PLANNED MODIFICATION OF RIGHTS TO SUBJECT INVENTIONS MADE THROUGH FUNDING 
AGREEMENTS TO FOREIGN ENTITIES

Release Date:  March 14, 2002		

NOTICE:  NOT-OD-02-039  

UPDATES: 
Foreign entities allowed to maintain rights in intellectual property, see NOT-OD-06-005
See also, NOT-OD-02-065 and NOT-OD-03-063
 
National Institutes of Health 

The National Institutes of Health (NIH) is planning a change in policy that 
will affect the right to elect title to inventions made under funding 
agreements (grants, cooperative agreements, contracts, subgrants, and 
subcontracts) to foreign entities.
  
Foreign entities, for the purposes of this policy change are defined as 
entities that are not located in the United States, that do not have a place 
of business located in the U.S. or that are subject to the control of a 
foreign government (48 CFR 27.303, 37 CFR 401.3(a)(1)). 

Sound public policy dictates that benefits of NIH-funded technology must be 
consistent with the best interest of U.S. citizens.  Intellectual property 
developed with NIH funding should be managed to provide the maximum benefit to 
the health of those citizens.  The automatic release to foreign entities of 
intellectual property developed at the expense of U.S. taxpayers could lead to 
a competitive disadvantage for U.S. firms or lead to a situation where a 
technology with significant public health benefit is controlled by a foreign 
entity.  Accordingly, NIH has decided to pursue policy measures that will 
afford the government better control over the disposition of right and title 
to inventions made by foreign entities under NIH funding agreements.  

As permitted by 48 CFR 27.303 for contracts and 37 CFR 401.3(a)(1) for grants, 
NIH has determined that the patent rights clauses for contracts and grants 
(and for subcontracts and subgrants) with foreign entities shall be modified 
to provide the United States Government with the right and title to Subject 
Inventions, i.e., those inventions conceived or first actually reduced to 
practice in the performance of the contract or grant (or subcontracts or 
subgrants) awarded to the foreign entity. 

NIH intends to implement this change in policy for contracts through the use 
of the patent rights clause for contracts (and subcontracts) at FAR 52.227.13, 
"Patent Rights - Acquisition by the Government", modified to remove the 
nonexclusive license for the contractor where the Government has title to a 
Subject Invention.  An abbreviated version of this clause will be adapted for 
grants and subgrants. When implemented the policy will provide for the foreign 
entity to retain the right to elect to retain title to their Subject 
Inventions in their country, while the NIH will have the right to the entire 
right, title and interest in all other countries.  This deviation from 
standard patent rights policy does not preclude foreign entities from 
requesting greater rights on a case-by-case basis. For example, the foreign 
entity could request a license in Subject Inventions in which the Government 
has title, or they could request title in designated countries.  

Further notice and indication of effective date of the policy change will be 
forthcoming by the end of FY02.

For additional information on this notice, contact:

George Stone, Ph.D.
Chief, Extramural Inventions and 
  Technology Resources Branch
Office of Extramural Research
National Institutes of Health
6705 Rockledge Drive MSC 7980
Bethesda, MD 20892-7980
Tel: (301) 435-0679
FAX: (301) 480-0272
e-mail: [email protected]

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