52.227-7 Patents-Notice of Government Licensee
Source: FAR 52.227-7 on acquisition.gov
Offerors must declare if they own or are licensed under a specified patent, or risk having the royalty amount added to their evaluated price.
Overview
FAR 52.227-7, "Patents-Notice of Government Licensee," is a solicitation provision used when the Government is obligated to pay a royalty under a license agreement with a patent owner for a proposed acquisition. The provision requires the contracting officer to specify the relevant patent number and royalty rate in the solicitation. Offerors must indicate whether they are the owner or a licensee of the specified patent. If an offeror does not declare ownership or licensee status, their offer will be evaluated by adding the royalty amount to their price, ensuring the Government accounts for royalty costs in its evaluation process.
Key Rules
- Disclosure of Patent and Royalty
- The solicitation must state the patent number and royalty rate applicable to the acquisition.
- Offeror Declaration
- Offerors must indicate if they are the owner or a licensee of the patent.
- Evaluation Adjustment
- If an offeror does not declare ownership or licensee status, the Government will add the royalty amount to their offer for evaluation purposes.
Responsibilities
- Contracting Officers: Must fill in the patent number and royalty rate in the solicitation and ensure the provision is included when required.
- Contractors/Offerors: Must declare if they are the patent owner or licensee; failure to do so results in a price adjustment during evaluation.
- Agencies: Ensure compliance with royalty payment obligations and proper evaluation of offers.
Practical Implications
- This provision ensures transparency regarding patent royalties and prevents the Government from inadvertently paying royalties twice. Offerors must be diligent in declaring their status to avoid unfavorable price adjustments. Contracting officers must accurately complete the provision to ensure fair and compliant evaluations.
As prescribed at 27.202-5(b), insert the following provision:
Patents-Notice of Government Licensee (Apr 1984)
The Government is obligated to pay a royalty applicable to the proposed acquisition because of a license agreement between the Government and the patent owner. The patent number is ____ [Contracting Officer fill in], and the royalty rate is ____ [Contracting Officer fill in]. If the offeror is the owner of, or a licensee under, the patent, indicate below:
□ Owner □ Licensee
If an offeror does not indicate that it is the owner or a licensee of the patent, its offer will be evaluated by adding thereto an amount equal to the royalty.
(End of provision)