Subject: Distribution of Royalties and Other Payments Received by NASA from the Licensing or Assignment of Inventions (Revalidated 7/31/19)

Responsible Office: Office of the General Counsel

Chapter 2. Distribution of Royalties

2.1 Distribution of Royalties

Whenever NASA licenses or assigns one or more inventions, any royalties or other payments received therefrom will be distributed to the inventors who have directly assigned their interests in such inventions to the Government, in accordance with subparagraph 2.2, and to the appropriate NASA facility or facilities, in accordance with subparagraph 2.3.

2.2 Distribution to NASA Employees Named as Inventors, and to Other Inventors Assigning Their Undivided Interests in Inventions to NASA

2.2.1 Distribution of royalties or other payments will be calculated on a fiscal year basis and should be distributed no later than the end of the following fiscal year's first quarter that the royalties or other payments are received. Monies remaining after distribution under this subparagraph will be distributed in accordance with subparagraph 2.3.

2.2.2 Distribution will be calculated on a per license or a per assignment basis and be based on the total royalties received by NASA for a particular license or assignment in the fiscal year for which the distribution is being calculated. If one inventor is named, that inventor will receive the first $5,000, plus 25 percent of the remainder. For two to four inventors, each inventor will receive an equal share up to $5,000 each, plus 25 percent of the remainder up to the first $25,000 received, and an equal share of 30 percent of the remainder after the first $25,000 received by NASA. For five or more inventors, each inventor will receive an equal share of the first $25,000 received plus an equal share of 30 percent of the remainder after the first $25,000 received by NASA.

2.2.3 If the expiration of a licensed patent, or the abandonment of a licensed patent application, results in one or more inventors no longer being named inventors on any of the remaining active licensed patents and/or pending patent applications, then such inventor(s) will receive royalties only through the fiscal year within which such patent expired or such patent application was abandoned.

2.2.4 Subject to applicable law, NASA will distribute a deceased inventor's share of royalty payments to the inventor's estate provided that the estate is legally in existence. Upon notification of the death of an inventor, the Center Patent or Intellectual Property Counsel at the appropriate NASA facility will make reasonable efforts to contact the inventor's personal representative to obtain information needed to establish the existence of an estate and to distribute royalties to the estate. If reasonable efforts to obtain the needed information for a particular inventor's estate fail, the royalties to be distributed will be recalculated without the participation of the inventor's estate in accordance with subparagraph 2.2.2. If the needed information is obtained at a later date, the inventor's estate will be included in future royalty distributions, but past royalties will not be restored. It is the responsibility of the inventor's personal representative to provide current information to the NASA officials listed in subparagraph 1.5.1.

2.2.5 Distribution of royalties or other payments to any one recipient will not exceed $150,000 per fiscal year, unless the President approves a larger amount (with the excess over $150,000 being treated as a Presidential Award under Section 4504 of Title 5, U.S.C.

2.3 Center Directors

2.3.1 The Center Directors; Director, NASA Management Office, or the Executive Director, Office of Headquarters Operations will be notified by the Office of the Chief Financial Officer of the balance of any royalties or other payments that are, after payment to the inventors made in accordance with subparagraph 2.2 and subject to the limitations of subparagraph 2.4, available for distribution to the facility where the invention occurred. If a license or assignment has inventors from more than one NASA facility, such distribution will be made to each facility on a pro rata basis for the number of facilities involved, unless other arrangements have been made among the relevant facilities. Notification will also be given as to the amounts of royalties or other payments received from the licensing or assignment of inventions made by contractors or grantees, in which title to such inventions has been assigned or otherwise vested in NASA, and which are available (subject to the limitations of subparagraph 2.4) for distribution to the facilities or the NASA Management Office (in cases where the contracts or grants originated at the Centers or at the NASA Management Office, or NASA Headquarters (in cases where the contracts or grants originated at NASA Headquarters).

2.3.2 Transfer of royalties or other payments to a facility will be made on a semiannual basis. Royalties and other payments so transferred to a facility may be used or obligated by that facility during the fiscal year in which the royalties or other payments were received or during the next two (2) succeeding fiscal years:

a. to reward scientific, engineering, and technical employees of the center, including developers of sensitive or classified technology, regardless of whether the technology has commercial applications;

b. to further scientific exchange among the centers of the agency;

c. for education and training of employees consistent with the research and development missions and objectives of the agency or center, and for other activities that increase the potential for transfer of the technology of the centers of the agency;

d. for payment of expenses incidental to the administration and licensing of intellectual property (including patent application preparation, prosecution, maintenance fees, travel, and other costs) incurred by the agency or center with respect to inventions made at that center, including the fees or other costs for the services of other agencies, persons, or organizations for intellectual property management and licensing services; or

e. for scientific research and development consistent with the research and development missions and objectives of the center.

2.3.3 All royalties or other payments retained by the agency or center after payments have been made pursuant to this Chapter 2 which are unobligated and unexpended at the end of the second fiscal year succeeding the fiscal year in which the royalties and other payments were received will be paid into the Treasury.

2.4 Excess Royalties and Other Payments

If, after payment to inventors under subparagraph 2.2, the royalties or other payments received by NASA in any fiscal year exceed 5 percent of the budget of the NASA facility or facilities in which the licensed inventions producing such royalties or other income were made, then 75 percent of such excess will be paid to the Treasury of the United States by NASA, and the remaining 25 percent be made available for use and obligations in accordance with subparagraph 2.3.2.

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