FAR Part 27 Overhaul: Proposed Patent Changes Are Primarily Procedural

The FAR overhaul has not changed the central patent-rights bargain for federally funded inventions. The governing statutory framework remains Bayh-Dole and 37 C.F.R. Part 401. In the FAR Council’s current Part 27 model text, the principal patent clauses—including FAR 52.227-11, Patent Rights—Ownership by the Contractor, and FAR 52.227-13, Patent Rights—Ownership by the Government—were retained without text changes. The same is true of the key patent-infringement clauses: Authorization and Consent, Notice and Assistance, Patent Indemnity, and Waiver of Indemnity.

Accordingly, the overhaul does not change the usual contractor right to elect title to a subject invention, the Government’s paid-up license, the Government’s ability to obtain title after specified contractor failures, or the statutory march-in structure. It also does not change the basic allocation of patent-infringement risk under 28 U.S.C. § 1498 and the related FAR clauses.

Administrative Changes

The change is principally one of administration and process.

Notice

Most notably, the RFO model text deletes FAR 52.227-7, Patents—Notice of Government Licensee. That provision applied when the Government already had a license under a patent relevant to the procurement and owed a royalty under that license. It required disclosure of the patent number and royalty rate, and it enabled the Government to adjust an offeror’s evaluated price where the offeror was neither the patent owner nor a licensee.

The deletion does not mean that an agency may no longer address a known Government patent license or royalty obligation. It means there is no longer a standardized FAR solicitation provision requiring that disclosure. Where a known patent license could affect price, sourcing, or infringement planning, the solicitation should address it expressly.

Royalty Reporting

The overhaul also reserves former FAR 27.202-1 through 27.202-4, which contained the detailed royalty-reporting, review, adjustment, and refund procedures. FAR 52.227-6, Royalty Information, and FAR 52.227-9, Refund of Royalties, remain unchanged. The FAR Companion now contains nonbinding best-practice guidance directing contracting personnel to obtain royalty information, identify improper or excessive royalties, and take appropriate action.

The revised royalty section retains language allowing a contracting officer to obtain information sufficient to provide “this notice” to other offerors, even though the former standardized notice provision, FAR 52.227-7, Patents—Notice of Government Licensee, has been deleted. The issue is narrow: it arises when the Government already holds a royalty-bearing patent license relevant to the procurement. It does not alter patent ownership or enforcement rights. But it leaves agencies to draft any needed disclosure and royalty treatment themselves, increasing the importance of clear solicitation-specific language.

Policy Language Removed

The overhaul also reserves FAR 27.302, the former policy statement on patent rights under Government contracts, and FAR 27.305, the former administrative guidance concerning Government acquisition and protection of invention rights. The FAR Companion preserves much of that material as guidance, including practices for securing confirmatory licenses or assignments, tracking invention disclosures, and protecting Government rights in filed patent applications. But the Companion expressly is non-regulatory, contains no mandates, and is not intended to provide a basis for protest or legal action.

Impact on Stakeholders

For agencies, the result is more discretion and less mandatory procedural detail.

For primes, the core invention-reporting, election, filing, and flowdown obligations remain unchanged, but solicitation review becomes more important in royalty-sensitive procurements.

For subcontractors, the underlying rule remains that covered patent-rights clauses apply at every tier and primes may not use subcontracting leverage to acquire rights in subcontractor inventions.

Still Waiting...

This remains a developing area. The Part 27 changes are currently being implemented through agency class deviations. The FAR Council’s Phase 2 case covering Parts 9, 27, and 47 has not yet been published as a proposed rule. The Part 27 model text did receive informal public feedback in 2025, but formal notice-and-comment rulemaking for this case has not begun.