Federal Acquisition Regulation; FAR Case 1999-402, FAR Part 27 Rewrite in Plain Language, 63045-63075 [07-5475]

Agencies

• General Services Administration
• National Aeronautics and Space Administration
• DEPARTMENT OF DEFENSE

[Federal Register Volume 72, Number 215 (Wednesday, November 7, 2007)]
[Rules and Regulations]
[Pages 63045-63075]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-5475]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 3, 12, 15, 18, 19, 27, 33, and 52

[FAC 2005-21; FAR Case 1999-402; Item III; Docket 2007-0001; Sequence 
7]
RIN 9000-AJ64


Federal Acquisition Regulation; FAR Case 1999-402, FAR Part 27 
Rewrite in Plain Language

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on a final rule 
amending the Federal Acquisition Regulation (FAR) to clarify, 
streamline, and update text and clauses on Patents, Data, and 
Copyrights (FAR Part 27).

DATES: Effective Date: December 7, 2007.

FOR FURTHER INFORMATION CONTACT: Mr. Ernest Woodson, Procurement 
Analyst, at (202) 501-3775 for clarification of content. For 
information pertaining to status or publication schedules, contact the 
FAR Secretariat at (202) 501-4755. Please cite FAC 2005-21, FAR case 
1999-402.

SUPPLEMENTARY INFORMATION:

A. Background

    This final rule is a ``plain language'' rewrite of FAR Part 27 and 
its associated clauses in Part 52. Part 27 implements a number of 
statutes and executive orders pertaining to patents, data, and 
copyrights. This effort focused on clarifying, streamlining, and 
updating the text, with the ultimate goal of making the policies and 
procedures

[[Page 63046]]

more understandable to the reader. For example, the materials have been 
edited to conform to the FAR Drafting Guide (available at https://
www.arnet.gov/far/draftingguide.htm). This rewrite was not intended to 
include substantive changes to Part 27 policies or procedures, except 
where necessary to comply with current statutory or regulatory 
requirements, or to resolve internal inconsistencies within FAR Part 27 
and its associated clauses.
    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 68 FR 31790, May 28, 2003 with public comments due by July 
28, 2003. The background information published with the proposed rule 
provided an overview of the rewrite effort, and highlighted examples of 
both plain language edits and additional substantive changes deemed 
within the scope of the revision. Accordingly, the remainder of the 
discussion below focuses on analysis of the public responses to the 
proposed rule, and the subsequent revisions to the proposed rule in 
response to those comments. Several of the public comments indicated 
general support for the plain language rewrite effort, or for specific 
revisions in the proposed rule, but these comments will not be 
discussed individually. The remainder of the comments was organized 
into three categories:
    Category 1: Revisions Based on Plain Language Rules.
    The first category included comments directed to the application of 
plain language rules, and thus fell clearly within the scope of the 
rewrite effort. These suggested edits or changes were evaluated based 
on the application of plain language rules (e.g., the FAR Drafting 
Guide), as follows:
    The definitions of ``computer database'' and ``technical data'' 
were moved from 27.401 to 2.101 because these terms appear in multiple 
FAR Parts. The definition of ``computer database'' was further revised 
to replace the term ``data'' with the term ``recorded information'' to 
avoid any confusion regarding the specialized use of the term ``data'' 
as it is defined at 27.401.
    The definition of ``computer software'' at 2.101 was conformed to 
the definition of that term as included in 27.401 of the proposed rule 
(and the definition at 27.401 was removed) to ensure consistent use of 
the term throughout the FAR.
    A definition of ``computer software documentation'' has been added 
at FAR 2.101.
    The heading for Subpart 27.2 was revised to refer to copyrights as 
well as patents.
    In 27.201-1(a), the phrase ``on behalf of the Government'' was 
clarified to specify that this determination depends on whether the 
Government has provided its ``authorization or consent.''
    In 27.201-2(c)(2)(i), the undefined term ``noncommercial item'' was 
clarified as ``items that are not commercial items.''
    In 27.302(i), the revisions clarify the guidance for contracting 
officers' review and approval of a contractor's request to transfer 
that contractor's license rights.
    In 27.304-1(h), redundant language that repeated (with only minor 
paraphrasing) the text from the associated clause was replaced with a 
cross-reference to the appropriate clause paragraph.
    In 52.227-1(b), 52.227-2(c), and 52.227-10(e), clause flow down 
language was conformed to FAR drafting conventions.
    In 52.227-13(c)(1)(ii) and 52.227-13(h), the language was conformed 
to the plain language describing the same requirements at 52.227-11(h), 
and 52.227-11(g), respectively.
    In 52.227-11(k) and 52.227-13(i), the guidance regarding flow down 
of the clauses to subcontractors was relocated to be the final 
paragraph in each clause, conformed to FAR drafting conventions, and 
clarified regarding the modification of clauses to identify the parties 
when flowed down to lower tiers.
    In 52.227-14(d)(1), the language was clarified to reference 
prohibitions by any Federal law or regulation, with export control and 
national security being examples rather than an all-inclusive listing.
    In 52.227-19, the requirement to place a notice on delivered 
software was highlighted by relocation from the end of paragraph (b)(3) 
to its own new paragraph (c).
    One respondent argued against the use of the defined term ``made'' 
instead of the phrase ``conceived or first actually reduced to 
practice'' within the definition of ``subject invention'' at 27.301 and 
associated clauses. This suggestion is not adopted. The combined 
revisions to the definitions ``made'' and ``subject invention'' are 
more consistent with the plain language guidelines.
    One respondent recommended that the phrase ``to the Government'' 
should be added to the end of the FAR 27.102(e) to clarify where the 
data is to be delivered. This suggestion is adopted.
    The final rule also incorporates a number of minor editorial, 
typographical, or grammatical corrections noted in the public comments.
    Category 2: Additional Revisions Within the Scope of This Case.
    The second category of comments raised issues or suggested changes 
that go beyond mere ``plain language'' conversions, but which the 
Councils determined were necessary for compliance with clear statutory 
or regulatory requirements, or otherwise mandated to resolve internal 
inconsistencies in the FAR Part 27 coverage. These suggestions are 
discussed below.
    A number of comments stated that the proposed definition of 
``commercial computer software'' at FAR 2.101 restricts the scope of 
software that is to be treated as a commercial item under FAR 12.212, 
and is therefore inconsistent with the requirements of the Federal 
Acquisition Streamlining Act (``FASA''), Pub. L. No. 103-355, 108 Stat. 
3243 (1994). The comments recommended either the elimination or 
redrafting of the proposed definition. The final rule resolves this 
issue by redefining commercial computer software as the intersection of 
two defined categories of items: ``computer software'' and ``commercial 
item.''
    Two respondents recommended that the term ``computer software 
documentation'' be defined in a manner generally consistent with the 
definition of that term in the Defense Federal Acquisition Regulation 
Supplement (DFARS) at 252.227-7014(a)(5). The term has been defined at 
2.101 using the DFARS definition.
    One respondent noted that the time periods associated with the 
restrictive markings challenge procedures in the clause at 52.227-14(e) 
are inconsistent with the time periods specified in 41 U.S.C. 253d. The 
commenter recommended changing the 30-day contractor response period to 
60 days, and eliminating the 90-day limit. These corrections are 
implemented at 52.227-14(e)(1)(i) and (ii), respectively.
    The phrase ``without unduly encumbering future research and 
discovery'' has been added to 27.302(a)(3) and 27.304-1(c)(2) to 
reflect changes to 35 U.S.C. 200 made in 2000.
    Two respondents stated that the revision of the definition of 
``computer software'' to exclude ``computer databases'' and the 
revision of the definition of ``technical data'' to include ``computer 
databases'' were substantive changes and beyond the scope of this 
rulemaking. They recommended that databases be treated as computer 
software. These recommendations are not adopted. The definition of 
``computer database'' is consistent with the policy and intent of 
27.404-2(c)(3) (formerly 27.404(d)(3)), and 52.227-

[[Page 63047]]

14(g)(2) (formerly (g)(1)). Similarly, this approach is consistent with 
the treatment of computer databases under the Defense Federal 
Acquisition Regulation Supplement (DFARS) (see DFARS 252.227-
7014(a)(2)). The individual elements of recorded information that are 
stored or formatted for delivery as a database must be distinguished 
from the computer software that may be required to view or manipulate 
the content of the database using a computer.
    One respondent suggested that the term ``commercial computer 
software'' had been substituted for ``restricted computer software'' in 
FAR 27.405-3 and 52.227-19, and that these revised sections change 
acquisition policy by discouraging use of commercial terms and 
conditions for the acquisition of computer software, which is 
inconsistent with FAR 12.212. There has been no change in policy from 
that expressed in FAR 12.212. Under the preexisting Part 27 scheme, the 
clause at 52.227-19 was prescribed for use with ``existing computer 
software,'' which was defined at former 27.405(b)(2) as software that 
was normally vended commercially. Thus, the term ``restricted computer 
software'' in that clause was applied only to ``existing computer 
software'' which was intended to mean commercial computer software. 
Furthermore, the revised 27.405-3 expressly states that commercial 
computer software shall be acquired under licenses customarily provided 
to the public to the extent the license is consistent with Federal law 
and otherwise satisfies the Government's needs, and refers to 12.212 
for further guidance in acquiring commercial computer software. 
Similarly, 12.212(b) has been revised to reference 27.405-3 for 
guidance when negotiating licenses for commercial computer software 
(e.g., when the standard commercial license is inconsistent with 
federal law or does not meet the Government's needs). The use of the 
clause 52.227-19 is discussed further in the Category 3 comments below.
    One respondent noted that the reference to the ``date of 
determination defined at 7 U.S.C. 2401(d'') within the definition of 
``subject invention'' at 27.301 and the associated clauses is improper 
because the cited section of the Plant Variety Protection Act (PVPA) 
has been deleted, and recommended that the citation be deleted. This 
suggestion is partially adopted. Although the statutory citation is 
outdated, the concept of a ``date of determination'' is still relevant 
and required under the statutory scheme (see 35 U.S.C. 201) to define 
the inventive event that connects the invention of a plant variety to a 
particular Federal contract. Accordingly, the substance of the 
previously codified definition of ``date of determination'' has been 
incorporated into the definition of the term ``made,'' at 27.301 and 
the associated clauses, as it applies to plant varieties. Additionally, 
further changes were made to the clause language to remove ambiguities 
regarding the contractor's ability to pursue PVPA protection as an 
alternative to patent protection (e.g., where the nomenclature that is 
used to reference patent requirements could have been mistakenly 
interpreted to exclude the equivalent under PVPA).
    One commenter argued that the flowdown provisions at 52.227-13(i) 
are potentially inconsistent with the Bayh-Dole Act (BDA) when that 
clause is used in a subcontract with a small business or nonprofit 
organization that is otherwise entitled to the standard BDA terms and 
conditions. These flowdown provisions are revised to conform to the BDA 
requirements.
    After the publication of the proposed rule, and the expiration of 
the public comment period, the BDA implementing regulations at 37 CFR 
Part 401 were revised (69 FR 17299) to provide an alternate version of 
the patent rights clause for contractors supporting works under 
cooperative research and development agreements. Thus, a change is 
necessary to implement this modification in the regulatory 
implementation of the BDA. The alternate language from 37 CFR 401.14(c) 
as prescribed by 37 CFR 401.3(c) is incorporated as a new Alternate V 
to the basic clause at FAR 52.227-11, with appropriate prescriptive 
language at 27.303(b)(7).
    Additional revisions were made to the coverage for Small Business 
Innovation Research (SBIR), to accommodate changes in the relevant SBIR 
statute (Pub. L. 106-554) and the Small Business Administration's SBIR 
Program Policy Directive (67 FR 60071). It was clarified that SBIR data 
rights also apply to phase three awards, and that the minimum four-year 
protection period can be extended in appropriate circumstances. See 
27.409(h), and 52.227-20(d).
    Category 3: Recommendations for Substantive Changes Beyond the 
Scope of This Case.
    The third category included comments suggesting edits that were 
substantive in nature, but which the Councils determined were not 
required to implement statutory or regulatory requirements. 
Accordingly, regardless of the merits of any individual recommendation, 
none of these comments were eligible for inclusion in the final rule 
because they exceeded the scope of the rulemaking effort. However, the 
Councils recognize that several of these comments raising substantive 
issues may be appropriate for further rulemaking efforts in the future. 
The following is an overview of the comments in this category:
    Two respondents suggested that 27.404 and its clauses be modified 
to state more clearly that the Government's unlimited rights license in 
technical data that is funded exclusively at Government expense is 
applicable only when delivery of that data is required as an element of 
performance and is necessary to ensure the competitive acquisition of 
supplies or services in substantial quantities in the future, citing 41 
U.S.C. 418a(b)(1). One responder suggested further that the Part 27 
materials should implement the concept of ``government purpose rights 
for mixed funding,'' citing 41 U.S.C. 418a(b)(2). Neither comment 
recommends specific language. The Councils note that Part 27 addresses 
delivery requirements independently of the license rights in those 
deliverables, and that there is no mention of a ``mixed funding'' 
criteria in the cited statute. In any case, the Part 27 implementation 
of the cited statutory requirements is well established, and any 
significant change in the overall scheme for specifying delivery 
requirements or license rights is beyond the scope of this plain 
language rewrite.
    Several respondents suggested that the clause at 52.227-19 be 
eliminated in favor of using the vendor's standard commercial computer 
software license, arguing that this is the policy stated at FAR 12.212. 
Elimination of the clause is unnecessary; the policies and procedures 
at 12.212 and 27.405-3 are entirely consistent and have been revised to 
cross-reference one another. As stated at 27.405-3, the clause at 
52.227-19 is provided as one optional solution when the standard 
commercial computer software license is inadequate under the criteria 
specified at 12.212 (e.g., when the standard commercial license is 
inconsistent with federal law or otherwise does not satisfy agency 
needs).
    One respondent recommended that the final rule further limit an 
agency's ability to restrict the publication or release of data first 
produced in the performance of the contract.
    One respondent recommended revising the policies and procedures 
regarding the delivery of data without restrictive markings at 52.227-
14(f).

[[Page 63048]]

    One respondent recommended using the term ``may'' rather than 
``should'' at 27.102(c). These terms are not equivalent, and thus the 
change is more than a plain language edit.
    Two respondents recommended eliminating the requirement to obtain 
the contracting officer's permission before asserting copyright in data 
first produced in the performance of the contract.
    One respondent suggested further broadening the government's 
acceptance of standard commercial terms and conditions.
    Two respondents recommended modification of the government's 
license rights in restricted computer software to more closely resemble 
commercial licenses.
    One respondent recommended the elimination of portions of the 
Rights in Data--General clause at FAR 52.227-14.
    One respondent recommended harmonizing the patent, data, and 
copyright sections of the FAR and DFARS.
    One respondent recommended adding coverage to specifically address 
the use or delivery of ``open source'' software.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not have a significant economic impact on a substantial 
number of small entities within the meaning of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., because most changes in the 
rule are plain language changes and the other changes have minimal 
economic impact.
    * The changes to the policies, procedures, and contract clauses 
pertaining to patents that were necessary to reflect current patent law 
and the current practices at the U.S. Patent and Trademark Office, do 
not impose any significant economic burden on small businesses.
    * The changes to implement the ``Small Business Innovation Research 
Program Policy Directive'' of the Small Business Administration allow 
the small business contractor to extend the period during which it is 
allowed to treat data and software as proprietary. Small business 
entities are entirely free to choose whether to utilize this new and 
enhanced capability. The procedures for extension of the protection 
period are set forth in the Small Business Innovation Research Program 
Policy Directive, not this FAR rule, which just references the policy 
directive.
    There were no public comments from small entities in response to 
the statement in the Federal Register notice for the proposed rule that 
the Councils did not expect the proposed rule to have a significant 
economic impact on a substantial number of small entities.

C. Paperwork Reduction Act

    The Paperwork Reduction Act applies because, as discussed in the 
preamble to the proposed rule, the clause 52.227-12 is being removed 
from the FAR and will be incorporated into the Defense Federal 
Acquisition Regulation Supplement (DFARS). The current paperwork burden 
associated with Part 27 of the FAR has already been cleared under OMB 
Control Numbers 9000-0090 and 9000-0095. OMB clearance 9000-0095 covers 
the burdens associated with FAR patent rights clauses 52.227-11, 
52.227-12, and 52.227-13. We estimate that removal of the clause at 
52.227-12 will reduce the approved FAR burden by 21,528 hours (from 
45,630 hours to 24,102 hours), but there will be a corresponding 
increase under another case in the estimated burden hours under OMB 
clearance 0704-0369. There will be no change to OMB clearance 9000-
0090, which covers FAR data rights clauses (52.227-14 through 52.227-
23), and is currently approved at 2,970 hours. As a result, these 
changes to the FAR do not impose additional information collection 
requirements to the previously approved paperwork burden.

List of Subjects in 48 CFR Parts 2, 3, 12, 15, 18, 19, 27, 33, and 
52

    Government procurement.

    Dated: October 31, 2007.
Al Matera,
Director, Contract Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 3, 12, 15, 18, 19, 
27, 33, and 52 as set forth below:
0
1. The authority citation for 48 CFR parts 2, 3, 12, 15, 18, 19, 27, 
33, and 52 continues to read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 2--DEFINITIONS OF WORDS AND TERMS

0
2. Amend section 2.101 in paragraph (b)(2) by--
0
a. Adding the definitions ``Commercial computer software'' and 
``Computer database'';
0
b. Revising the definition ``Computer software'';
0
c. Adding the definitions ``Computer software documentation'', ``Small 
business concern'', and ``Technical data'', and
0
d. Amending the definition ``United States'', by redesignating 
paragraph (6) as paragraph (7), and adding a new paragraph (6).
0
The added and revised text reads as follows:


2.101  Definitions.

* * * * *
    (b) * * *
    (2) * * *
    Commercial computer software means any computer software that is a 
commercial item.
* * * * *
    Computer database or database means a collection of recorded 
information in a form capable of, and for the purpose of, being stored 
in, processed, and operated on by a computer. The term does not include 
computer software.
    Computer software--(1) Means (i) Computer programs that comprise a 
series of instructions, rules, routines, or statements, regardless of 
the media in which recorded, that allow or cause a computer to perform 
a specific operation or series of operations; and
    (ii) Recorded information comprising source code listings, design 
details, algorithms, processes, flow charts, formulas, and related 
material that would enable the computer program to be produced, 
created, or compiled.
    (2) Does not include computer databases or computer software 
documentation.
    Computer software documentation means owner's manuals, user's 
manuals, installation instructions, operating instructions, and other 
similar items, regardless of storage medium, that explain the 
capabilities of the computer software or provide instructions for using 
the software.
* * * * *
    Small business concern means a concern, including its affiliates, 
that is independently owned and operated, not dominant in the field of 
operation in which it is bidding on Government contracts, and qualified 
as a small business under the criteria and size standards in 13 CFR 
part 121 (see 19.102). Such a concern is ``not dominant in its field of 
operation'' when it does not exercise a controlling or major influence 
on a national basis in a kind of business activity in which a number of 
business concerns are primarily engaged. In determining

[[Page 63049]]

whether dominance exists, consideration must be given to all 
appropriate factors, including volume of business, number of employees, 
financial resources, competitive status or position, ownership or 
control of materials, processes, patents, license agreements, 
facilities, sales territory, and nature of business activity. (See 15 
U.S.C. 632.)
* * * * *
    Technical data means recorded information (regardless of the form 
or method of the recording) of a scientific or technical nature 
(including computer databases and computer software documentation). 
This term does not include computer software or financial, 
administrative, cost or pricing, or management data or other 
information incidental to contract administration. The term includes 
recorded information of a scientific or technical nature that is 
included in computer databases (See 41 U.S.C. 403(8)).
* * * * *
    United States * * *
    (6) For use in Part 27, see the definition at 27.001.
* * * * *

PART 3--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF 
INTEREST


3.104-4  [Amended]

0
3. Amend section 3.104-4 in paragraph (d)(3) by removing ``27.404(h)'' 
and adding ``27.404-5'' in its place.

PART 12--ACQUISITION OF COMMERCIAL ITEMS

0
4. Amend section 12.212 by adding a sentence to the end of paragraph 
(b) to read as follows:


12.212  Computer software.

* * * * *
    (b) * * * For additional guidance regarding the use and negotiation 
of license agreements for commercial computer software, see 27.405-3.

PART 15--CONTRACTING BY NEGOTIATION


15.408  [Amended]

0
5. Amend section 15.408 in Table 15-2, ``II. Cost Elements'' which 
follows paragraph (m)(4), by removing from paragraph ``E(10)'' ``FAR 
27.204'' and adding ``FAR 27.202'' in its place.

PART 18--EMERGENCY ACQUISITIONS


18.119  [Amended]

0
6. Amend section 18.119 by removing ``See 27.208'' and adding ``See 
27.204-1'' in its place.

PART 19--SMALL BUSINESS PROGRAMS


19.001  [Amended]

0
7. Amend section 19.001 by removing the definition ``Small business 
concern''.

0
8. Revise Part 27 to read as follows:

PART 27--PATENTS, DATA, AND COPYRIGHTS

Sec.
27.000 Scope of part.
27.001 Definition.
Subpart 27.1--General
27.101 Applicability.
27.102 General guidance.
Subpart 27.2--Patents and Copyrights
27.200 Scope of subpart.
27.201 Patent and copyright infringement liability.
27.201-1 General.
27.201-2 Contract clauses.
27.202 Royalties.
27.202-1 Reporting of royalties.
27.202-2 Notice of Government as a licensee.
27.202-3 Adjustment of royalties.
27.202-4 Refund of royalties.
27.202-5 Solicitation provisions and contract clause.
27.203 Security requirements for patent applications containing 
classified subject matter.
27.203-1 General.
27.203-2 Contract clause.
27.204 Patented technology under trade agreements.
27.204-1 Use of patented technology under the North American Free 
Trade Agreement.
27.204-2 Use of patented technology under the General Agreement on 
Tariffs and Trade (GATT).
Subpart 27.3--Patent Rights under Government Contracts
27.300 Scope of subpart.
27.301 Definitions.
27.302 Policy.
27.303 Contract clauses.
27.304 Procedures.
27.304-1 General.
27.304-2 Contracts placed by or for other Government agencies.
27.304-3 Subcontracts.
27.304-4 Appeals.
27.305 Administration of patent rights clauses.
27.305-1 Goals.
27.305-2 Administration by the Government.
27.305-3 Securing invention rights acquired by the Government.
27.305-4 Protection of invention disclosures.
27.306 Licensing background patent rights to third parties.
Subpart 27.4--Rights in Data and Copyrights
27.400 Scope of subpart.
27.401 Definitions.
27.402 Policy.
27.403 Data rights--General.
27.404 Basic rights in data clause.
27.404-1 Unlimited rights data.
27.404-2 Limited rights data and restricted computer software.
27.404-3 Copyrighted works.
27.404-4 Contractor's release, publication, and use of data.
27.404-5 Unauthorized, omitted, or incorrect markings.
27.404-6 Inspection of data at the contractor's facility.
27.405 Other data rights provisions.
27.405-1 Special works.
27.405-2 Existing works.
27.405-3 Commercial computer software.
27.405-4 Other existing data.
27.406 Acquisition of data.
27.406-1 General.
27.406-2 Additional data requirements.
27.406-3 Major system acquisition.
27.407 Rights to technical data in successful proposals.
27.408 Cosponsored research and development activities.
27.409 Solicitation provisions and contract clauses.
Subpart 27.5--Foreign License and Technical Assistance Agreements
27.501 General.


27.000  Scope of part.

    This part prescribes the policies, procedures, solicitation 
provisions, and contract clauses pertaining to patents, data, and 
copyrights.


27.001  Definition.

    United States, as used in this part, means the 50 States and the 
District of Columbia, U.S. territories and possessions, Puerto Rico, 
and the Northern Mariana Islands.

Subpart 27.1--General


27.101  Applicability.

    This part applies to all agencies. However, agencies are authorized 
to adopt alternative policies, procedures, solicitation provisions, and 
contract clauses to the extent necessary to meet the specific 
requirements of laws, executive orders, treaties, or international 
agreements. Any agency adopting alternative policies, procedures, 
solicitation provisions, and contract clauses should include them in 
the agency's published regulations.


27.102  General guidance.

    (a) The Government encourages the maximum practical commercial use 
of

[[Page 63050]]

inventions made under Government contracts.
    (b) Generally, the Government will not refuse to award a contract 
on the grounds that the prospective contractor may infringe a patent. 
The Government may authorize and consent to the use of inventions in 
the performance of certain contracts, even though the inventions may be 
covered by U.S. patents.
    (c) Generally, contractors providing commercial items should 
indemnify the Government against liability for the infringement of U.S. 
patents.
    (d) The Government recognizes rights in data developed at private 
expense, and limits its demands for delivery of that data. When such 
data is delivered, the Government will acquire only those rights 
essential to its needs.
    (e) Generally, the Government requires that contractors obtain 
permission from copyright owners before including copyrighted works, 
owned by others, in data to be delivered to the Government.

Subpart 27.2--Patents and Copyrights


27.200  Scope of subpart.

    This subpart prescribes policies and procedures with respect to--
    (a) Patent and copyright infringement liability;
    (b) Royalties;
    (c) Security requirements for patent applications containing 
classified subject matter; and
    (d) Patented technology under trade agreements.


27.201  Patent and copyright infringement liability.


27.201-1  General.

    (a) Pursuant to 28 U.S.C. 1498, the exclusive remedy for patent or 
copyright infringement by or on behalf of the Government is a suit for 
monetary damages against the Government in the Court of Federal Claims. 
There is no injunctive relief available, and there is no direct cause 
of action against a contractor that is infringing a patent or copyright 
with the authorization or consent of the Government (e.g., while 
performing a contract).
    (b) The Government may expressly authorize and consent to a 
contractor's use or manufacture of inventions covered by U.S. patents 
by inserting the clause at 52.227-1, Authorization and Consent.
    (c) Because of the exclusive remedies granted in 28 U.S.C. 1498, 
the Government requires notice and assistance from its contractors 
regarding any claims for patent or copyright infringement by inserting 
the clause at 52.227-2, Notice and Assistance, Regarding Patent and 
Copyright Infringement.
    (d) The Government may require a contractor to reimburse it for 
liability for patent infringement arising out of a contract for 
commercial items by inserting the clause at FAR 52.227-3, Patent 
Indemnity.


27.201-2  Contract clauses.

    (a)(1) Insert the clause at 52.227-1, Authorization and Consent, in 
solicitations and contracts except that use of the clause is--
    (i) Optional when using simplified acquisition procedures; and
    (ii) Prohibited when both complete performance and delivery are 
outside the United States.
    (2) Use the clause with its Alternate I in all R&D solicitations 
and contracts for which the primary purpose is R&D work, except that 
this alternate shall not be used in construction and architect-engineer 
contracts unless the contract calls exclusively for R&D work.
    (3) Use the clause with its Alternate II in solicitations and 
contracts for communication services with a common carrier and the 
services are unregulated and not priced by a tariff schedule set by a 
regulatory body.
    (b) Insert the clause at 52.227-2, Notice and Assistance Regarding 
Patent and Copyright Infringement, in all solicitations and contracts 
that include the clause at 52.227-1, Authorization and Consent.
    (c)(1) Insert the clause at 52.227-3, Patent Indemnity, in 
solicitations and contracts that may result in the delivery of 
commercial items, unless--
    (i) Part 12 procedures are used;
    (ii) The simplified acquisition procedures of Part 13 are used;
    (iii) Both complete performance and delivery are outside the United 
States; or
    (iv) The contracting officer determines after consultation with 
legal counsel that omission of the clause would be consistent with 
commercial practice.
    (2) Use the clause with either its Alternate I (identification of 
excluded items) or II (identification of included items) if--
    (i) The contract also requires delivery of items that are not 
commercial items; or
    (ii) The contracting officer determines after consultation with 
legal counsel that limitation of applicability of the clause would be 
consistent with commercial practice.
    (3) Use the clause with its Alternate III if the solicitation or 
contract is for communication services and facilities where performance 
is by a common carrier, and the services are unregulated and are not 
priced by a tariff schedule set by a regulatory body.
    (d)(1) Insert the clause at 52.227-4, Patent Indemnity--
Construction Contracts, in solicitations and contracts for construction 
or that are fixed-price for dismantling, demolition, or removal of 
improvements. Do not insert the clause in contracts solely for 
architect-engineer services.
    (2) If the contracting officer determines that the construction 
will necessarily involve the use of structures, products, materials, 
equipment, processes, or methods that are nonstandard, noncommercial, 
or special, the contracting officer may expressly exclude them from the 
patent indemnification by using the clause with its Alternate I. Note 
that this exclusion is for items, as distinguished from identified 
patents (see paragraph (e) of this subsection).
    (e) It may be in the Government's interest to exempt specific U.S. 
patents from the patent indemnity clause. Exclusion from indemnity of 
identified patents, as distinguished from items, is the prerogative of 
the agency head. Upon written approval of the agency head, the 
contracting officer may insert the clause at 52.227-5, Waiver of 
Indemnity, in solicitations and contracts in addition to the 
appropriate patent indemnity clause.
    (f) If a patent indemnity clause is not prescribed, the contracting 
officer may include one in the solicitation and contract if it is in 
the Government's interest to do so.
    (g) The contracting officer shall not include in any solicitation 
or contract any clause whereby the Government agrees to indemnify a 
contractor for patent infringement.


27.202  Royalties.


27.202-1  Reporting of royalties.

    (a) To determine whether royalties anticipated or actually paid 
under Government contracts are excessive, improper, or inconsistent 
with Government patent rights the solicitation provision at 52.227-6 
requires prospective contractors to furnish royalty information. The 
contracting officer shall take appropriate action to reduce or 
eliminate excessive or improper royalties.
    (b) If the response to a solicitation includes a charge for 
royalties, the contracting officer shall, before award of the contract, 
forward the information to the office having cognizance of patent 
matters for the contracting activity. The cognizant office shall 
promptly advise the contracting officer of appropriate action.

[[Page 63051]]

    (c) The contracting officer, when considering the approval of a 
subcontract, shall require royalty information if it is required under 
the prime contract. The contracting officer shall forward the 
information to the office having cognizance of patent matters. However, 
the contracting officer need not delay consent while awaiting advice 
from the cognizant office.
    (d) The contracting officer shall forward any royalty reports to 
the office having cognizance of patent matters for the contracting 
activity.


27.202-2  Notice of Government as a licensee.

    (a) When the Government is obligated to pay a royalty on a patent 
because of an existing license agreement and the contracting officer 
believes that the licensed patent will be applicable to a prospective 
contract, the Government should furnish the prospective offerors with--
    (1) Notice of the license;
    (2) The number of the patent; and
    (3) The royalty rate cited in the license.
    (b) When the Government is obligated to pay such a royalty, the 
solicitation should also require offerors to furnish information 
indicating whether or not each offeror is the patent owner or a 
licensee under the patent. This information is necessary so that the 
Government may either--
    (1) Evaluate an offeror's price by adding an amount equal to the 
royalty; or
    (2) Negotiate a price reduction with an offeror when the offeror is 
licensed under the same patent at a lower royalty rate.


27.202-3  Adjustment of royalties.

    (a) If at any time the contracting officer believes that any 
royalties paid, or to be paid, under a contract or subcontract are 
inconsistent with Government rights, excessive, or otherwise improper, 
the contracting officer shall promptly report the facts to the office 
having cognizance of patent matters for the contracting activity 
concerned.
    (b) In coordination with the cognizant office, the contracting 
officer shall promptly act to protect the Government against payment of 
royalties--
    (1) With respect to which the Government has a royalty-free 
license;
    (2) At a rate in excess of the rate at which the Government is 
licensed; or
    (3) When the royalties in whole or in part otherwise constitute an 
improper charge.
    (c) In appropriate cases, the contracting officer in coordination 
with the cognizant office shall demand a refund pursuant to any refund 
of royalties clause in the contract (see 27.202-4) or negotiate for a 
reduction of royalties.
    (d) For guidance in evaluating information furnished pursuant to 
27.202-1, see 31.205-37. See also 31.109 regarding advance 
understandings on particular cost items, including royalties.


27.202-4  Refund of royalties.

    The clause at 52.227-9, Refund of Royalties, establishes procedures 
to pay the contractor royalties under the contract and recover 
royalties not paid by the contractor when the royalties were included 
in the contractor's fixed price.


27.202-5  Solicitation provisions and contract clause.

    (a)(1) Insert a solicitation provision substantially the same as 
the provision at 52.227-6, Royalty Information, in--
    (i) Any solicitation that may result in a negotiated contract for 
which royalty information is desired and for which cost or pricing data 
are obtained under 15.403; or
    (ii) Sealed bid solicitations only if the need for such information 
is approved at a level above the contracting officer as being necessary 
for proper protection of the Government's interests.
    (2) If the solicitation is for communication services and 
facilities by a common carrier, use the provision with its Alternate I.
    (b) If the Government is obligated to pay a royalty on a patent 
involved in the prospective contract, insert in the solicitation a 
provision substantially the same as the provision at 52.227-7, 
Patents--Notice of Government Licensee. If the clause at 52.227-6 is 
not included in the solicitation, the contracting officer may require 
offerors to provide information sufficient to provide this notice to 
the other offerors.
    (c) Insert the clause at 52.227-9, Refund of Royalties, in 
negotiated fixed-price solicitations and contracts when royalties may 
be paid under the contract. If a fixed-price incentive contract is 
contemplated, change ``price'' to ``target cost and target profit'' 
wherever it appears in the clause. The clause may be used in cost-
reimbursement contracts where agency approval of royalties is necessary 
to protect the Government's interests.


27.203  Security requirements for patent applications containing 
classified subject matter.


27.203-1  General.

    (a) Unauthorized disclosure of classified subject matter, whether 
in patent applications or resulting from the issuance of a patent, may 
be a violation of 18 U.S.C. 792, et seq. (Chapter 37--Espionage and 
Censorship), and related statutes, and may be contrary to the interests 
of national security.
    (b) Upon receipt of a patent application under paragraph (a) or (b) 
of the clause at 52.227-10, Filing of Patent Applications--Classified 
Subject Matter, the contracting officer shall ascertain the proper 
security classification of the patent application. If the application 
contains classified subject matter, the contracting officer shall 
inform the contractor how to transmit the application to the United 
States Patent Office in accordance with procedures provided by legal 
counsel. If the material is classified ``Secret'' or higher, the 
contracting officer shall make every effort to notify the contractor 
within 30 days of the Government's determination, pursuant to paragraph 
(a) of the clause.
    (c) Upon receipt of information furnished by the contractor under 
paragraph (d) of the clause at 52.227-10, the contracting officer shall 
promptly submit that information to legal counsel in order that the 
steps necessary to ensure the security of the application will be 
taken.
    (d) The contracting officer shall act promptly on requests for 
approval of foreign filing under paragraph (c) of the clause at 52.227-
10 in order to avoid the loss of valuable patent rights of the 
Government or the contractor.


27.203-2  Contract clause.

    Insert the clause at 52.227-10, Filing of Patent Applications--
Classified Subject Matter, in all classified solicitations and 
contracts and in all solicitations and contracts where the nature of 
the work reasonably might result in a patent application containing 
classified subject matter.


27.204  Patented technology under trade agreements.


27.204-1  Use of patented technology under the North American Free 
Trade Agreement.

    (a) The requirements of this section apply to the use of technology 
covered by a valid patent when the patent holder is from a country that 
is a party to the North American Free Trade Agreement (NAFTA).

[[Page 63052]]

    (b) Article 1709(10) of NAFTA generally requires a user of 
technology covered by a valid patent to make a reasonable effort to 
obtain authorization prior to use of the patented technology. However, 
NAFTA provides that this requirement for authorization may be waived in 
situations of national emergency or other circumstances of extreme 
urgency, or for public noncommercial use.
    (c) Section 6 of Executive Order 12889, ``Implementation of the 
North American Free Trade Act,'' of December 27, 1993, waives the 
requirement to obtain advance authorization for an invention used or 
manufactured by or for the Federal Government. However, the patent 
owner shall be notified in advance whenever the agency or its 
contractor knows or has reasonable grounds to know, without making a 
patent search, that an invention described in and covered by a valid 
U.S. patent is or will be used or manufactured without a license. In 
cases of national emergency or other circumstances of extreme urgency, 
this notification need not be made in advance, but shall be made as 
soon as reasonably practicable.
    (d) The contracting officer, in consultation with the office having 
cognizance of patent matters, shall ensure compliance with the notice 
requirements of NAFTA Article 1709(10) and Executive Order 12889. A 
contract award should not be suspended pending notification to the 
patent owner.
    (e) Section 6(c) of Executive Order 12889 provides that the notice 
to the patent owner does not constitute an admission of infringement of 
a valid privately-owned patent.
    (f) When addressing issues regarding compensation for the use of 
patented technology, Government personnel should be advised that NAFTA 
uses the term ``adequate remuneration.'' Executive Order 12889 equates 
``remuneration'' to ``reasonable and entire compensation'' as used in 
28 U.S.C. 1498, the statute that gives jurisdiction to the U.S. Court 
of Federal Claims to hear patent and copyright cases involving 
infringement by the Government.
    (g) When questions arise regarding the notice requirements or other 
matters relating to this section, the contracting officer should 
consult with legal counsel.


27.204-2  Use of patented technology under the General Agreement on 
Tariffs and Trade (GATT).

    Article 31 of Annex 1C, Agreement on Trade-Related Aspects of 
Intellectual Property Rights, to GATT (Uruguay Round) addresses 
situations where the law of a member country allows for use of a patent 
without authorization, including use by the Government.

Subpart 27.3--Patent Rights under Government Contracts


27.300  Scope of subpart.

    This subpart prescribes policies, procedures, solicitation 
provisions, and contract clauses pertaining to inventions made in the 
performance of work under a Government contract or subcontract for 
experimental, developmental, or research work. Agency policies, 
procedures, solicitation provisions, and contract clauses may be 
specified in agency supplemental regulations as permitted by law, 
including 37 CFR 401.1.


27.301  Definitions.

    As used in this subpart--
    Invention means any invention or discovery that is or may be 
patentable or otherwise protectable under title 35 of the U.S. Code, or 
any variety of plant that is or may be protectable under the Plant 
Variety Protection Act (7 U.S.C. 2321, et seq.)
    Made means--
    (1) When used in relation to any invention other than a plant 
variety, means the conception or first actual reduction to practice of 
the invention; or
    (2) When used in relation to a plant variety, means that the 
contractor has at least tentatively determined that the variety has 
been reproduced with recognized characteristics.
    Nonprofit organization means a university or other institution of 
higher education or an organization of the type described in section 
501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and 
exempt from taxation under section 501(a) of the Internal Revenue Code 
(26 U.S.C. 501(a)), or any nonprofit scientific or educational 
organization qualified under a State nonprofit organization statute.
    Practical application means to manufacture, in the case of a 
composition or product; to practice, in the case of a process or 
method; or to operate, in the case of a machine or system; and, in each 
case, under such conditions as to establish that the invention is being 
utilized and that its benefits are, to the extent permitted by law or 
Government regulations, available to the public on reasonable terms.
    Subject invention means any invention of the contractor made in the 
performance of work under a Government contract.


27.302  Policy.

    (a) Introduction. In accordance with chapter 18 of title 35, U.S.C. 
(as implemented by 37 CFR part 401), Presidential Memorandum on 
Government Patent Policy to the Heads of Executive Departments and 
Agencies dated February 18, 1983, and Executive Order 12591, 
Facilitating Access to Science and Technology dated April 10, 1987, it 
is the policy and objective of the Government to--
    (1) Use the patent system to promote the use of inventions arising 
from federally supported research or development;
    (2) Encourage maximum participation of industry in federally 
supported research and development efforts;
    (3) Ensure that these inventions are used in a manner to promote 
free competition and enterprise without unduly encumbering future 
research and discovery;
    (4) Promote the commercialization and public availability of the 
inventions made in the United States by United States industry and 
labor;
    (5) Ensure that the Government obtains sufficient rights in 
federally supported inventions to meet the needs of the Government and 
protect the public against nonuse or unreasonable use of inventions; 
and
    (6) Minimize the costs of administering patent policies.
    (b) Contractor right to elect title. (1) Generally, pursuant to 35 
U.S.C. 202 and the Presidential Memorandum and Executive order cited in 
paragraph (a) of this section, each contractor may, after required 
disclosure to the Government, elect to retain title to any subject 
invention.
    (2) A contract may require the contractor to assign to the 
Government title to any subject invention--
    (i) When the contractor is not located in the United States or does 
not have a place of business located in the United States or is subject 
to the control of a foreign government (see 27.303(e)(1)(i));
    (ii) In exceptional circumstances, when an agency determines that 
restriction or elimination of the right to retain title in any subject 
invention will better promote the policy and objectives of chapter 18 
of title 35, U.S.C. and the Presidential Memorandum;
    (iii) When a Government authority, that is authorized by statute or 
executive order to conduct foreign intelligence or counterintelligence 
activities, determines that the restriction or elimination of the right 
to retain title to any subject invention is necessary to protect the 
security of such activities;
    (iv) When the contract includes the operation of a Government-
owned,

[[Page 63053]]

contractor-operated facility of the Department of Energy (DOE) 
primarily dedicated to the Department's naval nuclear propulsion or 
weapons related programs and all funding agreement limitations under 35 
U.S.C. 202(a)(iv) for agreements with small business concerns and 
nonprofit organizations are limited to inventions occurring under the 
above two programs; or
    (v) Pursuant to statute or in accordance with agency regulations.
    (3) When the Government has the right to acquire title to a subject 
invention, the contractor may, nevertheless, request greater rights to 
a subject invention (see 27.304-1(c)).
    (4) Consistent with 37 CFR part 401, when a contract with a small 
business concern or nonprofit organization requires assignment of title 
to the Government based on the exceptional circumstances enumerated in 
paragraph (b)(2)(ii) or (iii) of this section for reasons of national 
security, the contract shall still provide the contractor with the 
right to elect ownership to any subject invention that--
    (i) Is not classified by the agency; or
    (ii) Is not limited from dissemination by the DOE within 6 months 
from the date it is reported to the agency.
    (5) Contracts in support of DOE's naval nuclear propulsion program 
are exempted from this paragraph (b).
    (6) When a contract involves a series of separate task orders, an 
agency may structure the contract to apply the exceptions at paragraph 
(b)(2)(ii) or (iii) of this section to individual task orders.
    (c) Government license. The Government shall have at least a 
nonexclusive, nontransferable, irrevocable, paid-up license to 
practice, or have practiced for or on behalf of the United States, any 
subject invention throughout the world. The Government may require 
additional rights in order to comply with treaties or other 
international agreements. In such case, these rights shall be made a 
part of the contract (see 27.303).
    (d) Government right to receive title. (1) In addition to the right 
to obtain title to subject inventions pursuant to paragraph (b)(2)(i) 
through (v) of this section, the Government has the right to receive 
title to an invention--
    (i) If the contractor has not disclosed the invention within the 
time specified in the clause; or
    (ii) In any country where the contractor--
    (A) Does not elect to retain rights or fails to elect to retain 
rights to the invention within the time specified in the clause;
    (B) Has not filed a patent or plant variety protection application 
within the time specified in the clause;
    (C) Decides not to continue prosecution of a patent or plant 
variety protection application, pay maintenance fees, or defend in a 
reexamination or opposition proceeding on the patent; or
    (D) No longer desires to retain title.
    (2) For the purposes of this paragraph, filing in a European Patent 
Office Region or under the Patent Cooperation Treaty constitutes 
election in the countries selected in the application(s).
    (e) Utilization reports. The Government has the right to require 
periodic reporting on how any subject invention is being used by the 
contractor or its licensees or assignees. In accordance with 35 U.S.C. 
202(c)(5) and 37 CFR part 401, agencies shall not disclose such 
utilization reports to persons outside the Government without 
permission of the contractor. Contractors should mark as confidential/
proprietary any utilization report to help prevent inadvertent release 
outside the Government.
    (f) March-in rights. (1) Pursuant to 35 U.S.C. 203, agencies have 
certain march-in rights that require the contractor, an assignee, or 
exclusive licensee of a subject invention to grant a nonexclusive, 
partially exclusive, or exclusive license in any field of use to 
responsible applicants, upon terms that are reasonable under the 
circumstances. If the contractor, assignee or exclusive licensee of a 
subject invention refuses to grant such a license, the agency can grant 
the license itself. March-in rights may be exercised only if the agency 
determines that this action is necessary--
    (i) Because the contractor or assignee has not taken, or is not 
expected to take within a reasonable time, effective steps to achieve 
practical application of the subject invention in the field(s) of use;
    (ii) To alleviate health or safety needs that are not reasonably 
satisfied by the contractor, assignee, or their licensees;
    (iii) To meet requirements for public use specified by Federal 
regulations and these requirements are not reasonably satisfied by the 
contractor, assignee, or licensees; or
    (iv) Because the agreement required by paragraph (g) of this 
section has neither been obtained nor waived, or because a licensee of 
the exclusive right to use or sell any subject invention in the United 
States is in breach of its agreement obtained pursuant to paragraph (g) 
of this section.
    (2) The agency shall not exercise its march-in rights unless the 
contractor has been provided a reasonable time to present facts and 
show cause why the proposed agency action should not be taken. The 
agency shall provide the contractor an opportunity to dispute or appeal 
the proposed action, in accordance with 27.304-1(g).
    (g) Preference for United States industry. In accordance with 35 
U.S.C. 204, no contractor that receives title to any subject invention 
and no assignee of the contractor shall grant to any person the 
exclusive right to use or sell any subject invention in the United 
States unless that person agrees that any products embodying the 
subject invention or produced through the use of the subject invention 
will be manufactured substantially in the United States. However, in 
individual cases, the requirement for this agreement may be waived by 
the agency upon a showing by the contractor or assignee that reasonable 
but unsuccessful efforts have been made to grant licenses on similar 
terms to potential licensees that would be likely to manufacture 
substantially in the United States or that under the circumstances 
domestic manufacture is not commercially feasible.
    (h) Special conditions for nonprofit organizations' preference for 
small business concerns. (1) Nonprofit organization contractors are 
expected to use reasonable efforts to attract small business licensees 
(see paragraph (i)(4) of the clause at 52.227-11, Patent Rights--
Ownership by the Contractor). What constitutes reasonable efforts to 
attract small business licensees will vary with the circumstances and 
the nature, duration, and expense of efforts needed to bring the 
invention to the market.
    (2) Small business concerns that believe a nonprofit organization 
is not meeting its obligations under the clause may report the matter 
to the Secretary of Commerce. To the extent deemed appropriate, the 
Secretary of Commerce will undertake informal investigation of the 
matter, and may discuss or negotiate with the nonprofit organization 
ways to improve its efforts to meet its obligations under the clause. 
However, in no event will the Secretary of Commerce intervene in 
ongoing negotiations or contractor decisions concerning the licensing 
of a specific subject invention. These investigations, discussions, and 
negotiations involving the Secretary of Commerce will be in 
coordination with other interested agencies, including the Small 
Business Administration. In the case of a contract for the operation of 
a Government-owned, contractor-operated research or production 
facility, the Secretary of Commerce will coordinate with the agency 
responsible for the facility prior

[[Page 63054]]

to any discussions or negotiations with the contractor.
    (i) Minimum rights to contractor. (1) When the Government acquires 
title to a subject invention, the contractor is normally granted a 
revocable, nonexclusive, paid-up license to that subject invention 
throughout the world. The contractor's license extends to any of its 
domestic subsidiaries and affiliates within the corporate structure of 
which the contractor is a part and includes the right to grant 
sublicenses to the extent the contractor was legally obligated to do so 
at the time of contract award. The contracting officer shall approve or 
disapprove, in writing, any contractor request to transfer its 
licenses. No approval is necessary when the transfer is to the 
successor of that part of the contractor's business to which the 
subject invention pertains.
    (2) In response to a third party's proper application for an 
exclusive license, the contractor's domestic license may be revoked or 
modified to the extent necessary to achieve expeditious practical 
application of the subject invention. The application shall be 
submitted in accordance with the applicable provisions in 37 CFR part 
404 and agency licensing regulations. The contractor's license will not 
be revoked in that field of use or the geographical areas in which the 
contractor has achieved practical application and continues to make the 
benefits of the subject invention reasonably accessible to the public. 
The license in any foreign country may be revoked or modified to the 
extent the contractor, its licensees, or its domestic subsidiaries or 
affiliates have failed to achieve practical application in that 
country. (See the procedures at 27.304-1(f).)
    (j) Confidentiality of inventions. Publishing information 
concerning an invention before a patent application is filed on a 
subject invention may create a bar to a valid patent. To avoid this 
bar, agencies may withhold information from the public that discloses 
any invention in which the Government owns or may own a right, title, 
or interest (including a nonexclusive license) (see 35 U.S.C. 205 and 
37 CFR part 401). Agencies may only withhold information concerning 
inventions for a reasonable time in order for a patent application to 
be filed. Once filed in any patent office, agencies are not required to 
release copies of any document that is a part of a patent application 
for those subject inventions. (See also 27.305-4.)


27.303  Contract clauses.

    (a)(1) Insert a patent rights clause in all solicitations and 
contracts for experimental, developmental, or research work as 
prescribed in this section.
    (2) This section also applies to solicitations or contracts for 
construction work or architect-engineer services that include--
    (i) Experimental, developmental, or research work;
    (ii) Test and evaluation studies; or
    (iii) The design of a Government facility that may involve novel 
structures, machines, products, materials, processes, or equipment 
(including construction equipment).
    (3) The contracting officer shall not include a patent rights 
clause in solicitations or contracts for construction work or 
architect-engineer services that call for or can be expected to involve 
only ``standard types of construction.'' ``Standard types of 
construction'' are those involving previously developed equipment, 
methods, and processes and in which the distinctive features include 
only--
    (i) Variations in size, shape, or capacity of conventional 
structures; or
    (ii) Purely artistic or aesthetic (as distinguished from 
functionally significant) architectural configurations and designs of 
both structural and nonstructural members or groupings, whether or not 
they qualify for design patent protection.
    (b)(1) Unless an alternative patent rights clause is used in 
accordance with paragraph (c), (d), or (e) of this section, insert the 
clause at 52.227-11, Patent Rights--Ownership by the Contractor.
    (2) To the extent the information is not required elsewhere in the 
contract, and unless otherwise specified by agency supplemental 
regulations, the contracting officer may modify 52.227-11(e) or 
otherwise supplement the clause to require the contractor to do one or 
more of the following:
    (i) Provide periodic (but not more frequently than annually) 
listings of all subject inventions required to be disclosed during the 
period covered by the report.
    (ii) Provide a report prior to the closeout of the contract listing 
all subject inventions or stating that there were none.
    (iii) Provide the filing date, serial number, title, patent number 
and issue date for any patent application filed on any subject 
invention in any country or, upon request, copies of any patent 
application so identified.
    (iv) Furnish the Government an irrevocable power to inspect and 
make copies of the patent application file when a Government employee 
is a co-inventor.
    (3) Use the clause with its Alternate I if the Government must 
grant a foreign government a sublicense in subject inventions pursuant 
to a specified treaty or executive agreement. The contracting officer 
may modify Alternate I, if the agency head determines, at contract 
award, that it would be in the national interest to sublicense foreign 
governments or international organizations pursuant to any existing or 
future treaty or agreement. When necessary to effectuate a treaty or 
agreement, Alternate I may be appropriately modified.
    (4) Use the clause with its Alternate II in contracts that may be 
affected by existing or future treaties or agreements.
    (5) Use the clause with its Alternate III in contracts with 
nonprofit organizations for the operation of a Government-owned 
facility.
    (6) If the contract is for the operation of a Government-owned 
facility, the contracting officer may use the clause with its Alternate 
IV.
    (7) If the contract is for the performance of services at a 
Government owned and operated laboratory or at a Government owned and 
contractor operated laboratory directed by the Government to fulfill 
the Government's obligations under a Cooperative Research and 
Development Agreement (CRADA) authorized by 15 U.S.C. 3710a, the 
contracting officer may use the clause with its Alternate V. Since this 
provision is considered an exercise of an agency's ``exceptional 
circumstances'' authority, the contracting officer must comply with 37 
CFR 401.3(e) and 401.4.
    (c) Insert a patent rights clause in accordance with the procedures 
at 27.304-2 if the solicitation or contract is being placed on behalf 
of another Government agency.
    (d) Insert a patent rights clause in accordance with agency 
procedures if the solicitation or contract is for DoD, DOE, or NASA, 
and the contractor is other than a small business concern or nonprofit 
organization.
    (e)(1) Except as provided in paragraph (e)(2) of this section, and 
after compliance with the applicable procedures in 27.304-1(b), the 
contracting officer may insert the clause at 52.227-13, Patent Rights--
Ownership by the Government, or a clause prescribed by agency 
supplemental regulations, if--
    (i) The contractor is not located in the United States or does not 
have a place of business l