Government Owned Patents: Everything You Need to Know
Government-owned patents exist on inventions that have come from government-funded research.3 min read
Government Owned Patents
Government-owned patents exist on inventions that have come from government-funded research. This type of research can exist in all types of industries among federal contractors, universities, corporations, small businesses, and research institutes. The government owns research facilities and provides research grants and procurement contracts to businesses in the private sector. Through these endeavors, the federal government provides funding for nearly half of the research and development efforts on a national scale, and because of its major investment, the government has the highest number of patent rights in the country.
When funding research and development, the federal government enters into various types of contracts, including:
- Research grant agreements
- Procurement contracts
- Cooperative agreements
These contracts and agreements exist to set the terms of developmental, experimental, and research work funded at least partially by the federal government. Any inventions that come from these federally funded R&D efforts are retained by the U.S. Federal Government. Those rights are included in the “Government Interest Statement,” found on every patent and patent application in the country.
Those rights include irrevocable and non-exclusive licenses that are free of royalties on thousands of patents owned by the U.S. Government. The government also has all types of other rights associated with its patents, including the right to approve assignments, march-in rights, the right to require a license on a background patent, the right to require licensing by the owner, the right to limit the terms of the agreement, and the right to reverse ownership.
One complex problem that comes from R&D funded by the federal government is deciding who owns the right to the patent, between any government employees, university employees, government contractors or subcontractors, and universities, as well as the government itself.
When deciding how to allocate government funds for R&D, the process is heavily regulated by federal acquisition regulations, federal laws, and executive orders, along with policies and regulations from more than 25 different governmental agencies. When allocating patent rights between the government and governmental employees, this action is detailed in Executive Order 10096. Government employees are not contracted in their employment, which is different from employees in the private sector.
In 1950, Executive Order 10096 went into effect to create a universal method to allocate patent rights between government agencies and their employees. The majority of patents owned by the federal government exist under this executive order's provisions.
Within the executive order, the main section details that the federal government obtains all rights to inventions made by employees if the invention:
- Is created using government equipment or facilities
- Is created during working hours
- Is created with the assistance of another government employee on duty
- Relates to the inventor's official duties
An additional provision under the order states that the government does not have to take title for the invention if it doesn't serve a benefit. For example, an invention created by an employee using government materials or time only minimally does not require the government to take title. If the government doesn't have sufficient interest in the invention, it may have the right to take title but could elect not to do so. Even when the government chooses not to take title, it does retain a royalty-free, non-exclusive, and irrevocable license, as well as the power to grant additional licenses.
The executive order includes guidelines to allocate patent rights, but allocating those rights requires all complex issues to be resolved first. Some of the complex issues that can come up include:
- What are a government employee or contractor's official duties?
- When is an invention actually made?
- When should the government elect not to take the title?
When resolving these issues, the various governmental agencies will review factual circumstances and how they relate to the executive order, as well as how they are interpreted by a judge.
The right for the federal government to own a patent for an invention developed under research and development sponsored by the government through small business organizations, universities, and nonprofit organizations exists in accordance with terms set forth in the agreement. Prior to 1980, the clauses related to patent rights in a funding agreement were decided by the agency's policies and legislation. In some cases, the agencies would keep the title, and in others, they would not.
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