27.304-1 General
Source: FAR 27.304-1 on acquisition.gov
FAR 27.304-1 establishes procedures for verifying contractor status, managing patent rights, and ensuring due process for small businesses and nonprofits in federally funded contracts.
Overview
FAR 27.304-1 outlines general procedures and requirements for handling patent rights in contracts with small business concerns and nonprofit organizations. It addresses how agencies should verify contractor status, apply exceptions, process requests for greater rights to inventions, and manage rights retention and assignment. The section also covers procedures for revoking or modifying contractor rights, exercising march-in rights, and special requirements for nonprofit organizations. The regulation ensures that the interests of the government, public, and contractors are balanced in federally funded research and development contracts.
Key Rules
- Verification of Status
- Agencies may require evidence of small business or nonprofit status and may file size protests if necessary.
- Use of Exceptions
- Agencies must follow specific procedures before applying exceptions to patent rights, especially for small businesses and nonprofits, and must allow for administrative review.
- Greater Rights Determinations
- Contractors or their inventors can request greater rights to inventions, and contracting officers must consider public and government interests before granting such rights.
- Retention of Rights by Inventor
- If a contractor declines title to an invention, the agency may allow the inventor to retain rights, subject to certain conditions.
- Assignment of Rights in Co-Invented Inventions
- Agencies may assign rights from government employee co-inventors to contractors, subject to statutory conditions.
- Revocation or Modification of Rights
- Contractors must be given notice and an opportunity to respond before their rights are revoked or modified, with appeal rights provided.
- March-In Rights
- Agencies must follow regulatory procedures when exercising march-in rights.
- Nonprofit Organization Requirements
- Certain actions by nonprofit contractors require agency approval.
Responsibilities
- Contracting Officers: Verify contractor status, follow procedures for exceptions, process greater rights requests, provide notices for revocation/modification, and ensure compliance with regulatory procedures.
- Contractors: Provide evidence of status, request greater rights as needed, comply with rights retention and assignment procedures, and respond to notices regarding rights.
- Agencies: Oversee compliance, process administrative reviews, assign rights appropriately, and follow march-in and licensing procedures.
Practical Implications
- This section ensures proper management of patent rights in federally funded contracts, protecting government and public interests while allowing contractors to benefit from their inventions. Contractors must be proactive in providing documentation, understanding their rights, and responding to agency actions. Common pitfalls include failing to provide timely evidence of status, misunderstanding rights retention, or missing deadlines for appeals or requests.
(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 http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title35-section202&num=0&edition=prelim" target="_blank">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.