimant has made a bona fide attempt to determine the item or process which is alleged to infringe, but was unable to do so, giving reasons, and stating a reasonable basis for his belief that his patent or patents are being infringed.

(b) In addition to the information listed in paragraph (a) of this section, the following material and information is generally necessary in the course of processing a claim of patent infringement. Claimants are encouraged to furnish this information at the time of filing a claim to permit the most expeditious processing and settlement of the claim.

(1) A copy of the asserted patent(s) and identification of all claims of the patent alleged to be infringed.

(2) Identification of all procurements known to claimant which involve the alleged infringing item or process, including the identity of the vendor or contractor and the Government procuring activity.

(3) A detailed identification of the accused article or process, particularly where the article or process relates to a component or subcomponent of the item procured, and an element by element comparison of the representative claims with the accused article or process. If available, this identification should include documentation and drawings to illustrate the accused article or process in suitable detail to enable verification of the infringement comparison.

(4) Names and addresses of all past and present licensees under the patent(s), and copies of all license agreements and releases involving the patent(s).

(5) A brief description of all litigation in which the patent(s) has been or is now involved, and the present status thereof.

(6) A list of all persons to whom notices of infringement have been sent, including all departments and agencies of the Government, and a statement of the ultimate disposition of each.

(7) A description of Government employment or military service, if any, by the inventor and/or patent owner.

(8) A list of all Government contracts under which the inventor, patent owner, or anyone in privity with him performed work relating to the patented subject matter.

(9) Evidence of title to the patent(s) alleged to be infringed or other right to make the claim.

(10) A copy of the Patent Office file of each patent if available to claimant.

(11) Pertinent prior art known to claimant, not contained in the Patent Office file, particularly publications and foreign art.

In addition to the foregoing, if claimant can provide a statement that the investigation may be limited to the specifically identified accused articles or processes, or to a specific procurement, it may materially expedite determination of the claim.

(c) Military department receiving an allegation of patent infringement which meets the requirements of this section shall acknowledge the same and supply the other departments' which may have an interest therein with a copy of such communication and the acknowledgement thereof.

[34 F.R. 13843, Aug. 29, 1969]

§ 9.405 Indirect notice of patent infringement claims.

(a) A communication by a patent owner to a Department of Defense contractor alleging that the contractor has committed acts of infringement in performance of a Government contract shall not be considered a claim within the meaning of § 9.404 until it meets the requirements specified therein.

(b) Any Military Department receiving an allegation of patent infringement which meets the requirements of § 9.404 shall acknowledge the same and supply the other Departments which may have an interest therein with a copy of such communication and the acknowledgment thereof.

(c) If a communication covering an infringement claim or notice which does not meet the requirements of § 9.404(a)

For the Department of the Army, Chief, Patents Division, Office of The Judge Advocate General; for the Department of the Navy, the Patent Counsel for Navy, Office of Naval Research; for the Department of the Air Force, Chief, Patents Division, Office of The Judge Advocate General; for the Defense Supply Agency, The Office of Counsel; and for the Defense Communications Agency, the Counsel.

is received from a contractor, the patent owner shall be advised in writing as covered by the instructions of § 9.404(d). [32 F.R. 534, Jan. 18, 1967, as amended at 34 F.R. 13844, Aug. 29, 1969]

§ 9.406 Investigation and administrative disposition of claims.

An investigation and administrative determination (denial or settlement) of each claim shall be made in accordance with instructions and procedures established by each Military Department, subject to the following:

(a) Where the procurement responsibility for the alleged infringing item or process is assigned to a single Military Department or only one Military Department is the purchaser of the alleged infringing item or process, and the funds of that Department only are to be charged in the settlement of the claim, that Department shall have the sole responsibility for the investigation and administrative determination of the claim and for the execution of any agreement in settlement of the claim. Where, however, funds of another Department are to be charged, in whole or in part, the approval of such Department shall be obtained as required by § 5.1102 of this chapter. Any agreement in settlement of the claim, approved pursuant to § 5.1102 of this chapter, shall be executed by each of the Departments concerned.

(b) Where two or more Military Departments are the respective purchasers of alleged infringing items or processes and the funds of those Departments are to be charged in the settlement of the claim, the investigation and administrative determination shall be the responsibility of the Department having the predominant financial interest in the claim or of the Department or Departments as jointly agreed upon by the Departments concerned. The Department responsible for negotiation shall, throughout the negotiation, coordinate with the other Departments concerned and keep them advised of the status of the negotiation. Any agreement in the settlement of the claim shall be executed by each Department concerned. § 9.407

Notification and disclosure to

claimants.

When a claim is denied, the Department responsible for the administrative determination of the claim shall so notify the claimant or his authorized representative and provide the claimant

a reasonable rationale of the basis for denying the claim. Disclosure of information or the rationale referred to above shall be subject to applicable statutes, regulations, and directives pertaining to security, access to official records, and the rights of others. § 9.408 claims.

Settlement of indemnified

Settlement of claims involving payment for past infringement shall not be made without the consent of, and equitable contribution by, each indemnifying contractor involved, unless such settlement is determined to be in the best interests of the Government and is coordinated with the Department of Justice with a view to preserving any rights of the Government against the contractors involved. If consent of and equitable contribution by the contractors are obtained, the settlement need not be coordinated with the Department of Justice.

§ 9.409 Patent releases, license agreements, and assignments.

Sections 9.409-9.409-4 contain clauses for use in patent release and settlement agreements, license agreements, and assignments, executed by the Government, under which the Government acquires rights.

§ 9.409-1 Required clauses.

Minor modifications of language (e.g., pluralization of "Secretary" or "Contracting Officer") in multidepartmental agreements may be made if necessary.

(a) Officials not to benefit. Insert the clause in § 7.103-19 of this chapter.

(b) Covenant against contingent fees. Insert the clause in § 7.103-20 of this chapter.

(c) Gratuities. Insert the clause in § 7.104-16 of this chapter.

(d) Assignment of claims. Insert the clause in § 7.103-8 of this chapter.

(e) Disputes. In accordance with the provisions of § 7.103-12 of this chapter, insert the appropriate clause set forth therein.

(f) Nonestoppel.

NONESTOPPEL (OCTOBER 1966)

The Government reserves the right at any time to contest the enforceability, validity, scope of, or the title to any patent or patent application herein licensed without waiving or forfeiting any right under this contract.

(a) Release of past infringement. The following clause is an example which may be modified or omitted as appropriate for particular circumstances, but only upon the advice of cognizant patent or legal counsel."

RELEASE OF PAST INFRINGEMENT

The Contractor hereby releases each and every claim and demand which he now has or may hereafter have against the Government for the manufacture or use by or for the Government, prior to the effective date of this contract, of any inventions covered by (i) any of the patents and applications for patent identified in this contract, [and (ii) any other patent or application for patent owned or hereafter acquired by him, insofar as and only to the extent that such other patent or patent application covers the manufacture, use, or disposition of (description of subject matter).] °

(b) Readjustment of payments.

The following clause shall be inserted in contracts providing for payment of a running royalty:

READJUSTMENT OF PAYMENTS (OCTOBER 1966)

(a) If any license, under substantially the same patents and authorizing substantially the same acts which are authorized under this contract, has been or shall hereafter be granted within the United States, on royalty terms which are more favorable to the licensee than those contained herein, the Government shall be entitled to the benefit of such more favorable terms with respect to all royalties accruing under this contract after the date such more favorable terms become effective, and the Contractor shall promptly notify the Secretary in writing of the granting of such more favorable terms.

(b) In the event any claim of any patent hereby licensed is construed or held invalid by decision of a court of competent jurisdiction, the requirement to pay royalties under this contract insofar as it arises solely by reason of such claim, and any other claim not materially different therefrom, shall be interpreted in conformity with the court's decision as to the scope or validity of such claims: Provided, however, That in the event such decision is modified or reversed on appeal, the requirement to pay royalties under this contract shall be interpreted in con

For the Department of the Army: Chief, Patents Division, Office of The Judge Advocate General; for the Department of the Air Force: Chief, Patents Division, Office of The Judge Advocate General; and for the Defense Supply Agency: The Patent Counsel.

• Bracketed portions of the clause may be omitted when not appropriate or not encompassed by the release as negotiated.