[Federal Register Volume 59, Number 215 (Tuesday, November 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27576]
[[Page Unknown]]
[Federal Register: November 8, 1994]
-----------------------------------------------------------------------
National Institutes of Health
Office of Science Policy and Technology Transfer
Developing Sponsored Research Agreements: Considerations for
Recipients of NIH Research Grants and Contracts
AGENCY: National Institutes of Health, Public Health Service, DHHS.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: The National Institutes of Health (NIH) published a proposed
draft of ``Developing Sponsored Research Agreements: Considerations for
Recipients of NIH Research Grants and Contracts'' (hereafter referred
to as Considerations) in the Federal Register on June 27, 1994. The
document is to provide recipients of NIH grants and contracts
(hereafter referred to as Recipients) with issues and points to
consider in developing sponsored research agreements with commercial
entities, where such agreements may include research activities which
are fully or partially funded by NIH. Comments on the document were
requested by July 27, 1994. In response to that Notice, NIH received
comments from 18 respondents, two of whom represented a large number of
research intensive institutions.
In general, the comments were favorable and supportive of the NIH's
action to assist its grantees and contractors in administering their
activities in accordance with public law and the terms of their awards.
There were a number of minor editorial comments that have been given
consideration and for the most part accepted. A summary of the comments
and the NIH response are presented below. The full text of the final
document is also presented.
FOR FURTHER INFORMATION CONTACT: Theodore J. Roumel, Assistant to the
Deputy Director for Science Policy and Technology Transfer, NIH, 6011
Executive Boulevard, Suite 325, Rockville, MD 20852-3804, (301) 496-
7057, ext. 203 (not a toll-free number).
Summary of Comments
In response to the June 27 Notice, NIH received 18 comments,
including two from organizations representing a large number of
research intensive institutions. Below are the substantive comments
offered and NIH's response, broken down by the section of the
Considerations to which they pertain.
Introduction
In order to limit confusion as to requirements that may apply to
grantees and contractors, the term Grantee has been replaced by the
term Recipient.
One entity questioned the need for the issuance of the
Considerations. As was stated in the document, the NIH, as a steward of
Federal funds, has the responsibility to advise Recipients as to the
requirements that attach to the receipt of NIH funds and to offer
technical assistance in adhering to those requirements. Recipients have
varying levels of sophistication in their technology transfer
activities and the NIH is trying to assist those institutions in
addressing substantive issues based on an extensive review of sponsored
research agreements. In keeping with its belief that:
Both the public and private sectors must work together to foster
rapid development and commercialization of useful products to
benefit human health, stimulate the economy, and enhance our
international competitiveness, while at the same time protecting
taxpayers' investment and safeguarding the principles of scientific
integrity and academic freedom,
the NIH has developed the Considerations to encourage Recipients to
address issues such as fair and open competition, dissemination and
commercialization of research results, and the maintenance of academic
freedom in developing sponsored research agreements with commercial
entities.
Purpose
Several institutions sought greater clarification as to the
universe to which the Considerations were addressed, e.g. NIH awards,
all Federal awards, or any sponsored program agreement. The Bayh-Dole
Act applies to all Federal agencies. However, the NIH can only provide
guidance to Recipients within its jurisdiction. The INTRODUCTION and
PURPOSE sections of the document have been modified to clearly indicate
that the requirements of the Bayh-Dole Act and its implementing
regulations apply to all NIH sponsored research, whether fully or
partially funded. The document provides information on the Act and the
regulations and guidance to institutions when situations arise where
NIH has fully or partially funded research activities that may be
included in a sponsored research agreement.
Three respondents commented on the definition of a sponsored
research agreement. The existing definition in the INTRODUCTION section
has been modified to more clearly state what is meant by the term. One
respondent proposed that the definition be used with NIH funding only.
This was not accepted because the term is one of general applicability
while the guidance will deal with only those types of agreements that
may involve NIH funded activities.
One respondent urged that NIH point out that sponsored research
agreements differ from one another and must be viewed on a case by case
basis. While it was our opinion that we had provided that sense, we
have modified the last paragraph of the PURPOSE section to reflect that
proposed sponsored research agreements should be reviewed on a case by
case basis and that provisions of those documents should be reviewed
both individually and in their totality.
Background
Several of the respondents raised concerns about individual
situations and whether or not the Considerations should be used in
those situations. In developing the Considerations, it was the intent
of the NIH to provide some general guidance for developing agreements
and not to specify how an agreement should be written, how an
institution should respond in certain situations, or prescribe any
special language that should be used other than that which is already
required by law and existing policy applicable to NIH funded projects.
In addition, it was not the intent of the guidance to interpret or
otherwise explain the Bayh Dole implementing regulations, which were
issued by the Department of Commerce. Issues regarding the regulations
and its requirements need to be addressed to the Department of
Commerce.
One respondent questioned how far the Federal rights extend to
sponsored activities not specifically funded by the Federal government.
If research results from an NIH funded activity or a piece of equipment
purchased under an NIH funding agreement was later used in a sponsored
research agreement which was being funded solely by the sponsor and
this led to the development of a new invention, would Federal rights
apply to any new invention made under that sponsored research
agreement? In general, Federal rights attach only if an invention is
conceived or first actually reduced to practice under a Federal funding
agreement. Mere use of equipment, data, or pre-existing inventions does
not mean that all work under the sponsored research agreement is
subject to the requirements of the Bayh Dole Act.
Universal Points for Consideration
Dissemination of Research Results
Several respondents commented on the time frames related to
possible delays in disclosure of research findings and the period for
consideration of a license option. Comments were mostly supportive,
however, there were several comments that the time frames offered might
be too tight. It is of the utmost importance to the NIH to have
research results disseminated and innovations brought to
commercialization as rapidly as possible. Time frames were provided as
guidance to institutions which need to exert their best efforts to
accommodate this important objective. The Considerations recognize that
different situations may dictate a shorter or longer period of time. To
protect intellectual property it may be necessary to grant longer
periods of time. However, each situation must be reviewed on a case by
case basis and the institution must determine the appropriateness of
the time frames for those particular circumstances.
On the basis of comments received, we have modified the time frame
for review under Dissemination of Research Results to read thirty (30)
to sixty (60) days, rather than thirty (30) days which was viewed by
several respondents as being too constraining.
Utilization
One respondent agreed with the idea of providing a commercial
sponsor of the research an option to license resulting intellectual
property with no second chance to license. However, the respondent
believes that it would seem appropriate that the sponsor should be
given an equal opportunity with its competitors to make a bid on the
license when the terms of the license offered to a competitor differed
from the terms offered to the sponsor.
The rationale for the language in the Considerations was that if
negotiations, within a reasonable period of time, do not end in a
license with the sponsor, the Recipient should be free to negotiate
with others to ensure the rapid transfer of technology to
commercialization. This would not preclude a Recipient, at its
discretion, from entering into new negotiations with the sponsor,
especially when the Recipient has modified the terms of the license
being offered to a competitor from that which it previously offered to
the sponsor.
Notification Requirements and Records
In response to one comment, the listing of timeliness
considerations has been revised to reflect more accurately the language
in the Bayh-Dole Act and the implementing regulations. One additional
consideration has been added, i.e., the specification in patent
applications that the invention was made with government support. This
is an important requirement which was omitted in the original document.
Two respondents expressed concern over the requirement that a
Recipient disclose an invention to the NIH prior to the publication of
any description of the invention. One of those respondents stated that
the language was incorrect. The language cited in the Considerations is
a grants policy requirement, has been in place for a number of years,
and is consistent with the Bayh-Dole requirements for notification of
inventions. However, since this appears to have raised a concern, we
have deleted the subject sentence and inserted information stating the
source of the requirement.
The comments related to notification requirements and records
reinforce the need for institutions to have adequate systems to meet
Federal requirements. Those institutions which have separated their
technology transfer activities from their sponsored research
administration activities may have difficulty in assuring coordination
of actions, submission of reports, and retention of appropriate
records. Institutions need to ensure that they have systems in place
which coordinate actions involving technology transfer and sponsored
research administration to preserve the rights of the government and be
responsive to requests for information and reporting.
Points for Special Consideration
Three respondents commented on their concern regarding the
suggestion that Recipients should avoid any other unusual practice or
stipulation that might generate public concern or undermine rather the
serve the public interest. With innovation and creativity being a major
part of the evolving field of technology transfer, it is not possible
for this document to cover every specific problem, concern or
consideration that may occur in the future. Therefore, this language
was written to encourage institutions to be constantly alert in their
review of potential agreements with special attention to conformity
with the Bayh-Dole Act, implementing regulations, and NIH funding
requirements.
Other Points for Consideration by Nonprofit Recipients
Three respondents expressed concern regarding the language on small
businesses. One had general concerns about the small business
preference and offered some additional language. A second also had
apprehensions with the small business preference being interpreted as a
``must use'' requirement. A third respondent was concerned that the
form and level of documentation be specified.
In the section on special provisions for nonprofit organizations,
the regulation states that such organizations will make efforts to
execute a license with small businesses and, in certain circumstances,
provide a preference for such businesses. However, the decision to give
a preference in any specific case is at the discretion of the
Recipient. Additionally, the regulation states that Recipients must be
satisfied that the small business firms have the capability and
resources to carry out plans or proposals. Having documentation
sufficient to support its decisions on small business preferences is a
key Recipient responsibility.
As noted above, these Considerations have been prepared for use by
Recipients; the regulations implementing the Bayh-Dole Act are issued
by the Department of Commerce and the NIH does not have authority to
modify their content.
The NIH appreciates the effort taken to provide comments on this
document and is pleased that the document is viewed as being a valuable
technical assistance tool.
Dated: October 28, 1994.
Daryl A. (Sandy) Chamblee,
Acting Deputy Director for Science Policy and Technology Transfer,
National Institutes of Health.
Developing Sponsored Research Agreements: Considerations for
Recipients of NIH Research Grants and Contracts
Introduction
The National Institutes of Health (NIH) is the principal biomedical
and behavioral research agency within the Federal Government. Its
mission is to improve human health by increasing scientific knowledge
related to health and disease through the conduct and support of
biomedical and behavioral research. The NIH advances its mission
through intramural research activity and the award of research grants
and contracts to institutions of higher education, research institutes
and foundations, and other non-profit and for-profit organizations
(hereafter referred to as Recipients). Whenever a Recipient's research
work is funded either in whole or in part through NIH research grants,
contracts, and cooperative agreements, that activity is subject to the
requirements of Public Law 96-517, known as the Bayh-Dole Act of
19801 (hereafter referred to as ``Bayh-Dole'' or ``the Act'').
Those Recipients are required to maximize the use of their research
findings by making them available to the research community and the
public at large and through their timely and effective transfer to
industry for development.
---------------------------------------------------------------------------
\1\Public Law 96-517, enacted December 12, 1980, Chapter 18--
Patent Rights in Inventions Made with Federal Assistance.
---------------------------------------------------------------------------
Recipients also have interactions with industry which may take many
forms, including industrial liaison programs, spinoff companies,
consortia, commercial licenses, material transfers, consultations, and
clinical trial agreements. This document addresses one form of
Recipient/industry interaction, sponsored research agreements. The NIH
has focused a substantial amount of its recent attention on this
relationship when NIH funds may also be involved. The term sponsored
research agreement means a written document which describes the
relationship between Recipients and commercial entities in which
Recipients receive funding or other consideration to support their
research in return for preferential access and/or rights to
intellectual property deriving from Recipient research results.
Although Recipients are primarily responsible for the
implementation of the Bayh-Dole requirements, NIH, as a steward of
Federal funds, has a responsibility to provide guidance on issues which
may place Recipients at odds with Federal law and/or NIH funding
requirements.
Purpose
The purpose of this document is to provide Recipients with issues
and points to consider in developing sponsored research agreements with
commercial entities, where such agreements may include research
activities which are fully or partially funded by NIH. The intent is to
assist Recipients in ensuring that those agreements comply with the
requirements of the Bayh-Dole Act and NIH funding agreements while
upholding basic principles of academic freedom.
This document represents the culmination of various activities,
under the aegis of the NIH Task Force on Commercialization of
Intellectual Property Rights from NIH Supported Extramural Research,
which included the review and analysis of 375 sponsored research
agreements from 100 Recipients, meetings with industry, academia, and
other Government agencies, and a specially convened public forum
involving subject matter experts from outside of the NIH.
The NIH recognizes that sponsored research agreements are unique,
creative devices which reflect the needs and interests of the parties
involved and require a delicate balance of risks and benefits to all of
the parties. Although this document identifies a number of points to
consider, with some necessitating more scrutiny than others, no single
point or issue is so dominant that it is likely to be fatal to an
agreement. Rather, the juxtaposition of multiple factors or clauses in
an agreement and their synergy needs to be assessed. Therefore,
Recipients should review each proposed sponsored research agreement on
a case by case basis, and the provisions both individually and in the
context of the entire agreement.
Background
While NIH policies on the use of research results have been in
effect for some time, commercial development of research results took a
major step forward with the passage of the Bayh-Dole Act. Congress
passed the Act in response to significant concerns about the United
States' competitiveness and data indicating that rights to many
inventions developed under Federal grants and contracts and assigned to
the Federal government were not being commercialized. In general, the
Act authorizes Recipients to retain title to inventions resulting from
their Federally funded research and to license such inventions to
commercial entities for development.
Specifically, the Act states that:
It is the policy and objective of the Congress to use the patent
system to promote the utilization of inventions arising from
Federally supported research or development; to encourage maximum
participation of small business firms in Federally sponsored
research and development efforts; to promote collaboration between
commercial concerns and nonprofit organizations, including
universities; to ensure that inventions made by nonprofit
organizations and small business firms are used to promote free
competition and enterprise; to promote the commercialization and
public availability of inventions made in the United States by
United States industry and labor; to ensure that the Government
obtains sufficient rights in federally supported inventions to meet
the needs of the Government and protect against nonuse or
unreasonable use of inventions; and to minimize the costs of
administering policies in this area.2
---------------------------------------------------------------------------
\2\Public Law 96-517, Chapter 18, Patent Rights in Inventions
Made With Federal Assistance, Sec. 200.
The provisions of the Act have been implemented through regulations
issued by the Department of Commerce and adopted by the Department of
Health and Human Services.3
---------------------------------------------------------------------------
\3\The Department of Commerce regulations are at 37 Code of
Federal Regulations (CFR) Part 401 and supersede applicable portions
of 45 CFR Parts 6 and 8.
---------------------------------------------------------------------------
The Act serves the public not only by encouraging the development
of useful commercial products such as drugs and clinical diagnostic
materials, but also by providing economic benefits, and enhancing U.S.
competitiveness in the global market place.
Since its passage, the Bayh-Dole Act has been effective in
promoting the transfer of technology from Recipients to industry as
evidenced by the aggressive pursuit of patenting and licensing and the
proliferation of university/industry collaborations.4 In addition,
the development of many new and important drugs and devices has been
facilitated by increased industrial support for academic research5
and the explosion in the licensing of university owned
inventions.6 Furthermore, statistics indicate that the Act has
provided significant economic benefits which are projected as
increasing between 25 to 30 percent per year.7
---------------------------------------------------------------------------
\4\Approximately one in every four university patents issued in
the late 1980s was for a biomedical or health related invention. In
the early 1970's, the ratio was one in eight. Source: Science and
Engineering Indicators, 1993, National Science Foundation.
\5\While still representing less than 10 percent of the total
funding for academic research, it is estimated that nearly 2 percent
of United States industry's expenditures for R&D now goes to
academic institutions, as compared with less than 1 percent in 1971.
Source: Science and Engineering Indicators, 1993, National Science
Foundation.
\6\Over 1000 licenses or options were executed in Fiscal Year
1992 by 260 academic institutions surveyed. The institutions also
reported that they had over 5000 active licenses in place at the
time of the survey. Source: Association of University Transfer
Managers Licensing Survey FY 1991-1992, published October, 1993.
\7\In FY 1992 sales and employment attributable to the Act were
estimated to be as follows: between $9 and $13 billion in sales and
50-100,000 jobs, with an annual increase of between 25 and 30
percent. Source: Dr. Ashley J. Stevens, Director, Office of
Technology Transfer, Dana-Farber Cancer Institute, Association of
University Technology Managers Winter Meeting, 1994.
---------------------------------------------------------------------------
Recipient Responsibilities
In keeping with the objectives and policies of Bayh-Dole, it is
incumbent upon Recipients to effectively and efficiently transfer
technology to industry for commercial development. However, in doing so
Recipients must also comply with the specific terms of the Act, its
implementing regulations, and the terms and conditions of each NIH
award and ensure that such compliance is reflected in their agreements
with commercial entities.
In carrying out that responsibility, at a minimum, Recipients need
to concern themselves with issues involving maintenance of academic
freedom for institutions and investigators, fair access to information,
timeliness of notification and reporting requirements, rational
licensing to commercial entities, and adherence to the specific
requirements of the Act and NIH funding agreements.
While sponsored research agreements frequently are used where basic
research is involved and no invention exists to disclose nor
intellectual property to license at the time the agreement is executed,
Recipients should anticipate such issues and consider the following
points in developing a sponsored research agreement.
The first section, Universal Points for Consideration, highlights
several requirements and issues that Recipients should consider in all
proposed sponsored research agreements. The second section, Points for
Special Consideration, delineates circumstances which suggest
heightened scrutiny. The third section, Other Points for Consideration
by Nonprofit Recipients, contains additional considerations which apply
only to nonprofit Recipients.
Universal Points for Consideration
Academic Freedom
Academic research freedom based upon social collaboration within
the scientific community and the scrutiny of claims and beliefs by its
members is at the heart of scientific advancement within the United
States. Primarily through Federal funding, academic institutions have
contributed to fundamental knowledge and techniques upon which current
and future scientific discoveries and technological innovations depend.
Therefore, the preservation of academic freedom for Recipient
institutions and researchers is of considerable concern to the NIH.
Recipients should be aware that their interest in the scientific
endeavor covered by a sponsored research agreement and the interest of
the industrial sponsor may not be totally consonant. As a result, in
general, Recipients should ensure that sponsored research agreements
preserve the freedom for academic researchers to select projects,
collaborate with other scientists, determine the types of sponsored
research activities in which they wish to participate, and communicate
their research findings at meetings, and by publication and through
other means.8 Academic researchers also should be made aware of
any agreements executed by their institutions which may restrict their
ability to pursue research activities and publish research results.
Recipients also should maintain their independence to pursue their own
mission without undue influence or restraint by their industrial
sponsors. For example, an agreement which gives an industrial sponsor
the ability to direct the research mission of a Recipient would be
inappropriate.
---------------------------------------------------------------------------
\8\The NIH recognizes that there may be certain instances when
it may be reasonable for a Grantee institution to agree to minimally
restrict a researcher from collaborating with another industrial
partner when the subject matter of such collaboration overlaps with
that of the sponsored research agreement.
---------------------------------------------------------------------------
Dissemination of Research Results
Recipients must ensure that the timely dissemination of research
findings is not adversely affected by the conditions of a sponsored
research agreement. For example, in the case of research grants, the
PHS Grants Policy Statement, incorporated as a condition of each NIH
research grant, details policies on publication of research results,
responsibilities to disseminate information on unique research
resources, and standards of conduct for the organization's employees.
Although an industrial sponsor's consideration of the commercial
applicability of specific research findings and/or the filing of a
patent application to secure intellectual property rights may justify a
need to delay disclosure of research findings, a delay of thirty (30)
to sixty (60) days is generally viewed as a reasonable period for such
activity. Depending upon the individual circumstances, Recipients could
consider a shorter or longer period of time, as they deem appropriate.
In addition to the timing, a sponsored research agreement which
requires the disclosure of inventions and research findings developed
with NIH funds to an industrial sponsor prior to submission of the
invention disclosure to the NIH, may be inconsistent with the terms and
conditions of the NIH grant or contract.
Utilization
The NIH also has a concern that Federally funded technology be
developed and commercialized in an expedited and efficient manner. In
deciding to enter into an agreement with a commercial entity,
Recipients should consider whether the organization has the experience,
capability, and commitment to bring its likely inventions to commercial
status.
Additionally, Recipients should not enter into sponsored research
agreements that permit a sponsor to tie up the development of a
technology by acquiring exclusive licensing rights to the product of
given research results before deciding whether or not it will actively
develop and commercialize that product. Recipients could provide a
sponsor with an option to pursue licensing rights. It is reasonable for
such options to be limited to no more than six (6) months after
disclosure to the authorized representative of the sponsor. However,
individual circumstances may dictate a shorter or longer period of
time. After the option period expires, the technology should become
available for licensing to other entities. Moreover, once a sponsor
decides not to exercise its option, normally, the agreement should not
provide for a second opportunity to obtain licensing rights by matching
other parties' offers for the rights. Such actions enable Grantees to
license to companies presenting a bona fide commercialization plan,
thus expediting the availability of products to the public.
In order to ensure that technology is developed rapidly and is not
being subjected to delays, Recipients should also establish, maintain,
and actively administer policies and procedures which ensure that
licenses arising from sponsored research agreements contain due
diligence requirements and benchmarks to monitor performance. When
future rights to as yet undiscovered inventions are included in a
sponsored research agreement, benchmarks for development of each such
invention should be established as they become available for commercial
development. In addition, Recipients should actively monitor licensees
in accordance with those requirements and benchmarks to assure
compliance with Recipient obligations under the Act.
Recipients also need to ensure that they have internal systems to
provide required utilization reports to the NIH on each invention.
Those reports are required by Department of Commerce regulation and
include such items as the status of development, first commercial sale,
and amount of gross royalties received. Detailed information about the
precise utilization report requirements can be obtained from the NIH
Office of Extramural Research.
U.S. Manufacture
The Bayh-Dole Act requires that products developed with Federal
funds and used and sold in the United States, be substantially
manufactured here. In granting exclusive rights to use or sell any
subject invention in the United States, Recipients must ensure that
each agreement requires that any products embodying the subject
invention or produced through the use of the subject invention will be
manufactured substantially in the United States. In individual cases, a
request for waiver may be considered by the NIH. A determination will
be made based upon a showing by the Recipient that reasonable but
unsuccessful efforts have been made to grant licenses on similar terms
to potential licensees that would be likely to manufacture
substantially in the United States or that under the circumstances
domestic manufacture is not commercially feasible. In granting a waiver
of the U.S. manufacture requirement, the NIH may consider other
benefits conferred on the United States by the potential license
including the rapid availability of a product of benefit to the health
of the American people.
Notification Requirements and Records
In sponsored research agreements, as in other contexts, Recipients
must also ensure that invention, patent and license notification
requirements are adhered to in a timely manner. Timeliness
considerations include prompt (1) employee notification to Recipient
administrators of an invention made under NIH funding, (2) written
disclosure to NIH in sufficient technical detail to adequately describe
the invention, (3) written election to the NIH of whether or not the
Recipient will retain title to such invention, (4) adherence to time
frames for initial filing of patent applications in the United States
and the filing of foreign patent applications, (5) execution and
delivery of all instruments necessary to establish or confirm NIH
rights throughout the world in the subject inventions to which the
Recipient has elected to retain title, (6) notification to the NIH of
any decision not to continue patent prosecution, pay fees, or defend
the patent in a reexamination or opposition proceeding on a patent, in
any country, (7) conveyance of title to NIH when requested, and (8)
specification in any United States patent applications and any patent
issuing thereon covering a subject invention that the invention was
made with government support.9
---------------------------------------------------------------------------
\9\The regulation, 37 CFR 401.14(F)(4), requires that the
following clause be used: ``This invention was made with government
support under (identify the grant, contract, or cooperative
agreement) awarded by (identify the Institute or Center), National
Institutes of Health. The government has certain rights in the
invention.''
---------------------------------------------------------------------------
Specifically, as conditions of NIH grants and cooperative
agreements, Recipients must fully notify the NIH in a timely manner
when an invention has been developed. In addition, PHS grants policy
requires that when applying for continued funding in each subsequent
funding period, the institution must also provide either a listing of
all inventions made during the preceding budget period or a
certification that no inventions were made during the applicable
period. A final invention statement and certification listing all
inventions that were conceived or first actually reduced to practice
during the course of work under the funding agreement is required
within ninety (90) days following the expiration or termination of
support on an applicable project. Additionally, Recipients need to
adhere to the specific requirements contained in the patent clauses of
their contracts as well as the general provisions of the Federal
Acquisition Regulations.
Furthermore, Recipients must also document their compliance with
the requirements of the Act, regulations, and terms and conditions of
NIH awards, generally and as related to sponsored research agreements.
Recipient records must be available for review by authorized Federal
officials in accordance with the terms and conditions of the award. For
example, concerning access and retention of records under NIH grants
and cooperative agreements, regulations require grantees to retain
financial and programmatic records, supporting documents, statistical
records, and all other grantee records which may reasonably be
considered pertinent to a grant or subgrant.10
---------------------------------------------------------------------------
\1\0The regulations are set forth at 45 CFR Part 74, Subpart D
and 45 CFR Part 92.42.
---------------------------------------------------------------------------
Points for Special Consideration
The NIH has identified several situations, outlined below, in which
Recipients should exercise heightened sensitivity and scrutiny in the
development of sponsored research agreements. Such an exercise should
confirm that a sponsored research agreement does not adversely impact
NIH funded activities and Recipient concerns such as academic freedom,
or shift control of the Recipient's scientific activities, management,
and independence into the hands of the sponsor. While there is no
requirement that Recipients submit proposed sponsored research
agreements to the NIH for review, at the discretion of the Recipient,
the NIH Deputy Director for Extramural Research may be consulted for
additional clarification in instances where special considerations
warrant.
First, Recipients should subject their sponsored research
agreements to heightened scrutiny when one or more of the following
threshold criteria apply:
(a) The amount of financial support from the sponsor meets or
exceeds $5 million in any one year, or, $50 million total over the
total period of funding under the agreement;
(b) The proportion of funding by the sponsor exceeds 20 percent of
the Recipient's total research funding;
(c) The sponsor's prospective licensing rights cover all
technologies developed by a major group or component of the Recipient
organization, such as a large laboratory, department or center, or the
technologies in question represent a substantial proportion of the
anticipated intellectual output of the Recipient's research staff; or
(d) The duration of the proposed agreement is for more than 5
years.
If one or more of these criteria apply, it is more likely that the
proposed sponsored research agreement will adversely affect open
commercial access, especially for small businesses, to a Recipient's
Federally funded research activities and may delay or impede the rapid
development and commercialization of technology.
Second, Recipients should be concerned if the scope of the
sponsored research agreement is so broad that the subsequent exclusive
licensing of technology under the agreement provides a single sponsor
with access to a wide array of Recipient research findings and
technologies that effectively exclude other organizations from
reasonable access to a Recipient's technology. This type of arrangement
can also delay commercialization if the sponsor does not have the
interest or the capability to develop the technology.
Third, if the sponsor's contribution of funds is to support a
Recipient's general operations rather than specifically defined
research projects, the Recipient should consider the amount of the
sponsor's general funding in relation to funds from other sources when
determining what prospective intellectual property rights the sponsor
will obtain from the results of the Recipient research. There should be
a reasonable relationship between the amount of money contributed by
the sponsor and the rights that it is granted both to review and
license resulting technology or inventions. Additionally, Recipients
should also consider the level of risk that the sponsor will be
assuming in order to obtain rights. In general, the greater the
restrictions on a sponsor's rights, the higher the sponsor's risk in
receiving benefit from its support. As an extreme example, a sponsor
should not be able to provide 5 percent of the Recipient's total
support, review 100 percent of the Recipient's inventions, and receive
rights or a first option to 50 percent of the research results
generated by the Recipient. Where general funding is involved, a
Recipient may consider a number of alternative actions, including
establishing some mechanism to limit the review and licensing rights of
the sponsor to a particular segment or percentage of the inventions for
a set period of time. For example, the Recipient may require the
sponsor to select those research areas on projects to which its general
funding rights would attach in advance, thereby freeing up research
areas that may be of interest to other commercial entities. Because, by
its nature, general funding is less directed and its results more
imprecise, Recipients should carefully monitor the impact on open
competition and fair access by small business of the sponsor's
licensing practices for technology supported by general funding.
Fourth, Recipients should avoid any other unusual practice or
stipulation that might generate public concern or undermine rather than
serve the public interest.
Other Points for Consideration by Non-Profit Recipients
The following points are to aid non-profit Recipients in
administering the Act and in complying with the requirements of NIH
funding agreements.
First, Recipients must ensure that the rights to inventions
resulting from Federal funding are not assigned without NIH approval.
An exception to this is when the assignment is made to an organization
which has as one of its primary functions the management of inventions,
in which case, the assignee will be subject to the same provisions as
the Recipient.
Second, Recipients must share royalties collected on NIH supported
inventions with the inventors and the balance of any royalties or
income earned, after payment of expenses, including payment to
inventors and incidental expenses to the administration of subject
inventions, must be utilized for the support of scientific research or
education.
Third, Recipients must employ reasonable efforts to attract
licensees of subject inventions that are small business firms.
Additionally, Recipients must provide a preference to small business
firms when licensing a subject invention if Recipients determine that
small business firms have plans or proposals for marketing the
invention which, if executed, are equally as likely to bring the
invention to practical application as any plans or proposals from
applicants that are not small business firms. However, Recipients must
be satisfied that the small business firms have the capability and
resources to carry out plans or proposals. The decision whether to give
a preference in any specific case is at the discretion of the
Recipient. However, since sponsored research agreements typically
provide exclusive licenses or options to such rights to the sponsor,
Recipients should seriously consider and provide for these issues when
negotiating such agreements.
Conclusion
Technology transfer is a vehicle through which the fruits of NIH
funded research are transferred to industry to be ultimately developed
into preventive, diagnostic and therapeutic products to advance human
health. In a dynamic and multinational marketplace, if the United
States is to remain a world leader in technological and scientific
innovation, both the public and private sectors must work together to
foster rapid development and commercialization of useful products to
benefit human health, stimulate the economy, and enhance our
international competitiveness, while at the same time protecting
taxpayers' investment and safeguarding the principles of scientific
integrity and academic freedom.
It is in this spirit that the NIH encourages Recipients to address
the issues and apply the points for consideration identified in this
document when developing sponsored research agreements with commercial
entities.
[FR Doc. 94-27576 Filed 11-7-94; 8:45 am]
BILLING CODE 4140-01-P