B-151821, NOVEMBER 7, 1963, 43 COMP. GEN. 436

B-151821: Nov 7, 1963

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BY AN EMPLOYEE FOR HIS INVENTION ON WHICH A PATENT IS PENDING. THERE IS NO LEGAL REQUIREMENT FOR HIM TO DO SO. NO PUBLIC RECORD OTHER THAN THE INCENTIVE AWARD IS NECESSARY TO SECURE THE GOVERNMENT'S RIGHTS. PRESENTED FOR OUR CONSIDERATION SEVERAL QUESTIONS CONCERNING THE RIGHTS OF THE GOVERNMENT TO A CERTAIN INVENTION BY A VETERANS ADMINISTRATION EMPLOYEE FOR WHICH AN INCENTIVE AWARD WAS PAID UNDER THE PROVISIONS OF TITLE III OF THE ACT OF SEPTEMBER 1. THE SUGGESTION WAS APPROVED AND AN AWARD OF $55 WAS MADE TO THE EMPLOYEE UNDER THE ABOVE- CITED ACT. SUBSEQUENTLY A SUPPLEMENTAL AWARD OF $25 WAS MADE TO THE EMPLOYEE IN CONNECTION WITH THE PUBLICATION OF THE SUGGESTION BY THE VETERANS ADMINISTRATION IN A PROFESSIONAL SERVICE LETTER.

B-151821, NOVEMBER 7, 1963, 43 COMP. GEN. 436

AWARDS - SUGGESTIONS, ETC. - USE BY GOVERNMENT. AWARDS - SUGGESTIONS, ETC. - ROYALTIES CHARGED LICENSEES SELLING TO GOVERNMENT. AWARDS - SUGGESTIONS, ETC. - RECORDING, ETC., OF GOVERNMENT'S RIGHTS UPON THE ACCEPTANCE OF A CASH INCENTIVE AWARD, MADE UNDER TITLE III OF THE ACT OF SEPTEMBER 1, 1954, 5 U.S.C. 2121-2123, BY AN EMPLOYEE FOR HIS INVENTION ON WHICH A PATENT IS PENDING, THE GOVERNMENT PURSUANT TO SECTION 304 (D) OF THE ACT, 5 U.S.C. 2123 (D), ACQUIRED THE USE OF THE INVENTION IN ANY MANNER NECESSARY OR DESIRABLE IN THE PERFORMANCE OF ITS AUTHORIZED FUNCTIONS, AND THE ACCEPTANCE OF THE AWARD CONSTITUTING AN AGREEMENT WHICH IN EFFECT CONFERRED A LICENSE, THE GOVERNMENT MAY USE THE INVENTION WITHOUT PAYING THE INVENTOR ANYTHING BEYOND THE AWARD, INCLUDING ROYALTY AND, THEREFORE, WITHOUT INCURRING ANY LIABILITY THE GOVERNMENT MAY CONTRACT WITH OTHERS TO MANUFACTURE THE ITEM FOR ITS USE, AND MAY MODIFY EXISTING PROPERTIES TO EMPLOY THE PRINCIPLES OF THE INVENTION. THE RIGHTS ACQUIRED BY THE GOVERNMENT UNDER 5 U.S.C. 2123 (D) TO USE AN INVENTION FREE OF ANY CLAIM FROM THE INVENTOR-EMPLOYEE, HIS HEIRS OR ASSIGNS, DO NOT AFFECT AGREEMENTS BETWEEN THE INVENTOR AND LICENSEES, AND A LICENSEE ALTHOUGH REQUIRED TO PAY ROYALTY TO THE INVENTOR FOR THE ITEMS SOLD THE GOVERNMENT CANNOT BE REQUIRED TO REDUCE ITS PRICE TO THE GOVERNMENT BY THE AMOUNT OF THE ROYALTY, AND WHILE THE INVENTOR COULD GRANT A LICENSE EXEMPTING ITEMS SOLD TO THE GOVERNMENT FROM ROYALTY, THERE IS NO LEGAL REQUIREMENT FOR HIM TO DO SO. THE GOVERNMENT WHEN AUTHORIZED TO USE AN INVENTION FOR WHICH AN EMPLOYEE HAD BEEN GRANTED AND HAD ACCEPTED AN INCENTIVE AWARD UNDER TITLE III OF THE ACT OF SEPTEMBER 1, 1954 (5 U.S.C. 2121-2123), ACQUIRED RIGHTS CONFERRED BY LAW THAT REQUIRE NO IMPLEMENTATION, THE PROVISIONS OF 5 U.S.C. 2123 (D) BEING SELF-EXECUTING REQUIRE NO LICENSE, AND THE RIGHTS AFFECTING ONLY THE GOVERNMENT AND THE INVENTOR EMPLOYEE, HIS HEIRS, AND ASSIGNS, NO PUBLIC RECORD OTHER THAN THE INCENTIVE AWARD IS NECESSARY TO SECURE THE GOVERNMENT'S RIGHTS.

TO THE ADMINISTRATOR, VETERANS ADMINISTRATION, NOVEMBER 7, 1963:

YOUR LETTER OF JUNE 17, 1963, PRESENTED FOR OUR CONSIDERATION SEVERAL QUESTIONS CONCERNING THE RIGHTS OF THE GOVERNMENT TO A CERTAIN INVENTION BY A VETERANS ADMINISTRATION EMPLOYEE FOR WHICH AN INCENTIVE AWARD WAS PAID UNDER THE PROVISIONS OF TITLE III OF THE ACT OF SEPTEMBER 1, 1954, CH. 1208, 68 STAT. 1112, 5 U.S.C. 2121-2123.

THE RECORD PRESENTED TO OUR OFFICE SHOWS THAT A CORRECTIVE THERAPIST IN THE EMPLOY OF THE VETERANS ADMINISTRATION HOSPITAL, BRONX, NEW YORK, SUBMITTED, THROUGH THE INCENTIVE AWARDS PROCEDURE, AN IDEA OR SUGGESTION FOR THE MODIFICATION OF CRUTCHES FOR USE BY PATIENTS. THE SUGGESTION WAS APPROVED AND AN AWARD OF $55 WAS MADE TO THE EMPLOYEE UNDER THE ABOVE- CITED ACT. SUBSEQUENTLY A SUPPLEMENTAL AWARD OF $25 WAS MADE TO THE EMPLOYEE IN CONNECTION WITH THE PUBLICATION OF THE SUGGESTION BY THE VETERANS ADMINISTRATION IN A PROFESSIONAL SERVICE LETTER. HOWEVER, YOU STATE THAT THE EMPLOYEE "HAS WITHHELD CASHING THE AWARD CHECK PENDING ASSURANCE THAT HIS ACT IN DOING SO WOULD IN NO WAY ENTITLE THE VETERANS ADMINISTRATION TO PARTICIPATE IN THE PENDING PATENT OR IN ANY MANNER ABRIDGE HIS RIGHTS IN RESPECT THERETO.' THE EMPLOYEE HAS MADE APPLICATION FOR UNITED STATES AND CANADIAN PATENTS ON HIS DESIGN FOR CRUTCHES.

IT IS INDICATED THAT THE CIRCUMSTANCES UNDER WHICH THE INVENTION WAS MADE ARE SUCH THAT THE GOVERNMENT CANNOT REQUIRE EITHER ASSIGNMENT OF THE ENTIRE RIGHT, TITLE AND INTEREST TO THE INVENTION OR THE RESERVATION OF A NONEXCLUSIVE, IRREVOCABLE, ROYALTY-FREE LICENSE IN THE INVENTION UNDER EXECUTIVE ORDER NO. 10096, AS AMENDED, WHICH PRESCRIBED A UNIFORM GOVERNMENT PATENT POLICY FOR INVENTIONS BY GOVERNMENT EMPLOYEES. HENCE, IT HAS BEEN DETERMINED BY THE COMMISSIONER OF PATENTS THAT THE EMPLOYEE, IN ACCORDANCE WITH PARAGRAPH 1 (D) OF EXECUTIVE ORDER NO. 10096, IS ENTITLED TO THE ENTIRE RIGHT, TITLE AND INTEREST IN AND TO THE INVENTION,"SUBJECT TO LAW.' SINCE AN INCENTIVE AWARD FOR THIS INVENTION WAS MADE UNDER THE PROVISIONS OF TITLE III OF THE ACT OF SEPTEMBER 1, 1954, SUPRA, ANY RIGHTS THE GOVERNMENT MAY HAVE THEREIN ARISE FROM THE PROVISIONS OF SUBSECTION 304 (D) OF THAT ACT, 5 U.S.C. 2123 (D), AS FOLLOWS:

A CASH AWARD UNDER THIS SECTION SHALL BE IN ADDITION TO THE REGULAR COMPENSATION OF THE RECIPIENT AND THE ACCEPTANCE OF SUCH CASH AWARD SHALL CONSTITUTE AN AGREEMENT THAT THE USE BY THE GOVERNMENT OF THE UNITED STATES OR THE MUNICIPAL GOVERNMENT OF THE DISTRICT OF COLUMBIA OF ANY IDEA, METHOD OR DEVICE FOR WHICH THE AWARD IS MADE SHALL NOT FORM THE BASIS OF A FURTHER CLAIM OF ANY NATURE UPON THE GOVERNMENT OF THE UNITED STATES OR THE MUNICIPAL GOVERNMENT OF THE DISTRICT OF COLUMBIA BY THE EMPLOYEE, HIS HEIRS, OR ASSIGNS.

IN VIEW OF THE ABOVE, YOU REQUEST OUR DECISION ON THE FOLLOWING FIVE QUESTIONS:

1. WHAT IS THE NATURE AND EXTENT OF "USE BY THE GOVERNMENT" WITHIN THE MEANING OF SAID SUBSECTION?

2.MAY THE GOVERNMENT MANUFACTURE OR CAUSE TO BE MANUFACTURED FOR ITS OWN USE PRODUCTS CONFORMING TO OR INCLUDING THE INVENTION WITHOUT INCURRING LIABILITY TO THE EMPLOYEE, HIS HEIRS OR ASSIGNS, FOR SUCH MANUFACTURE AND USE?

3. MAY THE GOVERNMENT MODIFY ITS EXISTING PROPERTIES TO EMPLOY THE PRINCIPLES OF THE INVENTION WITHOUT INCURRING SUCH LIABILITY?

4. MAY THE GOVERNMENT PURCHASE FREE OF ROYALTY FROM THE INVENTOR'S LICENSEE ARTICLES MANUFACTURED IN CONFORMITY WITH OR INCLUDING THE INVENTION?

5. IN WHAT WAY AND BY WHAT MEANS MAY THE RIGHTS OF THE GOVERNMENT BE ASSERTED, IMPLEMENTED AND MADE A MATTER OF RECORD?

THERE IS NOTHING IN THE LEGISLATIVE HISTORY OF TITLE III WHICH SHEDS ANY LIGHT UPON THE INTENT OF THE PHRASE "USE BY THE GOVERNMENT.' HENCE, THE WORDS MUST BE GIVEN THEIR ORDINARY AND FAMILIAR IMPORT AND MEANING OF A DIRECT USE BY THE GOVERNMENT. "USE" MEANS THE POSSESSION AND EMPLOYMENT OF A THING FOR THE PURPOSES TO WHICH IT IS ADAPTED. THUS THE GOVERNMENT WOULD BE AUTHORIZED TO USE AN INVENTION FOR WHICH AN INCENTIVE AWARD HAD BEEN GRANTED AND ACCEPTED UNDER TITLE III IN ANY MANNER NECESSARY OR DESIRABLE IN THE PERFORMANCE OF ITS AUTHORIZED FUNCTIONS. QUESTION 1 IS ANSWERED ACCORDINGLY.

THE CITED STATUTE PROVIDES THAT ACCEPTANCE OF A CASH AWARD THEREUNDER "SHALL CONSTITUTE AN AGREEMENT THAT THE USE BY THE GOVERNMENT OF THE UNITED STATES * * * OF ANY IDEA, METHOD OR DEVICE FOR WHICH THE AWARD IS MADE SHALL NOT FORM THE BASIS OF A FURTHER CLAIM OF ANY NATURE UPON THE GOVERNMENT OF THE UNITED STATES * * * BY THE EMPLOYEE, HIS HEIRS, OR ASSIGNS.' THIS PROVISION CLEARLY MEANS THAT THE GOVERNMENT MAY USE THE INVENTION WITHOUT PAYING THE INVENTOR ANYTHING BEYOND THE AWARD AND CLEARLY CONTEMPLATES USE WITHOUT PAYING ROYALTY TO THE INVENTOR. SUCH AN AGREEMENT IN EFFECT CONFERS UPON THE GOVERNMENT A LICENSE UNDER THE PATENT LIMITED AS STATED IN THE ANSWER TO QUESTION 1. A LICENSE UNDER A PATENT IS NOT REQUIRED TO MANUFACTURE THE PATENTED ITEM HIMSELF, BUT MAY CONTRACT WITH OTHERS TO MANUFACTURE THE ITEM FOR HIS USE. QUESTION 2 IS ANSWERED IN THE AFFIRMATIVE.

UNDER THE AGREEMENT EFFECTED BY ACCEPTANCE OF AN AWARD UNDER 5 U.S.C. 2123 (D) FOR AN INVENTION, THE GOVERNMENT IS ENTITLED TO THE BENEFIT OF ANY DIRECT USE THAT IT MAKES OF SUCH INVENTION. HENCE, QUESTION 3 IS ANSWERED IN THE AFFIRMATIVE.

THE GOVERNMENT'S RIGHT TO USE THE INVENTION FREE OF ANY CLAIM FROM THE INVENTOR-EMPLOYEE, HIS HEIRS, OR ASSIGNS, DOES NOT IN ANY WAY AFFECT ANY AGREEMENTS BETWEEN THE INVENTOR AND HIS LICENSEES. HENCE, IF THE GOVERNMENT PURCHASES THE ITEM IN QUESTION FROM A LICENSEE WHO HAS AGREED TO PAY THE INVENTOR A ROYALTY ON EACH ITEM PRODUCED, SAID LICENSEE WOULD BE REQUIRED TO PAY SUCH ROYALTY TO THE INVENTOR FOR THE ITEMS SOLD TO THE GOVERNMENT. HENCE, THE GOVERNMENT CANNOT REQUIRE SUCH A LICENSEE TO REDUCE ITS PRICE TO THE GOVERNMENT BY THE AMOUNT OF SAID ROYALTY. WHILE THE INVENTOR PRESUMABLY COULD GRANT A LICENSE EXEMPTING ITEMS SOLD TO THE GOVERNMENT FROM ROYALTY, THERE IS NO LEGAL REQUIREMENT FOR HIM TO DO SO. QUESTION 4 IS ANSWERED ACCORDINGLY.

WITH RESPECT TO THE MEANS FOR ASSERTING AND IMPLEMENTING THE GOVERNMENT'S RIGHTS AND MAKING THEM A MATTER OF RECORD, THE PROVISIONS OF 5 U.S.C. 2123 (D) ARE SELF-EXECUTING AND DO NOT REQUIRE THE EXECUTION OF A LICENSE. SINCE THE GOVERNMENT'S RIGHTS ARE CONFERRED BY LAW, NO FURTHER ASSERTION OR IMPLEMENTATION APPEARS NECESSARY. ALSO, SINCE THE RIGHT AFFECTS ONLY THE GOVERNMENT AND THE INVENTOR EMPLOYEE, HIS HEIRS AND ASSIGNS, NO PUBLIC RECORD OTHER THAN THE INCENTIVE AWARD IS NECESSARY TO SECURE THE GOVERNMENT'S RIGHTS. QUESTION 5 IS ANSWERED ACCORDINGLY.