I 

; -.-__-__,- _-.- - ..__... -.- . ..--__ -_--._- --.._. -_-~_-- 

1; April 1991 TECHNOLOGY ; i, IX TRANSFER 

Federal Agencies’ 

Patent Licensing 

Activities 

143538 

\ 
. . . . . .“. “.” - .” ..- _ . ...” -..-_.... ~_-.-_ -.-. ll-ll.-. - .__I.. _ .-...-.. -~-.---_-.- ---- - _.._-..--- --.--- ~ 

I ..-_I - 
. 

GAO UIlited.Stbe8 

General Accounting Office 

Washington, D.C. 20548 

Resources, Community, and 

Economic Development Division 

B-242438 

April 3,199l 

The Honorable Joseph R. Biden 

Chairman, Committee on the Judiciary 

United States Senate 

The Honorable Jack Brooks 

Chairman, Committee on the Judiciary 

House of Representatives 

The Honorable George E. Brown, Jr. 

Chairman, Committee on Science, Space, 

and Technology 

House of Representatives 

The Patent and Trademark Amendments of 1980 (P.L. 96-517) require 

us to report annually on federal agencies’ implementation of section 6 of 

the act, which amended the law to promote the use of federally funded 

inventions. This report provides information on agencies’ implementation of provisions that enable them to grant licenses to make, use, or sell 

government-owned inventions. As agreed with your offices, we are providing (1) patenting and licensing data for fiscal years 1981 through 

1990 for 12 federal agencies and 16 of the Department of Energy’s contractor-operated laboratories and (2) federal patent attorneys’ and 

licensing officials’ perceptions of possible ways to facilitate their agencies’ patent licensing efforts. The 12 federal agencies we surveyed 

funded about $16.2 billion of the estimated $16.7 billion obligated for 

research and development at government laboratories in fiscal year 

1990 and are the principal patenting and licensing agencies. 

Results in Brief On an annual average between fiscal years 1987 and 1990, the 12 federal agencies and 16 contractor-operated laboratories filed 1,578 patent 

applications, were issued 979 patents by the US. Patent and Trademark 

Office, and granted 164 licenses. In comparison, on an annual average 

between fiscal years 1981 and 1986, these agencies and laboratories 

filed 1,669 patent applications, were issued 1,193 patents, and granted 

130 licenses. The agencies and laboratories increased the percentage of 

licenses requiring royalty payments from less than 60 percent of the 

licenses granted in the early 1980s to 96 percent of the licenses granted 

in fiscal year 1990. A royalty-bearing license generally indicates a significant commitment by the licensee to invest in commercializing a 

licensed invention. 

Page 1 GAO/RCED-91430 Federal Patent Licensing Activities 
R.242429 

The federal patent attorneys and licensing officials interviewed said 

that the Patent and Trademark Amendments’ requirements to protect 

the public’s interest and ensure fairness may discourage businesses from 

seeking to obtain licenses for government-owned inventions, in part 

because the requirements lengthen the time needed to negotiate a license 

agreement. However, these officials generally support the purpose of 

these requirements and, while offering a few individual views, did not 

uniformly suggest any changes to laws or regulations to facilitate their 

patent licensing efforts. The officials did note that the Federal Register, 

in which agencies are required to publish official notices, does not effectively get information to company managers who might be interested in 

commercializing an invention. The officials further noted that only three 

agencies make this information readily available through computerized 

data bases. 

Background The Patent and Trademark Amendments of 1980 were among the first 

of several laws enacted in the 1980s to stimulate the transfer of federally funded technology to U.S. businesses and other organizations. Section 6 of the amendments amended title 35 of the US. Code by (1) 

authorizing federal agencies to issue licenses granting exclusive, partially exclusive, or nonexclusive rights to make, use, or sell governmentowned inventions’ and (2) giving small business and nonprofit recipients 

of federal funding, with few exceptions, the option to retain title to their 

inventions. Public Law 98-620, enacted in November 1984, extended this 

coverage to most of the nonprofit contractors of Energy’s contractoroperated laboratories. Subsequent laws, particularly the Federal Technology Transfer Act of 1986 (P.L. 99-502) and sections 3131 to 3133 of 

the National Defense Authorization Act for Fiscal Years 1990 and 1991 

(P.L. lOl-189), were intended to further stimulate the transfer of technology developed at federal government-operated and contractor-operated laboratories. These laws authorized such laboratories to enter into 

cooperative research and development agreements and required agencies to share royalty and other income with the federal inventor(s). 

The Department of Commerce’s governmentwide regulations for 

licensing government-owned inventions require that, before granting an 

exclusive license, federal agencies (1) obtain an applicant’s plans for 

‘Under an exclusive license, only one licensee has the right to make, use, or sell an invention during 

the patent’s 17-year life. Under a partially exclusive license, the number of licensees, term of exclusivity, field of use, or territory of use may be restricted. 

Page 2 GAO/RCED-91-99 Federal Patent Licensing Activities 
commercializing the invention,2 (2) provide notice of a prospective 

license in the Federal Register identifying the invention and prospective 

licensee and allowing a 60-day period for any interested party to file 

written objections, and (3) justify granting an exclusive license. 

The Air Force, Army, and Navy in the Department of Defense; Energy; 

the National Aeronautics and Space Administration (NASA); and the Tennessee Valley Authority historically have assigned a patent attorney the 

responsibility for licensing their patented inventions. Alternatively, several other agencies have used the Office of Federal Patent Licensing in 

Commerce’s National Technical Information Service (NTIS) to negotiate 

royalty-bearing licenses for their inventions, These agencies include the 

Departments of Agriculture; Commerce, including the National Institute 

of Standards and Technology (NIST); Health and Human Services, 

including the National Institutes of Health (NIH); Interior; Transportation; and Veterans Affairs; and the Environmental Protection Agency 

(EPA). 

Federal Patenting and From fiscal year 1981 through fiscal year 1990, the federal agencies and 

Licensing Activities contractor-operated laboratories that we surveyed filed 15,669 patent 

applications, received 11,075 patents issued by the US. Patent and 

Trademark Office, granted 981 nonexclusive licenses and 456 exclusive 

licenses for the use of patented inventions, and received $37.5 million in 

license income. (Tables III.1 to III.3 in app. III present data for each 

agency.) 

Patent Applications 

Patents Issued 

and The number of patent applications filed by the federal agencies and contractor-operated laboratories surveyed fluctuated considerably in the 

past 10 years, declining from 1,708 in fiscal year 1981 to 1,208 in fiscal 

year 1987 before climbing to 1,837 in fiscal year 1990. The number of 

patents that the Patent and Trademark Office issued to these agencies 

and laboratories ranged from a high of 1,321 in fiscal year 1984 to a low 

of 889 in fiscal year 1988 before increasing to 998 in fiscal year 1990. 

Federal patent trends do not necessarily reflect agencies’ and laboratories’ efforts to commercialize their inventions; some agencies, particularly Defense, have other reasons for seeking patent protection. 

2Federal agencies may exclude these submissions from disclosure under the Freedom of Information 

Act by treating them as commercial and financial information under 6 USC. 662(bX4). 

Page 3 GAO/RCED-91-30 Federal Patent Licensing Activities 
R-242439 

According to Air Force, Army, and Navy patent attorneys, their principal objective in patenting inventions has been to protect Defense’s procurement programs from a patent infringement lawsuit by another 

organization that might subsequently make and patent an invention 

used in a defense weapons system. While the Air Force, Army, and Navy 

filed 49 percent of the patent applications and received 57 percent of 

the patents issued to the agencies and laboratories surveyed between 

fiscal years 1981 and 1990, they granted only 8 percent of the licenses. 

Patent Licensing Activities The federal agencies and contractor-operated laboratories surveyed 

have modestly increased the average number of patent licenses granted 

per year from 130 licenses per year between fiscal years 1981 and 1986 

to 164 licenses per year between fiscal years 1987 and 1990. The agencies and laboratories also increased the percentage of licenses requiring 

royalty payments from less than 50 percent of the licenses granted in 

the early 1980s to 95 percent of the licenses granted in fiscal year 1990.3 

This increase in federal patent licensing activity primarily reflects 

implementation of provisions in (1) the Patent and Trademark Amendments of 1980, which allow federal agencies to grant exclusive licenses; 

(2) 1984 amendments to the Patent and Trademark Amendments of 

1980, which allow nonprofit organizations that operate Energy’s contractor-operated laboratories, with few exceptions, to retain title to federally funded inventions they make; and (3) the Federal Technology 

Transfer Act of 1986, which allows federal inventors and laboratories to 

share in any royalty and other income earned on licensed patents. Over 

the past 10 years the following changes in federal patent licensing 

occurred: 

9 The percentage of exclusive licenses granted by the agencies and laboratories surveyed increased from only 6 percent of 173 licenses granted in 

fiscal year 1981 to 32 percent of 114 licenses granted in fiscal year 1986 

to 41 percent of 191 licenses granted in fiscal year 1990. Federal patent 

licensing officials said that businesses generally seek an exclusive 

license to protect their investment in developing an invention into a 

commercial product. 

l In fiscal year 198 1, all 28 licenses that Agriculture granted were on a 

nonexclusive, royalty-free basis. NTIS also granted two licenses for Agriculture patents and collected $7,300 on Agriculture licenses. In fiscal 

year 1986, Agriculture granted nine nonexclusive, royalty-free licenses 

3All 10 royalty-free licenses granted in fiscal year 1990 were for patents for which nonexclusive, 

royalty-free licenses had previously been granted. 

Page 4 GAO/WED-91-99 Federal Patent Licensing Activities 
R-242439 

while NTIS granted eight licenses for Agriculture patents and collected 

$86,000 on Agriculture licenses. In fiscal year 1990, Agriculture granted 

19 exclusive licenses; 1 nonexclusive, royalty-bearing license; and 2 

nonexclusive, royalty-free licenses and collected $146,000 in license 

income. NTIS also granted nine licenses for Agriculture patents and collected $413,000 on Agriculture licenses. 

. During fiscal year 1987, Energy approved modifications to the contracts 

for several of its contractor-operated laboratories that generally enable 

the contractors to retain title to and license inventions that they 

develop. In the 6 years before this change took effect, Energy issued an 

average of 19 licenses per year. Since fiscal year 1987, Energy and its 

contractor-operated laboratories have issued an average of 62 licenses 

per year. (Table III.4 shows the patenting and licensing activities of 

Energy’s contractor-operated laboratories in fiscal year 1990.) 

l In response to the royalty-sharing provisions of the Federal Technology 

Transfer Act, several agencies that formerly relied on NTIS to negotiate 

royalty-bearing licenses have expanded their own patenting and 

licensing activities. Between fiscal years 1981 and 1990, NTIS granted 

310 licenses for NIH and other Health and Human Services patents, 93 

licenses for Agriculture patents, 20 licenses for NIST and other Commerce patents, and 2 licenses for EPA patents. (See table 111.5.) Agriculture and EPA have begun to negotiate royalty-bearing licenses. Similarly, 

in recent years NIH and NIST have filed more patent applications and, 

while continuing to use NTIS, are assuming more control over the 

licensing decisions. 

. The number of licenses that NTIS granted dropped to 48 in fiscal year 

1990, after growing from 20 in fiscal year 1981 to 51 in fiscal year 1986 

and 70 in fiscal year 1989. According to an NTIS official, this decline 

reflected (1) the downturn in the U.S. economy, which discouraged businesses from seeking government licenses, and (2) other agencies’ 

increased involvement in patent licensing. 

. Licensing of Defense inventions had minimal importance until the last 2 

years, when Defense began to incorporate technology transfer into its 

mission in response to the Federal Technology Transfer Act of 1986. In 

fiscal years 1989 and 1990, the Air Force, Army, and Navy granted 16 

licenses per year and received $190,000 in license income per year. 

During the 6 preceding fiscal years, they granted eight licenses per year 

and received $31,000 per year. 

License Income” The federal agencies and contractor-operated laboratories surveyed 

increased their patent licensing income from $348,000 in fiscal year 

Page 5 GAO/ICED-91-80 Federal Patent Licensing Activitiee 
1981 to $6 million in 1986 and $9.4 million in 1990.4 Nonexclusive 

licenses that NTIS granted for two inventions made at NIH, a hepatitis B 

vaccine and an Acquired Immune Deficiency Syndrome test kit, earned 

$22.6 million, or 60 percent, of the $37.6 million received from fiscal 

year 1981 through fiscal year 1990. Energy’s contractor-operated laboratories have earned $48 million since they began licensing inventions 

in fiscal year 1987. 

Views of Federal 

Patent Licensing 

Officials 

Despite only modest improvement in licensing federal patents, the 

patent attorneys and licensing officials interviewed at NTIS, the Air 

Force, the Army, the Navy, Energy, NASA, NIH, Agriculture, and NET are 

generally satisfied with the procedures outlined in legislation and 

governmentwide regulations for licensing government-owned inventions, These agencies have granted almost all of the exclusive licenses 

for government inventions. 

Patent attorneys and licensing officials noted that the Patent and Trademark Amendments of 1980, while encouraging the commercial use of 

federal inventions by granting exclusivity, also protect the public’s 

interests by establishing procedures to ensure fairness and openness in 

licensing. In particular, NTIS and NASA officials believe that the requirements to ensure fairness are appropriate and have proved to be workable. Some of the federal licensing officials, however, suggested changes 

to address particular problems they have experienced in granting 

licenses and responding to requests under the Freedom of Information 

Act (6 U.S.C. 662) for documents submitted by licensees. In addition, 

several of the officials mentioned that they do not have an effective 

means for officially notifying businesses and other organizations of federal patents available for licensing or of other technology transfer 

opportunities. 

Ensuring Fairness in 

Granting Exclusivity 

Government Patents 

for 

NTIS licensing officials stated that negotiating an exclusive federal 

patent license, particularly with a large business, typically takes more 

than 1 year and may take as long as 2 years to complete. According to 

the NTI~ officials, negotiations take so much time because of the normal 

internal business and legal reviews and analyses needed to determine 

acceptable licensing terms and conditions. For example, management for 

large businesses typically will enter into a licensing agreement only 

4Licenae income may include an initial fee payable with the execution of the license, an annual minimum fee, and royalties, which typically represent a percentage of the resulting product’s sales. 

Page 0 GAO/RCED91-90 Federal Patent Licensing ActIvitIes 
after comparing the costs and benefits of commercializing a federal 

invention with the costs and benefits of undertaking alternative company projects. 

Governmentwide regulations require that a federal agency publish a 

notice in the Federal Register of its intent to grant an exclusive license, 

This notice provides 60 days for the filing of objections, and if an 

outside party submits its own plans, the agency is required to consider 

the appropriateness of granting a license to the objecting party. The federal patent attorneys and licensing officials interviewed generally support the 60-day notice requirement, citing (1) the need to ensure fairness 

of opportunity, (2) the public’s right to know who is getting exclusive 

rights to commercialize government-owned inventions, and/or (3) the 

opportunity to attract other licensees who were not aware of the invention’s availability and who are willing to pay royalties for a license. All 

of these officials stated that if a company requested an exclusive license 

to a government-owned invention as a basis for a cooperative research 

and development agreement, their agencies would follow the 60-day 

notice procedures before signing an agreement. 

Patent licensing officials stated that their agencies have handled objections to the granting of exclusive licenses differently. On the one hand, 

NTIS normally does not begin to negotiate until the 60-day period is complete because it interprets governmentwide regulations as requiring 

agencies to negotiate with the original applicant and any qualified objectors. On the other hand, Energy and the Air Force give preference to an 

original applicant while trying to accommodate a qualified objector by, 

for example, granting the objector a patent license for a specific field of 

use. 

While the patent licensing officials interviewed generally support the 

current procedures, they cited a few cases in which an objection to the 

granting of an exclusive license constrained their licensing efforts. Air 

Force and Navy licensing officials stated that in at least two instances 

the process of handling objections resulted in no license being granted 

because (1) the licensing process was drawn out too long, causing the 

potential licensee to lose interest, and/or (2) the primary motive of the 

objector apparently was to block the granting of an exclusive license to 

a competitor, rather than any direct interest in commercializing the 

technology. Similarly, Energy licensing officials stated that they typically grant exclusive licenses only to small businesses because competitors would object to granting an exclusive license to a large corporation. 

Further, Army technology transfer officials noted that one company 

Page 7 GAO/RCED-9180 Federal Patent Licensing Activities 
E242428 

applying for an exclusive license objected to the requirement that its 

name appear in the 60-day notice because competitors might deduce 

from the notice that it was planning to enter into a new market. 

In addition, the director of NIH'S Office of Technology Transfer cited the 

documentation requirement in 36 USC. 209 as particularly burdensome. Under this requirement, agencies must make formal, affirmative 

findings before granting an exclusive license that (1) federal and public 

interests are best served by exclusive licensing, (2) expeditious practical 

application of the invention is unlikely to occur under a nonexclusive 

license, (3) exclusive licensing is a reasonable and necessary incentive to 

attract investment of risk capital, (4) the proposed terms and scope of 

exclusivity are not greater than reasonably necessary, and (6) exclusive 

licensing will not tend substantially to lessen competition or result in 

undue market concentration. The director suggested that federal 

licensing officers be able to award an exclusive license when the evidence of record reasonably favors exclusive licensing. According to the 

director, this kind of agency discretion would be consistent with the 

Federal Technology Transfer Act of 1986. 

Freedom of Information 

Act 

NTIS licensing officials also told us that in recent years their administrative burden has increased in responding to requests under the Freedom 

of Information Act for documents about a licensee’s invention commercialization plans and progress reports. Because agencies have authority 

to treat these documents as commercial and financial information 

obtained from a person and therefore not subject to disclosure, the NTIS 

officials stated that their office’s six licensing specialists are required to 

review all of the requested documents carefully, in consultation with the 

licensee, to determine what information should be excluded. 

The NTIS licensing officials suggested that the 36 U.S.C. 209 exception 

might be changed to state that a licensee’s invention commercialization 

plan and periodic progress reports “shall” be treated as commercial and 

financial information and not subject to disclosure. Other patent attorneys and licensing officials interviewed noted, however, that this 

approach would still require an agency to review documents in 

responding to a Freedom of Information Act request. They suggested 

that a more effective way to change section 209 would be specifically to 

exempt it from the Freedom of Information Act, as long as the licensee’s 

identity and information about the patent, including its patent number 

and perhaps an abstract of the invention, were disclosed. 

Page 8 GAO/RCED-91-80 Federal Patent Licensing Activities 

. . 
B242428 

Public Notice for Fede 

Technology Transfer 

Opportunities 

ral The licensing officials we interviewed stated that, in accordance with 

Commerce’s governmentwide regulations, they use the Federal Register 

to announce the availability of patents for license and to provide notice 

of their intent to grant an exclusive license. However, these officials said 

that the Federal Register does not effectively get information to company managers who might be interested in the invention. In addition to 

the official legal notice, NTIS announces the availability of patents for 

license through (1) NTIS' weekly journals; (2) NTIS' computerized data 

base, which businesses can access through such commercial data bases 

as Dialog and Orbit, and (3) direct mailings, telephone contacts, and personal meetings. Agriculture also provides information about its issued 

patents available for licensing through its computerized system, 

AGRICOLA, which can be searched through Dialog and BRS Information 

Technologies. NIH similarly provides on-line information through its electronic bulletin board, NIH-CYI'TO, about patents available for licensing 

and collaborative research opportunities at NIH; the Alcohol, Drug Abuse 

and Mental Health Administration; and the Centers for Disease Control. 

Scope and 

Methodology 

We obtained patenting and licensing data for fiscal years 1981 through 

1990 for the 12 principal federal agencies that patent and/or license 

government-owned inventions. These agencies accounted for about 

$16.2 billion, or 97 percent, of the estimated $16.7 billion obligated for 

research and development at government laboratories in fiscal year 

1990 (see app. I). We also obtained patenting and licensing data from 16 

of the Department of Energy’s government-owned, contractor-operated 

laboratories (see app. II) because, in response to the 1984 amendments 

to the Patent and Trademark Amendments of 1980, Energy’s contractoroperated laboratories have begun to license their patents. Before the 

1984 amendments were implemented, Energy licensed inventions made 

at its contractor-operated laboratories, unless a contractor requested a 

waiver of title rights from Energy. 

To obtain federal patent attorneys’ and licensing officials’ perceptions of 

possible ways to facilitate their agencies’ patent licensing efforts, we 

interviewed patent attorneys and licensing officials at Agriculture; NIST 

and NTIS within Commerce; the Air Force, Army, and Navy within 

Defense; Energy; NASA; and NIH within Health and Human Services. 

These agencies have active patent licensing programs. We did not seek 

industry views on federal patent licensing requirements. 

We conducted our review between June 1990 and November 1990 in 

accordance with generally accepted government auditing standards. 

Page 9 GAO/RCED-9140 Federal Patent Licenthg Activities 

.I 
B-242499 

Agency Comments A draft of this report was sent to the Departments of Agriculture, Commerce, Defense, Energy, and Health and Human Services and to NASA. 

Agriculture, Commerce, Defense, and Health and Human Services provided official comments. All generally agreed with the report’s presentation of the issues; their comments appear in appendixes IV to VII. 

Energy and NASA chose not to provide official comments. Commerce 

stated that it plans to initiate a formal interagency review of its governmentwide regulations, which will include public hearings to serve as a 

forum for discussing such issues as those raised in this report and possible revisions to the regulations. Commerce also noted that enforcement 

of government-owned patents against infringers could have a major 

impact on the success of agencies’ licensing programs. All six agencies 

suggested changes to improve the presentation and technical accuracy 

of the draft report. We incorporated appropriate changes. 

As agreed with your offices, we are sending copies of this report to the 

Director, Office of Management and Budget, and other interested parties. Copies will be made available to others upon request. Major contributors are listed in appendix VIII. 

John M. Ols, Jr. 

Director, Housing and Community 

Development Issues 

Page 10 GAO/WED-91-90 Federal Patent Licensing Activities 

.’ 
Page 11 GAO/RCJSD-91-N Federal Patent Licensing Activities 
Contents 

Appendix I 

FederaI Agencies 

Providing Patenting 

and Licensing Data 

Appendix II 

Energy’s GovernmentOwned, ContractorOperated (GOCO) 

Laboratories 

Providing Patenting 

and Licensing Data 

Appendix III 

Federal Patent and 

16 

Licensing Activities 

for Fiscal Years 1981- 

1990 

Appendix IV 

Comments From the 

Department of 

Agriculture 

23 

Appendix V 

Comments From the 

Department of 

Commerce 

26 

Page 12 GAO/RCXD-914&O Federal Patent Licenshg Activities 
Contant8 

Appendix VI 

Comments From the 

Department of 

Defense 

Appendix VII 

Comments From the 

Department of Health 

and Human Services 

Appendix VIII 

Major Contributors to 

This Report 

Related GAO Products 32 

Tables Table III. 1: Summary of Federal Patenting and Licensing 

Data 

16 

Table 111.2: Federal Agencies’ Patent and Licensing 

Activities by Year 

17 

Table 111.3: Licenses Granted by Federal Agencies 

Table 111.4: Patenting and Licensing Activities of Energy’s 

GOCO Laboratories in Fiscal Year 1990 

Table 111.6: Licenses Granted by NTIS for Various Federal 

Agencies 

20 

21 

22 

Abbreviations 

EPA Environmental Protection Agency 

GAO General Accounting Office 

GOCO government-owned, contractor-operated 

NASA National Aeronautics and Space Administration 

HHS Health and Human Services 

NIH National Institutes of Health 

NIST National Institute of Standards and Technology 

NTIS National Technical Information Service 

Page 18 GAO/RCEDBl-80 Federal Patent Licensing Activities 
Appendix I 

Federal Agencies ProvZl.ing Patenting and 

Licensing Data 

Dollars in millions 

Department or agency 

Aariculture 

Estimated 

intramural R&D obligations 

in FY 1990’ 

Awicultural Research Service $532 

Forest Service 126 

Other Agriculture agencies and offices 

Decartment total 

84 

$742 

Commerce 

National Institute of Standards and Technology 

National Technical Information Service 

Defense 

113 

b 

Air Force 

-_ 

Army 

2,759 

2,193 

Navy 3,537 

Defense aaencies and officesC 2.007 

Department total 10,496 

Energy 

Environmental Protection Agency 

Health and Human Services 

162 

119 

Alcohol, Drug Abuse and Mental Health Administration 220 

Centers for Disease Control 77 

National Institutes of Health 1,241 

Deoartment total 1,538 

Interior 349 

NASA 2,108 

National Science Foundation 1926 

Tennessee Vallev Authoritv 26 

Transportation 179 

Veterans Affairs 201 

Total estimated obligations $ 16,225 

‘%cludes obligations for R&D performed at federal government-operated laboratories. Intramural R&D 

obligations do not include obligations for R&D performed by contractors and grantees, including contractor-operated laboratories. 

bNTIS licenses patents for other federal agencies. 

Clncludes the Defense Logistics Agency, the Defense Mapping Agency, and the National Security 

Agency. 

dAlthough it annually obligates substantial funds for intramural R&D, the National Science Foundation 

did not file any patent applications between fiscal years 1981 and 1990. 

Source: National Science Foundation. Federal Funds for Research and Development: Fiscal Years 1988, 

1989, and 1990 (NSF 90-306). 

Page 14 GAO/RCRD91-f!9 Federal Patent Licensing Activities 
Appendix II 

EInergy’s Government-Owned, CmtractorOperated (GOCO) Laboratories Providing 

Paknting and Licensing Data 

Laboratory or location Operating contractor 

Ames Laboratory 

Argonne National Laboratory 

Brookhaven National Laboratorv 

Iowa State University 

University of Chicago 

Associated Universities, Inc. 

Fermi National Accelerator Laboratory 

Idaho National Engineering Laboratory 

Lawrence Berkelev National Laboratorv 

University Research Association, Inc. 

EG&G Idaho, Inc. 

Universitv of California 

Lawrence Livermore National Laboratorv University of California 

Los Alamos National Laboratory University of California 

Oak Ridge, Tennessee 

Oak Ridae National Laboratorv 

Oak Ridge Associated Universities 

Martin Marietta Enerav Svstems, Inc. 

Pacific Northwest Laboratory Battelle Memorial Institute 

Princeton Plasma Physics Laboratory 

Sandia National Laboratories 

Solar Enerav Research Institute 

Princeton University 

AT&T Technologies, Inc. 

Midwest Research Institute 

Stanford Linear Accelerator Center Stanford University 

Savannah River Laboratory Westinghouse Savannah River Company 

Note: Contractors also operate Bettis Atomic Power Laboratory and Knolls Atomic Power Laboratory for 

Energy. However, patenting and licensing data for these laboratories are included in Energy’s totals 

because, as naval nuclear propulsion laboratories, they are specifically excluded by the Patent and 

Trademark Amendments of 1980, as amended, from retaining title to inventions they make. 

Page 16 GAO/RCED-91-99 Federal Patent Licensing Activities 
Appendix III 

Fedel Patent and Licensing Activities for 

Fiscal Years 19814990 

Table 111.1: Summary of Federal Patenting and Llcen8lng Data (Fiscal Years 1981-90) 

Dollars in thousands 

AwmCY 

Patent Patents Licenses granted License 

applications issued Nonexcluslve Exclusive income 

Agricultures 

.._. “.. l_l _- .I ._.._- ..^. --..- 

Commerce 

NISTa 

506 421 166 26 $148 

86 53 0 0 0 

NTIS= 0 0 259 194 30,226 

.” __.. __- .-.-.- . --- 

Defense 7,742 6,371 64 46 682 

Eneravb 4,411 2,405 239 122 5,629 

Environmental Protection AQencvB 20 11 0 1 3 

Health and Human Servicesa 986 266 0 0 0 

Interiora 215 187 32 0 0 

NASA 1,559 1,275 136 65 652 

National Science Foundation 0 0 0 0 0 

Tennessee Valley Authority 117 68 85 1 174 

Transportationa 22 18 0 0 0 

Veterans Affairsa 5 0 

Total 15,669 11,075 661 455 $37,514 

aNTlS licenses patents for several federal agencies including Agriculture, Commerce, the National 

Security Agency in Defense, EPA, Interior, the Public Health Service in Health and Human Services, and 

Veterans Affairs. About $26 million, or 66 percent, of NTIS’ licensing revenue was earned from nonexclusive licenses, including $22.6 million from AIDS test kit and hepatitis B vaccine licenses. 

blncludes data from 16 contractor-operated laboratories on patent applications filed, licenses granted, 

and license income. Data on patents issued to the laboratories were not available. 

CData not available. 

Source: GAO compilation of agency data. 

Page 10 GAO/RCEDSl-99 Federal Patent Licensing Activities 
Federal Patent and Licensing AeUvttIer for a 

F&al Years 1981-1999 

Table 111.2: Federal Agencies’ Patent and Llcenrlng Actlvlties by Year (Fiscal Years 1981-90) 

License income in thousands of dollars 

_.-_.--_- 

Patent/license actlvlty 

by agency 1961 1962 1963 1964 1985 1986 1987 1988 1969 1990 Total 

Aatlculture~ 

Patent applications 61 71 52 44 38 42 39 45 61 53 506 

..__ -_-_ .-- .___.-. 

Patents issued 55 45 45 46 39 34 34 28 47 48 45 

--__.___. --._-.- ..-. ___.. ” -._-- -- 

Patents licensed 19 8 13 7 9 7 8 6 10 19 106 

--~- -.__-__.-. -._____ 

Licenses granted ---28 21 40 26 16 9 12 7 11 22 192 I __,_,, _I.. “., .._ . ..-_. -._-_~-..-__-- 

License income $0 $0 $0 $0 $0 $0 $0 $0 $2 $146 $148 

Commerce 

NIST’ 

Patent applications 

Patents issued 

NTIS. 

Patent applications 

forwarded to NTIS for 

licensina 

5 4 2 6 5 12 8 4 17 23 86 

3 4 5 4 2 7 6 14 2 6 53 

b b 154 97 92 109 109 224 208 195 1,188 

Licenses granted 20 27 41 36 41 51 53 66 70 48 453 I .I ._. ,... -.-... __. . ..___ -...-. .- .__.____-..__. ______. 

License income $69 $155 $907 $868 $1,509 $4,831 $4,466 $5,683 $5,377 $6,361 $30,226 

Defense 

Air Force 

. ..-- _._--. ..-- _... -_~ - .._.._.._ 

Patent applications 172 238 210 205 216 223 154 149 147 178 1.892 

_” ..__._ -!. .I-. --.--..---. . ..--.-____ 

Patents issued 149 98 144 204 180 203 212 149 136 115 lI590 

Patents licensed 0 0 0 1 2 5 

Licenses granted 0 0 0 1 2 1 

_. .I.- ._ ..-. .,.I_ .-___- -__ ...__._I___ ___ 

License income $0 $0 $0 $0 $6 $7 _._ .- _ .- . . . . ---. --...________ 

Army 

Patent applications 365 315 277 287 253 227 

Patents issued 257 243 237 249 223 245 

-.__ _.. . -I__. .-.---.._“--.--. 

Patents licensed 1 8 8 IO 0 4 

1 1 2 8 20 

1 1 2 5 13 

$27 $31 $27 $44 $142 

192 246 328 254 2,744 

268 226 243 203 2,394 

10 2 4 0 47 

Licenses granted 1 3 3 1 0 1 5 4 7 0 25 

License income $5 $31 $24 $10 $5 $8 $10 $4 $11 $18 $126 

Navy 

-_..- -.---.-..--- 

Patent applications 514 445 373 281 288 139 117 197 278 439 3,071 

Patents issued 

__-_ ---_I...-.--.-_--.. 

Patents licensed 

_____-.. ._- ..--__ -__- 

Licenses granted 

License income 

343 344 295 313 253 199 194 101 114 202 2,358 

7 15 12 22 5 0 7 2 15 11 96 

6 15 9 11 5 0 6 2 10 8 72 

$0 $58 $28 $14 $8 $6 $7 $13 $143 $137 $414 

” (continued) 

Page 17 GAO/ICED-91439 Federal Patent Licensing Activities 
Federal Patent and Licensing Activities iok 

FIBcal Yemw 1981~1990 

Patent/llcenrs actlvlty 

by agency 1981 1982 1983 1984 1985 1988 1987 1988 1989 1990 Total 

Natlonal Security 

Agency’ 

.__.--..-- .___._. 

Patent applications 

~-. l--l.-.._ 

Patents issued 

Energy 

-_.- ..__ _ ._ --... 

Patent applicationsC 

Patents issuedd 

--. ..“.- - .._. -.-- 

Patents licensed I .._ . - .__._. -- 

Licenses granted 

-“.- -_-- -_ 

License income .I__ ._-- __..- 

Energy’8 OOCO Labr 

- . ..__. --.- 

Patent applicationsC 

-.----- 

Patents issuedd 

5 4 4 1 3 3 2 5 4 4 35 

1 4 3 6 1 3 1 3 5 2 29 

327 300 321 545 440 462 425 497 555 459 4,411 

232 239 219 298 288 286 219 211 200 213 2,405 

17 7 16 19 20 37 17 11 4 6 154 

19 6 16 24 24 26 19 11 6 8 159 

$262 $208 $82 $54 $31 $42 $49 $49 $50 $50 $877 

b b b b b b b b b b b 

b b b b b b b b b b b 

Licenses granted b b b b b b 14 43 57 88 202 

License income b b b b b b $297 $496 $1,449 $2,510 $4,752 

Environmental 

Protectlon Agency. ~. 

Patent applications b b b b b b 4 5 5 6 20 

-_----- 

Patents issued b b b b b b 1 3 2 5 11 

--~- 

Licenses granted’ 0 0 0 0 0 0 0 0 0 1 1 

-_. 

License incomea 0 0 0 0 0 0 0 0 0 $3 $3 

;r;;eaeyd Human 

-.._ ._. .._ 2’_._.. - 

Patents issued 

. 

~-.--_.~ 

Alcohol, Dru 

31 

Abuse & 

Mental Healt 

Admlnlatratlon 

.-____. .^.__.. ----.- 

Patent atxAications 

b b b b b b 0 1 

b 

2 

b 

2 

b 

5 

b b b 9 17 16 14 58 

--.- _____ -------- 

Patent applications b b b b b b 8 16 26 31 81 

.----_-..-. - ._... --..-.~- 

Patents issued b b b b b b 5 4 7 3 19 

NIH 

--_-. “... _I......_.. -- “_-. .-- 

Patent applications 36 46 39 44 76 95 97 127 133 156 849 

..__.__... ---..-.-____ 

Patents issued 16 12 20 30 22 26 28 32 25 31 242 

Interlop 

---.. __.._ I_- 

Patent aDDlications 37 37 19 16 20 20 11 14 14 27 215 

Patents issued 44 26 27 18 10 17 12 12 12 9 187 

-. _ ._-.._ ._._..____ 

Licenses granted 15 12 1 1 0 1 2 0 0 0 32 

--“-__.I _____-.._.___- 

License income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 80 

” (continued) 

Page 18 GAO/RCED-Bl-BB Federal Patent Licensing Activities 
Aim- III 

Federal Patent and Lkamdng Activitie~~ for’ 

Fi#cal YeaN 1981.1990 

Patent/licenre actlvlty 

by agency 

NASA 

. . ..- - _._" -_____.. -.-- 

Patent applications 

Patents issued 

__... _. ..____ - 

Patents licensed 

__.... .._.....__.. -.--...-__ 

Licenses aranted 

License income 

Tennefwe Valley 

Authority 

Patent applications 

__ _. _._ - .._.-_ -.._. -_ 

Patents issued 

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 Total 

171 190 169 135 128 115 134 174 162 181 1,559 

149 114 132 144 139 110 114 98 127 148 1,275 

66 34 18 25 7 10 15 7 6 6 196 

58 35 23 23 9 10 23 7 7 6 201 

$11 $15 $24 $98 $82 $73 $73 $79 $84 $113 $652 

9 17 11 17 14 8 8 10 13 10 117 

9 3 3 8 7 9 8 7 4 10 88 

._- ---._ 

Patents licensed 

. .- . . _._______ ._ 

Licenses granted 

License income 

6 6 0 2 8 9 0 3 4 4 42 

26 11 0 2 10 15 0 6 11 5 86 

$1 $1 $0 $0 $1 $1 $6 $6 $163 $7 $174 

Traneportation~ 

._ . _._... --. .._ --_.- 

Patent applications 

Patents issued 

4 7 6 0 0 0 0 2 1 2 22 

1 4 2 1 6 2 1 0 0 1 18 

Veterans Affairs*,* 

_._... .- .._ ..-___--.. _ ~._..__ 

Patent applications 2 1 0 0 2 0 0 0 0 0 5 

_-. _. . . ._. -..- -.__.----- 

Patents issued b b b b b b b b b b b 

Totals 

Patent applications 1,708 1,755 1,483 1,581 1,463 1,346 1,206 1,508 1,780 1,837 15,669 

Patents irsuedr 1,259 1,138 1,132 1,321 1,170 1,141 1,103 889 928 996 11,075 

Patents licensed* 118 78 87 86 61 72 58 32 45 54 661 

Licensee granted 173 130 133 125 107 114 135 147 181 191 1,436 

Llcenbe income $348 S488 $1,085 $1,044 $1,642 $4,988 $4,929 $6,355 $7,306 $9,389 $37,514 

aNTlS licenses patents for several federal agencies including Agriculture, Commerce, the National 

Security Agency in Defense, EPA, Interior, Health and Human Services, and Veterans Affairs. In fiscal 

year 1990, NTIS collected license revenue of $5839,000 for the Public Health Service patents, $413,000 

for Agriculture patents, $52,000 for Commerce patents, $41,000 for Interior patents, and $16,000 for 

other agencies’ patents. 

bData not available. 

CBeginning in fiscal year 1984, Energy’s patent application data include totals for its GOCO laboratories. 

The GOCO laboratories filed about 245 patent applications in fiscal year 1987, 319 applications in fiscal 

year 1988. 364 applications in fiscal year 1989, and 342 applications in fiscal year 1990. These totals 

may include some applications filed by Energy. 

dPatents issued are for Energy’s patent applications only and do not include patents issued to its 

GOCO laboratories, for which data were not available. 

BBecause its researchers typically also have university appointments, Veterans Affairs almost always 

waives its rights to inventions to its employee inventor to facilitate the licensing of the invention by the 

university. 

‘Data not available for Energy’s GOCO laboratories. 

‘JData not available for NTIS, Energy’s GOCO laboratories, or Interior. 

Page 19 GAO/WED-91-80 Federal Patent Liceming Activities 
Federd Patent and Ihenahg Activltieo f&r 

FIlwRlYeanr1981.1990 

Table 111.3: Licenrer Granted by Federal Agencler (Fiscal Years 1981-90) 

Licenses by agency 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 Total 

Agriculture 

__--_ .-... _____.--_._- 

Exclusive 0 0 0 0 0 0 0 0 7 19 26 

__..... ._..I . ..-- -__ 

Nonexclusive 28 21 40 26 16 9 12 7 4 3 166 

Commerce 

NTIS 

Exclusive 

..-----~ 

5 -ii- 14 14 23 25 22 36 29 17 194 

Nonexclusive 15 18 27 22 18 26 31 30 41 31 259 

Defense 

Air Force 

Exclusive 0 0 0 0 2 0 1 1 1 4 9 

. . _. . ..-.-... "_. . ~ -... - .._- 

Nonexclusive 0 0 0 1 0 1 0 0 1 1 4 

Army 

-- 

Exclusive 1 1 2 1 0 1 5 0 7 0 18 

NAkxclusive 0 2 1 0 0 0 0 4 0 0 7 

__ ..- ..--.-.-...-____- 

Navy 

Exclusive 1 1 0 4 2 0 4 1 3 3 19 

Nonexclusive 5 14 9 7 3 0 2 1 7 5 53 

Energy 

- -- 

Exclusive 0 3 3 2 13 5 5 4 0 0 35 

_. ..-. I.-... ..__ --..--.~_..- 

Nonexclusive 19 3 13 22 11 21 14 7 6 8 124 

_.__.._. -._^- -__.. -. .._-_....- 

Energy’s BOCO Labs 

Exclusive a 8 a a a a 14 18 25 30 87 

.-__. -_-- 

Nonexclusive a B a a a a a 25 32 58 115 

Envlronmental 

Protection Agency 

Exclusive 0 0 0 0 0 0 0 0 0 1 1 

Nonexclusive 0 0 0 0 0 0 0 0 0 0 0 

Interior 

Exclusive 0 0 0 0 0 0 0 0 0 0 0 

_ .._ -~~ ..-... .-~--.-~~ 

Noneklusive 15 12 1 1 0 1 2 0 0 0 32 

NASA 

Ekclhive 

Nonexclusive 

3 8 0 10 4 5 14 4 4 

55 27 15 13 5 5 9 3 3 

5 65 

1 136 

(continued) 

Page 20 GAO/WED-91430 Federal Patent Licensing Activities 
Appendix III 

Federal Patent and Licensing Activities for ’ 

Fbcal Yeam 1991.1999 

Llcenoer by agency 

Tennerwe Valley Authority 

~- 

Exclusive 

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 Total 

0 0 0 0 0 0 0 0 1 0 1 

Nonexclusive 26 11 0 2 10 15 0 6 10 5 85 

Total 

Exclurlve 

Nonexclurlve 

10 22 27 31 44 30 65 64 77 79 455 

183 108 100 94 83 78 70 83 104 112 981 

aData not available. 

Table 111.4: Patentlng and Llcenrlng 

Actlvltier of Energy’s GOCO 

Laboratories in Fiscal Year 1990 

License income in thousands of dollars 

Patent Licenses granted License 

QOCO laboratorv aoolications Nonexclusive Exclusive income 

Ames Laboratorv 12 0 2 $1 

Ar onne National 

La % oratory 

Brookhaven National 

Laboratory 

9 5 0 45 

14 24 1 138 

Fermi National Accelerator 

Laboratorv 3 0 1 5 

Idaho National Engineering 

Laboratorv 16 0 2 73 

Lawrence Berkeley 

National Laboratorv 

Lawrence Livermore 

National Laboratory 

Los Alamos National 

Laboratory 

20 0 1 50 

87 7 2 250 

42 1 6 55 

Oak Ridge Associated 

Universities 0 0 0 7 

Oak Ridge National 

Laboratory 51 5 5 480 

Pacific Northwest 

Laboratorv 

Princeton Plasma Physics 

Laboratory 

Sandia National 

Laboratories 

Solar Energy Research 

Institute 

Stanford Linear Accelerator 

Center 

27 13 5 1,240 

1 0 1 2 

36 2 3 3 

11 0 1 93 

0 0 0 50 

Savannah River Laboratory 13 1 0 18 

Total 342 58 30 $2,510 

Page 21 GAO/WED-91430 Federal Patent Licensing Activities 
Appendix III 

Federal Patent and Licensing Activities fbr 

Fiscal Years 1981-1990 

Table 111.5: Lloenser Qranted by NTIS for Varlour Federal Agencies (Fiscal Years 1981-90) 

Agency 1981 1982 1983 1984 1985 1988 1987 1988 1989 1990 Total 

___.. -__ ..__ --_.__ 

Agriculture 2 3 7 7 13 8 14 15 15 9 93 

_. .-....-...-.. --. ..--._----- 

Commerce 1 6 3 2 1 0 2 2 3 0 20 

__.._.. -.- _^_ -.._ .-._ _ -.____._ ___I 

EPA 0 0 0 0 0 2 0 0 0 0 2 

Interior 4 1 1 1 2 0 3 5 1 1 19 

Health and Human 

Services0 

Veterans Affairs 

_--_-~- 

Other aaencies 

12.5b 15 30 24 25 40.5b 34 43 49 37 310 

0.5b 1 0 2 o- 0 0 0 0 1 4.5 

0 1 0 0 0 0.5b 0 1 2 0 4.5 

._ .._ -z _._. ..- _.... -.._ .-.- ---- 

Total 20 27 41 38 41 51 53 88 70 48 453 

%cludes the Alcohol, Drug Abuse and Mental Health Administration; the Centers for Disease Control; 

and NIH. 

b”Half” of a license may indicate that the license was for a package of patented inventions or that the 

patented invention was jointly developed by researchers from the indicated agencies. 

Page 22 GAO/RCED-91-M Federal Patent Licensing Activities 
Appendix IV 

~ Comments From the Department of Agriculture 

DEPARTMENT OF AQRICULTURE 

OPPICS OP THC StZCRW’ARV 

WA6tllNQTON, D.C. 20260 

Mr. John M. 016, Jr. 

Director, Housing and 

Community Development Issues 

&II. 4073, GAO Building 

441 G Street, NW. 

Washington, D.C. 20548 

Dear Mr. 01s: 

Thank you for the opportunity to review the General Accounting Office 

Draft Report RCED-91-80, "TECHNOLOGY TRANSFER: Federal Agencies' Patent 

Licensing Activities.” 

The Forest Service did not have any comments. I am forwarding the 

enclosed comments prepared by the Agricultural Research Service. 

Sincerely, \ 

(a (-&d$S.b 

CHARLES E. HESS 

Assistant Secretary for 

Science and Education 

Enclosure 

cc: w/enclosure 

R. Plowman, ARS 

J. Franks, OGC 

S. Dewhurst, OBPA 

Page 23 GAO/RCJD-91-30 Federal Patent Licensing Activities 
Appendix IV 

Comment83 Fvom the Department 

ofAgriculture 

February 12, 1991 

ARS Comment on GAO Report RCED-91-80, "Technology Transfer, 

Federal Agencies’ Patent Licensing Activities" 

We request that the terms "royaltyll, "royalties", and "royalty 

income" where used throughout the subject report be changed to 

"license income". A typical license does not provide royalties 

until from 3 to 5 years after the grant of the license. 

We recommend the first paragraph on page 6 be reworded to 

incorporate this request as follows: 

In fiscal year 1981, Agriculture granted 28 licenses on 19 

different patents. These 28 licenses were granted on a 

nonexclusive royalty free basis as the majority of the subject 

patents were being actively practiced by others under the same 

provisions granted previously. NTIS granted 2 licenses for 

Agriculture patents and collected $7,300 in license income. 

In fiscal year 1986, Agriculture granted 9 nonexclusive 

royalty free licenses on 7 different patents where the majority of 

the subject patents were actively being practiced by others under 

the same provisions while NTIS licensed 8 different Agriculture 

patents and collected $85,000 in license income. 

In fiscal year 1990, Agriculture granted 19 exclusive royalty 

bearing licenses, 1 nonexclusive royalty bearing license, and 2 

nonexclusive royalty free licenses. Of the 19 exclusive licenses 

granted 14 were to joint owners (Educational Institutions) with no 

upfront fees charged. A total of $146,000 license income was 

collected. Additionally, NTIS granted for Agriculture 5 

nonexclusive licenses and 4 exclusive and collected a total of 

$413,000 of which $203,741 were royalties on previously licensed 

Agriculture patents. 

Page 13 P j 0 Tra sfer 

ities . Please reword the last sentence. Although it was 

anticipated that patents would be available through our database 

and although this system is in its planning stage, it is not 

available yet. We suggest the following alternative sentence: 

Agriculture issued patents are available through AGRICOLA 

(multural $&Line Access) a computerized USDA system available 

for search through DIALOG and BRS Information Technologies. It is 

planned for FY91 to add pending Agriculture patent abstracts to 

TEKTRAN, a computerized database designed specifically as a 

technology transfer mechanism for ARS. 

Page 24 GAO/WED-91-90 Federal Patent Licensing Activities 
APW* IV 

Commenta From the Department 

ofAgriculture 

Page 2 

We also suggest that,beginning in FY90,dollar figures reported 

from all agencies be appropriately reflected to divide license 

income collected from royalty income collected. This will provide 

Congress a true value analysis of the progress made to date under 

the patent license process by all Federal Agencies. 

Page 26 GAO/WED-91-80 Federal Patent Licensing Activities 
Appendix V 

Comments From the Department of Commerce 

*r* 

df 

or cot 

\& ++ E UNITED STATES DEPARTMENT OF COMMERCE 

. 

aegNi’ 

The Assistent Secretary for Technology Policy 

Washmgton. O.C. 20230 

John M. Ols, Jr. 

Director, Housing and Community 

Development Issues 

United States General 

Accounting Office 

Washington, D.C. 20548 

Re: ~olosv Transfer. Federal Asencie P tent; 

ma A&iv&& (GAO/RCED-91-80)y'Drift Report 

Dear Mr. 01s: 

This is in regard to your letter to Secretary of Commerce 

Robert Mosbacher, dated February 1, 1991, in which you invited 

the Department to review and comment on the draft report 

referenced above. My staff and I have reviewed the draft and 

found it to be a very interesting and informative report on the 

state of the Federal Government's role and performance in the 

field of Federal patent licensing. 

One point that was addressed in the report is the 

observation that the Department's regulations pertaining to 

patent licensing and technology transfer were in need of review 

and revision. The present licensing regulations have been in 

effect since 1981 when they were first promulgated by the General 

Services Administration. I plan to initiate a formal interagency 

review of the regulations, and the comments contained in the 

report will be extremely helpful in this effort. In fact, as we 

have indicated in our submission to the 1991 Unified Agenda of 

Federal Regulations, the Technology Administration will be 

holding public hearings during the coming year to serve as a 

forum for discussing issues such as those raised in the report 

and possible revisions to the regulations. 

Of particular concern are several issues related to patent 

infringement and enforcement, which were not addressed in the 

report. Most licenses granted by agencies permit the licensee to 

suspend the payment of royalties while the agency attempts to 

enjoin the infringement of the licensed patent. Although this is 

not a large problem at present, since there are only two Federal 

patent infringement suits pending, we anticipate that 

infringement and infringement litigation will increase as more 

and more Federal technology is licensed. 

Page 26 GAO/RCED-91-80 Federal Patent Lkenaing Activitka 
AmenW V 

Comment8 From the Department 

of commera 

2 

The Department of Commerce notes that the enforcement of 

Government-owned patents could have a major impact on the success 

of the Government's licensing program. For example, if the 

Government or its exclusive licensee do not vigorously pursue 

infringers, companies may not be willing to enter into licensing 

agreements with the Government requiring substantial royalties 

and/or large capital investment and risk. 

Since litigation is expensive, there is a question of who is 

to pay for the legal costs and how. If the Government sues for 

infringement, these costs have been borne by the Department of 

Justice (DoJ), although the DoJ might seek payment or 

reimbursement from the licensing agency and/or inventor agency, 

to be extracted from royalty income, or from the licensee. On 

the other hand, if the exclusive licensee is maintaining the 

suit, the legal expenses are normally considered as an advance 

against future royalty payments that may be due. Under either 

approach, the Government's royalty income could be adversely 

affected by such litigation. 

Finally, the National Technical Information Service and the 

National Institute of Standards and Technology had the following 

comments and observations: 

ion Service (NTIS) 

1. On page 9 of the Draft Report, it would more accurate 

read that licensing “may take as long as two years to complete 

and not %ypically.81 

2. The administrative burden that the Freedom of 

Information Act has created should be described as having 

llincreased,tl rather than i8substantially increased." 

3. NTIS does believe the Pederal Resister to be an 

effective means of accomplishing legal notices, and that it is 

not lntended as a tool for invention marketing. Companies have 

been accustomed since the early 70's to looking for such notices 

in the Federu Reaistm. The primary function of the Resister 

announcement is to provide legal notice. 

4. NTIS also believes that the report should indicate that 

views attributed on page 2 to 

licensing officials" 

"federal patent attorneys and 

are not universally shared. NTIS' 

experience is that the requirements to protect public interest 

and ensure fairness are appropriate and have been found to be 

1Y II 

, 

Page 27 GAO/RCED-91-90 Federal Patent Licensing Activities 

,.’ .i 
AppendtxV 

Cwnmente From the Department 

of Cksnme~ 

3 

workable. NTIS has granted the majority of the Federal 

Government's exclusive licenses applying such requirements. 

Companies prefer fairness and, if, occasionally a company is 

discouraged from taking a license, that does not outweigh 

industry's need to know when the Government intends to exclude 

other companies from using one of its inventions. 

5. And finally, NTIS has commented that on page 13, under 

the section "Technology Transfer Opportunities,11 it should be 

noted that NTIS promotes inventions directly to potential 

industry licensees through direct mailings, telephone contacts 

and personal meetings. 

With regard to Table 111.1, Su ma 

the data with regardmto 

rv of Federal Patenting 

licenses granted by 

NIH and NSF may be misleading unless the reader 

understa;ds that up until recently Commerce and NIH did all of 

their licensing through NTIS, while under P.L. 96-517, as 

amended, universities making patentable inventions with NSF 

funding file their own patents and conduct their own licensing. 

It would be of service to the report's readers to clearly 

explain this, and to credit to these agencies the licenses 

granted by NTIS for their patents with a note that NTIS performed 

the licensing but was not the funding agency. 

2. A similar problem exists in Table III.2 on pages 20 

through 29. Although a footnote appears on p. 28 listing the 

agencies using NTIS for their patent licensing, the casual reader 

y;zo;z misled by tables showing that NIST and NIH have no royalty 

. The data would be clearer if the table presented the 

royalty income for each funding agency with a footnote indicating 

that NTIS handled the licensing. 

Thank you for the opportunity to comment on the draft 

report. 

Deborah L. Wince-Smith 

Page 29 GAO/lUXD-91439 Federal Patent Licensing Activitie~~ 
Appendix VI 

Comments From the Department of Defense 

DIRECTOR OF DEFENSE RESEARCH AND ENGINEERING 

WASHINGTON, DC 20301-3010 

2 1 FEB 1991 

Mr. John M. Ols, Jr. 

Director, Housing and Community 

Development Issues 

Resources, Community, and Economic 

Development Division 

U.S. General Accounting Office 

Washington, D.C. 20548 

Dear Mr. 01s: 

This is the Department of Defense (DOD) response to the 

General Accounting Office (GAO) draft report, "TECHNOLOGY 

TRANSFER: Federal Agencies' Patent Licensing Activities," dated 

February 1, 1991, (GAO Code 385515/0SD Case 8604). 

The DOD has reviewed the report and concurs without further 

comment. Suggested technical changes have been provided 

separately. The Department appreciates the opportunity to 

review the report in draft form. 

Sincerely, 

Charles M. Herzfeld 

Page 29 GAO/WED-91-99 Federal Patent Licensing Activities 
Appendix VII 

Comments From the Department of Health asLd 

Hums Services 

- 

DEPARTMENTOF HEALTH & HUMAN SERVICES Oll~.e 01 lnsvpecbr General 

Washln~lon. 0.12 20201 

Mr. John M. 018, Jr. 

Director, Housing and Community 

Development Issues 

U.S. General Accounting Office 

Washington, D.C. 20548 

Dear Mr. 01s: 

The Secretary asked that we respond to your request for the 

Department's comments on your draft report, 88Technology Transfer: 

Federal Agencies' Patent Licensing Activities.@@ The Department 

haa carefully reviewed your report and has no comments except for 

the technical comments which were provided earlier to your staff. 

We appreciate the opportunity to comment on this draft report 

before its publication. 

Sincerely youre, 

Qk 

Richard P. Kusserow 

Inspector General 

Page 30 GAO/RCED91-30 Federal Patent Licensing Activities 
Appendix VIII 

Major Contributors to This Report 

Resources, Lowell Mininger, Assistant Director 

Community, and 

Richard Cheston, Evaluator-in-Charge 

Stephanie Keith, Evaluator 

Economic 

Development Division, 

Washington D.C. 

Page 81 GAO/RCED-91-80 Federal Patent Licensing Activities 
Related GAO Products 

Patent and Trademark Amendments of 1980 Set the Stage for Uniform 

Patent Practice by Federal Agencies (~~~-82-32, May 20, 1982). 

Major Federal Research and Development Agencies Are Implementing 

the Patent and Trademark Amendments of 1980 (GAO/RCED-84-26, Feb. 28. 

1984). 

Federal Agencies’ Policies and Practices Are in Accordance With Patent 

and Trademark Amendments of 1980 (GAopKxm-86-94, Aug. 29,1986). 

Patent Policy: Universities’ Research Efforts Under Public Law 96-617 

(GAOIRCED-86-93, Apr. 4, 1986). 

Patent Policy: Recent Changes in Federal Law Considered Beneficial 

(GAO/RCEDW-44, Apr. 16, 1987). 

Page 3 2 GAO/WED-91-80 Federal Patent Licensing Activities