{"data":{"id":"us/48-cfr-31.205-37","jurisdiction":"us","citation":"48 CFR 31.205-37","heading":"31.205-37 Royalties and other costs for use of patents.","body":"(a) Royalties on a patent or amortization of the cost of purchasing a patent or patent rights necessary for the proper performance of the contract and applicable to contract products or processes are allowable unless—\n(1) The Government has a license or the right to a free use of the patent;\n(2) The patent has been adjudicated to be invalid, or has been administratively determined to be invalid;\n(3) The patent is considered to be unenforceable; or\n(4) The patent is expired.\n(b) Care should be exercised in determining reasonableness when the royalties may have been arrived at as a result of less-than-arm's-length bargaining; e.g., royalties—\n(1) Paid to persons, including corporations, affiliated with the contractor;\n(2) Paid to unaffiliated parties, including corporations, under an agreement entered into in contemplation that a Government contract would be awarded; or\n(3) Paid under an agreement entered into after the contract award.\n(c) In any case involving a patent formerly owned by the contractor, the royalty amount allowed should not exceed the cost which would have been allowed had the contractor retained title.\n(d) See 31.109 regarding advance agreements.","path":["Title 48—Federal Acquisition Regulations System","CHAPTER 1—FEDERAL ACQUISITION REGULATION","SUBCHAPTER E—GENERAL CONTRACTING REQUIREMENTS","PART 31—CONTRACT COST PRINCIPLES AND PROCEDURES","Subpart 31.2—Contracts With Commercial Organizations"],"source_url":"https://www.ecfr.gov/api/versioner/v1/full/2026-08-25/title-48.xml","current_through":"2026-08-25","vintage":"","retrieved_at":"2026-08-27T02:26:29Z","sha256":"497cd6753094230918e53f921a7bbe3dd5b0feff5263a9c5ef6ddc2fe8e35450","source_id":"us-cfr","stale":true,"prev":"us/48-cfr-31.205-36","next":"us/48-cfr-31.205-38"},"notice":"GroundRules: Original legal text. Not legal advice."}