FAR 28.105-2—Patent infringement bonds.
Plain-English Summary
FAR 28.105-2 addresses when a contracting officer may require a patent infringement bond in contracts that include patent indemnity. The section is narrow but important: it limits the Government’s ability to demand this bond to situations where no performance bond is furnished and the contractor’s financial responsibility is unknown or doubtful. It also assigns the contracting officer the duty to set the bond’s penal sum, meaning the officer must decide the amount of coverage needed rather than leaving it to the contractor or a standard formula. In practice, this provision is meant to balance risk protection for the Government against unnecessary bonding burdens on contractors. It applies only in the specific context of patent indemnity and should be read as a conditional authority, not a general requirement to bond all patent-related risk.
Key Rules
Only for patent indemnity contracts
A patent infringement bond may be required only in contracts that provide for patent indemnity. If the contract does not include patent indemnity, this section does not authorize the bond.
No performance bond furnished
The bond may be required only when a performance bond is not furnished. If a performance bond is already in place, this section does not permit an additional patent infringement bond under this authority.
Financial responsibility must be uncertain
The contractor’s financial responsibility must be unknown or doubtful before the bond can be required. This makes the bond a risk-based safeguard, not a routine requirement.
Contracting officer sets penal sum
The contracting officer must determine the penal sum of the bond. The amount should reflect the level of protection needed for the Government based on the circumstances of the procurement.
Responsibilities
Contracting Officer
Decide whether the contract includes patent indemnity and whether the conditions for requiring a patent infringement bond are met. If the bond is required, determine the penal sum.
Contractor
Provide the patent infringement bond if the contracting officer properly requires it under this section, and ensure the bond amount and terms satisfy the solicitation or contract requirements.
Agency
Apply this authority consistently and only in the limited circumstances allowed, so that bonding requirements do not exceed what the regulation permits.
Practical Implications
This section is a narrow exception, so contracting officers should not treat patent infringement bonds as a standard clause-driven requirement.
Before requiring the bond, the officer should confirm both conditions: no performance bond and contractor financial responsibility that is unknown or doubtful.
The penal sum is not preset, so poor documentation of how the amount was chosen can create disputes or weaken the Government’s position later.
Contractors should watch for patent indemnity language in solicitations because it can trigger an additional bonding requirement if the regulatory conditions are met.
Because the rule is conditional, misapplying it can lead to unnecessary bonding costs or an unsupported requirement that may be challenged.
Official Regulatory Text
(a) Contracts providing for patent indemnity may require these bonds only if- (1) A performance bond is not furnished; and (2) The financial responsibility of the contractor is unknown or doubtful. (b) The contracting officer shall determine the penal sum.