Rights to Federally Funded Inventions and Licensing of Government Owned Inventions
| Published date | 04 January 2021 |
| Citation | 86 FR 35 |
| Record Number | 2020-27581 |
| Section | Proposed rules |
| Court | National Institute Of Standards And Technology |
Federal Register, Volume 86 Issue 1 (Monday, January 4, 2021)
[Federal Register Volume 86, Number 1 (Monday, January 4, 2021)]
[Proposed Rules]
[Pages 35-44]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27581]
[[Page 35]]
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DEPARTMENT OF COMMERCE
National Institute of Standards and Technology
37 CFR Parts 401 and 404
[Docket No.: 201207-0327]
RIN 0693-AB66
Rights to Federally Funded Inventions and Licensing of Government
Owned Inventions
AGENCY: National Institute of Standards and Technology (NIST), United
States Department of Commerce.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The National Institute of Standards and Technology (NIST)
requests comments on proposed revisions to regulations that would
further the Return on Investment (ROI) Initiative for Unleashing
American Innovation. The proposed revisions to ``Rights to Inventions
Made by Nonprofit Organizations and Small Business Firms under
Government Grants, Contracts, and Cooperative Agreements'' and
``Licensing of Government-Owned Inventions'' make technical
corrections; reorganize certain subsections; remove outdated and/or
unnecessary sections; institute a reporting requirement on Federal
agencies; and provide clarifications on definitions, communications,
scope of march-in rights, filing of provisional patent applications,
electronic filing, the purpose of royalties on government licenses, and
the processes for granting exclusive, co-exclusive and partially
exclusive licenses and for appeals. NIST intends to hold a webinar
regarding the proposed changes and information on that webinar will be
available to the public at https://www.nist.gov/tpo/bayh-dole.
DATES:
For Comments: Comments must be received no later than April 5,
2021.
For Public Webinar: Details about accessing the public webinar will
be made available via the Technology Partnerships Office website at
http://www.nist.gov/tpo/bayh-dole.
ADDRESSES: Submit your comments, identified by docket identification
(ID) number: 201207-0327, through the Federal e-Rulemaking Portal:
http://www.regulations.gov (search using the docket number). Follow the
online instructions for submitting comments. Identify the document by
docket ID number and other identifying information (subject heading,
Federal Register date and page number). See SUPPLEMENTARY INFORMATION
for file formats and other information about electronic filing. All
submissions, including attachments and other supporting materials, will
become part of the public record and subject to public disclosure. NIST
reserves the right to publish relevant comments publicly, unedited and
in their entirety. Personal information, such as account numbers or
Social Security numbers, or names of other individuals, should not be
included. Do not submit confidential business information, or otherwise
proprietary, sensitive or protected information. Comments that contain
profanity, vulgarity, threats, or other inappropriate language or
content will not be posted or considered.
For Public Webinar: Details about accessing the public webinar will
be made available via the Technology Partnerships Office website at
http://www.nist.gov/tpo/bayh-dole.
FOR FURTHER INFORMATION CONTACT: Courtney Silverthorn, via email:
[email protected] or by telephone at 301-975-4189.
SUPPLEMENTARY INFORMATION:
I. General Information
Does this action apply to me?
This action may be of interest to you if you are an educational
institution, company, or nonprofit organization, especially one that
has received or would like to receive Federal funding for scientific
research and development.
II. Statutory Framework
These proposed rule revisions are promulgated under the University
and Small Business Patent Procedures Act of 1980, Public Law 96-517 (as
amended), codified at title 35 of the United States Code (U.S.C.) 200
et seq., commonly known as the ``Bayh-Dole Act'' or ``Bayh-Dole,''
which governs rights in inventions made with Federal assistance. The
Bayh-Dole Act obligates nonprofit organizations and small business
firms (``contractors''), and large businesses, as directed by Executive
Order 12591, to disclose each ``subject invention'' (that is, each
invention conceived or first actually reduced to practice in the
performance of work under a funding agreement, 35 U.S.C. 201(e)) within
a reasonable time after the invention becomes known to the contractor,
35 U.S.C. 202(c)(1), and permits contractors to elect, within a
reasonable time after disclosure, to retain title to a subject
invention, 35 U.S.C. 202(a). Under certain defined ``exceptional''
circumstances, Bayh-Dole permits the Government to restrict or
eliminate the contractor's right to elect to retain title, 35 U.S.C.
202(a), 202(b), and under such circumstances, rights vest in the
Government.
The Secretary of Commerce has delegated to the Director of NIST the
authority to promulgate implementing regulations. Regulations
implementing 35 U.S.C. 200 through 204 are codified at 37 CFR part 401,
``Rights to Inventions Made by Nonprofit Organizations and Small
Business Firms under Government Grants, Contracts, and Co-operative
Agreements,'' and apply to all Federal agencies, 37 CFR 401.1(b). These
regulations govern all subject inventions under Bayh-Dole, 37 CFR
401.2(d), even if the Federal Government is not the sole source of
funding for either the conception or the reduction to practice, 37 CFR
401.1(a). Regulations implementing 35 U.S.C. 208, specifying the terms
and conditions upon which federally owned inventions, other than
inventions owned by the Tennessee Valley Authority, may be licensed on
a nonexclusive, partially exclusive, or exclusive basis, are codified
at 37 CFR part 404, ``Licensing of Government Owned Inventions.''
Bayh-Dole and its implementing regulations require Federal funding
agencies to employ certain ``standard clauses'' in funding agreements
awarded to contractors, except under certain specified conditions; 37
CFR 401.3. Through these standard clauses, set forth at 37 CFR
401.14(a), contractors are obligated to take certain actions to
properly manage subject inventions. These actions include disclosing
each subject invention to the Federal agency within two months after
the contractor's inventor discloses it in writing to contractor
personnel responsible for patent matters, 37 CFR 401.14(c)(1); electing
in writing whether or not to retain title to any subject invention by
notifying the Federal agency within two years of disclosure, 37 CFR
401.14(c)(2); filing an initial patent application on a subject
invention as to which the contractor elects to retain title within one
year after election, 37 CFR 401.14(c)(3); executing and promptly
delivering to the Federal agency all instruments necessary to establish
or confirm the rights the Government has throughout the world in those
subject inventions to which the contractor elects to retain title, 37
CFR 401.14(f)(1); requiring, by written agreement, the contractor's
employees to disclose promptly in writing each subject invention made
under contract, 37 CFR 401.14(f)(2); notifying the Federal agency of
any decision not to continue the prosecution of a patent application,
37 CFR 401.14(f)(3); and including in the specification of any U.S.
patent
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applications and any patent issuing thereon covering a subject
invention, a statement that the invention was made with Government
support under the grant or contract awarded by the Federal agency, and
that the Government has certain rights in the invention, 37 CFR
401.14(f)(4).
In addition, a contractor is obligated to include the requirements
of the standard clauses in any subcontracts under the contractor's
award, 37 CFR 401.14(g); to submit periodic reports as requested on the
utilization of a subject invention or on efforts at obtaining such
utilization that are being made by the contractor or its licensees or
assignees, 37 CFR 401.14(h); and to agree that neither the contractor
nor any assignee will grant to any person the exclusive right to use or
sell any subject inventions in the United States unless such person
agrees that any products embodying the subject invention or produced
through the use of the subject invention will be manufactured
substantially in the United States, 37 CFR 401.14(i), subject to
waiver.
Bayh-Dole and its implementing regulations also specify certain
conditions applicable to licenses granted by Federal agencies in any
federally owned invention. The implementing regulations include 37 CFR
404.5, which sets forth restrictions and conditions applicable to all
Federal agency licenses, 37 CFR 404.6, which addresses requirements
pertaining to nonexclusive licenses, and 37 CFR 404.7, which addresses
requirements pertaining to exclusive and partially exclusive licenses.
Pursuant to authority delegated to it by the Secretary of Commerce,
NIST is providing notice to the public of a proposed rulemaking to
revise Parts 401 and 404 of Title 37 of the Code of Federal Regulations
which address rights to inventions made under Government grants,
contracts, and cooperative agreements, and licensing of government
owned inventions. NIST is seeking public comments on the proposed
amendments. Brief explanations of the proposed changes are included
below; the full text of 37 CFR part 401 is available at https://www.gpo.gov/fdsys/pkg/CFR-2010-title37-vol1/pdf/CFR-2010-title37-vol1-part401.pdf and the full text of 37 CFR part 404 is available at
https://www.gpo.gov/fdsys/granule/CFR-2004-title37-vol1/CFR-2004-title37-vol1-part404.
III. Return on Investment Initiative
In 2018, NIST undertook a large-scale stakeholder engagement effort
to inform the development of the Lab-to-Market Cross Agency Priority
(CAP) goal, part of the 2018 President's Management Agenda. The Lab-to-
Market CAP goal's stated purpose is to ``. . .improve the transition of
federally funded innovations from the laboratory to the marketplace by
reducing the administrative and regulatory burdens for technology
transfer and increasing private sector investment in later-stage
research and development (R&D); develop and implement more effective
partnering models and technology transfer mechanisms for Federal
agencies; and enhance the effectiveness of technology transfer by
improving the methods for evaluating the ROI and economic and national
security impacts of federally funded R&D, and using that information to
focus efforts on approaches proven to work.''
Beginning in April 2018, NIST utilized a number of avenues to seek
input from the public on ways to improve federal technology transfer
and the commercialization of federally funded inventions. These
included a Request for Information that NIST published in the Federal
Register,\1\ four public meetings,\2\ a summit hosted by NIST,
extensive consultations with interagency working groups responsible for
technology transfer issues, and multiple stakeholder engagement
sessions. These public inputs, as well as an extensive literature
review of government and academic publications on federal technology
transfer, ultimately informed NIST Special Publication 1234: Return on
Investment Initiative To Advance the President's Management Agenda,
Final Green Paper.
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\1\ ``Request for Information Regarding Federal Technology
Transfer Authorities and Process'' published in the Federal Register
on May 1, 2018 (83 FR 19052).
\2\ San Jose, California, May 17, 2018; Denver, Colorado, May
21, 2018; Oak Lawn, Illinois, May 29, 2018; NIST Campus
Gaithersburg, Maryland, June 14, 2018.
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The Green Paper described 15 findings from NIST's stakeholder
engagement process that may have the potential to ``unleash American
innovation'' and advance the goals of Lab-to-Market through regulatory
or legislative changes, updates to policy and guidance, and the
development of new tools and services. In addition to the overall Lab-
to-Market strategy to ``Identify regulatory impediments and
administrative improvements in Federal technology transfer policies and
practices'' (which supports the Administration's stated goal to
streamline and reduce regulatory burdens), seven of the Green Paper's
15 findings noted potential changes to the Bayh-Dole implementing
regulations that could improve compliance, enhance a contractor's
ability to commercialize subject inventions, and increase the return on
investment of Federal funding through new goods and services to the
public. Four of those seven findings are considered in this notice of
proposed rulemaking (NPRM or proposed rule).
As part of the overall streamlining effort in this proposed rule,
some outdated or redundant text has been proposed for removal. This
includes Sec. Sec. 401.1(a), 401.1(c), 401.1(d), 401.1(f), 401.3(g),
401.8, 401.11(a), 401.11(b)(5), 401.13(b) and 404.4. Other text has
been moved or substantially reincorporated into new sections in the
proposed rule as follows: Sec. 401.5(f) moved to Sec. 401.14(c)(1)
and (3); Sec. Sec. 401.7 and 401.14(m) incorporated into Sec. Sec.
401.14(k)(4) through (6); Sec. 401.13(a) moved to Sec. 401.14(c)(6);
Sec. 401.15 incorporated into Sec. 401.9; Sec. 401.16 moved to Sec.
401.14(m); Sec. 404.2 incorporated into Sec. 404.1(b); and Sec.
404.4 incorporated into Sec. 404.5(g).
In addition to these changes and technical corrections throughout
the regulation, the proposed revisions to 37 CFR part 401 will:
(1) Clarify in Sec. 401.1 the scope of the regulation and
applicability to large businesses unless otherwise directed by statute,
and remove the outdated requirement for multiple copies of agency
regulations to be submitted to the Secretary prior to OMB review.
(2) Update the definitions of electronically filed and electronic
system in Sec. 401.2(k) and (l) to remove outdated references to
``optical electronic system''.
(3) Update the definitions of patent application and initial patent
application in Sec. 401.2(m) and (n) to encompass U.S. provisional and
non-provisional applications, applications filed in a foreign country
or international patent office directly, PCT applications, and
applications for Plant Variety Protection certificates.
(4) Update Sec. 401.5(a) to reflect that modifications to
paragraph Sec. 401.14(g) are no longer needed due to the applicability
of 37 CFR part 401 to all businesses regardless of size pursuant to
E.O. 12591.
(5) Revise Sec. 401.5(b) for clarity by removing the ambiguity of
``instructions'' to the agency versus ``instructions'' to the
contractor.
(6) Revise the existing text at Sec. 401.6(b) [new Sec.
401.6(a)(1)] to clarify the informal agency consultation process with
the contractor prior to the exercise of march-in rights, and increase
the allowable time frame an agency has
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to respond to the contractor following the informal consultation from
60 days to 120 days.
(7) Clarify Sec. 401.6 to include a provision that march-in rights
shall not be exercised by an agency exclusively on the basis of
business decisions of a contractor regarding the pricing of commercial
goods and services arising from the practical application of the
invention.
(8) Revise Sec. 401.9 to clarify the statutory authority and
process for assigning rights to an employee/inventor, and to clarify
said employee/inventor's responsibilities under 37 CFR part 401 when
receiving an assignment of rights to a subject invention made under a
funding agreement, and incorporate streamlined text from Sec. 401.15
to clarify the process by which a contractor may make a request for
greater rights in an invention when the funding agreement contains an
alternate provision in accordance with Sec. 401.3(a)(2), and remove
the requirement for an agency to reimburse the contractor for the costs
of filing a patent application while a greater rights request is under
review.
(9) Revise Sec. 401.13 to streamline the text and clarify the
confidentiality of contractor submissions made under Sec. 401.14(c) as
it relates to Freedom of Information Act requests, copies of documents
filed with a patent office, and agency policies on public dissemination
of results supported by agency funding programs.
(10) Revise Sec. 401.14(c)(3) to clarify the procedures for filing
more than one provisional patent application on a disclosed subject
invention.
(11) Revise Sec. 401.14(d) to add a new paragraph permitting
agencies, at their discretion, to release the contractor from the
requirement to waive title to the agency after one of the conditions in
Sec. 401.14(d) has occurred.
(12) Revise Sec. 401.14(k) to streamline the requirements for
small business considerations into a single section by incorporating
language from Sec. Sec. 401.7 and 401.14(m).
(13) Move the electronic filing requirements from Sec. 401.16 into
the standard clause at Sec. 401.14; update the requirements to include
that if the patent information and periodic reports in Sec.
401.14(c)(3) and/or the close-out report Sec. 401.14(c)(1) are
required by an agency, they will be electronically filed unless
otherwise directed by the agency; and permit other written notices to
be electronically transmitted between the contractor and the agency.
(14) Implement a requirement [new Sec. 401.16] for federal
agencies to report annually on activities under 37 CFR part 401,
including the number of subject inventions reported, the number of
patent applications filed on reported subject inventions, the number of
issued patents on subject inventions, the number of requests made and
granted for extensions of time under Sec. 401.14(c)(5), the number of
subject inventions to which title has been conveyed to the Government,
the number of requests made and granted for a waiver of the preference
for U.S. industry requirement, and the number of requests for
assignment of invention rights.
(15) Remove the telephone number for the Interagency Edison service
center so that contact information can be updated in a timelier fashion
via the iEdison website.
This proposed rulemaking does not address government assignment to
contractor of rights in invention of government employee (Sec. 401.10)
or licensing of background rights to third parties (Sec. 401.12).
In addition to the aforementioned streamlining changes and
technical corrections throughout the regulation, the proposed revisions
to 37 CFR part 404 will:
(1) Revise Sec. 404.1 to clarify that licensing royalties are not
considered an augmentation of appropriated funds.
(2) Revise Sec. 404.2 to clarify the link between establishing
patent license financial terms and the goal of promoting commercial
use, by noting that the government may consider licensing payments as a
means to ensure commercialization by the licensee and thus promote the
practical application of a subject invention.
(3) Streamline Sec. 404.7 by removing duplicative sections and
revising the paragraph to align the process for granting exclusive, co-
exclusive and partially exclusive licenses with the requirements of 35
U.S.C. 209 as it pertains to the required information and publication
site for a notice of intent to grant an exclusive license, the
requirement to consider the interests of the Federal Government or
United States industry in foreign commerce before granting an exclusive
license on a foreign patent application or patent, and the additional
provisions that apply to exclusive licenses beyond the requirements of
Sec. 404.5.
(4) Revise Sec. 404.10 to remove the requirement that a Federal
agency notify sublicensees of an intent to modify or terminate a
license.
(5) Revise Sec. 404.11 to clarify who has standing to appeal the
grant, denial, modification, or termination of a license by limiting a
claim of damage by the agency's granting of an exclusive license to
that which denies a party the opportunity to promote the
commercialization of an invention, and by requiring all agencies to
establish procedures for considering appeals.
This proposed rulemaking does not address definitions (Sec.
404.3), nonexclusive licenses (Sec. 404.6), application for a license
(Sec. 404.8), protection and administration of inventions (Sec.
404.12), or transfer of custody (Sec. 404.13).
IV. Request for Comments
NIST is requesting comments about 37 CFR parts 401 and 404 of the
Bayh-Dole regulations. We have included some questions that you might
consider as you develop your comments:
1. Are there any changes to these regulations, consistent with
current law, that you or your organization think would accelerate the
transfer of federally funded research and technology to entrepreneurs,
or otherwise strengthen the Nation's innovation system?
2. Are there specific revisions to the language in Sec. 401.14(b)
that could help clarify the existing scope of the Government Use
License for owners and licensees working to achieve practical
application of subject inventions?
3. Are there provisions within 37 CFR part 401 or 404 that are
inconsistent with, or otherwise affected by, changes in the patent laws
under the Leahy-Smith America Invents Act, Public Law 112-29, or that
Act's implementing regulations?
When submitting comments, remember to:
i. Identify the document by docket ID number and other identifying
information (subject heading, Federal Register date and page number).
ii. Please organize your comments by referencing the specific
question you are responding to or the relevant section number in the
proposed regulatory text.
iii. Explain why you agree or disagree; suggest alternatives and
substitute language for your requested changes.
iv. Describe any assumptions and provide any technical information
and/or data that you used.
v. Provide specific examples to illustrate your concerns and
suggest alternatives.
vi. Explain your views as clearly as possible.
vii. All submissions, including attachments and other supporting
materials, will become part of the public record and subject to public
disclosure. NIST reserves the right to publish relevant comments
publicly, unedited and in their entirety. Personal information, such as
account numbers
[[Page 38]]
or Social Security numbers, or names of other individuals, should not
be included. Do not submit confidential business information, or
otherwise proprietary, sensitive or protected information. Comments
that contain profanity, vulgarity, threats, or other inappropriate
language will not be considered.
viii. Make sure to submit your comments by the comment period
deadline identified.
ix. The following formats are preferred for comment submissions:
.doc or .docx, .pdf, and .txt.
V. References
1. National Institute of Standards and Technology (2019). Unleashing
American Innovation: Return on Investment Initiative to Advance the
President's Management Agenda, Final Green Paper. NIST Special
Publication 1234, retrieved from: https://www.nist.gov/unleashing-american-innovation/green-paper.
2. Copan, W. and Kratsios, M. (2019). Lab to Market: Cross Agency
Priority Goal Quarterly Progress Update, December 2019. Retrieved
from: https://www.performance.gov/CAP/action_plans/dec_2019_Lab_to_Market.pdf.
3. Additional Actions Needed to Improve Licensing of Patented
Laboratory Inventions (2018). GAO-18-327, Retrieved from: https://www.gao.gov/assets/700/692961.pdf.
4. National Institute of Standards and Technology (2019). Federal
Laboratory Technology Transfer, Fiscal Year 2016 Summary Report to
the President and the Congress. Retrieved from: https://www.nist.gov/tpo/reports-and-publications. See ``Federal Licenses''
table on page 8.
5. Federal Laboratory Consortium for Technology Transfer (2013).
Technology Transfer Desk Reference. Retrieved from: https://federallabs.org/media/publication-library/flc-technology-transfer-desk-reference.
VI. Statutory and Executive Order Reviews
Executive Order 12866
This rulemaking is a significant regulatory action under Executive
Order 12866. This rulemaking, however, is not an ``economically
significant'' regulatory action under section 3(f)(1) of the Executive
order, as it does not have an effect on the economy of $100 million or
more in any one year, and it does not have a material adverse effect on
the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or State, local, or tribal
governments or communities.
Executive Order 13132
This proposed rule does not contain policies with federalism
implications as defined in Executive Order 13132.
Executive Order 13771
This final rule is considered to be an E.O. 13771 deregulatory
action. The proposed regulation is deregulatory in that it is removing
duplicative text and streamlining and/or reducing regulatory burdens,
all at no additional cost.
The proposed regulation: (1) Updates the definitions of patent
application and initial patent application in Sec. 401.2(m) and (n) to
encompass U.S. provisional and non-provisional applications,
applications filed in a foreign country or international patent office
directly, PCT applications, and applications for Plant Variety
Protection certificates, which reduces patent filing burdens for
recipients of federal funding by providing additional options to
fulfill the regulation's filing requirements. (2) Clarifies Sec. 401.6
to include a provision that march-in rights shall not be exercised by
an agency exclusively on the basis of business decisions of a
contractor regarding the pricing of commercial goods and services
arising from practical application of the invention, which limits the
government's use of this provision and provides additional certainty to
licensees. (3) Moves the electronic filing requirements from Sec.
401.16 into the standard clause at Sec. 401.14; update the
requirements to include that if the patent information and periodic
reports in Sec. 401.14(c)(3) and/or the close-out report Sec.
401.14(c)(1) are required by an agency, they will be electronically
filed unless otherwise directed by the agency; and permit other written
notices to be electronically transmitted between the contractor and the
agency, which reduces the burden on recipients of federal funding to
complete and submit paper forms.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) requires the preparation and
availability for public comment of ``an initial regulatory flexibility
analysis'' which will ``describe the impact of the proposed rule on
small entities.'' (5 U.S.C. 603(a)). Section 605 of the RFA allows an
agency to certify a rule, in lieu of preparing an analysis, if the
proposed rulemaking is not expected to have a significant economic
impact on a substantial number of small entities.
The Chief Counsel for Regulation of the Department of Commerce
certified to the Chief Counsel for Advocacy of the Small Business
Administration (SBA) that this rulemaking, if adopted, would not have a
significant economic impact on a substantial number of small entities.
The factual basis for this determination is as follows:
A description of this proposed rule, why it is being considered,
and the objectives of this proposed rule are contained in the preamble
and in the SUMMARY section of the preamble. The statutory basis for
this proposed rule is provided by 35 U.S.C. 200-212. The Bayh-Dole Act
and its implementing regulations apply to all small business firms and
nonprofit organizations that have entered into a Federal funding
agreement, as defined in 35 U.S.C. 201, and express a policy to
``encourage maximum participation of small business firms in federally
supported research and development efforts; to promote collaboration
between commercial concerns and nonprofit organizations, including
universities; [and] to ensure that inventions made by nonprofit
organizations and small business firms are used in a manner to promote
free competition and enterprise without unduly encumbering future
research and discovery.'' 35 U.S.C. 200. For small business firms and
nonprofit organizations that deal with the Government in areas of
technology development, the Bayh-Dole implementing regulations make it
easier to participate in federally-supported programs by guaranteeing
the protection of the intellectual property they create. This proposed
rule, if implemented, would predominantly make technical changes and
clarifications, remove outdated material, and streamline the
regulation, and is not anticipated to have any quantifiable economic
impact with respect to small entities. Several proposed changes would
reduce administrative burdens and increase the ability of small
entities to fulfill regulatory requirements through electronic
submissions, while clarifying the confidentiality of said submissions
so as to not affect the ability to seek patent protection on a subject
invention. The proposed change to the definition of an ``initial patent
application'' expands the applications by which a contractor can fulfil
the filing requirement of the regulation, providing additional
flexibility for small entities. Proposed revisions to 37 CFR 401.6
provide additional clarity on the scope of the Government's march-in
rights, while the proposed revision to 37 CFR 401.14(d) provides an
avenue for an agency to release a small entity from the requirement to
convey title to the Government if they have taken corrective actions
after failing to meet a
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regulatory requirement--these revisions will all increase the ability
for a small entity to more effectively attract outside funding for
their inventions. Proposed revisions to 37 CFR 401.9 and Sec. 401.15
will clarify the process by which small entities and sole proprietors
may request title to their inventions when not otherwise automatically
granted title by the funding agreement. While the requirements for
small business considerations in licensing have been significantly
streamlined, the proposed revision greatly increases the clarity of
these requirements while not affecting any of the statutory
requirements that a contractor must fulfill with regard to small
entities. Finally, revisions to 37 CFR 404.7 will make it easier for
small entities to seek exclusive, co-exclusive, or partially exclusive
licenses.
The information provided above supports a determination that this
proposed rule would not have a significant economic impact on a
substantial number of small entities. Because this rulemaking, if
implemented, is not expected to have a significant economic impact on
any small entities, an initial regulatory flexibility analysis is not
required and none has been prepared.
Paperwork Reduction Act
This proposed rule contains no new collection of information
subject to the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
National Environmental Policy Act
This proposed rule will not significantly affect the quality of the
human environment. Therefore, an environmental assessment or
Environmental Impact Statement is not required to be prepared under the
National Environmental Policy Act of 1969.
List of Subjects in 37 CFR Parts 401 and 404
Inventions and patents, Laboratories, Research and development,
Science and technology, Technology transfer.
For the reasons stated in the preamble, the National Institute of
Standards and Technology proposes to amend 37 CFR parts 401 and 404 as
follows:
PART 401--RIGHTS TO INVENTIONS MADE BY NONPROFIT ORGANIZATIONS AND
SMALL BUSINESS FIRMS UNDER GOVERNMENT GRANTS, CONTRACTS, AND
COOPERATIVE AGREEMENTS
0
1. The authority citation for 37 CFR part 401 continues to read as
follows:
Authority: 35 U.S.C. 206; DOO 30-2A.
0
2. Revise Sec. 401.1 to read as follows:
Sec. 401.1 Scope.
(a) This part implements 35 U.S.C. 200 through 204 and is
applicable to any funding agreement with a nonprofit organization or
small business firm as defined by 35 U.S.C. 201, except for an
agreement made primarily for educational purposes under 35 U.S.C. 212.
This part also applies to any funding agreement with business firms
regardless of size in accordance with section 1, paragraph (b)(4) of
Executive Order 12591, as amended by Executive Order 12618, unless
directed otherwise pursuant to NASA or DOE vesting statutes.
(b) This regulation supersedes OMB Circular A-124 and shall take
precedence over any regulations or other guidance dealing with
ownership of inventions made by businesses and nonprofit organizations
which are inconsistent with it. Only deviations requested by a
contractor and not inconsistent with Chapter 18 of Title 35, United
States Code, may be made without approval of the Secretary.
Modifications or tailoring of clauses as authorized by Sec. 401.5 or
401.3, when alternate provisions are used under Sec. 401.3(a)(1)
through (6), are not considered deviations requiring the Secretary's
approval.
(c) This part is not intended to apply to arrangements under which
nonprofit organizations, small business firms, or others are allowed to
use government-owned research facilities and normal technical
assistance provided to users of those facilities, whether on a
reimbursable or nonreimbursable basis. This part is also not intended
to apply to arrangements under which sponsors reimburse the government
or facility contractor for the contractor employee's time in performing
work for the sponsor. Such arrangements are not considered ``funding
agreements'' as defined at 35 U.S.C. 201(b) and Sec. 401.2(a).
0
3. Amend Sec. 401.2 by revising the introductory text and paragraphs
(k) through (o) to read as follows:
Sec. 401.2 Definitions.
In addition to the definitions in 35 U.S.C. 201, as used in this
part--
* * * * *
(k) The term electronically filed means any submission of
information transmitted by an electronic system.
(l) The term electronic system means a software-based system
approved by the agency for the transmission of information.
(m) The term patent application or ``application for patent'' may
be the following:
(1) A United States provisional application as defined in 37 CFR
1.9(a)(2) and filed under 35 U.S.C. 111(b); or
(2) A United States nonprovisional application as defined in 37 CFR
1.9(a)(3) and filed under 35 U.S.C. 111(a); or
(3) A patent application filed in a foreign country or an
international patent office; or
(4) A patent application filed under the Patent Cooperation Treaty
as defined in 37 CFR 1.9(b) which designates the United States; or
(5) An application for a Plant Variety Protection certificate.
(n) The term initial patent application means, as to a given
subject invention:
(1) The first United States provisional application as defined in
37 CFR 1.9(a)(2) and filed under 35 U.S.C. 111(b); or
(2) The first United States nonprovisional application as defined
in 37 CFR 1.9(a)(3) and filed under 35 U.S.C. 111(a); or
(3) The first patent application filed in a foreign country or an
international patent office; or
(4) The first patent application filed under the Patent Cooperation
Treaty as defined in 37 CFR 1.9(b) which designates the United States;
or
(5) The first application for a Plant Variety Protection
certificate.
(o) The term statutory period means the one-year period before the
effective filing date of a claimed invention in a patent application
during which exceptions to prior art exist per 35 U.S.C. 102(b) as
amended by the Leahy-Smith America Invents Act, Public Law 112-29.
Sec. 401.3 [Amended]
0
4. Amend Sec. 401.3 as follows:
0
a. Remove ``Sec. 401.5(g)'' and add in its place ``Sec. 401.5(f)'' in
paragraph (c)(3);
0
b. Remove ``of Commerce'' from the fourth sentence of paragraph (f);
and
0
c. Remove paragraph (g) and redesignate paragraphs (h) and (i) as
paragraphs (g) and (h).
[[Page 40]]
Sec. 401.4 [Amended]
0
5. Amend Sec. 401.4 as follows:
0
a. Remove ``35 U.S.C. 202(b)(4)'' and add in its place ``35 U.S.C.
202(b)(3)'' in the first sentence of paragraph (a); and
0
b. Remove ``United States Claims Court'' and add in its place ``United
States Court of Federal Claims'' in the last sentence of paragraph
(b)(6).
0
6. Amend Sec. 401.5 as follows:
0
a. Revise paragraphs (a) and (b);
0
b. Remove paragraph (f) and redesignate paragraphs (g) and (h) as
paragraphs (f) and (g);
0
c. Revise the newly redesignated paragraph (g).
The revisions read as follows:
Sec. 401.5 Modification and tailoring of clauses.
(a) Agencies should complete the blank in paragraph (g)(2) of the
clauses at Sec. 401.14 in accordance with their own or applicable
government-wide regulations such as the Federal Acquisition Regulation.
If the funding agreement is a grant or cooperative agreement, paragraph
(g)(3) of the clause may be deleted.
(b) Agencies should complete paragraph (l) of the clause in Sec.
401.14, ``Communication'' by designating a central point of contact for
communications on matters relating to the clause. Agencies may also
include additional information on communications in paragraph (l) of
the clause in Sec. 401.14.
* * * * *
(g) If the contract is for the operation of a government-owned
facility, agencies may add paragraph (f)(6) to the clause at Sec.
401.14 with the following text:
The contractor shall establish and maintain active and effective
procedures to ensure that subject inventions are promptly identified
and timely disclosed and shall submit a description of the procedures
to the contracting officer so that the contracting officer may evaluate
and determine their effectiveness.
0
7. Amend Sec. 401.6 as follows:
0
a. Remove the period from the end of paragraph (a) introductory text
and add in its place a colon;
0
b. Add paragraphs (a)(1) through (7);
0
c. Redesignate paragraph (b) as paragraph (a)(1) and revise the newly
redesignated paragraph (a)(1);
0
d. Redesignate paragraphs (c) and (d) as paragraphs (a)(2) and (3);
0
e. Redesignate paragraph (e) as paragraph (a)(4) and revise the newly
redesignated paragraph (a)(4);
0
f. Redesignate paragraphs (f) through (h) as paragraphs (a)(5) through
(7) respectively;
0
g. Redesignate paragraph (i) as paragraph (b);
0
h. Redesignate paragraph (j) as paragraph (c) and revise the newly
redesignated paragraph (c);
0
i. Redesignate paragraph (k) as paragraph (d);
0
j. Add a new paragraph (e);
0
k. Redesignate paragraph (l) as paragraph (f).
The revisions and additions read as follows:
Sec. 401.6 Exercise of march-in rights.
(a) * * *
(1) Whenever an agency receives information that it believes might
warrant the exercise of march-in rights, before initiating any march-in
proceeding, it shall notify the contractor in writing (including
electronic means) of the information and request an informal
consultation and information relevant to the matter with the contractor
to understand the nature of the issue and consider possible actions
other than exercising march-in rights. In the absence of response from
the contractor to the agency request for informal consultation within
30 days, the agency may, at its discretion, proceed with the procedures
below. If informal consultation occurs within 30 days, or later if the
agency has not initiated the procedures below, then the agency shall,
within 120 days after informal consultation, either notify the
contractor of the initiation of the procedures below with a summary of
the efforts taken, or notify the contractor, in writing, that it will
not pursue march-in rights on the basis of the available information.
(2) A march-in proceeding shall be initiated by the issuance of a
written notice by the agency to the contractor and its assignee or
exclusive licensee, as applicable and if known to the agency, stating
that the agency is considering the exercise of march-in rights. The
notice shall state the reasons for the proposed march-in in terms
sufficient to put the contractor on notice of the facts upon which the
action would be based and shall specify the field or fields of use in
which the agency is considering requiring licensing. The notice shall
advise the contractor (assignee or exclusive licensee) of its rights,
as set forth in this section and in any supplemental agency
regulations. The determination to exercise march-in rights shall be
made by the head of the agency or his or her designee.
(3) Within 30 days after the receipt of the written notice of
march-in, the contractor (assignee or exclusive licensee) may submit in
person, in writing, or through a representative, information or
argument in opposition to the proposed march-in, including any
additional specific information which raises a genuine dispute over the
material facts upon which the march-in is based. If the information
presented raises a genuine dispute over the material facts, the head of
the agency or designee shall undertake or refer the matter to another
official for fact-finding.
(4) Fact-finding shall be conducted in accordance with the
procedures established by the agency. Such procedures shall be as
informal as practicable and be consistent with principles of
fundamental fairness. The procedures should afford the contractor the
opportunity to appear with counsel, submit documentary evidence,
present witnesses and confront such persons as the agency may present.
A transcribed record shall be made and shall be available at cost to
the contractor upon request. The requirement for a transcribed record
may be waived by mutual agreement of the contractor and the agency. Any
portion of the march-in proceeding, including a fact-finding hearing
that involves testimony or evidence relating to the utilization or
efforts at obtaining utilization that are being made by the contractor,
its assignee, or licensees shall be closed to the public, including
potential licensees. In accordance with 35 U.S.C. 202(c)(5), agencies
shall not disclose any such information obtained during a march-in
proceeding to persons outside the government except when such release
is authorized by the contractor (assignee or licensee) or otherwise
required by law.
(5) The official conducting the fact-finding shall prepare or adopt
written findings of fact and transmit them to the head of the agency or
designee promptly after the conclusion of the fact-finding proceeding
along with a recommended determination. A copy of the findings of fact
shall be sent to the contractor (assignee or exclusive licensee) by
registered or certified mail. The contractor (assignee or exclusive
licensee) and agency representatives will be given 30 days to submit
written arguments to the head of the agency or designee; and, upon
request by the contractor oral arguments will be held before the agency
head or designee that will make the final determination.
(6) In cases in which fact-finding has been conducted, the head of
the agency or designee shall base his or her determination on the facts
found, together with any other information and written or oral
arguments submitted by the contractor (assignee or exclusive licensee)
and agency representatives,
[[Page 41]]
and any other information in the administrative record. The consistency
of the exercise of march-in rights with the policy and objectives of 35
U.S.C. 200 shall also be considered. In cases referred for fact-
finding, the head of the agency or designee may reject only those facts
that have been found to be clearly erroneous, but must explicitly state
the rejection and indicate the basis for the contrary finding. Written
notice of the determination whether march-in rights will be exercised
shall be made by the head of the agency or designee and sent to the
contractor (assignee of exclusive licensee) by certified or registered
mail within 90 days after the completion of fact-finding or 90 days
after oral arguments, whichever is later, or the proceedings will be
deemed to have been terminated and thereafter no march-in based on the
facts and reasons upon which the proceeding was initiated may be
exercised.
(7) An agency may, at any time, terminate a march-in proceeding if
it is satisfied that it does not wish to exercise march-in rights.
(b) The procedures of this part shall also apply to the exercise of
march-in rights against inventors receiving title to subject inventions
under 35 U.S.C. 202(d) and, for that purpose, the term ``contractor''
as used in this section shall be deemed to include the inventor.
(c) An agency determination unfavorable to the contractor (assignee
or exclusive licensee) shall be held in abeyance pending the exhaustion
of appeals or petitions filed under 35 U.S.C. 203(b).
(d) For purposes of this section the term exclusive licensee
includes a partially exclusive licensee.
(e) March-in rights shall not be exercised exclusively based on the
business decisions of the contractor regarding the pricing of
commercial goods and services arising from the practical application of
the invention.
(f) Agencies are authorized to issue supplemental procedures not
inconsistent with this part for the conduct of march-in proceedings.
Sec. Sec. 401.7 and 401.8 [Removed and Reserved]
0
8. Remove and reserve Sec. Sec. 401.7 and 401.8.
0
9. Revise Sec. 401.9 as follows:
Sec. 401.9 Contractor and contractor employee inventor requests for
rights in inventions.
(a) Agencies shall allow a contractor to request greater rights in
an invention, including a request to return title to an invention to
the contractor, when the funding agreement contains alternate
provisions in accordance with Sec. 401.3(a)(2):
(1) The agency shall consider if the circumstances which originally
led the agency to invoke an exception under Sec. 401.3(a) are
currently valid and applicable to the actual subject invention.
(i) The agency shall provide the contractor the opportunity to
submit information on its plans and intentions to bring the subject
invention to practical application pursuant to 35 U.S.C. 200.
(ii) The agency shall assess whether government ownership of the
invention will better promote the policies and objectives of 35 U.S.C.
200 than the plans and intentions submitted by the contractor.
(iii) The agency shall consider whether to allow the standard
clause at Sec. 401.14 to apply with additional conditions imposed upon
the contractor's use of the invention for specific uses or
applications, or with expanded government license rights in such uses
or applications.
(2) The agency shall reply to the contractor with its determination
within 90 days after receiving a request and any supporting information
from the contractor. If a bar to patenting is sooner than 90 days from
receipt of a request, the agency may either file a patent application
on the subject invention or authorize the contractor to file a patent
application at its own risk and expense.
(3) The Department of Energy is authorized to process deferred
determinations either in accordance with its waiver regulations or this
section.
(b) Pursuant to 35 U.S.C. 202(d), a contractor is required to
obtain approval from a funding Agency before assigning rights to a
subject invention made under a funding agreement to an employee/
inventor. When an employee/inventor retains rights to a subject
invention made under a funding agreement, either the Agency or the
contractor must ensure compliance by the employee/inventor with at
least those conditions that would apply under paragraphs (b), (d),
(f)(4), (h), (i), and (j) of the clause at Sec. 401.14.
0
10. Amend Sec. 401.11 as follows:
0
a. Remove paragraph (a);
0
b. Redesignate paragraph (b) as paragraph (a);
0
c. Revise the newly redesignated paragraphs (a)(1) through (4);
0
d. Remove newly redesignated paragraph (a)(5);
0
e. Redesignate paragraphs (c) through (e) as paragraphs (b) through
(d), respectively, and revise the newly redesignated paragraphs (b)
through (d).
The revisions read as follows:
Sec. 401.11 Appeals.
(a) * * *
(1) A refusal to grant an extension under paragraph (c)(5) of the
standard clause at Sec. 401.14.
(2) A request for a conveyance of title under paragraph (d)(1) of
the standard clause at Sec. 401.14.
(3) A refusal to grant a waiver under paragraph (i) of the standard
clause at Sec. 401.14.
(4) A refusal to approve an assignment under paragraph (k)(1) of
the standard clause at Sec. 401.14.
(b) Each agency shall establish and publish procedures under which
any of the agency actions listed in paragraph (a) of this section may
be appealed to the head of the agency or designee. Review at this level
shall consider both the factual and legal basis for the actions and its
consistency with the policy and objectives of 35 U.S.C. 200-206.
(c) Appeals procedures established under paragraph (b) of this
section shall include administrative due process procedures and
standards for fact-finding at least comparable to those set forth in
Sec. 401.6(a)(4) through (6) whenever there is a dispute as to the
factual basis for an agency request for a conveyance of title under
paragraph (d) of the standard clause at Sec. 401.14, including any
dispute as to whether or not an invention is a subject invention.
(d) To the extent that any of the actions described in paragraph
(a) of this section are subject to appeal under the Contract Dispute
Act, the procedures under the Act will satisfy the requirements of
paragraphs (b) and (c) of this section.
0
11. Revise Sec. 401.13 to read as follows:
Sec. 401.13 Confidentiality of contractor submissions.
Pursuant to 35 U.S.C. 202(c)(5) and 205, the following procedures
shall govern confidentiality of documents submitted under paragraph (c)
of the standard clause found at Sec. 401.14:
(a) Agencies shall not disclose to third parties pursuant to
requests under the Freedom of Information Act (FOIA) any information
disclosing a subject invention during the time which an initial patent
application may be filed under paragraph (c) of the standard clause
found at Sec. 401.14 or such other clause in the funding agreement.
This prohibition does not apply to information that has previously been
published by the inventor, contractor, or otherwise.
(b) Agencies shall not disclose or release, pursuant to requests
under the Freedom of Information Act or
[[Page 42]]
otherwise, copies of any document which is part of an application for
patent with the U.S. Patent and Trademark Office or any foreign patent
office filed by the contractor (or its assignees, licensees, or
employees) on a subject invention to which the contractor has elected
to retain title. This prohibition does not extend to disclosure to
other government agencies or contractors of government agencies under
an obligation to maintain such information in confidence. This
prohibition does not apply to documents published by the U.S. Patent
and Trademark Office or any foreign patent office.
(c) When implementing policies that encourage public dissemination
of the results of work supported by the agency through government
publications or other publications of technical reports, agencies shall
not include copies of documents submitted by contractors pursuant to
Sec. 401.14(c) when a contractor notifies the agency that a particular
report or other submission contains a disclosure of a subject invention
to which it has elected title or may elect title, or such publication
could create a statutory bar to obtaining patent protection.
0
12. Amend Sec. 401.14 as follows:
0
a. Revise paragraphs (a)(2) and (7), and (c)(1) and (3);
0
b. Add paragraph (c)(6);
0
c. Revise paragraph (d);
0
d. Remove ``sucessor'' and add in its place ``successor'' in the final
sentence of paragraph (e)(1);
0
e. Revise paragraph (f)(3);
0
f. Remove ``incidential'' and add in its place ``incidental'' in
paragraph (k)(3);
0
g. Revise paragraph (k)(4);
0
h. Add paragraphs (k)(5) and (6);
0
i. Add paragraph (m).
The revisions read as follows:
Sec. 401.14 Standard patent rights clauses.
* * * * *
(a) * * *
(2) Subject invention means any invention of a contractor conceived
or first actually reduced to practice in the performance of work under
a funding agreement; provided that in the case of a variety of plant,
the date of determination (as defined in section 41(d) of the Plant
Variety Protection Act, 7 U.S.C. 2401(d)) must also occur during the
period of contract performance. An invention that is conceived and
reduced to practice without the use of any federal funds is not
considered a subject invention.
* * * * *
(7) The term statutory period means the one-year period before the
effective filing date of a claimed invention in a patent application
during which exceptions to prior art exist per 35 U.S.C. 102(b) as
amended by the Leahy-Smith America Invents Act, Public Law 112-29.
* * * * *
(c) * * *
(1) The contractor will disclose each subject invention to the
Federal agency within two months after the inventor discloses it in
writing to contractor personnel responsible for patent matters. The
disclosure to the agency shall be in the form of a written report and
shall identify the contract under which the invention was made and the
inventor(s). It shall be sufficiently complete in technical detail to
convey a clear understanding to the extent known at the time of the
disclosure, of the nature, purpose, operation, and the physical,
chemical, biological or electrical characteristics of the invention.
The disclosure shall also identify any publication, on sale or public
use of the invention, and whether a manuscript describing the invention
has been submitted for publication and, if so, whether it has been
accepted for publication at the time of disclosure. In addition, after
disclosure to the agency, the contractor will promptly notify the
agency of the acceptance of any manuscript describing the invention for
publication or of any on sale or public use planned by the contractor.
If required by the Federal agency, the contractor will provide periodic
(but no more frequently than annual) listings of all subject inventions
which were disclosed to the agency during the period covered by the
report, and will provide a report prior to the close-out of a funding
agreement listing all subject inventions or stating that there were
none.
* * * * *
(3)(i) The contractor will file its initial patent application on a
subject invention to which it elects to retain title within one year
after election of title or, if earlier, prior to the end of any
statutory period wherein valid patent protection can be obtained in the
United States after a publication, on sale, or public use. Subject to
the grant of an extension by an agency under paragraph (c)(5) of this
clause, if the contractor files a provisional application as its
initial patent application, it shall file a non-provisional application
within 10 months of the filing of the provisional application.
(ii) Each provisional application filed following the initial
patent application must contain additional written description of the
subject invention not previously disclosed in a patent application. The
contractor shall file or notify the government that they do not intend
to file a non-provisional application within 10 months of the last
filed provisional application that is consistent with this section.
(iii) The contractor will file patent applications in additional
countries or international patent offices within either ten months of
the first filed patent application or six months from the date
permission is granted by the Commissioner of Patents to file foreign
patent applications where such filing has been prohibited by a Secrecy
Order.
(iv) If required by the Federal agency, the contractor will provide
the filing date, patent application number and title; a copy of the
patent application; and patent number and issue date for any subject
invention in any country in which the contractor has applied for a
patent.
* * * * *
(6) In the event a subject invention is made under funding
agreements of more than one agency, at the request of the contractor or
on their own initiative the agencies shall designate one agency as
responsible for administration of the rights of the government in the
invention.
(d) Conditions When the Government May Obtain Title
(1) A Federal agency may require the contractor to convey title to
the Federal agency of any subject invention--
(i) If the contractor fails to disclose or elect title to the
subject invention within the times specified in paragraph (c) of this
clause, or elects not to retain title.
(ii) In those countries in which the contractor fails to file
patent applications within the times specified in paragraph (c) of this
clause; provided, however, that if the contractor has filed a patent
application in a country after the times specified in paragraph (c) of
this clause, but prior to its receipt of the written request of the
Federal agency, the contractor shall continue to retain title in that
country.
(iii) In any country in which the contractor decides not to
continue the prosecution of any non-provisional patent application for,
to pay a maintenance, annuity or renewal fee on, or to defend in a
reexamination or opposition proceeding on, a patent on a subject
invention.
(2) A Federal agency, at its discretion, may waive the requirement
for the contractor to convey title to any subject invention.
* * * * *
(f) * * *
(3) For each subject invention, the contractor will, no less than
60 days
[[Page 43]]
prior to the expiration of the statutory deadline, or 60 days prior to
the date if 401.14(c)(5) applies, notify the Federal agency of any
decision.
* * * * *
(k) * * *
(4) It will make efforts that are reasonable under the
circumstances to attract licensees of subject inventions that are small
business firms and that, when appropriate, it will give a preference to
a small business firm when licensing a subject invention;
(5) The Federal agency may review the contractor's licensing
program and decisions regarding small business applicants, and the
contractor will negotiate changes to its licensing policies,
procedures, or practices with the Federal agency when the Federal
agency's review discloses that the contractor could take reasonable
steps to more effectively implement the requirements of paragraph
(k)(4) of this clause; and
(6) The Federal agency may take into consideration concerns
presented by small businesses in making such determinations in
paragraph (k)(5) of this clause.
* * * * *
(m) Electronic Filing
(a) Unless otherwise requested or directed by the Federal agency--
(1) The written disclosure required in (c)(1) of this clause shall
be electronically filed;
(2) The written election required in (c)(2) of this clause shall be
electronically filed; and
(3) If required by the agency to be submitted, the close-out report
in paragraph (c)(1) of this clause and the patent information and
periodic reporting identified in paragraph (c)(3) of this clause shall
be electronically filed.
(b) Other written notices required in this clause may be
electronically delivered to the agency or the contractor through an
electronic database used for reporting subject inventions, patents, and
utilization reports to the funding agency.
Sec. 401.15 [Removed and Reserved]
0
13. Remove and reserve Sec. 401.15.
0
14. Revise Sec. 401.16 to read as follows:
Sec. 401.16 Federal agency reporting requirements.
Federal agencies will report annually to the Secretary of Commerce
on data pertaining to reported subject inventions under a funding
agreement, including--
(a) Number of subject inventions reported to the Federal Agency;
(b) Patent applications filed on subject inventions;
(c) Issued patents on subject inventions;
(d) Number of requests and number of requests granted for extension
of the time for disclosures, election, and filing per 37 CFR
401.14(c)(5);
(e) Number of subject inventions conveyed to the Government in
accordance with 37 CFR 401.14(d);
(f) Number of waivers requested and waivers granted per 37 CFR
401.14(i); and
(g) Number of requests for assignment of invention rights. Such
information will be received by the Secretary no later than the last
day of October of each year.
Sec. 401.17 [Amended]
0
15. Amend Sec. 401.17 by removing the phrase ``, telephone (301) 435-
1986'' before the final period of the paragraph.
PART 404--LICENSING OF GOVERNMENT OWNED INVENTIONS
0
16. The authority citation for 37 CFR part 404 continues to read as
follows:
Authority: 35 U.S.C. 207-209, DOO 30-2A.
0
17. Revise Sec. 404.1 to read as follows:
Sec. 404.1 Scope of part.
(a) This part prescribes the terms, conditions, and procedures upon
which a federally owned invention, other than an invention in the
custody of the Tennessee Valley Authority, may be licensed. This part
does not affect licenses which:
(1) Were in effect prior to April 7, 2006;
(2) May exist at the time of the Government's acquisition of title
to the invention, including those resulting from the allocation of
rights to inventions made under Government research and development
contracts;
(3) Are the result of an authorized exchange of rights in the
settlement of patent disputes, including interferences; or
(4) Are otherwise authorized by law or treaty, including 35 U.S.C.
202(e), 35 U.S.C. 207(a)(3) and 15 U.S.C. 3710a, which also may
authorize the assignment of inventions. Although licenses on inventions
made under a cooperative research and development agreement (CRADA) are
not subject to this regulation, agencies are encouraged to apply the
same policies and use similar terms when appropriate. Similarly, this
should be done for licenses granted under inventions where the agency
has acquired rights pursuant to 35 U.S.C. 207(a)(3).
(b) Royalties collected pursuant to this part are not intended as
an alternative to appropriated funding or as an alternative funding
mechanism.
0
18. Revise Sec. 404.2 to read as follows:
Sec. 404.2 Policy and objective.
It is the policy and objective of this subpart to promote the
results of federally funded research and development through the
patenting and licensing process. In negotiating licenses, the
Government may consider payments under a licensing agreement as a means
for promoting the practical application of a subject invention and as a
method to ensure commercialization by the licensee.
Sec. 404.4 [Removed and Reserved]
0
19. Remove and reserve Sec. 404.4.
Sec. 404.5 [Amended]
0
20. Amend Sec. 404.5 by removing ``Sec. 404.5(a)(2)'' from paragraph
(b)(8)(iv) and adding in its place ``35 U.S.C. 209(b)''.
0
21. Revise Sec. 404.7 to read as follows:
Sec. 404.7 Exclusive, co-exclusive, and partially exclusive licenses.
(a) Exclusive, co-exclusive or partially exclusive licenses may be
granted on Government owned inventions, only if:
(1) Notice of a prospective license, identifying the invention at a
minimum, has been published and responses, if any, reviewed in
accordance with 35 U.S.C. 209. The agency, in its discretion, may
include other information as appropriate;
(2) After expiration of the public notice period and consideration
of any written objections received in accordance with 35 U.S.C. 209(e),
the Federal agency has determined that:
(i) The public will be served by the granting of the license, as
indicated by the applicant's intentions, plans and ability to bring the
invention to the point of practical application or otherwise promote
the invention's utilization by the public;
(ii) The proposed scope of exclusivity is not greater than
reasonably necessary to provide the incentive for bringing the
invention to practical application, as proposed by the applicant, or
otherwise to promote the invention's utilization by the public; and
(iii) Exclusive, co-exclusive or partially exclusive licensing is a
reasonable and necessary incentive to call forth the investment capital
and expenditures needed to bring the invention to practical application
or otherwise promote the invention's utilization by the public;
(3) The Federal agency has determined that the grant of such a
license will not tend substantially to
[[Page 44]]
lessen competition or create or maintain a violation of the Federal
antitrust laws;
(4) The Federal agency has given first preference to any small
business firms submitting plans that are determined by the agency to be
within the capability of the firms and as having equal or greater
likelihood as those from other applicants to bring the invention to
practical application within a reasonable time; and
(5) In the case of an invention covered by a foreign patent
application or patent, the interests of the Federal Government or
United States industry in foreign commerce will be enhanced.
(b) In addition to the provisions of Sec. 404.5, the following
terms and conditions apply to exclusive, co-exclusive and partially
exclusive licenses:
(1) The license shall be subject to the irrevocable, royalty-free
right of the Government of the United States to practice or have
practiced the invention on behalf of the United States and on behalf of
any foreign government or international organization pursuant to any
existing or future treaty or agreement with the United States.
(2) The license shall reserve to the Federal agency the right to
require the licensee to grant sublicenses to responsible applicants, on
reasonable terms, when necessary to fulfill health or safety needs.
(3) The license shall be subject to any licenses in force at the
time of the grant of the exclusive, co-exclusive or partially exclusive
license.
(4) The license may grant the licensee the right to take any
suitable and necessary actions to protect the licensed property, on
behalf of the Federal Government.
(c) Federal agencies shall maintain a record of determinations to
grant exclusive, co-exclusive or partially exclusive licenses.
Sec. 404.10 [Amended]
0
22. Amend Sec. 404.10 by removing ``and any sublicensee of record''.
0
23. Revise paragraphs (a) introductory text, (a)(3), and (b) to read as
follows:
Sec. 404.11 Appeals.
(a) The following parties may appeal to the agency head or designee
any decision or determination concerning the grant, denial,
modification, or termination of a license:
* * * * *
(3) A person who timely filed a written objection in response to
the notice required by Sec. 404.7 and who can demonstrate to the
satisfaction of the Federal agency that such person may be damaged by
the agency action due to being denied the opportunity to promote the
commercialization of the invention.
(b) The Federal agency shall establish appropriate procedures for
considering appeals under paragraph (a) of this section.
0
24. Revise Sec. 404.14 to read as follows:
Sec. 404.14 Confidentiality of information.
35 U.S.C. 209(f) requires that any plan submitted pursuant to Sec.
404.8(a)(8) and any report required by 35 U.S.C. 209(d)(2) shall be
treated as commercial or financial information obtained from a person
and privileged and confidential and not subject to disclosure under 5
U.S.C. 552.
Kevin Kimball,
Chief of Staff.
[FR Doc. 2020-27581 Filed 12-31-20; 8:45 am]
BILLING CODE 3510-13-P
