March 11, 2004
The purpose of this document is to provide guidance on the rights of the FHWA, State DOTs, and Metropolitan Planning Organizations (MPOs) to copyrighted publications and patented inventions or discoveries resulting from activities performed with FHWA planning and research funds.1 This guidance is in response to several recent inquiries about this issue. This guidance is intended as an overview and does not purport to address all issues that may arise regarding the FHWA's, a state's, or a MPO's intellectual property rights.
The law that controls the allocation of rights to inventions made during federally-supported experimentation, research, or development is commonly known as the Dole-Bayh Act.2 Under the Dole-Bayh Act, any person, small business firm, or nonprofit organization3 that is awarded a federally funded contract, grant, or cooperative agreement to perform experimental, developmental, or research work may elect to retain the entire right, title and interest to each subject invention4 resulting from work performed under the funding agreement. See 35 U.S.C. §§201-202.
Government-wide regulations implementing the Dole-Bayh Act are contained in part 401 of title 37 of the Code of Federal Regulations. The FHWA's regulation, 23 C.F.R. §420.121(i), provides that State DOTs, using FHWA planning and research funds, and their subrecipients must include or cite the standard patent rights clauses at 37 C.F.R. §401.14, in all subgrants or contracts. Accordingly, with respect to any subject invention in which a grantee, subgrantee, or contractor elects to retain title, the Federal government has a nonexclusive, nontransferable, irrevocable, paid-up license to use the subject invention for or on behalf of the United States.5 37 C.F.R. §401.14(b). The Federal Government's license cannot be transferred to third parties, including State DOTs. As a result, if a State DOT or a MPO wishes to reserve the right to use an invention or discovery resulting from activities funded by FHWA planning and research funds, it must specifically do so in its contract with the contractor. In addition, while a State DOT may negotiate to obtain the right to use a subject invention, it is prohibited, under 23 C.F.R. §420.121(i), from requiring a contractor to relinquish title to the subject invention as a condition of being awarded the contract.
In the case of state-led pooled fund studies, a lead state DOT enters into a contract for research. The lead state DOT may wish to negotiate with its contractor in order to provide all states that contribute funds to the study with a license to use an invention.
Under government-wide regulations for grants and cooperative agreements with state and local governments (see 49 C.F.R. §18.34) and with universities and non-profit organizations (see 49 C.F.R. §19.36), grantees and subgrantees and their contractors are free to copyright any work produced with Federal funds. As a result, "State DOTs and their subrecipients may copyright any books, publications, or other copyrightable materials developed in the course of the FHWA planning and research funded project. The FHWA reserves a royalty-free, nonexclusive and irrevocable right to reproduce, publish, or otherwise use, and to authorize others to use, the work for Government purposes." 23 C.F.R. §420.121(b).
In summary, if an item produced or developed with FHWA planning and research funds is copyrighted or patented, the FHWA has a right to use the work or invention for Federal purposes without paying a royalty fee. This does not apply to a State or subrecipient unless the State or subrecipient includes such a provision in its subgrant, agreement or contract. It should be noted that intellectual property is a complex area of law; and State DOTs are encouraged to seek input from their legal counsel before executing any binding agreements with contractors.
1 FHWA planning and research funds include (1) State planning and research (SPR) funds; (2) Metropolitan planning (PL) funds; and (3) National highway system (NHS), Surface transportation program (STP) funds, and Minimum guarantee (MP) funds used for planning or research, development & technology. 23 C.F.R. §420.103.
2 Pub. L. No. 96-517, 94 Stat. 3019 (codified as amended at 35 U.S.C. §§200-212 (2001)).
3 The term "nonprofit organization" is defined as "universities and other institutions of higher education or an organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1986 (26 U.S.C. 501(c)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit scientific or educational organization qualified under a State nonprofit organization statute." 35 U.S.C. §201(i).
4 The term "subject invention" is defined as "any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement." 35 U.S.C. §201(e).
5 The FHWA construes the scope of its license to include: (1) use of the subject invention for research and development and support services performed under a Federal procurement contract and (2) use of the subject invention on a federally owned road.