[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 209 Referred in Senate (RFS)]

  1st Session
                                H. R. 209


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 12, 1999

                                Received

                           September 29, 1999

  Read twice and referred to the Committee on Commerce, Science, and 
                             Transportation

_______________________________________________________________________

                                 AN ACT


 
 To improve the ability of Federal agencies to license federally owned 
                              inventions.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Technology Transfer 
Commercialization Act of 1999''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) the importance of linking our unparalleled network of 
        over 700 Federal laboratories and our Nation's universities 
        with United States industry continues to hold great promise for 
        our future economic prosperity;
            (2) the enactment of the Bayh-Dole Act in 1980 was a 
        landmark change in United States technology policy, and its 
        success provides a framework for removing bureaucratic barriers 
        and for simplifying the granting of licenses for inventions 
        that are now in the Federal Government's patent portfolio;
            (3) Congress has demonstrated a commitment over the past 2 
        decades to fostering technology transfer from our Federal 
        laboratories and to promoting public/private sector 
        partnerships to enhance our international competitiveness;
            (4) Federal technology transfer activities have 
        strengthened the ability of United States industry to compete 
        in the global marketplace; developed a new paradigm for greater 
        collaboration among the scientific enterprises that conduct our 
        Nation's research and development--government, industry, and 
        universities; and improved the quality of life for the American 
        people, from medicine to materials;
            (5) the technology transfer process must be made ``industry 
        friendly'' for companies to be willing to invest the 
        significant time and resources needed to develop new products, 
        processes, and jobs using federally funded inventions; and
            (6) Federal technology licensing procedures should balance 
        the public policy needs of adequately protecting the rights of 
        the public, encouraging companies to develop existing 
        government inventions, and making the entire system of 
        licensing government technologies more consistent and simple.

SEC. 3. COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS.

    Section 12(b)(1) of the Stevenson-Wydler Technology Innovation Act 
of 1980 (15 U.S.C. 3710a(b)(1)) is amended by inserting ``or, subject 
to section 209 of title 35, United States Code, may grant a license to 
an invention which is federally owned, for which a patent application 
was filed before the signing of the agreement, and directly within the 
scope of the work under the agreement,'' after ``under the 
agreement,''.

SEC. 4. LICENSING FEDERALLY OWNED INVENTIONS.

    (a) Amendment.--Section 209 of title 35, United States Code, is 
amended to read as follows:
``Sec. 209. Licensing federally owned inventions
    ``(a) Authority.--A Federal agency may grant an exclusive or 
partially exclusive license on a federally owned invention under 
section 207(a)(2) only if--
            ``(1) granting the license is a reasonable and necessary 
        incentive to--
                    ``(A) call forth the investment capital and 
                expenditures needed to bring the invention to practical 
                application; or
                    ``(B) otherwise promote the invention's utilization 
                by the public;
            ``(2) the Federal agency finds that the public will be 
        served by the granting of the license, as indicated by the 
        applicant's intentions, plans, and ability to bring the 
        invention to practical application or otherwise promote the 
        invention's utilization by the public, and that the proposed 
        scope of exclusivity is not greater than reasonably necessary 
        to provide the incentive for bringing the invention to 
        practical application, as proposed by the applicant, or 
        otherwise to promote the invention's utilization by the public;
            ``(3) the applicant makes a commitment to achieve practical 
        application of the invention within a reasonable time, which 
        time may be extended by the agency upon the applicant's request 
        and the applicant's demonstration that the refusal of such 
        extension would be unreasonable;
            ``(4) granting the license will not tend to substantially 
        lessen competition or create or maintain a violation of the 
        Federal antitrust laws; and
            ``(5) in the case of an invention covered by a foreign 
        patent application or patent, the interests of the Federal 
        Government or United States industry in foreign commerce will 
        be enhanced.
    ``(b) Manufacture in United States.--A Federal agency shall 
normally grant a license under section 207(a)(2) to use or sell any 
federally owned invention in the United States only to a licensee who 
agrees that any products embodying the invention or produced through 
the use of the invention will be manufactured substantially in the 
United States.
    ``(c) Small Business.--First preference for the granting of any 
exclusive or partially exclusive licenses under section 207(a)(2) shall 
be given to small business firms having equal or greater likelihood as 
other applicants to bring the invention to practical application within 
a reasonable time.
    ``(d) Terms and Conditions.--Any licenses granted under section 
207(a)(2) shall contain such terms and conditions as the granting 
agency considers appropriate, and shall include provisions--
            ``(1) retaining a nontransferrable, irrevocable, paid-up 
        license for any Federal agency to practice the invention or 
        have the invention practiced throughout the world by or on 
        behalf of the Government of the United States;
            ``(2) requiring periodic reporting on utilization of the 
        invention, and utilization efforts, by the licensee, but only 
        to the extent necessary to enable the Federal agency to 
        determine whether the terms of the license are being complied 
        with, except that any such report shall be treated by the 
        Federal agency as commercial and financial information obtained 
        from a person and privileged and confidential and not subject 
        to disclosure under section 552 of title 5 of the United States 
        Code; and
            ``(3) empowering the Federal agency to terminate the 
        license in whole or in part if the agency determines that--
                    ``(A) the licensee is not executing its commitment 
                to achieve practical application of the invention, 
                including commitments contained in any plan submitted 
                in support of its request for a license, and the 
                licensee cannot otherwise demonstrate to the 
                satisfaction of the Federal agency that it has taken, 
                or can be expected to take within a reasonable time, 
                effective steps to achieve practical application of the 
                invention;
                    ``(B) the licensee is in breach of an agreement 
                described in subsection (b);
                    ``(C) termination is necessary to meet requirements 
                for public use specified by Federal regulations issued 
                after the date of the license, and such requirements 
                are not reasonably satisfied by the licensee; or
                    ``(D) the licensee has been found by a court of 
                competent jurisdiction to have violated the Federal 
                antitrust laws in connection with its performance under 
                the license agreement.
    ``(e) Public Notice.--No exclusive or partially exclusive license 
may be granted under section 207(a)(2) unless public notice of the 
intention to grant an exclusive or partially exclusive license on a 
federally owned invention has been provided in an appropriate manner at 
least 15 days before the license is granted, and the Federal agency has 
considered all comments received before the end of the comment period 
in response to that public notice. This subsection shall not apply to 
the licensing of inventions made under a cooperative research and 
development agreement entered into under section 12 of the Stevenson-
Wydler Technology Innovation Act of 1980 (15 U.S.C. 3710a).
    ``(f) Plan.--No Federal agency shall grant any license under a 
patent or patent application on a federally owned invention unless the 
person requesting the license has supplied the agency with a plan for 
development or marketing of the invention, except that any such plan 
shall be treated by the Federal agency as commercial and financial 
information obtained from a person and privileged and confidential and 
not subject to disclosure under section 552 of title 5 of the United 
States Code.''.
    (b) Conforming Amendment.--The item relating to section 209 in the 
table of sections for chapter 18 of title 35, United States Code, is 
amended to read as follows:

``209. Licensing federally owned inventions.''.

SEC. 5. MODIFICATION OF STATEMENT OF POLICY AND OBJECTIVES FOR CHAPTER 
              18 OF TITLE 35, UNITED STATES CODE.

    Section 200 of title 35, United States Code, is amended by striking 
``enterprise;'' and inserting ``enterprise without unduly encumbering 
future research and discovery;''.

SEC. 6. TECHNICAL AMENDMENTS TO BAYH-DOLE ACT.

    Chapter 18 of title 35, United States Code (popularly known as the 
``Bayh-Dole Act''), is amended--
            (1) by amending section 202(e) to read as follows:
    ``(e) In any case when a Federal employee is a coinventor of any 
invention made with a nonprofit organization, a small business firm, or 
a non-Federal inventor, the Federal agency employing such coinventor 
may, for the purpose of consolidating rights in the invention and if it 
finds that it would expedite the development of the invention--
            ``(1) license or assign whatever rights it may acquire in 
        the subject invention to the nonprofit organization, small 
        business firm, or non-Federal inventor in accordance with the 
        provisions of this chapter; or
            ``(2) acquire any rights in the subject invention from the 
        nonprofit organization, small business firm, or non-Federal 
        inventor, but only to the extent the party from whom the rights 
        are acquired voluntarily enters into the transaction and no 
        other transaction under this chapter is conditioned on such 
        acquisition.''; and
            (2) in section 207(a)--
                    (A) by striking ``patent applications, patents, or 
                other forms of protection obtained'' and inserting 
                ``inventions'' in paragraph (2); and
                    (B) by inserting ``, including acquiring rights for 
                and administering royalties to the Federal Government 
                in any invention, but only to the extent the party from 
                whom the rights are acquired voluntarily enters into 
                the transaction, to facilitate the licensing of a 
                federally owned invention'' after ``or through 
                contract'' in paragraph (3).

SEC. 7. TECHNICAL AMENDMENTS TO THE STEVENSON-WYDLER TECHNOLOGY 
              INNOVATION ACT OF 1980.

    The Stevenson-Wydler Technology Innovation Act of 1980 is amended--
            (1) in section 4(4) (15 U.S.C. 3703(4)), by striking 
        ``section 6 or section 8'' and inserting ``section 7 or 9'';
            (2) in section 4(6) (15 U.S.C. 3703(6)), by striking 
        ``section 6 or section 8'' and inserting ``section 7 or 9'';
            (3) in section 5(c)(11) (15 U.S.C. 3704(c)(11)), by 
        striking ``State of local governments'' and inserting ``State 
        or local governments'';
            (4) in section 9 (15 U.S.C. 3707), by--
                    (A) striking ``section 6(a)'' and inserting 
                ``section 7(a)'';
                    (B) striking ``section 6(b)'' and inserting 
                ``section 7(b)''; and
                    (C) striking ``section 6(c)(3)'' and inserting 
                ``section 7(c)(3)'';
            (5) in section 11(e)(1) (15 U.S.C. 3710(e)(1)), by striking 
        ``in cooperation with Federal Laboratories'' and inserting ``in 
        cooperation with Federal laboratories'';
            (6) in section 11(i) (15 U.S.C. 3710(i)), by striking ``a 
        gift under the section'' and inserting ``a gift under this 
        section'';
            (7) in section 14 (15 U.S.C. 3710c)--
                    (A) in subsection (a)(1)(A)(i), by inserting ``, 
                other than payments of patent costs as delineated by a 
                license or assignment agreement,'' after ``or other 
                payments'';
                    (B) in subsection (a)(1)(A)(i), by inserting ``, if 
                the inventor's or coinventor's rights are assigned to 
                the United States'' after ``inventor or coinventors'';
                    (C) in subsection (a)(1)(B), by striking 
                ``succeeding fiscal year'' and inserting ``2 succeeding 
                fiscal years'';
                    (D) in subsection (a)(2), by striking ``Government-
                operated laboratories of the''; and
                    (E) in subsection (b)(2), by striking ``inventon'' 
                and inserting ``invention''; and
            (8) in section 22 (15 U.S.C. 3714), by striking ``sections 
        11, 12, and 13'' and inserting ``sections 12, 13, and 14''.

SEC. 8. REVIEW OF COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT 
              PROCEDURES.

    (a) Review.--Within 90 days after the date of the enactment of this 
Act, each Federal agency with a federally funded laboratory that has in 
effect on that date of enactment one or more cooperative research and 
development agreements under section 12 of the Stevenson-Wydler 
Technology Innovation Act of 1980 (15 U.S.C. 3710a) shall report to the 
Committee on National Security of the National Science and Technology 
Council and the Congress on the general policies and procedures used by 
that agency to gather and consider the views of other agencies on--
            (1) joint work statements under section 12(c)(5) (C) or (D) 
        of the Stevenson-Wydler Technology Innovation Act of 1980 (15 
        U.S.C. 3710a(c)(5)(C) or (D)); or
            (2) in the case of laboratories described in section 
        12(d)(2)(A) of the Stevenson-Wydler Technology Innovation Act 
        of 1980 (15 U.S.C. 3710a(d)(2)(A)), cooperative research and 
        development agreements under such section 12,
with respect to major proposed cooperative research and development 
agreements that involve critical national security technology or may 
have a significant impact on domestic or international competitiveness.
    (b) Procedures.--Within one year after the date of the enactment of 
this Act, the Committee on National Security of the National Science 
and Technology Council, in conjunction with relevant Federal agencies 
and national laboratories, shall--
            (1) determine the adequacy of existing procedures and 
        methods for interagency coordination and awareness with respect 
        to cooperative research and development agreements described in 
        subsection (a); and
            (2) establish and distribute to appropriate Federal 
        agencies--
                    (A) specific criteria to indicate the necessity for 
                gathering and considering the views of other agencies 
                on joint work statements or cooperative research and 
                development agreements as described in subsection (a); 
                and
                    (B) additional procedures, if any, for carrying out 
                such gathering and considering of agency views with 
                respect to cooperative research and development 
                agreements described in subsection (a).
Procedures established under this subsection shall be designed to the 
extent possible to use or modify existing procedures, to minimize 
burdens on Federal agencies, to encourage industrial partnerships with 
national laboratories, and to minimize delay in the approval or 
disapproval of joint work statements and cooperative research and 
development agreements.
    (c) Limitation.--Nothing in this Act, nor any procedures 
established under this section shall provide to the Office of Science 
and Technology Policy, the National Science and Technology Council, or 
any Federal agency the authority to disapprove a cooperative research 
and development agreement or joint work statement, under section 12 of 
the Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 
3710a), of another Federal agency.

SEC. 9. INCREASED FLEXIBILITY FOR FEDERAL LABORATORY PARTNERSHIP 
              INTERMEDIARIES.

    Section 23 of the Stevenson-Wydler Technology Innovation Act of 
1980 (15 U.S.C. 3715) is amended--
            (1) in subsection (a)(1) by inserting ``, institutions of 
        higher education as defined in section 1201(a) of the Higher 
        Education Act of 1965 (20 U.S.C. 1141(a)), or educational 
        institutions within the meaning of section 2194 of title 10, 
        United States Code'' after ``small business firms''; and
            (2) in subsection (c) by inserting ``, institutions of 
        higher education as defined in section 1201(a) of the Higher 
        Education Act of 1965 (20 U.S.C. 1141(a)), or educational 
        institutions within the meaning of section 2194 of title 10, 
        United States Code,'' after ``small business firms''.

SEC. 10. REPORTS ON UTILIZATION OF FEDERAL TECHNOLOGY.

    (a) Agency Activities.--Section 11 of the Stevenson-Wydler 
Technology Innovation Act of 1980 (15 U.S.C. 3710) is amended--
            (1) by striking the last sentence of subsection (b);
            (2) by inserting after subsection (e) the following:
    ``(f) Agency Reports on Utilization.--
            ``(1) In general.--Each Federal agency which operates or 
        directs one or more Federal laboratories or which conducts 
        activities under sections 207 and 209 of title 35, United 
        States Code, shall report annually to the Office of Management 
        and Budget, as part of the agency's annual budget submission, 
        on the activities performed by that agency and its Federal 
        laboratories under the provisions of this section and of 
        sections 207 and 209 of title 35, United States Code.
            ``(2) Contents.--The report shall include--
                    ``(A) an explanation of the agency's technology 
                transfer program for the preceding fiscal year and the 
                agency's plans for conducting its technology transfer 
                function, including its plans for securing intellectual 
                property rights in laboratory innovations with 
                commercial promise and plans for managing its 
                intellectual property so as to advance the agency's 
                mission and benefit the competitiveness of United 
                States industry; and
                    ``(B) information on technology transfer activities 
                for the preceding fiscal year, including--
                            ``(i) the number of patent applications 
                        filed;
                            ``(ii) the number of patents received;
                            ``(iii) the number of fully-executed 
                        licenses which received royalty income in the 
                        preceding fiscal year, categorized by whether 
                        they are exclusive, partially-exclusive, or 
                        non-exclusive, and the time elapsed from the 
                        date on which the license was requested by the 
                        licensee in writing to the date the license was 
                        executed;
                            ``(iv) the total earned royalty income 
                        including such statistical information as the 
                        total earned royalty income, of the top 1 
                        percent, 5 percent, and 20 percent of the 
                        licenses, the range of royalty income, and the 
                        median, except where disclosure of such 
                        information would reveal the amount of royalty 
                        income associated with an individual license or 
                        licensee;
                            ``(v) what disposition was made of the 
                        income described in clause (iv);
                            ``(vi) the number of licenses terminated 
                        for cause; and
                            ``(vii) any other parameters or discussion 
                        that the agency deems relevant or unique to its 
                        practice of technology transfer.
            ``(3) Copy to secretary; attorney general; congress.--The 
        agency shall transmit a copy of the report to the Secretary of 
        Commerce and the Attorney General for inclusion in the annual 
        report to Congress and the President required by subsection 
        (g)(2).
            ``(4) Public availability.--Each Federal agency reporting 
        under this subsection is also strongly encouraged to make the 
        information contained in such report available to the public 
        through Internet sites or other electronic means.'';
            (3) by striking subsection (g)(2) and inserting the 
        following:
            ``(2) Reports.--
                    ``(A) Annual report required.--The Secretary, in 
                consultation with the Attorney General and the 
                Commissioner of Patents and Trademarks, shall submit 
                each fiscal year, beginning one year after enactment of 
                the Technology Transfer Commercialization Act of 1999, 
                a summary report to the President, the United States 
                Trade Representative, and the Congress on the use by 
                Federal agencies and the Secretary of the technology 
                transfer authorities specified in this Act and in 
                sections 207 and 209 of title 35, United States Code.
                    ``(B) Content.--The report shall--
                            ``(i) draw upon the reports prepared by the 
                        agencies under subsection (f);
                            ``(ii) discuss technology transfer best 
                        practices and effective approaches in the 
                        licensing and transfer of technology in the 
                        context of the agencies' missions; and
                            ``(iii) discuss the progress made toward 
                        development of additional useful measures of 
                        the outcomes of technology transfer programs of 
                        Federal agencies.
                    ``(C) Public availability.--The Secretary shall 
                make the report available to the public through 
                Internet sites or other electronic means.''; and
            (4) by inserting after subsection (g) the following:
    ``(h) Duplication of Reporting.--The reporting obligations imposed 
by this section--
            ``(1) are not intended to impose requirements that 
        duplicate requirements imposed by the Government Performance 
        and Results Act of 1993 (31 U.S.C. 1101 note);
            ``(2) are to be implemented in coordination with the 
        implementation of that Act; and
            ``(3) are satisfied if an agency provided the information 
        concerning technology transfer activities described in this 
        section in its annual submission under the Government 
        Performance and Results Act of 1993 (31 U.S.C. 1101 note).''.
    (b) Royalties.--Section 14(c) of the Stevenson-Wydler Technology 
Innovation Act of 1980 (15 U.S.C. 3710c(c)) is amended to read as 
follows:
    ``(c) Reports.--The Comptroller General shall transmit a report to 
the appropriate committees of the Senate and House of Representatives 
on the effectiveness of Federal technology transfer programs, including 
findings, conclusions, and recommendations for improvements in such 
programs. The report shall be integrated with, and

submitted at the same time as, the report required by section 202(b)(3) 
of title 35, United States Code.''.

            Passed the House of Representatives May 11, 1999.

            Attest:

                                                 JEFF TRANDAHL,

                                                                 Clerk.