[Federal Register Volume 63, Number 224 (Friday, November 20, 1998)]
[Rules and Regulations]
[Pages 64411-64415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30956]


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DEPARTMENT OF COMMERCE

National Institute of Standards and Technology

15 CFR Part 295

[Docket No. 980717184-8277-02]
RIN 0693-AB48


Advanced Technology Program

AGENCY: National Institute of Standards and Technology, Technology 
Administration, Commerce.

ACTION: Final rule.

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SUMMARY: The National Institute of Standards and Technology is today 
issuing a final rule which amends the implementing regulations for the 
Advanced Technology Program (ATP). Changes include modification of the 
ATP evaluation criteria and weights for project selection and 
clarification of other sections of the rule.

EFFECTIVE DATE: This rule is effective November 20, 1998.

FOR FURTHER INFORMATION CONTACT:
To receive additional program information, contact Barbara Lambis at 
301-975-4447.

SUPPLEMENTARY INFORMATION: The National Institute of Standards and 
Technology is today issuing a final rule which amends regulations found 
at Part 295 of Title 15 of the Code of Federal

[[Page 64412]]

Regulations, which implements the Advanced Technology Program (ATP). 
These changes strengthen the fundamental mission of the ATP; for 
government to work in partnership with industry to foster the 
development and broad dissemination of challenging, high-risk 
technologies that offer the potential for significant, broad-based 
economic benefits for the nation. Such a unique government-industry 
research partnership fosters dramatic gains in existing industries, 
accelerates the development of emerging or enabling technologies 
leading to revolutionary new products, industrial processes and 
services for the world's markets, and helps spawn new industries of the 
21st century. Furthermore, the changes also ensure that the fundamental 
strengths of the ATP remain unchanged, especially the requirement that 
the ATP continue to be a wholly merit-driven program based on peer 
review. Changes to Part 295 include revisions on the following topics 
(please see the analysis of comments below for additional details):
     Section 295.2, Definitions, is modified to add a 
definition of ``company'' for clarity; revises the definition of 
``industry-led joint research and development venture'' for clarity; 
and removes the definition of ``joint research and development 
venture'' or ``joint venture'' which is already included in the ATP 
statute.
     Section 295.4, The selection process, is modified to 
eliminate funding to assist proposers in overcoming any organizational 
deficiencies because the adequacy of the organizational structure is 
included in one of the ATP selection criteria.
     Section 295.6, Criteria for selection, is modified to 
place equal emphasis on the technical and economic merits of a proposal 
in accordance with the purpose of the Program.
     Sections 295.10 and 295.11 are removed because they are 
operational procedures unnecessary for inclusion in a regulation.
     Redesignated section 295.11, NIST technical and 
educational services for ATP recipients, is modified to add educational 
services to be provided to ATP recipients.
     Section 295.21, Qualifications of proposers, is modified 
to state that for joint ventures, costs will only be allowed after the 
execution of the joint venture agreement and approval by NIST.
     Also, a number of administrative and clerical changes are 
implemented to sections 295.5, 295.7, 295.8, and 295.24 for consistency 
and clarity.

Summary of Comments

    On September 25, 1998, NIST published a notice of proposed 
rulemaking in the Federal Register (63 FR 51307). In response to this 
notice three comments were received; two from associations representing 
universities and one from a state entity. An analysis of the comments 
follows.

Section 295.2 Definitions--(2 Comments)

    One commenter stated that the definition of ``company'' should 
include ``limited liability company (LLC). Another commenter raised 
concern that the current and proposed definition of a joint venture 
imposes restrictions on the participation of universities and urged 
that it be conceptualized as broadly as possible so that universities 
can more fully participate in partnership with private industry.
    NIST Response: ATP accepts the suggestion to include limited 
liability partnership in the definition and the change is reflected 
herein. No change is made with respect to the second comment since the 
definition of a joint venture already offers universities the 
opportunity to participate in partnership with the private industry and 
the ATP statute requires joint ventures to be industry-led.

Section 295.5 Use of Pre-proposals in the Selection Process--(1 
Comment)

    One commenter stated that it was uncertain from the proposed change 
whether or not proposers are ``accepted'' or ``rejected'' at the pre-
proposal stage, or whether they are just given feedback as to how they 
can improve their full proposal.
    NIST Response: To clarify any uncertainty, the section is modified 
to indicate that written feedback is provided to the proposers to 
determine whether the proposed projects appear sufficiently promising 
to warrant further development into full proposals and that proposals 
are neither ``accepted'' or ``rejected'' at the pre-proposal stage.

Section 295.6 Criteria for Selection--(1 Comment)

    One commenter stated that the criteria may be too broad and 
suggested that ATP add some level of breakdown of each major category 
to better guide proposers in the proposal development process.
    NIST Response: Some level of breakdown of each of the two major 
categories is included in this section. The ATP Proposal Preparation 
Kit will help guide proposers further in the proposal development 
process by providing detailed information about the types of 
documentation that will fulfill the evaluation criteria.

Section 295.7 Notice of Availability of Funds--(1 Comment)

    One commenter suggested that information on pre-proposals be added 
to be consistent with section 295.5.
    NIST Response: Since NIST may use mandatory or optional pre-
proposals, the appropriate Commerce Business Daily notice and ATP 
Proposal Preparation Kit will provide the appropriate information.

Section 295.8 Intellectual Property Rights: Publication of Research 
Results--(3 Comments)

    Two commenters raised opposition to the restriction that title to 
inventions arising from ATP funded projects must vest in a company or 
companies incorporated in the United States and requested that the 
proposed rulemaking be deferred until this is resolved or the 
restriction be lifted to include universities. Another commenter 
suggested that this section be modified to require companies to list 
their ``background intellectual property rights'' they bring to the 
program at the beginning of the project, so there is no confusion as to 
what is actually developed in the course of the technology development.
    NIST Response: The proposed rule made no change to the ATP patent 
policy. Since NIST did not seek public comment on the ATP patent 
policy, no changes are made here. No change is made with respect to the 
second comment because requiring the companies to list their 
``background intellectual property rights'' they bring to the program 
at the beginning of the project would cause a significant burden on the 
companies and is unnecessary.

Additional Information

Effective Date of Final Rule

    Pursuant to authority at 5 U.S.C. 553(a)(2), this final rule 
relating to grants, benefits, and contracts is exempt from the delayed 
effective date requirement of 5 U.S.C. 553(d), and is therefore being 
made effective immediately without a 30 day delay in effective date.

Executive Order 12866

    This rule has been determined to be significant under section 3(f) 
of Executive Order 12866.

Executive Order 12612

    This rule does not contain policies with Federalism implications 
sufficient to warrant preparation of a Federalism

[[Page 64413]]

assessment under Executive Order 12612.

Regulatory Flexibility Act

    The Assistant General Counsel for Legislation and Regulation of the 
Department of Commerce certified to the Chief Counsel for Advocacy, 
Small Business Administration, that this rule, if promulgated, will not 
have a significant economic effect on a substantial number of small 
entities. (5 U.S.C. 605(b)). This is because there are only a small 
number of awardees and thus only a small number of awards will be given 
to small businesses. Specifically, based on past experience and 
currently foreseen budgets, the ATP would expect to receive only a few 
hundred proposals annually from small businesses, and from these, to 
make under 100 awards. Seeking ATP funding is entirely voluntary. No 
comments were received regarding this certification. As such, a final 
regulatory flexibility analysis is not required and none has been 
prepared.

Paperwork Reduction Act

    Notwithstanding any other provisions of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with a collection-of-information, subject to the 
requirements of the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et 
seq., unless that collection of information displays a currently valid 
Office of Management and Budget (OMB) control number.
    This rule contains collection of information requirements subject 
to review and approval by the OMB under the PRA. The collection of 
information requirement applies to persons seeking financial assistance 
under the ATP as well as reporting requirements if financial assistance 
is granted. The collection of information requirements have been 
approved under OMB Control Number 0693-0009 and 0651-0032. The public 
reporting burden per respondent for the collection of information 
contained in this rule is estimated to range between 20 and 30 hours 
per submission and 3 hours annually for recipients of financial 
assistance to provide monitoring reports. This estimate includes the 
time for reviewing instructions, searching existing data sources, 
gathering and maintaining the data needed, and completing and reviewing 
the collection of information.
    Comments on the burden estimates, or any other aspect of the 
information requirements, should be addressed to Barbara Lambis, 
National Institutes of Standards and Technology; Advanced Technology 
Program; 100 Bureau Drive, Stop 4700; Administration Bldg. 101, Room 
A333; Gaithersburg, MD 20899-4700.

National Environmental Policy Act

    This rule will not significantly affect the quality of the human 
environment. Therefore, an environmental assessment or Environmental 
Impact Statement is not required to be prepared under the National 
Environmental Policy Act of 1969.

Executive Order 12372

    Executive Order 12372 ``Intergovernmental Review of Federal 
Programs'' does not apply to this Program.

List of Subjects in 15 CFR Part 295

    Inventions and patents, Laboratories, Research and development, 
Science and technology.

    Dated: November 16, 1998.
Robert E. Hebner,
Acting Deputy Director, National Institute of Standards and Technology.
    For reasons set forth in the preamble, Title 15, Part 295 of the 
Code of Federal Regulations is amended as follows:

PART 295--ADVANCED TECHNOLOGY PROGRAM

    1. The authority citation for Part 295 continues to read as 
follows:

    Authority: 15 U.S.C. 278n.

    2. Section 295.2 is amended by removing paragraph (j), 
redesignating paragraphs (b) through (i) as paragraphs(c) through (j), 
revising newly redesignated paragraph (i), and adding new paragraph (b) 
to read as follows:


Sec. 295.2  Definitions.

* * * * *
    (b) The term ``company'' means a for-profit organization, including 
sole proprietors, partnerships, limited liability companies (LLCs), or 
corporations.
* * * * *
    (i) The term ``industry-led joint research and development 
venture'' or ``joint venture'' means a business arrangement that 
consists of two or more separately-owned, for-profit companies that 
perform research and development in the project; control the joint 
venture's membership, research directions, and funding priorities; and 
share total project costs with the Federal government. The joint 
venture may include additional companies, independent research 
organizations, universities, and/or governmental laboratories (other 
than NIST) which may or may not contribute funds (other than Federal 
funds) to the project and perform research and development. A for-
profit company or an independent research organization may serve as an 
Administrator and perform administrative tasks on behalf of a joint 
venture, such as handling receipts and disbursements of funds and 
making antitrust filings. The following activities are not permissible 
for ATP funded joint ventures:
    (1) Exchanging information among competitors relating to costs, 
sales, profitability, prices, marketing, or distribution of any 
product, process, or service that is not reasonably required to conduct 
the research and development that is the purpose of such venture;
    (2) Entering into any agreement or engaging in any other conduct 
restricting, requiring, or otherwise involving the production or 
marketing by any person who is a party to such joint venture of any 
product, process, or service, other than the production or marketing of 
proprietary information developed through such venture, such as patents 
and trade secrets; and
    (3) Entering into any agreement or engaging in any other conduct:
    (i) To restrict or require the sale, licensing, or sharing of 
inventions or developments not developed through such venture, or
    (ii) To restrict or require participation by such party in other 
research and development activities, that is not reasonably required to 
prevent misappropriation of proprietary information contributed by any 
person who is a party to such venture or of the results of such 
venture.
* * * * *
    4. Section 295.4 is revised to read as follows:


Sec. 295.4  The selection process.

    (a) The selection process for awards is a multi-step process based 
on the criteria listed in Sec. 295.6. Source evaluation boards (SEB) 
are established to ensure that all proposals receive careful 
consideration. In the first step, called ``preliminary screening,'' 
proposals may be eliminated by the SEB that do not meet the 
requirements of this Part of the annual Federal Register Program 
announcement. Typical but not exclusive of the reasons for eliminating 
a proposal at this stage are that the proposal: is deemed to have 
serious deficiencies in either the technical or business plan; involves 
product development rather than high-risk R&D is not industry-led; is 
significantly overpriced or underpriced given the scope of the work; 
does not meet the requirements set out in the notice of availability of 
funds issued pursuant to

[[Page 64414]]

Sec. 295.7; or does not meet the cost-sharing requirement. NIST will 
also examine proposals that have been submitted to a previous 
competition to determine whether substantive revisions have been made 
to the earlier proposal, and, if not, may reject the proposal.
    (b) In the second step, referred to as the ``technical and business 
review,'' proposals are evaluated under the criteria found in 
Sec. 295.6. Proposals judged by the SEB after considering the technical 
and business evaluations to have the highest merit based on the 
selection criteria receive further consideration and are referred to as 
``semifinalists.''
    (c) In the third step, referred to as ``selection of finalists,'' 
the SEB prepares a final ranking of semifinalist proposals by a 
majority vote, based on the evaluation criteria in Sec. 295.6. During 
this step, the semifinalist proposers will be invited to an oral review 
of their proposals with NIST, and in some cases site visits may be 
required. Subject to the provisions of Sec. 295.6, a list of ranked 
finalists is submitted to the Selecting Official.
    (d) In the final step, referred to as ``selection of recipients,'' 
the Selecting Official selects funding recipients from among the 
finalists, based upon: the SEB rank order of the proposals on the basis 
of all selection criteria (Sec. 295.6); assuring an appropriate 
distribution of funds among technologies and their applications; the 
availability of funds; and adherence to the Program selection criteria. 
The Program reserves the right to deny awards in any case where 
information is uncovered which raises a reasonable doubt as to the 
responsibility of the proposer. The decision of the Selecting Official 
is final.
    (e) NIST reserves the right to negotiate the cost and scope of the 
proposed work with the proposers that have been selected to receive 
awards. For example, NIST may request that the proposer delete from the 
scope of work a particular task that is deemed by NIST to be product 
development or otherwise inappropriate for ATP support.
    5. Section 295.5 is revised to read as follows:


Sec. 295.5  Use of pre-proposals in the selection process.

    To reduce proposal preparation costs incurred by proposers and to 
make the selection process more efficient, NIST may use mandatory or 
optional preliminary qualification processes based on pre-proposals. In 
such cases, announcements requesting pre-proposals will be published as 
indicated in Sec. 295.7, and will seek abbreviated proposals (pre-
proposals) that address both of the selection criteria, but in 
considerably less detail than full proposals. The Program will review 
the pre-proposals in accordance with the selection criteria and provide 
written feedback to the proposers to determine whether the proposed 
projects appear sufficiently promising to warrant further development 
into full proposals. Proposals are neither ``accepted'' or ``rejected'' 
at the pre-proposal stage. When the full proposals are received in 
response to the notice of availability of funds described in 
Sec. 295.7, the review and selection process will occur as described in 
Sec. 295.4.
    6. Section 295.6 is revised to read as follows:


Sec. 295.6  Criteria for selection.

    The evaluation criteria to be used in selecting any proposal for 
funding under this program, and their respective weights, are listed in 
this section. No proposal will be funded unless the Program determines 
that it has scientific and technological merit and that the proposed 
technology has strong potential for broad-based economic benefits to 
the nation. Additionally, no proposal will be funded that does not 
require Federal support, that is product development rather than high 
risk R&D, that does not display an appropriate level of commitment from 
the proposer, or does not have an adequate technical and 
commercialization plan.
    (a) Scientific and Technological Merit (50%). The proposed 
technology must be highly innovative. The research must be challenging, 
with high technical risk. It must be aimed at overcoming an important 
problem(s) or exploiting a promising opportunity. The technical 
leverage of the technology must be adequately explained.
    The research must have a strong potential for advancing the state 
of the art and contributing significantly to the U.S. scientific and 
technical knowledge base. The technical plan must be clear and concise, 
and must clearly identify the core innovation, the technical approach, 
major technical hurdles, the attendant risks, and clearly establish 
feasibility through adequately detailed plans linked to major technical 
barriers. The plan must address the questions of ``what, how, where, 
when, why, and by whom'' in substantial detail. The Program will assess 
the proposing team's relevant experience for pursuing the technical 
plan. The team carrying out the work must demonstrate a high level of 
scientific/technical expertise to conduct the R&D and have access to 
the necessary research facilities.
    (b) Potential for broad-based economic benefits (50%). The proposed 
technology must have a strong potential to generate substantial 
benefits to the nation that extend significantly beyond the direct 
returns to the proposing organization(s). The proposal must explain why 
ATP support is needed and what difference ATP funding is expected to 
make in terms of what will be accomplished with the ATP funding versus 
without it. The pathways to economic benefit must be described, 
including the proposer's plan for getting the technology into 
commercial use, as well as additional routes that might be taken to 
achieve broader diffusion of the technology. The proposal should 
identify the expected returns that the proposer expects to gain, as 
well as returns that are expected to accrue to others, i.e., spillover 
effects. The Program will assess the proposer's relevant experience and 
level of commitment to the project and project's organizational 
structure and management plan, including the extent to which 
participation by small businesses is encouraged and is a key component 
in a joint venture proposal, and for large company single proposers, 
the extent to which subcontractor/subrecipient teaming arrangements are 
featured and are a key component of the proposal.
    7. Section 295.7 is revised to read as follows:


Sec. 295.7  Notice of availability of funds.

    The Program shall publish at least annually a Federal Register 
notice inviting interested parties to submit proposals, and may more 
frequently publish invitations for proposals in the Commerce Business 
Daily, based upon the annual notice. Proposals must be submitted in 
accordance with the guidelines in the ATP Proposal Preparation Kit as 
identified in the published notice. Proposals will only be considered 
for funding when submitted in response to an invitation published in 
the Federal Register, or a related announcement in the Commerce 
Business Daily.
    8. Section 295.8(a)(1) and 295.8(a)(2) are revised to read as 
follows:


Sec. 295.8  Intellectual property rights; Publication of research 
results.

    (a)(1) Patent Rights. Title to inventions arising from assistance 
provided by the Program must vest in a company or companies 
incorporated in the United States. Joint ventures shall provide to NIST 
a copy of their written agreement which defines the disposition of 
ownership rights among the members of the joint venture, and their 
contractors and subcontractors as appropriate, that complies with the 
first

[[Page 64415]]

sentence of this paragraph. The United States will reserve a 
nonexclusive, nontransferable, irrevocable, paid-up license to practice 
or have practiced for or on behalf of the United States any such 
intellectual property, but shall not, in the exercise of such license, 
publicly disclose proprietary information related to the license. Title 
to any such intellectual property shall not be transferred or passed, 
except to a company incorporated in the United States, until the 
expiration of the first patent obtained in connection with such 
intellectual property. Nothing in this paragraph shall be construed to 
prohibit the licensing to any company of intellectual property rights 
arising from assistance provided under this section.
    (2) Patent Procedures. Each award by the Program shall include 
provisions assuring the retention of a governmental use license in each 
disclosed invention, and the government's retention of march-in rights. 
In addition, each award by the Program will contain procedures 
regarding reporting of subject inventions by the funding Recipient to 
the Program, including the subject inventions of members of the joint 
venture (if applicable) in which the funding Recipient is a 
participant, contractors and subcontractors of the funding Recipient. 
The funding Recipient shall disclose such subject inventions to the 
Program within two months after the inventor discloses it in writing to 
the Recipient's designated representative responsible for patent 
matters. The disclosure shall consist of a detailed, written report 
which provides the Program with the following: the title of the present 
invention; the names of all inventors; the name and address of the 
assignee (if any); an acknowledgment that the United States has rights 
in the subject invention; the filing date of the present invention, or, 
in the alternative, a statement identifying that the Recipient 
determined that filing was not feasible; an abstract of the disclosure; 
a description or summary of the present invention; the background of 
the present invention or the prior art; a description of the preferred 
embodiments; and what matter is claimed. Upon issuance of the patent, 
the funding Recipient or Recipients must notify the Program 
accordingly, providing it with the Serial Number of the patent as 
issued, the date of issuance, a copy of the disclosure as issued, and 
if appropriate, the name, address, and telephone number(s) of an 
assignee.
* * * * *


Secs. 295.10 and 295.11  [Removed]


Secs. 295.12 and 295.13  [Redesignated as sections 295.10 and 295.11]

    9. Sections 295.10 and 295.11 are removed and Secs. 295.12 and 
295.13 are redesignated as Secs. 295.10 and 295.11.
    10. The newly redesignated Sec. 295.11 is amended by revising the 
heading and by adding a new paragraph (c) to read as follows:


Sec. 295.11  Technical and educational services for ATP recipients.

* * * * *
    (c) From time to time, ATP may conduct public workshops and 
undertake other educational activities to foster the collaboration of 
funding Recipients with other funding resources for purposes of further 
development and commercialization of ATP-related technologies. In no 
event will ATP provide recommendations, endorsements, or approvals of 
any ATP funding Recipients to any outside party.
    11. Section 295.21 is revised to read as follows:


Sec. 295.21  Qualifications of proposers.

    Subject to the limitations set out in Sec. 295.3, assistance under 
this subpart is available only to industry-led joint research and 
development ventures. These ventures may include universities, 
independent research organizations, and governmental entities. 
Proposals for funding under this Subpart may be submitted on behalf of 
a joint venture by a for-profit company or an independent research 
organization that is a member of the joint venture. Proposals should 
include letters of commitment or excerpts of such letters from all 
proposed members of the joint venture, verifying the availability of 
cost-sharing funds, and authorizing the party submitting the proposal 
to act on behalf of the venture with the Program on all matters 
pertaining to the proposal. No costs shall be incurred under an ATP 
project by the joint venture members until such time as a joint venture 
agreement has been executed by all of the joint venture members and 
approved by NIST. NIST will withhold approval until it determines that 
a sufficient number of members have signed the joint venture agreement. 
Costs will only be allowed after the execution of the joint venture 
agreement and approval by NIST.
    12. Section 295.24 is revised to read as follows:


Sec. 295.24  Registration.

    Joint ventures selected for funding under the Program must notify 
the Department of Justice and the Federal Trade Commission under the 
National Cooperative Research Act of 1984. No funds will be released 
prior to receipt by the Program of copies of such notification.

[FR Doc. 98-30956 Filed 11-17-98; 2:55 pm]
BILLING CODE 3510-13-M