[Congressional Record Volume 143, Number 130 (Thursday, September 25, 1997)]
[Extensions of Remarks]
[Pages E1867-E1868]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    H.R. 2544, THE TECHNOLOGY TRANSFER COMMERCIALIZATION ACT OF 1997

                                 ______
                                 

                       HON. CONSTANCE A. MORELLA

                              of maryland

                    in the house of representatives

                      Thursday, September 25, 1997

  Mrs. MORELLA. Mr. Speaker, today I am introducing H.R. 2544, the 
Technology Transfer Commercialization Act of 1997, a bill which 
promotes technology transfer by facilitating licenses for federally 
owned inventions.
  Each day research and development programs at our Nation's over 700 
Federal laboratories produce new knowledge, processes, and products. 
Often, technologies and techniques generated in these Federal 
laboratories have commercial applications, if further developed by the 
industrial community.
  As a result, Federal laboratories are working closely with U.S. 
business, industry, and State and local governments to help them apply 
these new capabilities to their own particular needs. Through this 
technology transfer process our Federal laboratories are sharing the 
benefits of our national investment in scientific progress with all 
segments of our society.
  It seems clear that the economic advances of the 21st century will 
rooted in the research and development performed in our Nation's 
laboratories. These advances are becoming even more dependent upon the 
continuous transfer of technology into commercial goods and services. 
By spinning-off and commercializing federally developed technology, the 
results of our Federal research and development enterprise are being 
used today to enhance our Nation's ability to compete in the global 
marketplace.
  For over a decade and a half, Congress, led the Science Committee, 
has embraced the use of technology transfer from our Federal 
laboratories to help boost our international competitiveness. We have 
enacted legislation establishing a system to facilitate this transfer 
of technology to the private sector and to State and local governments.
  The primary law to promote the transfer of technology from Federal 
laboratories is the Stevenson-Wydler Technology Innovation Act of 1980. 
The Stevenson-Wydler Act, Public Law 96-480, makes it easier to 
transfer technology from the laboratories and provides a means for 
private sector researchers to access laboratory development.
  In addition, Congress has enacted additional laws to foster 
technology transfer, including the Federal Technology Transfer Act of 
1986 (Public Law 99-502); the Omnibus Trade and Competitiveness Act of 
1988 (Public Law 100-418); the National Competitiveness Technology 
Transfer Act of 1989 (Public Law 101-189); and the American Technology 
Preeminence Act of 1991 (Public Law 102-245), among others. In 
addition, Congress enacted the amendments to the Patent and Trademark 
Laws, also known as the Bayh-Dole of 1980 (Public Law 96-517).
  Most recently, in the past Congress, the National Technology Transfer 
and Advancement Act of 1995 (Public Law 104-113), which I introduced, 
was enacted into law. Public Law 104-113 amends the Stevenson-Wydler 
Technology Innovation Act of 1980 and the Federal Technology Transfer 
Act of 1986 to improve U.S. competitiveness by speeding 
commercialization of inventions developed through collaborative 
agreements between the Government and industry. The law also promotes 
partnership ventures with Federal laboratories and the private-sector 
and creates incentives to laboratory personnel for new inventions.
  As the chair of the House Science Committee's Technology 
Subcommittee, I am pleased to continue this tradition of advancing 
technology transfer and encouraging research and development 
partnerships between Government and industry with the introduction of 
H.R. 2544, the Technology Transfer Commercialization Act. H.R. 2544 
seeks to remove the legal obstacles to effectively license federally 
owned inventions, created in Government-owned, Government-operated 
laboratories, by

[[Page E1868]]

adopting the successful Bayh-Dole Act as a framework.
  The bill provides parallel authorities to those currently in place 
under the Bayh-Dole Act for licensing university or university-operated 
Federal laboratory inventions. The bill also amends the Stevenson-
Wydler Act, as amended, to allow Federal laboratories to include 
already existing patented inventions into a cooperative research and 
development agreement [CRADA].
  Thus, agencies would be provided with two important new tools for 
effectively commercializing on-the-shelf Federally owned technologies--
either licensing them as stand-alone inventions, under the bill's 
revised authorities of section 209 of the Bayh-Dole Act, or including 
them as part of a larger package under a CRADA. In doing so, this will 
make both mechanisms much more attractive to U.S. companies that are 
striving to form partnerships with Federal laboratories.
  Additionally, H.R. 2544 removes language requiring onerous public 
notification procedures in the current law, recognizing that in 
partnering with Government, industry must undertake great risks and 
expenditures to bring new discoveries to the marketplace and that in 
today's competitive world economy, time-to-market commercialization is 
a critical factor for successful products. Federal regulations 
currently require a 3-month notification of the availability of an 
invention for exclusive licensing in the Federal Register. If a company 
responds by seeking to license the invention exclusively, another 
notice requirement follows providing for a 60-day period for filing 
objections. The prospective licensee is publicly identified along with 
the invention during this second notice. This built-in delay of at 
least 5 months, along with public notification that a specific company 
is seeking the license, is a great disincentive to commercializing on-
the-shelf Government inventions.

  No such requirements for public notification and filing of objections 
exist for licensing university patents or patents made by contractor-
operated Federal laboratories. In addition, no such restriction applies 
to companies seeking a CRADA, which now guarantees companies the right 
to an exclusive field of use license. In all the years that the 
statutes have been utilized, no evidence has arisen that the 
universities or contractor-operated laboratories abuse these 
authorities. The steady increase of university licensing agreements, 
royalties, commercialized technologies, and economic benefits to the 
U.S. economy shows that removing such legal impediments is critical to 
success.
  Changing this provision would not only speed the commercialization of 
billions of dollars of on-the-shelf technologies, it would also allow 
these discoveries to be effectively included in CRADA, which is now 
very difficult to do. These built-in delays fundamentally exacerbate 
the biggest industry complaint about dealing with the Federal 
Government as a R&D partner--it simply takes too long to complete a 
deal. Requiring a half year delay to receive a license that both 
parties want to grant makes no sense.
  Removing this restriction eliminates the last significant legal 
roadblock to expediting licensing and commercialization of federally 
funded patents. This should provide an important tool for our economic 
growth if the agencies apply this new authority aggressively.
  While removing language requiring onerous public notification 
procedures in the current law, it is the intent of the bill that 
agencies will continue to widely disseminate public notices that 
inventions are available for licensing. Agencies should approach this 
in the same manner that they are now providing notice that 
opportunities or a CRADA are available under the Federal Technology 
Transfer Act, and universities advertise available licenses under the 
Bayh-Dole Act.
  In providing the appropriate notice of the availability of their 
technologies for licensing, I would expect that agencies would make the 
greatest possible use of the Internet. Electronic postings provide 
instantaneous notice that commercial partners are being sought for 
developing Federal patents. Virtually all Federal laboratories and 
universities now already use their Internet websites to post such 
notices. This should be a far more effective advertising tool than mere 
publication in the Federal Register, especially since most small 
businesses do not scan the Federal Register looking for new 
technologies.
  Mr. Speaker, the Technology Transfer Commercialization Act 
streamlines Federal technology licensing procedures by removing the 
uncertainty and delay associated with the licensing determination 
process. Removing the roadblocks to the commercialization of Federal 
research and development by industry has been a goal we, in Congress, 
have long supported, and I would urge my colleagues to join me in this 
effort.

                               H.R. 2544

       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 1997''.

     SEC. 2. 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, in a federally owned invention directly related 
     to the scope of the work under the agreement,'' after ``under 
     the agreement,''.

     SEC. 3. 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 
     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;
       ``(3) the applicant makes a commitment to achieve practical 
     utilization of the invention within a reasonable time;
       ``(4) granting the license will not substantially lessen 
     competition or create or maintain a violation of the 
     antitrust laws; and
       ``(5) in the case of an invention covered by a foreign 
     patent application or patent, the interests of United States 
     industry in foreign commerce will be enhanced.
       ``(b) Manufacture in United States.--Licenses shall 
     normally be granted under this section 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 
     licenses under this section 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.--Licenses granted under this 
     section shall contain such terms and conditions as the 
     granting agency considers appropriate. Such terms and 
     conditions--
       ``(1) shall include provisions--
       ``(A) requiring period reporting on utilization of the 
     invention, and utilization efforts, by the licensee; and
       ``(B) empowering the Federal agency to terminate the 
     license in whole or in part if the agency determines that--
       ``(i) the licensee is not adequately executing its 
     commitment to achieve practical utilization of the invention 
     within a reasonable time;
       ``(ii) the licensee is in breach of an agreement described 
     in subsection (b); or
       ``(iii) 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; and
       ``(2) may include a requirement that the licensee provide 
     the agency with a plan for development or marketing the 
     invention.
     Information obtained pursuant to paragraph (1)(A) 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, United States Code.
       ``(e) Public Notice.--No license may be granted under this 
     section unless public notice of the availability of a 
     federally owned invention for licensing in an appropriate 
     manner has been provided at least 30 days before the license 
     is granted. 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).''.
       (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.''.

       

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