28.105-2
Patent infringement bonds
Patent infringement bonds are only required when no performance bond is provided and the contractor's financial responsibility is uncertain, with the penal sum set by the contracting officer.
Overview
FAR 28.105-2 addresses the use of patent infringement bonds in government contracts that include patent indemnity provisions. These bonds are only required under two specific conditions: when a performance bond is not provided, and when the contractor's financial responsibility is either unknown or questionable. The regulation assigns the responsibility of determining the penal sum (the maximum amount payable under the bond) to the contracting officer. This ensures that the government is protected against potential patent infringement liabilities when there is uncertainty about the contractor's ability to cover such risks.
Key Rules
- Patent Infringement Bond Requirement
- Only required if no performance bond is furnished and the contractor's financial responsibility is unknown or doubtful.
- Penal Sum Determination
- The contracting officer is responsible for setting the penal sum of the bond.
Responsibilities
- Contracting Officers: Assess the need for a patent infringement bond based on the presence of a performance bond and the contractor's financial responsibility; determine the appropriate penal sum if a bond is required.
- Contractors: Must provide a patent infringement bond if required by the contracting officer under the specified conditions.
- Agencies: Ensure proper risk assessment and compliance with bond requirements.
Practical Implications
- This section exists to protect the government from financial risk related to patent infringement when dealing with contractors of uncertain financial standing and without a performance bond.
- Contractors should be prepared to demonstrate financial responsibility or provide the required bond if requested.
- Failure to comply may result in contract delays or disqualification.