[Federal Register Volume 83, Number 72 (Friday, April 13, 2018)]
[Rules and Regulations]
[Pages 15954-15963]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-07532]


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DEPARTMENT OF COMMERCE

National Institutes of Standards and Technology

37 CFR Parts 401 and 404

[Docket No.: 160311229-8347-02]
RIN 0693-AB63


Rights to Federally Funded Inventions and Licensing of Government 
Owned Inventions

AGENCY: National Institute of Standards and Technology (NIST), United 
States Department of Commerce.

ACTION: Final rule.

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SUMMARY: This final rule reduces regulatory burdens by clarifying 
electronic reporting, updating certain sections to conform with changes 
in the patent laws, and streamlining the licensing application process 
for some Federal laboratory collaborators, makes technical corrections, 
clarifies the role of provisional patent application filing, explains a 
unique situation that may be appropriate for a Determination of 
Exceptional Circumstances, clarifies the role of funding agencies in 
the Bayh-Dole process, and addresses subject inventions as to which a 
Federal laboratory employee is a co-inventor.

DATES: This rule is effective May 14, 2018.

FOR FURTHER INFORMATION CONTACT: Courtney Silverthorn, via email: 
[email protected] or by telephone at 301-975-4189.

SUPPLEMENTARY INFORMATION: These rule revisions are promulgated under 
the University and Small Business Patent Procedures Act of 1980, Public 
Law 96-517 (as amended), codified at title 35 of the United States Code 
(U.S.C.) 200 et seq., commonly known as the ``Bayh-Dole Act'' or simply 
``Bayh-Dole,'' which governs rights in inventions made with Federal 
assistance. The Bayh-Dole Act obligates nonprofit organizations and 
small business firms (``contractors''), and large businesses, as 
directed by Executive Order 12591 and to the extent permitted by law, 
to disclose each ``subject invention'' (that is, each invention 
conceived or first actually reduced to practice in the performance of 
work under a funding agreement, 35 U.S.C. 201(e)) within a reasonable 
time after the invention becomes known to the contractor, 35 U.S.C. 
202(c)(1), and permits contractors to elect, within a reasonable time 
after disclosure, to retain title to a subject invention, 35 U.S.C. 
202(a). Under certain defined ``exceptional'' circumstances, Bayh-Dole 
permits the Government to restrict or eliminate the contractor's right 
to elect to retain title, 35 U.S.C. 202(a), 202(b).
    The Secretary of Commerce has delegated to the Director of NIST the 
authority to promulgate implementing regulations. Regulations 
implementing 35 U.S.C. 202 through 204 are codified at 37 CFR part 401, 
``Rights to Inventions Made by Nonprofit Organizations and Small 
Business Firms under Government Grants, Contracts, and Co-operative 
Agreements,'' and apply to all Federal agencies, 37 CFR 401.1(b). These 
regulations govern all ``subject inventions,'' as defined in 37 CFR 
401.2(d), even if the Federal government is not the sole source of 
funding for either the conception or the reduction to practice, 37 CFR 
401.1(a). Regulations implementing 35 U.S.C. 208, specifying the terms 
and conditions upon which federally owned inventions, other than 
inventions owned by the Tennessee Valley Authority, may be licensed on 
a nonexclusive, partially exclusive, or exclusive basis, are codified 
at 37 CFR part 404, ``Licensing of Government Owned Inventions.''
    Bayh-Dole and its implementing regulations require Federal funding 
agencies to employ certain ``standard clauses'' in funding agreements 
awarded to contractors, except under certain specified conditions, 37 
CFR 401.3. Through these standard clauses, set forth at 37 CFR 
401.14(a), contractors are obligated to take certain actions to 
properly manage subject inventions. These actions include, but are not 
limited to, disclosing each subject invention to the Federal agency 
within two months after the contractor's inventor discloses it in 
writing to contractor personnel responsible for patent matters, 
paragraph (c)(1) of the clause; electing in writing whether or not to 
retain title to any subject invention by notifying the Federal agency 
within two years of disclosure to the Federal agency, paragraph (c)(2) 
of the clause; filing an initial patent application on a subject 
invention as to which the contractor elects to retain title within one 
year after election, paragraph (c)(3) of the clause; executing and 
promptly delivering to the Federal agency all instruments necessary to 
establish or confirm the rights the Government has throughout the world 
in those subject inventions to which the contractor elects to retain 
title, paragraph (f)(1) of the clause; requiring, by written agreement, 
the contractor's employees to disclose promptly in writing each subject 
invention made under contract, paragraph (f)(2) of the clause; 
notifying the Federal agency of any decision not to continue the 
prosecution of a patent application, paragraph (f)(3) of the clause; 
and including in the specification of any U.S. patent applications and 
any patent issuing thereon covering a subject invention, a statement 
that the invention was made with Government support under the grant or 
contract awarded by the Federal agency, and that the Government has 
certain rights in the invention, paragraph (f)(4) of the clause.
    In addition, a contractor is obligated to include the requirements 
of the standard clauses in any subcontracts under the contractor's 
award, paragraph (g) of the clause; to submit periodic reports as 
requested on the utilization of a subject invention or on efforts at 
obtaining such utilization that are being made by the contractor or its 
licensees or assignees, paragraph (h) of the clause;

[[Page 15955]]

and to agree that neither the contractor nor any assignee will grant to 
any person the exclusive right to use or sell any subject inventions in 
the United States unless such 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, 
paragraph (i) of the clause, subject to waiver.
    Bayh-Dole and its implementing regulations also specify certain 
conditions applicable to licenses granted by Federal agencies in any 
federally owned invention. The implementing regulations include 37 CFR 
404.5, which sets forth restrictions and conditions applicable to all 
Federal agency licenses, 37 CFR 404.6, which addresses requirements 
pertaining to nonexclusive licenses, and 37 CFR 404.7, which addresses 
requirements pertaining to exclusive and partially exclusive licenses.
    This rulemaking reduces regulatory burdens on large and small 
businesses, universities, non-profit organizations, and other 
recipients of federal funding in several ways. The rule provides 
greater clarity to large businesses by codifying the applicability of 
Bayh-Dole as directed in Executive Order 12591 which has been in effect 
since 1987, and provides greater clarity to all federal funding 
recipients by updating regulatory provisions to align with provisions 
of the Leahy-Smith America Invents Act in terms of definitions, 
required time frames, and use of royalty funds, which will reduce 
compliance burdens on recipients of federal funding. The rule also 
clarifies electronic reporting processes, simplifying the burden of the 
statutorily required reporting process. Finally, the rule provides for 
automatic extensions of the requirement to file non-provisional patent 
applications, and removes the requirement for a business, university, 
or other collaborator to submit a separate license application for a 
federal invention being used under a cooperative research and 
development agreement.
    Pursuant to authority delegated to it by the Secretary of Commerce, 
NIST is revising parts 401 and 404 of title 37 of the Code of Federal 
Regulations (CFR) which address rights to inventions made under 
Government grants, contracts, and co-operative agreements, and 
licensing of government owned inventions. The rule shall apply to all 
new funding agreements as defined in 37 CFR 401.2(a) that are executed 
after the effective date of the rule. The rule shall not apply to a 
funding agreement in effect on or before the effective date of the 
rule, provided that if such existing funding agreement is thereafter 
amended, the funding agency may, in its discretion, make the amended 
funding agreement subject to the rule prospectively.

Response to Comments

    NIST received 17 comment submissions during the public comment 
period for the notice of proposed rulemaking published November 7, 
2016, 81 FR 78090. NIST thanks the public for its careful review and 
submissions. The comments received and NIST's responses are summarized 
below.
    1. One comment requested clarification about the revised definition 
of statutory period in Sec. Sec.  401.2(o) and 401.14(a)(7). NIST has 
revised the definition to clarify that the statutory period refers to 
the one-year period in 35 U.S.C. 102(b)(1) as amended by the Leahy-
Smith America Invents Act.
    2. Several comments suggested a revision to Sec.  401.3(a)(1) 
permitting foreign collaborators to receive standard Bayh-Dole rights. 
NIST declines to revise this provision of the regulations. NIST notes 
that the language of Sec.  401.3(a)(1) closely tracks that of 35 U.S.C. 
202(a)(i). Both the statute and the regulation accord a funding agency 
discretion in crafting the terms and conditions of a funding agreement 
``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.''
    3. Several comments noted the removal of the appeals process in 
Sec.  401.3(a)(5). This was not NIST's intent. Accordingly, NIST has 
added reference to Sec.  401.3(a)(5) in Sec.  401.3(b), requiring an 
agency exercising that exception to use the standard clause at Sec.  
401.14 with only such modifications as are necessary to address the 
exceptional circumstances or concerns which led to the use of the 
exception. In addition, the first sentence of Sec.  401.4(a) of the 
final rule makes clear that each of the exceptions at Sec.  401.3(a)(1) 
through (6) of the final rule is subject to a contractor right to an 
administrative review.
    4. Several comments objected to the addition of the exception, 
recited in Sec.  401.3(a)(6), which authorizes a funding agency to use 
alternative provisions if the contract provides for services and the 
contractor is not a nonprofit organization and does not promote the 
commercialization and public availability of subject inventions. This 
exception is intended to address the scenario in which a services 
contractor, whose business model by design does not promote the 
commercialization or public availability of subject inventions, can, by 
simply neglecting to waive title for as long as two years, delay (at 
best) efforts to achieve commercialization or public availability. In 
reciting the Sec.  401.3(a)(6) exception, the final rule also provides 
that it is subject to an administrative review right.
    5. Several comments objected to provisions in Sec.  401.5 allowing 
Federal agencies to request additional invention reporting. NIST notes 
that the alternative reporting set forth in Sec.  401.5(f)(1) through 
(3) is neither new language nor obligatory upon funding agencies. The 
suggestion of several commenters, that this is new language, is 
incorrect.
    6. Several comments objected to the proposed revisions to 
Sec. Sec.  401.7 and 401.14(k) (by reference to Sec.  401.7), regarding 
the small business preference requirement of 35 U.S.C. 202(c)(7)(D). 
The proposed revision to Sec.  401.7(b) provides that small business 
firms that believe a nonprofit organization is not according 
appropriate preference to small business firms may report their 
concerns in the first instance to the funding agency, rather than to 
the Secretary of Commerce as previously provided. It is believed that 
this change will in many instances facilitate resolution of concerns, 
given the funding agency's familiarity with the subject matter and 
purpose of its award. Where a small business firm is dissatisfied with 
the funding agency response, or receives none within 90 days, the 
proposed revision provides that it may thereafter report its concerns, 
together with any response from the funding agency, to the Secretary of 
Commerce. NIST declines to remove these proposed changes.
    7. One comment suggested revisions to Sec. Sec.  401.7 and 
401.14(k) to address licensing to what were characterized by the 
commenter as ``non-practicing entities.'' NIST declines to make the 
suggested revisions, and notes that under Sec.  401.14(k)(4), a 
nonprofit contractor must give a licensing preference to a small 
business firm with a marketing plan for the invention which is as 
likely to bring the invention to practical application as the plans of 
other firms, however those other firms might be characterized. At the 
same time, Sec.  401.14(k)(4) does not prescribe the type of license 
(exclusive, non-exclusive, or partially exclusive) to be granted, the 
result of which is that a nonprofit contractor is accorded the 
flexibility, through its licensing policies, procedures and practices, 
to promote

[[Page 15956]]

the practical application and public availability of subject 
inventions, while according to small business firms the preference 
required under 35 U.S.C. 202(7)(D).
    8. Comments generally supported revisions to Sec.  401.10 on the 
management of subject inventions when there is a Federal employee who 
is a co-inventor of the subject invention, and NIST appreciates the 
suggestions for additional clarification. NIST has required 
consultation with the contractor in Sec.  401.10(a)(2), but declines 
the suggestion that it should restrict the scope of the required 
consultation. In addition, NIST has clarified that paragraphs (ii) 
through (vi) of Sec.  401.10(a)(3) all apply only after a contractor 
has elected not to retain title, and has added a paragraph (c) to 
clarify that the regulation will not supersede inter-institutional 
agreements for the management of jointly-owned subject inventions. As 
appropriate, NIST has also revised Sec.  401.10(a)(3) to recite 
``title'' rather than ``rights'' for consistency and clarity.
    9. Several comments pertained to priority of patent applications 
and prosecution or abandonment of an initial patent application filed 
by the Government per Sec.  401.10(a)(2). Priority of applications is 
an individual determination made by the U.S. Patent and Trademark 
Office and is outside the scope of this rulemaking. With regard to 
prosecution or abandonment of an initial patent application filed by 
the Government on a jointly-owned subject invention, NIST notes that it 
is within the discretion of the funding agency to determine, in 
consultation with the contractor as required by this paragraph, the 
appropriate course of action for a particular subject invention, which 
could include abandoning an initial patent application or transferring 
the prosecution of an initial patent application to the contractor 
under an inter-institutional or other appropriate agreement. In all 
cases, NIST observes that actions taken by a funding agency should not 
operate to preclude a contractor from electing title to a subject 
invention.
    10. One comment requested clarification as to whether the ``team 
exception'' of post-AIA 35 U.S.C. 102(b)(2)(C) may be invoked for 
filings on joint subject inventions. That provision of the patent 
statute provides that subject matter disclosed 1 year or less before 
the effective filing date of a claimed invention shall not be prior art 
to the claimed invention under 35 U.S.C. 102(a)(2), where that subject 
matter and the claimed invention, not later than the effective filing 
date of the claimed invention, were owned by the same person or subject 
to an obligation of assignment to the same person. The present 
rulemaking is not intended to affect the prosecution strategy of a sole 
or joint applicant for patent. At the same time, NIST notes that prior 
art determinations, including the applicability of the ``team 
exception,'' are made by the U.S. Patent and Trademark Office, and so 
are outside the scope of this rulemaking.
    11. One comment noted that Sec.  401.14 does not contain a 
definition of the term contractor. NIST has made this addition in Sec.  
401.14(a)(8) to recite the revised definition found in Sec.  401.2(b).
    12. A number of comments objected to the proposed revision to Sec.  
401.14(c)(2), providing that a Federal agency may shorten the two-year 
period for election of title by a contractor if ``necessary to protect 
the Government's interests.'' NIST has removed this revision from the 
final rulemaking.
    13. A number of comments objected to the proposed revision to Sec.  
401.14(d)(1), which would remove the 60-day time limit within which a 
Federal agency must make written request to a contractor to convey 
title, after learning of the failure of the contractor to disclose an 
invention or elect title within the specified times. While NIST 
appreciates the concerns of commenters, the proposed revision will be 
maintained in the final rule. A contractor's failure to timely disclose 
or elect title to a subject invention, both as required by its funding 
agreement, can work to deny the Federal government any rights in the 
funded invention, through no fault of the funding agency.
    14. A number of comments urged clarification of proposed revisions 
relating to the increased use by contractors of provisional 
applications under the Leahy-Smith America Invents Act and the 
Government's ability to request conveyance of rights in abandoned 
provisional applications. NIST acknowledges the increased use of 
provisional applications, and that a contractor may reasonably decide, 
as a matter of prosecution strategy, not to convert a provisional 
application under appropriate circumstances, without abandoning the 
subject invention itself or foreclosing the contractor's ability to 
file one or more additional applications directed to that invention. 
NIST has revised Sec.  401.14(d)(3) to make clear that this section 
applies to abandoned non-provisional applications, and has made an 
analogous revision to Sec.  401.14(f)(3). NIST expects that a 
contractor making a strategic decision such as described above will 
communicate its decision, and its intent not to abandon the subject 
invention itself, to the funding agency.
    15. A number of comments objected to the proposed revision in Sec.  
401.14(f)(3) to extend the required notification period for decisions 
not to continue patent prosecution from 30 days before the expiration 
of the response period to 120 days. NIST aims to balance the needs of 
contractors to have sufficient time to respond to actions, and the 
needs of Federal agencies to receive information in sufficient time to 
evaluate whether to request conveyance and assume prosecution of an 
application. NIST appreciates comments reflecting appreciation of these 
competing needs. NIST has shortened the notification period from the 
proposed 120 days to 60 days in the final rule.
    16. One comment requested clarification of references to Patent 
Trial and Appeals Board proceedings in Sec.  401.14(f)(3). NIST has 
revised this paragraph to clarify that the list of decisions requiring 
the contractor to notify the Federal agency pertain to a subject 
invention.
    17. Several comments requested revisions to the Government support 
clause in Sec.  401.14(f)(4) to allow flexibility in the statement 
required by the contractor rather than the precise language recited. 
NIST declines to do so, and notes that, apart from the requirement to 
identify the contract and the funding agency, the language of the 
statement required by the rule tracks almost verbatim that of 35 U.S.C. 
202(c)(6). NIST will not invite departure from these two clear, concise 
sentences, which notify readers of the Federal government's rights in a 
subject invention.
    18. Several comments suggested revision to Sec.  401.14(i) to 
permit automatic waivers from the requirement for substantial U.S. 
manufacture. NIST declines to make such a change, noting that Sec.  
401.14(i) tracks very closely the language of 35 U.S.C. 204, which 
itself makes clear that waivers from the requirement may be granted by 
the funding agency ``in individual cases,'' upon a showing.
    19. Several comments were directed towards electronic filing and 
the Interagency Edison (iEdison) system, and noted the proposed changes 
in Sec. Sec.  401.16 and 401.17. While NIST strongly supports the use 
of iEdison by funding agencies, it cannot mandate or compel agency use. 
Accordingly, revisions to Sec.  401.16, which provides that written 
notices may be electronically delivered to the agency or the contractor 
through an electronic database, do not mandate the use of

[[Page 15957]]

iEdison or any other system. NIST also notes comments directed to 
compliance and training, and is pleased to note that it is 
collaborating with the National Institutes of Health to develop a 
series of iEdison training modules expected to be available to agencies 
and contractors after publication of this final rule.
    20. A number of comments noted specific challenges and error 
messages relating to the iEdison reporting system. NIST is pleased to 
note that it is working with the National Institutes of Health to 
evaluate the iEdison messaging system and identify opportunities for 
updates and improvements. Contractors and agencies are encouraged to 
contact the National Institutes of Health to report specific errors in 
the system so these can be flagged for evaluation.
    21. One comment concerned the publication process for patent 
applications, which NIST notes is unrelated to this rulemaking.
    22. Several comments were submitted regarding the management and 
licensing of federally owned inventions with regard to transparency and 
availability to the public. NIST notes that 35 U.S.C. 209 and 37 CFR 
404.7 direct agencies in the criteria to be applied and the public 
notification processes to be followed in exercising the authority to 
grant exclusive and partially exclusive licenses to federally owned 
inventions, and provide for administrative appeals from agency 
licensing decisions, which appeals are also subject to review by the 
United States Court of Federal Claims.
    23. One comment stated that the notice of proposed rulemaking was 
not as widely publicized as other regulation changes, and suggested 
that more time should be provided ``if few comments are received.'' 
NIST published its notice of proposed rulemaking in the Federal 
Register, in which it announced a public meeting/webinar, which took 
place during the 30-day period set in the Federal Register notice of 
proposed rulemaking for public comment. In addition to the Federal 
Register, NIST utilized multiple communications media to publicize the 
notice of proposed rulemaking, the public meeting, and the request for 
comments. NIST was pleased to receive 17 comments through 
Regulations.gov, which NIST has taken into account in this final rule.

Changes From the Proposed Rule

    1. Revise the scope in Sec.  401.1(e) to include the alternate 
provisions in Sec.  401.3(a)(5) and (6) in the list of deviations that 
do not require the Secretary's approval.
    2. Revise the proposed definition of the term initial patent 
application in Sec.  401.2(n) to include Patent Cooperative Treaty 
applications and applications for Plant Variety Protection 
certificates, when applicable.
    3. Revise the proposed definition of the term statutory period in 
Sec.  401.2(o) and in Sec.  401.14(a)(7) to clarify that it refers to 
the one-year period in 35 U.S.C. 102(b) as amended by the Leahy-Smith 
America Invents Act.
    4. Revise Sec.  401.3(b) to include the exception at Sec.  
401.3(a)(5) in the list of exceptions where an agency must use only the 
modifications necessary to address the exceptional circumstances.
    5. Correct formatting error to retain Sec.  401.3(e) through (g).
    6. Re-insert the small business certification requirement in Sec.  
401.3(h).
    7. Revise Sec.  401.4(a) to include the exceptions at Sec.  
401.3(a)(5) and (6) in the list of exceptions as to which a contractor 
has the right to an administrative review.
    8. Revise Sec.  401.5 to make technical clarifications.
    9. Revise the proposed addition at Sec.  401.10(a)(2) to require a 
Federal agency to consult with a contractor before submitting an 
initial patent application.
    10. Revise the proposed additions at Sec.  401.10(a)(3)(iv) and 
(vi) to clarify that they apply after a contractor has waived title to 
the subject invention.
    11. Add a paragraph at Sec.  401.10(c) to allow other inter-
institutional agreements for the management of jointly-owned subject 
inventions to supersede Sec.  401.10.
    12. Revise Sec.  401.10 to align regulatory language with statute 
language.
    13. Revise Sec.  401.13(c)(2) to remove the time limit under which 
agencies shall not disclose patent applications, and state that the 
prohibition on agency release does not apply to documents published by 
the U.S. Patent and Trademark Office.
    14. Add a paragraph at Sec.  401.14(a)(8) to define the term 
contractor as defined in Sec.  401.2(b).
    15. Remove the proposed revision at Sec.  401.14(c)(2) which would 
allow an agency to shorten the two-year period for election of title if 
necessary to protect the Government's interest.
    16. Revise Sec.  401.14(c)(3) to require a contractor to file a 
non-provisional application 10 months after filing a provisional 
application.
    17. Revise the proposed addition at Sec.  401.14(c)(4) to clarify 
that the Federal agency employing a co-inventor may file an initial 
patent application, provided that the contractor retains the ability to 
elect title, in accordance with the revisions at Sec.  401.10.
    18. Revise Sec.  401.14(c)(5) to state that a request to extend the 
10-month deadline for filing a non-provisional application after first 
filing a provisional application will be automatically granted for one 
year unless an agency notifies the contractor within 60 days of the 
request.
    19. Revise Sec.  401.14(d)(3) to state that the section only 
applies to non-provisional applications and update the conditions under 
which a contractor will convey title to the Federal agency to be 
consistent with the Leahy-Smith America Invents Act provisions.
    20. Revise the proposed revision at Sec.  401.14(f)(3) to change 
the notification period to 60 days prior to the expiration of the 
statutory deadline and clarify that only decisions pertaining to the 
subject invention made under contract require the contractor to provide 
notification to the Federal agency.
    21. Correct formatting error to retain Sec.  401.14(f)(4) and 
(g)(1).
    22. Revise the proposed revisions at Sec.  401.14(k)(4) to 
reference Sec.  401.7.
    23. Revise Sec.  404.7(a)(1)(i) and (b)(1)(i) to allow prospective 
exclusive, co-exclusive, or partially exclusive licenses to be 
advertised in places other than the Federal Register.

Classification

    NIST has determined that the final rule is consistent with the 
Bayh-Dole Act of 1980 and other applicable law.

Executive Order 12866

    This rulemaking is a significant regulatory action under sections 
3(f)(3) and 3(f)(4) of Executive Order 12866, as it raises novel policy 
issues. This rulemaking, however, is not an ``economically 
significant'' regulatory action under section 3(f)(1) of the Executive 
order, as it does not have an effect on the economy of $100 million or 
more in any one year, and it does not have a material adverse effect on 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or tribal 
governments or communities.

Executive Order 13771

    This final rule is considered to be an E.O. 13771 deregulatory 
action. Details on the cost savings can be found in the rule's 
Estimated Cost Savings section.

Executive Order 13132

    This rule does not contain policies with Federalism implications as 
defined in Executive Order 13132.

[[Page 15958]]

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires the preparation and 
availability for public comment of ``an initial regulatory flexibility 
analysis'' which will ``describe the impact of the rule on small 
entities.'' (5 U.S.C. 603(a).) Section 605 of the RFA allows an agency 
to certify a rule, in lieu of preparing an analysis, if the rulemaking 
is not expected to have a significant economic impact on a substantial 
number of small entities.
    The Chief Counsel for Regulation of the Department of Commerce 
certified to the Chief Counsel for Advocacy of the Small Business 
Administration during the proposed rule stage that this rule would not 
have a significant economic impact on a substantial number of small 
entities. The factual basis for this determination was published in the 
proposed rule and is not repeated here. No comments were received 
regarding the certification and NIST has not received any new 
information that would affect its determination. As a result, a final 
regulatory flexibility analysis was not required and none was prepared.

Estimated Cost Savings

    Cost savings are anticipated from this rule by streamlining the 
licensing process for licensees that are already partnering with a 
Federal agency under a Cooperative Research and Development Agreement 
(CRADA). Federal agency collaborators include members from industry, 
academia, state and local governments, and individuals from the public. 
Costs to enter into a license with a Federal agency include the labor 
time on the part of the non-government collaborator to negotiate and 
execute the license with the Federal agency. NIST subject matter 
experts utilized annual technology transfer data reported by several 
Federal agencies to determine that the average Federal license takes 
approximately 5 months to execute.\1\ Assuming 5 hours of effort per 
month, approximately 25 hours of effort is invested by the non-Federal 
collaborator in executing a license with a Federal agency. Based on 
NIST database information, NIST subject matter experts estimate 
approximately one in five invention licenses is associated with a CRADA 
research plan, and Federal agencies report approximately 446 new 
invention licenses each year.\2\
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    \1\ DOC average time over last five years to execute a license 
is 5 months: https://www.nist.gov/sites/default/files/documents/2017/09/08/fy2016-doc-tech-trans-report-final-9-5-17.pdf; DOE 
average time to execute a license is 98 business days; 22 business 
days per month averages 4.5 months: https://www.nist.gov/sites/default/files/documents/2017/04/19/technologytransferreporttocongressfy14.pdf; USDA average time over 
last five years to execute a license is 4.6 months: https://www.usda.gov/sites/default/files/documents/usda-fy16-tech-transfer-report.pdf.
    \2\ Average over the last five years: https://www.nist.gov/sites/default/files/documents/2016/10/26/fy2014_federal_tech_transfer_report.pdf.
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    For the purposes of estimating opportunity costs, NIST subject 
matter experts deemed it reasonable to use the average of a lawyer's 
mean hourly wage ($67.25) and a legal support worker's hourly wage 
($31.81), as informed by the Bureau of Labor and Statistics,\3\ to 
approximate an hourly wage for the average Federal license negotiator. 
That rate is $49.52/hour.
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    \3\ Bureau of Labor and Statistics May 2016 wage data: https://www.bls.gov/oes/current/oes_nat.htm.
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    Eliminating the need to negotiate a separate license document from 
CRADA collaborators is estimated to save Federal agency collaborators 
approximately $110,430 annually, as reflected in the chart below.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                        Percent of licenses     Number of licenses
     New invention licenses/ year        associated with a      associated with a      Negotiation time/     Hourly wage of non-       Projected cost
                                               CRADA                  CRADA             license (hours)       Federal negotiator   savings to the public
--------------------------------------------------------------------------------------------------------------------------------------------------------
446..................................                    20                     92                     25                 $49.52              -$110,430
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National Environmental Policy Act

    This rule will not significantly affect the quality of the human 
environment. Therefore, an environmental assessment or Environmental 
Impact Statement is not required to be prepared under the National 
Environmental Policy Act of 1969.

List of Subjects in 37 CFR Parts 401 and 404

    Inventions and patents, Laboratories, Research and development, 
Science and technology, Technology transfer.

    For the reasons stated in the preamble, the National Institute of 
Standards and Technology amends 37 CFR parts 401 and 404 as follows:

PART 401--RIGHTS TO INVENTIONS MADE BY NONPROFIT ORGANIZATIONS AND 
SMALL BUSINESS FIRMS UNDER GOVERNMENT GRANTS, CONTRACTS, AND 
COOPERATIVE AGREEMENTS

0
1. The authority citation for 37 CFR part 401 continues to read as 
follows:

    Authority:  35 U.S.C. 206; DOO 30-2A.


0
2. Section 401.1 is amended as follows:
0
a. Revise the second sentence of paragraph (b); and
0
b. Revise the fourth and fifth sentences of paragraph (e).
    The revisions read as follows:


Sec.  401.1   Scope.

* * * * *
    (b) * * * It applies to all funding agreements with business firms 
regardless of size (consistent with section 1, paragraph (b)(4) of 
Executive Order 12591, as amended by Executive Order 12618) and to 
nonprofit organizations, except for a funding agreement made primarily 
for educational purposes. * * *
* * * * *
    (e) * * * Modifications or tailoring of clauses as authorized by 
Sec.  401.5 or Sec.  401.3, when alternate provisions are used under 
Sec.  401.3(a)(1) through (6), are not considered deviations requiring 
the Secretary's approval. Three copies of proposed and final agency 
regulations supplementing this part shall be submitted to the Secretary 
at the office set out in Sec.  401.17 for approval for consistency with 
this part before they are submitted to the Office of Management and 
Budget (OMB) for review under Executive Order 12866 or, if no 
submission is required to be made to OMB, before their submission to 
the Federal Register for publication.
* * * * *

0
3. Section 401.2 is amended as follows:
0
a. Revise paragraphs (b) and (n); and
0
b. Add paragraph (o).

[[Page 15959]]

    The revisions and additions read as follows:


Sec.  401.2   Definitions.

* * * * *
    (b) The term contractor means any person, small business firm or 
nonprofit organization, or, as set forth in section 1, paragraph (b)(4) 
of Executive Order 12591, as amended, any business firm regardless of 
size, which is a party to a funding agreement.
* * * * *
    (n) The term initial patent application means, as to a given 
subject invention, the first provisional or non-provisional U.S. 
national application for patent as defined in 37 CFR 1.9(a)(2) and (3), 
respectively, the first international application filed under the 
Patent Cooperation Treaty as defined in 37 CFR 1.9(b) which designates 
the United States, or the first application for a Plant Variety 
Protection certificate, as applicable.
    (o) The term statutory period means the one-year period before the 
effective filing date of a claimed invention during which exceptions to 
prior art exist per 35 U.S.C. 102(b) as amended by the Leahy-Smith 
America Invents Act, Public Law 112-29.

0
4. Section 401.3 is amended as follows:
0
a. Revise the first sentence of paragraph (a) introductory text;
0
b. In paragraph (a)(4), remove the period at the end of the paragraph 
and add in its place ``; or'';
0
c. Revise paragraph (a)(5);
0
d. Add paragraph (a)(6);
0
e. In paragraph (b), revise the first sentence, remove ``Sec.  
401.14(b)'' and add in its place ``paragraph (c) of this section'', 
remove ``Sec.  401.3(a)(2)'' and add in its place ``paragraph (a)(2) of 
this section'', remove ``Sec.  401.14(a)'' and add in its place ``Sec.  
401.14'', and remove ``this paragraph'' and add in its place ``this 
paragraph (b)'';
0
f. Revise paragraph (c);
0
g. Revise the first sentence of paragraph (d);
0
h. Revise paragraph (h); and
0
i. Add paragraph (i).
    The revisions and additions read as follows:


Sec.  401.3   Use of the standard clauses at Sec.  401.14.

    (a) Each funding agreement awarded to a contractor (except those 
subject to 35 U.S.C. 212) shall contain the clause found in Sec.  
401.14 with such modifications and tailoring as authorized or required 
elsewhere in this part. * * *
* * * * *
    (5) If any part of the contract may require the contractor to 
perform work on behalf of the Government at a Government laboratory 
under a Cooperative Research and Development Agreement (CRADA) pursuant 
to the statutory authority of 15 U.S.C. 3710a; or
    (6) If the contract provides for services and the contractor is not 
a nonprofit organization and does not promote the commercialization and 
public availability of subject inventions pursuant to 35 U.S.C. 200.
    (b) When an agency exercises the exceptions at paragraph (a)(2), 
(3), (5), or (6) of this section, it shall use the standard clause at 
Sec.  401.14 with only such modifications as are necessary to address 
the exceptional circumstances or concerns which led to the use of the 
exception. * * *
    (c) When the Department of Energy (DOE) determines to use 
alternative provisions under paragaph (a)(4) of this section, the 
standard clause at Sec.  401.14 shall be used with the following 
modifications, or substitute thereto with such modification and 
tailoring as authorized or required elsewhere in this part:
    (1) The title of the clause shall be changed to read as follows: 
Patent Rights to Nonprofit DOE Facility Operators.
    (2) Add an ``(A)'' after ``(1)'' in paragraph (c)(1) of the clause 
in Sec.  401.14 and add paragraphs (B) and (C) to paragraph (c)(1) of 
the clause in Sec.  401.14 as follows:

    (B) If the subject invention occurred under activities funded by 
the naval nuclear propulsion or weapons related programs of DOE, 
then the provisions of this paragraph (c)(1)(B) will apply in lieu 
of paragraphs (c)(2) and (3) of this clause. In such cases the 
contractor agrees to assign the government the entire right, title, 
and interest thereto throughout the world in and to the subject 
invention except to the extent that rights are retained by the 
contractor through a greater rights determination or under paragraph 
(e) of this clause. The contractor, or an employee-inventor, with 
authorization of the contractor, may submit a request for greater 
rights at the time the invention is disclosed or within a reasonable 
time thereafter. DOE will process such a request in accordance with 
procedures at 37 CFR 401.15. Each determination of greater rights 
will be subject to paragraphs (h) through (k) of this clause and 
such additional conditions, if any, deemed to be appropriate by the 
Department of Energy.
    (C) At the time an invention is disclosed in accordance with 
paragraph (c)(1)(A) of this clause, or within 90 days thereafter, 
the contractor will submit a written statement as to whether or not 
the invention occurred under a naval nuclear propulsion or weapons-
related program of the Department of Energy. If this statement is 
not filed within this time, paragraph (c)(1)(B) of this clause will 
apply in lieu of paragraphs (c)(2) and (3) of this clause. The 
contractor statement will be deemed conclusive unless, within 60 
days thereafter, the Contracting Officer disagrees in writing, in 
which case the determination of the Contracting Officer will be 
deemed conclusive unless the contractor files a claim under the 
Contract Disputes Act within 60 days after the Contracting Officer's 
determination. Pending resolution of the matter, the invention will 
be subject to paragraph (c)(1)(B) of this clause.

    (3) Paragraph (k)(3) of the clause in Sec.  401.14 will be modified 
as prescribed at Sec.  401.5(g).
    (d) When a funding agreement involves a series of separate task 
orders, an agency may apply the exceptions at paragraph (a)(2) or (3) 
of this section to individual task orders, and it may structure the 
contract so that modified patent rights provisions will apply to the 
task order even though either the standard clause at Sec.  401.14 or 
the modified clause as described in paragraph (c) of this section is 
applicable to the remainder of the work. * * *
* * * * *
    (h) A prospective contractor may be required by an agency to 
certify that it is either a small business firm or a nonprofit 
organization. If the agency has reason to question the status of the 
prospective contractor, it may require the prospective contractor to 
furnish evidence to establish its status.
    (i) When an agency exercises the exception at paragraph (a)(5) of 
this section, replace paragraph (b) of the basic clause in Sec.  401.14 
with the following paragraphs (b)(1) and (2):

    (b) Allocation of principal rights. (1) The Contractor may 
retain the entire right, title, and interest throughout the world to 
each subject invention subject to the provisions of this clause, 
including paragraph (b)(2) of this clause, and 35 U.S.C. 203. With 
respect to any subject invention in which the Contractor retains 
title, the Federal Government shall have a nonexclusive, 
nontransferable, irrevocable, paid-up license to practice or have 
practiced for or on behalf of the United States the subject 
invention throughout the world.
    (2) If the Contractor performs 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 
Government may require the Contractor to negotiate an agreement with 
the CRADA collaborating party or parties regarding the allocation of 
rights to any subject invention the Contractor makes, solely or 
jointly, under the CRADA. The agreement shall be negotiated prior to 
the Contractor

[[Page 15960]]

undertaking the CRADA work or, with the permission of the 
Government, upon the identification of a subject invention. In the 
absence of such an agreement, the Contractor agrees to grant the 
collaborating party or parties an option for a license in its 
inventions of the same scope and terms set forth in the CRADA for 
inventions made by the Government.


0
5. In Sec.  401.4, revise the first sentence of paragraph (a) to read 
as follows:


Sec.  401.4   Contractor appeals of exceptions.

    (a) In accordance with 35 U.S.C. 202(b)(4) a contractor has the 
right to an administrative review of a determination to use one of the 
exceptions at Sec.  401.3(a)(1) through (6) if the contractor believes 
that a determination is either contrary to the policies and objectives 
of this chapter or constitutes an abuse of discretion by the agency. * 
* *
* * * * *

0
6. Revise Sec.  401.5 to read as follows:


Sec.  401.5   Modification and tailoring of clauses.

    (a) Agencies should complete the blank in paragraph (g)(2) of the 
clauses at Sec.  401.14 in accordance with their own or applicable 
government-wide regulations such as the Federal Acquisition Regulation. 
In funding agreements, agencies wishing to apply the same clause to all 
subcontractors as is applied to the contractor may delete paragraph 
(g)(2) of the clause in Sec.  401.14 and delete the words ``to be 
performed by a small business firm or domestic nonprofit organization'' 
from paragraph (g)(1). Also, if the funding agreement is a grant or 
cooperative agreement, paragraph (g)(3) of the clause may be deleted. 
When either paragraph (g)(2) of the clause in Sec.  401.14 or 
paragraphs (g)(2) and (3) of the clause in Sec.  401.14 are deleted, 
the remaining paragraph or paragraphs should be renumbered 
appropriately.
    (b) Agencies should complete paragraph (l), ``Communications'', at 
the end of the clauses at Sec.  401.14 by designating a central point 
of contact for communications on matters relating to the clause. 
Additional instructions on communications may also be included in 
paragraph (l) of the clause in Sec.  401.14.
    (c) Agencies may replace the italicized words and phrases in the 
clause at Sec.  401.14 with those appropriate to the particular funding 
agreement. For example, ``contractor'' could be replaced by 
``grantee.'' Depending on its use, ``agency'' or ``Federal agency'' can 
be replaced either by the identification of the agency or by the 
specification of the particular office or official within the agency.
    (d)(1) When the agency head or duly authorized designee determines 
at the time of contracting that it would be in the national interest to 
acquire the right to sublicense foreign governments, their nationals, 
or international organizations in accordance with any existing treaty 
or international agreement, a sentence may be added at the end of 
paragraph (b) of the clause at Sec.  401.14 as follows:

This license will include the right of the government to sublicense 
foreign governments, their nationals, and international 
organizations, in accordance with the following treaties or 
international agreements: ____.

    (2) The blank in the added text in paragraph (d)(1) of this section 
should be completed with the names of applicable existing treaties or 
international agreements, including agreements of cooperation, and 
military agreements relating to weapons development and production. The 
added language is not intended to encompass treaties or other 
agreements that are in effect on the date of the award but which are 
not listed. Alternatively, agencies may use substantially similar 
language relating the government's rights to specific treaties or other 
agreements identified elsewhere in the funding agreement. The language 
may also be modified to make clear that the rights granted to the 
foreign government, and its nationals or an international organization 
may be for additional rights beyond a license or sublicense if so 
required by the applicable treaty or other international agreement. For 
example, in some cases exclusive licenses or even the assignment of 
title to the foreign country involved might be required. Agencies may 
also modify the added language to provide for the direct licensing by 
the contractor of the foreign government or international organization.
    (e) If the funding agreement involves performance over an extended 
period of time, such as the typical funding agreement for the operation 
of a government-owned facility, the following language may also be 
added:

The agency reserves the right to unilaterally amend this funding 
agreement to identify specific treaties or international agreements 
entered into or to be entered into by the government after the 
effective date of this funding agreement and effectuate those 
license or other rights which are necessary for the government to 
meet its obligations to foreign governments, and international 
organizations under such treaties or international agreements with 
respect to subject inventions made after the date of the amendment.

    (f) Agencies may add additional paragraphs to paragraph (f) of the 
clauses at Sec.  401.14 to require the contractor to do one or more of 
the following:
    (1) Provide a report prior to the close-out of a funding agreement 
listing all subject inventions or stating that there were none.
    (2) Provide, upon request, the filing date, patent application 
number and title; a copy of the patent application; and patent number 
and issue date for any subject invention in any country in which the 
contractor has applied for a patent.
    (3) Provide periodic (but no more frequently than annual) listings 
of all subject inventions which were disclosed to the agency during the 
period covered by the report.
    (g) If the contract is with a nonprofit organization and is for the 
operation of a government-owned, contractor-operated facility, the 
following will be substituted for the text of paragraph (k)(3) of the 
clause at Sec.  401.14:

After payment of patenting costs, licensing costs, payments to 
inventors, and other expenses incidental to the administration of 
subject inventions, the balance of any royalties or income earned 
and retained by the contractor during any fiscal year on subject 
inventions under this or any successor contract containing the same 
requirement, up to any amount equal to five percent of the budget of 
the facility for that fiscal year, shall be used by the contractor 
for scientific research, development, and education consistent with 
the research and development mission and objectives of the facility, 
including activities that increase the licensing potential of other 
inventions of the facility. If the balance exceeds five percent, 15 
percent of the excess above five percent shall be paid by the 
contractor to the Treasury of the United States and the remaining 85 
percent shall be used by the contractor only for the same purposes 
as described in the preceding sentence. To the extent it provides 
the most effective technology transfer, the licensing of subject 
inventions shall be administered by contractor employees on location 
at the facility.

    (h) If the contract is for the operation of a government-owned 
facility, agencies may add paragraph (f)(5) to the clause at Sec.  
401.14 with the following text:

The contractor shall establish and maintain active and effective 
procedures to ensure that subject inventions are promptly identified 
and timely disclosed and shall submit a description of the 
procedures to the contracting officer so that the contracting 
officer may evaluate and determine their effectiveness.


0
7. In Sec.  401.7, revise paragraph (b) to read as follows:


Sec.  401.7   Small business preference.

* * * * *

[[Page 15961]]

    (b) Small business firms that believe a nonprofit organization is 
not meeting its obligations under the clause may report their concerns 
to the funding agency identified at Sec.  401.14(l), and following 
receipt of the funding agency's initial response to their concerns or, 
if no initial funding agency response is received within 90 days from 
the date their concerns were reported to the funding agency, may 
thereafter report their concerns, together with any response from the 
funding agency, to the Secretary. To the extent deemed appropriate, the 
Secretary, in consultation with the funding agency, will undertake 
informal investigation of the concern, and, if appropriate, enter into 
discussions or negotiations with the nonprofit organization to the end 
of improving its efforts in meeting its obligations under the clause. 
However, in no event will the Secretary intervene in ongoing 
negotiations or contractor decisions concerning the licensing of a 
specific subject invention. All investigations, discussions, and 
negotiations of the Secretary described in this paragraph (b) will be 
in coordination with other interested agencies, including the funding 
agency and 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 will coordinate with the agency 
responsible for the facility prior to any discussions or negotiations 
with the contractor.


Sec.  401.9   [Amended]

0
8. In Sec.  401.9, remove ``Sec.  401.14(a)'' and add in its place 
``Sec.  401.14''.

0
9. Revise Sec.  401.10 to read as follows:


Sec.  401.10   Government assignment to contractor of rights in 
invention of government employee.

    (a) In any case when a Federal employee is a co-inventor of any 
invention made under a funding agreement with a contractor:
    (1) If the Federal agency employing such co-inventor transfers or 
reassigns to the contractor the right it has acquired in the subject 
invention from its employee as authorized by 35 U.S.C. 202(e), the 
assignment will be made subject to the patent rights clause of the 
contractor's funding agreement.
    (2) The Federal agency employing such co-inventor, in consultation 
with the contractor, may submit an initial patent application, provided 
that the contractor retains the right to elect to retain title pursuant 
to 35 U.S.C. 202(a).
    (3) When a Federal employee is a co-inventor of a subject invention 
developed with contractor-employed co-inventors under a funding 
agreement from another agency:
    (i) The funding agency will notify the agency employing a Federal 
co-inventor of any report of invention and whether the contractor 
elects to retain title.
    (ii) If the contractor does not elect to retain title to the 
subject invention, the funding agency must promptly provide notice to 
the agency employing a Federal co-inventor, and to the extent 
practicable, at least 60 days before any statutory bar date.
    (iii) Upon notification by the funding agency of a subject 
invention in which the contractor has not elected to retain title, the 
agency employing a Federal co-inventor must determine if there is a 
government interest in patenting the invention and will notify the 
funding agency of its determination.
    (iv) If the agency employing a Federal co-inventor determines there 
is a government interest in patenting the subject invention in which 
the contractor has not elected to retain title, the funding agency must 
provide administrative assistance (but is not required to provide 
financial assistance) to the agency employing a Federal co-inventor in 
acquiring rights from the contractor in order to file an initial patent 
application.
    (v) The agency employing a Federal co-inventor has priority for 
patenting over funding agencies that do not have a Federal co-inventor 
when the contractor has not elected to retain title.
    (vi) When the contractor has not elected to retain title, the 
funding agency and the agency employing a Federal co-inventor shall 
consult in order to ensure that the intent of the programmatic 
objectives conducted under the funding agreement is represented in any 
patenting decisions. The agency employing a Federal co-inventor may 
transfer patent management responsibilities to the funding agency.
    (4) Federal agencies employing such co-inventors may enter into an 
agreement with a contractor when an agency determines it is a suitable 
and necessary step to protect and administer rights on behalf of the 
Federal Government, pursuant to 35 U.S.C. 202(e).
    (5) Federal agencies employing such co-inventors will retain all 
ownership rights to which they are otherwise entitled if the contractor 
elects to retain title to the subject invention.
    (b) Agencies may add additional conditions as long as they are 
consistent with 35 U.S.C. 201-206.
    (c) Nothing in this section shall supersede any existing inter-
institutional agreements between a contractor and a Federal agency for 
the management of jointly-owned subject inventions.

0
10. Section 401.13 is amended as follows:
0
a. Revise the second sentence of paragraph (c)(1);
0
b. Revise paragraph (c)(2); and
0
c. Revise the second sentence of paragraph (c)(3).
    The revisions read as follows:


Sec.  401.13   Administration of patent rights clauses.

* * * * *
    (c) * * *
    (1) * * * With respect to subject inventions of contractors that 
are small business firms or nonprofit organizations, a reasonable time 
shall be the time during which an initial patent application may be 
filed under paragraph (c) of the standard clause found at Sec.  401.14 
or such other clause may be used in the funding agreement. * * *
    (2) In accordance with 35 U.S.C. 205, agencies shall not disclose 
or release, pursuant to requests under the Freedom of Information Act 
or otherwise, copies of any document which the agency obtained under 
the clause in Sec.  401.14 which is part of an application for patent 
with the U.S. Patent and Trademark Office or any foreign patent office 
filed by the contractor (or its assignees, licensees, or employees) on 
a subject invention to which the contractor has elected to retain 
title. This prohibition does not extend to disclosure to other 
government agencies or contractors of government agencies under an 
obligation to maintain such information in confidence. This prohibition 
does not apply to documents published by the U.S. Patent and Trademark 
Office or any foreign patent office.
    (3) * * * In recognition of the fact that such publication, if it 
included descriptions of a subject invention could create bars to 
obtaining patent protection, it is the policy of the executive branch 
that agencies will not include in such publication programs copies of 
disclosures of inventions submitted by small business firms or 
nonprofit organizations, pursuant to paragraph (c) of the standard 
clause found at Sec.  401.14, except under the same circumstances under 
which agencies are authorized to release such information pursuant to 
FOIA requests under paragraph (c)(1) of this section agencies may 
publish such disclosures.
* * * * *

0
11. Amend Sec.  401.14 as follows:
0
a. Redesignate paragraph (a) introductory text as undesignated

[[Page 15962]]

introductory text and republish the introductory text;
0
b. Remove the heading ``Patent Rights (Small Business Firms and 
Nonprofit Organizations)'' and add in its place the heading ``Standard 
Patent Rights'';
0
c. In ``Standard Patent Rights'':
0
i. Add paragraphs (a)(7) and (8);
0
ii. Revise paragraphs (c)(2) and (3);
0
iii. Redesignate paragraph (c)(4) as paragraph (c)(5);
0
iv. Add a new paragraph (c)(4);
0
v. Revise newly redesignated paragraph (c)(5);
0
vi. Revise paragraphs (d)(1) through (3), (f)(2) and (3), (g)(1) first 
sentence, and (k)(4); and
0
vii. Revise the undesignated text after the heading of paragraph (l); 
and
0
d. Remove paragraphs (b) and (c) at the end of the section.
    The additions and revisions read as follows:


Sec.  401.14   Standard patent rights clauses.

    The following is the standard patent rights clause to be used as 
specified in Sec.  401.3(a):
* * * * *
    (a) * * *
    (7) The term statutory period means the one-year period before the 
effective filing date of a claimed invention during which exceptions to 
prior art exist per 35 U.S.C. 102(b) as amended by the Leahy-Smith 
America Invents Act, Public Law 112-29.
    (8) The term contractor means any person, small business firm or 
nonprofit organization, or, as set forth in section 1, paragraph (b)(4) 
of Executive Order 12591, as amended, any business firm regardless of 
size, which is a party to a funding agreement.
* * * * *
    (c) * * *
    (2) The contractor will elect in writing whether or not to retain 
title to any such invention by notifying the Federal agency within two 
years of disclosure to the Federal agency. However, in any case where a 
patent, a printed publication, public use, sale, or other availability 
to the public has initiated the one year statutory period wherein valid 
patent protection can still be obtained in the United States, the 
period for election of title may be shortened by the agency to a date 
that is no more than 60 days prior to the end of the statutory period.
    (3) The contractor will file its initial patent application on a 
subject invention to which it elects to retain title within one year 
after election of title or, if earlier, prior to the end of any 
statutory period wherein valid patent protection can be obtained in the 
United States after a publication, on sale, or public use. If the 
contractor files a provisional application as its initial patent 
application, it shall file a non-provisional application within 10 
months of the filing of the provisional application. The contractor 
will file patent applications in additional countries or international 
patent offices within either ten months of the first filed patent 
application or six months from the date permission is granted by the 
Commissioner of Patents to file foreign patent applications where such 
filing has been prohibited by a Secrecy Order.
    (4) For any subject invention with Federal agency and contractor 
co-inventors, where the Federal agency employing such co-inventor 
determines that it would be in the interest of the government, pursuant 
to 35 U.S.C. 207(a)(3), to file an initial patent application on the 
subject invention, the Federal agency employing such co-inventor, at 
its discretion and in consultation with the contractor, may file such 
application at its own expense, provided that the contractor retains 
the ability to elect title pursuant to 35 U.S.C. 202(a).
    (5) Requests for extension of the time for disclosure, election, 
and filing under paragraphs (1), (2), and (3) of this clause may, at 
the discretion of the Federal agency, be granted. When a contractor has 
requested an extension for filing a non-provisional application after 
filing a provisional application, a one-year extension will be granted 
unless the Federal agency notifies the contractor within 60 days of 
receiving the request.
    (d) * * *
    (1) If the contractor fails to disclose or elect title to the 
subject invention within the times specified in paragraph (c) of this 
clause, or elects not to retain title.
    (2) In those countries in which the contractor fails to file patent 
applications within the times specified in paragraph (c) of this 
clause; provided, however, that if the contractor has filed a patent 
application in a country after the times specified in paragraph (c) of 
this clause, but prior to its receipt of the written request of the 
Federal agency, the contractor shall continue to retain title in that 
country.
    (3) In any country in which the contractor decides not to continue 
the prosecution of any non-provisional patent application for, to pay a 
maintenance, annuity or renewal fee on, or to defend in a reexamination 
or opposition proceeding on, a patent on a subject invention.
* * * * *
    (f) * * *
    (2) The contractor agrees to require, by written agreement, its 
employees, other than clerical and nontechnical employees, to disclose 
promptly in writing to personnel identified as responsible for the 
administration of patent matters and in a format suggested by the 
contractor each subject invention made under contract in order that the 
contractor can comply with the disclosure provisions of paragraph (c) 
of this clause, to assign to the contractor the entire right, title and 
interest in and to each subject invention made under contract, and to 
execute all papers necessary to file patent applications on subject 
inventions and to establish the government's rights in the subject 
inventions. This disclosure format should require, as a minimum, the 
information required by paragraph (c)(1) of this clause. The contractor 
shall instruct such employees through employee agreements or other 
suitable educational programs on the importance of reporting inventions 
in sufficient time to permit the filing of patent applications prior to 
U.S. or foreign statutory bars.
    (3) For each subject invention, the contractor will, no less than 
60 days prior to the expiration of the statutory deadline, notify the 
Federal agency of any decision: Not to continue the prosecution of a 
non-provisional patent application; not to pay a maintenance, annuity 
or renewal fee; not to defend in a reexamination or opposition 
proceeding on a patent, in any country; to request, be a party to, or 
take action in a trial proceeding before the Patent Trial and Appeals 
Board of the U.S. Patent and Trademark Office, including but not 
limited to post-grant review, review of a business method patent, inter 
partes review, and derivation proceeding; or to request, be a party to, 
or take action in a non-trial submission of art or information at the 
U.S. Patent and Trademark Office, including but not limited to a pre-
issuance submission, a post-issuance submission, and supplemental 
examination.
* * * * *
    (g) * * *
    (1) The contractor will include this clause, suitably modified to 
identify the parties, in all subcontracts, regardless of tier, for 
experimental, developmental or research work to be performed by a 
subcontractor. * * *
* * * * *
    (k) * * *
    (4) It will make efforts that are reasonable under the 
circumstances to attract licensees of subject inventions that are small 
business firms and that it

[[Page 15963]]

will give a preference to a small business firm when licensing a 
subject invention if the contractor determines that the small business 
firm has a plan or proposal for marketing the invention which, if 
executed, is equally as likely to bring the invention to practical 
application as any plans or proposals from applicants that are not 
small business firms; provided, that the contractor is also satisfied 
that the small business firm has the capability and resources to carry 
out its plan or proposal. The decision whether to give a preference in 
any specific case will be at the discretion of the contractor. However, 
the contractor agrees that the Federal agency may review the 
contractor's licensing program and decisions regarding small business 
applicants, and the contractor will negotiate changes to its licensing 
policies, procedures, or practices with the Federal agency when the 
Federal agency's review discloses that the contractor could take 
reasonable steps to implement more effectively the requirements of this 
paragraph (k)(4). In accordance with 37 CFR 401.7, the Federal agency 
or the contractor may request that the Secretary review the 
contractor's licensing program and decisions regarding small business 
applicants.
    (l) * * *
    [Complete according to instructions at Sec.  401.5(b)]


Sec.  401.15  [Amended]

0
12. In Sec.  401.15:
0
a. In paragraph (b), remove ``Sec.  401.14(a)'' and add in its place 
``Sec.  401.14''; and
0
b. In paragraph (d), remove ``Sec.  401.14(a)'' and add in its place 
``Sec.  401.14'' and remove ``of this part''.


0
13. In Sec.  401.16:
0
a. In paragraphs (a) and (b), remove ``Sec.  401.14(a) may'' and add in 
its place ``Sec.  401.14 shall'';
0
b. In paragraph (c), remove ``(f)(1)'' and add in its place ``paragraph 
(f)(1)'', remove ``(f)(2) and (f)(3)'' and add in its place 
``paragraphs (f)(2) and (3)'', and remove ``may'' and add in its place 
``shall''; and
0
c. Add paragraph (d).
    The addition reads as follows:


Sec.  401.16  Electronic filing.

* * * * *
    (d) Other written notices required in the clause in Sec.  401.14 
may be electronically delivered to the agency or the contractor through 
an electronic database used for reporting subject inventions, patents, 
and utilization reports to the funding agency.

0
14. Revise Sec.  401.17 to read as follows:


Sec.  401.17  Submissions and inquiries.

    All submissions or inquiries should be directed to the Chief 
Counsel for NIST, National Institute of Standards and Technology, 100 
Bureau Drive, Mail Stop 1052, Gaithersburg, Maryland 20899-1052; 
telephone: (301) 975-2803; email: [email protected]. Information 
about and procedures for electronic filing under this part are 
available at the Interagency Edison website and service center, http://www.iedison.gov, telephone (301) 435-1986.

PART 404--LICENSING OF GOVERNMENT OWNED INVENTIONS

0
15. The authority citation for 37 CFR part 404 continues to read as 
follows:

    Authority:  35 U.S.C. 207-209, DOO 30-2A.


0
16. Amend Sec.  404.7 by revising paragraphs (a)(1)(i) and (b)(1)(i) to 
read as follows:


Sec.  404.7  Exclusive, co-exclusive and partially exclusive licenses.

    (a)(1) * * *
    (i) Notice of a prospective license, identifying the invention and 
the prospective licensee, has been published in the Federal Register or 
other appropriate manner, providing opportunity for filing written 
objections within at least a 15-day period;
* * * * *
    (b)(1) * * *
    (i) Notice of a prospective license, identifying the invention and 
the prospective licensee, has been published in the Federal Register or 
other appropriate manner, providing opportunity for filing written 
objections within at least a 15-day period and following consideration 
of such objections received during the period;
* * * * *

0
17. Revise Sec.  404.8 to read as follows:


Sec.  404.8  Application for a license.

    (a) An application for a license should be addressed to the Federal 
agency having custody of the invention and shall normally include:
    (1) Identification of the invention for which the license is 
desired including the patent application serial number or patent 
number, title, and date, if known;
    (2) Identification of the type of license for which the application 
is submitted;
    (3) Name and address of the person, company, or organization 
applying for the license and the citizenship or place of incorporation 
of the applicant;
    (4) Name, address, and telephone number of the representative of 
the applicant to whom correspondence should be sent;
    (5) Nature and type of applicant's business, identifying products 
or services which the applicant has successfully commercialized, and 
approximate number of applicant's employees;
    (6) Source of information concerning the availability of a license 
on the invention;
    (7) A statement indicating whether the applicant is a small 
business firm as defined in Sec.  404.3(c);
    (8) A detailed description of applicant's plan for development or 
marketing of the invention, or both, which should include:
    (i) A statement of the time, nature and amount of anticipated 
investment of capital and other resources which applicant believes will 
be required to bring the invention to practical application;
    (ii) A statement as to applicant's capability and intention to 
fulfill the plan, including information regarding manufacturing, 
marketing, financial, and technical resources;
    (iii) A statement of the fields of use for which applicant intends 
to practice the invention; and
    (iv) A statement of the geographic areas in which applicant intends 
to manufacture any products embodying the invention and geographic 
areas where applicant intends to use or sell the invention, or both;
    (9) Identification of licenses previously granted to applicant 
under federally owned inventions;
    (10) A statement containing applicant's best knowledge of the 
extent to which the invention is being practiced by private industry or 
Government, or both, or is otherwise available commercially; and
    (11) Any other information which applicant believes will support a 
determination to grant the license to applicant.
    (b) An executed CRADA which provides for the use for research and 
development purposes by the CRADA collaborator under that CRADA of a 
Federally-owned invention in the Federal laboratory's custody (pursuant 
to 35 U.S.C. 209 and 15 U.S.C. 3710a(b)(1)), and which addresses the 
information in paragraph (a) of this section, may be treated by the 
Federal laboratory as an application for a license.

Kevin A. Kimball,
Chief of Staff.
[FR Doc. 2018-07532 Filed 4-12-18; 8:45 am]
BILLING CODE 3510-13-P