[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40997-41000]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19713]



[[Page 40997]]

DEPARTMENT OF COMMERCE

Patent and Trademark Office

37 CFR Parts 101 and 102

Under Secretary for Technology

37 CFR Part 501

[Docket No. 960604157-6157-01]
RIN 0692-AA15


Acquisition and Protection of Foreign Rights in Inventions; 
Licensing of Foreign Patents Acquired by the Government; Uniform Patent 
Policy for Rights in Inventions Made by Government Employees

AGENCY: Patent and Trademark Office; Under Secretary for Technology, 
Commerce.

ACTION: Interim final rule with request for comments.

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SUMMARY: The interim final rule removes the regulation dealing with the 
Government's foreign rights in inventions made by Government employees, 
and expands the uniform patent policy for domestic rights in inventions 
to include foreign rights in order to have a uniform patent policy for 
all rights in inventions made by Government employees. The rule also 
removes the regulation dealing with the licensing of foreign patents 
acquired by the Government, which is inconsistent with 37 CFR Part 404 
on the licensing of Government-owned inventions. This action is taken 
in keeping with the goals of the National Performance Review and in 
order to comply with recent Executive Orders that address regulatory 
reforms.
    The rule also revises the uniform patent policy to permit an agency 
to impose certain conditions on the employee's title to the invention 
where the agency decides not to file a patent application, some of 
which are authorized by Sec. 15 of the Federal Technology Transfer Act 
of 1986; to require agencies to provide the inventor, prior to appeal, 
with a full explanation of the agency determination and a copy of 37 
CFR Part 501 in all cases where the agency has determined that the 
Government is entitled to title or a license in the invention in order 
to reduce the number of appeals; and to require agencies to decide if 
they should file any foreign patent applications within 8 months from 
filing a patent application in the U.S. or to authorize agencies to use 
an option to acquire foreign rights from the employee in order to avoid 
the need to transfer back the foreign rights to the employee if the 
agency does not file a foreign patent application within 8 months of 
filing an unclassified patent application in the U.S.

DATES: This document is effective August 7, 1996.
    Comments on the rule must be received on or before September 5, 
1996.
    The regulations will apply to any Rights Determination made after 
August 7, 1996.

ADDRESSES: Comments on the rule may be mailed to Mr. John Raubitschek, 
Patent Counsel, Office of the Chief Counsel for Technology, Room 4610, 
Herbert C. Hoover Building, U.S. Department of Commerce, Washington, DC 
20230.

FOR FURTHER INFORMATION CONTACT:
Mr. John Raubitschek at telephone: (202) 482-8010.

SUPPLEMENTARY INFORMATION: Under the authority of section 4, E.O. 
10096, CFR, 1949-1953 Comp., p. 292, as amended by E.O. 10930, 3 CFR, 
1959-1963 Comp., p. 456 and by E.O. 10695, 3 CFR, 1954-1958 Comp., p. 
355; and the delegation by the Secretary of Commerce in DOO 10-17 and 
DOO 10-18, the Under Secretary of Commerce for Technology is amending 
37 CFR Part 501 to include the relevant portions of former 37 CFR Part 
101 to reduce duplication and streamline the regulations.
    On March 4, 1995, as part of the President's Regulatory Reform 
Initiative, the President directed agencies to conduct a page-by-page 
review of all regulations and eliminate or revise those that are 
outdated or otherwise in need of reform.
    Under the former rules, foreign rights in inventions made by 
Government employees were covered by 37 CFR Part 101 while domestic 
rights were covered by 37 CFR Part 501. After conducting a review of 37 
CFR Parts 101 and 501, it was determined that some sections in Part 101 
were no longer being followed by the agencies and others were 
interpreted by agencies in an inconsistent manner. This review also 
determined that Part 101 should be removed and Part 501 should be 
amended to cover both foreign and domestic rights, so as to have a 
uniform policy for the Government's domestic and foreign rights in 
inventions made by Government employees. It is noted that E.O. 10096 is 
not limited to domestic rights in invention made by Government 
employees.
    Accordingly, 37 CFR Part 101 is removed and reserved, and 37 CFR 
Part 501 is amended as follows:
    The title of Part 501 is changed to delete the reference to 
``domestic'' rights so that this part will now cover both ``domestic'' 
and ``foreign'' rights.
    The authority section is changed to make reference (1) to E.O. 
10695, 3 CFR, 1954-1958 Comp., p. 355, which also amended E.O. 10096; 
and (2) to the latest DOO 10-17 and 10-18, issued July 15, 1992, and 
March 31, 1994, respectively.
    Section 501.1 is changed to delete ``domestic'' so that this part 
will now cover both ``domestic'' and ``foreign'' rights.
    Section 501.3(a) is editorially amended by adding a comma (,) after 
``Secretary.''
    Section 501.3(b) retains the exclusion of the Department of Energy 
although it follows the procedures in Part 501 because the exemption 
for this agency is contained in E.O. 10096. Also, the Tennessee Valley 
Authority and the Postal Service are excluded consistent with existing 
practice.
    Section 501.3(c) is changed to clearly indicate that the definition 
of ``Government employee'' includes any special Government employee as 
defined in 18 U.S.C. 202 or an individual working for a Federal agency 
pursuant to the Intergovernmental Personnel Act (IPA), Pub. L. 91-648, 
5 U.S.C. 1304 and 3371-3376. This section is also being changed to 
provide a reference to the statute which defines the term ``part-time 
employee.''
    Section 501.3(d) is changed to further define the term ``art'' as a 
``process'' which is the equivalent term used by the Patent and 
Trademark Office (35 U.S.C. 100(b)).
    New paragraph (e) is added to Sec. 501.3 to define the term 
``made'' when used in relation to any invention as the conception or 
first actual reduction to practice of such invention. See In re King, 3 
USPQ2d (BNA) 1747 (Comm'r Pat. 1987).
    Section 501.4 is changed to make reference to E.O. 10695, 3 CFR, 
1954-1958 Comp., p. 355, which also amended E.O. 10096. This section is 
also being editorially amended by deleting ``therein'' in the section 
title; adding ``in and to the invention'' after ``rights;'' deleting 
the words ``therein'' and ``herein;'' and adding ``Sec. '' before 
``501.6.''
    Section 501.6(a)(1) is changed to delete the reference to 
``domestic'' rights so that this section will now cover both 
``domestic'' and ``foreign'' rights.
    Section 501.6(a)(1)(iii) is changed to delete the reference to 37 
CFR Part 101 which is being removed.
    Section 501.6(a)(2) is changed to delete ``domestic'' (twice) so 
that this

[[Page 40998]]

section will now cover both ``domestic'' and ``foreign'' rights. Also, 
the last five lines in the first sentence of this section is being 
editorially amended by replacing ``purposes, such reservation, in terms 
thereof, to appear'' with ``purposes. The terms of such reservation 
will appear.''
    Section 501.6(a)(3)(i) is changed to further define the term 
``art'' as a ``process'' which is the equivalent term used by the 
Patent and Trademark Office (35 U.S.C. 100(b)).
    Section 501.6(a)(4)(i) is changed to delete ``domestic'' so that 
this section will now cover both ``domestic'' and ``foreign'' rights.
    Section 501.7(b) is revised to allow agencies to impose certain 
conditions where the Government decides not to file a patent 
application. Some of these conditions are contained in section 15 of 
the Federal Technology Transfer Act (15 U.S.C. 3710(a)) which permits 
an agency to condition the inventor's right to title on the timely 
filing of a patent application in cases if it determines that the 
Government has a need to practice the invention. Other conditions are 
taken from the licensing regulation in 37 CFR Part 404.
    Section 501.7(c) is revised to require the agency to provide to the 
employee (inventor) a signed and dated statement of its determination 
and reasons therefor, as well as a copy of 37 CFR 501 in all cases 
where the agency has determined that the Government is entitled to 
title or a license in the invention. It is expected that the revised 
Sec. 501.7(c) will help reduce the number of appeals since an inventor 
will now be provided with a full explanation for the initial 
determination of the agency without having to file an appeal. Also, by 
giving the inventor a copy of 37 CFR Part 501, it is ensured that the 
inventor will become better aware of all his/her rights under 37 CFR 
Part 501. It should be noted that some of the information previously 
required by both Secs. 501.7(c) and 501.8(b) appears now only in 
Sec. 501.8 (b)(2) and (b)(3) so that such information is needed only 
when an appeal has been filed.
    Section 501.8(a) is changed to clearly indicate that the Secretary 
shall forward one copy of the appeal to the liaison officer of the 
Government agency. This change will ensure conformance with Sec. 501.5.
    Section 501.8(b) is changed to indicate that the agency liaison 
officer will be the person in charge of furnishing the report to the 
Secretary and the inventor.
    Section 501.8(b)(1) is modified to delete the reference to 
information which is no longer required by Sec. 501.7.
    Section 501.8 (b)(2) and (b)(3) are added to include information 
which was required by Secs. 501.(7) (c)(1) and (c)(2).
    Section 501.8(b)(4) is former Sec. 501.8(b)(2) and changed to 
indicate that a copy of the reply by the employee must be filed with 
the agency liaison officer. This section is also being editorially 
amended by deleting the words ``thereto'' and ``thereof'' and moving 
the last sentence so that it is part of Sec. 501.8(b).
    Section 501.9(a) is changed to require a ``prompt'' determination 
by the agency about whether to seek patent protection in the United 
States, which may include the filing of a provisional application. The 
section would now explicitly allow any other agency or private law firm 
authorized by the agency to seek patent protection on its behalf.
    Section 501.9(b) is changed by replacing ``will'' with ``may'' to 
remove the requirement that an agency determine whether patent 
protection will be sought pending the Secretary's decision on the 
dispute. The agency will now have the choice of seeking patent 
protection pending the Secretary's decision on the dispute. This 
section is also being editorially amended by dividing a long sentence 
into two sentences.
    Section 501.9(c) is editorially amended by adding a comma (,) after 
``patent.''
    New section 501.9(d) is added to give agencies 8 months from the 
filing date of a patent application in the U.S. to decide if and where 
they should file foreign patent applications. It is anticipated that 
agencies will defer the selection of individual foreign countries by 
filing an international application under the Patent Cooperation 
Treaty. If an agency chooses not to file in any foreign country, then 
the employee may request rights in that country subject to any of the 
restrictions stated in Sec. 501.7(b) that may be imposed by the agency. 
It should be noted that under this section, the rights would no longer 
be retained by the inventor in any foreign country if the agency does 
not cause a patent application to be filed in that country within 
certain time periods previously set forth in 37 CFR 101.8. However, 
Sec. 501.9(d) authorizes agencies to use an option to acquire foreign 
rights from the employee similar to that in 37 CFR 101.8 except that 
the time for exercising the option has been increased from 6 to 8 
months from the filing of an unclassified application in the U.S., 
which is presently the practice in the Department of Army and National 
Aeronautics and Space Administration. Use of such an option will avoid 
the need to transfer back any foreign rights to the employee when the 
agency chooses not to file a patent application in any foreign country 
although such transfer is now authorized under section 6 of Pub. L. 
104-113. If an agency determines that it wants to file a foreign patent 
application after the 8-month option period has expired, it may do so 
only after obtaining an assignment of the foreign rights from the 
employee.
    New section 501.11 is added to provide the address where any 
submissions or inquiries should be sent.
    Part 102 was established under the authority of Executive Order 
9865 to provide for the administration of a uniform policy for the 
licensing of foreign patents owned by the Government. In 1980 under 
Pub. L. 96-517, all Government agencies were given authority to obtain 
and license foreign and domestic patents. The procedures for granting a 
license are contained in 37 CFR Part 404 and conflicts with Part 102 in 
a number of respects. Since agencies no longer need the authority of 
Executive Order 9865, it was determined to cancel Part 102.
    Pursuant to Sec. 553(a)(2) of the Administrative Procedure Act (5 
U.S.C. 553) (APA), the Under Secretary of Commerce for Technology finds 
that the interim final rule involves a matter relating to agency 
personnel since it concerns the foreign and domestic rights in 
inventions made by Government employees; therefore, the rule is 
exempted from the prior notice of proposed rulemaking and the delayed 
effective date requirements. Furthermore, the rule provides a 30-day 
comment period and any comments received will be considered prior to 
finalization of the interim rule.
    The rule has been determined to be not significant for purposes of 
E.O. 12866.
    The rule does not contain policies with Federalism implications 
sufficient to warrant preparation of a Federalism assessment under E.O. 
12612.
    Because a notice of proposed rulemaking and an opportunity for 
public comment are not required to be given for the interim final rule 
by section 553 of the APA (5 U.S.C. 553) or by any other law, under 
sections 3(a) of the Regulatory Flexibility Act (5 U.S.C. 603(a) and 
604(a)), no initial or final Regulatory Flexibility Analysis has to be 
or will be prepared.
    The interim final rule does not involve a collection of information 
under the Paperwork Reduction Act.

[[Page 40999]]

List of Subjects

37 CFR Part 101

    Foreign rights in inventions, Inventions made by Government 
employees.

37 CFR Part 102

    Licensing of foreign patents acquired by the Government.

37 CFR Part 501

    Uniform patent policy, Domestic rights in inventions, Inventions 
made by Government employees, Foreign rights in inventions.

    For the reasons set forth in the preamble and under authority of 5 
U.S.C. 301, 37 CFR chapters I and V are amended as follows:

CHAPTER I--PATENT AND TRADEMARK OFFICE, DEPARTMENT OF COMMERCE

PART 101--[REMOVED AND RESERVED]

    1. Part 101 is removed and reserved.

PART 102--[REMOVED AND RESERVED]

    2. Part 102 is removed and reserved.
CHAPTER V--UNDER SECRETARY FOR TECHNOLOGY, DEPARTMENT OF COMMERCE

PART 501--UNIFORM PATENT POLICY FOR RIGHTS IN INVENTIONS MADE BY 
GOVERNMENT EMPLOYEES

    3. The authority citation for 37 CFR part 501 is revised to read as 
follows:

    Authority: Sec. 4, E.O. 10096, 3 CFR, 1949-1953 Comp., p. 292, 
as amended by E.O. 10930, 3 CFR, 1959-1963 Comp., p. 456 and by E.O. 
10695, 3 CFR, 1954-1958 Comp., p. 355; DOO 10-17, July 15, 1992, and 
DOO 10-18, March 31, 1994.

    4. The heading of part 501 is revised as set forth above.
    5. Section 501.1 is revised to read as follows:


Sec. 501.1  Purpose.

    The purpose of this part is to provide for the administration of a 
uniform patent policy for the Government with respect to the rights in 
inventions made by Government employees and to prescribe rules and 
regulations for implementing and effectuating such policy.
    6. Section 501.3 is revised to read as follows:


Sec. 501.3  Definitions.

    (a) The term Secretary, as used in this part, means the Under 
Secretary of Commerce for Technology.
    (b) The term Government agency, as used in this part, means any 
Executive department or independent establishment of the Executive 
branch of the Government (including any independent regulatory 
commission or board, any corporation wholly owned by the United States, 
and the Smithsonian Institution), but does not include the Department 
of Energy for inventions made under the provisions of 42 U.S.C. 2182, 
the Tennessee Valley Authority, or the Postal Service.
    (c) The term Government employee, as used in this part, means any 
officer or employee, civilian or military, of any Government agency, 
including any special Government employee as defined in 18 U.S.C. 202 
or an individual working for a Federal agency pursuant to the 
Intergovernmental Personnel Act (IPA), 5 U.S.C. 1304 and 3371-3376, or 
a part-time consultant or part-time employee as defined in 29 U.S.C. 
2101(a)(8) except as may otherwise be provided by agency regulation 
approved by the Secretary.
    (d) The term invention, as used in this part, means any art or 
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.
    (e) The term made as used in this part in relation to any 
invention, means the conception or first actual reduction to practice 
of such invention as stated in In re King, 3 USPQ2d (BNA) 1747 (Comm'r 
Pat. 1987).
    7. Section 501.4 is revised to read as follows:


Sec. 501.4  Determination of inventions and rights.

    Each Government agency has the approval of the Secretary to 
determine whether the results of research, development, or other 
activity in the agency constitute an invention within the purview of 
Executive Order 10096, as amended by Executive Order 10930 and 
Executive Order 10695, and to determine the rights in and to the 
invention in accordance with the provisions of Secs. 501.6 and 501.7.
    8. Section 501.6 is amended by revising paragraphs (a)(1) 
introductory text, (a)(1)(iii), (a)(2), (a)(3)(i) and (a)(4)(i) to read 
as follows:


Sec. 501.6  Criteria for the Determination of rights in and to 
inventions.

    (a) * * *
    (1) The Government shall obtain, except as herein otherwise 
provided, the entire right, title and interest in and to any invention 
made by any Government employee:
* * * * *
    (iii) Which bears a direct relation to or is made in consequence of 
the official duties of the inventor.
    (2) In any case where the contribution of the Government, as 
measured by any one or more of the criteria set forth in paragraph 
(a)(1) of this section, to the invention is insufficient equitably to 
justify a requirement of assignment to the Government of the entire 
right, title and interest in and to such invention, or in any case 
where the Government has insufficient interest in an invention to 
obtain the entire right, title and interest therein (although the 
Government could obtain same under paragraph (a)(1) of this section), 
the Government agency concerned shall leave title to such invention in 
the employee, subject however, to the reservation to the Government of 
a nonexclusive, irrevocable, royalty-free license in the invention with 
power to grant licenses for all governmental purposes. The terms of 
such reservation will appear, where practicable, in any patent, 
domestic or foreign, which may issue on such invention. Reference is 
made to section 15 of the Federal Technology Transfer Act of 1986 (15 
U.S.C. 3710d) which requires a Government agency to allow the inventor 
to retain title to any covered invention when the agency does not 
intend to file a patent application or otherwise promote 
commercialization.
    (3) * * *
    (i) To invent or improve or perfect any art or process, machine, 
design, manufacture, or composition of matter;
* * * * *
    (4) * * *
    (i) Obtains the entire right, title and interest in and to an 
invention pursuant to the provisions of paragraph (a)(1) of this 
section nor
* * * * *
    9. Section 501.7 is amended by revising paragraphs (b) and (c) to 
read as follows:


Sec. 501.7   Agency determination.

* * * * *
    (b) In the event that a Government agency determines, pursuant to 
paragraph (a)(2) or (a)(4) of Sec. 501.6, that title to an invention 
will be left with the employee, the agency shall notify the employee of 
this determination. In cases pursuant to Sec. 501.6(a)(2) where the 
Government's insufficient interest in the invention is evidenced by its 
decision not to file a patent application, the agency may impose on the 
employee any one or all of the following conditions or any other 
conditions that may be necessary in a particular case:
    (1) That a patent application be filed in the United States and/or 
abroad, if

[[Page 41000]]

the Government has determined that it has or may need to practice the 
invention;
    (2) That the invention not be assigned to any foreign-owned or 
controlled corporation without the written permission of the agency; 
and
    (3) That any assignment or license of rights to use or sell the 
invention in the United States shall contain a requirement that any 
products embodying the invention or produced through the use of the 
invention be substantially manufactured in the United States. The 
agency shall notify the employee of any conditions imposed.
    (c) In the case of a determination under either paragraph (a) or 
(b) of this section, the agency shall promptly provide the employee 
with:
    (1) A signed and dated statement of its determination and reasons 
therefor; and
    (2) A copy of 37 CFR part 501.
    10. Section 501.8 is amended by revising paragraphs (a) and (b), 
redesignating paragraphs (c) and (d) as paragraph (d) and (e), and 
adding new paragraph (c) to read as follows:


Sec. 501.8   Appeals by employees.

    (a) Any Government employee who is aggrieved by a Government agency 
determination pursuant to Secs. 501.6(a)(1) or (a)(2), may obtain a 
review of any agency determination by filing, within 30 days (or such 
longer period as the Secretary may, for good cause shown in writing, 
fix in any case) after receiving notice of such determination, two 
copies of an appeal with the Secretary. The Secretary then shall 
forward one copy of the appeal to the liaison officer of the Government 
agency.
    (b) On receipt of a copy of an appeal filed pursuant to paragraph 
(a) of this section, the agency liaison officer shall, subject to 
considerations of national security, or public health, safety or 
welfare, promptly furnish both the Secretary and the inventor with a 
copy of a report containing the following information about the 
invention involved in the appeal:
    (1) A copy of the agency's statement specified in Sec. 501.7(c);
    (2) A description of the invention in sufficient detail to identify 
the invention and show its relationship to the employee's duties and 
work assignments;
    (3) The name of the employee and employment status, including a 
detailed statement of official duties and responsibilities at the time 
the invention was made; and
    (4) A detailed statement of the points of dispute or controversy, 
together with copies of any statements or written arguments filed with 
the agency, and of any other relevant evidence that the agency 
considered in making its determination of Government interest.
    (c) Within 25 days (or such longer period as the Secretary may, for 
good cause shown, fix in any case) after the transmission of a copy of 
the agency report to the employee, the employee may file a reply with 
the Secretary and file one copy with the agency liaison officer.
* * * * *
    11. Section 501.9 is revised to read as follows:


Sec. 501.9   Patent protection.

    (a) A Government agency, upon determining that an invention coming 
within the scope of Secs. 501.6(a)(1) or (a)(2) has been made, shall 
promptly determine whether patent protection will be sought in the 
United States by or on behalf of the agency for such invention. A 
controversy over the respective rights of the Government and of the 
employee shall not unnecessarily delay the filing of a patent 
application by the agency to avoid the loss of patent rights. In cases 
coming within the scope of Sec. 501.6(a)(2), the filing of a patent 
application shall be contingent upon the consent of the employee.
    (b) Where there is an appealed dispute as to whether Secs. 501.6 
(a)(1) or (a)(2) applies in determining the respective rights of the 
Government and of an employee in and to any invention, the agency may 
determine whether patent protection will be sought in the United States 
pending the Secretary's decision on the dispute. If the agency decides 
that an application for patent should be filed, the agency will take 
such rights as are specified in Sec. 501.6(a)(2), but this shall be 
without prejudice to acquiring the rights specified in paragraph (a)(1) 
of that section should the Secretary so decide.
    (c) Where an agency has determined to leave title to an invention 
with an employee under Sec. 501.6(a)(2), the agency will, upon the 
filing of an application for patent, take the rights specified in that 
paragraph without prejudice to the subsequent acquisition by the 
Government of the rights specified in paragraph (a)(1) of that section 
should the Secretary so decide.
    (d) Where an agency has filed a patent application in the United 
States, the agency will, within 8 months from the filing date of the 
U.S. application, determine if any foreign patent applications should 
also be filed. If the agency chooses not to file an application in any 
foreign country, the employee may request rights in that country 
subject to the conditions stated in Sec. 501.7(b) that may be imposed 
by the agency. Alternatively, the agency may permit the employee to 
retain foreign rights by including in any assignment to the Government 
of an unclassified U.S. patent application on the invention an option 
for the Government to acquire title in any foreign country within 8 
months from the filing date of the U.S. application.
    12. A new Sec. 501.11 is added to read as follows:


Sec. 501.11   Submissions and inquiries.

    All submissions or inquiries should be directed to Chief Counsel 
for Technology, telephone number 202-482-1984, Room H4835, U.S. 
Department of Commerce, Washington DC 20230.

    Dated: July 22, 1996.
Bruce A. Lehman,
Assistant Secretary of Commerce and Commissioner of Patents and 
Trademarks.
    Dated: July 26, 1996.
Mary L. Good,
Under Secretary of Commerce for Technology.
[FR Doc. 96-19713 Filed 8-6-96; 8:45 am]
BILLING CODE 3510-18-P; 3510-16-P