FAR 27.302—Policy.
Plain-English Summary
FAR 27.302 states the Government’s patent policy for inventions made under federally supported research and development, tying the FAR to 35 U.S.C. chapter 18, 37 CFR part 401, the Presidential Memorandum on Government Patent Policy, and Executive Order 12591. It explains the Government’s objectives for using the patent system, encouraging industry participation, promoting commercialization and public availability, preserving free competition and future research, and ensuring the Government receives sufficient rights while minimizing administrative cost. The section then addresses the contractor’s general right to elect title to a subject invention after disclosure, the limited circumstances when a contract may require assignment of title to the Government, and the contractor’s ability to request greater rights when the Government otherwise has title. It also covers special national security and DOE naval nuclear propulsion exceptions, the Government’s worldwide license in subject inventions, the Government’s right to receive title when the contractor fails to disclose or maintain rights, utilization reporting and confidentiality of those reports, and the Government’s march-in rights under 35 U.S.C. 203. In practice, this section is the core policy framework for allocating patent rights in federal R&D contracts and funding agreements, and it affects disclosure timing, title elections, patent prosecution decisions, reporting obligations, and the Government’s ability to intervene if inventions are not being made available to the public.
Key Rules
Government patent policy goals
The section begins by stating the policy objectives that guide patent-rights decisions: promote use and commercialization of federally supported inventions, encourage industry participation, preserve competition and future research, protect the public from nonuse or unreasonable use, and keep administration efficient. These goals shape how agencies interpret and apply patent-rights clauses.
Contractor may elect title
As a general rule, after required disclosure, a contractor may elect to retain title to a subject invention. This is the default Bayh-Dole framework for most federal research and development funding agreements.
Limited mandatory assignment cases
A contract may require assignment of title to the Government in specific situations, including foreign contractors or foreign-controlled entities, exceptional circumstances, national security determinations, certain DOE naval nuclear propulsion or weapons-related facilities, or where another statute or agency regulation requires it. These are exceptions, not the norm.
Greater rights may be requested
Even when the Government has the right to take title, the contractor may request greater rights in the invention. This preserves a path for contractors to seek ownership or expanded rights where appropriate under the implementing rules.
National security carveout for small business and nonprofits
When title is required under exceptional circumstances for national security reasons, small business concerns and nonprofit organizations still retain the right to elect ownership of unclassified inventions, or inventions not limited from dissemination by DOE within six months of reporting. This protects the Bayh-Dole policy for those entities unless security needs require otherwise.
Government worldwide license
The Government receives at least a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced the subject invention worldwide. Additional rights may be required to satisfy treaties or international agreements and must be included in the contract.
Government may obtain title later
The Government can receive title if the contractor fails to disclose on time, fails to elect title in a country, fails to file or continue patent or plant variety protection applications, stops paying maintenance fees or defending proceedings, or otherwise no longer wants to retain title. Filing through the European Patent Office or under the Patent Cooperation Treaty counts as election in the selected countries.
Utilization reporting is allowed and protected
Agencies may require periodic reports on how subject inventions are being used by the contractor or its licensees or assignees. These reports are confidential and may not be disclosed outside the Government without the contractor’s permission, and contractors should mark them confidential or proprietary.
March-in rights remain available
Under 35 U.S.C. 203, agencies may require the contractor, assignee, or exclusive licensee to grant additional rights in specified circumstances. This is the Government’s enforcement tool when the invention is not being made available or used as required by law.
Responsibilities
Contracting Officer / Agency
Include the proper patent-rights terms in the contract, apply the correct exceptions when foreign ownership, exceptional circumstances, national security, or statutory/regulatory requirements exist, and ensure any additional treaty-based rights are written into the contract. The agency must also protect confidential utilization reports and may exercise march-in or title rights when the statutory conditions are met.
Contractor
Disclose subject inventions as required, decide whether to elect title within the required time, file and maintain patent or plant variety protection applications when retaining rights, submit utilization reports when required, and mark those reports confidential or proprietary to reduce the risk of improper disclosure. The contractor must also comply with any Government title, license, or march-in obligations.
Small Business Concern / Nonprofit Organization
Follow the same disclosure and election requirements as other contractors, but in national-security exceptional-circumstances cases retain the special right to elect ownership of qualifying unclassified inventions or inventions not restricted by DOE within six months. These entities must still comply with reporting and patent-prosecution obligations if they keep title.
Assignee / Exclusive Licensee
Comply with march-in obligations if the Government invokes them, because the statute expressly reaches assignees and exclusive licensees as well as contractors. They may also be affected by title, license, and prosecution decisions tied to the subject invention.
Government authority with foreign intelligence or counterintelligence responsibility
Determine whether restricting or eliminating the contractor’s right to retain title is necessary to protect sensitive activities, and trigger the applicable national-security exception when justified.
Department of Energy
Apply the special rules for DOE naval nuclear propulsion and weapons-related programs, including the limited scope of funding-agreement restrictions and the exemption for contracts in support of DOE’s naval nuclear propulsion program.
Practical Implications
This section is the starting point for every patent-rights discussion in a federal R&D contract, so the exact clause language and any agency-specific deviations matter a great deal.
Missing disclosure deadlines or failing to elect title on time can cause the Government to obtain title, even if the contractor otherwise expected to keep the invention.
Contractors that keep title must actively manage patent prosecution, maintenance fees, and foreign filing decisions; abandoning rights can shift title to the Government in some countries.
Utilization reports are sensitive: agencies may ask for them, but they cannot be freely shared outside the Government, so contractors should treat them as confidential and proprietary.
March-in rights are uncommon but real, so contractors and exclusive licensees should ensure inventions are being developed and made available in a way that would withstand Government scrutiny if invoked.
Official Regulatory Text
(a) Introduction . In accordance with chapter 18 of title 35, U.S.C. (as implemented by 37 CFR part 401 ), Presidential Memorandum on Government Patent Policy to the Heads of Executive Departments and Agencies dated February 18, 1983, and Executive Order 12591, Facilitating Access to Science and Technology dated April 10, 1987, it is the policy and objective of the Government to- (1) Use the patent system to promote the use of inventions arising from federally supported research or development; (2) Encourage maximum participation of industry in federally supported research and development efforts; (3) Ensure that these inventions are used in a manner to promote free competition and enterprise without unduly encumbering future research and discovery; (4) Promote the commercialization and public availability of the inventions made in the United States by United States industry and labor; (5) Ensure that the Government obtains sufficient rights in federally supported inventions to meet the needs of the Government and protect the public against nonuse or unreasonable use of inventions; and (6) Minimize the costs of administering patent policies. (b) Contractor right to elect title . (1) Generally, pursuant to 35 U.S.C. 202 and the Presidential Memorandum and Executive order cited in paragraph (a) of this section, each contractor may, after required disclosure to the Government, elect to retain title to any subject invention. (2) A contract may require the contractor to assign to the Government title to any subject invention- (i) When the contractor is not located in the United States or does not have a place of business located in the United States or is subject to the control of a foreign government (see 27.303 (e)(1)(i)); (ii) In exceptional circumstances, when an agency determines that restriction or elimination of the right to retain title in any subject invention will better promote the policy and objectives of chapter 18 of title 35, U.S.C. and the Presidential Memorandum; (iii) When a Government authority, that is authorized by statute or executive order to conduct foreign intelligence or counterintelligence activities, determines that the restriction or elimination of the right to retain title to any subject invention is necessary to protect the security of such activities; (iv) When the contract includes the operation of a Government-owned, contractor-operated facility of the Department of Energy (DOE) primarily dedicated to the Department’s naval nuclear propulsion or weapons related programs and all funding agreement limitations under 35 U.S.C. 202(iv) for agreements with small business concerns and nonprofit organizations are limited to inventions occurring under the above two programs; or (v) Pursuant to statute or in accordance with agency regulations. (3) When the Government has the right to acquire title to a subject invention, the contractor may, nevertheless, request greater rights to a subject invention (see 27.304-1 (c)). (4) Consistent with 37 CFR part 401 , when a contract with a small business concern or nonprofit organization requires assignment of title to the Government based on the exceptional circumstances enumerated in paragraph (b)(2)(ii) or (iii) of this section for reasons of national security, the contract shall still provide the contractor with the right to elect ownership to any subject invention that- (i) Is not classified by the agency; or (ii) Is not limited from dissemination by the DOE within 6 months from the date it is reported to the agency. (5) Contracts in support of DOE’s naval nuclear propulsion program are exempted from this paragraph (b). (6) When a contract involves a series of separate task orders, an agency may structure the contract to apply the exceptions at paragraph (b)(2)(ii) or (iii) of this section to individual task orders. (c) Government license . The Government shall have at least a nonexclusive, nontransferable, irrevocable, paid-up license to practice, or have practiced for or on behalf of the United States, any subject invention throughout the world. The Government may require additional rights in order to comply with treaties or other international agreements. In such case, these rights shall be made a part of the contract (see 27.303 ). (d) Government right to receive title. (1) In addition to the right to obtain title to subject inventions pursuant to paragraph (b)(2)(i) through (v) of this section, the Government has the right to receive title to an invention- (i) If the contractor has not disclosed the invention within the time specified in the clause; or (ii) In any country where the contractor- (A) Does not elect to retain rights or fails to elect to retain rights to the invention within the time specified in the clause; (B) Has not filed a patent or plant variety protection application within the time specified in the clause; (C) Decides not to continue prosecution of a patent or plant variety protection application, pay maintenance fees, or defend in a reexamination or opposition proceeding on the patent; or (D) No longer desires to retain title. (2) For the purposes of this paragraph, filing in a European Patent Office Region or under the Patent Cooperation Treaty constitutes election in the countries selected in the application(s). (e) Utilization reports . The Government has the right to require periodic reporting on how any subject invention is being used by the contractor or its licensees or assignees. In accordance with 35 U.S.C. 202(5) and 37 CFR part 401 , agencies shall not disclose such utilization reports to persons outside the Government without permission of the contractor. Contractors should mark as confidential/proprietary any utilization report to help prevent inadvertent release outside the Government. (f) March-in rights. (1) Pursuant to 35 U .S.C. 203, agencies have certain march-in rights that 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 responsible applicants, upon terms that are reasonable under the circumstances. If the contractor, assignee or exclusive licensee of a subject invention refuses to grant such a license, the agency can grant the license itself. March-in rights may be exercised only if the agency determines that this action is necessary- (i) 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 the field(s) of use; (ii) To alleviate health or safety needs that are not reasonably satisfied by the contractor, assignee, or their licensees; (iii) To meet requirements for public use specified by Federal regulations and these requirements are not reasonably satisfied by the contractor, assignee, or licensees; or (iv) Because the agreement required by paragraph (g) of this section has neither been obtained nor waived, or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of its agreement obtained pursuant to paragraph (g) of this section. (2) The agency shall not exercise its march-in rights unless the contractor has been provided a reasonable time to present facts and show cause why the proposed agency action should not be taken. The agency shall provide the contractor an opportunity to dispute or appeal the proposed action, in accordance with 27.304-1 (g). (g) Preference for United States industry . In accordance with 35 U.S.C. 204 , no contractor that receives title to any subject invention and no assignee of the contractor shall grant to any person the exclusive right to use or sell any subject invention in the United States unless that person agrees that any products 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 this agreement may be waived by the agency upon a showing by the contractor or 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) Special conditions for nonprofit organizations’ preference for small business concerns. (1) Nonprofit organization contractors are expected to use reasonable efforts to attract small business licensees (see paragraph (i)(4) of the clause at 52.227-11 , Patent Rights-Ownership by the Contractor). What constitutes reasonable efforts to attract small business licensees will vary with the circumstances and the nature, duration, and expense of efforts needed to bring the invention to the market. (2) Small business concerns that believe a nonprofit organization is not meeting its obligations under the clause may report the matter to the Secretary of Commerce. To the extent deemed appropriate, the Secretary of Commerce will undertake informal investigation of the matter, and may discuss or negotiate with the nonprofit organization ways to improve its efforts to meet its obligations under the clause. However, in no event will the Secretary of Commerce intervene in ongoing negotiations or contractor decisions concerning the licensing of a specific subject invention. These investigations, discussions, and negotiations involving the Secretary of Commerce will be in coordination with other interested agencies, including the Small Business Administration. In the case of a contract for the operation of a Government-owned, contractor-operated research or production facility, the Secretary of Commerce will coordinate with the agency responsible for the facility prior to any discussions or negotiations with the contractor. (i) Minimum rights to contractor. (1) When the Government acquires title to a subject invention, the contractor is normally granted a revocable, nonexclusive, paid-up license to that subject invention throughout the world. The contractor’s license extends to any of its domestic subsidiaries and affiliates within the corporate structure of which the contractor is a part and includes the right to grant sublicenses to the extent the contractor was legally obligated to do so at the time of contract award. The contracting officer shall approve or disapprove, in writing, any contractor request to transfer its licenses. No approval is necessary when the transfer is to the successor of that part of the contractor’s business to which the subject invention pertains. (2) In response to a third party’s proper application for an exclusive license, the contractor’s domestic license may be revoked or modified to the extent necessary to achieve expeditious practical application of the subject invention. The application shall be submitted in accordance with the applicable provisions in 37 CFR part 404 and agency licensing regulations. The contractor’s license will not be revoked in that field of use or the geographical areas in which the contractor has achieved practical application and continues to make the benefits of the subject invention reasonably accessible to the public. The license in any foreign country may be revoked or modified to the extent the contractor, its licensees, or its domestic subsidiaries or affiliates have failed to achieve practical application in that country. (See the procedures at 27.304-1 (f).) (j) Confidentiality of inventions . Publishing information concerning an invention before a patent application is filed on a subject invention may create a bar to a valid patent. To avoid this bar, agencies may withhold information from the public that discloses any invention in which the Government owns or may own a right, title, or interest (including a nonexclusive license) (see 35 U.S.C. 205 and 37 CFR part 401 ). Agencies may only withhold information concerning inventions for a reasonable time in order for a patent application to be filed. Once filed in any patent office, agencies are not required to release copies of any document that is a part of a patent application for those subject inventions. (See also 27.305-4 .)