[Federal Register Volume 88, Number 57 (Friday, March 24, 2023)]
[Rules and Regulations]
[Pages 17730-17740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06033]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
National Institute of Standards and Technology
37 CFR Parts 401 and 404
[Docket No.: 230315-0076]
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: Final rule.
-----------------------------------------------------------------------
SUMMARY: The National Institute of Standards and Technology (NIST)
announces revisions to regulations in order to make several technical
corrections; reorganize certain subsections; remove outdated and/or
unnecessary sections; institute a reporting requirement on federal
agencies; and provide clarifications on definitions, communications,
process for exercising march-in rights, filing of provisional patent
applications, electronic filing of Bayh-Dole related reporting, the
purpose of royalties on licenses from the Federal Government, and the
processes for granting exclusive, co-exclusive, and partially exclusive
licenses and for appeals. NIST has not
[[Page 17731]]
adopted in this final rule a provision in the proposed rule regarding
exercising march-in rights on the sole basis of product pricing.
Instead, NIST intends to engage with stakeholders and agencies with the
goal of developing a comprehensive framework for agencies considering
the use of march-in provisions.
DATES: This rule is effective April 24, 2023.
FOR FURTHER INFORMATION CONTACT: Bethany Loftin, via email at
[email protected] or by telephone at 301-975-0496.
SUPPLEMENTARY INFORMATION:
Background
This final rule is 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.,
and commonly known as the ``Bayh-Dole Act'' or ``Bayh-Dole,'' and its
implementing regulations, found at title 37 Code of Federal Regulations
(CFR) parts 401 and 404.
The rule shall apply to all new funding agreements as defined in 37
CFR 401.2(a) that are executed after the effective date of the rule.
The rule shall not apply to a funding agreement in effect on or before
the effective date of the rule, provided that if such existing funding
agreement is thereafter amended, the funding agency may, in its
discretion, make the amended funding agreement subject to the rule
prospectively.
On January 4, 2021, NIST published a notice of proposed rulemaking
(NPRM) in the Federal Register (86 FR 35) requesting public comments on
proposed revisions to the regulations at 37 CFR parts 401 and 404, as
well as general comments relating to federal technology transfer
practices. The NPRM described the statutory framework for the proposed
rule revisions under the Bayh-Dole Act and its implementing
regulations. NIST received 81,253 submissions during the public comment
period, which closed on April 5, 2021, including comments, questions,
suggestions, and recommendations from, inter alia, individual members
of the public, public and private universities, professional
associations, research institutions, and non-profit foundations. Of the
81,253 submissions received during the public comment period, the
largest percentage of the comments related to the proposed addition to
37 CFR 401.6(e) regarding exercising march-in rights on the sole basis
of product pricing. A discussion of these comments and NIST's response
is included in Comment 8 below. During the public comment period, on
February 25, 2021, NIST also held a public webinar in which the
proposed changes were reviewed, and public statements were accepted and
made a part of the record. NIST appreciates and has considered the
comments received, and this final rule reflects a number of changes to
the regulations proposed in the NPRM based on this feedback.
Additionally, severability clauses have been added to both Parts
401 and 404 in this final rule. In the event that any part of the
regulations is stayed or determined to be invalid, the remaining
provisions should be severable and remain in effect.
Response to Comments
All submissions were carefully reviewed, and NIST thanks the public
for its engagement. NIST's responses to comments within the scope of
this rulemaking have been correlated by topic and are summarized below.
1. Comment: NIST's legal authority to promulgate regulations
implementing the Bayh-Dole Act was questioned by one commenter, who
asserted that the regulations should instead emanate directly from the
Department of Commerce.
Response: Authority to issue these regulations is granted to the
Secretary of Commerce under 35 U.S.C. 206 and has been properly
delegated to the Director of NIST under Department of Commerce
Department Organization Order 30-2A.
2. Comment: The NPRM stated that the rulemaking was not an
``economically significant'' regulatory action under Executive Order
12866, ``as it does not have an effect on the economy of $100 million
or more in any one year . . . .'' This determination was questioned by
a commenter based on the regulations' application ``to all Federal
agencies,'' and the large number of inventions and patents in which the
Federal Government maintains an interest.
Response: NIST determined at the proposed rule stage that this
rulemaking is not an economically significant regulatory action under
section 3(f)(1) of Executive Order 12866. NIST conducted an analysis,
by looking at all the proposed changes and the effect of those changes
on the existing regulations, and concluded that the changes to the
regulations are primarily clarifications and a reorganization of
existing content. NIST has compared the text of the proposed rule to
the text of this final rule and affirms its earlier determination that
the regulatory changes are not economically significant.
3. Comment: Two commenters objected to the proposed removal of
Sec. 401.1(a), which describes the effect of third-party funding on
the ownership of a ``subject invention'' and the treatment of any
invention created under a project that is closely related to, but
separate from, a project funded by the Federal Government. The
objecting commenters requested that these clarifications be maintained,
as they are of use in determining whether or not an invention is a
``subject invention.''
Response: NIST has re-inserted the introductory language at Sec.
401.1(a) to maintain this additional guidance and clarification.
4. Comment: Multiple commenters were supportive of, objected to,
and/or requested additional clarification on the proposed revisions to
the newly designated Sec. 401.6(a)(1) (previously Sec. 401.6(b)).
Those who objected or requested additional information generally
expressed concern that this process would be adversarial or asked that
other title holders, including exclusive licensees, also be permitted
to attend the consultation.
Response: Both the original and the revised versions of this
section establish an informal process between a funding agency and a
contractor prior to the agency's initiation of march-in procedures,
though the original version limited this process to ``informal written
or oral comments from the contractor as well as information relevant to
the matter.'' The proposed language expands this process to a full
informal consultation and was more explicit about the nature of the
consultation, explaining that the additional factfinding would allow
the agency to better ``understand the nature of the issue and consider
possible actions other than exercising march-in rights.'' It was not
the intent of this addition to create an adversarial process; the
intent was to encourage informal consultation and to potentially avoid
the need to proceed to formal march-in procedures. Regarding
commenters' requests to include licensees in the consultation, given
its informal nature, agencies have discretion to include additional
parties, if necessary. Therefore, NIST determined that explicitly
including or requiring additional parties was unnecessary. To address
commenters' concerns regarding the nature of the informal consultation,
NIST has replaced ``actions'' with ``alternatives'' in this final rule
and added the words ``may also'' to the statement regarding the funding
agency's consideration of march-in alternatives.
[[Page 17732]]
5. Comment: One commenter objected to the requirement under the
newly designated Sec. 401.6(a)(1) (previously Sec. 401.6(b)) that the
contractor respond to an agency request for informal consultation
within 30 days, expressing the opinion that contractors should be
allowed a longer amount of time in which to respond.
Response: This 30-day response period was present in the previous
regulations but required the contractor to provide written comments to
the agency within 30 days. The revision provides this same 30-day
period, but only requires the contractor to provide notice to the
agency that the contractor wishes to proceed with informal
consultation. Given that this revision only requires the contractor to
make a determination regarding whether to participate in an informal
consultation and not the time required to collect and compose comments,
30 days is a sufficient amount of time for a contractor to provide such
notice, and NIST declines to lengthen the response period in this final
rule.
6. Comment: A proposed revision to the newly designated Sec.
401.6(a)(1) (previously Sec. 401.6(b)) increased the amount of time
for an agency to issue a decision as to whether or not it will pursue
march-in rights following an informal consultation with a contractor
from 60 days to 120 days. A commenter questioned the necessity of this
longer response period.
Response: The longer period is believed appropriate to facilitate
and ensure thorough agency consideration of all issues and
supplementary information submitted by the contractor following
informal consultation; thus, NIST has maintained the NPRM's extension
from 60 days to 120 days in this final rule.
7. Comment: Several comments were received relating to newly
designated Sec. 401.6(a)(4) (previously Sec. 401.6(e)), which
concerns the confidentiality of information obtained during march-in
proceedings. Concern was expressed over the addition of language that
allows an agency to disclose information obtained during a march-in
proceeding to persons outside the Federal Government when ``otherwise
required by law.''
Response: The intent of this additional language is to put
contractors on notice that other laws may require disclosure of the
information, and compliance with such laws is mandatory, whether or not
the phrase in question is added to the regulations. NIST has maintained
the phrase in this final rule.
8. Comment: The large majority of comments received related to the
new language proposed at Sec. 401.6(e). (The NPRM redesignated the
previous Sec. 401.6(e), which relates to fact-finding during the
march-in process, as the new Sec. 401.6(a)(4)). The proposed new Sec.
401.6(e) of the NPRM stated that ``[m]arch-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.'' These comments ranged in
content. Many commenters stated that the provision should be removed
and that the Federal Government's right to march-in should be exercised
solely on the basis of product pricing. Some expressed general support
for the addition, and others requested additional changes to further
clarify and ensure that the Federal Government would not march-in based
on product pricing.
Response: The large number of comments received on this issue raise
questions that warrant further consideration. Consistent with this, on
July 9, 2021, the President issued Executive Order 14036 (``Promoting
Competition in the American Economy''), which, inter alia, directed the
Secretary of Commerce, acting through the Director of NIST and in light
of the policies set forth in the Executive Order, to consider not
finalizing ``any provisions on march-in rights and product pricing'' in
the NPRM. Given the comments received, NIST's examination of them, and
the Executive Order, NIST removed this provision from the final rule.
The circumstances in which an agency might exercise its right to march-
in are enumerated in the regulations at Sec. 401.14(j) and include (a)
a contractor's failure to take action to achieve practical application
of a subjection invention, (b) a contractor's failure to meet health or
safety needs, (c) a contractor's failure to meet public use
requirements, and (d) a contractor's failure to comply with the
preference for United States industry. NIST intends to engage with
stakeholders and agencies with the goal of developing a comprehensive
framework for agencies considering the use of march-in provisions. In
this final rule, Sec. 401.6(e) of the NPRM is removed, and Sec.
401.6(f) of the NPRM is redesignated as Sec. 401.6(e).
9. Comment: The NPRM reorganized Sec. 401.13, relocating certain
paragraphs (e.g., Sec. 401.13(a) became Sec. 401.14(c)(6)), removing
outdated portions, and retitling the section from ``Administration of
patent rights clauses'' to ``Confidentiality of contractor
submissions.'' Several commenters that were supportive of the revisions
asked NIST to expand the confidentiality provisions to apply to all
information related to ``subject inventions.''
Response: This final rule maintains the revisions to Sec. 401.13
that were proposed in the NPRM, which includes confidentiality
protections for contractor submissions under many circumstances. While
NIST appreciates the importance of maintaining the confidentiality of
information related to inventions for which patent protection has not
yet been sought as well as business information, NIST cannot expand
confidentiality provisions beyond those provided in the Bayh-Dole
statute and therefore has not expanded the confidentiality provisions
in this final rule.
10. Comment: Several commenters objected to the proposed change in
Sec. 401.14(a)(2) amending the definition of ``subject invention.''
These changes included a rephrasing of the definition and the
incorporation of a clarifying statement explaining that ``[a]n
invention that is conceived and reduced to practice without the use of
any federal funds is not considered a subject invention.''
Response: NIST has removed this revision from the final rule, as
the additional guidance regarding inventions conceived without the use
of any federal funds was reinstated at Sec. 401.1(a), as discussed in
Comment 3 above.
11. Comment: The NPRM revised Sec. 401.14(c)(3), creating
(c)(3)(i)-(iv). Several commenters expressed concern with the proposed
additional language in Sec. 401.14(c)(3)(ii) requiring that each
provisional application filed after a first provisional application
``contain additional written description of the subject invention not
previously disclosed in a patent application.'' Commenters pointed to
the increasingly common practice of re-filing provisional applications
since the United States moved to a first-to-file patent system, and
there was also confusion expressed as to whether prior agency approval
would be needed before the filing of additional provisional patent
applications.
Response: NIST appreciates the submitted comments and the need for
contractor flexibility in developing patent filing strategy. Therefore,
NIST has removed the requirement that additional written description of
the subject invention be included in subsequent provisional patent
filings. NIST has further revised this provision to clarify that
additional provisional
[[Page 17733]]
patent applications may be filed until the nonprovisional application
is timely filed in accordance with Sec. 401.14(c)(3)(i) and allowing
for additional extensions, if needed, granted under Sec. 401.14(c)(5).
Nothing in these regulations supersedes any deadlines or requirements
imposed by the United States Patent and Trademark Office.
12. Comment: Under Sec. 401.14(c)(3)(iv) and if required by the
funding agency, a contractor must provide information related to patent
filings, including the filing date, application number, title, a copy
of the patent application, patent number, and issue date. One commenter
requested that this section be revised to remove the discretionary
aspect, instead requiring each agency to ask for this information.
Response: NIST notes that many agencies already request this
information as a matter of course. However, NIST leaves the collection
of specific information to the discretion of funding agencies.
13. Comment: Several commenters supported the revision to Sec.
401.14(d) allowing agencies to release the contractor from the
requirement to convey title to a subject invention to the agency,
although many commenters requested that there be a timeframe in which
the agency must respond to a request for release under this provision.
Response: NIST will work with the interagency community to provide
additional guidance on the waiver process, as needed. Because each
agency concerned must adhere to different internal requirements and
processes in furtherance of their unique missions, a specific time
limit for agency response would not be advisable, and NIST declines to
impose the same in this final rule.
14. Comment: At Sec. 401.14(k), (k)(4) of the regulations was
revised and divided into the newly designated sections (k)(4) and
(k)(5). Both the previous regulations and the NPRM contained the
requirement at Sec. 401.14(k)(4) that the contractor make efforts that
are reasonable under the circumstances to attract licensees of subject
inventions that are small business firms and, when appropriate, give
preference to a small business firm when licensing a subject invention.
Part of the previous Sec. 401.14(k)(4) and the NPRM's newly designated
Sec. 401.14(k)(5) require that the contractor ``negotiate changes to
its licensing policies, procedures, or practices'' with the funding
agency if the funding agency's review of the contractor's licensing
programs and decisions discloses that the contractor could take
reasonable steps to more effectively implement the small business
consideration requirements. Several commenters requested an amendment
to the language changing ``negotiate'' to ``consider.''
Response: The language in question was not proposed for revision,
as the requirement that small business firms be given a preference in
the licensing of subject inventions is statutory, 35 U.S.C. 202.
Requiring a contractor to only ``consider'' reasonable changes to
implement this statutory requirement would be inadequate; thus, NIST
has maintained the requirement that a contractor negotiate such
reasonable changes with a funding agency in this final rule.
15. Comment: One commenter objected to the removal of Sec. 401.15,
stating that guidance on deferred determinations should be retained.
Response: The guidance on deferred determinations previously found
at Sec. 401.15 has been substantially retained in Sec. 401.9 of both
the proposed and final rule.
16. Comment: Previously entitled ``Electronic filing,'' Sec.
401.16 was revamped in the NPRM and retitled ``Federal agency reporting
requirements.'' Its requirements relate to information that must be
reported by agencies internally, within the Federal Government. Several
commenters requested the addition of language that would limit the
information being reported to only that data that is already available
within the iEdison system, as well as text that would require the
agencies to pull the information from iEdison when fulfilling their
reporting obligations so as to avoid creating an additional reporting
burden for contractors.
Response: As noted by the commenters, many of the data points for
which reporting is required under Sec. 401.16 are currently available
via iEdison, and NIST intends to incorporate the remainder in a
forthcoming update to the iEdison system to minimize the burden on
agencies in fulfilling this requirement. However, while NIST
appreciates the commenters' concerns and strongly supports the use of
iEdison by funding agencies, NIST cannot mandate or compel agency use
of iEdison, nor can NIST dictate the manner in which the agencies
collect data. Accordingly, NIST declines to make the suggested revision
in this final rule.
17. Comment: At Sec. 404.2, entitled ``Policy and objective,'' the
NPRM amended and expanded the previous text. Comments were received
objecting to the proposed revisions, observing the text's brevity as
compared to the stated objectives in 35 U.S.C. 200 and questioning its
consistency with the definition of ``practical application.''
Response: The text of 35 U.S.C. 200 remains governing law. The
revisions at Sec. 404.2 do not alter the definition of ``practical
application'' found at Sec. 401.2. The amended text does not consider
payments as achieving ``practical application''; it encourages the
Federal Government to consider how the utilization of payments under a
license agreement may encourage licensees to develop an invention in
order to advance practical application and to promote commercialization
by the licensee. NIST has slightly reworded Sec. 404.2, in order to
clarify the intent in this final rule.
18. Comment: One commenter objected to the removal of Sec. 404.4
and requested additional language specific to certain action items,
diseases, and/or products. NIST also received a comment from a federal
agency to re-insert Sec. 404.4, because the requirement to notify the
public of federally owned inventions available for license is not found
elsewhere within the regulation.
Response: The regulations are meant to apply to an invention
without regard to invention type or industry sector, and therefore,
NIST declines to add references to specific sectors, diseases, or
products. However, although much of this section is already
substantively included elsewhere, NIST agrees that the requirement to
publish federally owned inventions is not. NIST will re-insert Sec.
404.4 in its entirety keeping the language unchanged from the previous
regulations.
19. Comment: Many commenters objected to the NPRM's proposed
amendment of Sec. 404.7(a)(1). The proposed rule retained the
requirement that, prior to granting an exclusive, co-exclusive, or
partially exclusive license on a Government owned invention, the
Government must first publish a notice identifying the invention on
which the proposed license is to be granted. However, the proposed rule
removed the requirement that the identity of the prospective licensee
of a Government owned invention also be published.
Response: In order to keep the public apprised of prospective
licensees of Government owned inventions, NIST has reincorporated the
requirement that the identity of such a prospective licensee be
published alongside the invention into this final rule.
20. Comment: One commenter objected to the NPRM's proposed
rewording at Sec. 404.7(a)(3) (previously Sec. 404.7(a)(1)(iii)).
Under the previous language, before granting an exclusive, co-
exclusive, or partially exclusive license to a Government owned
[[Page 17734]]
invention, it was required that ``[t]he Federal agency ha[d] not
determined that the grant of such a license [would] tend substantially
to lessen competition or create or maintain a violation of the Federal
antitrust laws.'' In the NPRM, the requirement of non-determination was
altered into a requirement of affirmative determination, such that the
license could be granted after ``[t]he Federal agency has determined
that the grant of such a license will not tend to substantially lessen
competition or create or maintain a violation of the Federal antitrust
laws.''
Response: The proposed changes in the NPRM were meant to mirror the
wording in the corresponding statute at 35 U.S.C. 209(a)(4). While
appreciative of the alternative language recommended, NIST only made
one revision to the language proposed in the NPRM in this final rule,
which moved the word ``to'' before the word ``lessen'' in order to
mirror the exact wording at 35 U.S.C. 209(a)(4).
21. Comment: Several commenters objected to the NPRM's proposed
addition of language at Sec. 404.11(a)(3); Sec. 404.11(a) lists the
parties who may appeal certain agency decisions or determinations
relating to Government owned inventions.
Response: Under this section, certain parties may appeal an agency
decision or determination concerning the grant, denial, modification,
or termination of a license, which, under Sec. 404.5, an agency may
grant ``only if the applicant has supplied the Federal agency with a
satisfactory plan for development or marketing of the invention, or
both, and with information about the applicant's capability to fulfill
the plan.'' The added language at Sec. 404.11(a)(3) provides that a
person who files a written objection to an agency's notice of proposed
licensing also demonstrate that the proposed license would deny that
person the opportunity to commercialize the invention. If a third party
who is not denied the opportunity to commercialize the invention
opposes a proposed license, they need only find another party willing
to license the invention to appeal. Requiring less would result in an
appeal with the potential to result in no license or commercialization.
Therefore, this additional language is maintained in the final rule.
Changes From the Proposed Rule
1. Re-insert the guidance and examples in Sec. 401.1(a).
2. Remove Sec. 401.2(m)(4) from the definition of ``patent
application'' and redesignate the proposed Sec. 401.2(m)(5) as Sec.
401.2(m)(4).
3. Remove Sec. 401.2(n)(3) from the definition of ``initial patent
application,'' redesignate Sec. Sec. 401.2(n)(4) and (5) as Sec. Sec.
401.2(n)(3) and (4) and remove ``which designates the United States''
from the newly designed Sec. 401.2(n)(3).
4. Revise the first sentence of Sec. 401.6(a)(1) to add ``may
also'' and replace ``actions'' with ``alternatives''.
5. Remove the proposed addition at Sec. 401.6(e) regarding the
consideration of pricing of commercial goods and services and
redesignate the proposed Sec. 401.6(f) as Sec. 401.6(e).
6. Remove the proposed revisions to the definition of ``subject
invention'' at Sec. 401.14(a)(2).
7. Revise Sec. 401.14(c)(3) by moving the last sentence of Sec.
401.14(c)(3)(i) to Sec. 401.14(c)(3)(ii).
8. Revise Sec. 401.14(c)(3)(ii) to remove the requirement that
additional written description be included in each provisional
application filed following the initial patent application and to
clarify that additional provisional applications may be filed so long
as a nonprovisional is filed within the regulatory time frame,
including any approved extensions.
9. Remove the proposed revision to Sec. 401.14(f)(3).
10. Revise Sec. 401.16 to add ``(h) Summary of utilization
information provided by contractors,'' in accordance with the directive
in Executive Order 14036 that the Secretary of Commerce, acting through
the Director of NIST, consider such an addition to the regulations.
11. Add Sec. 401.18 to include a severability clause in this Part.
12. Revise Sec. 404.2 to clarify intent by stating that payments
received under a license agreement may be considered as ``a means for
encouraging the licensee to develop an invention in order to advance
practical application and to promote commercialization by the licensee.
13. Revise Sec. 404.1(b) to add ``and used in accordance with 15
U.S.C. 3710c(a)(1)(B),'' to reiterate that royalties collected must be
used in accordance with this statute.
14. Re-insert Sec. 404.4 in its entirety.
15. Revise Sec. 404.7(a)(1) to re-insert the phrase ``and the
prospective licensee'' to the information required in a Notice of a
prospective license.
16. Revise Sec. 404.7(a)(3) to move the word ``to'' before the
word ``lessen'' to be consistent with 35 U.S.C. 209(a)(4).
17. Add Sec. 404.15 to include a severability clause in this Part.
Executive Order 12866 and Regulatory Impact Analysis
This rulemaking is a significant regulatory action under section
3(f)(4) of 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. This rule only makes
administrative changes for ease, clarity, and transparency, and
therefore does not have economically significant effects.
Executive Order 13132
This rule does not contain policies with Federalism implications as
defined in Executive Order 13132.
Regulatory Flexibility Act
The Chief Counsel for Regulation of the Department of Commerce
certified to the Chief Counsel for Advocacy of the Small Business
Administration during the proposed rule stage that this rule would not
have a significant economic impact on a substantial number of small
entities. The factual basis for this determination was published in the
proposed rule and is not repeated here. No comments were received
regarding the certification, and NIST has not received any new
information that would affect its determination. As a result, a final
regulatory flexibility analysis was not required and none was prepared.
Paperwork Reduction Act
Notwithstanding any other provision of law, no person is required
to respond to, nor is subject to a penalty for failure to comply with,
a collection of information, subject to the requirements of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless
that collection of information displays a currently valid Office of
Management and Budget (OMB) Control Number. This rule contains a
collection of information approved by OMB under the following control
number: 0693-0090--iEdison. NIST believes any overall increases/
decreases in burdens and costs will be minimal and will fall within the
already approved amounts for the existing collection. The public may
access the current version of the collection, including all supporting
materials, at www.reginfo.gov/public/do/PRAMain.
[[Page 17735]]
National Environmental Policy Act
This 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 amends 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) Traditionally there have been no conditions imposed by the
government on research performers while using private facilities which
would preclude them from accepting research funding from other sources
to expand, to aid in completing or to conduct separate investigations
closely related to research activities sponsored by the government.
Notwithstanding the right of research organizations to accept
supplemental funding from other sources for the purpose of expediting
or more comprehensively accomplishing the research objectives of the
government sponsored project, it is clear that the ownership provisions
of these regulations would remain applicable in any invention
``conceived or first actually reduced to practice in performance'' of
the project. Separate accounting for the two funds used to support the
project in this case is not a determining factor.
(1) To the extent that a non-government sponsor established a
project which, although closely related, falls outside the planned and
committed activities of a government-funded project and does not
diminish or distract from the performance of such activities,
inventions made in performance of the non-government sponsored project
would not be subject to the conditions of these regulations. An example
of such related but separate projects would be a government sponsored
project having research objectives to expand scientific understanding
in a field and a closely related industry sponsored project having as
its objectives the application of such new knowledge to develop usable
new technology. The time relationship in conducting the two projects
and the use of new fundamental knowledge from one in the performance of
the other are not important determinants since most inventions rest on
a knowledge base built up by numerous independent research efforts
extending over many years. Should such an invention be claimed by the
performing organization to be the product of non-government sponsored
research and be challenged by the sponsoring agency as being reportable
to the government as a ``subject invention'', the challenge is
appealable as described in Sec. 401.11(d).
(2) An invention which is made outside of the research activities
of a government-funded project is not viewed as a ``subject invention''
since it cannot be shown to have been ``conceived or first actually
reduced to practice'' in performance of the project. An obvious example
of this is a situation where an instrument purchased with government
funds is later used, without interference with or cost to the
government funded project, in making an invention all expenses of which
involve only non-government funds.
(b) This part implements 35 U.S.C. 202 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.
(c) 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.
(d) 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) 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 under the Patent Cooperation
Treaty as defined in 37 CFR 1.9(b); or
(4) The first application for a Plant Variety Protection
certificate.
(o) The term statutory period means the one-year period before the
effective
[[Page 17736]]
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 the words ``Sec. 401.5(g)'' and add in their place ``Sec.
401.5(f)'' in paragraph (c)(3);
0
b. Remove the words ``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).
Sec. 401.4 [Amended]
0
5. Amend Sec. 401.4 as follows:
0
a. Remove the words ``35 U.S.C. 202(b)(4)'' and add in their place ``35
U.S.C. 202(b)(3)'' in the first sentence of paragraph (a); and
0
b. Remove the words ``United States Claims Court'' and add in their
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 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)(5) 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. Revise Sec. 401.6 to read as follows:
Sec. 401.6 Exercise of march-in rights.
(a) The following procedures shall govern the exercise of the
march-in rights of the agencies set forth in 35 U.S.C. 203 and
paragraph (j) of the clause at Sec. 401.14:
(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 may also consider possible
alternatives 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, and any other information in the
administrative record. The consistency of the exercise of march-in
rights with
[[Page 17737]]
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) 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 to read 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. Revise Sec. 401.11 to read as follows:
Sec. 401.11 Appeals.
(a) The agency official initially authorized to take any of the
following actions shall provide the contractor with a written statement
of the basis for his or her action at the time the action is taken,
including any relevant facts that were relied upon in taking the
action.
(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 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
[[Page 17738]]
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. In Sec. 401.14, amend the clause by:
0
a. Revising paragraphs (a)(7) and (8); and (c)(1) and (3);
0
b. Adding paragraph (c)(6);
0
c. Revising paragraph (d);
0
d. Removing the word ``sucessor'' and adding in its place ``successor''
in the final sentence of paragraph (e)(1);
0
e. Removing the word ``incidential'' and adding in its place
``incidental'' in paragraph (k)(3);
0
f. Revise paragraph (k)(4);
0
g. Add paragraphs (k)(5) and (6);
0
h. Add paragraph (m).
The revisions read as follows:
Sec. 401.14 Standard patent rights clauses.
* * * * *
(a) * * *
(7) 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.
(8) Contractor means any person, small business firm, or nonprofit
organization, or, as set forth in section 1, paragraph (b)(4) of
Executive Order 12591, as amended, any business firm regardless of
size, which is a party to a funding agreement.
* * * * *
(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.
(ii) If the contractor files a provisional application as its
initial patent application, it shall file a nonprovisional application
within 10 months of the filing of the provisional application. So long
as there is a pending patent application for the subject invention and
the statutory period wherein valid patent protection can be obtained in
the United States has not expired, additional provisional applications
may be filed within the initial 10 months or any extension period
granted under paragraph (c)(5) of this clause. If an extension(s) is
granted under paragraph (c)(5) of this clause, the contractor shall
file a nonprovisional patent application prior to the expiration of the
extension(s) or notify the agency of any decision not to file a
nonprovisional application prior to the expiration of the extension(s),
or if earlier, 60 days prior to the end of any statutory period wherein
valid patent protection can be obtained in the United States.
(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 nonprovisional 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.
* * * * *
(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
[[Page 17739]]
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
(1) Unless otherwise requested or directed by the Federal agency--
(i) The written disclosure required in (c)(1) of this clause shall
be electronically filed;
(ii) The written election required in (c)(2) of this clause shall
be electronically filed; and
(iii) 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.
(2) 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 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);
(g) Number of requests for assignment of invention rights; and
(h) Summary of utilization information provided by contractors.
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''.
0
16. Add Sec. 401.18 to read as follows:
Sec. 401.18 Severability.
The provisions of this part are separate and severable from one
another. If any provision is stayed or determined to be invalid, the
remaining provisions shall remain in effect.
PART 404--LICENSING OF GOVERNMENT OWNED INVENTIONS
0
17. The authority citation for 37 CFR part 404 continues to read as
follows:
Authority: 35 U.S.C. 207-209, DOO 30-2A.
0
18. 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, and used in
accordance with 15 U.S.C. 3710c(a)(1)(B), are not intended as an
alternative to appropriated funding or as an alternative funding
mechanism.
0
19. 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 encouraging the licensee to develop an invention in order to
advance practical application and promote commercialization by the
licensee.
Sec. 404.5 [Amended]
0
20. Amend Sec. 404.5 by removing the words ``Sec. 404.5(a)(2)'' from
paragraph (b)(8)(iv) and adding in their 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 and
the prospective licensee has been published and responses, if any,
reviewed in accordance with 35 U.S.C. 209(e). 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 to substantially 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
[[Page 17740]]
(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 the words ``and any sublicensee of
record''.
0
23. Amend Sec. 404.11 by revising paragraph (a) introductory text and
paragraphs (a)(3) and (b) to read as follows:
Sec. 404.11 Appeals.
(a) The following parties may appeal to the agency head or designee
of the Federal agency 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.
0
25. Add Sec. 404.15 to read as follows:
Sec. 404.15 Severability.
The provisions of this part are separate and severable from one
another. If any provision is stayed or determined to be invalid, the
remaining provisions shall remain in effect.
Alicia Chambers,
NIST Executive Secretariat.
[FR Doc. 2023-06033 Filed 3-21-23; 4:15 pm]
BILLING CODE 3510-13-P