How to protect your IP when your project is funded by the DOE or another branch of the government.

1. How to Protect Intellectual
Property in Department of
Energy Funding Programs
Fred Greguras
+1.650.798.6708
fred.greguras@klgates.com
Charles Holland
+1.650.798.6710
chuck.holland@klgates.com
January 2010

2. How to Protect Intellectual Property in Department of Energy Funding Programs K&L Gates 2
Introduction
An applicant for DOE grant funding or other financing incentives (including
a loan guarantee and cash grant in lieu of investment tax credit) needs
to understand the intellectual property (“IP”) rights provisions under such
programs and take the actions required to protect IP starting with protecting
confidential information submitted in a funding application or concept paper.
Ownership of inventions first conceived or actually reduced to practice in
the performance of work under an agreement with the federal government
(“Government”) belongs to the Government (except under the initial ARPA-E
solicitation discussed below) and the contactor has only a limited license
unless a different allocation of ownership is negotiated and agreed to in
writing. Ownership of technical data developed and delivered under an
agreement with DOE belongs to the contractor and the Government has a
license which can range from very limited rights to unlimited rights to use and
disclose such data1
.
The key leverage a contractor may have in negotiating rights with the
Government is the need to have strong IP rights in order to undertake and
finance commercialization of a technology important to a DOE mission
requirement2
. The contractor needs to build a case with DOE for an
allocation of IP rights for both inventions and technical data that will enable
commercialization. For example, the IP in a thin film solar manufacturing
technology may include both patentable inventions and know-how
(“technical data”). The contractor may be unable to obtain the financing
needed for commercialization if the Government has such broad rights that
the contractor is not able to protect its competitive business position.
A key planning consideration is to carefully identify the required deliverables
and determine, deliverable by deliverable, which will be developed with
Government funding under the agreement, which deliverables are developed
with private funds and which deliverables will be developed with a mix of
private and Government funding (“mixed funding”). The deliverables that
need to be protected by the contractor for commercialization purposes
need to be identified with granularity since the public policy is that the
Government should have broad rights to deliverables developed with
public funds. The contractor’s case for allocating IP rights needs to identify
which deliverables will be completed with small amounts of Government
funds to try to avoid a loss of IP rights when substantial development was
funded privately3
.
The Government and contractor will document the allocation of IP rights in a
grant or cooperative agreement, or in some cases, a Technology Investment
Agreement (“TIA”) under which the technology will be developed. The
discussion below with respect to protecting IP during the application stage
applies to all three types of agreements. A TIA is a separate case in the
agreement stage and is discussed separately below.
Application Stage
The application for a DOE program should disclose patentable ideas, trade
secrets, proprietary or confidential commercial or financial information
(collectively, “Confidential Information”) only to the extent needed to
communicate an understanding of the value proposition of the proposed
project and to persuade DOE to fund the project. The submission of
1
DOE contract clauses on patent and technical data are at
http://www.gc.doe.gov/financial_assistance awards htm; see
generally 10 C.F.R. 600.325
2
10 C.F.R. §603.110
3
10 C.F.R. §603.860(c)
Confidential Information should be minimized but enough information needs
to be disclosed to get the money4
.
The applicant must identify and mark Confidential Information in a
conspicuous manner in accordance with the specific Funding Opportunity
Announcement (“FOA”). This action needs to be taken for all types of
applications not just research related. For example, the disclosure of
Confidential Information may be required in order to persuade the reviewer
that a loan guarantee application should be approved over another
applicant’s application.
The consequence of disclosure of a patentable invention without taking
precautions to protect Confidential Information could be a public disclosure
which, while perhaps not immediately fatal in the U.S., could bar the
inventor from obtaining a patent around the world5
.
The language below from the initial ARPA-E solicitation for concept papers6
illustrates the actions needed to protect Confidential Information at the
application stage:
“Patentable ideas, trade secrets, proprietary or confidential commercial
or financial information, disclosure of which may harm the applicant,
should be included in a concept paper or application only when such
information is necessary to convey an understanding of the proposed
project. The use and disclosure of such data may be restricted,
provided the applicant includes the following legend on the first page
of the project narrative and specifies the pages of the application
which are to be restricted:
“The data contained in pages [insert pages] of this application have
been submitted in confidence and contain trade secrets or proprietary
information, and such data shall be used or disclosed only for
evaluation purposes, provided that if this applicant receives an award
as a result of or in connection with the submission of this application,
DOE shall have the right to use or disclose the data herein to the
extent provided in the award. Any disclosure outside the Government
shall be made only to a party subject to an appropriate obligation to
the Government to protect the confidentiality of the application. This
restriction does not limit the government’s right to use or disclose data
obtained without restriction from any source, including the applicant.”
“To protect such data, each line or paragraph on the pages containing
such data must be specifically identified and marked with a legend
similar to the following:
“The following contains proprietary information that (name of applicant)
requests not be released to persons outside the Government, except for
purposes of review and evaluation.”
Patent Rights
The Government will have certain statutory rights in an invention that is
conceived or first actually reduced to practice under a grant or a cooperative
agreement (a “Subject Invention”). The allocation of rights under a TIA will
be discussed below. A contractor that is a domestic small business or non-
profit organization has the option to retain title to a Subject Invention under
the Bayh-Dole Act7
, (the “Bayh-Dole Act”), subject to certain Government-
4
The Federal Trade Secrets Act, 18 U.S.C. §1905, is intended to
protect trade secrets disclosed to the Government.
5
35 U.S.C. §102(b); e.g. EPC Article 54
6
DE-FOA-0000065, Section IV, E, pages 22-23, Issue Date April 27,
2009, as amended
7
35 U.S.C. §§200-212; see also 48 C.F.R. §27.3

3. How to Protect Intellectual Property in Department of Energy Funding Programs KL Gates 3
retained rights8
and provided the contractor fulfills various obligations
specified in the Act9
.
A business is “small” if it meets the specific size standard for its industry
as established by the Small Business Administration10
(“SBA”). The two
widely used SBA standards are 500 employees for select manufacturing
and mining industries, and $7 million in annual receipts for certain non-
manufacturing industries11
.
A “nonprofit organization” is an institution of higher education, 501(c)
(3) tax-exempt organization or other nonprofit scientific or education
organization qualified as a nonprofit under applicable state law12
.
Under the Bayh-Dole Act, the contractor must elect to retain title to a Subject
Invention by notifying the DOE in writing generally within 24 months13
.
If the contractor elects to retain title, the Government is granted a non-
exclusive, non-transferable, irrevocable, paid-up, world-wide license to
practice or have practiced the Subject Invention for or on behalf of the
Government14
. The Government also has “march-in rights” and may, under
some circumstances, require the contractor to grant a non-exclusive, partially
exclusive, or exclusive license if the contractor is not taking effective steps to
practice the Subject Invention in a given field, or such action is needed for
health or safety purposes or to meet regulatory requirements for public use of
the invention15
. A contractor may not grant any exclusive right to use or sell
any Subject Invention in the U.S. unless the licensee agrees that any products
embodying the Subject Invention or produced with the use of the Subject
Invention will be manufactured substantially in the U.S. unless DOE grants a
waiver to such requirement16
.
For other contractors or for a small business or non-profit organization
that fails to fulfill the obligations following election mentioned above, the
Government owns such inventions unless a class or individual waiver is
granted17
. The initial ARPA-E FOA granted a class waiver18
, discussed in
more detail below, which allocates patent rights in a Subject Invention
substantially similar to the allocation of rights under the Bayh-Dole Act.
If the Government owns a Subject Invention, the contractor is granted a
worldwide, non-exclusive, royalty-free license to the invention19
. The license
includes the right to sublicense only to the extent the contractor was legally
obligated to do so when funding was awarded20
. The license may be
transferred by the contractor only with the DOE’s consent except in the case
of an acquisition of the contractor’s business21
.
For a Subject Invention of a small business or a nonprofit institution under
the Bayh-Dole Act or if the contractor is granted, a waiver of ownership,
a U.S. patent application for such invention and any patent issuing from
the application must contain certain language indicating that the invention
was developed with Government funding and that the Government has
certain rights22
.
8
35 U.S.C. §202, 203
9
35 U.S.C. §202(c), 204
10
35 U.S.C. §201(h)
11
See 13 CFR §121.201 for a table of size standards broken down
by industry.
12
35 U.S.C. §201(i)
13
35 U.S.C. §202(c) (2)
14
35 U.S.C. §202(c) (4)
15
35 U.S.C. §203
16
35 U.S.C. §204
17
42 U.S.C. §5908 (c)
18
DE-FOA-0000065, Section VIII, D, Issue Date April 27, 2009,
as amended
19
58 C.F.R. §37.302(i) (1)
20
48 C.F.R. §27.302(i) (1)
21
48 C.F.R. §27.302(i) (1)
22
35 U.S.C. §202(c) (6)
ARPA-E Class Waiver
The ARPA-E class waiver23
permits contractors who do not qualify under
the Bayh-Dole Act to retain title to Subject Inventions subject to the same
Government rights specified above. In addition, under the waiver, the
contractor must be cost sharing on at least a 20% basis and agree to
manufacture new technology developed under the agreement in the U.S. or
provide other net economic benefits to the U.S. The class waiver permits the
U.S. manufacturing requirement to be negotiated on a case by case basis.
The circumstances under which DOE may require assignment of a Subject
Invention, the reporting requirements and march-in rights under the class
waiver are substantially similar to those under the Bayh-Dole Act but the times
for contractor disclosure and patent filing under the class waiver are shorter
than under the Bayh-Dole Act.
Rights in Technical Data
The rights in technical data provisions are the same for both large and small
businesses. The definition of “technical data” includes research and test data,
technical designs, drawings, specifications and other scientific and technical
information24
. Technical data developed in the performance of work under
an agreement with DOE belongs to the contractor and the Government has
license rights (royalty free, world-wide, nonexclusive, irrevocable) in such
data which can range from very limited rights to broad unlimited rights in
terms of both use and further disclosure of the applicable data. In general,
the scope of the license is dependent on the source of funding for the
development of the technical data but with some flexibility in order to enable
the contractor to successfully commercialize the results. The contractor must
identify and mark the technical data deliverables in accordance with the
applicable restrictions25
.
As indicated above, in order to have negotiating leverage, the contractor
needs to build a case with DOE for an allocation of IP rights for both
inventions and technical data that will enable commercialization by
providing a competitive business advantage. If, for example, the IP in a thin
film solar manufacturing technology includes a Subject Invention and know-
how (technical data), the contractor will likely need enforceable IP rights to
both the Subject Invention and technical data in order to have a competitive
business advantage. As with Subject Inventions, technical data deliverables
may be developed under the agreement with Government funding, with
private funds or with mixed funding. If a contractor is required to deliver
technical data to the Government that is Confidential Information, the
contractor needs to negotiate the agreement with the Government to protect
such information.
The “Rights in Technical Data Provisions” chart below identifies the types of
rights that can be negotiated by a contractor. The primary license rights that
the Government is granted are unlimited rights, government purpose rights or
limited rights.
23
DE-FOA-0000065, Section VIII, D, Issue Date April 27, 2009,
as amended
24
48 C.F.R. §252.277-7013 (a) (14) Rights in technical data—
Noncommercial items [48 C.F.R. §252.277-7013 is hereinafter
referred to as “7013”]
25
7013(e)

4. How to Protect Intellectual Property in Department of Energy Funding Programs KL Gates 4
Unlimited Rights
The Government generally receives an unlimited rights license to technical
data first developed or delivered under an agreement with a contractor26
.
Except in the case of Special Protected Data Rights discussed below, the
Government always has unlimited rights in certain other data including the
following: (i) form, fit, and function data (data that describes the required
overall physical, functional, and performance characteristics of an item,
component, or process to the extent necessary to permit identification of
physically and functionally interchangeable items); (ii) data needed for
installation, operation, maintenance, or training purposes (other than detailed
manufacturing or process data); (iii) data that is otherwise publicly available
or has been released or disclosed by the contractor without any restrictions;
or (iv) data in which the Government has obtained unlimited rights under
another Government contract27
.
The “unlimited rights” license is the broadest license and permits the
Government to use, disclose, reproduce, prepare derivative works of,
distribute copies of, and publicly perform and display the applicable
technical data in any manner and for any purpose, including commercial
purposes, and to authorize others to do the same28
.
Government Purpose Rights
The “government purpose rights” license (“GPR”) may be used for technical
data developed with mixed funding29
. The GPR license authorizes the
Government to use, modify, reproduce, release, perform, display, or
disclose technical data within the Government without restriction but not for
commercial purposes30
. GPR covers any activity in which the Government is
a party, including cooperative agreements with international or multi-national
defense organizations, or sales or transfers to foreign governments or
international organizations31
.
The GPR license is usually effective for only 5 years but the period is
negotiable32
. The Government has unlimited rights in the data after the
expiration of the five-year or other negotiated period33
.
The Government may not release or disclose data licensed under the GPR
unless prior to release or disclosure, the recipient is subject to the non-
disclosure agreement at 227.7103–7 of the Defense Federal Acquisition
Regulation Supplement (DFARS); or the recipient is a party to a Government
contract that contains the clause at DFARS §252.227–7025, Limitations
on the Use or Disclosure of Government-Furnished Information Marked with
Restrictive Legends34
.
Limited Rights
A limited rights license to the Government is primarily used for technical data
developed exclusively with private funding35
.
“Limited rights” mean the rights to use, modify, reproduce, release, perform,
display, or disclose data, in whole or in part, within the Government
but not for commercial purposes. The Government may not, without the
written permission of contractor, release or disclose the data outside the
26
7013(b) (1)
27
7013(b) (1)
28
7013(a) (15)
29
7013(b) (2)
30
7013(a) (12)
31
7013(a) (11)
32
7013(b) (2)
33
7013(b) (2)
34
7013 (b) (2)
35
7013 (b) (3)
Government, use the data for manufacture, or authorize the data to be
used by another party, except that the Government may reproduce, release
or disclose such data or authorize the use or reproduction of the data by
persons outside the Government if reproduction, release, disclosure or use is
(i) needed for emergency repair and overhaul; or (ii) a release or disclosure
of data (other than detailed manufacturing or process data) to, or use of
such data by, a foreign government that is in the interest of the Government
and is required for evaluation or informational purposes; provided that
the reproduction, release, disclosure or use is subject to a prohibition on
the further reproduction, release, disclosure, or use of the data; and the
contractor is notified of such reproduction, release, disclosure, or use36
.
The limited rights license is usually perpetual but may have an effective
period in certain cases. The Government has unlimited rights in the technical
data after the expiration of any such specified period.
Special Protected Data Rights
The ARPA-E initial funding solicitation illustrates the use of special protected
data rights37
that may be negotiated to protect certain technical data
deliverables from public disclosure for up to five (5) years38
. This category
of rights is generally the most protective of the contractor. Generally, the
contract provision Rights in Data − Programs Covered Under Special
Protected Data Statutes, 10 C.F.R. §600, Appendix A to Subpart D, apply,
but the agreement must specifically list and identify the data or categories of
data first developed under the agreement that will be made available to the
public and which data will be treated as protected data.
Identification and Marking of Technical Data Delivered
with Restrictions
Technical data deliverables which are to be provided to the Government
with restrictions on use, release or disclosure must be identified in an
attachment to the agreement (the “Attachment”)39
. and marked with the
applicable restrictive legend when actually delivered40
. The contractor may
not deliver any data with restrictive markings unless they are listed on the
Attachment but may usually identify other restricted data after the contract
award based on new information or an inadvertent omission41
.
The contractor must conspicuously mark technical data deliverables on all
forms of media with the applicable restrictive legend (GPR, limited rights,
special protected data rights) at the time of delivery. The restrictive legend
must be placed on the transmittal document or storage container and,
for printed material, each page containing restricted data. When only
portions of a page are subject to the restrictions, those portions must be
identified by circling, underscoring, with a note, or other appropriate
identifier. Technical data transmitted electronically also needs to contain the
applicable restrictive legends.
36
7013(a) (13)
37
7013(b) (4)
38
DE-FOA-0000065, Section VIII, D, Issue Date April 27, 2009,
as amended
39
7013(e) (2)
40
7013 (f)
41
7013(e) (3)

5. How to Protect Intellectual Property in Department of Energy Funding Programs KL Gates 5
Technology Investment Agreements
The third type of agreement, the TIA which is negotiated between the
contractor and the Government, should be requested when there are
deliverables developed in whole or part under the agreement which need
to be protected for commercialization. The initial ARPA-E FOA authorized
the use of a TIA42
. The primary reasons the DOE may approve the use of a
TIA are to expand the base of technology available to meet DOE mission
requirements, to foster new relationships and practices within the technology
base, to advance national economic and energy security and to promote
scientific and technological innovation in support of the DOE mission43
.
The final agreement between the Government and the contractor must be
consistent with certain regulatory guidance in 10 C.F.R. §603.845 through
10 C.F.R. §603.87544.
42
DE-FOA-0000065, Section VIII, D, Issue Date April 27, 2009,
as amended
43
10 C.F.R. §603.110
44
Neither the Bayh-Dole Act nor the class waiver are applicable in the
case of a TIA.
Summary
The initial action step is to protect Confidential Information submitted to DOE
as part of a concept paper or application for a grant or other incentive.
Failure to do so can be a public disclosure which may immediately bar
patent protection at least outside of the U.S.
The contractor should consider requesting the use of a TIA whenever
technology development will be required because of the greater flexibility
in negotiating IP rights that can provide a competitive advantage for
commercialization purposes.
The contractor needs to initially identify which required deliverables will
be developed under an agreement, which deliverables are funded with
private funds and which deliverables will be mixed funding and build
the case for negotiating the allocation of IP rights needed for successful
commercialization. The deliverables that need to be protected should be
identified with granularity since the public policy is that the Government
should have broad rights to deliverables developed with public funds.
A contractor which qualifies under the Bayh-Dole Act or a class or individual
waiver must elect to retain title to a Subject Invention by notifying the DOE in
writing within the specified deadline.
A contractor which is required to deliver technical data to the Government
that is Confidential Information needs to negotiate the agreement with the
Government to protect such information as restricted with limited rights, GPR
or special protected data and mark the deliverables accordingly.
Rights in Technical Data Provisions
ContractorOwnsTechnical
Data
Restrictionson
DisclosureOutside
Government
Non-use,Non-disclosure
AgreementRequired
WithRecipient
OutsideGovernment
ContractorConsent
RequiredforDisclosure
OutsideGovernment
Expiration
ofProtection
Unlimited Rights
May disclose, reproduce, prepare derivative works, distribute copies to the public, and
perform publicly and display publicly, in any manner and for any purpose including
commercial purposes, and to have or permit others to do so.
Y N N N N
Government Purpose Rights
May modify, reproduce, release, perform, display or disclose technical data within the
Government without restriction and outside the Government for Government purposes only. Y Y Y N Y
Limited Rights
May modify, reproduce, release, perform, display or disclose technical data within the
Government. May not be used for manufacturing or disclosed outside the Government,
except in limited circumstances.
Y Y Y Y N
Special Protected Rights
Negotiated but generally may not modify, reproduce, release, perform, display or disclose
technical data outside the Government.
Y Y
Not
Permitted
Not
Permitted
Y

6. 100111_3612
Anchorage Austin Beijing Berlin Boston Charlotte Chicago Dallas Dubai Fort Worth Frankfurt Harrisburg Hong Kong London
Los Angeles Miami Moscow Newark New York Orange County Palo Alto Paris Pittsburgh Portland Raleigh Research Triangle Park
San Diego San Francisco Seattle Shanghai Singapore Spokane/Coeur d’Alene Taipei Tokyo Washington, D.C.
KL Gates includes lawyers practicing out of 35 offices located in North America, Europe, Asia and the Middle East,
and represents numerous GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle
market companies, entrepreneurs, capital market participants and public sector entities. For more information, visit
www.klgates.com.
KL Gates is comprised of multiple affiliated entities: a limited liability partnership with the full name KL Gates LLP qualified in Delaware and maintaining offices
throughout the United States, in Berlin and Frankfurt, Germany, in Beijing (KL Gates LLP Beijing Representative Office), in Dubai, U.A.E., in Shanghai (KL Gates
LLP Shanghai Representative Office), in Tokyo, and in Singapore; a limited liability partnership (also named KL Gates LLP) incorporated in England and
maintaining offices in London and Paris; a Taiwan general partnership (KL Gates) maintaining an office in Taipei; a Hong Kong general partnership (KL Gates,
Solicitors) maintaining an office in Hong Kong; and a Delaware limited liability company (KL Gates Holdings, LLC) maintaining an office in Moscow. KL Gates
maintains appropriate registrations in the jurisdictions in which its offices are located. A list of the partners or members in each entity is available for inspection at
any KL Gates office.
This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to
any particular facts or circumstances without first consulting a lawyer.
©2010 KL Gates LLP. All Rights Reserved.©2009 KL Gates LLP. All Rights Reserved.