[Federal Register: November 7, 2007 (Volume 72, Number 215)]
[Rules and Regulations]
[Page 63045-63075]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07no07-14]
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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 http://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 located in the United States or is subject to
the control of a foreign government;
(ii) There are exceptional circumstances and the agency head
[[Page 63055]]
determines that restriction or elimination of the right to retain title
to any subject invention will better promote the policy and objectives
of chapter 18 of title 35 of the United States Code;
(iii) A Government authority that is authorized by statute or
executive order to conduct foreign intelligence or counterintelligence
activities, determines that restriction or elimination of the right to
retain any subject invention is necessary to protect the security of
such activities; or
(iv) The contract includes the operation of a Government-owned,
contractor-operated facility of DOE primarily dedicated to that
Department's naval nuclear propulsion or weapons related programs.
(2) If an agency exercises the exceptions at paragraph (e)(1)(ii)
or (iii) of this section in a contract with a small business concern or
a nonprofit organization, the contracting officer shall use the clause
at 52.227-11 with only those modifications necessary to address the
exceptional circumstances and shall include in the modified clause
greater rights determinations procedures equivalent to those at 52.227-
13(b)(2).
(3) When using the clause at 52.227-13, Patent Rights--Ownership by
the Government, the contracting officer may supplement the clause to
require the contractor to--
(i) Furnish a copy of each subcontract containing a patent rights
clause (but if a copy of a subcontract is furnished under another
clause, a duplicate shall not be requested under the patent rights
clause);
(ii) Submit interim and final invention reports listing subject
inventions and notifying the contracting officer of all subcontracts
awarded for experimental, developmental, or research work;
(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 specific request, copies of any
patent application so identified; and
(iv) Submit periodic reports on the utilization of a subject
invention.
(4) Use the clause at 52.227-13 with its Alternate I if--
(i) The Government must grant a foreign government a sublicense in
subject inventions pursuant to a treaty or executive agreement; or
(ii) 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. If other rights are necessary to effectuate any treaty or
agreement, Alternate I may be appropriately modified.
(5) Use the clause at 52.227-13 with its Alternate II in the
contract when necessary to effectuate an existing or future treaty or
agreement.
27.304 Procedures.
27.304-1 General.
(a) Status as small business concern or nonprofit organization. If
an agency has reason to question the size or nonprofit status of the
prospective contractor, the agency may require the prospective
contractor to furnish evidence of its nonprofit status or may file a
size protest in accordance with FAR 19.302.
(b) Exceptions. (1) Before using any of the exceptions under
27.303(e)(1) in a contract with a small business concern or a nonprofit
organization and before using the exception of 27.303(e)(1)(ii) for any
contractor, the agency shall follow the applicable procedures at 37 CFR
401.
(2) A small business concern or nonprofit organization is entitled
to an administrative review of the use of the exceptions at
27.303(e)(1)(i) through (e)(1)(iv) in accordance with agency procedures
and 37 CFR part 401.
(c) Greater rights determinations. Whenever the contract contains
the clause at 52.227-13, Patent Rights--Ownership by the Government, or
a patent rights clause modified pursuant to 27.303(e)(2), the
contractor (or an employee-inventor of the contractor after
consultation with the contractor) may request greater rights to an
identified invention within the period specified in the clause. The
contracting officer may grant requests for greater rights if the
contracting officer determines that the interests of the United States
and the general public will be better served. In making these
determinations, the contracting officer shall consider at least the
following objectives (see 37 CFR 401.3(b) and 401.15):
(1) Promoting the utilization of inventions arising from federally
supported research and development.
(2) Ensuring that inventions are used in a manner to promote full
and open competition and free enterprise without unduly encumbering
future research and discovery.
(3) Promoting public availability of inventions made in the United
States by United States industry and labor.
(4) Ensuring 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.
(d) Retention of rights by inventor. If the contractor elects not
to retain title to a subject invention, the agency may consider and,
after consultation with the contractor, grant requests for retention of
rights by the inventor. Retention of rights by the inventor will be
subject to the conditions in paragraphs (d) (except paragraph
(d)(1)(i)), (e)(4), (f), (g), and (h) of the clause at 52.227-11,
Patent Rights--Ownership by the Contractor.
(e) Government assignment to contractor of rights in Government
employees' inventions. When a Government employee is a co-inventor of
an invention made under a contract with a small business concern or
nonprofit organization, the agency employing the co-inventor may
license or assign whatever rights it may acquire in the subject
invention from its employee to the contractor, subject at least to the
conditions of 35 U.S.C. 202-204.
(f) Revocation or modification of contractor's minimum rights.
Before revoking or modifying the contractor's license in accordance
with 27.302(i)(2), the contracting officer shall furnish the contractor
a written notice of intention to revoke or modify the license. The
agency shall allow the contractor at least 30 days (or another time as
may be authorized for good cause by the contracting officer) after the
notice to show cause why the license should not be revoked or modified.
The contractor has the right to appeal, in accordance with applicable
regulations in 37 CFR part 404 and agency licensing regulations, any
decisions concerning the revocation or modification.
(g) Exercise of march-in rights. When exercising march-in rights,
agencies shall follow the procedures set forth in 37 CFR 401.6.
(h) Licenses and assignments under contracts with nonprofit
organizations. If the contractor is a nonprofit organization, paragraph
(i) of the clause at 52.227-11 provides that certain contractor actions
require agency approval.
27.304-2 Contracts placed by or for other Government agencies.
The following procedures apply unless an interagency agreement
provides otherwise:
(a) When a Government agency requests another Government agency to
award a contract on its behalf, the request should explain any special
circumstances surrounding the contract and specify the patent rights
clause to be used. The clause should be selected and modified, if
necessary, in accordance with the policies and procedures of this
subpart. If, however,
[[Page 63056]]
the request states that a clause of the requesting agency is required
(e.g., because of statutory requirements, a deviation, or exceptional
circumstances), the awarding agency shall use that clause rather than
those of this subpart.
(1) If the request states that an agency clause is required and the
work to be performed under the contract is not severable and is funded
wholly or in part by the requesting agency, then include the requesting
agency clause and no other patent rights clause in the contract.
(2) If the request states that an agency clause is required, and
the work to be performed under the contract is severable, then the
contracting officer shall assure that the requesting agency clause
applies only to that severable portion of the work and that the work
for the awarding agency is subject to the appropriate patent rights
clause.
(3) If the request states that a requesting agency clause is not
required in any resulting contract, the awarding agency shall use the
appropriate patent rights clause, if any.
(b) Any action requiring an agency determination, report, or
deviation involved in the use of the requesting agency's clause is the
responsibility of the requesting agency unless the agencies agree
otherwise. However, the awarding agency may not alter the requesting
agency's clause without prior approval of the requesting agency.
(c) The requesting agency may require, and provide instructions
regarding, the forwarding or handling of any invention disclosures or
other reporting requirements of the specified clauses. Normally, the
requesting agency is responsible for the administration of any subject
inventions. This responsibility shall be established in advance of
awarding any contracts.
27.304-3 Subcontracts.
(a) The policies and procedures in this subpart apply to all
subcontracts at any tier.
(b) Whenever a prime contractor or a subcontractor considers
including a particular clause in a subcontract to be inappropriate or a
subcontractor refuses to accept the clause, the contracting officer, in
consultation with counsel, shall resolve the matter.
(c) It is Government policy that contractors shall not use their
ability to award subcontracts as economic leverage to acquire rights
for themselves in inventions resulting from subcontracts.
27.304-4 Appeals.
(a) The designated agency official shall provide the contractor
with a written statement of the basis, including any relevant facts,
for taking any of the following actions:
(1) A refusal to grant an extension to the invention disclosure
period under paragraph (c)(4) of the clause at 52.227-11;
(2) A demand for a conveyance of title to the Government under
27.302(d)(1)(i) and (ii);
(3) A refusal to grant a waiver under 27.302(g), Preference for
United States industry; or
(4) A refusal to approve an assignment under 27.304-1(h).
(b) Each agency may establish and publish procedures under which
any of these actions may be appealed. These appeal procedures should
include administrative due process procedures and standards for fact-
finding. The resolution of any appeal shall consider both the factual
and legal basis for the action and its consistency with the policy and
objectives of 35 U.S.C. 200-206 and 210.
(c) To the extent that any of the actions described in paragraph
(a) of this section are subject to appeal under the Contract Disputes
Act, the procedures under that Act will satisfy the requirements of
paragraph (b).
27.305 Administration of patent rights clauses.
27.305-1 Goals.
(a) Contracts having a patent rights clause should be so
administered that--
(1) Inventions are identified, disclosed, and reported as required
by the contract, and elections are made;
(2) The rights of the Government in subject inventions are
established;
(3) When patent protection is appropriate, patent applications are
timely filed and prosecuted by contractors or by the Government;
(4) The rights of the Government in filed patent applications are
documented by formal instruments such as licenses or assignments; and
(5) Expeditious commercial utilization of subject inventions is
achieved.
(b) If a subject invention is made under a contract funded by more
than one agency, at the request of the contractor or on their own
initiative, the agencies shall designate one agency as responsible for
administration of the rights of the Government in the invention.
27.305-2 Administration by the Government.
(a) Agencies should establish and maintain appropriate follow-up
procedures to protect the Government's interest and to check that
subject inventions are identified and disclosed, and when appropriate,
patent applications are filed, and that the Government's rights therein
are established and protected. Follow-up activities for contracts that
include a clause referenced in 27.304-2 should be coordinated with the
appropriate agency.
(b)(1) The contracting officer administering the contract (or other
representative specifically designated in the contract for this
purpose) is responsible for receiving invention disclosures, reports,
confirmatory instruments, notices, requests, and other documents and
information submitted by the contractor pursuant to a patent rights
clause.
(i) For other than confirmatory instruments, if the contractor
fails to furnish documents or information as called for by the clause
within the time required, the contracting officer shall promptly
request the contractor to supply the required documents or information.
If the failure persists, the contracting officer shall take appropriate
action to secure compliance.
(ii) If the contractor does not furnish confirmatory instruments
within 6 months after filing each patent application, or within 6
months after submitting the invention disclosure if the application has
been previously filed, the contracting officer shall request the
contractor to supply the required documents.
(2) The contracting officer shall promptly furnish all invention
disclosures, reports, confirmatory instruments, notices, requests, and
other documents and information relating to patent rights clauses to
legal counsel.
(c) Contracting activities should establish appropriate procedures
to detect and correct failures by the contractor to comply with its
obligations under the patent rights clauses, such as failures to
disclose and report subject inventions, both during and after contract
performance. Government effort to review and correct contractor
compliance with its patent rights obligations should be directed
primarily toward contracts that are more likely to result in subject
inventions significant in number or quality. These contracts include
contracts of a research, developmental, or experimental nature;
contracts of a large dollar amount; and any other contracts when there
is reason to believe the contractor may not be
[[Page 63057]]
complying with its contractual obligations. Other contracts may be
reviewed using a spot-check method, as feasible. Appropriate follow-up
procedures and activities may include the investigation or review of
selected contracts or contractors by those qualified in patent and
technical matters to detect failures to comply with contract
obligations.
(d) Follow-up activities should include, where appropriate, use of
Government patent personnel--
(1) To interview agency technical personnel to identify novel
developments made in contracts;
(2) To review technical reports submitted by contractors with
cognizant agency technical personnel;
(3) To check the Official Gazette of the United States Patent and
Trademark Office and other sources for patents issued to the contractor
in fields related to its Government contracts; and
(4) To have cognizant Government personnel interview contractor
personnel regarding work under the contract involved, observe the work
on site, and inspect laboratory notebooks and other records of the
contractor related to work under the contract.
(e) If a contractor or subcontractor does not have a clear
understanding of its obligations under the clause, or its procedures
for complying with the clause are deficient, the contracting officer
should explain to the contractor its obligations. The withholding of
payments provision (if any) of the patent rights clause may be invoked
if the contractor fails to meet the obligations required by the patents
rights clause. Significant or repeated failures by a contractor to
comply with the patent rights obligation in its contracts shall be
documented and made a part of the general file (see 4.801(c)(3)).
27.305-3 Securing invention rights acquired by the Government.
(a) Agencies are responsible for implementing procedures necessary
to protect the Government's interest in subject inventions. When the
Government acquires the entire right, title, and interest in an
invention by contract, the chain of title from the inventor to the
Government shall be clearly established. This is normally accomplished
by an assignment either from each inventor to the contractor and from
the contractor to the Government, or from the inventor to the
Government with the consent of the contractor. When the Government's
rights are limited to a license, there should be a confirmatory
instrument to that effect.
(b) Agencies may, by supplemental instructions, develop suitable
assignments, licenses, and other papers evidencing any rights of the
Government in patents or patents applications. These instruments should
be recorded in the U.S. Patent and Trademark Office (see Executive
Order 9424, Establishing in the United States Patent Office a Register
of Government Interests in Patents and Applications for Patents,
(February 18, 1944).
27.305-4 Protection of invention disclosures.
(a) The Government will, to the extent authorized by 35 U.S.C. 205,
withhold from disclosure to the public any invention disclosures
reported under the patent rights clauses of 52.227-11 or 52.227-13 for
a reasonable time in order for patent applications to be filed. The
Government will follow the policy in 27.302(j) regarding protection of
confidentiality.
(b) The Government should also use reasonable efforts to withhold
from disclosure to the public for a reasonable time other information
disclosing a subject invention. This information includes any data
delivered pursuant to contract requirements provided that the
contractor notifies the agency as to the identity of the data and the
subject invention to which it relates at the time of delivery of the
data. This notification shall be provided to both the contracting
officer and to any patent representative to which the invention is
reported, if other than the contracting officer.
(c) For more information on protection of invention disclosures,
also see 37 CFR 401.13.
27.306 Licensing background patent rights to third parties.
(a) A contract with a small business concern or nonprofit
organization shall not contain a provision allowing the Government to
require the licensing to third parties of inventions owned by the
contractor that are not subject inventions unless the agency head has
approved and signed a written justification in accordance with
paragraph (b) of this section. The agency head may not delegate this
authority and may exercise the authority only if it is determined that
the--
(1) Use of the invention by others is necessary for the practice of
a subject invention or for the use of a work object of the contract;
and
(2) Action is necessary to achieve the practical application of the
subject invention or work object.
(b) Any determination will be on the record after an opportunity
for a hearing, and the agency shall notify the contractor of the
determination by certified or registered mail. The notification shall
include a statement that the contractor must bring any action for
judicial review of the determination within 60 days after the
notification.
Subpart 27.4--Rights in Data and Copyrights
27.400 Scope of subpart.
This subpart sets forth policies and procedures regarding rights in
data and copyrights, and acquisition of data. The policy statement in
27.402 applies to all executive agencies. The remainder of the subpart
applies to all executive agencies except the Department of Defense.
27.401 Definitions.
As used in this subpart--
Data means recorded information, regardless of form or the media on
which it may be recorded. The term includes technical data and computer
software. The term does not include information incidental to contract
administration, such as financial, administrative, cost or pricing, or
management information.
Form, fit, and function data means data relating to items,
components, or processes that are sufficient to enable physical and
functional interchangeability, and data identifying source, size,
configuration, mating and attachment characteristics, functional
characteristics, and performance requirements. For computer software it
means data identifying source, functional characteristics, and
performance requirements, but specifically excludes the source code,
algorithms, processes, formulas, and flow charts of the software.
Limited rights means the rights of the Government in limited rights
data as set forth in a Limited Rights Notice.
Limited rights data means data, other than computer software, that
embody trade secrets or are commercial or financial and confidential or
privileged, to the extent that such data pertain to items, components,
or processes developed at private expense, including minor
modifications. (Agencies may, however, adopt the following alternate
definition: Limited rights data means data (other than computer
software) developed at private expense that embody trade secrets or are
commercial or financial and confidential or privileged (see 27.404-
2(b)).
Restricted computer software means computer software developed at
private expense and that is a trade secret, is commercial or financial
and
[[Page 63058]]
confidential or privileged, or is copyrighted computer software,
including minor modifications of the computer software.
Restricted rights means the rights of the Government in restricted
computer software as set forth in a Restricted Rights Notice.
Unlimited rights means the rights of the Government to use,
disclose, reproduce, prepare derivative works, distribute copies to the
public, and perform publicly and display publicly, in any manner and
for any purpose, and to have or permit others to do so.
27.402 Policy.
(a) To carry out their missions and programs, agencies acquire or
obtain access to many kinds of data produced during or used in the
performance of their contracts. Agencies require data to--
(1) Obtain competition among suppliers;
(2) Fulfill certain responsibilities for disseminating and
publishing the results of their activities;
(3) Ensure appropriate utilization of the results of research,
development, and demonstration activities including the dissemination
of technical information to foster subsequent technological
developments;
(4) Meet other programmatic and statutory requirements; and
(5) Meet specialized acquisition needs and ensure logistics
support.
(b) Contractors may have proprietary interests in data. In order to
prevent the compromise of these interests, agencies shall protect
proprietary data from unauthorized use and disclosure. The protection
of such data is also necessary to encourage qualified contractors to
participate in and apply innovative concepts to Government programs. In
light of these considerations, agencies shall balance the Government's
needs and the contractor's legitimate proprietary interests.
27.403 Data rights--General.
All contracts that require data to be produced, furnished,
acquired, or used in meeting contract performance requirements, must
contain terms that delineate the respective rights and obligations of
the Government and the contractor regarding the use, reproduction, and
disclosure of that data. Data rights clauses do not specify the type,
quantity or quality of data that is to be delivered, but only the
respective rights of the Government and the contractor regarding the
use, disclosure, or reproduction of the data. Accordingly, the contract
shall specify the data to be delivered.
27.404 Basic rights in data clause.
This section describes the operation of the clause at 52.227-14,
Rights in Data--General, and also the use of the provision at 52.227-
15, Representation of Limited Rights Data and Restricted Computer
Software.
27.404-1 Unlimited rights data.
The Government acquires unlimited rights in the following data
except for copyrighted works as provided in 27.404-3:
(a) Data first produced in the performance of a contract (except to
the extent the data constitute minor modifications to data that are
limited rights data or restricted computer software).
(b) Form, fit, and function data delivered under contract.
(c) Data (except as may be included with restricted computer
software) that constitute manuals or instructional and training
material for installation, operation, or routine maintenance and repair
of items, components, or processes delivered or furnished for use under
a contract.
(d) All other data delivered under the contract other than limited
rights data or restricted computer software (see 27.404-2).
27.404-2 Limited rights data and restricted computer software.
(a) General. The basic clause at 52.227-14, Rights in Data--
General, enables the contractor to protect qualifying limited rights
data and restricted computer software by withholding the data from the
Government and instead delivering form, fit, and function data.
(b) Alternate definition of limited rights data. For contracts that
do not require the development, use, or delivery of items, components,
or processes that are intended to be acquired by or for the Government,
an agency may adopt the alternate definition of limited rights data set
forth in Alternate I to the clause at 52.227-14. The alternate
definition does not require that the data pertain to items, components,
or processes developed at private expense; but rather that the data
were developed at private expense and embody a trade secret or are
commercial or financial and confidential or privileged.
(c) Protection of limited rights data specified for delivery. (1)
The clause at 52.227-14 with its Alternate II enables the Government to
require delivery of limited rights data rather than allow the
contractor to withhold the data. To obtain delivery, the contract may
identify and specify data to be delivered, or the contracting officer
may require, by written request during contract performance, the
delivery of data that has been withheld or identified to be withheld
under paragraph (g)(1) of the clause. In addition, the contract may
specifically identify data that are not to be delivered under Alternate
II or which, if delivered, will be delivered with limited rights. The
limited rights obtained by the Government are set forth in the Limited
Rights Notice contained in paragraph (g)(3) of Alternate II. Agencies
shall not, without permission of the contractor, use limited rights
data for purposes of manufacture or disclose the data outside the
Government except as set forth in the Notice. Any disclosure by the
Government shall be subject to prohibition against further use and
disclosure by the recipient. The following are examples of specific
purposes that may be adopted by an agency in its supplement and added
to the Limited Rights Notice of paragraph (g)(3) of Alternate II of the
clause:
(i) Use (except for manufacture) by support service contractors.
(ii) Evaluation by nongovernment evaluators.
(iii) Use (except for manufacture) by other contractors
participating in the Government's program of which the specific
contract is a part.
(iv) Emergency repair or overhaul work.
(v) Release to a foreign government, or its instrumentalities, if
required to serve the interests of the U.S. Government, for information
or evaluation, or for emergency repair or overhaul work by the foreign
government.
(2) The provision at 52.227-15, Representation of Limited Rights
Data and Restricted Computer Software, helps the contracting officer to
determine whether the clause at 52.227-14 should be used with its
Alternate II. This provision requests that an offeror state whether
limited rights data are likely to be delivered. Where limited rights
data are expected to be delivered, use Alternate II. Where negotiations
are based on an unsolicited proposal, the need for Alternate II of the
clause at 52.227-14 should be addressed during negotiations or
discussions, and if Alternate II was not included initially it may be
added by modification, if needed, during contract performance.
(3) If data that would otherwise qualify as limited rights data is
delivered as a computer database, the data shall be treated as limited
rights data, rather than restricted computer software, for the purposes
of paragraph (g) of the clause at 52.227-14.
[[Page 63059]]
(d) Protection of restricted computer software specified for
delivery. (1) Alternate III of the clause at 52.227-14, enables the
Government to require delivery of restricted computer software rather
than allow the contractor to withhold such restricted computer
software. To obtain delivery of restricted computer software the
contracting officer shall--
(i) Identify and specify the deliverable computer software in the
contract; or
(ii) Require by written request during contract performance, the
delivery of computer software that has been withheld or identified to
be withheld under paragraph (g)(1) of the clause.
(2) In considering whether to use Alternate III, contracting
officers should note that, unlike other data, computer software is also
an end item in itself. Thus, the contracting officer shall use
Alternate III if delivery of restricted computer software is required
to meet agency needs.
(3) Unless otherwise agreed (see paragraph (d)(4) of this
subsection), the restricted rights obtained by the Government are set
forth in the Restricted Rights Notice contained in paragraph (g)(4)
(Alternate III). Such restricted computer software will not be used or
reproduced by the Government, or disclosed outside the Government,
except that the computer software may be--
(i) Used or copied for use with the computers for which it was
acquired, including use at any Government installation to which the
computers may be transferred;
(ii) Used or copied for use with a backup computer if any computer
for which it was acquired is inoperative;
(iii) Reproduced for safekeeping (archives) or backup purposes;
(iv) Modified, adapted, or combined with other computer software,
provided that the modified, adapted, or combined portions of the
derivative software incorporating any of the delivered, restricted
computer software shall be subject to the same restricted rights;
(v) Disclosed to and reproduced for use by support service
contractors or their subcontractors, in accordance with paragraphs
(3)(i) through (iv) of this section; and
(vi) Used or copied for use with a replacement computer.
(4) The restricted rights set forth in paragraph (d)(3) of this
subsection are the minimum rights the Government normally obtains with
restricted computer software and will automatically apply when such
software is acquired under the Restricted Rights Notice of paragraph
(g)(4) of Alternate III of the clause at 52.227-14. However, the
contracting officer may specify different rights in the contract,
consistent with the purposes and needs for which the software is to be
acquired. For example, the contracting officer should consider any
networking needs or any requirements for use of the computer software
from remote terminals. Also, in addressing such needs, the scope of the
restricted rights may be different for the documentation accompanying
the computer software than for the programs and databases. Any
additions to, or limitations on, the restricted rights set forth in the
Restricted Rights Notice of paragraph (g)(4) of Alternate III of the
clause at 52.227-14 shall be expressly stated in the contract or in a
collateral agreement incorporated in and made part of the contract, and
the notice modified accordingly.
(5) The provision at 52.227-15, Representation of Limited Rights
Data and Restricted Computer Software, helps the contracting officer
determine whether to use the clause at 52.227-14 with its Alternate
III. This provision requests that an offeror state whether restricted
computer software is likely to be delivered under the contract. In
addition, the need for Alternate III should be addressed during
negotiations or discussions with an offeror, particularly where
negotiations are based on an unsolicited proposal. However, if
Alternate III is not used initially, it may be added by modification,
if needed, during contract performance.
27.404-3 Copyrighted works.
(a) Data first produced in the performance of a contract. (1)
Generally, the contractor must obtain permission of the contracting
officer prior to asserting rights in any copyrighted work containing
data first produced in the performance of a contract. However,
contractors are normally authorized, without prior approval of the
contracting officer, to assert copyright in technical or scientific
articles based on or containing such data that is published in
academic, technical or professional journals, symposia proceedings and
similar works.
(2) The contractor must make a written request for permission to
assert its copyright in works containing data first produced under the
contract. In its request, the contractor should identify the data
involved or furnish copies of the data for which permission is
requested, as well as a statement as to the intended publication or
dissemination media or other purpose for which the permission is
requested. Generally, a contracting officer should grant the
contractor's request when copyright protection will enhance the
appropriate dissemination or use of the data unless the--
(i) Data consist of a report that represents the official views of
the agency or that the agency is required by statute to prepare;
(ii) Data are intended primarily for internal use by the
Government;
(iii) Data are of the type that the agency itself distributes to
the public under an agency program;
(iv) Government determines that limitation on distribution of the
data is in the national interest; or
(v) Government determines that the data should be disseminated
without restriction.
(3) Alternate IV of the clause at 52.227-14 provides a substitute
paragraph (c)(1) granting permission for contractors to assert
copyright in any data first produced in the performance of the contract
without the need for any further requests. Except for contracts for
management or operation of Government facilities and contracts and
subcontracts in support of programs being conducted at those facilities
or where international agreements require otherwise, Alternate IV shall
be used in all contracts for basic or applied research to be performed
solely by colleges and universities. Alternate IV shall not be used in
contracts with colleges and universities if a purpose of the contract
is for development of computer software for distribution to the public
(including use in solicitations) by or on behalf of the Government. In
addition, Alternate IV may be used in other contracts if an agency
determines that it is not necessary for a contractor to request further
permission to assert copyright in data first produced in performance of
the contract. The contracting officer may exclude any data, or items or
categories of data, from the provisions of Alternate IV by expressly so
providing in the contract or by adding a paragraph (d)(4) to the
clause, consistent with 27.404-4(b).
(4) Pursuant to paragraph (c)(1) of the clause at 52.227-14, the
contractor grants the Government a paid-up nonexclusive, irrevocable,
worldwide license to reproduce, prepare derivative works, distribute to
the public, perform publicly and display publicly by or on behalf of
the Government, for all data (other than computer software) first
produced in the performance of a contract. For computer software, the
scope of the Government's license includes all of the above rights
except the right to distribute to the public. Agencies may also obtain
a license of
[[Page 63060]]
different scope if the contracting officer determines, after consulting
with legal counsel, such a license will substantially enhance the
dissemination of any data first produced under the contract or if such
a license is required to comply with international agreements. If an
agency obtains a different license, the contractor shall clearly state
the scope of that license in a conspicuous place on the medium on which
the data is recorded. For example, if the data is delivered as a
report, the terms of the license shall be stated on the cover, or first
page, of the report.
(5) The clause requires the contractor to affix the applicable
copyright notices of 17 U.S.C. 401 or 402, and acknowledgment of
Government sponsorship, (including the contract number) to data when it
asserts copyright in data. Failure to do so could result in such data
being treated as unlimited rights data (see 27.404-5(b)).
(b) Data not first produced in the performance of a contract. (1)
Contractors shall not deliver any data that is not first produced under
the contract without either--
(i) Acquiring for or granting to the Government a copyright license
for the data; or
(ii) Obtaining permission from the contracting officer to do
otherwise.
(2) The copyright license the Government acquires for such data
will normally be of the same scope as discussed in paragraph (a)(4) of
this subsection, and is set forth in paragraph (c)(2) of the clause at
52.227-14. However, agencies may obtain a license of different scope if
the agency determines, after consultation with its legal counsel, that
such different license will not be inconsistent with the purpose of
acquiring the data. If a license of a different scope is acquired, it
must be so stated in the contract and clearly set forth in a
conspicuous place on the data when delivered to the Government. If the
contractor delivers computer software not first produced under the
contract, the contractor shall grant the Government the license set
forth in paragraph (g)(4) of Alternate III if included in the clause at
52.227-14, or a license agreed to in a collateral agreement made part
of the contract.
27.404-4 Contractor's release, publication, and use of data.
(a) In contracts for basic or applied research with universities or
colleges, agencies shall not place any restrictions on the conduct of
or reporting on the results of unclassified basic or applied research,
except as provided in applicable U.S. statutes. However, agencies may
restrict the release or disclosure of computer software that is or is
intended to be developed to the point of practical application
(including for agency distribution under established programs). This is
not considered a restriction on the reporting of the results of basic
or applied research. Agencies may also preclude a contractor from
asserting copyright in any computer software for purposes of
established agency distribution programs, or where required to
accomplish the purpose for which the software is acquired.
(b) Except for the results of basic or applied research under
contracts with universities or colleges, agencies may, to the extent
provided in their FAR supplements, place limitations or restrictions on
the contractor's exercise of its rights in data first produced in the
performance of the contract, including a requirement to assign
copyright to the Government or another party. Any of these restrictions
shall be expressly included in the contract.
27.404-5 Unauthorized, omitted, or incorrect markings.
(a) Unauthorized marking of data. (1) The Government has, in
accordance with paragraph (e) of the clause at 52.227-14, the right to
either return data containing unauthorized markings or to cancel or
ignore the markings.
(2) Agencies shall not cancel or ignore markings without making
written inquiry of the contractor and affording the contractor at least
60 days to provide a written justification substantiating the propriety
of the markings.
(i) If the contractor fails to respond or fails to provide a
written justification substantiating the propriety of the markings
within the time afforded, the Government may cancel or ignore the
markings.
(ii) If the contractor provides a written justification
substantiating the propriety of the markings, the contracting officer
shall consider the justification.
(A) If the contracting officer determines that the markings are
authorized, the contractor will be so notified in writing.
(B) If the contracting officer determines, with concurrence of the
head of the contracting activity, that the markings are not authorized,
the contractor will be furnished a written determination which becomes
the final agency decision regarding the appropriateness of the markings
and the markings will be cancelled or ignored and the data will no
longer be made subject to disclosure prohibitions, unless the
contractor files suit within 90 days in a court of competent
jurisdiction. The markings will not be cancelled or ignored until final
resolution of the matter, either by the contracting officer's
determination becoming the final agency decision or by final
disposition of the matter by court decision if suit is filed.
(3) The foregoing procedures may be modified in accordance with
agency regulations implementing the Freedom of Information Act (5
U.S.C. 552) if necessary to respond to a request. In addition, the
contractor may bring a claim, in accordance with the Disputes clause of
the contract, that may arise as the result of the Government's action
to remove or ignore any markings on data, unless the action occurs as
the result of a final disposition of the matter by a court of competent
jurisdiction.
(b) Omitted or incorrect notices. (1) Data delivered under a
contract containing the clause without a limited rights notice or
restricted rights notice, and without a copyright notice, will be
presumed to have been delivered with unlimited rights, and the
Government assumes no liability for the disclosure, use, or
reproduction of the data. However, to the extent the data has not been
disclosed without restriction outside the Government, the contractor
may, within 6 months (or a longer period approved by the contracting
officer for good cause shown), request permission of the contracting
officer to have the omitted limited rights or restricted rights
notices, as applicable, placed on qualifying data at the contractor's
expense. The contracting officer may permit adding appropriate notices
if the contractor--
(i) Identifies the data for which a notice is to be added;
(ii) Demonstrates that the omission of the proposed notice was
inadvertent;
(iii) Establishes that use of the proposed notice is authorized;
and
(iv) Acknowledges that the Government has no liability with respect
to any disclosure or use of any such data made prior to the addition of
the notice or resulting from the omission of the notice.
(2) The contracting officer may also--
(i) Permit correction, at the contractor's expense, of incorrect
notices if the contractor identifies the data on which correction of
the notice is to be made, and demonstrates that the correct notice is
authorized; or
(ii) Correct any incorrect notices.
27.404-6 Inspection of data at the contractor's facility.
Contracting officers may obtain the right to inspect data at the
contractor's facility by use of the clause at 52.227-14 with its
Alternate V, which adds
[[Page 63061]]
paragraph (j) to provide that right. Agencies may also adopt Alternate
V for general use. The data subject to inspection may be data withheld
or withholdable under paragraph (g)(1) of the clause. Inspection may be
made by the contracting officer or designee (including nongovernmental
personnel under the same conditions as the contracting officer) for the
purpose of verifying a contractor's assertion regarding the limited
rights or restricted rights status of the data, or for evaluating work
performance under the contract. This right may be exercised up to 3
years after acceptance of all items to be delivered under the contract.
The contract may specify data items that are not subject to inspection
under paragraph (j) of the Alternate. If the contractor demonstrates to
the contracting officer that there would be a possible conflict of
interest if inspection were made by a particular representative, the
contracting officer shall designate an alternate representative.
27.405 Other data rights provisions.
27.405-1 Special works.
(a) The clause at 52.227-17, Rights in Data--Special Works, is for
use in contracts (or may be made applicable to portions thereof) that
are primarily for the production or compilation of data (other than
limited rights data or restricted computer software) for the
Government's own use, or when there is a specific need to limit
distribution and use of the data or to obtain indemnity for liabilities
that may arise out of the content, performance, or disclosure of the
data. Examples are contracts for--
(1) The production of audiovisual works, including motion pictures
or television recordings with or without accompanying sound, or for the
preparation of motion picture scripts, musical compositions, sound
tracks, translation, adaptation, and the like;
(2) Histories of the respective agencies, departments, services, or
units thereof;
(3) Surveys of Government establishments;
(4) Works pertaining to the instruction or guidance of Government
officers and employees in the discharge of their official duties;
(5) The compilation of reports, books, studies, surveys, or similar
documents that do not involve research, development, or experimental
work;
(6) The collection of data containing personally identifiable
information such that the disclosure thereof would violate the right of
privacy or publicity of the individual to whom the information relates;
(7) Investigatory reports;
(8) The development, accumulation, or compilation of data (other
than that resulting from research, development, or experimental work
performed by the contractor), the early release of which could
prejudice follow-on acquisition activities or agency regulatory or
enforcement activities; or
(9) The development of computer software programs, where the
program--
(i) May give a commercial advantage; or
(ii) Is agency mission sensitive, and release could prejudice
agency mission, programs, or follow-on acquisitions.
(b) The contract may specify the purposes and conditions (including
time limitations) under which the data may be used, released, or
reproduced other than for contract performance. Contracts for the
production of audiovisual works, sound recordings, etc., may include
limitations in connection with talent releases, music licenses, and the
like that are consistent with the purposes for which the works are
acquired.
(c) Paragraph (c)(1)(ii) of the clause, which enables the
Government to obtain assignment of copyright in any data first produced
in the performance of the contract, may be deleted if the contracting
officer determines that such assignment is not needed to further the
objectives of the contract.
(d) Paragraph (e) of the clause, which requires the contractor to
indemnify the Government against any liability incurred as the result
of any violation of trade secrets, copyrights, right of privacy or
publicity, or any libelous or other unlawful matter arising out of or
contained in any production or compilation of data that are subject to
the clause, may be deleted or limited in scope where the contracting
officer determines that, because of the nature of the particular data
involved, such liability will not arise.
(e) When the audiovisual or other special works are produced to
accomplish a public purpose other than acquisition for the Government's
own use (such as for production and distribution to the public of the
works by other than a Federal agency) agencies are authorized to modify
the clause for use in contracts, with rights in data provisions that
meet agency mission needs yet protect free speech and freedom of
expression, as well as the artistic license of the creator of the work.
27.405-2 Existing works.
The clause at 52.227-18, Rights in Data--Existing Works, is for use
in contracts exclusively for the acquisition (without modification) of
existing works such as, motion pictures, television recordings, and
other audiovisual works; sound recordings; musical, dramatic, and
literary works; pantomimes and choreographic works; pictorial, graphic,
and sculptural works; and works of a similar nature. The contract may
set forth limitations consistent with the purposes for which the works
covered by the contract are being acquired. Examples of these
limitations are means of exhibition or transmission, time, type of
audience, and geographical location. However, if the contract requires
that works of the type indicated in this paragraph are to be modified
through editing, translation, or addition of subject matter, etc.
(rather than purchased in existing form), then see 27.405-1.
27.405-3 Commercial computer software.
(a) When contracting other than from GSA's Multiple Award Schedule
contracts for the acquisition of commercial computer software, no
specific contract clause prescribed in this subpart need be used, but
the contract shall specifically address the Government's rights to use,
disclose, modify, distribute, and reproduce the software. Section
12.212 sets forth the guidance for the acquisition of commercial
computer software and states that commercial computer software or
commercial computer software documentation 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. The clause at 52.227-19, Commercial Computer Software License,
may be used when there is any confusion as to whether the Government's
needs are satisfied or whether a customary commercial license is
consistent with Federal law. Additional or lesser rights may be
negotiated using the guidance concerning restricted rights as set forth
in 27.404-2(d), or the clause at 52.227-19. If greater rights than the
minimum rights identified in the clause at 52.227-19 are needed, or
lesser rights are to be acquired, they shall be negotiated and set
forth in the contract. This includes any additions to, or limitations
on, the rights set forth in paragraph (b) of the clause at 52.227-19
when used. Examples of greater rights may be those necessary for
networking purposes or use of the software from remote terminals
communicating with a host
[[Page 63062]]
computer where the software is located. If the computer software is to
be acquired with unlimited rights, the contract shall also so state. In
addition, the contract shall adequately describe the computer programs
and/or databases, the media on which it is recorded, and all the
necessary documentation.
(b) If the contract incorporates, makes reference to, or uses a
vendor's standard commercial lease, license, or purchase agreement, the
contracting officer shall ensure that the agreement is consistent with
paragraph (a)(1) of this subsection. The contracting officer should
exercise caution in accepting a vendor's terms and conditions, since
they may be directed to commercial sales and may not be appropriate for
Government contracts. Any inconsistencies in a vendor's standard
commercial agreement shall be addressed in the contract and the
contract terms shall take precedence over the vendor's standard
commercial agreement. If the clause at 52.227-19 is used,
inconsistencies in the vendor's standard commercial agreement regarding
the Government's right to use, reproduce or disclose the computer
software are reconciled by that clause.
(c) If a prime contractor under a contract containing the clause at
52.227-14, Rights in Data--General, with paragraph (g)(4) (Alternate
III) in the clause, acquires restricted computer software from a
subcontractor (at any tier) as a separate acquisition for delivery to
or for use on behalf of the Government, the contracting officer may
approve any additions to, or limitations on the restricted rights in
the Restricted Rights Notice of paragraph (g)(4) in a collateral
agreement incorporated in and made part of the contract.
27.405-4 Other existing data.
(a) Except for existing works pursuant to 27.405-2 or commercial
computer software pursuant to 27.405-3, no clause contained in this
subpart is required to be included in--
(1) Contracts solely for the acquisition of books, periodicals, and
other printed items in the exact form in which these items are to be
obtained unless reproduction rights are to be acquired; or
(2) Other contracts that require only existing data (other than
limited rights data) to be delivered and the data are available without
disclosure prohibitions, unless reproduction rights to the data are to
be obtained.
(b) If the reproduction rights to the data are to be obtained in
any contract of the type described in paragraph (b)(1) (i) or (ii) of
this section, the rights shall be specifically set forth in the
contract. No clause contained in this subpart is required to be
included in contracts substantially for on-line data base services in
the same form as they are normally available to the general public.
27.406 Acquisition of data.
27.406-1 General.
(a) It is the Government's practice to determine, to the extent
feasible, its data requirements in time for inclusion in solicitations.
The data requirements may be subject to revision during contract
negotiations. Since the preparation, reformatting, maintenance and
updating, cataloging, and storage of data represents an expense to both
the Government and the contractor, efforts should be made to keep the
contract data requirements to a minimum, consistent with the purposes
of the contract.
(b) The contracting officer shall specify in the contract all known
data requirements, including the time and place for delivery and any
limitations and restrictions to be imposed on the contractor in the
handling of the data. Further, and to the extent feasible, in major
system acquisitions, the contracting officer shall set out data
requirements as separate contract line items. In establishing the
contract data requirements and in specifying data items to be delivered
by a contractor, agencies may, consistent with paragraph (a) of this
subsection, develop their own contract schedule provisions. Agency
procedures may, among other things, provide for listing, specifying,
identifying source, assuring delivery, and handling any data required
to be delivered, first produced, or specifically used in the
performance of the contract.
(c) Data delivery requirements should normally not require that a
contractor provide the Government, as a condition of the procurement,
unlimited rights in data that qualify as limited rights data or
restricted computer software. Rather, form, fit, and function data may
be furnished with unlimited rights instead of the qualifying data, or
the qualifying data may be furnished with limited rights or restricted
rights if needed (see 27.404-2(c) and (d)). If greater rights are
needed, they should be clearly set forth in the solicitation and the
contractor fairly compensated for the greater rights.
27.406-2 Additional data requirements.
(a) In some contracting situations, such as experimental,
developmental, research, or demonstration contracts, it may not be
feasible to ascertain all the data requirements at contract award. The
clause at 52.227-16, Additional Data Requirements, may be used to
enable the subsequent ordering by the contracting officer of additional
data first produced or specifically used in the performance of these
contracts as the actual requirements become known. The clause shall
normally be used in solicitations and contracts involving experimental,
developmental, research or demonstration work (other than basic or
applied research to be performed under a contract solely by a
university or college when the contract amount will be $500,000 or
less) unless all the requirements for data are believed to be known at
the time of contracting and specified in the contract. If the contract
is for basic or applied research to be performed by a university or
college, and the contracting officer believes the contract effort will
in the future exceed $500,000, even though the initial award does not,
the contracting officer may include the clause in the initial award.
(b) Data may be ordered under the clause at 52.227-16 at any time
during contract performance or within a period of 3 years after
acceptance of all items to be delivered under the contract. The
contractor is to be compensated for converting the data into the
prescribed form, for reproduction, and for delivery. In order to
minimize storage costs for the retention of data, the contracting
officer may relieve the contractor of the retention requirements for
specified data items at any time during the retention period required
by the clause. The contracting officer may permit the contractor to
identify and specify in the contract data not to be ordered for
delivery under the clause if the data is not necessary to meet the
Government's requirements for data. Also, the contracting officer may
alter the clause by deleting the term ``or specifically used'' in
paragraph (a) of the clause if delivery of the data is not necessary to
meet the Government's requirements for data. Any data ordered under
this clause will be subject to the clause at 52.227-14, Rights in
Data--General, (or other equivalent clause setting forth the respective
rights of the Government and the contractor) in the contract. Data
authorized to be withheld under such clause will not be required to be
delivered under the clause at 52.227-16, except as provided in
Alternate II or Alternate III, if included (see 27.404-2(c) and (d)).
(c) Absent an established program for dissemination of computer
software, agencies should not order additional computer software under
the clause at 52.227-16, for the sole purpose of disseminating or
marketing the software to the public. In ordering software for internal
purposes, the contracting
[[Page 63063]]
officer shall consider, consistent with the Government's needs, not
ordering particular source codes, algorithms, processes, formulas, or
flow charts of the software if the contractor shows that this aids its
efforts to disseminate or market the software.
27.406-3 Major system acquisition.
(a) The clause at 52.227-21, Technical Data Declaration, Revision,
and Withholding of Payment--Major Systems, implements 41 U.S.C.
418a(d). When using the clause at 52.227-21, the section of the
contract specifying data delivery requirements (see 27.406-1(b)) shall
expressly identify those line items of technical data to which the
clause applies. Upon delivery of the technical data, the contracting
officer shall review the technical data and the contractor's
declaration relating to it to assure that the data are complete,
accurate, and comply with contract requirements. If the data are not
complete, accurate, or compliant, the contracting officer should
request the contractor to correct the deficiencies, and may withhold
payment. Final payment shall not be made under the contract until it
has been determined that the delivery requirements of those line items
of data to which the clause applies have been satisfactorily met.
(b) In a contract for, or in support of, a major system awarded by
a civilian agency other than NASA or the U.S. Coast Guard, the
following applies:
(1) The contracting officer shall require the delivery of any
technical data relating to the major system or supplies for the major
system, that are to be developed exclusively with Federal funds if the
delivery of the technical data is needed to ensure the competitive
acquisition of supplies or services that will be required in
substantial quantities in the future. The clause at 52.227-22, Major
System--Minimum Rights, is used in addition to the clause at 52.227-14,
Rights in Data--General, and other required clauses, to ensure that the
Government acquires at least those rights required by Pub. L. 98-577 in
technical data developed exclusively with Federal funds.
(2) Technical data, relating to a major system or supplies for a
major system, procured or to be procured by the Government and also
relating to the design, development, or manufacture of products or
processes offered or to be offered for sale to the public (except for
such data as may be necessary for the Government to operate or maintain
the product, or use the process if obtained by the Government as an
element of performance under the contract), shall not be required to be
provided to the Government from persons who have developed such
products or processes as a condition for the procurement of such
products or processes by the Government.
27.407 Rights to technical data in successful proposals.
The clause at 52.227-23, Rights to Proposal Data (Technical),
allows the Government to acquire unlimited rights to technical data in
successful proposals. Pursuant to the clause, the prospective
contractor is afforded the opportunity to specifically identify pages
containing technical data to be excluded from the grant of unlimited
rights. This exclusion is not dispositive of the protective status of
the data, but any excluded technical data, as well as any commercial
and financial informat