[Federal Register Volume 67, Number 143 (Thursday, July 25, 2002)]
[Rules and Regulations]
[Pages 48568-48571]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18825]



[[Page 48568]]

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DEPARTMENT OF ENERGY

48 CFR Part 970

RIN 1991-AB55


Acquisition Regulations: Revision of Patent Regulations Relating 
to Department of Energy Management and Operating Contracts

AGENCY: Department of Energy.

ACTION: Final rule.

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SUMMARY: The Department of Energy is adopting, with changes, as a final 
rule the interim final rule published on November 15, 2000, which 
amended the Department of Energy Acquisition Regulation (DEAR) to 
improve the patent coverage relating to the Department's management and 
operating contracts. The final rule generally reflects the contract 
clauses used by the Department in management and operating contracts 
over the last 5 years. The changes adapt patent-related clauses to 
subcontracting under management and operating contracts, restate the 
clauses in plain language, and provide a complete set of patent clauses 
for a variety of management and operating contracts.

DATES: This final rule is effective August 26, 2002.

FOR FURTHER INFORMATION CONTACT: Robert M. Webb at (202) 586-8264

SUPPLEMENTARY INFORMATION:   

I. Background
II. Discussion of Changes
III. Procedural Requirements
    A. Review Under Executive Order 12866
    B. Review Under Executive Order 12988
    C. Review Under the Regulatory Flexibility Act
    D. Review Under the Paperwork Reduction Act
    E. Review Under the National Environmental Policy Act
    F. Review Under Executive Order 13132
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Congressional Review
    J. Approval by the Office of the Secretary of Energy

I. Background

    On November 15, 2000, at 65 FR 68932, the Department of Energy (DOE 
or Department) published an interim final rule containing amendments to 
the patent regulations covering its management and operating contracts. 
In response to the notice of interim final rulemaking, DOE received 
only one comment. That comment took no exception to the interim final 
rule and opined that the rule had achieved its intended purposes of 
clarity and organization. Internal deliberations of the Department have 
resulted in minor changes to the interim final rule. These are 
discussed in the next portion of this rule. Except as noted in this 
preamble, the regulations and clauses are as originally promulgated.
    Since publication of the interim final rule, the regulations and 
clauses included in the interim final rule were republished as part of 
a final rule republishing Part 970 of the DEAR (65 FR 80994, Dec. 22, 
2000). While the provisions themselves were not changed in any way in 
that republication, changes in numbering did occur. The numbering 
system of this final rule are different than those used in the 
publication of the interim final rule but are consistent with the 
republication of DEAR Part 970.
    Finally, since the publication of the interim final rule, Congress 
enacted two statutes that affect the Technology Transfer Mission clause 
at 970.5227-3. Section 3196 of Pub. L. 106-398 limited the time for 
agency review and response to proposed joint work statements and 
proposed Cooperative Research and Development Agreements (CRADAs) at 
contractor-operated, government-owned laboratories. Also, Section 11 of 
the Technology Transfer Commercialization Act of 2000, Pub. L. 106-404, 
directs the Secretary to assure that certain of DOE's laboratory and 
facilities contractors designate a Technology Partnership Ombudsman to 
perform specified duties This final rule amends the Technology Transfer 
Mission clause to implement these statutes. The implementing language 
follows the statutory direction.

II. Discussion of Changes

    In order to reflect Section 3196 of Pub.L. 106-398, changes have 
been made to paragraph (n) of the Technology Transfer Mission clause, 
now at 970.5227-3. These changes reflect the time for DOE review of 
proposed joint work statements and CRADAs that result after enactment 
of the statute. Additionally, a paragraph (p) has been added to the 
same clause to reflect Section 11 of the Technology Transfer 
Commercialization Act of 2000, Pub. L. 106-404. This latter change will 
assure that DOE's management and operating and other major contractors 
with a technology transfer mission designate a Technology Partnership 
Ombudsman to perform specified duties.
    The threshold for flowdown of the clause at 970.5227-4, 
Authorization and Consent, has been raised to $100,000 to reduce the 
contractor's burden of including it in subcontracts, and paragraph (c) 
has been reorganized to improve its clarity. The flowdown threshold for 
the clause at 970.5227-5, Notice and Assistance Regarding Patent and 
Copyright Infringement, has been raised to $100,000 also to reduce the 
contractor's burden of including the clause in subcontracts.
    The clause at 970.5227-8, Refund of Royalties, was altered as a 
result of experience gained since the publication of the interim final 
rule. Changes have been made to limit the scope of the clause to 
royalties payable for a licensing of an invention. The version 
originally published covered all royalties, including royalties for 
copyright. In this day of the purchase of large quantities of 
commercial software, that inclusion would be burdensome and not provide 
a return worth the investment of resources by both the contractor and 
DOE. Additionally, the version of the clause included in the interim 
final rule was written in a way that assumed there was a solicitation 
and that the royalties could be identified in the contract price for 
the term of the contract. While there are more solicitations leading to 
management and operating contracts than ever before, there remain many 
instances in which contracts are extended. In neither event would it be 
possible for the offeror or the contractor to identify all royalties 
associated with contract performance at the inception of the contract 
because of the broad research and development nature of these 
contracts; therefore, the Department has made changes to focus the 
clause to require that the contractor gain DOE approval before paying 
patent royalties of more than $250 during contract performance.
    The Department has deleted the phrase ``as DOE deems appropriate'' 
as the last words of paragraph (b)(6) of the clause at 970.5227-10, 
Patent Rights-Management and Operating Contracts, Nonprofit 
Organizations or Small Business Firm Contractor and paragraph (b)(9) of 
the clause at 970.5227-12, Patent Rights-Management and Operating 
Contracts, For-Profit Contractor, Advance Class Waiver. The sentence 
without that phrase accomplishes its intended purpose of requiring the 
contractor to share royalties with a co-inventor who is a Federal 
employee. That additional phrase could have been construed as making 
the sharing scheme subject to DOE dictation or approval, neither of 
which was intended.
    The Department has also inserted specific reference to the National 
Nuclear Security Administration in the definition of ``weapons related 
inventions'' in Alternates I to the clauses at 970.5227-10 and -12.

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III. Procedural Requirements

A. Review Under Executive Order 12866

    Today's regulatory action has been determined not to be a 
``significant regulatory action'' under Executive Order 12866, 
``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993). 
Accordingly, this final rule is not subject to review under that 
Executive Order by the Office of Information and Regulatory Affairs of 
the Office of Management and Budget (OMB).

B. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. With regard to the review 
required by section 3(a), section 3(b) of Executive Order 12988 
specifically requires that Executive agencies make every reasonable 
effort to ensure that the regulation: (1) Clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive effect, if any; (5) adequately defines 
key terms; and (6) addresses other important issues affecting clarity 
and general draftsmanship under any guidelines issued by the Attorney 
General. Section 3(c) of Executive Order 12988 requires Executive 
agencies to review regulations in light of applicable standards in 
section 3(a) and section 3(b) to determine whether they are met or it 
is unreasonable to meet one or more of them. DOE has completed the 
required review and determined that, to the extent permitted by law, 
this final regulation meets the relevant standards of Executive Order 
12988.

C. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires 
preparation of an initial regulatory flexibility analysis for any rule 
that must be proposed for public comment and that is likely to have 
significant economic impact on a substantial number of small entities. 
The Regulatory Flexibility Act does not apply to this rulemaking.

D. Review Under the Paperwork Reduction Act

    Section 11 of the Technology Transfer Commercialization Act of 
2000, Pub. L. 106-404, provides that each technology partnership 
ombudsman appointed pursuant to the Act ``shall * * * report quarterly 
on the number and nature of complaints and disputes raised, along with 
the ombudsman's assessment of their resolution, consistent with the 
protection of confidential and sensitive information'' to specified DOE 
officials and employees. In this final rule, DOE is amending the 
Technology Transfer Mission clause at 970.5227-3 to include this 
reporting requirement. Although mandated by statute, the Technology 
Partnership Ombudsman reporting requirement is subject to review and 
approval by the Office of Management and Budget (OMB) pursuant to the 
Paperwork Reduction Act, 44 U.S.C. 3501 et seq. As provided in OMB's 
regulations implementing the Act, DOE will soon publish a separate 
notice in the Federal Register inviting public comment on this 
collection of information, after which it will submit the collection of 
information to OMB for approval pursuant to 5 CFR 1320.10.

E. Review Under the National Environmental Policy Act

    DOE has concluded that promulgation of this final rule falls into a 
class of actions which would not individually or cumulatively have 
significant impact on the human environment, as determined by DOE's 
regulations (10 CFR Part 1021, subpart D) implementing the National 
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et seq.). 
Specifically, this rule is categorically excluded from NEPA review 
because the amendments to the DEAR would be strictly procedural 
(categorical exclusion A6); therefore, this final rule does not require 
an environmental impact statement or environmental assessment pursuant 
to NEPA.

F. Review Under Executive Order 13132

    Executive Order 13132 (64 FR 43255, August 4, 1999) requires that 
regulations or rules be reviewed for any substantial direct effects on 
States, on the relationship between the national government and the 
States, or in the distribution of power and responsibilities among the 
various levels of Government. If there are sufficient substantial 
direct effects, then Executive Order 13132 requires agencies to engage 
in intergovernmental consultation and take other steps before 
promulgating such a regulation or rule. This final rule merely provides 
the Department a single set of clauses to govern patent rights in its 
contracts for the management and operation of major DOE sites and 
facilities. The action does not involve any substantial direct effects 
on States or other considerations stated in Executive Order 13132.

G. Review Under the Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally 
requires a Federal agency to perform a detailed assessment of costs and 
benefits of any rule imposing a Federal Mandate with costs to State, 
local or tribal governments, or to the private sector, of $100 million 
or more. This final rule would only affect private sector entities, and 
the impact is less than $100 million.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277), requires Federal agencies to issue a 
Family Policymaking Assessment for any proposed rule or policy that may 
affect family well-being. This final rule would not affect the family.

I. Congressional Notification

    Consistent with the Small Business Regulatory Enforcement Fairness 
Act of 1996 (5 U.S.C. 801), DOE will submit to Congress a report 
regarding the issuance of today's final rule prior to the effective 
date set forth at the outset of this notice. The report will note that 
it has been determined that this rule does not constitute a ``major 
rule'' under that Act.

J. Approval by the Office of the Secretary of Energy

    Issuance of this final rule has been approved by the Office of the 
Secretary of Energy.

List of Subjects in 48 CFR Part 970

    Government procurement.

    Issued in Washington, DC, on July 15, 2002.
Richard H. Hopf,
Director, Office of Procurement and Assistance Management, U.S. 
Department of Energy.

    Accordingly, the interim rule amending Chapter 9 of Title 48 of the 
Code of Federal Regulations which was published at 65 FR 68932 on 
November 15, 2000, is adopted as a final rule with the following 
changes.

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PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS.

    1. The authority citation for Part 970 continues to read as 
follows:

    Authority: 42 U.S.C. 2201; 42 U.S.C. 7101 et seq.; 50 U.S.C. 
2401 et seq.

Subpart 970.27--Patents, Data, and Copyrights.

    2. The clause at 970.5227-3, Technology Transfer Mission, is 
amended as follows:
    a. The clause date is revised;
    b. Paragraph (n)(1)(iii) is revised;
    c. Paragraph (n)(l)(iv) is deleted and paragraph (n)(l)(v) is 
redesignated as (n)(l)(iv);
    d. Redesignated paragraph (n)(l)(iv) is amended by deleting the 
last sentence; and
    e. In Alternate I, paragraph (p) is redesignated as paragraph (q) 
and the date is revised to read ``(August 2002)'', and a new paragraph 
(p) is added to the clause:


970.5227-3  Technology transfer mission.

* * * * *

Technology Transfer Mission (August 2002)

    (n) * * *
    (1)(i) * * *
    (ii) * * *
    (iii) Within thirty (30) days after submission of a JWS or 
proposed CRADA, the contracting officer shall approve, disapprove or 
request modification to the JWS or CRADA. The contracting officer 
shall provide a written explanation to the Contractor's Laboratory 
Director or designee of any disapproval or requirement for 
modification of a JWS or proposed CRADA.
* * * * *
    (p) Technology Partnership Ombudsman.
    (1) The Contractor agrees to establish a position to be known as 
``Technology Partnership Ombudsman,'' to help resolve complaints 
from outside organizations regarding the policies and actions of the 
contractor with respect to technology partnerships (including 
CRADAs), patents owned by the contractor for inventions made at the 
laboratory, and technology licensing.
    (2) The Ombudsman shall be a senior official of the Contactor's 
laborratory staff, who is not involved in day-to-day technology 
partnerships, patents or technology licensing, or, if appointed from 
outside the laboratory or facility, shall function as such senior 
official.
    (3) The duties of the Technology Partnership Ombudsman shall 
include:
    (i) Serving as the focal point for assisting the public and 
industry in resolving complaints and disputes with the laboratory or 
facility regarding technology partnerships, patents, and technology 
licensing;
    (ii) Promoting the use of collaborative alternative dispute 
resolution techniques such as mediation to facilitate the speedy and 
low cost resolution of complaints and disputes, when appropriate; 
and
    (iii) Submitting a quarterly report, in a format provided by 
DOE, to the Secretary of Energy, the Administrator for Nuclear 
Security, the Director of the DOE Office of Dispute Resolution, and 
the Contracting Officer concerning the number and nature of 
complaints and disputes raised, along with the Ombudsman's 
assessment of their resolution, consistent with the protection of 
confidential and sensitive information.

(End of clause)

    3. The clause at 970.5227-4 is revised to read as follows:


970.5227-4  Authorization and Consent.

    Insert the following clause in solicitations and contracts in 
accordance with 970.2702-1:

Authorization and Consent (August 2002)

    (a) The Government authorizes and consents to all use and 
manufacture of any invention described in and covered by a United 
States patent in the performance of this contract or any subcontract 
at any tier.
    (b) If the Contractor is sued for copyright infringement or 
anticipates the filing of such a lawsuit, the Contractor may request 
authorization and consent to copy a copyrighted work from the 
contracting officer. Programmatic necessity is a major consideration 
for DOE in determining whether to grant such request.
    (c)(1) The Contractor agrees to include, and require inclusion 
of, the Authorization and Consent clause at 52.227-1, without 
Alternate 1, but suitably modified to identify the parties, in all 
subcontracts expected to exceed $100,000 at any tier for supplies or 
services, including construction, architect-engineer services, and 
materials, supplies, models, samples, and design or testing 
services.
    (2) The Contractor agrees to include, and require inclusion of, 
paragraph (a) of this Authorization and Consent clause, suitably 
modified to identify the parties, in all subcontracts at any tier 
for research and development activities expected to exceed $100,000.
    (3) Omission of an authorization and consent clause from any 
subcontract, including those valued less than $100,000 does not 
affect this authorization and consent.

(End of clause)


970.5227-5  [Amended]

    4. Paragraph (c) of the clause at 970.5227-5 is amended by deleting 
the reference ``$25,000'' and inserting ``$100,000'' in its place.

    5. The clause at 970.5227-8 is revised to read as follows:


970.5227-8  Refund of Royalties.

    Insert the following clause in solicitations and contracts in 
accordance with 970.2702-4:

Refund of Royalties (August 2002)

    (a) During performance of this Contract, if any royalties are 
proposed to be charged to the Government as costs under this 
Contract, the Contractor agrees to submit for approval of the 
Contracting Officer, prior to the execution of any license, the 
following information relating to each separate item of royalty:
    (1) Name and address of licensor;
    (2) Patent numbers, patent application serial numbers, or other 
basis on which the royalty is payable;
    (3) Brief description, including any part or model numbers of 
each contract item or component on which the royalty is payable;
    (4) Percentage or dollar rate of royalty per unit;
    (5) Unit price of contract item;
    (6) Number of units;
    (7) Total dollar amount of royalties; and
    (8) A copy of the proposed license agreement.
    (b) If specifically requested by the Contracting Officer, the 
Contractor shall furnish a copy of any license agreement entered 
into prior to the effective date of this clause and an 
identification of applicable claims of specific patents or other 
basis upon which royalties are payable.
    (c) The term ``royalties'' as used in this clause refers to any 
costs or charges in the nature of royalties, license fees, patent or 
license amortization costs, or the like, for the use of or for 
rights in patents and patent applications that are used in the 
performance of this contract or any subcontract hereunder.
    (d) The Contractor shall furnish to the Contracting Officer, 
annually upon request, a statement of royalties paid or required to 
be paid in connection with performing this Contract and subcontracts 
hereunder.
    (e) For royalty payments under licenses entered into after the 
effective date of this Contract, costs incurred for royalties 
proposed under this paragraph shall be allowable only to the extent 
that such royalties are approved by the Contracting Officer.If the 
Contracting Officer determines that existing or proposed royalty 
payments are inappropriate, any payments subsequent to such 
determination shall be allowable only to the extent approved by the 
Contracting Officer.
    (f) Regardless of prior DOE approval of any individual payments 
or royalties, DOE may contest at any time the enforceability, 
validity, scope of, or title to a patent for which the Contractor 
makes a royalty or other payment.
    (g) If at any time within 3 years after final payment under this 
contract, the Contractor for any reason is relieved in whole or in 
part from the payment of any royalties to which this clause applies, 
the Contractor shall promptly notify the Contracting Officer of that 
fact and shall promptly reimburse the Government for any refunds 
received or royalties paid after having received notice of such 
relief.
    (h) The Contractor agrees to include, and require inclusion of, 
this clause, including this paragraph (h), suitably modified to 
identify the parties in any subcontract at any tier in which the 
amount of royalties reported during negotiation of the subcontract 
exceeds $250.

(End of clause)

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970.5227-10  [Amended]

    6. The clause at 970.5227-10 is amended by:
    a. Deleting the phrase ``as DOE deems appropriate'' at the end of 
paragraph (b)(6); and
    b. By adding the phrase ``or the National Nuclear Security 
Administration'' at the end of Alternate 1 Weapons Related Subject 
Inventions, paragraph (a)(10).


970.5227-12  [Amended]

    7. The clause at 970.5227-12 is amended by:
    a. Deleting the phrase ``as DOE deems appropriate'' at the end of 
paragraph (b)(9); and
    b. By adding the phrase ``or the National Nuclear Security 
Administration'' at the end of Alternate 1 Weapons Related Subject 
Inventions, paragraph (a)(9).

[FR Doc. 02-18825 Filed 7-24-02; 8:45 am]
BILLING CODE 6450-01-P