Patent Rights-Ownership by the Contractor
Contractors can retain ownership of inventions made under federal research contracts if they follow strict disclosure, election, and patent filing requirements, while the Government retains significant rights and oversight.
Overview
FAR 52.227-11, "Patent Rights—Ownership by the Contractor," governs the allocation of patent rights for inventions made under federal contracts for experimental, developmental, or research work. It allows contractors, including small businesses and nonprofit organizations, to retain ownership of inventions ("subject inventions") developed during contract performance, provided they comply with specific disclosure, election, and patent filing requirements. The clause also outlines the Government’s rights, including a nonexclusive license to use the invention, march-in rights, and the ability to take title under certain circumstances. Special provisions apply to nonprofit organizations, and the clause must be flowed down to certain subcontracts.
Key Rules
- Contractor Ownership and Disclosure
- Contractors may retain worldwide ownership of subject inventions if they timely disclose inventions, elect title, and file patent applications as required.
- Government Rights
- The Government retains a nonexclusive, irrevocable license to use the invention and may require assignment of title if the contractor fails to comply with disclosure or filing obligations.
- Reporting and Marking
- Contractors must report utilization of inventions, mark patent applications with government support statements, and notify the Government of key patent prosecution decisions.
- Preference for U.S. Industry and Small Businesses
- Exclusive licenses in the U.S. require domestic manufacturing, and nonprofits must give preference to small businesses when licensing.
- Subcontract Flowdown
- The clause (or its substance) must be included in subcontracts for research work with small businesses or nonprofits.
Responsibilities
- Contracting Officers: Ensure inclusion of the clause in applicable contracts and subcontracts; monitor compliance and exercise march-in rights if necessary.
- Contractors: Timely disclose inventions, elect title, file patent applications, report utilization, and flow down the clause to eligible subcontracts.
- Agencies: Oversee contractor compliance, protect government rights, and review nonprofit licensing practices.
Practical Implications
- This clause ensures federally funded inventions are commercialized for public benefit while protecting government interests. Contractors must establish robust internal procedures for invention disclosure and patent management. Failure to comply can result in loss of patent rights. Flowdown and reporting requirements are common compliance pitfalls.