and Human Services (HHS)
PUBLIC NOTICE: DEVIATION TO THE STANDARD PATENT RIGHTS CLAUSE (FAR 52.227-11
PATENT RIGHTS - RETENTION BY THE CONTRACTOR (SHORT FORM)), IN A CONTRACT TO BE
AWARDED UNDER THE NIH ROADMAP: MOLECULAR LIBRARIES SMALL MOLECULE REPOSITORY
RELEASE DATE: January 30, 2004
RFP RELEASE DATE: DECEMBER 31, 2003
NOTICE: NOT-RM-04-008
National Institutes of Health (NIH)
COMMENTS/ALTERNATIVE PLAN RECEIPT DATE: MARCH 2, 2004
DESCRIPTION
The NIMH is seeking public comments (or alternative plans) regarding potential use
of a deviation to the standard patent rights clause (FAR 52.227-11 Patent Rights -
Retention by the Contractor (Short Form), in a contract to be awarded under the NIH
Roadmap: Molecular Libraries Small Molecule Repository . The proposed clause is
included in full text below, and also in the solicitation for this contract
(NIMH-04-DB-0001), which can be accessed at:
http://www.nimh.nih.gov/grants/indexcon.cfm#RequestforProposal and in the
FedBizOpps at: http://vsearch1.eps.gov/servlet/SearchServlet.
If a Determination of Exceptional Circumstances (DEC) were implemented, this clause
deviation would serve to protect the pre-existing and future patent rights of
suppliers of proprietary materials for synthesis or inclusion in the compound
collection/repository. The proposed clause deviation only applies to discoveries
resulting from routine synthesis activities and repository activities involving the
use of proprietary materials (compounds and procedures). Discoveries resulting
from research activities pertaining to the development or modification of chemical
synthesis procedures, process development, or other unanticipated discoveries
developed by the contractor without the use of proprietary materials will be
covered by the standard Patent Rights Clause (FAR 52.227-11, Patent Rights -
Retention by the Contractor (Short Form) (June 1997). Furthermore, the Contractor
will have the right to ask for greater rights, as defined in the clause, if the
supplier of the proprietary compound is not interested in the subject invention.
Potential offerors and other interested parties are invited to submit comments
herein or provide alternative plans when responding to the solicitation for this
contract (http://www.nimh.nih.gov/grants/indexcon.cfm#RequestforProposal), which
would serve to meet the objectives/goals of this Program without the use of this
deviation. All plans and comments will be considered and discussed with interested
parties.
Any comments or alternative plans regarding this clause should be submitted, in
writing, by March 2, 2004, to Mr. Bruce Anderson, Contracting Officer, Contract
Management Branch, NIMH, NIH, 6001 Executive Blvd., Rm. 8154 (MSC 9661), Bethesda,
MD 20892 (for Fed Ex, UPS etc. use Rockville, MD 20852);Voice: (301) 443-2234; Fax:
(301) 443-0501; E-Mail: [email protected]. See solicitation for instructions on
submission of an alternative plan with a proposal.
The following Statement of Facts provides more detail into the potential use of a
deviated patent rights clause:
Statement of Facts
The primary goal of the Molecular Libraries initiative is to improve public health
by stimulating the discovery, development, and commercialization of new research
tools and potential therapeutic compounds for the treatment of a variety of
disorders and the validation of new targets for drug therapy. We believe the
synthesis and repository activities of this contract may constitute an exceptional
circumstance where the imposition of a FAR deviation, through a Determination of
Exceptional Circumstances (DEC), would further the achievement of the programmatic
goals and meet the objectives of 35 U.S.C. 200. Historically, the NIMH has
obtained the approval of DECs in similar contract programs where proprietary
materials are involved.
To meet the goals and objectives of the Molecular Libraries Small Molecule
Repository, this contract will need to acquire and maintain a library of hundreds
of thousands of diverse small molecules, which will become a major resource to
investigators for further evaluation in a wide variety of assays of biological
activity. The small molecules collected in this repository will be arrayed and
sent to screening centers (i.e., grantees, which are not part of this contract) or
investigators, to be evaluated and screened for a large number of possible new
activities and applications. Screening will enhance the identification of small
molecules that are useful as research tools (e.g., probes to alter the function of
novel proteins or molecular imaging probes) or as starting points for the
development of novel compounds with therapeutic potential. The contractor shall
maintain an appropriate quantity of each compound by either repurchasing additional
quantities, or through synthesis efforts. Under this contract, both proprietary and
non-proprietary materials will be provided directly by the compound suppliers (or
through NIH) to the contractor for inclusion in the compound collection/repository.
It is anticipated that some of the most unique and promising compounds with the
most interesting biological activities will be proprietary. Therefore, in order
for this program to succeed, it will be essential to obtain a sufficient flow of
proprietary materials.
Our previous experience and discussions with compound suppliers (i.e.,
investigators at academic institutions, biotechnology companies, and pharmaceutical
companies) have shown that they will not submit their proprietary materials without
complete assurance that their intellectual property rights will be protected, such
as that which could be provided through a DEC.
Through discussions with these organizations it was determined that, except for the
protection offered by this clause, the NIH would have no other method to gain
access to some of these promising compounds; this would result in a less effective
and less diverse and unique compound collection. As many of the compounds with the
most interesting activity will be proprietary, having an insufficient number of
these compounds submitted for inclusion in the repository would inhibit the
discovery of promising new leads for further development as potential research
tools or therapeutics. This would not appear to appropriately support the
objectives of 35 U.S.C. 200, et. seq., or benefit the public health under this
program.
Pharmaceutical and biotechnology companies are highly unlikely to invest in areas
such as the development of research compounds to be used as research tools, imaging
probes, or as therapeutics for rare or orphan diseases because of cost-restraints
and low potential returns. Therefore, this program will fill a critical need by
supporting and stimulating the development of much-needed research tools and
potential therapeutics that might not otherwise be developed. It is expected that
many investigators who use the compound collection will go on to further develop
these compounds into much-needed agents and therapeutics to further research and
benefit the public health.
We recognize the scientific expertise of the contractors and the importance of the
Bayh-Dole Act in protecting the intellectual property rights of contractors. While
Bayh-Dole provides incentives for the commercialization of Government supported
research and development by allowing contractors to retain rights to inventions,
the Act also permits an exception to this provision under exceptional
circumstances. In this instance, we believe that restriction or elimination of the
contractor’s right to retain title to subject inventions, in a narrow field, may be
needed to further the programmatic goals of research and development in order to
benefit public health.
If adopted, use of the proposed restricted Patent Rights clause has been narrowly
tailored to apply only to subject inventions using proprietary materials obtained
and evaluated under these contracts, and not to subject inventions outside the
scope of the deviated patent rights clause. The Contractor will have the right to
ask for greater rights, as defined in the clause, if the supplier of the
proprietary materials is not interested in licensing or pursuing the invention.
Furthermore, even if a DEC were implemented, rights to subject inventions made
without the use of proprietary materials would remain with the contractor, and will
be subject to the standard clause at FAR 52.227-11, Patent Rights-Retention by the
Contractor (Short Form) (June 1997).
Based on previous experience with similar programs, we have discussed and
considered approaches other than the use of a DEC for acquiring and evaluating
proprietary materials, but we are not currently aware of any viable alternatives
that would adequately address the concerns noted above.
[End of Statement of Facts]
Authority to use the following clause may be sought for the contract entitled
Molecular Libraries Small Molecule Repository :
52.227-11 Patent Rights (Deviation)
This clause deviation applies to discoveries resulting from routine synthesis or
repository activities involving the use of proprietary materials (compounds and
procedures). Discoveries resulting from research activities pertaining to the
development of new assays or the development or modification of chemical synthesis
procedures, process development or other unanticipated discoveries developed by the
contractor without the use of proprietary materials will be covered by the standard
Patent Rights Clause (FAR 52.227-11, Patent Rights Retention by the Contractor
(Short Form) (June 1997)
(a) Definitions. (1) Invention means any invention or discovery, which is or may
be patentable or otherwise protectable under title 35 of the United States Code, or
any novel variety of plant which is or may be protected under the Plant Variety
Protection Act (7 U.S.C. 2321, et, seq.)
(2) Made when used in relation to any invention, means the conception or first
actual reduction to practice of such invention.
(3) Nonprofit organization means a university or other institution of higher
education or an organization of the type described in section 501(c)(3) of the
Internal Revenue code of 1954 (26 U.S.C. 501(c)) and exempt from taxation under
section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit
scientific or educational organization qualified under a state nonprofit
organization statue.
(4) Practical application means to manufacture, in the case of a composition of
matter or product; to practice, in the case of a process or method, or to operate,
in the case of a machine or system; and, in each case, under such conditions as to
establish that the invention is being utilized and that its benefits are, to the
extent permitted by law or Government regulations, available to the public on
reasonable terms.
(5) Small business firm means a small business concern as defined at section 2 of
Pub. L. 85-536 (15 U.S.C. 632) and implementing regulations of the Administrator of
the Small Business Administration. For the purpose of this clause, the size
standards for small business concerns involved in Government procurement and
subcontracting at 13 CFR 121.3-8 and 13 CFR 121.3-12, respectively, will be used.
(6) Subject Invention for the purpose of this clause, means any invention of the
contractor conceived or first actually reduced to practice in the performance of
work under this contract, provided that in the case of a variety of plant, the date
of determination (as defined in Section 41(d) of the Plant Variety Protection Act,
7 U.S.C. 2401(d)) must also occur during the period of contract performance.
(7) Compound Suppliers means any entities or organizations that make available to
NIMH a composition of matter or product, patented or unpatented.
(8) NIMH means the National Institute of Mental Health of the National Institutes
of Health (NIH).
(9) NIH means the National Institutes of Health.
(b) Allocation of principal rights. (1) Retention of pre-existing rights.
Compound Suppliers shall retain all pre-existing rights to those compounds in which
the compound supplier has a proprietary interest.
(2) Assignment to the NIH or compound supplier. The contractor agrees to assign to
the NIH or to a Compound Supplier designated by NIMH the entire right, title, and
interest throughout the world to each subject invention except to the extent that
rights are retained by the contractor under subparagraph (b)(3) of this clause and
subject to a nonexclusive, nontransferable, irrevocable, paid-up license to the
United States Government to practice or have practiced the subject invention for or
on behalf of the United States throughout the world.
(3) Greater Rights Determinations. The contractor, or an employee-inventor after
consultation by the NIMH with the contractor, may request greater rights to an
identified subject invention of the contract in accordance with the procedures of
FAR paragraph 27.304-1(b) and FAR paragraph 27.304-1(c) (in the case of an
employee-inventor) subject to the considerations set forth below. The NIMH will
grant greater rights if the supplier is not interested in developing the invention.
In addition to the considerations set forth in paragraph 27.304-1(b), NIMH will
consider whether granting the requested greater rights will interfere with rights
of the Government or any Compound Supplier or otherwise impede the ability of the
Government or the Compound Supplier to develop and commercialize new compositions
of matter, compounds, product designs, dosage forms, therapies, technologies or
other approaches for the treatment of mental disorders in a rapid, efficient, and
cost-effective manner. A request for a determination of whether the contractor or
the employee-inventor is entitled to retain such greater rights must be submitted
to the NIMH Contracting Officer at the time of the first disclosure of the
invention pursuant to subparagraph (c)(1) below, or not later than eight (8) months
thereafter, unless a longer period is authorized in writing by the Contracting
Officer for good cause shown in writing by the contractor. Each determination of
greater rights under this contract shall be subject to paragraph (c) of the FAR
clause at 52.227-13, and to any reservations and conditions deemed to be
appropriate by NIMH such as the requirement to assign or exclusively license the
rights to subject inventions to the Compound supplier. A determination by NIMH
denying a request by the contractor for greater rights in a subject invention may
be appealed within 30 days of the date the contractor is notified of the
determination to an agency official at a level above the individual who made the
determination. If greater rights are granted, the contractor must file a patent
application on the invention. Upon request, the contractor shall provide the
filing date, serial number and title, a copy of the patent application (including
an English-language version if filed in a language other than English), and patent
number and issue date for any subject invention in any country for which the
contractor has retained title. Upon request, the contractor shall furnish the
Government an irrevocable power to inspect and make copies of the patent
application file.
(c) Invention disclosure by contractor. The contractor will disclose each subject
invention to the NIMH Contracting Officer as provided in paragraph (j) within two
months after the inventor discloses it in writing to contractor personnel
responsible for patent matters. The disclosure to the NIMH Contracting Officer
shall be in the form of a written report and shall identify the contract under
which the invention was made and the inventor(s). It shall be sufficiently
complete in technical detail to convey a clear understanding to the extent known at
the time of the disclosure, of the nature, purpose, operation, and the physical,
chemical, biological or electrical characteristics of the invention. The
disclosure shall also identify any publication, on sale (offer for sale), or public
use of the invention and whether a manuscript describing the invention has been
submitted for publication and, if so, whether it has been accepted for publication
at the time of disclosure. In addition, after disclosure to the agency, the
contractor will promptly notify the agency of the acceptance of any manuscript
describing the invention for publication or of any on sale or public use planned by
the contractor.
(d) Contractor action to protect the Government’s interest. (1) The contractor
agrees to execute or to have executed and promptly deliver to the NIH all
instruments necessary to (i) Establish or confirm the rights the Government has
throughout the world in subject inventions pursuant to paragraph b.2. above, and
(ii) Convey title to the NIH or to a Compound Supplier when requested under
paragraph b.2. of this clause and to enable the NIH or a Compound supplier to
obtain patent protection throughout the world in that subject invention.
(2) The contractor agrees to require, by written agreement, its employees, other
than clerical and nontechnical employees, to disclose promptly in writing to
personnel identified as responsible for the administration of patent matters and in
a format suggested by the contractor each subject invention made under contract in
order that the contractor can comply with the disclosure provisions of paragraph
(c) of this clause, and to execute all papers necessary to file patent applications
on subject inventions and to establish the Government’s right or a Compound
Supplier’s right in the subject inventions. This disclosure format should require,
as a minimum, the information required by subparagraph (c)(1) of this clause. The
contractor shall instruct such employees, through employee agreements or other
suitable educational programs, on the importance of reporting inventions in
sufficient time to permit the filing of patent applications prior to U.S. or
foreign statutory bars. The contractor will notify the NIH of any decisions not to
continue the prosecution of a patent application, pay maintenance fees, or defend
in a reexamination or opposition proceeding on a patent, in any country, not less
than 30 days before the expiration of the response period required by the relevant
patent office.
(3) The contractor agrees to include, within the specification of any United States
patent application it files and any patent issuing thereon covering a subject
invention the following statement, This invention was made with Government support
under (identify the contract) awarded by the National Institute of Mental Health.
The Government has certain rights in the invention.
(4) The contractor agrees to provide a final invention statement and certification
prior to the close-out of the contract listing all subject inventions or stating
that there were none.
(e) Subcontracts. (1) The contractor will include this clause, suitably modified
to identify the parties, in all subcontracts, regardless of tier, for experimental,
developmental, or research work. The subcontractor will retain all rights provided
for the contractor in this clause, and the contractor will not, as part of the
consideration for awarding the contract, obtain rights in the subcontractor’s
subject inventions.
(2) In the case of subcontracts, at any tier, NIH, the subcontractor, and the
contractor agree that the mutual obligations of the parties created by this clause
constitute a contract between the subcontractor and NIH with respect to the matters
covered by the clause; provided, however, that nothing in this paragraph is
intended to confer any jurisdiction under the Contract Disputes Act in connection
with proceedings under paragraph (c)(1)(ii) of FAR clause 52.227-13 which is
incorporated by reference in paragraph b.3 of this clause.
(f) Reporting on utilization of subject inventions in the event greater rights are
granted to the contractor. The contractor agrees to submit, on request, periodic
reports no more frequently than annually on the utilization of a subject invention
or on efforts at obtaining such utilization that are being made by the contractor
or its licensees or assignees when the NIH has granted a request under subparagraph
b.3. Such reports shall include information regarding the status of development,
date of first commercial sale or use, gross royalties received by the contractor,
and such other data and information as the agency may reasonably specify. The
contractor also agrees to provide additional reports as may be requested by the NIH
in connection with any march-in proceeding undertaken by the NIH in accordance with
paragraph (h) of this clause. As required by 35 U.S.C. 202(c)(5), the NIH agrees
it will not disclose such information to persons outside the Government without
permission of the contractor.
(g) Preference for United States industry in the event greater rights are granted
to the contractor. Notwithstanding any other provision of this clause, the
contractor agrees that neither it nor any assignee will grant to any person the
exclusive right to use or sell any subject invention in the United States unless
such person agrees that any product embodying the subject invention or produced
through the use of the subject invention will be manufactured substantially in the
United States. However, in individual cases, the requirement for such an agreement
may be waived by the NIH upon a showing by the contractor or its assignee that
reasonable but unsuccessful efforts have been made to grant licenses on similar
terms to potential licensees that would be likely to manufacture substantially in
the United States or that under the circumstances domestic manufacture is not
commercially feasible.
(h) March-in rights in the event greater rights are granted to the contractor. The
contractor agrees that, with respect to any subject invention in which it has
acquired title through the exercise of the rights specified in subparagraph (b)(3),
the NIH has the right in accordance with the procedures in FAR paragraph 27.304-1
and any supplemental regulations of the agency to require the contractor, an
assignee or exclusive licensee of a subject invention to grant a nonexclusive,
partially exclusive, or exclusive license in any field of use to a responsible
applicant or applicants, upon terms that are reasonable under the circumstances,
and if the contractor, assignee, or exclusive licensee refuses such a request the
NIH has the right to grant such a license itself if the NIH determines that
(1) Such action is necessary because the contractor or assignee has not taken, or
is not expected to take within a reasonable time, effective steps to achieve
practical application of the subject invention in such field of use;
(2) Such action is necessary to alleviate health or safety needs which are not
reasonably satisfied by the contractor, assignee, or their licensees;
(3) Such action is necessary to meet requirements for public use specified by
Federal regulations and such requirements are not reasonably satisfied by the
contractor, assignee, or licensees; or
(4) Such action is necessary because the agreement required by paragraph (g) of
this clause has not been obtained or waived or because a licensee of the exclusive
right to use or sell any subject invention in the United States is in breach of
such agreement.
(i) Special provisions for contracts with nonprofit organizations in the event
greater rights are granted to the contractor. If the contractor is a nonprofit
organization, it agrees that
(1) Rights to a subject invention in the United States may not be assigned without
the approval of the NIH, except where such assignment is made to an organization
which has as one of its primary functions the management of inventions; provided,
that such assignee will be subject to the same provisions as the contractor;
(2) The contractor will share royalties collected on a subject invention with the
inventor, including Federal employee co-inventors (when the NIH deems it
appropriate) when the subject invention is assigned in accordance with 35 U.S.C.
202(e);
(3) The balance of any royalties or income earned by the contractor with respect to
subject inventions, after payment of expenses, (including payments to inventors)
incidental to the administration of subject inventions will be utilized for the
support of scientific research or education; and
(4) It will make efforts that are reasonable under the circumstances to attract
licensees of subject inventions that are small business firms, and that it ill give
a preference to a small business firm when licensing a subject invention if the
contractor determines that the small business firm has plan or proposal for
marketing the invention which, if executed, is equally as likely to bring the
invention to practical application as any plans or proposals from applicants that
are not small business firms; provided, that the contractor is also satisfied that
the small business firm has the capability and resources to carry out its plan or
proposal. The decision whether to give a preference in any specific case will be
at the discretion of the contractor. However, the contractor agrees that the
Secretary of Commerce may review the contractor’s licensing program and decisions
regarding small business applicants, and the contractor will negotiate changes to
its licensing policies, procedures, or practices with the Secretary of Commerce
when the Secretary’s review discloses that the contractor could take reasonable
steps to more effectively implement the requirements of this subparagraph.
(j) Communications. All invention disclosures and requests for greater rights
shall be sent to the NIMH Contracting Officer. Additionally, a copy of all
disclosures, confirmatory licenses to the Government, face page of the patent
applications, waivers and other routine communications should be sent to the Office
of Extramural Inventions and Technology Resources Branch, OPERA, National
Institutes of Health, Rockledge, II, 6701 Rockledge Drive, Room 3190, MSC 7750,
Bethesda, MD 20892-7750
Weekly TOC for this Announcement
NIH Funding Opportunities and Notices
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