[Congressional Record Volume 141, Number 130 (Saturday, August 5, 1995)]
[Extensions of Remarks]
[Pages E1665-E1668]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


      H.R. 2196, THE TECHNOLOGY TRANSFER IMPROVEMENTS ACT OF 1995

                                 ______


                       HON. CONSTANCE A. MORELLA

                              of maryland

                    in the house of representatives

                         Friday, August 4, 1995
  Mrs. MORELLA. Mr. Speaker, the economic advances of the 21st century 
are rooted in the 

[[Page E1666]]
research and development performed in laboratories around the world 
today. Our Nation's future well-being, therefore, becomes dependent 
upon the continuous transfer of basic science and technology from the 
laboratories into commercial goods and services
  Congress has long tried to encourage the transfer of technology and 
collaboration between the labs and industry. The 1980 Stevenson-Wydler 
Technology Innovation Act was the first significant measure by Congress 
to foster technology transfer from Federal labs to the private sector. 
That landmark legislation was expanded considerably in 1986 with the 
Federal Technology Transfer Act, and again in 1989, with the National 
Competitiveness Technology Transfer Act. These laws explicitly instruct 
the Federal labs to seek commercial opportunities for their 
technologies and to make technology transfer a job responsibility of 
every Federal scientist and engineer.
  This is eminently logical since Federal laboratories are one of our 
Nation's greatest assets. Yet they are also a largely untapped resource 
of technical expertise. There are over 700 Federal laboratories 
throughout the United States, occupying one-fifth of the country's lab 
and equipment capabilities, and employing one of every six scientists 
in the United States.
  Representing Montgomery County, Maryland, the home of a number of 
major Federal laboratories, I am fully aware of the high-quality work 
and the vital role which Federal laboratories play in our research and 
development. Our future economic well-being is too important to exclude 
the resources and abilities of our Federal scientists.
  One very successful method of effectively utilizing our Federal 
laboratories has been through the use of Cooperative Research and 
Development Agreements (CRADAs). I have always been a strong supporter 
of CRADA development and have attempted to resolve barriers and remove 
impediments in its creation.
  In the past two Congresses, I have joined forces with Senator 
Rockefeller of West Virginia in this effort. In this Congress, we are 
teaming up once again to introduce legislation which is very
 similar to the bill which we introduced last year. We have created a 
slightly updated version of our bill and, today, I am introducing that 
bill, H.R. 2196, the Technology Transfer Improvement Act of 1995.

  I am very pleased that a number of my distinguished colleagues have 
cosponsored my legislation, including Science Committee Chairman Bob 
Walker, Committee Ranking Minority Member, George Brown, and 
Subcommittee Ranking Minority Member, John Tanner. Senator Rockefeller 
will be introducing the Senate companion bill to my legislation next 
week.
  On June 27, the House Science Committee's Technology Subcommittee, 
which I chair, and the Basic Research Subcommittee held a joint hearing 
on technology transfer and our Federal laboratories with a focus on the 
Technology Transfer Improvements Act. The witnesses at the hearing 
testified very favorably in support of the bill. The testimony from the 
hearing supplemented the hearing record on the bill already established 
in the previous Congress.
  In the 103rd Congress, hearings in the House and Senate were held on 
the previous version of the bill, H.R. 3590 and S. 1537. The bills 
received strong support from the Administration and a series of Federal 
agency officials, as well as a broad spectrum of academicians and 
industry association representatives. The hearings helped spark a very 
beneficial debate on the current role of our Federal laboratories in 
our Nation's global competitiveness.
  The purpose of the Technology Transfer Improvements Act is to provide 
assurances to United States industry that they will be granted 
sufficient rights to justify prompt commercialization of resulting 
inventions arising from CRADAs with Federal laboratories. The bill 
would also provide important new incentives to Federal laboratory 
personnel who create new inventions.
  In this way, a CRADA would be made more attractive to both American 
industry and Federal laboratories. the bill is important because it 
comes at a time when both Federal laboratories and industry need to 
work closer together for their mutual benefit and our national 
competitiveness.
  The bill enhances commercialization of technology and industrial 
innovation in the United States by guaranteeing to a collaborating 
partner from industry, in a CRADA, the option to choose an exclusive 
license for a field of use. The collaborating party would have the 
right to use the technology in exchange for reasonable compensation to 
the laboratory.
  In addition, the bill provides that the Federal Government will 
retain minimum statutory rights to use the technology for its own 
purposes. In addition, if the title holder does not commercialize the 
technology in any field of use or it is not manufactured in the Untied 
States or if there is a public necessity to the technology, the 
Government may exercise its ``march-in rights'' provided in the bill.
  The bill would also seek to encourage greater cooperation between 
Federal labs and U.S. industry by enhancing the financial incentives 
and rewards given to Federal laboratory scientists for technology that 
results in marketable products. These incentives are paid from the 
income the laboratories received for commercialized technology, not 
from tax dollars.
  Mr. Speaker, I ask unanimous consent that the text of the Technology 
Transfer Improvements Act of 1995 and its summary outline be printed at 
this point in the Record.
 H.R. 2196, The Technology Transfer Improvements Act of 1995--Outline 
                          Summary of H.R. 2196


                          statutory authority

       The Act amends the Stevenson-Wydler Technology Innovation 
     Act of 1980 and the Federal Technology Transfer Act of 1986 
     by creating incentives to promote technology 
     commercialization and for other purposes. The Act would 
     impact upon technology transfer policies in both Government-
     owned, Government-operated laboratories (GOGOs) and 
     Government-owned, Contractor-operated laboratories (GOCOs).


                        specific bill objectives

       (1) Provides assurances to United States industry that they 
     will be granted sufficient rights to justify prompt 
     commercialization of resulting inventions arising from CRADAs 
     with Federal laboratories; (2) Provides important new 
     incentives to Federal laboratory personnel who create new 
     inventions; and (3) Provides several clarifying amendments to 
     strengthen the current law.


                   the two major sections of the bill

       Title to intellectual property arising from CRADAs (Section 
     4). Guarantees a collaborating partner from industry, in a 
     CRADA, the option to choose an exclusive license for a field 
     of use for any such invention created under the agreement. 
     This is an important change because it permits industry to 
     select which option of rights to the invention makes the most 
     sense under the CRADA, in order for industry to commercialize 
     promptly.
       Distribution of income from intellectual property received 
     by Federal labs--Royalties (Section 5). Responds to criticism 
     made by the GAO and witnesses at previous Committee hearings 
     that agencies are not sufficiently providing incentives and 
     rewarding laboratory personnel. The change is significant 
     because it comes at a time that both Federal laboratories and 
     industry need to work closer together for their mutual 
     benefit and our national competitiveness. Requires that 
     agencies must pay Federal inventors each year the first 
     $2,000, and thereafter at least 15% of the royalties, 
     received by the agency for the inventions made by the 
     employee. It also allows for rewarding other lab personnel 
     involved in the project, permits agencies to pay for related 
     administrative and legal costs, and provides a significant 
     new incentive by allowing the laboratory to use royalties for 
     related research in the laboratory.


                effect upon crada partner under the act

       Right to choose exclusive or non-exclusive license in a 
     field of use for resulting CRADA invention.
       Assurance that privileged and confidential information will 
     be protected when CRADA invention is used by the Government.


                  effect upon government under the act

       Right to use invention for legitimate governmental needs 
     with minimum statutory rights to the invention.
       March-in rights to require license to others for public 
     health, safety, or regulatory reasons.
       March-in rights to require license to others for failure to 
     manufacture resulting technologies in the United States.
       Clarifies contributions laboratories can make in a CRADA; 
     continues current prohibition of direct Federal funds to 
     CRADA.
       Clarifies that agencies may use royalty revenue to hire 
     temporary personnel to assist in the CRADA or in related 
     projects.
       Permits agencies to use royalty revenue for related 
     research in the laboratory, and related administrative & 
     legal costs.
       Would return all unused royalty revenue to the Treasury 
     after the completion of the second fiscal year.

[[Page E1667]]



          effect upon federal scientist/inventor under the act

       Inventors would receive the first $2,000 each year and 
     thereafter at least 15% of the royalties.
       Restates current law permitting the Federal employee to 
     work on the commercialization of their invention.
       Clarifies that the inventor has rights to his or her 
     invention when the Government chooses not to pursue it.
                               H.R. 2196

       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 
     Improvements Act of 1995''.

     SEC. 2. FINDINGS.

       The Congress finds the following:
       (1) Bringing technology and industrial innovation to the 
     marketplace is central to the economic, environmental, and 
     social well-being of the people of the United States.
       (2) The Federal Government can help United States business 
     to speed the development of new products and processes by 
     entering into cooperative research and development agreements 
     which make available the assistance of Federal laboratories 
     to the private sector, but the commercialization of 
     technology and industrial innovation in the United States 
     depends upon actions by business.
       (3) The Commercialization of technology and industrial 
     innovation in the United States will be enhanced if 
     companies, in return for reasonable compensation to the 
     Federal Government, can more easily obtain exclusive licenses 
     to inventions which develop as a result of cooperative 
     research with scientists employed by Federal laboratories.

     SEC. 3. USE OF FEDERAL TECHNOLOGY.

       Subparagraph (B) of section 11(e)(7) of the Stevenson-
     Wydler Technology Innovation Act of 1980 (15 U.S.C. 
     3710(e)(7)(B)) is amended to read as follows:
       ``(B) A transfer shall be made by any Federal agency under 
     subparagraph (A), for any fiscal year, only if the
      amount so transferred by that agency (as determined under 
     such subparagraph) would exceed $10,000.''.

     SEC. 4. TITLE TO INTELLECTUAL PROPERTY ARISING FROM 
                   COOPERATIVE RESEARCH AND DEVELOPMENT 
                   AGREEMENTS.

       Subsection (b) of section 12 of the Stevenson-Wydler 
     Technology Innovation Act of 1980 (15 U.S.C. 3710a(b)) is 
     amended to read as follows:
       ``(b) Enumerated Authority.--(1) Under an agreement entered 
     into pursuant to subsection (a)(1), the laboratory may grant, 
     or agree to grant in advance, to a collaborating party patent 
     licenses or assignments, or options thereto, in any invention 
     made in whole or in part by a laboratory employee under the 
     agreement, for reasonable compensation when appropriate. The 
     laboratory shall ensure that the collaborating party has the 
     option to choose an exclusive license for a field of use for 
     any such invention under the agreement or, if there is more 
     than one collaborating party, that the collaborating parties 
     are offered the option to hold licensing rights that 
     collectively encompass the rights that would be held under 
     such an exclusive license by one party. In consideration for 
     the Government's contribution under the agreement, grants 
     under this paragraph shall be subject to the following 
     explicit conditions:
       ``(A) A nonexclusive, nontransferable, irrevocable, paid-up 
     license from the collaborating party to the laboratory to 
     practice the invention or have the invention practiced 
     throughout the world by or on behalf of the Government. In 
     the exercise of such license, the Government shall not 
     publicly disclose trade secrets or commercial or financial 
     information that is privileged or confidential within the 
     meaning of section 552(b)(4) of title 5, United States Code, 
     or which would be considered as such if it had been obtained 
     from a non-Federal party.
       ``(B) If a laboratory assigns title or grants an exclusive 
     license to such an invention, the Government shall retain the 
     right--
       ``(i) to require the collaborating party to grant to a 
     responsible applicant a nonexclusive, partially exclusive, or 
     exclusive license to use the invention in the applicant's 
     licensed field of use, on terms that are reasonable under the 
     circumstances; or
       ``(ii) if the collaborating party fails to grant such a 
     license, to grant the license itself.
       ``(C) The Government may exercise its right retained under 
     subparagraphs (B) (ii) and (iii) only if the Government finds 
     that--
       ``(i) the action is necessary to meet health or safety 
     needs that are not reasonably satisfied by the collaborating 
     party;
       ``(ii) the action is necessary to meet requirements for 
     public use specified by Federal regulations, and such 
     requirements are not reasonably satisfied by the 
     collaborating party; or
       ``(iii) the collaborating party has failed to comply with 
     an agreement containing provisions described in subsection 
     (c)(4)(B).
       ``(2) Under agreements entered into pursuant to subsection 
     (a)(1), the laboratory shall ensure that a collaborating 
     party may retain title to any invention made solely by its 
     employee in exchange for normally granting the Government a 
     nonexclusive, nontransferable, irrevocable, paid-up license 
     to practice the invention or have the invention practiced 
     throughout the world by or on behalf of the Government for 
     research or other Government purposes.
       ``(3) Under an agreement entered into pursuant to 
     subsection (a)(1), a laboratory may--
       ``(A) accept, retain, and use funds, personnel, services, 
     and property from a collaborating party and provide 
     personnel, services, and property to a collaborating party;
       ``(B) use funds received from a collaborating party in 
     accordance with subparagraph (A) to hire personnel to carry 
     out the agreement who will not be subject to full-time-
     equivalent restrictions of the agency; and
       ``(C) to the extent consistent with any applicable agency 
     requirements or standards of conduct, permit an employee or 
     former employee of the laboratory to participate in an effort 
     to commercialize an invention made by the employee or former 
     employee while in the employment or service of the 
     Government.
       ``(4) A collaborating party in an exclusive license in any 
     invention made under an agreement entered into pursuant to 
     subsection (a)(1) shall have the right of enforcement under 
     chapter 29 of title 35, United States Code.
       ``(5) A Government-owned, contractor-operated laboratory 
     that enters into a cooperative research and development 
     agreement pursuant to subsection (a)(1) may use or obligate 
     royalties or other income accruing to the laboratory under 
     such agreement with respect to any invention only--
       ``(A) for payments to inventors;
       ``(B) for a purpose described in clauses (i), (iii), and 
     (iv) of section 14(a)(1)(B); and
       ``(C) for scientific research and development consistent 
     with the research and development missions and objectives of 
     the laboratory.''.

     SEC. 5. DISTRIBUTION OF INCOME FROM INTELLECTUAL PROPERTY 
                   RECEIVED BY FEDERAL LABORATORIES.

       Section 14 of the Stevenson-Wydler Technology Innovation 
     Act of 1980 (15 U.S.C. 3710c) is amended--
       (1) by amending subsection (a)(1) to read as follows:
       ``(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 12, and 
     from the licensing of inventions of Federal laboratories 
     under section 207 of title 35, United States Code, or under 
     any other provision of law, shall be retained by the agency 
     whose laboratory 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 to the inventor or coinventors.
       ``(ii) An agency or laboratory may provide appropriate 
     incentives, from royalties or other payments, to employees of 
     a laboratory who contribute substantially to the technical 
     development of licensed or assigned inventions between the 
     time that the intellectual property rights to such inventions 
     are legally asserted and the time of the licensing or 
     assigning of the inventions.
       ``(iii) The agency or laboratory shall retain the royalties 
     and other payments received from an invention until the 
     agency or laboratory makes payments to employees of a 
     laboratory under clause (i) or (ii).
       ``(B) The balance of the royalties or other payments shall 
     be transferred by the agency to its laboratories, with the 
     majority share of the royalties or other payments from any 
     invention going to the laboratory where the invention 
     occurred. The royalties or other payments so transferred to 
     any laboratory may be used or obligated by the laboratory 
     during the fiscal year in which they are received or during 
     the succeeding fiscal year--
       ``(i) to reward scientific, engineering, and technical 
     employees of the laboratory, including developers of 
     sensitive or classified technology, regardless of whether the 
     technology has commercial applications;
       ``(ii) to further scientific exchange among the 
     laboratories of the agency;
       ``(iii) for education and training of employees consistent 
     with the research and development missions and objectives of 
     the agency or laboratory, and for other activities that 
     increase the potential for transfer of the technology of the 
     laboratories of the agency;
       ``(iv) for payment of expenses incidental to the 
     administration and licensing of intellectual property by the 
     agency or laboratory with respect to inventions made at that 
     laboratory, including the fees or other costs for the 
     services of other agencies, persons, or organizations for 
     intellectual property management and licensing services; or
       ``(v) for scientific research and development consistent 
     with the research and development missions and objectives of 
     the laboratory.
       ``(C) All royalties or other payments retained by the 
     agency or laboratory after payments have been made pursuant 
     to subparagraphs (A) and (B) that is unobligated and 
     unexpended at the end of the second fiscal year succeeding 
     the fiscal year in which the royalties and other payments 
     were received shall be paid into the Treasury.'';
       (2) in subsection (a)(2)--
       (A) by inserting ``or other payments'' after ``royalties''; 
     and
       (B) by striking ``for the purposes described in clauses (i) 
     through (iv) of paragraph (1)(B) 

[[Page E1668]]

     during that fiscal year or the succeeding fiscal year'' and 
     inserting in lieu thereof ``under paragraph (1)(B)'';
       (3) in subsection (a)(3), by striking ``$100,000'' both 
     places it appears and inserting ``$150,000'';
       (4) in subsection (a)(4)--
       (A) by striking ``income'' each place it appears and 
     inserting in lieu thereof ``payments'';
       (B) by striking ``the payment of royalties to inventors'' 
     in the first sentence thereof and
      inserting in lieu thereof ``payments to inventors'';
       (C) by striking ``clause (i) of paragraph (1)(B)'' and 
     inserting in lieu thereof ``clause (iv) of paragraph 
     (1)(B)'';
       (D) by striking ``payment of the royalties,'' in the second 
     sentence thereof and inserting in lieu thereof ``offsetting 
     the payments to inventors,''; and
       (E) by striking ``clauses (i) through (iv) of''; and
       (5) by amending paragraph (1) of subsection (b) to read as 
     follows:
       ``(1) by a contractor, grantee, or participant, or an 
     employee of a contractor, grantee, or participant, in an 
     agreement or other arrangement with the agency, or''.

     SEC. 6. EMPLOYEE ACTIVITIES.

       Section 15(a) of the Stevenson-Wydler Technology Innovation 
     Act of 1980 (15 U.S.C. 3710d(a)) is amended--
       (1) by striking ``the right of ownership to an invention 
     under this Act'' and inserting in lieu thereof ``ownership of 
     or the right of ownership to an invention made by a Federal 
     employee''; and
       (2) by inserting ``obtain or'' after ``the Government, 
     to''.

     SEC. 7. AMENDMENT TO BAYH-DOLE ACT.

       Section 210(e) of title 35, United States Code, is amended 
     by striking ``, as amended by the Federal Technology Transfer 
     Act of 1986,''.
     

                          ____________________