Assistant Secretary for Technology Policy; Licensing of Government Owned Inventions, 1403-1407 [05-338]
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Federal Register / Vol. 70, No. 5 / Friday, January 7, 2005 / Proposed Rules
adopted by voluntary consensus
standards bodies.
This rule does not use technical
standards. Therefore, we did not
consider the use of voluntary consensus
standards.
Environment
We have analyzed this proposed rule
under Commandant Instruction
M16475.lD, which guides the Coast
Guard in complying with the National
Environmental Policy Act of 1969
(NEPA) (42 U.S.C. 4321–4370f), and
have concluded that there are no factors
in this case that would limit the use of
a categorical exclusion under section
2.B.2 of the Instruction. Therefore, this
rule is categorically excluded, under
figure 2–1, paragraph (34)(g), of the
Instruction, from further environmental
documentation because this rule is not
expected to result in any significant
adverse environmental impact as
described in the National
Environmental Policy Act of 1969
(NEPA).
A draft ‘‘Environmental Analysis
Check List’’ and a draft ‘‘Categorical
Exclusion Determination’’ are available
in the docket where indicated under
ADDRESSES. Comments on this section
will be considered before we make the
final decision on whether the rule
should be categorically excluded from
further environmental review.
List of Subjects in 33 CFR Part 165
Harbors, Marine safety, Navigation
(water), Reporting and recordkeeping
requirements, Security measures,
Waterways.
For the reasons discussed in the
preamble, the Coast Guard proposes to
amend 33 CFR part 165 as follows:
PART 165—REGULATED NAVIGATION
AREAS AND LIMITED ACCESS AREAS
1. The authority citation for part 165
continues to read as follows:
Authority: 33 U.S.C. 1226, 1231; 46 U.S.C.
Chapter 701; 50 U.S.C. 191, 195; 33 CFR
1.05–1(g), 6.04–1, 6.04–6, and 160.5; Pub. L.
107–295, 116 Stat. 2064; Department of
Homeland Security Delegation No. 0170.1.
2. Add § 165.835 to read as follows:
§ 165.835 Security Zone; Port of Mobile,
Mobile Ship Channel, Mobile, AL.
(a) Definition. As used in this
section—
Cruise Ship means a passenger vessel
over 100 gross tons, carrying more than
12 passengers for hire, making a voyage
lasting more than 24 hours any part of
which is on the high seas, and for which
passengers are embarked or
disembarked in the United States or its
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territories. This definition covers
passenger vessels that must comply
with 33 CFR parts 120 and 128.
(b) Location. The following areas are
security zones: all waters of the Port of
Mobile and Mobile Ship Channel?
(1) Within 100 yards of a cruise ship
that is transiting shoreward of the
Mobile Sea Buoy (located in
approximate position 28°07′50″ N,
88°04′12″ W; NAD 83), and
(2) Within 25 yards of a cruise ship
that is moored shoreward of the Mobile
Sea Buoy.
(c) Periods of enforcement. This rule
will only be enforced when a cruise
ship is transiting the Mobile Ship
Channel shoreward of the Mobile Sea
Buoy, while transiting in the Port of
Mobile, or while moored in the Port of
Mobile. The Captain of the Port Mobile
or a designated representative would
inform the public through broadcast
notice to mariners of the enforcement
periods for the security zone.
(d) Regulations. (1) Under § 165.33,
entry into a security zone is prohibited
unless authorized by the Captain of the
Port Mobile or a designated
representative.
(2) While a cruise ship is transiting on
the Mobile Ship Channel shoreward of
the Mobile Sea Buoy, and while
transiting in the Port of Mobile, all
persons and vessels are prohibited from
entering within 100 yards of a cruise
ship.
(3) While a cruise ship is moored in
the Port of Mobile, all persons and
vessels are prohibited from entering
within 25 yards of a cruise ship.
(4) Persons or vessels that desire to
enter into the security zone for the
purpose of passing or overtaking a
cruise ship that is in transit on the
Mobile Ship Channel or in the Port of
Mobile must contact the on-scene Coast
Guard representative, request
permission to conduct such action, and
receive authorization from the on-scene
Coast Guard representative prior to
initiating such action. The on-scene
Coast Guard representative may be
contacted on VHF–FM channel 16.
(5) All persons and vessels authorized
to enter into this security zone must
obey any direction or order of the
Captain of the Port or designated
representative. The Captain of the Port
Mobile may be contacted by telephone
at (251) 441–5976. The on-scene Coast
Guard representative may be contacted
on VHF–FM channel 16.
(6) All persons and vessels must
comply with the instructions of the
Captain of the Port Mobile and
designated on-scene U.S. Coast Guard
patrol personnel. On-scene Coast Guard
patrol personnel include commissioned,
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warrant, and petty officers of the U.S.
Coast Guard.
Dated: December 6, 2004.
Steven D. Hardy,
Captain, U.S. Coast Guard, Captain of the
Port Mobile.
[FR Doc. 05–379 Filed 1–6–05; 8:45 am]
BILLING CODE 4910–15–P
DEPARTMENT OF COMMERCE
37 CFR Part 404
[Docket No. 040305084–4084–01]
RIN 0692–AA19
Assistant Secretary for Technology
Policy; Licensing of Government
Owned Inventions
Assistant Secretary for
Technology Policy, Department of
Commerce (DOC).
ACTION: Notice of proposed rule making;
request for comments.
AGENCY:
SUMMARY: This proposed rule
incorporates several changes made by
the Technology Transfer
Commercialization Act of 2000 with
respect to the granting of licenses by
Federal agencies on Federally owned
inventions. It also streamlines the
licensing procedures to focus primarily
on statutory requirements.
DATES: Comments must be received no
later than February 7, 2005.
ADDRESSES: Comments on the proposed
revisions must be submitted to: Mr. John
Raubitschek, Office of the Chief Counsel
for Technology, Room 4835, HCHB,
Department of Commerce, Washington,
DC 20230.
FOR FURTHER INFORMATION CONTACT: Mr.
John Raubitschek, Patent Counsel, at
telephone: (202) 482–8010.
SUPPLEMENTARY INFORMATION: Summary
of the Proposed Amendments:
1. DOC proposes to revise the index
of sections to remove § 404.9 which
would become reserved and to modify
the title of § 404.7 to add ‘‘coexclusive.’’
2. DOC proposes to revise § 404.1 to
change the effective date of the
regulation and remove the reference to
the first licensing regulation in 1981.
Other proposed changes include the
adding of additional examples of
licenses which would not be subject to
the regulation, including exchange of
rights in settlements of patent disputes,
licenses and assignments of certain joint
inventions as authorized by 35 U.S.C.
202(e) or of inventions under
cooperative research and development
agreements (CRADAs) as authorized by
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15 U.S.C. 3710a or by a treaty, or
licenses where the agency has acquired
rights under 35 U.S.C. 207(a)(3) to
facilitate the licensing of a federally
owned invention, sometimes referred to
as ‘‘bundling inventions.’’
3. DOC proposes to revise § 404.3(a) to
remove the limitation that the invention
must be described in a patent or
application to be licensable in view of
the change to 35 U.S.C. 207 made by
Public Law 106–404. The only
requirement would be that the invention
is or may be patentable or protectable
subject matter although it may be
covered by a patent or patent
application. Since ‘‘invention’’ is
defined in 35 U.S.C. 201(d), this is
included in subparagraph (a) with the
additional reference to foreign patent
law. Under this authority, agencies may
now license computer software and
biological materials as inventions
without filing a patent application
because they are patentable subject
matter. In addition, the phrase ‘‘in
whole or in part’’ is added to make it
clear that an agency can license its
undivided interest in a joint invention.
4. DOC proposes to revise § 404.4 to
require each agency to notify the public
of its inventions which are available for
licensing. Such notification was
encouraged by the House Committee on
Science in H.R. Report 106–129, Part I,
106th Cong., 1st sess. Previously, notice
was required only if the agency was
going to exclusively license the
invention. See § 404.7(a)(1). However,
the form of notification is left to the
discretion of the agency, which is
strongly encouraged to use the internet
or other electronic means to notify the
public. Also, DOC proposes to move the
substance of §§ 404.5(b)(2), (7) and (11)
to this section.
5. DOC proposes to add a sentence in
§ 404.5(a)(1) to permit an abbreviated
development plan for a non-exclusive
research license because 35 U.S.C.
209(a) requires that all applicants for a
license submit a plan even though the
applicant may have no present intent to
commercialize the invention. Such a
license would be appropriate for a party
working with an agency under a CRADA
on the agency’s pre-existing
invention(s), which may now be
included in the CRADA under Public
Law 106–404 if a patent application was
filed prior to the CRADA.
6. DOC proposes to add a sentence to
§ 404.5(a)(2) to provide guidance for an
agency to waive or modify the domestic
manufacturing requirement. This
proposal is based substantially on 35
U.S.C. 204, which applies to inventions
made by nonprofit organizations and
small business firms with federal funds.
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7. As mentioned in paragraph no. 4,
DOC proposes to move §§ 404.5(b)(2),
(7) and (11) to § 404.4, which is more
directed to policy. This will result in a
renumbering of § 404.5. A new
§ 404.5(b)(2) is being added to permit
any licensee to enforce a licensed
patent. As noted in Nutrition 21 v. U.S.,
930 F.2d 867, 871, 18 USPQ2d (BNA)
1351, 1354, n.7 (Fed. Cir. 1991), the
authority for enforcement in 35 U.S.C.
207(b)(1) is not limited to exclusive
licensees. Editorial changes are
proposed to § 404.5(b)(4) as well as
adding a requirement that copies of
sublicenses and modifications be
promptly provided to the agencies.
§ § 404.5(b)(5) and (b)(6) are being
slightly modified to adopt the language
from Public Law 106–404.
8. DOC proposes to modify
§ 404.5(b)(9), now renumbered as
404.5(b)(8), to include the language of
Public Law 106–404, which specifically
mentions terminating for a breach of the
domestic manufacturing requirement in
§ 404.5(a)(2) and the new requirement in
§ 404.5(b)(8)(v) that a license be
terminated if a court determines that it
violates the antitrust laws.
9. DOC proposes to remove the
exclusion in § 404.6(a) for publishing
the availability of an invention for
licensing, which is subsequently
licensed non-exclusively. This is not
necessary in view of the proposed
change described in paragraph no. 4 that
the public will be notified of all
inventions which are available for
licensing. In addition, the suggestion in
§ 404.6(b) that after expiration of a
specific time period, the field of use be
limited to where the licensee has
commercialized the invention is being
deleted because it implies that nonexclusive licenses should contain such
a clause. In fact, few agencies use such
a clause because most nonexclusive
licenses are for the full term of the
patent. However, an agency may still
use such a clause if it so chooses.
10. DOC proposes to add co-exclusive
licenses to § 404.7 to specifically
recognize that an agency may grant an
exclusive license to more than one
company to better achieve
commercialization or to resolve disputes
with competing license applications.
11. DOC proposes to remove the
requirement in § 404.7(a)(1) to publish
in the Federal Register a notice of
availability of an invention for licensing
prior to granting an exclusive license on
that invention. However, agencies will
be required to make the public aware of
their inventions through use of the
Internet or other electronic means in
accordance with the revised § 404.4.
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12. DOC proposes to delete
§ 404.7(a)(1)(ii)(B) because the new law
does not contain a preference for
nonexclusive licenses.
§ 404.7(a)(1)(ii)(C) would be renumbered
as (B) and contain the slightly different
language from the new law for the
justification for an exclusive license.
Similarly, the justification in
§ 404.7(a)(1)(ii)(A) is being slightly
revised in view of the language in the
new law. The antitrust consideration in
§§ 404.7(a)(1)(iii) and (b)(1)(iii) is being
revised in view of the new law although
a positive determination by the agency
is not required. Similarly, the small
business preference in § 404.7(a)(1)(iv)
is being revised slightly because of the
new law.
13. DOC proposes to change the
semicolon to a colon at the end of
§ 407(a)(2) and delete §§ 404.7(a)(2)(iv)
and (b)(2)(iii) in view of the new
§ 404.5(b)(2), which permits all
licensees to have the right to enforce
licensed patents.
14. DOC proposes to delete § 404.9
since review by the Attorney General of
an exclusive license notice is not
required by statute. It is noted that the
license may be terminated if there is a
violation of the antitrust law. See
proposed 404.5(b)(8)(v).
15. DOC proposes to delete the second
reference to a sublicensee in § 404.10
because there is no need to give a
sublicensee the right to be involved in
the modification or termination of a
license to which it is not a party.
However, many agencies allow a
sublicensee to become a direct licensee
if the license is terminated.
16. DOC proposes to modify the
appeal rights in § 404.11 to remove a
dispute over the interpretation of a
license from being appealable except as
it may relate to the termination of a
license, which is appealable. DOC also
proposes adding a right for a hearing
when a license has been modified or
terminated if there is a dispute over any
relevant fact. Alternate Dispute
Resolution is now being authorized
instead of an appeal, if the parties agree.
17. DOC proposes to corrects the
misspelling of ‘‘owned’’ in § 404.12.
18. DOC proposes to make the FOIA
exemption in § 404.14 mandatory in
accordance with the new law.
Classification
Executive Order 12866
This rule has been determined not to
be significant for purposes of E.O.
12866.
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Executive Order 13132
This rule does not contain policies
with Federalism implications as that
term is defined in E.O. 13132.
Administrative Procedure Act
This rule involves rules of agency
practice and procedure under 5 U.S.C.
553(b)(A) and prior notice and an
opportunity for public comment are,
therefore, not required by the
Administrative Procedure Act, or any
other statute or regulation, for this rule.
Because a notice of proposed
rulemaking and an opportunity for
public comment are not required to be
given for this rule pursuant to 5 U.S.C.
553(b)(A), or by any other law, this rule
is not subject to the analytical
requirements of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.).
Paperwork Reduction Act
The proposed rule does not impose
any new collection of information
requirements under the Paperwork
Reduction Act (PRA) (44 U.S.C. 3501 et
seq.). However, OMB approval for the
application for a license in 404.8 and
the utilization reports in 404.5(a)(6)
(number 0692–0006) expired on June
30, 2003, we are resubmitting the
package to OMB. The time to complete
the license application is estimated to
be 2 hours and the utilization report 1
hour. These estimated response times
include the time for completing and
reviewing the collections of
information.
Comments are invited on (a) whether
the collections of information are
necessary for the functions of the
agencies; (b) the accuracy of the
estimates on the time to complete and
review the collected information; (c)
ways to enhance the quality, utility and
clarity of the information to be
collected; and (d) ways to minimize the
burden on respondents to collect the
information.
Notwithstanding any other provision
of law, no person is required to respond
to, nor shall any person be subject to a
penalty for failure to comply with, a
collection of information subject to the
requirements of the PRA, unless that
collection of information displays a
currently valid OMB control number.
List of Subjects in 37 CFR Part 404
Inventions, Patents, Licenses.
14:41 Jan 06, 2005
For the reasons set forth in the
preamble, 37 CFR Part 404 is proposed
to be amended as follows:
PART 404—LICENSING OF
GOVERNMENT OWNED INVENTIONS
1. The authority citation for Part 404
is revised to read as follows:
Authority: 35 U.S.C. 207–209.
2. Section 404.1 is revised to read as
follows:
Regulatory Flexibility Act
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Dated: January 4, 2005.
Benjamin H. Wu,
Assistant Secretary of Commerce for
Technology Policy.
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§ 404.1
Scope of part.
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:
(a) Were in effect prior to [INSERT
FINAL RULE EFFECTIVE DATE];
(b) 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;
(c) Are the result of an authorized
exchange of rights in the settlement of
patent disputes, including interferences;
or
(d) 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).
3. In § 404.3, paragraph (a) is revised
to read as follows:
§ 404.3
Definitions.
(a) Federally owned invention means
an invention, whether or not covered by
a patent or patent application, or
discovery which is or may be patentable
or otherwise protectable under title 35,
the Plant Variety Protection Act (7
U.S.C. 2321 et seq.) or foreign patent
law, owned in whole or in part by the
United States Government.
*
*
*
*
*
4. Section 404.4 is revised to read as
follows:
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§ 404.4
1405
Authority to grant licenses.
Federally owned inventions shall be
made available for licensing as deemed
appropriate in the public interest and
each agency shall notify the public of
these inventions. The agencies having
custody of these inventions may grant
nonexclusive, co-exclusive, partially
exclusive, or exclusive licenses thereto
under this part. Licenses may be
royalty-free or for royalties or other
consideration. They may be for all or
less than all fields of use or in specified
geographic areas and may include a
release for past infringement. Any
license shall not confer on any person
immunity from the antitrust laws or
from a charge of patent misuse, and the
exercise of such rights pursuant to this
part shall not be immunized from the
operation of state or federal law by
reason of the source of the grant.
5. In Section 404.5, paragraph (a),
paragraph (b)(2) and paragraphs (b)(4)
through (b)(9) are revised to read as
follows:
§ 404.5 Restrictions and conditions on all
licenses granted under this part.
(a)(1) A license may be granted 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 plan for a non-exclusive
research license may be limited to
describing the research phase of
development.
(2) A license granting rights to use or
sell under a federally owned invention
in the United States shall normally be
granted only to a license who agrees that
any products embodying the invention
or produced through the use of the
invention will be manufactured
substantially in the United States.
However, this condition may be waived
or modified if reasonable but
unsuccessful efforts have been made to
grant licenses to potential licensees that
would be likely to manufacture
substantially in the United States or if
domestic manufacture is not
commercially feasible.
(b) * * *
(1) * * *
(2) Any patent license may grant the
licensee the right of enforcement of the
licensed patent without joining the
Federal agency as a party as determined
appropriate in the public interest.
(3) * * *
(4) The license may provide the
licensee the right to grant sublicenses
under the license, subject to the
approval of the Federal agency. Each
sublicense shall make reference to the
license, including the rights retained by
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the Government, and a copy of such
sublicense with any modifications
thereto, shall be promptly furnished to
the Federal agency.
(5) The license shall require the
licensee to carry out the plan for
development or marketing of the
invention, or both, to bring the
invention to practical application
within a reasonable time as specified in
the license, and continue to make the
benefits of the invention reasonably
accessible to the public.
(6) The license shall require the
licensee to report periodically on the
utilization or efforts at obtaining
utilization that are being made by the
licensee, with particular reference to the
plan submitted but only to the extent
necessary to enable the agency to
determine compliance with the terms of
the license.
(7) Where an agreement is obtained
pursuant to § 404.5(a)(2) that any
products embodying the invention or
produced through the use of the
invention will be manufactured
substantially in the United States, the
license shall recite such an agreement.
(8) The license shall provide for the
right of the Federal agency to terminate
the license, in whole or in part, if the
agency determines that:
(i) The licensee is not executing its
commitment to achieve practical
application of the invention, including
commitments contained in any plan
submitted in support of its request for
a license and the licensee cannot
otherwise demonstrate to the
satisfaction of the Federal agency that it
has taken, or can be expected to take
within a reasonable time, effective steps
to achieve practical application of the
invention;
(ii) Termination is necessary to meet
requirements for public use specified by
Federal regulations issued after the date
of the license and such requirements are
not reasonably satisfied by the licensee;
(iii) The licensee has willfully made
a false statement of or willfully omitted
a material fact in the license application
or in any report required by the license
agreement;
(iv) The licensee commits a
substantial breach of a covenant or
provision contained in the license
agreement, including the requirement in
§ 404.5(a)(2); or
(v) The licensee has been found by a
court of competent jurisdiction to have
violated the Federal antitrust laws in
connection with its performance under
the license agreement.
(9) The license may be modified or
terminated, consistent with this part,
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upon mutual agreement of the Federal
agency and the licensee.
*
*
*
*
*
6. Section 404.6 is revised to read as
follows:
§ 404.6
Nonexclusive licenses.
Nonexclusive licenses may be granted
under federally owned inventions
without a public notice of a prospective
license.
7. Section 404.7 is revised to read as
follows:
§ 404.7 Exclusive, co-exclusive and
partially exclusive licenses.
(a)(1) Exclusive, co-exclusive or
partially exclusive domestic licenses
may be granted on federally owned
inventions, only if;
(i) Notice of a prospective license,
identifying the invention and the
prospective licensee, has been
published in the Federal Register,
providing opportunity for filing written
objections within at least a 15-day
period;
(ii) After expiration of the period in
§ 404.7(a)(1)(i) and consideration of any
written objections received during the
period, the Federal agency has
determined that;
(A) The public will be served by the
granting of the license, in view of 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.
(B) 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; and
(C) 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;
(iii) The Federal agency has not
determined that the grant of such a
license will tend substantially to lessen
competition or create or maintain a
violation of the Federal antitrust laws;
and
(iv) 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.
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(2) In addition to the provisions of
§ 404.5, the following terms and
conditions apply to domestic exclusive,
co-exclusive and partially exclusive
licenses:
(i) 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.
(ii) 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.
(iii) 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.
(b)(1) Exclusive, co-exclusive or
partially exclusive foreign licenses may
be granted on a federally owned
invention provided that;
(i) Notice of the prospective license,
identifying the invention and
prospective licensee, has been
published in the Federal Register,
providing opportunity for filing written
objections within at least a 15-day
period and following consideration of
such objections received during the
period;
(ii) The agency has considered
whether the interests of the Federal
Government or United States industry
in foreign commerce will be enhanced;
and
(iii) The Federal agency has not
determined that the grant of such a
license will tend substantially to lessen
competition or create or maintain a
violation of the Federal antitrust laws.
(2) In addition to the provisions of
§ 404.5, the following terms and
conditions apply to foreign exclusive,
co-exclusive and partially exclusive
licenses:
(i) The license shall be subject to the
irrevocable, royalty-free right of the
Government of the United States to
practice and 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.
(ii) 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.
(iii) The license may grant the
licensee the right to take any suitable
and necessary actions to protect the
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Federal Register / Vol. 70, No. 5 / Friday, January 7, 2005 / Proposed Rules
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.
§ 404.9
[Removed and reserved]
8. Section 404.9 is removed and
reserved:
9. Section 404.10 is revised to read as
follows:
§ 404.10 Modification and termination of
licenses.
Before modifying or terminating a
license, other than by mutual
agreement, the Federal agency shall
furnish the licensee and any sublicensee
of record a written notice of intention to
modify or terminate the license, and the
licensee shall be allowed 30 days after
such notice to remedy any breach of the
license or show cause why the license
shall not be modified or terminated.
10. Section 404.11 is revised to read
as follows:
VerDate jul<14>2003
14:41 Jan 06, 2005
Jkt 205001
§ 404.11
Appeals.
(a) In accordance with procedures
prescribed by the Federal agency, the
following parties may appeal to the
agency head or designee any decision or
determination concerning the grant,
denial, modification, or termination of a
license:
(1) A person whose application for a
license has been denied;
(2) A licensee whose license has been
modified or terminated, in whole or in
part; or
(3) A person who timely filed a
written objection in response to the
notice required by § 404.7(a)(1)(i) or
§ 404.7(b)(1)(i) and who can
demonstrate to the satisfaction of the
Federal agency that such person may be
damaged by the agency action.
(b) An appeal by a licensee under
paragraph (a)(2) of this section may
include a hearing, upon the request of
the licensee, to address a dispute over
any relevant fact. The parties may agree
to Alternate Dispute Resolution in lieu
of an appeal.
PO 00000
Frm 00025
Fmt 4702
Sfmt 4702
1407
11. Section 404.12 is revised to read
as follows:
§ 404.12 Protection and administration of
inventions.
A Federal agency may take any
suitable and necessary steps to protect
and administer rights to federally
owned inventions, either directly or
through contract.
12. Section 404.14 is revised to read
as follows:
§ 404.14
Confidentiality of information.
Title 35, United States Code, section
209, requires that any plan submitted
pursuant to § 404.8(h) and any report
required by § 404.5(b)(6) shall be treated
as commercial or financial information
obtained from a person and privileged
and confidential and not subject to
disclosure under section 552 of title 5 of
the United States Code.
[FR Doc. 05–338 Filed 1–6–05; 8:45 am]
BILLING CODE 3510–18–P
E:\FR\FM\07JAP1.SGM
07JAP1
Agencies
[Federal Register Volume 70, Number 5 (Friday, January 7, 2005)]
[Proposed Rules]
[Pages 1403-1407]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-338]
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DEPARTMENT OF COMMERCE
37 CFR Part 404
[Docket No. 040305084-4084-01]
RIN 0692-AA19
Assistant Secretary for Technology Policy; Licensing of
Government Owned Inventions
AGENCY: Assistant Secretary for Technology Policy, Department of
Commerce (DOC).
ACTION: Notice of proposed rule making; request for comments.
-----------------------------------------------------------------------
SUMMARY: This proposed rule incorporates several changes made by the
Technology Transfer Commercialization Act of 2000 with respect to the
granting of licenses by Federal agencies on Federally owned inventions.
It also streamlines the licensing procedures to focus primarily on
statutory requirements.
DATES: Comments must be received no later than February 7, 2005.
ADDRESSES: Comments on the proposed revisions must be submitted to: Mr.
John Raubitschek, Office of the Chief Counsel for Technology, Room
4835, HCHB, Department of Commerce, Washington, DC 20230.
FOR FURTHER INFORMATION CONTACT: Mr. John Raubitschek, Patent Counsel,
at telephone: (202) 482-8010.
SUPPLEMENTARY INFORMATION: Summary of the Proposed Amendments:
1. DOC proposes to revise the index of sections to remove Sec.
404.9 which would become reserved and to modify the title of Sec.
404.7 to add ``co-exclusive.''
2. DOC proposes to revise Sec. 404.1 to change the effective date
of the regulation and remove the reference to the first licensing
regulation in 1981. Other proposed changes include the adding of
additional examples of licenses which would not be subject to the
regulation, including exchange of rights in settlements of patent
disputes, licenses and assignments of certain joint inventions as
authorized by 35 U.S.C. 202(e) or of inventions under cooperative
research and development agreements (CRADAs) as authorized by
[[Page 1404]]
15 U.S.C. 3710a or by a treaty, or licenses where the agency has
acquired rights under 35 U.S.C. 207(a)(3) to facilitate the licensing
of a federally owned invention, sometimes referred to as ``bundling
inventions.''
3. DOC proposes to revise Sec. 404.3(a) to remove the limitation
that the invention must be described in a patent or application to be
licensable in view of the change to 35 U.S.C. 207 made by Public Law
106-404. The only requirement would be that the invention is or may be
patentable or protectable subject matter although it may be covered by
a patent or patent application. Since ``invention'' is defined in 35
U.S.C. 201(d), this is included in subparagraph (a) with the additional
reference to foreign patent law. Under this authority, agencies may now
license computer software and biological materials as inventions
without filing a patent application because they are patentable subject
matter. In addition, the phrase ``in whole or in part'' is added to
make it clear that an agency can license its undivided interest in a
joint invention.
4. DOC proposes to revise Sec. 404.4 to require each agency to
notify the public of its inventions which are available for licensing.
Such notification was encouraged by the House Committee on Science in
H.R. Report 106-129, Part I, 106th Cong., 1st sess. Previously, notice
was required only if the agency was going to exclusively license the
invention. See Sec. 404.7(a)(1). However, the form of notification is
left to the discretion of the agency, which is strongly encouraged to
use the internet or other electronic means to notify the public. Also,
DOC proposes to move the substance of Sec. Sec. 404.5(b)(2), (7) and
(11) to this section.
5. DOC proposes to add a sentence in Sec. 404.5(a)(1) to permit an
abbreviated development plan for a non-exclusive research license
because 35 U.S.C. 209(a) requires that all applicants for a license
submit a plan even though the applicant may have no present intent to
commercialize the invention. Such a license would be appropriate for a
party working with an agency under a CRADA on the agency's pre-existing
invention(s), which may now be included in the CRADA under Public Law
106-404 if a patent application was filed prior to the CRADA.
6. DOC proposes to add a sentence to Sec. 404.5(a)(2) to provide
guidance for an agency to waive or modify the domestic manufacturing
requirement. This proposal is based substantially on 35 U.S.C. 204,
which applies to inventions made by nonprofit organizations and small
business firms with federal funds.
7. As mentioned in paragraph no. 4, DOC proposes to move Sec. Sec.
404.5(b)(2), (7) and (11) to Sec. 404.4, which is more directed to
policy. This will result in a renumbering of Sec. 404.5. A new Sec.
404.5(b)(2) is being added to permit any licensee to enforce a licensed
patent. As noted in Nutrition 21 v. U.S., 930 F.2d 867, 871, 18 USPQ2d
(BNA) 1351, 1354, n.7 (Fed. Cir. 1991), the authority for enforcement
in 35 U.S.C. 207(b)(1) is not limited to exclusive licensees. Editorial
changes are proposed to Sec. 404.5(b)(4) as well as adding a
requirement that copies of sublicenses and modifications be promptly
provided to the agencies. Sec. Sec. 404.5(b)(5) and (b)(6) are being
slightly modified to adopt the language from Public Law 106-404.
8. DOC proposes to modify Sec. 404.5(b)(9), now renumbered as
404.5(b)(8), to include the language of Public Law 106-404, which
specifically mentions terminating for a breach of the domestic
manufacturing requirement in Sec. 404.5(a)(2) and the new requirement
in Sec. 404.5(b)(8)(v) that a license be terminated if a court
determines that it violates the antitrust laws.
9. DOC proposes to remove the exclusion in Sec. 404.6(a) for
publishing the availability of an invention for licensing, which is
subsequently licensed non-exclusively. This is not necessary in view of
the proposed change described in paragraph no. 4 that the public will
be notified of all inventions which are available for licensing. In
addition, the suggestion in Sec. 404.6(b) that after expiration of a
specific time period, the field of use be limited to where the licensee
has commercialized the invention is being deleted because it implies
that non-exclusive licenses should contain such a clause. In fact, few
agencies use such a clause because most nonexclusive licenses are for
the full term of the patent. However, an agency may still use such a
clause if it so chooses.
10. DOC proposes to add co-exclusive licenses to Sec. 404.7 to
specifically recognize that an agency may grant an exclusive license to
more than one company to better achieve commercialization or to resolve
disputes with competing license applications.
11. DOC proposes to remove the requirement in Sec. 404.7(a)(1) to
publish in the Federal Register a notice of availability of an
invention for licensing prior to granting an exclusive license on that
invention. However, agencies will be required to make the public aware
of their inventions through use of the Internet or other electronic
means in accordance with the revised Sec. 404.4.
12. DOC proposes to delete Sec. 404.7(a)(1)(ii)(B) because the new
law does not contain a preference for nonexclusive licenses. Sec.
404.7(a)(1)(ii)(C) would be renumbered as (B) and contain the slightly
different language from the new law for the justification for an
exclusive license. Similarly, the justification in Sec.
404.7(a)(1)(ii)(A) is being slightly revised in view of the language in
the new law. The antitrust consideration in Sec. Sec. 404.7(a)(1)(iii)
and (b)(1)(iii) is being revised in view of the new law although a
positive determination by the agency is not required. Similarly, the
small business preference in Sec. 404.7(a)(1)(iv) is being revised
slightly because of the new law.
13. DOC proposes to change the semicolon to a colon at the end of
Sec. 407(a)(2) and delete Sec. Sec. 404.7(a)(2)(iv) and (b)(2)(iii)
in view of the new Sec. 404.5(b)(2), which permits all licensees to
have the right to enforce licensed patents.
14. DOC proposes to delete Sec. 404.9 since review by the Attorney
General of an exclusive license notice is not required by statute. It
is noted that the license may be terminated if there is a violation of
the antitrust law. See proposed 404.5(b)(8)(v).
15. DOC proposes to delete the second reference to a sublicensee in
Sec. 404.10 because there is no need to give a sublicensee the right
to be involved in the modification or termination of a license to which
it is not a party. However, many agencies allow a sublicensee to become
a direct licensee if the license is terminated.
16. DOC proposes to modify the appeal rights in Sec. 404.11 to
remove a dispute over the interpretation of a license from being
appealable except as it may relate to the termination of a license,
which is appealable. DOC also proposes adding a right for a hearing
when a license has been modified or terminated if there is a dispute
over any relevant fact. Alternate Dispute Resolution is now being
authorized instead of an appeal, if the parties agree.
17. DOC proposes to corrects the misspelling of ``owned'' in Sec.
404.12.
18. DOC proposes to make the FOIA exemption in Sec. 404.14
mandatory in accordance with the new law.
Classification
Executive Order 12866
This rule has been determined not to be significant for purposes of
E.O. 12866.
[[Page 1405]]
Executive Order 13132
This rule does not contain policies with Federalism implications as
that term is defined in E.O. 13132.
Administrative Procedure Act
This rule involves rules of agency practice and procedure under 5
U.S.C. 553(b)(A) and prior notice and an opportunity for public comment
are, therefore, not required by the Administrative Procedure Act, or
any other statute or regulation, for this rule.
Regulatory Flexibility Act
Because a notice of proposed rulemaking and an opportunity for
public comment are not required to be given for this rule pursuant to 5
U.S.C. 553(b)(A), or by any other law, this rule is not subject to the
analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601
et seq.).
Paperwork Reduction Act
The proposed rule does not impose any new collection of information
requirements under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et
seq.). However, OMB approval for the application for a license in 404.8
and the utilization reports in 404.5(a)(6) (number 0692-0006) expired
on June 30, 2003, we are resubmitting the package to OMB. The time to
complete the license application is estimated to be 2 hours and the
utilization report 1 hour. These estimated response times include the
time for completing and reviewing the collections of information.
Comments are invited on (a) whether the collections of information
are necessary for the functions of the agencies; (b) the accuracy of
the estimates on the time to complete and review the collected
information; (c) ways to enhance the quality, utility and clarity of
the information to be collected; and (d) ways to minimize the burden on
respondents to collect the information.
Notwithstanding any other provision of law, no person is required
to respond to, nor shall any person be subject to a penalty for failure
to comply with, a collection of information subject to the requirements
of the PRA, unless that collection of information displays a currently
valid OMB control number.
List of Subjects in 37 CFR Part 404
Inventions, Patents, Licenses.
Dated: January 4, 2005.
Benjamin H. Wu,
Assistant Secretary of Commerce for Technology Policy.
For the reasons set forth in the preamble, 37 CFR Part 404 is
proposed to be amended as follows:
PART 404--LICENSING OF GOVERNMENT OWNED INVENTIONS
1. The authority citation for Part 404 is revised to read as
follows:
Authority: 35 U.S.C. 207-209.
2. Section 404.1 is revised to read as follows:
Sec. 404.1 Scope of part.
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:
(a) Were in effect prior to [INSERT FINAL RULE EFFECTIVE DATE];
(b) 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;
(c) Are the result of an authorized exchange of rights in the
settlement of patent disputes, including interferences; or
(d) 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).
3. In Sec. 404.3, paragraph (a) is revised to read as follows:
Sec. 404.3 Definitions.
(a) Federally owned invention means an invention, whether or not
covered by a patent or patent application, or discovery which is or may
be patentable or otherwise protectable under title 35, the Plant
Variety Protection Act (7 U.S.C. 2321 et seq.) or foreign patent law,
owned in whole or in part by the United States Government.
* * * * *
4. Section 404.4 is revised to read as follows:
Sec. 404.4 Authority to grant licenses.
Federally owned inventions shall be made available for licensing as
deemed appropriate in the public interest and each agency shall notify
the public of these inventions. The agencies having custody of these
inventions may grant nonexclusive, co-exclusive, partially exclusive,
or exclusive licenses thereto under this part. Licenses may be royalty-
free or for royalties or other consideration. They may be for all or
less than all fields of use or in specified geographic areas and may
include a release for past infringement. Any license shall not confer
on any person immunity from the antitrust laws or from a charge of
patent misuse, and the exercise of such rights pursuant to this part
shall not be immunized from the operation of state or federal law by
reason of the source of the grant.
5. In Section 404.5, paragraph (a), paragraph (b)(2) and paragraphs
(b)(4) through (b)(9) are revised to read as follows:
Sec. 404.5 Restrictions and conditions on all licenses granted under
this part.
(a)(1) A license may be granted 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 plan for a non-
exclusive research license may be limited to describing the research
phase of development.
(2) A license granting rights to use or sell under a federally
owned invention in the United States shall normally be granted only to
a license who agrees that any products embodying the invention or
produced through the use of the invention will be manufactured
substantially in the United States. However, this condition may be
waived or modified if reasonable but unsuccessful efforts have been
made to grant licenses to potential licensees that would be likely to
manufacture substantially in the United States or if domestic
manufacture is not commercially feasible.
(b) * * *
(1) * * *
(2) Any patent license may grant the licensee the right of
enforcement of the licensed patent without joining the Federal agency
as a party as determined appropriate in the public interest.
(3) * * *
(4) The license may provide the licensee the right to grant
sublicenses under the license, subject to the approval of the Federal
agency. Each
[[Page 1406]]
sublicense shall make reference to the license, including the rights
retained by the Government, and a copy of such sublicense with any
modifications thereto, shall be promptly furnished to the Federal
agency.
(5) The license shall require the licensee to carry out the plan
for development or marketing of the invention, or both, to bring the
invention to practical application within a reasonable time as
specified in the license, and continue to make the benefits of the
invention reasonably accessible to the public.
(6) The license shall require the licensee to report periodically
on the utilization or efforts at obtaining utilization that are being
made by the licensee, with particular reference to the plan submitted
but only to the extent necessary to enable the agency to determine
compliance with the terms of the license.
(7) Where an agreement is obtained pursuant to Sec. 404.5(a)(2)
that any products embodying the invention or produced through the use
of the invention will be manufactured substantially in the United
States, the license shall recite such an agreement.
(8) The license shall provide for the right of the Federal agency
to terminate the license, in whole or in part, if the agency determines
that:
(i) The licensee is not executing its commitment to achieve
practical application of the invention, including commitments contained
in any plan submitted in support of its request for a license and the
licensee cannot otherwise demonstrate to the satisfaction of the
Federal agency that it has taken, or can be expected to take within a
reasonable time, effective steps to achieve practical application of
the invention;
(ii) Termination is necessary to meet requirements for public use
specified by Federal regulations issued after the date of the license
and such requirements are not reasonably satisfied by the licensee;
(iii) The licensee has willfully made a false statement of or
willfully omitted a material fact in the license application or in any
report required by the license agreement;
(iv) The licensee commits a substantial breach of a covenant or
provision contained in the license agreement, including the requirement
in Sec. 404.5(a)(2); or
(v) The licensee has been found by a court of competent
jurisdiction to have violated the Federal antitrust laws in connection
with its performance under the license agreement.
(9) The license may be modified or terminated, consistent with this
part, upon mutual agreement of the Federal agency and the licensee.
* * * * *
6. Section 404.6 is revised to read as follows:
Sec. 404.6 Nonexclusive licenses.
Nonexclusive licenses may be granted under federally owned
inventions without a public notice of a prospective license.
7. Section 404.7 is revised to read as follows:
Sec. 404.7 Exclusive, co-exclusive and partially exclusive licenses.
(a)(1) Exclusive, co-exclusive or partially exclusive domestic
licenses may be granted on federally owned inventions, only if;
(i) Notice of a prospective license, identifying the invention and
the prospective licensee, has been published in the Federal Register,
providing opportunity for filing written objections within at least a
15-day period;
(ii) After expiration of the period in Sec. 404.7(a)(1)(i) and
consideration of any written objections received during the period, the
Federal agency has determined that;
(A) The public will be served by the granting of the license, in
view of 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.
(B) 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; and
(C) 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;
(iii) The Federal agency has not determined that the grant of such
a license will tend substantially to lessen competition or create or
maintain a violation of the Federal antitrust laws; and
(iv) 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.
(2) In addition to the provisions of Sec. 404.5, the following
terms and conditions apply to domestic exclusive, co-exclusive and
partially exclusive licenses:
(i) 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.
(ii) 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.
(iii) 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.
(b)(1) Exclusive, co-exclusive or partially exclusive foreign
licenses may be granted on a federally owned invention provided that;
(i) Notice of the prospective license, identifying the invention
and prospective licensee, has been published in the Federal Register,
providing opportunity for filing written objections within at least a
15-day period and following consideration of such objections received
during the period;
(ii) The agency has considered whether the interests of the Federal
Government or United States industry in foreign commerce will be
enhanced; and
(iii) The Federal agency has not determined that the grant of such
a license will tend substantially to lessen competition or create or
maintain a violation of the Federal antitrust laws.
(2) In addition to the provisions of Sec. 404.5, the following
terms and conditions apply to foreign exclusive, co-exclusive and
partially exclusive licenses:
(i) The license shall be subject to the irrevocable, royalty-free
right of the Government of the United States to practice and 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.
(ii) 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.
(iii) The license may grant the licensee the right to take any
suitable and necessary actions to protect the
[[Page 1407]]
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. 404.9 [Removed and reserved]
8. Section 404.9 is removed and reserved:
9. Section 404.10 is revised to read as follows:
Sec. 404.10 Modification and termination of licenses.
Before modifying or terminating a license, other than by mutual
agreement, the Federal agency shall furnish the licensee and any
sublicensee of record a written notice of intention to modify or
terminate the license, and the licensee shall be allowed 30 days after
such notice to remedy any breach of the license or show cause why the
license shall not be modified or terminated.
10. Section 404.11 is revised to read as follows:
Sec. 404.11 Appeals.
(a) In accordance with procedures prescribed by the Federal agency,
the following parties may appeal to the agency head or designee any
decision or determination concerning the grant, denial, modification,
or termination of a license:
(1) A person whose application for a license has been denied;
(2) A licensee whose license has been modified or terminated, in
whole or in part; or
(3) A person who timely filed a written objection in response to
the notice required by Sec. 404.7(a)(1)(i) or Sec. 404.7(b)(1)(i) and
who can demonstrate to the satisfaction of the Federal agency that such
person may be damaged by the agency action.
(b) An appeal by a licensee under paragraph (a)(2) of this section
may include a hearing, upon the request of the licensee, to address a
dispute over any relevant fact. The parties may agree to Alternate
Dispute Resolution in lieu of an appeal.
11. Section 404.12 is revised to read as follows:
Sec. 404.12 Protection and administration of inventions.
A Federal agency may take any suitable and necessary steps to
protect and administer rights to federally owned inventions, either
directly or through contract.
12. Section 404.14 is revised to read as follows:
Sec. 404.14 Confidentiality of information.
Title 35, United States Code, section 209, requires that any plan
submitted pursuant to Sec. 404.8(h) and any report required by Sec.
404.5(b)(6) shall be treated as commercial or financial information
obtained from a person and privileged and confidential and not subject
to disclosure under section 552 of title 5 of the United States Code.
[FR Doc. 05-338 Filed 1-6-05; 8:45 am]
BILLING CODE 3510-18-P