[House Report 105-620]
[From the U.S. Government Publishing Office]
105th Congress Rept. 105-620
HOUSE OF REPRESENTATIVES
2d Session Part I
_______________________________________________________________________
TECHNOLOGY TRANSFER COMMERCIALIZATION ACT OF 1998
_______________________________________________________________________
July 14, 1998.--Ordered to be printed
_______
Mr. Sensenbrenner, from the Committee on Science, submitted the
following
R E P O R T
[To accompany H.R. 2544]
[Including cost estimate of the Congressional Budget Office]
The Committee on Science, to whom was referred the bill
(H.R. 2544) to improve the ability of federal agencies to
license federally owned inventions, having considered the same,
reports favorably thereon with an amendment and recommends that
the bill as amended do pass.
C O N T E N T S
Page
I. Amendment.......................................................2
II. Purpose of the Bill.............................................4
III. Background and Need for the Legislation.........................4
IV. Summary of Hearings.............................................6
V. Committee Actions...............................................9
VI. Summary of Major Provisions of the Bill........................10
VII. Section-By-Section Analysis (By Title and Section).............10
VIII. Committee Views................................................12
IX. Committee Cost Estimate........................................16
X. Congressional Budget Office Cost Estimate......................16
XI. Compliance With Public Law 104-4...............................17
XII. Committee Oversight Findings and Recommendations...............17
XIII. Oversight Findings and Recommendations by the Committee on
Government Reform and Oversight................................17
XIV. Constitutional Authority Statement.............................18
XV. Federal Advisory Committee Statement...........................18
XVI. Congressional Accountability Act...............................18
XVII. Changes in Existing Law Made by the Bill, as Reported..........18
XVIII.Committee Recommendations......................................24
XIX. Exchange of Committee Correspondence...........................24
XX. Proceedings of the Subcommittee Markup.........................27
XXI. Proceedings of the Full Committee Markup.......................53
I. Amendment
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Technology Transfer
Commercialization Act of 1998''.
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, made before the granting of the
license, and 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 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;
``(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 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 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 shall include
provisions--
``(1) retaining a nontransferrable, irrevocable, paid-up
license for the 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 competent
authority 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 this section 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 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) Basic Business Plan.--A Federal agency may grant a license on
a federally owned invention only if the person requesting the license
has supplied to the agency a basic business plan with development
milestones, commercialization milestones, or both.
``(g) Nondisclosure of Certain Information.--Any basic business
plan, and revisions thereto, submitted by an applicant for a license,
and any report on the utilization or utilization efforts of a licensed
invention submitted by a licensee, shall be treated by the Federal
agency as commercial and financial information obtained from a person
and not subject to disclosure under section 552 of title 5, 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. 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 under a funding agreement with a nonprofit organization
or small business firm, the Federal agency employing such coinventor
may, for the purpose of consolidating rights in the invention--
``(1) license or assign whatever rights it may acquire in
the subject invention from its employee to the nonprofit
organization or small business firm; or
``(2) acquire any rights in the subject invention, but only
to the extent the party from whom the rights are acquired
voluntarily enters into the transaction.''; 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
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. 5. TECHNICAL AMENDMENTS TO THE STEVENSON-WYDLER TECHNOLOGY
INNOVATION ACT OF 1980.
Section 14(a)(1) of the Stevenson-Wydler Technology Innovation Act
of 1980 (15 U.S.C. 3710c(a)(1)) is amended--
(1) in subparagraph (A)(i), by inserting ``, if the
inventor's or coinventor's rights are assigned to the United
States'' after ``inventor or coinventors''; and
(2) in subparagraph (B), by striking ``succeeding fiscal
year'' and inserting ``2 succeeding fiscal years''.
SEC. 6. REVIEW OF COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT
PROCEDURES.
(a) Review.--The Director of the Office of Science and Technology
Policy, in consultation with relevant Federal agencies, national
laboratories, and any other person the Director considers appropriate,
shall review the general policies and procedures used by Federal
agencies 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 Director of the Office of Science and Technology Policy,
in consultation with relevant Federal agencies and national
laboratories, shall--
(1) determine the adequacy of existing procedures and
methods for interagency coordination and awareness; 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.
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.
II. Purpose of the Bill
The purpose of H.R. 2544, as reported, is to promote the
transfer and commercialization of the technology created in our
Nation's system of over 700 federal laboratories, thereby
increasing scientific collaboration between federal
laboratories and private industry. Specifically, the reported
bill improves and streamlines the ability of federal agencies
to license federally owned inventions.
III. Background and Need for the Legislation
For nearly 2 decades, the Committee has encouraged the
transfer to United States private industry of unclassified
technology created in our federal laboratories. Our federal
laboratories have long been considered one of our greatest
scientific research and development resources, employing one of
every six scientists in the country and encompassing one-fifth
of the country's laboratory and equipment capabilities.
Effectively capturing this wealth of ideas and technology from
our federal laboratories, through the transfer to private
industry for commercialization, has helped to bolster our
Nation's ability to compete in the global marketplace.
By permitting effective collaboration between our federal
laboratories and private industry, new technologies can be
rapidly commercialized. Federal technology transfer stimulates
the American economy, enhances the competitive position of
United States industry internationally, and promotes the
development and use of new technologies developed under
taxpayer funded research so those innovations are incorporated
rapidly and effectively into practice to the benefit of the
American public.
To help further these goals, the Committee first reported
the Stevenson-Wydler Technology Innovation Act of 1980 (Public
Law 96-480). The Committee expanded on that landmark
legislation with the passage of the Federal Technology Transfer
Act of 1986 (Public Law 99-502), the National Competitiveness
Technology Transfer Act of 1989 (Public Law 101-189), the
American Technology Preeminence Act of 1991 (Public Law 102-
245), and the National Technology Transfer and Advancement Act
of 1995 (Public Law 104-113), among others.
In 1980, the Committee also reported the University and
Small Business Patent Procedures Act, now commonly referred to
as the Bayh-Dole Act (Public Law 96-517). The Bayh-Dole Act
permits universities, not-for-profit organizations, and small
businesses to obtain title to scientific inventions developed
with Federal Government support. The Bayh-Dole Act also allows
federal agencies to license government-owned patented
scientific inventions nonexclusively, partially exclusively, or
exclusively, depending upon which avenue seems to be the most
effective means for achieving commercialization. Additionally,
the Committee reported out amendments to the Bayh-Dole Act in
the Trademark Clarification Act of 1984 (Public Law 98-620),
which permitted decisions on the awarding of licenses for
patents to be made at the laboratory level in a government-
owned, contractor-operated laboratory (GOCO).
Critical pressures prompted the passage of the Bayh-Dole
Act. Prior to its enactment, many of the discoveries that
resulted from federally-funded scientific research were not
commercialized for the benefit of the American public. Since
the Federal Government lacked the resources to market new
innovations, and private industry was reluctant to make high-
risk investments without the protection of patent rights, many
valuable new innovations were left to sit unused on the shelf
at federal laboratories.
Widely viewed as an effective framework for federal
technology transfer, the Bayh-Dole Act has resulted in
successful patent licensing. In a report submitted to the
Committee, the Association of University Technology Managers
(AUTM) conducted a 1996 study on the effect of the Bayh-Dole
Act. AUTM concluded that the law garnered tremendous economic
benefits not just for the universities and private industry
directly involved in each partnership, but more importantly,
for the United States economy as a whole. The AUTM report
documented that the effect of the Bayh-Dole Act represented a
very real gain to federal agencies and the Nation since it not
only encourages the commercialization of government-owned
patents that would otherwise gather dust on the shelf, but it
also brings in revenues to the Federal Government through
licensing fees.
Accordingly, the process for the licensing of government-
owned patents should continue to be refined by streamlining the
procedures and by removing the uncertainty associated with the
licensing process. Both past and prospective private industry
partners, however, have voiced their concerns regarding the
licensing process. They indicate that the strategic advantages
of acquiring intellectual property rights through a Cooperative
Research and Development Agreement (CRADA) and/or the licensing
of government-owned technology are unfortunately offset by the
delays and uncertainty often associated with the lengthy
federal technology transfer process which is often out of sync
with private sector timing. In addition to the added
uncertainty as to whether the license will be granted, these
procedural barriers increase transaction costs and delay
commercialization.
The present regulations also make it difficult for a
government-owned and government-operated laboratory (GOGO) to
bring existing scientific inventions into a CRADA even when
inclusion would create a more complete technology package. A
GOGO does not have the flexibility that small businesses and
non-profits have in managing their inventions under the Bayh-
Dole Act. Also, a GOGO, unlike a GOCO, currently faces
statutory notification provisions when granting exclusive
licenses, and more importantly, it cannot include existing
inventions in a CRADA under the Federal Technology Transfer Act
of 1986.
By reducing the delay and uncertainty imposed by existing
procedural barriers and thus lowering the transactional costs
associated with licensing technology transfer from federal
laboratories, federal agencies could greatly increase
participation by the private sector in their technology
transfer programs. This approach would expedite the
commercialization of the government-owned invention and reduce
the cost to the American taxpayer for the production of new
technology-based products.
IV. Summary of Hearings
September 25, 1997: ``Promoting Technology Transfer by Facilitating
Licenses to Federally Owned Inventions''
On September 25, 1997, the Subcommittee on Technology held
a hearing on ``Promoting Technology Transfer by Facilitating
Licenses to Federally Owned Inventions.'' The hearing was held
to discuss the effectiveness of our federal technology transfer
laws and methods in which they may be improved, and to review
H.R. 2544, the Technology Transfer Commercialization Act of
1997, which seeks to promote technology transfer by
facilitating licenses to federally-owned inventions. Witnesses
included: Mr. Joe Allen, Vice President, Market and Technology
Assessment, National Technology Transfer Center, Wheeling, WV;
Mr. C. Dan Brand, Chair, Federal Laboratory Consortium,
Jefferson, AR; Mr. Dan Passeri, Vice President, Business
Development and Intellectual Property, Gene Logic, Inc.,
Columbia, MD; and Mr. John G. Mannix, Associate General
Counsel, National Aeronautics and Space Administration, NASA
Headquarters, Washington, DC.
Mr. Joe Allen, testifying as Vice President, Market and
Technology Assessment, National Technology Transfer Center,
stated that linking federal laboratories and universities with
American industry holds great promise for our future economic
prosperity. Mr. Allen asserted that the passage of the Bayh-
Dole Act in 1980, initially considered a bold and radical idea,
is now a model that our economic competitors are emulating.
This legislation holds the same promise. However, Mr. Allen
believes that in order to license government-owned inventions,
the Congress must ease the current complex system which a
company must go through. For example, a company must publish in
the Federal Register its intention to pursue a federally-owned
license. Companies, however, are reluctant to do this as it
effectively gives away their marketing strategy. In conclusion,
Mr. Allen recommended taking a well thought out incremental
approach, such as H.R. 2544, that simplifies current procedures
while retaining important safeguards.
Mr. Daniel R. Passeri, testifying as Vice President, Gene
Logic, Inc., spoke of the importance for the Federal Government
to streamline the procedures and remove the uncertainty
associated with the licensing determination process. In doing
so, the Federal Government will foster an attractive
environment for corporate investment and partnering efforts.
Mr. Passeri believes that under the current system there is a
tension between the needs of industry to rapidly respond to
market demands and opportunities, and the procedural
requirements of federal agencies in regards to the exclusive
licensing of high risk, early stage technology. He stated that
these procedural barriers create increased transaction costs,
delays in obtaining the license, as well as the uncertainty of
actually being granted the license. The barriers, however, do
not exist in university technology transfer. In conclusion, Mr.
Passeri welcomed H.R. 2544's proposed improvements to the
current law and indicated that in their current form, they will
address the frustrations of industry.
Mr. C. Dan Brand, testifying as Chair, Federal Laboratory
Consortium, spoke of the Federal Laboratory Consortium's (FLC)
importance as the nationwide network of federal laboratories
who provide a forum to develop strategies and opportunities for
linking government technology to the marketplace. Mr. Brand
stated that in advance of this hearing, the FLC solicited and
received comments from a number of their member departments and
agencies on removing legal obstacles to effectively license
federally-owned inventions. He cautioned that these are not an
``official'' department or agency position, but rather an
initial assessment. Mr. Brand stated the FLC's belief, as well
as those comments received from departments and agencies, is
that the amendments to the Bayh-Dole Act will serve to speed
transfer and commercialization of technologies to industry,
while maintaining a fair and open competitive environment. Mr.
Brand further cautioned that while the initial input from
member laboratories was largely positive, the Subcommittee
should also consider the views of the FLC Legal Issues
Committee and the National Institutes of Health.
Mr. John G. Mannix, testifying as Associate General
Counsel, Intellectual Property, National Aeronautics and Space
Administration, began by stating that neither NASA nor the
Administration had an opportunity to completely review the
proposed legislation so neither has had an opportunity to
formulate a detailed position. However, Mr. Mannix asserted
that having learned many lessons over the years in this regard,
he would hope NASA's position would be considered before any
changes in the law were made. Mr. Mannix highlighted the two
major improvements to the licensing process that he has seen
during his career. First, he cited the increased personal
involvement of technical experts, and individuals with
marketing, negotiation, and business experience in the
licensing process. Second, he emphasized the importance of the
statutory authority given to NASA negotiators to require
written commercialization plans and yearly status reports
describing progress toward commercialization. Additionally, Mr.
Mannix emphasized the importance of providing some form of
notice of the availability of federally owned licenses. Without
such a notice, Mr. Mannix maintained, we will always be subject
to claims of favoritism.
March 17, 1998: ``Facilitating Licenses to Federally-Owned Inventions:
A Legislative Hearing on H.R. 2544, the Technology Transfer
Commercialization Act''
On March 17, 1998, the Subcommittee on Technology held a
hearing on ``Facilitating Licenses to Federally-Owned
Inventions: A Legislative Hearing on H.R. 2544, the Technology
Transfer Commercialization Act.'' The hearing was held to
review H.R. 2544, the Technology Transfer Commercialization Act
of 1997, which seeks to promote technology transfer by
facilitating licenses to federally-owned inventions. Witnesses
included: The Honorable Ray Kammer, Director, National
Institute of Standards and Technology, Gaithersburg, MD; Mr.
Randolph J. Guschl, Director of Technology Acquisitions,
Central Research and Development, DuPont Chemical Company,
Wilmington, DE; Ms. Elizabeth Kraftician, Chief Executive
Officer, Touchstone Research Laboratory, Tridelphia, WV.
The Honorable Ray Kammer, testifying as Director, National
Institute of Standards and Technology explained the newly
formed Interagency Committee on Technology Transfer and the
consensus of this Committee on H.R. 2544. Specifically, Mr.
Kammer emphasized the need to pay closer attention to the
output side of R&D spending. While a greater pecuniary
commitment to R&D spending is laudable, the end result is
equally important. Further, enabling end results to make their
way to the marketplace is equally important, as they can have
important societal benefits. He also spoke of the Interagency
Committee's suggestions regarding certain provisions of the
legislation. For example, the agencies suggest the licensees be
subject to the same current notification requirements and the
need to retain current requirements for licensees to submit
development or marketing plans. Mr. Kammer emphasized the
importance of utilizing those plans as an objective basis for
deciding whether the prospective licensee is likely to quickly
bring the innovation to market. Additionally, bundling
innovations should be addressed in the legislation and Mr.
Kammer spoke of the improved ability to streamline and allow
licensees to derive maximum commercial benefit from inventions
by ``bundling'' similar innovations together. In conclusion he
indicated that industry and the government are still learning
how to better work together in commercializing the American
people's investment in R&D.
Mr. Randolph J. Guschl, testifying as Director, Technology
Acquisitions, Central Research and Development, DuPont,
Wilmington, DE, expressed support for the legislation and
highlighted the fact that H.R. 2544 puts the discoveries of
government-owned, government-operated (GOGO) laboratories on
terms equal to those of government-owned, contractor operated
(GOCO) laboratories. However, Mr. Guschl indicated he had a
couple of ideas regarding the legislation. First, revise the
wording regarding U.S. manufacture. Better language would
require the earliest possible deployment in the United States,
but not require it to be substantially manufactured in the
United States. This would allow U.S. businesses to compete
globally, thereby strengthening the U.S. components of
international companies. Second, he supports the bill's
recognition of exclusivity. This provision has been used in
GOCO labs and should also be used in GOGO labs. Third, he
support the bill's shift from 90+60 day notification process to
a 30 day notification process. Fourth, retain requiring
submission of a business and marketing plan. This allows agency
to determine commitment of prospective licensees. Lastly,
consider empowering the technology transfer directors to make
quick and final decisions for their labs, but also allow there
to be a quick appeals process. In conclusion, Mr. Guschl
suggested support for the legislation and commended its
improvement of the technology transfer process.
Ms. Elizabeth Kraftician, Chief Executive Officer,
Touchstone Research Laboratory, offered her strong support for
H.R. 2544. Ms. Kraftician believes this legislation will have a
strong impact in moving federal technologies to the
marketplace. Additionally, Ms. Kraftician expressed support for
this legislation as a way to benefit small businesses in this
technology transfer process. Small businesses have
traditionally been locked out of the technology transfer arena
by the slow, cumbersome, bureaucratic and oftentimes anti-small
business process by which Federal Government has traditionally
transferred technology to the marketplace. Ms. Kraftician
applauded especially H.R. 2544's leveling the notification
playing field by allowing advertisement in a wider variety of
venues which gives the federal laboratory greater flexibility
and no longer forces small business to rely exclusively on the
Federal Register. In conclusion, Ms. Kraftician emphasized that
in order for this legislation to work, public institutions must
be held accountable for how they wield the authorities they are
given. With respect to technology transfer, public agencies
must be willing to make decisions and take risks.
V. Committee Actions
Subcommittee Markup
On March 26, 1998, the Technology Subcommittee convened to
consider H.R. 2544, as introduced. Two amendments were offered
and accepted by the Subcommittee. The Subcommittee approved an
amendment offered by Mr. Barcia of Michigan and an amendment by
Mr. Cook of Utah by voice vote. Both amendments reflected
consensus revisions as requested by the Administration. With a
quorum present, Mr. Barcia moved that H.R. 2544, as amended, be
reported. The motion was adopted by voice vote.
Committee Markup
On May 13, 1998, the Science Committee convened to consider
H.R 2544. An Amendment in the Nature of a Substitute, offered
by Chairman Sensenbrenner of Wisconsin, was adopted by voice
vote. The amendment made technical and conforming changes to
H.R. 2544 and added Section 6 (Review of Cooperative Research
and Development Agreement Procedures), sponsored by Mrs.
Tauscher of California, to the bill. With a quorum present, Mr.
Brown moved that H.R. 2544, as amended, be reported. The motion
was adopted by voice vote.
VI. Summary of Major Provisions of the Bill
The goal of H.R. 2544 is to remove the procedural obstacles
and to the greatest extent possible, within the limits of the
public interest, the uncertainty involved in the licensing of
government-owned patented inventions created in a GOGO, by
applying the successful GOCO provisions in the Bayh-Dole Act to
a GOGO. In H.R. 2544, federal agencies would be provided with
two important new tools for effectively commercializing on-the-
shelf, government-owned inventions: (1) the bill's revised
authorities of Section 209 of the Bayh-Dole Act; and (2) the
ability to license technology as part of a CRADA. Both
mechanisms make federal technology transfer programs much more
attractive to United States private industries that seek to
form partnerships with federal laboratories. H.R. 2544, as
amended, also makes a number of smaller adjustments to the
Bayh-Dole Act and the Stevenson-Wydler Act, which are designed
to improve these laws, reflecting a series of consensus
``lessons learned'' during 18 years of experience in technology
transfer.
VII. Section-by-Section Analysis
SECTION 1. SHORT TITLE.
The Act shall be called the ``Technology Transfer
Commercialization Act of 1997.''
SECTION. 2. COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS.
Section 2 amends the Stevenson-Wydler Technology Innovation
Act of 1980 by setting out the circumstances under which
federal laboratories may license existing patented inventions
as part of a Cooperative Research and Development Agreement
(CRADA). The federal laboratory may, subject to Section 209 of
title 35 of the United States Code, grant a license to a
federally-owned invention, created prior to the granting of the
license, if it is directly related to the scope of the work
under the agreement.
SECTION 3. LICENSING FEDERALLY OWNED INVENTIONS.
Section 3 rewrites Section 209, title 35 of the United
States Code preserving existing preferences while streamlining
notice and other procedural requirements.
Subsection 3(a) provides that a federal agency may grant an
exclusive or partially exclusive license to a federally owned
invention only if granting the license is a reasonable and
necessary incentive for commercialization or to promote the
invention's utilization by the public. The federal agency must
find 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 within
a reasonable time or otherwise promote the invention's
utilization by the public. The proposed scope of an exclusive
or partially exclusive license should not be greater than
reasonably necessary. The granting of the license should not
substantially lessen competition or create or maintain a
violation of the antitrust laws, and in the case of an
invention covered by a foreign patent application or patent,
must enhance interests of United States industry in foreign
commerce.
Subsection 3(b) provides that licenses should be granted
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.
Subsection 3(c) provides that the first preference for the
granting of licenses should be given to small businesses that
have an equal or greater likelihood as other applicants to
bring the invention to commercialization within a reasonable
time.
Subsection 3(d) provides certain terms and conditions
required for licenses, as the granting agency considers
appropriate. These include: retaining a nontransferable,
irrevocable, paid-up license for a federal agency to practice
the invention or have the invention practiced throughout the
world by or on behalf of the United States; periodic reporting
on the use of the invention and commercialization 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 providing ``march-in rights'' that
empower a federal agency to terminate the license, in whole or
in part, if it determines that the licensee is not adequately
executing its commitment to achieve practical utilization of
the invention within a reasonable time, if the licensee is in
breach of the substantial United States manufacture
requirement, if termination is necessary to meet the public use
requirements specified by federal regulations issued after the
grant of the license, or if the licensee has been found by a
competent authority to have violated federal antitrust laws.
Subsection 3(e) provides that no exclusive or partially
exclusive license may be granted unless public notice of the
intention to grant such a license 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 in response to that public notice. Subsection 3(e),
however, shall not apply to the licensing of inventions made
under a CRADA entered into under Section 12 of the Stevenson-
Wydler Technology Innovation Act of 1980 (15 U.S.C. 3710a).
Section 3(f) provides that a federal agency may grant a
license on a federally-owned invention only if the licensee has
supplied a basic business plan with development milestones and/
or commercialization milestones.
Section 3(g) provides that any basic business plan
submitted by an applicant for a license, and any report on the
utilization of the invention, shall be treated as commercial
and financial information and not subject to disclosure under
the Freedom of Information Act.
SECTION 4. TECHNICAL AMENDMENTS TO BAYH-DOLE ACT.
Section 4 provides that a federal agency, employing a
coinventor of any invention made under a funding agreement with
a non-profit organization or small business, may consolidate
rights in the invention to ease commercialization of the
invention. Consolidation under Section 4 may occur either by a
federal agency licensing or assigning rights or by the federal
agency acquiring rights related to the invention.
SECTION 5. TECHNICAL AMENDMENTS TO THE STEVENSON-WYDLER TECHNOLOGY
INNOVATION ACT OF 1980.
Section 5 clears up an ambiguity in current law by
providing that the rights of the inventors must be assigned to
the Federal Government in order for the inventors to share
royalties and that the federal agency may retain royalty income
for 2 succeeding fiscal years.
SECTION 6. REVIEW OF COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT
PROCEDURES.
Section 6 provides the Director of the Office of Science
and Technology Policy (OSTP), in consultation with relevant
national laboratories, shall review the general policies and
procedures used by federal agencies to gather and consider the
views of other agencies with respect to major proposed
Cooperative Research and Development Agreements (CRADA) that
involve critical national security technology or may have a
significant impact on domestic or international
competitiveness. Within 1 year after the date of enactment, the
Director of OSTP, in consultation with relevant federal
agencies and national laboratories, shall determine the
adequacy of existing procedures and methods for interagency
coordination and awareness, and establish and distribute to
appropriate federal agencies specific criteria to indicate the
necessity for gathering and considering the views of other
agencies and additional procedures, if any, for carrying out
such gathering and considering of agency views. Procedures
established 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 collaborative relationship with federal
laboratories and private industry.
VIII. Committee Views
SECTION 1. SHORT TITLE.
The Act may be cited as ``The Technology Transfer
Commercialization Act of 1998.''
SECTION. 2. COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS.
The Committee recognizes the success of Cooperative
Research and Development Agreements (CRADA) for federal
technology transfer. Since the inception in 1986 of the CRADA
legislation, over 2,000 have been signed, resulting in the
transfer of technology, knowledge, and expertise back and forth
between our federal laboratories and the private sector. The
Committee believes that the broadening of CRADA licensing
authority to include pre-existing inventions will make a CRADA
more attractive to private industry and increase the transfer
of federal technology.
SECTION 3. LICENSING FEDERALLY OWNED INVENTIONS.
While the Committee does not wish to delay the process of
issuing exclusive or partially exclusive licenses, the
Committee recognizes the importance of public notice. Public
notice provides others knowledge of the proposed license and
provides an opportunity to comment. The Committee understands
that notice of this type has helped the federal agencies find
additional or better licensees than those first proposed. The
Committee is more concerned with the effectiveness of notice
than its form; public notice should not be construed to require
publication in the Federal Register. Other available forms,
including electronic forms, of making public the intention to
grant an exclusive or partially exclusive license on a
federally owned invention should be pursued. The Committee
strongly encourages federal agencies to use the Internet to
meet the public notice requirement in the Act.
The Committee also recognizes that requiring a basic
business plan as part of the application for a license gives
the federal agencies an objective basis for selecting the
private industry firm best suited to commercialize the
invention. The exercise of preparing the plan is also of
considerable use in assisting companies, especially small
businesses, in defining their own focus with respect to the
invention; it also gives agencies valuable insights into the
comparative abilities of companies competing for a single
license and a more precise understanding of the specific field
of use needed to execute a company's commercialization plan.
The Committee strongly believes, however, the basic business
plan should not be an overly burdensome bureaucratic
requirement. A business plan under this section should not be
required to include extraneous materials but rather should be
specifically focused on providing the federal agency the
information it needs to make licensing decisions and to
understand the development and commercialization milestones the
company plans to meet.
The Committee believes that business plans submitted by a
private industry in the licensing process, as well as progress
reports under the license such as reports on utilization and
utilization efforts should be treated by the federal agency as
commercial and financial information not subject to the Freedom
of Information Act and should be entitled to protection from
disclosure. The Committee understands that, absent protection
of its proprietary information, private industry would
otherwise be very reluctant to partner with federal
laboratories which would cause a chilling effect on federal
technology licensing.
SECTION 4. TECHNICAL AMENDMENTS TO BAYH-DOLE ACT.
The Bayh-Dole Act defines the patent rights of small
business and non-profit organizations receiving Federal
Government funding. A significant percentage of government
inventions are co-invented with federally-funded parties, most
commonly university researchers. It is often necessary
consolidate rights to such co-inventions, under appropriate
licenses or assignments, to achieve public benefit through
commercialization. Depending on the specific circumstances, it
may be advantageous for the unified rights and patent
prosecution responsibility to reside with either the co-
inventing entity or the federal agency. The Committee believes
that the Bayh-Dole Act should be amended to make it clear that
both the agency and the co-inventing entity have authority to
enter into license agreements with one another in these
circumstances.
While Bayh-Dole currently provides specific authority for
the Federal Government to assign its rights in a subject co-
invention to the co-inventing entity, it does not mention the
licensing of such rights. The Committee understands that the
absence of specific authority to license in those circumstances
has resulted in inconsistent rulings by federal agencies, with
some approving such licenses while others reject them. The
Bayh-Dole Act is accordingly amended to provide a mechanism
whereby the co-inventing entity can voluntarily transfer its
rights by license or assignment to the federal agency in return
for a share of any subsequent income.
The Committee understands that it is increasingly necessary
for an agency to be able to offer a potential licensee access
to related inventions in order to practice a government-owned
invention. There is, however, no mechanism whereby an agency
can ``in-license'' the rights to related inventions, in return
for the payment of a share of any subsequent royalties, so that
they can be ``bundled'' with a government-owned invention and
licensed together for commercialization. This section adds in
such language.
SECTION 5. TECHNICAL AMENDMENTS TO THE STEVENSON-WYDLER TECHNOLOGY
INNOVATION ACT OF 1980.
The Committee understands that there have been widely
differing federal agency interpretations regarding whether the
rights of the inventors must be assigned to the Federal
Government in order for them to share royalties. For example,
some federal agencies share with all inventors even though they
have not assigned their rights to the Federal Government, while
others do not share with non-government inventors who have
assigned their rights. Under this section, royalty shares will
be due only after assignment of rights by the inventor or co-
inventor.
The Committee also understands that there is confusion on
how long an agency may retain royalty income. Accordingly, the
Committee clarified that federal agencies should be given 2
fiscal years to retain royalty income before transferring
outstanding royalty income, if any, to the general treasury.
SECTION 6. REVIEW OF COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT
PROCEDURES.
The Committee is pleased with the blossoming of the CRADA
concept into a major tool for industry-government cooperation.
At the same time, the Committee has heard of concerns that
major, far-reaching CRADA's may now have outgrown the current
CRADA approval process. A CRADA, as envisioned at the time of
the passage of the Federal Technology Transfer Act of 1986, was
designed to help move individual ideas from the federal
laboratories into the private sector or lead to cooperation
between industry and government labs in areas of mutual
interest. A common benefit of such agreements has been the
acquisition by small businesses of the technological expertise
necessary to succeed that otherwise may not have been available
to them. These CRADA's are small enough that they do not raise
national issues; therefore, the appropriate approval process is
one which is executed quickly without high level signoffs. Most
current CRADA's are still of this type and should be approved
in the traditional manner.
However, in recent years, a handful of major CRADA's have
emerged which involve cutting edge technology, the world's
largest companies, and occasionally consortia of federal
laboratories. Some recent CRADA's are important enough that
they have the potential to affect the future direction of
entire industries including their suppliers. These CRADA's
generally have a positive impact on the laboratories and
companies which participate and should be encouraged. However,
the issues raised by these major CRADA's if they involve
critical national security technology (classified technology or
technology subject to export controls), domestic
competitiveness issues (competitive advantage for market
leaders), or international competitiveness (participation by
foreign companies or foreign suppliers) can go beyond the
expertise of the laboratory's home agency.
The Committee understands that there are instances where
foreign participation and special relations with market leaders
are desirable or even essential to the success of a CRADA, but
other values within the jurisdiction of other agencies, like
the effect on other U.S. companies and the impact on present
and future jobs within the United States, must be considered.
The Committee, therefore, believes that a careful review, and
upgrading if necessary, of existing approval procedures for
these major CRADA's with interagency consequences is in order.
Section 6, therefore, instructs the Director of the White
House Office of Science and Technology Policy to convene
representatives of appropriate federal agencies such as the
Office of Management and Budget, the Department of Defense, the
Department of Energy, the Department of Commerce, the National
Institutes of Health, and NASA and other affected parties to
review current approval procedures for these major CRADA's.
Special care is to be taken to understand the needs of private
sector parties. OSTP is to identify criteria to separate out
the small minority of major CRADA's which need interagency
review from those which do not. For instance, it makes sense to
review only the very largest CRADA's for domestic
competitiveness issues. This review is to understand the
procedures that currently apply to major CRADA's and the extent
to which they lead to a satisfactory airing of national
security, domestic competitiveness, and international
competitiveness issues.
Within 1 year of enactment, the Director of OSTP is to
determine the adequacy of existing procedures and methods for
interagency coordination and awareness and to use them as the
starting point for procedures established under this section.
The Director then is to establish and distribute to appropriate
federal agencies specific criteria for triggering an
interagency review and procedures for carrying out that review
in an expeditious manner. The procedures are to reflect the
needs of the private sector parties for prompt, binding
decisions on CRADA's and the significant investments private
sector partners commit to such endeavors. Existing procedures
are to be used to the extent that they are appropriate. The
purpose of these changes is to solve potential problems through
better interagency coordination rather than to add layers of
review. OSTP is to add new procedures only to the extent that
existing procedures are inadequate, and to assure that any new
procedures lead to expedited, substantive interagency decisions
within the spirit of the CRADA concept. Section 6 does not
modify any statutory deadlines for CRADA approval and does not
grant authority to the OSTP or other agencies to establish a
review board or other new bureaucratic structure to carry out
this section.
IX. Committee Cost Estimate
Clause 7(a) of Rule XIII of the Rules of the House of
Representatives requires each Committee report accompanying
each bill or joint resolution of a public character to contain:
(1) an estimate, made by such Committee, of the costs which
would be incurred in carrying out such bill or joint resolution
in the fiscal year in which it is reported, and in each of the
5 fiscal years following such fiscal year (or for the
authorized duration of any program authorized by such bill or
joint resolution, if less than 5 years); (2) a comparison of
the estimate of costs described in subparagraph (1) of this
paragraph made by such Committee with an estimate of such costs
made by any government agency and submitted to such Committee;
and (3) when practicable, a comparison of the total estimated
funding level for the relevant program (or programs) with the
appropriate levels under current law. However, clause 7(d) of
that Rule provides that this requirement does not apply when a
cost estimate and comparison prepared by the Director of the
Congressional Budget Office under Section 403 of the
Congressional Budget Act of 1974 has been timely submitted
prior to the filing of the report and included in the report
pursuant to clause 2(l)(3)(C) of Rule XI. A cost estimate and
comparison prepared by the Director of the Congressional Budget
Office under Section 403 of the Congressional Budget Act of
1974 has been timely submitted prior to the filing of this
report and included in Section X of this report pursuant to
clause 2(l)(3)(C) of Rule XI.
Clause 2(l)(3)(B) of Rule XI of the Rules of the House of
Representatives requires each Committee report that accompanies
a measure providing new budget authority (other than continuing
appropriations), new spending authority, or new credit
authority, or changes in revenues or tax expenditures to
contain a cost estimate, as required by Section 308(a)(1) of
the Congressional Budget Act of 1974 and, when practicable with
respect to estimates of new budget authority, a comparison of
the total estimated funding level for the relevant program (or
programs) to the appropriate levels under current law. H.R.
2544 does not contain any new budget authority, credit
authority, or changes in revenues or tax expenditures. Assuming
that the sums authorized under the bill are appropriated, H.R.
2544 does authorize additional discretionary spending, as
described in the Congressional Budget Office report on the
bill, which is contained in Section X of this report.
X. Congressional Budget Office Cost Estimate
Congressional Budget Office
U.S. Congress
Washington, DC. 20515
June E. O'Neill, Director
May 21, 1998
Honorable F. James Sensenbrenner, Jr.,
Chairman, Committee on Science,
U.S. House of Representatives,
Washington, DC. 20515
Dear Mr. Chairman:
The Congressional Budget Office has prepared the enclosed cost
estimate for H.R. 2544, the Technology Transfer Commercialization Act
of 1998.
If you wish further details on this estimate, we will be pleased to
provide them. The CBO staff contact is Kathleen Gramp, who can be
reached at 226-2860.
Sincerely,
June E. O'Neill
Enclosure
cc: Honorable George E. Brown, Jr., Ranking Minority Member
______
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
May 21, 1998
H.R 2544
Technology Transfer Commercialization Act of 1998
As ordered reported by the House Committee on Science on May 13, 1998
H.R. 2544 would amend existing law regarding the licensing of
technologies developed with federal resources. This bill would change
the terms and procedures governing such licenses and would expand the
scope of inventions that could be included in a license. Royalties
collected by federal agencies would be available for obligation for 2
years after they are received rather than the one year allowed under
current law. The bill also would direct the Office of Science and
Technology Policy (OSTP) to analyze and recommend policies regarding
major cooperative research and development agreements (CRADAs) within
one year after enactment.
CBO estimates that implementing H.R. 2544 would have no significant
effect on the federal budget over the 1999-2003 period. Based on
information from OSTP, we expect that preparing the report on CRADAs
would involve little additional cost because most of the analyses
required by the bill are being done under current law. Provisions
affecting the collection and spending of royalties by federal agencies
would affect direct spending, so pay-as-you-go procedures would apply
to this bill, but CBO estimates that the effects would not be
significant. Although receipts from royalties could increase if more
licenses are issued as a result of this legislation, any additional
collections would be offset by an increase in direct spending by
agencies for payments to inventors or for related agency programs.
Likewise, giving agencies an additional year to obligate royalty income
would have little effect on direct spending, because agencies obligate
virtually all of the receipts within the one-year limit specified in
current law.
H.R. 2544 contains no intergovernmental or private-sector mandates
as defined in the Unfunded Mandates Reform Act of 1995 and would impose
no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Kathleen Gramp, who can
be reached at 226-2860. This estimate was approved by Robert A.
Sunshine, Deputy Assistant Director for Budget Analysis.
XI. Compliance with Public Law 104-4
H.R. 2544 contains no unfunded mandates.
XII. Committee Oversight Findings and Recommendations
Clause 2(l)(3)(A) of Rule XI of the Rules of the House of
Representatives requires each Committee report to include
oversight findings and recommendations required pursuant to
clause 2(b)(1) of Rule X. The Committee has no oversight
findings.
XIII. Oversight Findings and Recommendations by the Committee on
Government Reform and Oversight
Clause 2(l)(3)(D) of Rule XI of the Rules of the House of
Representatives requires each Committee report to contain a
summary of the oversight findings and recommendations made by
the House Government Reform and Oversight Committee pursuant to
clause 4(c)(2) of Rule X, whenever such findings and
recommendations have been submitted to the Committee in a
timely fashion. The Committee on Science has received no such
findings or recommendations from the Committee on Government
Reform and Oversight.
XIV. Constitutional Authority Statement
Clause 2(l)(4) of Rule XI of the Rules of the House of
Representatives requires each report of a Committee on a bill
or joint resolution of a public character to include a
statement citing the specific powers granted to the Congress in
the Constitution to enact the law proposed by the bill or joint
resolution. Article I, Section 8 of the Constitution of the
United States grants Congress the authority to enact H.R. 2544.
XV. Federal Advisory Committee Statement
H.R. 2544 does not authorize the creation of any new
advisory committees.
XVI. Congressional Accountability Act
The Committee finds that H.R. 2544 does not relate to the
terms and conditions of employment or access to public services
or accommodations within the meaning of Section 102(b)(3) of
the Congressional Accountability Act (Public Law 104-1).
XVII. Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
STEVENSON-WYDLER TECHNOLOGY INNOVATION ACT OF 1980
* * * * * * *
SEC. 12. COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS.
(a) * * *
(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, or, subject to section 209 of title 35, United
States Code, may grant a license to an invention which is
federally owned, made before the granting of the license, and
directly related to the scope of the work under the agreement,
for reasonable compensation when appropriate. The laboratory
shall ensure, through such agreement, that the collaborating
party has the option to choose an exclusive license for a pre-
negotiated 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) * * *
* * * * * * *
SEC. 14. DISTRIBUTION OF ROYALTIES RECEIVED BY FEDERAL AGENCIES.
(a) In General.--(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
laboratory which 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, if the inventor's or coinventor's rights
are assigned to the United States.
* * * * * * *
(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 that laboratory during the fiscal year
in which they are received or during the [succeeding
fiscal year] 2 succeeding fiscal years--
(i) * * *
* * * * * * *
----------
TITLE 35, UNITED STATES CODE
* * * * * * *
PART II--PATENTABILITY OF INVENTIONS AND GRANT OF PATENTS
* * * * * * *
CHAPTER 18--PATENT RIGHTS IN INVENTIONS MADE WITH FEDERAL ASSISTANCE
Sec.
200. Policy and objective.
* * * * * * *
[209. Restrictions on licensing of federally owned inventions.]
209. Licensing federally owned inventions.
* * * * * * *
Sec. 202. Disposition of rights
(a) * * *
* * * * * * *
[(e) In any case when a Federal employee is a coinventor of
any invention made under a funding agreement with a nonprofit
organization or small business firm, the Federal agency
employing such coinventor is authorized to transfer or assign
whatever rights it may acquire in the subject invention from
its employee to the contractor subject to the conditions set
forth in this chapter.]
(e) In any case when a Federal employee is a coinventor of
any invention made under a funding agreement with a nonprofit
organization or small business firm, the Federal agency
employing such coinventor may, for the purpose of consolidating
rights in the invention--
(1) license or assign whatever rights it may
acquire in the subject invention from its employee to
the nonprofit organization or small business firm; or
(2) acquire any rights in the subject invention,
but only to the extent the party from whom the rights
are acquired voluntarily enters into the transaction.
* * * * * * *
Sec. 207. Domestic and foreign protection of federally owned inventions
(a) Each Federal agency is authorized to--
(1) * * *
(2) grant nonexclusive, exclusive, or partially
exclusive licenses under federally owned [patent
applications, patents, or other forms of protection
obtained] inventions, royalty-free or for royalties or
other consideration, and on such terms and conditions,
including the grant to the licensee of the right of
enforcement pursuant to the provisions of chapter 29 of
this title as determined appropriate in the public
interest;
(3) undertake all other suitable and necessary
steps to protect and administer rights to federally
owned inventions on behalf of the Federal Government
either directly or through contract, 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; and
* * * * * * *
[Sec. 209. Restrictions on licensing of federally owned inventions
[(a) 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) A Federal agency shall normally grant the right to use
or sell any federally owned invention in the United States only
to a licensee that agrees that any products embodying the
invention or produced through the use of the invention will be
manufactured substantially in the United States.
[(c)(1) Each Federal agency may grant exclusive or
partially exclusive licenses in any invention covered by a
federally owned domestic patent or patent application only if,
after public notice and opportunity for filing written
objections, it is determined that--
[(A) the interests of the Federal Government and
the public will best be served by the proposed license,
in view of the applicant's intentions, plans, and
ability to bring the invention to practical application
or otherwise promote the invention's utilization by the
public;
[(B) the desired practical application has not been
achieved, or is not likely expeditiously to be
achieved, under any nonexclusive license which has been
granted, or which may be granted, on the invention;
[(C) exclusive or partially exclusive licensing is
a reasonable and necessary incentive to call forth the
investment of risk capital and expenditures to bring
the invention to practical application or otherwise
promote the invention's utilization by the public; and
[(D) the proposed terms and scope of exclusivity
are not greater than reasonably necessary to provide
the incentive for bringing the invention to practical
application or otherwise promote the invention's
utilization by the public.
[(2) A Federal agency shall not grant such exclusive or
partially exclusive license under paragraph (1) of this
subsection if it determines that the grant of such license will
tend substantially to lessen competition or result in undue
concentration in any section of the country in any line of
commerce to which the technology to be licensed relates, or to
create or maintain other situations inconsistent with the
antitrust laws.
[(3) First preference in the exclusive or partially
exclusive licensing of federally owned inventions shall go to
small business firms submitting plans that are determined by
the agency to be within the capabilities of the firms and
equally likely, if executed, to bring the invention to
practical application as any plans submitted by applicants that
are not small business firms.
[(d) After consideration of whether the interests of the
Federal Government or United States industry in foreign
commerce will be enhanced, any Federal agency may grant
exclusive or partially exclusive licenses in any invention
covered by a foreign patent application or patent, after public
notice and opportunity for filing written objections, except
that a Federal agency shall not grant such exclusive or
partially exclusive license if it determines that the grant of
such license will tend substantially to lessen competition or
result in undue concentration in any section of the United
States in any line of commerce to which the technology to be
licensed relates, or to create or maintain other situations
inconsistent with antitrust laws.
[(e) The Federal agency shall maintain a record of
determinations to grant exclusive or partially exclusive
licenses.
[(f) Any grant of a license shall contain such terms and
conditions as the Federal agency determines appropriate for the
protection of the interests of the Federal Government and the
public, including provisions for the following:
[(1) periodic reporting on the utilization or
efforts at obtaining utilization that are being made by
the licensee with particular reference to the plan
submitted: Provided, That any such information 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;
[(2) the right of the Federal agency to terminate
such license in whole or in part if it determines that
the licensee is not executing the plan submitted with
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;
[(3) the right of the Federal agency to terminate
such license in whole or in part if the licensee is in
breach of an agreement obtained pursuant to paragraph
(b) of this section; and
[(4) the right of the Federal agency to terminate
the license in whole or in part if the agency
determines that such action 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.]
Sec. 209. Licensing federally owned inventions
(a) Authority.--A Federal agency may grant an exclusive or
partially exclusive license on a federally owned invention 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;
(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 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 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 shall
include provisions--
(1) retaining a nontransferrable, irrevocable,
paid-up license for the 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
competent authority 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 this section 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 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) Basic Business Plan.--A Federal agency may grant a
license on a federally owned invention only if the person
requesting the license has supplied to the agency a basic
business plan with development milestones, commercialization
milestones, or both.
(g) Nondisclosure of Certain Information.--Any basic
business plan, and revisions thereto, submitted by an applicant
for a license, and any report on the utilization or utilization
efforts of a licensed invention submitted by a licensee, shall
be treated by the Federal agency as commercial and financial
information obtained from a person and not subject to
disclosure under section 552 of title 5, United States Code.
* * * * * * *
XVIII. Committee Recommendations
On May 13, 1998, a quorum being present, the Committee
favorably reported H.R. 2544, the Technology Transfer
Commercialization Act of 1998, by a voice vote, and recommends
its enactment.
XIX. Exchange of Committee Correspondence
XX. Proceedings of the Subcommittee Markup
SUBCOMMITTEE MARKUP OF H.R. 2544, THE TECHNOLOGY TRANSFER
COMMERCIALIZATION ACT
----------
THURSDAY, MARCH 26, 1998
U.S. House of Representatives,
Committee on Science,
Subcommittee on Technology,
Washington, DC.
The Subcommittee met at 10:12 a.m., in room 2318 of the
Rayburn House Office Building, Hon. Constance A. Morella,
Chairwoman of the Subcommittee, presiding.
Mrs. Morella. Good morning, everybody. Pursuant to notice,
the Subcommittee on Technology is meeting today to consider the
following measures: H.R. 2544, which is a bill to improve the
ability of federal agencies to license federally owned
inventions; and H.R. 3007, the Commission on the Advancement of
Women in Science, Engineering, and Technology Development Act.
I ask unanimous consent of this Subcommittee for the
authority to recess at anytime. If there is no objection, I
need to have somebody offer--hearing no objection, it is so
ordered.
So, welcome everybody to today's markup of the two bills
that I have mentioned, that have received very strong support
in legislative hearings before our Subcommittee.
This morning, we're going to consider H.R. 2544, the
Technology Transfer Commercialization Act, which is a bill to
improve the ability of federal agencies to license federally
owned inventions, and, as I mentioned H.R. 3007, the Commission
on the Advancement of Women in Science, Engineering, and
Technology Development Act.
Our first bill, H.R. 2544, continues the Science
Committee's long and rich history of advancing technology
transfer from our federal laboratories to help boost United
States international competitiveness.
As a result of technology transfer legislation advanced by
this Committee, in almost 2 decades, the ability of the United
States to compete in the global marketplace has been
strengthened, a new paradigm for greater collaboration among
the scientific enterprises that conduct our Nation's research
and development--government, industry, and universities--has
been developed. As a result, the quality of life for the
American people, we believe, has been improved.
By spinning off and commercializing technology developed in
our Nation's over 700 federal laboratories, the result of our
federal research and development enterprise are used today to
enhance our ability to compete in the global marketplace.
In two legislative hearings on H.R. 2544, witnesses
enthusiastically endorsed the bill's intent to streamline
technology licensing to make it more effective.
The bill removes the legal obstacles to effectively license
federally-owned inventions created in government-owned,
government-operated laboratories by adopting the successful
Bayh-Dole Act as a framework.
Under the bill, 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 by including them as a
part of a larger package under the Cooperative Research and
Development Agreement.
In so doing, this will make both mechanisms much more
attractive to U.S. companies that are striving to form
partnerships with federal laboratories.
I think that H.R. 2544 is yet another important step in
refining our Nation's technology transfer laws to remove
existing impediments to enhance government and industry
collaboration.
As we have prepared this bill for today's markup, I'm
pleased to have worked very closely with Ranking Member Barcia,
and Mr. Cook of Utah, as well as the Administration, to fashion
consensus revisions to the original bill that incorporate
suggestions made by the affected parties.
Mr. Barcia and Mr. Cook will be offering amendments to H.R.
2544 which will reflect the consensus revisions this morning.
I appreciate the Administration's strong support for the
bill's goal of simplifying the requirements imposed on federal
laboratories in the licensing of their inventions, and I can
assure the Administration that their views and their proposed
amendments were sufficiently considered.
This Committee's previous technology transfer efforts have
been successful, in part because of the collaboration and
bipartisan nature of the legislation, and the result of today's
markup should be no different.
The second bill under consideration today is H.R. 3007, the
Advancement of Women in Science, Engineering, and Technology
Development Act. Currently eight Science Committee members are
cosponsors of the bill; others can certainly join in today.
I would like to especially thank the Subcommittee members
who are cosponsors, for their strong support of women in the
science, engineering and technology fields:
Our Subcommittee Vice Chairman, Gil Gutknecht, who has done
yeoman's work on the bill, our Ranking Member, Jim Barcia, Full
Committee Vice Chair, Vern Ehlers, Congressman Tom Davis,
Congresswoman Debbie Stabenow.
In addition to these distinguished members of the
Subcommittee, the Institute of Electrical and Electronics
Engineers, the IEEE, the American Society of Mechanical
Engineers, ASME, the American Chemical Society, the American
Association of Engineering Societies, Women in Technology, and
the Association of Women in Science, have all endorsed the
bill.
The bill, as drafted, will establish a Commission on Women
in Science, Engineering, and Technology Development. This
Commission will identify and examine the number of women in the
fields of science, engineering, and technology, and the
specific occupations where they are underrepresented.
The Commission also will describe the practices and
policies of employers relating to the recruitment, retention,
and advancement of women in science, engineering, and
technology.
The Commission will then determine if these practices and
policies are comparable to their male counterparts, and issue
recommendations to government, academia, and private industry,
based on successful programs.
H.R. 3007 will be a first step in countering the roadblocks
for women in our rapidly evolving high-tech society. The bill
will help women break through that glass ceiling, as well as
the silicon ceiling, and it will help the Nation's high-tech
economy to continue to flourish in the 21st Century by ensuring
we have a sufficient pool of trained, high-tech workers in the
United States.
Countering the barriers for women in the fields of science,
engineering, and technology development will bring our Nation
closer to creating a highly effective, high-tech workforce
which, in turn, will both help women and promote economic
prosperity.
During the markup, I will offer a substitute amendment to
streamline the Commission process by: One, requiring the
Commission to be appointed in 90, not 180 days; second, giving
the Commission 1 year, not 18 months, to report; third,
terminating the Commission 30 days, not 1 year after it
reports; fourth, reducing the size of the Commission from 18 to
11 members; and, fifth, replacing a requirement that the
National Science Foundation conduct a study, with language that
would require NSF to transmit the data it currently collects to
the Commission.
In addition, the substitute will ensure that the States are
active participants in the Commission by allowing the National
Governors Association's Chairman and Vice Chairman to appoint 4
of the 11 Commissioners, and by requiring the Commission's
report be transmitted to all 50 States, the District of
Columbia, and the U.S. Territories.
Finally, the substitute includes the phrase,
nondiscriminatory, in its description of what kinds of
recommendations we expect from the Commission.
During our hearing on March 10th of this year, all our
witnesses stressed that quotas were not the answer, not a
viable solution to the problem of the underrepresentation of
women in the scientific and engineering fields.
The purpose of this Commission is to lift women scientists
and engineers up, not drag men down by discriminating against
them. As a supporter of affirmative action, but an opponent of
quotas, I'm interested in increasing the pool of qualified
high-tech workers in America by increasing the number of women
in science and engineering.
The recommendations that come out of H.R. 3007 should do
just that, not simply change the ratio of men to women in the
field. In addition to the substitute amendment, we have cleared
five Democrat amendments to the bill which are all consistent
with the bill's purpose, and so I now turn, after that lengthy
introduction, to the Technology Subcommittee Ranking Member,
the gentleman from Michigan, Mr. Barcia, for his opening
statement.
Mr. Barcia. Thank you very much, Madam Chairwoman. I have
no statement at this time, but will be making remarks on the
bills before the Subcommittee in a few minutes.
Mrs. Morella. Thank you, Mr. Barcia.
Are there any other members seeking recognition for an
opening statement on the bills?
[No response.]
Mrs. Morella. Hearing none, then we'll now consider H.R.
2544, a bill to improve the ability of federal agencies to
license federally-owned inventions.
Mr. Barcia, would you like to make a statement at this
point?
Mr. Barcia. Madam Chairwoman, I might reserve some time
later. I understand one of our members may have a conflict in
Committees.
Mrs. Morella. The first reading of the bill, I would ask
unanimous consent that the bill be considered as read and open
to amendment at any point.
There are two amendments on the roster. Are there any
members who wish to offer an amendment?
Mr. Cook. Yes.
Mrs. Morella. I recognize Mr. Cook.
Mr. Cook. Madam Chairwoman, I have an amendment at the
desk.
Mrs. Morella. The gentleman is recognized for 5 minutes to
offer the amendment.
[The text of H.R. 2544, a section-by-section analysis of
the bill, the amendment roster, and the text of the amendments
follow:]
Mr. Cook. Thank you. I want to thank you, Madam Chairwoman,
for your commitment and leadership in improving our Nation's
laws promoting technology transfer from our Nation's federal
laboratories.
This technology transfer has the potential for bolstering
our ability to compete internationally, and I commend you for
your efforts on behalf of H.R. 2544.
You've assembled endorsements for the bill from an
impressive array of large industry, small business, technology
transfer organizations, and the Administration, and I'm very
pleased to support your bill as it is considered by the
Committee.
As a former businessman, I understand how difficult it is
to interact with the government. This is especially onerous in
our technology transfer laws when we're trying to attract
incentives for industry to partner with government and not to
create additional reasons for them to run away from working
with government.
For that reason, I'm offering a set of en bloc amendments
to H.R. 2544, which I believe will further knock down some of
the obstacles and concerns of industry when they seek to
license technology from our federal laboratories.
First, my amendment would underscore that at a minimum, the
development plan required under the current law should simply
be a basic business plan with commercialization milestones.
My amendment would also extend the protection from
disclosure by the industry partner of information submitted by
private properties in connection with licensing. I believe that
all such information, with the exception of the name of the
licensee and type of such license, should be entitled to
protection from disclosure.
My amendment also allows for an agency to be able to offer
a potential licensee access to related inventions in order to
practice a government-owned invention.
Although federal law addresses the issue of out-licensing
of government owned inventions or rights thereto, there is no
specific governmentwide authority for the opposite transaction,
for example, to authorize an agency to in-license or accept an
assignment of rights from a nongovernment party.
Unfortunately, relatively few inventions can be
commercialized without access to related inventions. However,
there is presently no mechanism whereby an agency, with the
exception of the Department of Commerce, can in-license the
rights to other inventions in return for the payment of a share
of any subsequent royalties so that they can be bundled with a
government-owned invention and licensed together for
commercialization.
Finally, my amendment makes it clear that both the agency
and an co-inventing entity should have authority to license to
one another in those circumstances.
This is important because a significant percentage of
government inventions are co-invented with federally funded
parties, most commonly, university researchers, and it's often
necessary to unify ownership of such co-inventions under
appropriate royalty-sharing arrangements such as licensing or
assignments to achieve public benefit through
commercialization.
Madam Chairwoman, thank you for the opportunity to work
with you in crafting these en bloc amendments to H.R. 2544, and
I believe my amendment complements your bill, and I appreciate
your consideration.
I urge all of my colleagues to support this amendment.
Mrs. Morella. Thank you, Mr. Cook. I would agree.
Does any other member seek recognition on that amendment
offered by Mr. Cook, en bloc?
[No response.]
Mrs. Morella. Not hearing any, then the vote is going to
occur on the amendment.
All in favor, say aye.
[Chorus of ayes.]
Mrs. Morella. Those opposed, no.
[No response.]
Mrs. Morella. The ayes have it, and the amendment is agreed
to.
Do we have another amendment?
Mr. Barcia?
Mr. Barcia. Yes, Madam Chairwoman, I have an amendment at
the desk, an en bloc amendment.
Mrs. Morella. The amendment can be considered as read, and
the gentleman has 5 minutes to explain his en bloc amendment.
Mr. Barcia. Thank you very much, Madam Chairwoman.
While we all agree with H.R. 2544's goals in making sure
that the products in federal labs are commercialized as quickly
and efficiently as possible, there was widespread concern about
the price that H.R. 2544, as introduced, extracted for that
efficiency.
I am happy to report that we have been able to develop a
bipartisan compromise which keeps the beneficial portions of
H.R. 2544, while restoring provisions designed to promote
fairness of opportunity, to increase due diligence on the part
of licensees, and to create American jobs.
Notice requirements, which my amendment will restore, are
essential to ensure that the public gets full benefit from its
research investment. They, and the requirement that exclusive
licenses be drawn as narrowly as possible, make sure that every
American company, no matter how small, has a chance to make its
case for a license before exclusive rights are awarded.
NIST Director Ray Kammer's testimony last week vividly
portrayed why these parts of my amendment are necessary. Time
and time again, public notice of the intent to grant exclusive
licenses has produced dramatic results.
Companies, often small businesses, previously unknown to
the laboratory with the innovation, have responded to the
notice with revolutionary ideas which otherwise could have been
lost.
The National Institutes of Health first learned of
companies with the capability to turn two NIH innovations into
a cystic fibrosis gene therapy, and the cervical cancer vaccine
this way.
Agriculture uncovered an important way of immunizing
poultry, and a way to make formaldehyde out of permanent press
cotton fabrics after giving notice, yet these innovations could
have been stopped in their tracks, had the public notice not
been given.
This amendment, however, is not a status quo amendment. It
retains the Chairwoman's innovations, including shortening the
period of public notice. I hope the report language will
reflect the Committee's consensus that an effective 21st
Century notice has to include the Internet.
My amendment, when coupled with Mr. Cook's amendment, also
restores planning requirements under the act to a reasonable
level.
Balance is necessary here. It is unfair to business if
laboratories which license technologies are permitted to
establish unnecessary paperwork requirements.
It is also unfair to the taxpayer if licenses are awarded
without enough information to tell who has the best ideas for
commercial products based on the innovation, and which
companies have the ability to take those ideas to market.
Agencies also have legitimate needs for specific
information on a company's performance under a license. My
amendment is clear that we want reports to be lean, timely, and
targeted, and as unobtrusive as possible.
Finally, federal licensing must lead to high quality
research and manufacturing jobs, right here in the United
States of America. In the 1980's, this Committee showed wisdom
in requiring a fair share of the jobs coming out of federal
innovations to be located in the United States. My amendments
will continue this important principle into the next century.
Madam Chairwoman, you know and I know that the
Administration did us a major favor in putting such a high
level of effort into perfecting H.R. 2544. Every federal agency
with major research laboratories, including NIH, USDA, FDA,
EPA, DOD, DOE, NASA, NOAA, and NIST, were involved in
developing the Administration's views.
This Subcommittee, in a bipartisan manner, has invested a
large amount of energy in gathering the information necessary
to perfect the Administration's suggestions. It is now time to
reap the harvest.
I urge my colleagues to support the en bloc amendments, and
I want to commend the Chairwoman for her diligent effort on
perfecting this very progressive legislation.
Mrs. Morella. Thank you, Mr. Barcia, and thank you for that
excellent input in offering the amendments.
Is there any further discussion to the en bloc amendments
offered by Mr. Barcia?
[No response.]
Mrs. Morella. Not hearing any, the vote occurs on the
amendment.
All in favor of the amendments offered by Mr. Barcia will
say aye.
[Chorus of ayes.]
Mrs. Morella. Those opposed, no.
[No response.]
Mrs. Morella. The ayes have it, and the amendment is agreed
to.
Are there any other amendments to come before the
Subcommittee?
[No response.]
Mrs. Morella. I'd like to recognize Ms. Stabenow for any
comment she may have.
Ms. Stabenow. Thank you, Madam Chairwoman. I have just a
brief comment in support of H.R. 2544, and also to indicate
that in testimony and again today, we have heard comments about
the importance in the area of agriculture of technology
transfer.
I would just like to emphasize, as a member of the
Agriculture Committee, the Research Subcommittee, as the
sponsor of the Safe Food Action Plan, which is in the
Agriculture Committee, it is incredibly important to be
focusing on research and technology transfer, developing new
tools for farmers, for processors, in order to protect our food
supply.
This particular bill is an important step, and it works in
tandem with the Safe Food Action Plan that we have introduced
in the Agriculture Committee, and I think it's important that
we have strengthened the technology transfer piece as it
relates to our ability to protect our food.
So, I would like to commend you, and I look forward to the
opportunity to seeing this particular bill work in tandem with
a number of different efforts as we look at the importance of
research and transferring our technologies to practical use.
Thank you.
Mrs. Morella. Thank you, Ms. Stabenow, and thank you for
indicating that linkage, the connection with the example in
terms of food safety.
I'd like to recognize Ms. Tauscher.
Ms. Tauscher. Thank you, Madam Chairwoman. I appreciate
your leadership on this important issue of technology transfer.
This legislation is a positive step towards enhancing
opportunities for moving technologies developed in our national
laboratories into the marketplace where they will benefit all
Americans.
I had intended to offer today, an amendment to this
legislation regarding the criteria used by the Department of
Energy and other federal agencies to evaluate proposed
Cooperative Research and Development Agreements.
It is essential that the federal agencies provide proper
oversight of CRADA's that the laboratories enter into with
private business, but it is equally important that the
oversight not unduly delay the approval of CRADA's.
I will not offer this amendment today because I understand
that some people have expressed concern about its wording.
Instead, I would like to reserve the right to offer this
amendment at the Full Committee markup of this bill, and I ask
the Chair for her assistance in working out acceptable language
as we move to Full Committee for consideration.
Thank you.
Mrs. Morella. Ms. Tauscher, we'll certainly consider it,
and look forward to working with you on that.
Are there any other amendments to be offered?
[No response.]
Mrs. Morella. Not hearing any, then the question is on the
bill, H.R. 2544, a bill to improve the ability of federal
agencies to license federally owned inventions, as amended.
All those in favor will say aye.
[Chorus of ayes.]
Mrs. Morella. All opposed will say no.
[No response.]
Mrs. Morella. In the opinion of the Chair, the ayes have
it.
I'd like to now recognize the honorable Ranking Member, Mr.
Barcia, for a motion.
Mr. Barcia. Madam Chairwoman, I ask unanimous consent that
the staff be instructed to make technical and conforming
corrections to H.R. 2544.
Also, I move that the Subcommittee report the bill, as
amended, and that the Chairwoman take all necessary steps to
bring the bill before the Full Committee for consideration.
Thank you.
Mrs. Morella. Thank you, Mr. Barcia. The Subcommittee has
heard the motion.
Those in favor will say aye.
[Chorus of ayes.]
Mrs. Morella. Those opposed, no.
[No response.]
Mrs. Morella. The ayes have it, and the motion is agreed to
without objection. The motion to reconsider is laid upon the
table.
XXI. Proceedings of the Full Committee Markup
FULL COMMITTEE MARKUP OF H.R. 2544
----------
WEDNESDAY, MAY 13, 1998
U.S. House of Representatives,
Committee on Science,
Washington, DC.
Chairman Sensenbrenner. The next order of business is H.R.
2544, the Technology Transfer Commercialization act of 1997.
And the Chair will recognize himself for a brief opening
statement.
In the past 2 decades, Congress by direction of the Science
Committee has established a system to transfer and
commercialize technology from our federal laboratories to
bolster our Nation's ability to compete in the global market
place. From the Stevenson-Wydler Technology Innovation Act of
1980 to the National Technology Transfer and Advancement Act of
1995, the Committee has strengthened and improved the process
of technology transfer from our federal labs. This bill
continues the Science Committee's long and rich history of
advancing technology transfer to help boost the United States
international competitiveness.
I congratulate the Chairwoman of the Technology
Subcommittee, the gentlewoman from Maryland, Mrs. Morella, for
introducing this bill and for her efforts to work cooperatively
with members of the Minority in the Administration to craft
this bill.
I am pleased that the Administration has informed us of
their strong support for the bill's goal of simplifying the
requirements imposed on the federal labs, and the licensing of
their inventions. Shortly, I will be offering an amendment to
H.R. 2544, which reflects technical corrections to the bill as
suggested by the Administration and includes language affecting
cooperative research and development agreements suggested by
Ms. Tauscher of California.
This bill is yet another important step in refining our
Nation's technology transfer laws, to remove existing
impediments to advance government and industry collaboration
and I urge its adoption.
Does the gentlewoman from Maryland have any opening
comments for the remainder of my 5 minutes?
Mrs. Morella. Yes, Mr. Chairman. I do. And I'll talk
quickly, because it is a good bill.
As a result of technology transfer legislation advanced by
this Committee, in almost 2 decades, the ability of the United
States to compete globally has, indeed, been strengthened in a
new paradigm for a greater collaboration among the scientific
enterprises that conduct our Nation's research and
development--government industry and academia has been
developed. By spinning off and commercializing technology
developed in our Nation's over 700 federal laboratories, the
results of our federal research and development enterprises as
successfully being used today to improve our ability to compete
internationally.
Given the importance and benefits of technology transfer,
the Technology Subcommittee has continued to refine the
technology transfer process to facilitate greater government,
university, and industry collaboration. In the past Congress,
we enhanced and simplified the process for CRADAs with the
National Technology Transfer and Advancement Act, and now in
H.R. 2544 we have attempted to remove the obstacles to
effectively license federally-owned inventions which are
created in government-owned, government-operated laboratories
by adopting this successful Bayh-Dole Act as a framework.
So under the bill, 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 by including them as part
of a larger package under a cooperative research and
development agreement. So by doing that, this will make both
mechanisms much more attractive to our companies that are
striving to form partnerships with federal laboratories.
In the Technology Subcommittee's two legislative hearings
on this bill, H.R. 2544, the witnesses all enthusiastically
endorsed the bill's intent to streamline technology licensing,
to make it more effective. We've heard from the Administration,
as you mentioned, large corporations, small businesses, federal
laboratories, and tech transfer organizations, among others,
that this bill is really going to improve the process.
I'm pleased that the bill is now before the Committee as we
push toward its enactment by the close of this Congress. And
Chairman Sensenbrenner, you will be offering an amendment on
our behalf, which further clarifies the intent of the bill and
refines certain language in the bill.
So, I'm pleased that we've worked closely with the members
of the Minority to reach the consensus revisions since the bill
was originally introduced. I want to thank all of the members
of the Technology Subcommittee. I look forward to working with
the Full Committee and with you Mr. Chairman, and having H.R.
2544 signed into law in the coming months.
Chairman Sensenbrenner. My time is expired. The Chair
recognizes the gentleman from California for an opening
statement. And without objection, the text of all member's
opening statements will appear in the record following the
gentleman from California's time.
Mr. Brown of California. Mr. Chairman, I would like to
compliment the Subcommittee and Mrs. Morella and Mr. Barcia, in
particular, for their diligence in bringing this before us
today. And for your flexibility in working out the differences
in the legislation. The law of federal inventions may very well
be the most difficult area of the law that this Committee deals
with and I commend my colleagues for having the endurance to
get the legislation this far. We now have a compromise text
which I hope the entire Committee can support.
Mr. Chairman, I ask unanimous consent that any statement
from Mr. Barcia be entered into the record following mine.
Chairman Sensenbrenner. Without objection.
Mr. Brown of California. I ask unanimous consent that the
full text of my statement be entered in the record. And I'd
like to commend Ms. Tauscher for her very important
contribution to the Amendment in the Nature of a Substitute.
Her amendment deals with that small group of cooperative
research and development agreements which are so important that
they affect policies of more than one agency in either national
security, domestic competitiveness, or international
competitiveness. I feel that Ms. Tauscher has come up with an
unobtrusive way to address these concerns, and I therefore
commend here for her keen understanding of these issues and her
diligence on behalf of our Nation's laboratories.
Mr. Chairman if you will indulge me for just another short
period. I recall when this Act--Technology Transfer Act--was
originally adopted, it bears the name of a distinguished senior
Senator, Mr.--Senator Stevenson. Not the present Senator
Stevenson but an earlier one, Adlie Stevenson, Jr. And the name
of the Ranking Member of this Committee, Mr. Wydler, who worked
diligently to insure the passage to this Act in its original
form. I was proud to be a co-sponsor then and I'm proud that it
has been as successful as it has in forging a better
cooperation between the Federal Government and its research
activities, and the private sector and their research
activities.
Chairman Sensenbrenner. The gentleman's time has expired.
Without objection, the bill will be considered as read, and
the Amendment in the Nature of a Substitute reported by the
Committee--Subcommittee--on Technology will be considered as
the original text of the bill for purposes of amendment. The
bill is now open for amendment. Without objection, the bill
will be open for amendment at any point. And I would like to
offer an Amendment in the Nature of a Substitute which has been
agreed upon.
[The prepared statements of Mr. Brown and Mr. Barcia and
the amendment roster and the text of the amendments follow:]
Chairman Sensenbrenner. The Clerk will report the Amendment
in the Nature of a Substitute.
The Clerk. ``Amendment in the Nature of a Substitute to
H.R. 2544, offered by Mr. Sensenbrenner.
``Strike''----
Chairman Sensenbrenner. Without objection, the Amendment in
the Nature of a Substitute is considered as read and open for
amendment at any point and the Chair recognizes himself for 5
minutes.
This amendment incorporates technical revisions as
suggested by the Administration to the text of the bill as
reported out by the Subcommittee on Technology. I am offering
this amendment with Mrs. Morella, the Chairwoman of the
Subcommittee on Technology. The amendment, in part, clarifies
certain requirements applied to exclusive and partially
exclusive licenses; clarifies that in deciding whether to
license exclusively or partially exclusively, consideration
should be given to Federal Government interest or whether the
interests of the United States industry and foreign commerce
will be enhanced; clarifies that an agency co-owner may
exclusively license its undivided interest to the other co-
owner in lieu of an assignment; clarifies the bill's intention
of enabling an agency to license inventions whether or not they
are covered by a patent or application for a patent; and
clarifies that any business plan and any reports submitted by a
licensee relating to the utilization of an invention is deemed
commercial and financial information which is not subject to
the Freedom of Information Act, and shortens the period for the
delay in obtaining an exclusive or partially exclusive license
which results from the requirements of public notice from 30 to
15 days.
In addition, the amendment contains language pertaining to
the review of cooperative research and development agreements
as suggested by the gentlewoman from California, Ms. Tauscher.
And I commend her and thank her for her very constructive work
in this area. The amendment is bi-partisan and is supported by
the Minority and I yield back the balance of my time.
Is there any further discussion on the amendment?
Ms. Tauscher. Mr. Chairman?
Chairman Sensenbrenner. The gentlewoman from California is
recognized for 5 minutes.
Ms. Tauscher. Thank you Mr. Chairman. I want to express my
appreciation to you Mr. Chairman, as well as Ranking Member
Brown and Subcommittee Chairwoman Morella, for your assistance
with an amendment that I had prepared for this legislation.
The amendment, which you have graciously incorporated into
your substitute to H.R. 2544, would require the White House
Office on Science and Technology Policy to review the policies
and procedures used by federal agencies to gather and consider
the views of other agencies on joint work statements, and
cooperative research and development agreements. This amendment
implies only to major CRADAs that involve critical national
security technologies or may have a significant impact on
domestic or international competitiveness.
After completing its review, OSTP is directed to establish,
if necessary, guidelines for federal agencies to use in
assessing CRADAs. Any new guidelines should be designed to make
use of current procedures and minimized any delay in the
approval or disapproval of joint work statements and CRADAs.
The intent of this amendment, Mr. Chairman, is to insure that
federal agencies work cooperatively to provide necessary review
of CRADA applications in a timely manner. In no way are we
encouraging OSTP to establish additional burdensome procedures
for agencies or National laboratories. On the contrary, a
coordinated review process should insure that National security
and domestic competitiveness issues are protected while
providing expedited consideration of CRADA applications.
To further clarify the intent of this amendment Mr.
Chairman, I would appreciate your assistance in developing
report language to accompany H.R. 2544 that makes clear that we
expect review of only the most significant CRADAs. And that
clearly defines the term ``Critical National Security
Technologies'' and ``Domestic and International
Competitiveness.''
I understand that work is already underway at some agencies
to examine the interagency process. I would expect this OSTP
review to make full use and consideration of any ongoing agency
efforts to improve the CRADA review process. It is not clear to
me, Mr. Chairman, that any changes are necessary in procedures
used by federal agencies to review CRADAs. What is clear,
however, is that an OSTP-led review will provide greater
certainty to those in government as well as industry that the
federal agencies can adequately review CRADAs in a timely and
effective manner.
Again I appreciate your support for this amendment and I
congratulate you on a fine piece of legislation. And I yield
back the balance of my time.
Chairman Sensenbrenner. Before you yield back, let me say
that we will work with you in developing the proper report
language to implement what you just advocated.
Ms. Tauscher. Thank you, Mr. Chairman.
Chairman Sensenbrenner. Is there further debate on the
amendment?
Mr. Rohrabacher. Mr. Chairman, I have a few questions about
the basic bill, and whether or not I should bring it up now
with the amendment or should I wait until the amendment passes?
Chairman Sensenbrenner. Why don't we get the amendment
adopted first?
Mr. Rohrabacher. All right.
Chairman Sensenbrenner. The question is on the adoption of
the amendment.
All those in favor will signify by saying aye.
Opposed, no.
The ayes appear to have it. The ayes have it. And the
amendment is agreed to.
The gentleman from California is recognized for 5 minutes
to strike the last word.
Mr. Rohrabacher. Okay. I just would--not being in the
Subcommittee that dealt with this piece of legislation--I would
like to know--maybe I could ask Mrs. Morella--is the intent of
this bill to make it easier to commercialize patents that are
in conflict?
Mrs. Morella. It is to make it easier to recognize patents
and to expedite even further the transfer of technology from
our federal laboratories to the private sector. And what it
gives--it gives two important new tools to effectively
commercialize this on-the-shelf federally-owned technologies,
to license them either as stand-alone inventions or by
including them as part of a CRADA.
So therefore, our companies are going to find them far more
attractive and it's going to expedite the partnership. That was
the intent of it.
Mr. Rohrabacher. Okay. I understand that this bill would
make it easier to cooperate, and thus--for example, in dealing
with the anti-trust laws and other regulatory complications to
the utilization of new technology and technology that usually
going through the patent system. But it is not the intent
then--it is not your intent and the intent of the authors of
this legislation, to make it easier to commercialize patents
that are in conflict--that they're in a conflict situation? In
terms of ownership.
Mrs. Morella. These would be patents in which the United
States is the title holder. That I think takes care of your
problem.
Mr. Rohrabacher. Okay. That takes care of that problem.
Thank you very much.
Chairman Sensenbrenner. Are there further amendments to the
bill?
[No response.]
If not, the Chair will recognize the gentleman from
California or his designee to make a motion to report the bill.
Mr. Brown of California. Mr. Chairman I move that the
Committee report the bill and that the Committee direct the
Chairman to take all necessary steps to bring it to the Floor
as quickly as possible.
Chairman Sensenbrenner. The question is on the motion. The
Chair notes the presence of a reporting quorum.
All those in favor of reporting the bill favorably will
signify by saying aye.
Opposed, no.
The ayes have it. And the bill is favorably reported.
Without objection, the bill will be reported in the form of
a single Amendment in the Nature of a Substitute reflecting
amendments adopted this morning by the Committee. Without
objection, members will be given the appropriate number of days
in which to file additional, Minority or dissenting views. And
without objection and pursuant to House Rule 20, the Chair will
authorized to make whatever motions will be necessary to send
the bill to conference.
Hearing no objection to any of these requests, so ordered.