[Federal Register Volume 65, Number 176 (Monday, September 11, 2000)]
[Proposed Rules]
[Pages 54826-54828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23080]


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DEPARTMENT OF COMMERCE

Assistant Secretary for Technology Policy

37 CFR Part 401

[Docket No. 95-0615153-0076-02]
RIN 0692-AA14


Rights to Inventions Made by Nonprofit Organizations and Small 
Business Firms Under Government Grants, Contracts, and Cooperative 
Agreements; Special Contracts To Provide Support Services for a 
Government-Owned and -Operated Laboratory Under a Cooperative Research 
and Development Agreement (CRADA) With a Collaborating Party

AGENCY: Assistant Secretary for Technology Policy, Commerce.

ACTION: Proposed rule with request for comments.

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SUMMARY: This proposed rule would authorize Federal agencies to use an 
alternate patent rights clause in certain contracts with nonprofit 
organizations and small business firms to provide support services at a 
Government-owned and -operated laboratory in connection with a CRADA 
between the laboratory and a collaborating party.

DATES: Comments must be received on or before October 11, 2000.

ADDRESSES: Comments should be mailed to Mr. Jon Paugh, Director, 
Technology Competitiveness, Office of Technology Policy, Room 4418, 
Herbert C. Hoover Building, U.S. Department of Commerce, Washington, DC 
20230.

FOR FURTHER INFORMATION CONTACT: Mr. John Raubitschek, Patent Counsel, 
at telephone: (202) 482-8010.

SUPPLEMENTARY INFORMATION: Under the authority of 35 U.S.C. 206 and the 
delegation by the Secretary of Commerce in section 3(g) of DOO 10-18, 
the Assistant Secretary of Commerce for Technology Policy may issue 
revisions to 37 CFR part 401.
    Under the Bayh-Dole Act (Pub. L. 96-517), nonprofit and small 
business contractors and grantees have the option to retain rights in 
their inventions in order to facilitate the commercialization of the 
results of federally funded research. However, this option may be 
limited if an exceptional circumstances determination is made by the 
funding agency under 37 CFR 401.3(a)(2). The criteria for such a 
determination are exacting and the contractor may appeal such a 
determination. There is a need to limit the rights of certain 
contractors and grantees in their inventions when

[[Page 54827]]

they are performing research for the Government under a cooperative 
research and development agreement (CRADA) with a collaborating party 
as authorized by the Federal Technology Transfer Act (Pub. L. 99-502) 
(FTTA). If these rights are not limited, the collaborating party would 
not receive the rights to which it would normally be entitled under a 
CRADA, which includes the option for an exclusive license to any CRADA 
invention made by a Government employee. Contractors are now being used 
at certain federally-owned and -operated laboratories of various 
agencies such as the Department of Defense and the Environmental 
Protection Agency. The contracts are not usually entered into for 
securing research expertise of a particular company or individual but 
rather to provide general support to the operation of the laboratories.
    Presently, some agencies using support contractors for CRADAs have 
notified their collaborating parties that they will endeavor to acquire 
the necessary rights from their contractors but cannot promise that 
those rights will be obtained. Other agencies preclude their 
contractors from working on CRADAs or permit them to own their 
inventions whether or not made under a CRADA. When the Department of 
Defense recently proposed a special clause for support contractors 
limiting rights in their inventions, the Department of Commerce was 
concerned that the exception was too broad and that the clause should 
encourage negotiation.
    Since the laboratory's obligations under the FTTA do not 
technically apply to the inventions of its contractors, the Department 
of Commerce does not consider that there is an actual conflict between 
the Bayh-Dole Act and the FTTA. Nevertheless, we do believe that the 
situation presents a conflict between the general policies of the Bayh-
Dole Act and the specific directives of the FTTA. We think that 
allowing a support contractor to work under a CRADA in such 
circumstances might be a negative factor or disincentive to the 
participation by private parties in a CRADA because they would not be 
assured of receiving rights in all CRADA inventions as mandated by the 
FTTA.
    Accordingly, we propose to add as an alternate a new subparagraph 
to paragraph (b) of the basic patent rights clause that encourages the 
contractor to negotiate with the collaborating party but in the absence 
of an agreement, provides certain minimum rights for the collaborating 
party in the contractor's inventions. The provision of those minimum 
rights in a contract constitutes an exceptional circumstances 
determination by the agency pursuant to 37 CFR 401.3(a)(2) and would be 
appealable under Sec. 401.4. The rights would be of the same scope and 
terms the collaborating party would receive in an invention made by a 
Government employee under the CRADA, which is typically an option for 
an exclusive license. Although negotiation should occur prior to the 
contractor starting work under the CRADA, it could be postponed with 
the permission of the Government until an invention is made by the 
contractor under the CRADA. The procedures for using the alternate 
clause are provided in new Sec. 401.3(a)(5). The alternate clause is 
optional and laboratories may allow support contractors to own their 
inventions made under a CRADA.

Classification

    Administrative Procedure Act: Pursuant to section 553(a)(2) of the 
Administrative Procedure Act (APA) (5 U.S.C. 553(a)(2)), the Assistant 
Secretary of Commerce for Technology Policy finds that the notice and 
comments requirements of the APA are not applicable. The Technology 
Administration, however, is interested in the views of interested 
parties and is, thus, soliciting comments on this policy.

Executive Order 12866

    This proposed rule has been determined to be not significant for 
purposes of E.O. 12866 (58 FR 51735, October 4, 1993).

Executive Order 13132

    This proposed rule does not contain policies with Federalism 
implications sufficient to warrant preparation of a Federalism 
assessment under E.O. 13132.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), the Assistant General Counsel for Legislation and Regulation of 
the Department of Commerce has certified to the Chief Counsel for 
Advocacy, Small Business Administration that the proposed rule change 
would not have a significant impact on a substantial number of small 
entities. The principal impact of the rule is to encourage negotiations 
between the support contractor and the laboratory's collaborating party 
under a CRADA.

Paperwork Reduction Act

    This proposed rule will impose no collection of information 
requirements under the Paperwork Reduction Act (44 U.S.C. 3501 et 
seq.).

List of Subjects in 37 CFR Part 401

    Inventions, Patents, Nonprofit Organizations, Small Business Firms.

    For the reasons set forth in the preamble, 37 CFR part 401 is 
amended as follows:

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

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

    Authority: 35 U.S.C. 206 and the delegation of authority by the 
Secretary of Commerce to the Assistant Secretary of Commerce for 
Technology Policy at sec. 3(g) of DOO 10-18.

    2. Section 401.3 is amended by adding a new paragraph (a)(5) to 
read as follows:


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

* * * * *
    (a) * * *
    (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, the contracting officer 
may include alternate paragraph (b) in the basic patent rights clause 
in Sec. 401.14. Because the use of the alternate is based on a 
determination of exceptional circumstances under Sec. 401.3(a)(2), the 
contracting officer shall ensure that the appeal procedures of 
Sec. 401.4 are satisfied whenever the alternate is used.
    3. A new paragraph (c) is added to Sec. 401.14 to read as follows:


Sec. 401.14  Standard patent rights clauses.

* * * * *
    (c) As prescribed in Sec. 401.3, replace (b) of the basic clause 
with the following paragraphs (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 (2) below, 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 support services at a Government 
owned and

[[Page 54828]]

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 try to negotiate an 
agreement with the CRADA collaborating party or parties over the 
rights to any subject invention the Contractor makes, solely or 
jointly, in the course of its work under the CRADA. The agreement 
shall be negotiated prior to the Contractor 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.

Kelly H. Carnes,
Assistant Secretary of Commerce for Technology Policy.
[FR Doc. 00-23080 Filed 9-8-00; 8:45 am]
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