SUBJECT: Royalty Compensation for Inventors of Army Patents In that the subject of money is usually of interest to everyone, even inventors, it won’t hurt to be familiar with the pertinent statutes and regulations on the subject that are applicable to the inventors of Army patents. Chapter 8 of Army Regulation 27-60, 8-1, states that cash incentive awards are granted to Government civilian employees and military personnel as recognition of their act of invention that has resulted in the filing of a patent application. It is the responsibility of supporting patent counsel to notify the Awards Office that an application has been filed and that a patent has issued, 8-2. When a patent application is filed each Government civilian employee or military person who is an inventor or co-inventor may receive an initial award of $200.00. A sole inventor may receive a final award of $500.00 and each co-inventor may receive an award of $250.00 upon a patent issuing. If more than one patent application is filed from a single invention disclosure, including continuation-in-part and divisional applications, the same monetary amounts apply--provided the filed application contains distinct and independent inventions from the previously filed application, 8-3. If one or more eligible inventors are co-joined as co-inventors with one or more persons who are ineligible to receive a cash award, the eligible inventors will be entitled to a pro rata share of the cash award that would be authorized if all co-inventors were eligible. Thus, it should be underscored that Invention Awards are for Government civilian employees and for military personnel, only. Contractor employees and Independent Inventors are not eligible for Invention Awards under the Army’s Invention Awards regulations. However, the applicable statutes indicate that both Government civilian employees, military personnel, and non-government inventors may receive royalty payments provided they have assigned their rights to the Government.
15 U.S.C. § 3710c states that the first $2,000, and thereafter at least 15 percent, of the royalties or other payments, other than payments of patent costs as delineated by a license or assignment agreement, are to be paid to the inventor or co-inventors, if the inventor’s or coinventor’s rights are assigned to the United States. However, the Department of Defense Instructions are even more generous for the inventors. DODI 5535.8 (May 14, 1999) states that each inventor or co-inventor shall receive, each year, at least $2,000 plus equal shares of at least 20 percent of the remainder of the royalties or other payments, 6.9.1 The total amount of royalties any one individual may receive in a year is capped at $150,000.00 unless one receives presidential approval under 5 U.S.C. § 4504 for additional money, 6.9.2. (5 U.S.C. § 4504 pertains to Government employees, so arguably a non-government employee could not petition for more compensation). Relevant Statutes, DoD Instructions, and Army Regulations on the Subject of Inventor Awards and Royalty Payments 15 U.S.C. § 3710c. Distribution of royalties received by Federal agencies (a) In general (1) Except as provided in paragraphs (2) and (4), any royalties or other payments received by a Federal agency from the licensing and assignment of inventions under agreements entered into by Federal laboratories under section 3710a of this title, and from the licensing of inventions of Federal laboratories under section 207 of title 35 or under any other provision of law, shall be retained by the laboratory which produced the invention and shall be disposed of as follows: (A) (i) The head of the agency or laboratory, or such individual’s designee, shall pay each year the first $2,000, and thereafter at least 15 percent, of the royalties or other payments, other than payments of patent costs as delineated by a license or assignment agreement, to the inventor or coinventors, if the inventor’s or coinventor’s rights are assigned to the United States.
DODI 5535.8 (May 14, 1999) 6.9.1. Royalties or other payments received on account of any invention licensed by a DoD Component shall be payable to the inventor or each co-inventor, as prescribed in the remainder of this paragraph. The DoD Component shall pay to the inventor or each co-inventor each year, at least $2,000 plus equal shares of at least 20 percent of the remainder of the royalties or other payments. In the absence of extrinsic evidence that co-inventors made unequal contributions to the invention, subject to review and approval by the concerned legal counsel for the DoD Component, it shall be presumed that the co-inventors made equal contributions to the invention and are entitled to equal shares of the 20 percent remainder of the royalties or other payments. If the royalties or other payments received in any given year are less than or equal to $2,000, or for co-inventors, less than or equal to $2,000 times the number of inventors, the entire amount is paid to the inventor, or for co-inventors, the entire amount is divided equally among the coinventors. The inventor or co-inventors shall receive their prescribed share of any royalties or other payments, as received by the Government on an annualized basis. 6.9.2. Royalties or other payments from inventions to any one person shall not exceed $150,000 for each year without Presidential approval, as in 5 U. S. C. § 4504 (reference (g)). 5 U.S.C. § 4504. Presidential Awards Release date: 2005-05-26 The President may pay a cash award to, and incur necessary expense for the honorary recognition of, an employee who— (1) by his suggestion, invention, superior accomplishment, or other personal effort contributes to the efficiency, economy, or other improvement of Government operations or achieves a significant reduction in paperwork; or
(2) performs an exceptionally meritorious special act or service in the public interest in connection with or related to his official employment. A Presidential award may be in addition to an agency award under section 4503 of this title.
By: Michael Gray July 06, 2005