79/ and makes recommendations to the NASA Administrator. ERDA's approach is to negotiate waivers while the contract is being negotiated, with the same personnel negotiating the contract scope of work and other related issues. This approach has been taken because of ERDA's belief that patent waivers will directly impact the Agency's mission and program by affecting the selection of contractors and the utilization of the program results. Accordingly, the questions of whether or not waivers are granted and the scope of any waiver is part of the overall procurement considerations. Based on our limited experience in negotiating advance waivers, prospective contractors seldom have requested all rights to all inventions that may result from the contract effort, but instead, are primarily concerned with a particular field of technology or a particular area of their business. Under the approach of negotiating advance patent waivers, therefore, the needs of ERDA in assuring widespread commercial utilization of its research results, the equities of the contractor, and its concern over a particular line of business, can often be reconciled and accommodated during negotiations. In addition, once the contract has been negotiated along with the waiver, the contract is ready for approval without delays in the contracting process occasioned by considering the waiver independently. Although waivers will be negotiated by the officials 79/ NASA Patent Waiver Regulations, 14 CFR 100; NASA Procurement Regulations 9.101. NASA procedures provide for the expedited consideration of advance waivers by a panel of the Inventions and Contributions Board, NASA NMI 1152.24. negotiating the contract, all waivers must be considered by the General Counsel and his decision must be concurred in by the responsible program 80/ officials. Any disagreement over a proposed waiver decision is sub mitted to the Administrator for resolution. b. Revocable Nonexclusive License to the Contractor Another emotional issue involves the nature of the license retained by the contractor when the Government acquires title to resulting inventions. The proposed regulations provide that normally the contractor will retain a revocable, not an irrevocable, license to such inventions. This provision represents a change not only from AEC's policies, but from the previous policy used by most Federal agencies. A similar change will be found in the FPR and the ASPR. The change was considered necessary if ERDA is to have a viable patent licensing program. While ERDA's patent licensing regulations, as well as those of GSA, emphasize the granting of nonexclusive licenses, they also permit the granting of exclusive rights for limited periods of time and limited fields of use if an invention is not otherwise commercialized. Contractors have argued that it is neither fair nor equitable to deny the contractor the right to utilize its own invention. They also argued that they license technology in packages and that if an invention is to be part of such a package, they need both irrevocable rights, with the right to grant sublicenses. 80/ The patent rights clause of the proposed ERDA-PR states that the license retained by the contractor cannot be revoked in any field of use or geographical location in which the contractor is actually utilizing the invention, or where he is making efforts in that direction. Secondly, the license can only be revoked to the extent that it is necessary to do so for the granting of a limited exclusive license. Such licenses, in turn, can only be granted if a finding is made that (1) the invention is not being utilized nonexclusively, (2) will not likely be utilized nonexclusively, and (3) exclusivity is necessary to encourage the investment of risk capital to commercialize the invention. As previously stated, such licenses are granted only for limited periods of time and in specific fields of use. In addition, the licensee must make firm commitments for the investment of risk capital. As a result, not many exclusive licenses have been granted by the Government. In fact, there have been fewer than 81/ 20 such licenses granted on the 24,000 or so government-owned patents. And finally, the contractor has a right to be notified and heard prior to the revocation of any license. Accordingly, the possibility of revoking a nonexclusive license as a practical matter, is almost nonexistent if the contractor is utilizing the invention. Nevertheless, this is a very sensitive point with industry even though most Federal agencies are committed in this direction. 81/ This The FCST Annual Report on Government Patent Policy, (Combined years issue is negotiable, however, as there are provisions in the proposed 82/ regulations for the granting of irrevocable licenses, and ERDA has done so in areas where the contractor has substantial equities or where the contractor is cost-sharing in the contract. The issue of the Government's acquiring any rights to a contractor's background patents is perhaps the most controversial and emotional issue raised by ERDA's proposed patent regulations. It is ERDA's policy, however, based upon its programmatic needs and the legislative history of its patent policy, to obtain at least limited rights in a contractor's background patents in the appropriate contracting situation. Normally contractors qualified to perform research, development or demonstration work under an ERDA contract will have developed a degree of expertise in the general field of activity of the contract. Therefore, it will not be unusual for a contractor to have an established patent position in the field of technology covered by the contract and to have ongoing R&D programs in this general field. Since the contractor is obligated to apply its best efforts to accomplish the objectives of the contract work, it is to be expected that inventions owned or controlled by the contractor would be utilized in connection with the contract work. If such inventions are or become the subject of a patent, they may be able to control the utilization of the results of the contract by the public and, therefore, affect the overall accomplishment of ERDA's mission of obtaining widespread commercial utilization of the results of its research, development and demonstration activities. It is for this reason that the proposed ERDA patent provisions generally require at least limited rights to a contractor's background patented inventions on behalf of the Government and/or third parties where these background patents could frustrate the objectives of ERDA's A sensitive area is the right that the Government retains whenever ERDA waives exclusive rights to inventions to the contractor. These rights include the ability to require the contractor to license others at reasonable royalties if the invention is required for use by government regulation, or is necessary to fulfill health, safety, or energy needs. This right is substantially the same as that found in the Presidential Patent Policy Statement. It has been narrowly construed to cover technology required for use by the Government, as a safety device required for use by the Federal Aviation Agency (FAA), or a technology that is badly needed in the public interest, as a Salk vaccine or cancer cure. Although the Presidential Policy has required contracts to include this right since 1963, it has yet to be exercised. The second "march-in" right gives the Administrator the authority to terminate a waiver, or to require a contractor to license others, if the contractor has not, or within a reasonable time does not, take effective steps to commercialize the invention. This right is a little stronger than that found in the Presidential Patent Policy Statement, but is required by our legislation. |