FAR 27.304—Procedures.

General.

FAR 27.304-1 explains the procedural safeguards and decision points that apply when the Government deals with patent rights under contracts involving small business concerns and nonprofit organizations. It covers: questioning a contractor’s small business or nonprofit status; using exceptions under FAR 27.303(e)(1) and the required procedures in 37 CFR part 401; administrative review rights for small businesses and nonprofits; requests for greater rights in inventions when the Government owns the default rights; retention of rights by an inventor when the contractor declines title; assignment or licensing of Government employee co-inventor rights to the contractor; notice, show-cause, and appeal rights before revoking or modifying a contractor’s minimum license rights; march-in procedures; and special approval requirements for nonprofit contractors under the patent rights clause. In practice, this section is about due process, consistency with Bayh-Dole implementing regulations, and protecting both Government interests and contractor/inventor rights. It tells contracting officers when they may question status, when they must follow specific regulatory procedures, and how to handle ownership, licensing, and enforcement decisions involving subject inventions. For contractors, it identifies when they can seek greater rights, defend against revocation or modification, and challenge the use of certain exceptions. For nonprofits, it also signals that some licensing and assignment actions require agency approval.

Contracts placed by or for other Government agencies.

FAR 27.304-2 explains how patent rights clauses are handled when one Government agency awards a contract on behalf of another agency. It covers the requesting agency’s duty to identify special circumstances, specify the patent rights clause to be used, and state when its own clause is required because of statute, a deviation, or exceptional circumstances. It also addresses how to treat contracts involving severable versus nonseverable work, including when only the requesting agency’s clause may be used and when different clauses must apply to different portions of the work. In addition, the section assigns responsibility for any needed agency determinations, reports, or deviations, limits the awarding agency’s ability to change the requesting agency’s clause, and allows the requesting agency to direct how invention disclosures and other reporting are handled. Practically, this section is meant to prevent conflicts between agencies’ patent policies, ensure the right clause is inserted up front, and make clear which agency will administer subject inventions and related reporting. It matters because interagency contracting can create ownership, reporting, and compliance problems if the agencies do not agree in advance on the governing patent rights terms.

Subcontracts.

FAR 27.304-3 addresses how the patent and invention policies in FAR Subpart 27.3 apply when work is performed through subcontracts, not just prime contracts. It makes clear that the subpart’s policies and procedures reach all subcontract tiers, so a requirement does not stop with the first subcontractor but flows down through lower-tier arrangements as appropriate. It also establishes a dispute-resolution role for the contracting officer, working with counsel, when a prime contractor or subcontractor believes a patent-related clause is inappropriate for a subcontract or when a subcontractor refuses to accept the clause. Finally, it states a government policy against using subcontract award leverage to pressure subcontractors into giving the contractor rights in inventions arising from subcontract work. In practice, this section is about controlling patent-rights treatment across the supply chain, preventing improper bargaining tactics, and ensuring clause disputes are handled by the Government rather than left to private leverage.

Appeals.

FAR 27.304-4 explains how contractors may challenge certain patent-related decisions made by the Government and what the agency must provide when it takes those actions. It covers four specific actions: a refusal to extend the invention disclosure period under the patent rights clause at 52.227-11, a demand that the contractor convey title to the Government under 27.302(d)(1)(i) and (ii), a refusal to grant a waiver under the preference for United States industry at 27.302(g), and a refusal to approve an assignment under 27.304-1(h). The section requires the designated agency official to give the contractor a written statement explaining the basis and relevant facts for the action, so the contractor knows why the decision was made. It also allows agencies to establish appeal procedures, and those procedures should provide administrative due process and fact-finding standards. In practice, this section matters because it gives contractors a path to contest significant patent-rights decisions and requires agencies to make those decisions in a reasoned, reviewable way consistent with the policy goals of the Bayh-Dole Act, including 35 U.S.C. 200-206 and 210. If an action is already appealable under the Contract Disputes statute, that statute’s procedures satisfy the appeal requirement.