[Congressional Record Volume 145, Number 51 (Wednesday, April 14, 1999)]
[Senate]
[Pages S3711-S3713]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER (for himself and Mr. Frist):
  S. 804. A bill to improve the ability of Federal agencies to license 
Federally-owned inventions; to the Committee on Commerce, Science, and 
Transportation.


           TECHNOLOGY TRANSFER COMMERCIALIZATION ACT OF 1999

  Mr. ROCKEFELLER. Mr. President, today I am with my colleague Senate 
Frist introducing the Technology Transfer Commercialization Act of 
1999. This bill would make technical changes and clarifications to the 
legislation which governs the transfer of intellectual property from 
the federal government to the private sector.
  The original Technology Transfer Improvements Act (TTIA), which I was 
author of in 1995, allowed for easier and quicker access to 
intellectual property which the government owns and private industry 
wants. It created a win-win situation. The government gets royalties 
from these licenses, private industry gets the intellectual property 
that it needs, and Americans get jobs from the production of inventions 
based on this intellectual property.
  This bill builds on the strong positive response from TTIA. It 
reduces the requirements for obtaining a non-exclusive license in order 
to allow as many companies and individuals as possible access to the 
information. It also addresses private industry's concerns about 
maintaining confidential information within applications.
  However, this does not come at the expense of the government being 
able to keep control of its property. This bill also clarifies the 
ability of the licensing agencies to terminate a license if certain 
criteria are not met. Furthermore, it allows the government to 
consolidate intellectual property which is developed in cooperation 
with a private entity so that the package can be relicensed to a third 
party.
  Technology transfer is a vital part of our national economy. It is 
what allows our industries to remain at the leading edge in their 
field. This bill clarifies and adjusts current legislation to allow for 
an even better working relationship between the federal government and 
private industry. I encourage my colleagues to support this bill.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 804

       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. 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 granting of the license, and directly within the 
     scope of the work under the agreement,'' after ``under the 
     agreement,''.

     SEC. 3. LICENSING FEDERALLY OWNED INVENTIONS.

       (a) In General.--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 utilization, 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 
     utilization of the invention within a reasonable time, which 
     may be extended by the agency upon the applicant's request 
     and the applicant's demonstration that the refusal of such an 
     extension would be unreasonable as specified in the license;
       ``(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. Such terms and 
     conditions shall include provisions--
       ``(1) retaining a nontransferable, 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; 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 utilization 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 utilization 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 and/or 
     marketing of the invention, except that any such plan may 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.''.

[[Page S3712]]

     SEC. 4. 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 or small 
     business firm, the Federal agency employing such coinventor 
     may, for the purpose of consolidating rights in the invention 
     and if it finds 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 or small 
     business firm; or
       ``(2) acquire any rights in the subject invention from the 
     nonprofit organization or small business firm, 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) in paragraph (2), by striking ``patent applications, 
     patents, or other forms of protection obtained'' and 
     inserting ``inventions''; and
       (B) in paragraph (3), by inserting ``, including acquiring 
     rights for 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''.

     SEC. 5. 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 ``, if the 
     inventor's or coinventor's rights are assigned to the United 
     States'' after ``inventor or coinventors'';
       (B) in subsection (a)(1)(B), by striking ``succeeding 
     fiscal year'' and inserting ``2 succeeding fiscal years''; 
     and
       (C) in subsection (b)(2), by striking ``invention'' 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. 6. 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 1 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.--
       (1) In general.--Within 1 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--
       (A) 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
       (B) establish and distribute to appropriate Federal 
     agencies--
       (i) 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
       (ii) 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).
       (2) Procedure design.--Procedures established under this 
     subsection shall be designed to the extent possible to--
       (A) use or modify existing procedures;
       (B) minimize burdens on Federal agencies;
       (C) encourage industrial partnerships with national 
     laboratories; and
       (D) 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. 7. 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 Stats Code,'' after ``small business firms''.

     SEC. 8. 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, 208, 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, 208, 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 year and the agency's plans for 
     conducting its technology transfer function for the upcoming 
     year, including its 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 year, including--
       ``(i) the number of patent applications filed;
       ``(ii) the number of patents received;
       ``(iii) the number of executed royalty-bearing licenses, 
     both exclusive and non-exclusive, and the time elapsed from 
     the date the license was requested to the date the license 
     was issued;
       ``(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;
       ``(v) the number of licenses terminated; and
       ``(vi) any other parameters or discussion that the agency 
     deems relevant or unique to its practice of technology 
     transfer.
       ``(3) Copy to secretary; congress.--The agency shall 
     transmit a copy of the report to the Secretary of Commerce 
     for inclusion in the annual report to Congress and the 
     President as set forth in subsection (g)(2) below.
       ``(4) Public availability.--The agency is also strongly 
     encouraged to make the required information available to the 
     public through web sites or other electronic means.'';
       (3) by striking subsection (g)(2) and inserting the 
     following:
       ``(2) Reports.--
       ``(A) Annual report required.--The Secretary shall submit 
     each fiscal year, beginning one year after enactment of the 
     Technology Transfer Commercialization Act of 1999, a summary 
     report to the President and the Congress on the use by the 
     agencies and the Secretary of the authorities specified in 
     this Act and in sections 207, 208, 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, lessons 
     learned, and successful approaches in the licensing and 
     transfer of technology in the context of the agencies' 
     missions; and
       ``(iii) discuss the progress made toward development of 
     useful measures of the outcomes of these programs.

[[Page S3713]]

       ``(C) Public availability.--The Secretary shall make the 
     report available to the public through Internet websites 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 US.C. 1101 nt); and
       ``(2) are to be implemented in coordination with the 
     implementation of that Act.''.
       (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.--At least once every 5 years, beginning one 
     year after enactment of the Technology Transfer 
     Commercialization Act of 1999, the Comptroller General shall 
     transmit a report to the appropriate committee of the Senate 
     and House of Representatives on the effectiveness of the 
     various programs in this Act, including findings, 
     conclusions, and recommendations for improvements in such 
     programs.''.

  Mr. FRIST. Mr. President, I rise today to support the Technology 
Transfer Commercialization Act of 1999.
  Technology transfer is a crucial link in the process that transforms 
research results into commercially viable products. The federal 
government's involvement in technology transfer arises naturally from 
its desire to encourage usage and commercialization of innovations 
resulting from federally-funded research. However, it is through 
further development, refinement, and marketing by the private sector 
that research results become diffused throughout the economy and 
generate growth. The private sector's active and timely participation 
in this process must be strongly encouraged if our competitiveness is 
to be enhanced.
  Patents and licensing rights play key roles in the technology 
transfer process in that they provide strong economic incentives to 
industry. Studies have shown that research funding accounts for only 25 
percent of the costs associated with bringing a new product to market. 
Increasingly, patent ownership is used as a means to recoup the 
investment through the incoming royalty stream. In addition, actual 
experience and studies concluded that if companies do not control the 
results of their investments, they are less likely to engage in related 
research and development.
  Existing legislation encourages the transfer of technologies and 
closer collaborations between the Federal labs and industry by allowing 
the industry partners to obtain title to inventions that result from 
these collaborations. The Stevenson-Wydler Act and subsequent 
amendments created a framework to facilitate cooperative and 
development agreement (CRADAs) between industry and the Federal labs. 
The Bayh-Dole Act and subsequent amendments established policies for 
the licensing of federally-funded inventions.
  The Technology Commercialization Act of 1999 improves upon both 
Stevenson-Wydler and Bayh-Dole by taking into consideration the 
increased competition in the marketplace. Provisions include 
streamlining the licensing procedure, and encouraging use of the 
electronic media to shorten the time requirements for public notice. 
This is in accordance with the fast pace required for doing business 
today. Other provisions include clarifications of criteria for granting 
any license, as well as exclusive and partially exclusive licenses.
  Although technology transfer is important, such transfer should not 
compromise national security or substantially reduce competition in the 
marketplace. In response to these concerns, the Act requires the Office 
of Science and Technology Policy to study existing practices of CRADA 
creation in the agencies, and issue a report outlining review 
procedures for the creation of certain types of CRADAs.
  The Act also lays the groundwork for a better understanding of the 
technology transfer process. Although there is consensus on the role of 
technology transfer in economic growth, there are no existing measures 
for understanding how much technology is transferred or how well the 
process works. Relevant questions include is the technology that is 
being transferred useful or successful, and are the inventions being 
produced in the federal labs relevant to the marketplace. As we 
transition into a knowledge-based economy, the management of knowledge 
movement will play a key role in sustaining our competitiveness.
  In summary, technology transfer is crucial to our national economic 
growth. Therefore, both Senator Rockefeller and I ask for your support 
in enhancing our competitiveness and encouraging industry to work 
together with our federal agencies to create the best technologies 
possible.

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