69–006

106TH CONGRESS REPT. 106–129 " ! HOUSE OF REPRESENTATIVES 1st Session Part 1

TECHNOLOGY TRANSFER COMMERCIALIZATION ACT OF

1999

MAY 6, 1999.—Committed to the Committee of the Whole House on the State of the

Union and ordered to be printed

Mr. SENSENBRENNER, from the Committee on Science,

submitted the following

R E P O R T

[To accompany H.R. 209]

[Including cost estimate of the Congressional Budget Office]

The Committee on Science, to whom was referred the bill (H.R.

209) to improve the ability of Federal agencies to license federally

owned inventions, having considered the same, report favorably

thereon with an amendment and recommend that the bill as

amended do pass.

CONTENTS

Page

I. Amendment ................................................................................................. 2

II. Purpose of the Bill ...................................................................................... 5

III. Background and Need for the Legislation ................................................ 5

IV. Summary of Hearings ................................................................................. 7

V. Committee Actions ...................................................................................... 10

VI. Summary of Major Provisions of the Bill .................................................. 11

VII. Section-by-Section Analysis (By Title and Section) .................................. 11

VIII. Committee Views ........................................................................................ 14

IX. Committee Cost Estimate ........................................................................... 18

X. Congressional Budget Office Cost Estimate ............................................. 19

XI. Compliance with Public Law 104–4 .......................................................... 20

XII. Committee Oversight Findings and Recommendations ........................... 20

XIII. Oversight Findings and Recommendations by the Committee on Government Reform ....................................................................................... 20

XIV. Constitutional Authority Statement .......................................................... 20

XV. Federal Advisory Committee Statement ................................................... 20

XVI. Congressional Accountability Act .............................................................. 20

XVII. Changes in Existing Law Made by the Bill, as Reported ........................ 20

XVIII. Committee Recommendations .................................................................... 29

XIX. Exchange of Committee Correspondence .................................................. 29

XX. Proceedings from Committee Markup of H.R. 209 ................................... 30
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The amendment is as follows:

Strike out all after the enacting clause and insert in lieu thereof

the following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Technology Transfer Commercialization Act of

1999’’.

SEC. 2. FINDINGS.

The Congress finds that—

(1) the importance of linking our unparalleled network of over 700 Federal

laboratories and our Nation’s universities with United States industry continues

to hold great promise for our future economic prosperity;

(2) the enactment of the Bayh-Dole Act in 1980 was a landmark change in

United States technology policy, and its success provides a framework for removing bureaucratic barriers and for simplifying the granting of licenses for inventions that are now in the Federal Government’s patent portfolio;

(3) Congress has demonstrated a commitment over the past 2 decades to fostering technology transfer from our Federal laboratories and to promoting public/private sector partnerships to enhance our international competitiveness;

(4) Federal technology transfer activities have strengthened the ability of

United States industry to compete in the global marketplace; developed a new

paradigm for greater collaboration among the scientific enterprises that conduct

our Nation’s research and development—government, industry, and universities; and improved the quality of life for the American people, from medicine

to materials;

(5) the technology transfer process must be made ‘‘industry friendly’’ for companies to be willing to invest the significant time and resources needed to develop new products, processes, and jobs using federally funded inventions; and

(6) Federal technology licensing procedures should balance the public policy

needs of adequately protecting the rights of the public, encouraging companies

to develop existing government inventions, and making the entire system of developing government technologies more consistent and simple.

SEC. 3. COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS.

Section 12(b)(1) of the Stevenson-Wydler Technology Innovation Act of 1980 (15

U.S.C. 3710a(b)(1)) is amended by inserting ‘‘or, subject to section 209 of title 35,

United States Code, may grant a license to an invention which is federally owned,

for which a patent application was filed before the signing of the agreement, and

directly within the scope of the work under the agreement,’’ after ‘‘under the agreement,’’.

SEC. 4. LICENSING FEDERALLY OWNED INVENTIONS.

(a) AMENDMENT.—Section 209 of title 35, United States Code, is amended to read

as follows:

‘‘§ 209. Licensing federally owned inventions

‘‘(a) AUTHORITY.—A Federal agency may grant an exclusive or partially exclusive

license on a federally owned invention under section 207(a)(2) only if—

‘‘(1) granting the license is a reasonable and necessary incentive to—

‘‘(A) call forth the investment capital and expenditures needed to bring

the invention to practical application; or

‘‘(B) otherwise promote the invention’s utilization by the public;

‘‘(2) the Federal agency finds that the public will be served by the granting

of the license, as indicated by the applicant’s intentions, plans, and ability to

bring the invention to practical application or otherwise promote the invention’s

utilization by the public, and that the proposed scope of exclusivity is not greater than reasonably necessary to provide the incentive for bringing the invention

to practical utilization, as proposed by the applicant, or otherwise to promote

the invention’s utilization by the public;

‘‘(3) the applicant makes a commitment to achieve practical utilization of the

invention within a reasonable time, which time may be extended by the agency

upon the applicant’s request and the applicant’s demonstration that the refusal

of such extension would be unreasonable;

‘‘(4) granting the license will not tend to substantially lessen competition or

create or maintain a violation of the Federal antitrust laws; and
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‘‘(5) in the case of an invention covered by a foreign patent application or patent, the interests of the Federal Government or United States industry in foreign commerce will be enhanced.

‘‘(b) MANUFACTURE IN UNITED STATES.—A Federal agency shall normally grant a

license under section 207(a)(2) to use or sell any federally owned invention in the

United States only to a licensee who agrees that any products embodying the invention or produced through the use of the invention will be manufactured substantially in the United States.

‘‘(c) SMALL BUSINESS.—First preference for the granting of any exclusive or partially exclusive licenses under section 207(a)(2) shall be given to small business

firms having equal or greater likelihood as other applicants to bring the invention

to practical application within a reasonable time.

‘‘(d) TERMS AND CONDITIONS.—Any licenses granted under section 207(a)(2) shall

contain such terms and conditions as the granting agency considers appropriate,

and shall include provisions—

‘‘(1) retaining a nontransferrable, irrevocable, paid-up license for any Federal

agency to practice the invention or have the invention practiced throughout the

world by or on behalf of the Government of the United States;

‘‘(2) requiring periodic reporting on utilization of the invention, and utilization

efforts, by the licensee, but only to the extent necessary to enable the Federal

agency to determine whether the terms of the license are being complied with,

except that any such report shall be treated by the Federal agency as commercial and financial information obtained from a person and privileged and confidential and not subject to disclosure under section 552 of title 5 of the United

States Code; and

‘‘(3) empowering the Federal agency to terminate the license in whole or in

part if the agency determines that—

‘‘(A) the licensee is not executing its commitment to achieve practical utilization of the invention, including commitments contained in any plan submitted in support of its request for a license, and the licensee cannot otherwise demonstrate to the satisfaction of the Federal agency that it has

taken, or can be expected to take within a reasonable time, effective steps

to achieve practical utilization of the invention;

‘‘(B) the licensee is in breach of an agreement described in subsection (b);

‘‘(C) termination is necessary to meet requirements for public use specified by Federal regulations issued after the date of the license, and such

requirements are not reasonably satisfied by the licensee; or

‘‘(D) the licensee has been found by a court of competent jurisdiction to

have violated the Federal antitrust laws in connection with its performance

under the license agreement.

‘‘(e) PUBLIC NOTICE.—No exclusive or partially exclusive license may be granted

under section 207(a)(2) unless public notice of the intention to grant an exclusive

or partially exclusive license on a federally owned invention has been provided in

an appropriate manner at least 15 days before the license is granted, and the Federal agency has considered all comments received before the end of the comment period in response to that public notice. This subsection shall not apply to the licensing of inventions made under a cooperative research and development agreement

entered into under section 12 of the Stevenson-Wydler Technology Innovation Act

of 1980 (15 U.S.C. 3710a).

‘‘(f) PLAN.—No Federal agency shall grant any license under a patent or patent

application on a federally owned invention unless the person requesting the license

has supplied the agency with a plan for development or marketing of the invention,

except that any such plan shall be treated by the Federal agency as commercial and

financial information obtained from a person and privileged and confidential and not

subject to disclosure under section 552 of title 5 of the United States Code.’’.

(b) CONFORMING AMENDMENT.—The item relating to section 209 in the table of

sections for chapter 18 of title 35, United States Code, is amended to read as follows:

‘‘209. Licensing federally owned inventions.’’.

SEC. 5. TECHNICAL AMENDMENTS TO BAYH-DOLE ACT.

Chapter 18 of title 35, United States Code (popularly known as the ‘‘Bayh-Dole

Act’’), is amended—

(1) by amending section 202(e) to read as follows:

‘‘(e) In any case when a Federal employee is a coinventor of any invention made

with a nonprofit organization, a small business firm, for a non-Federal inventor, the

Federal agency employing such coinventor may, for the purpose of consolidating
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rights in the invention or if it finds that it would expedite the development of the

invention—

‘‘(1) license or assign whatever rights it may acquire in the subject invention

to the nonprofit organization, small business firm, or non-Federal inventor in

accordance with the provisions of this chapter; or

‘‘(2) acquire any rights in the subject invention from the nonprofit organization, small business firm, or non-Federal inventor, but only to the extent the

party from whom the rights are acquired voluntarily enters into the transaction

and no other transaction under this chapter is conditioned on such acquisition.’’;

and

(2) in section 207(a)—

(A) by striking ‘‘patent applications, patents, or other forms of protection

obtained’’ and inserting ‘‘inventions’’ in paragraph (2); and

(B) by inserting ‘‘, including acquiring rights for and administering royalties to the Federal Government in any invention, but only to the extent the

party from whom the rights are acquired voluntarily enters into the transaction, to facilitate the licensing of a federally owned invention’’ after ‘‘or

through contract’’ in paragraph (3).

SEC. 6. TECHNICAL AMENDMENTS TO THE STEVENSON-WYDLER TECHNOLOGY INNOVATION

ACT OF 1980.

The Stevenson-Wydler Technology Innovation Act of 1980 is amended—

(1) in section 4(4) (15 U.S.C. 3703(4)), by striking ‘‘section 6 or section 8’’ and

inserting ‘‘section 7 or 9’’;

(2) in section 4(6) (15 U.S.C. 3703(6)), by striking ‘‘section 6 or section 8’’ and

inserting ‘‘section 7 or 9’’;

(3) in section 5(c)(11) (15 U.S.C. 3704(c)(11)), by striking ‘‘State of local governments’’ and inserting ‘‘State or local governments’’;

(4) in section 9 (15 U.S.C. 3707), by—

(A) striking ‘‘section 6(a)’’ and inserting ‘‘section 7(a)’’;

(B) striking ‘‘section 6(b)’’ and inserting ‘‘section 7(b)’’; and

(C) striking ‘‘section 6(c)(3)’’ and inserting ‘‘section 7(c)(3)’’;

(5) in section 11(e)(1) (15 U.S.C. 3710(e)(1)), by striking ‘‘in cooperation with

Federal Laboratories’’ and inserting ‘‘in cooperation with Federal laboratories’’;

(6) in section 11(i) (15 U.S.C. 3710(i)), by striking ‘‘a gift under the section’’

and inserting ‘‘a gift under this section’’;

(7) in section 14 (15 U.S.C. 3710c)—

(A) in subsection (a)(1)(A)(i), by inserting ‘‘, other than payments of patent costs as delineated by a license or assignment agreement,’’ after ‘‘or

other payments’’;

(B) in subsection (a)(1)(A)(i), by inserting ‘‘, if the inventor’s or coinventor’s rights are assigned to the United States’’ after ‘‘inventor or coinventors’’;

(C) in subsection (a)(1)(B), by striking ‘‘succeeding fiscal year’’ and inserting ‘‘2 succeeding fiscal years’’;

(D) in subsection (a)(2), by striking ‘‘Government-operated’’; and

(E) in subsection (b)(2), by striking ‘‘inventon’’ and inserting ‘‘invention’’;

and

(8) in section 22 (15 U.S.C. 3714), by striking ‘‘sections 11, 12, and 13’’ and

inserting ‘‘sections 12, 13, and 14’’.

SEC. 7. REVIEW OF COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT PROCEDURES.

(a) REVIEW.—Within 90 days after the date of the enactment of this Act, each Federal agency with a federally funded laboratory that has in effect on that date of enactment one or more cooperative research and development agreements under section 12 of the Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C.

3710a) shall report to the Committee on National Security of the National Science

and Technology Council and the Congress on the general policies and procedures

used by that agency to gather and consider the views of other agencies on—

(1) joint work statements under section 12(c)(5) (C) or (D) of the StevensonWydler Technology Innovation Act of 1980 (15 U.S.C. 3710a(c)(5)(C) or (D)); or

(2) in the case of laboratories described in section 12(d)(2)(A) of the Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 3710a(d)(2)(A)), cooperative research and development agreements under such section 12,

with respect to major proposed cooperative research and development agreements

that involve critical national security technology or may have a significant impact

on domestic or international competitiveness.
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(b) PROCEDURES.—Within one year after the date of the enactment of this Act, the

Committee on National Security of the National Science and Technology Council, in

conjunction with relevant Federal agencies and national laboratories, shall—

(1) determine the adequacy of existing procedures and methods for interagency coordination and awareness with respect to cooperative research and development agreements described in subsection (a); and

(2) establish and distribute to appropriate Federal agencies—

(A) specific criteria to indicate the necessity for gathering and considering

the views of other agencies on joint work statements or cooperative research and development agreements as described in subsection (a); and

(B) additional procedures, if any, for carrying out such gathering and considering of agency views with respect to cooperative research and development agreements described in subsection (a).

Procedures established under this subsection shall be designed to the extent possible to use or modify existing procedures, to minimize burdens on Federal agencies,

to encourage industrial partnerships with national laboratories, and to minimize

delay in the approval or disapproval of joint work statements and cooperative research and development agreements.

(c) LIMITATION.—Nothing in this Act, nor any procedures established under this

section shall provide to the Office of Science and Technology Policy, the National

Science and Technology Council, or any Federal agency the authority to disapprove

a cooperative research and development agreement or joint work statement, under

section 12 of the Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C.

3710a), of another Federal agency.

SEC. 8. INCREASED FLEXIBILITY FOR FEDERAL LABORATORY PARTNERSHIP INTERMEDIARIES.

Section 23 of the Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C.

3715) is amended—

(1) in subsection (a)(1) by inserting ‘‘, institutions of higher education as defined in section 1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1141(a)),

or educational institutions within the meaning of section 2194 of title 10,

United States Code’’ after ‘‘small business firms’’; and

(2) in subsection (c) by inserting ‘‘, institutions of higher education as defined

in section 1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1141(a)), or

educational institutions within the meaning of section 2194 of title 10, United

States Code,’’ after ‘‘small business firms’’.

II. PURPOSE OF THE BILL

The purpose of H.R. 209, as reported, is to promote the transfer

and commercialization of the technology created in our Nation’s

system of over 700 federal laboratories, thereby increasing scientific collaboration between federal laboratories and private industry. Specifically, the bill would improve and streamline the ability

of federal agencies to license government-owned inventions.

III. BACKGROUND AND NEED FOR THE LEGISLATION

For nearly two decades, the Committee has encouraged the

transfer to United States private industry of unclassified technology created in our federal laboratories. Our federal laboratories

have long been considered one of our greatest scientific research

and development resources, employing one of every six scientists in

the country and encompassing one-fifth of the country’s laboratory

and equipment capabilities. Effectively capturing this wealth of

ideas and technology from our federal laboratories through the

transfer to private industry for commercialization has helped to

bolster our Nation’s ability to compete in the global marketplace.

By permitting effective collaboration between our federal laboratories and private industry, new technologies can be rapidly commercialized. Federal technology transfer stimulates the American

economy, enhances the competitive position of United States indus-
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try internationally, and promotes the development and use of new

technologies developed under taxpayer funded research so those innovations are incorporated rapidly and effectively into practice to

the benefit of the American public.

To help further these goals, the Committee first reported the Stevenson-Wydler Technology Innovation Act of 1980 (Public Law 96–

480). The Committee expanded on that landmark legislation with

the passage of the Federal Technology Transfer Act of 1986 (Public

Law 99–502), the National Competitiveness Technology Transfer

Act of 1989 (Public Law 101–189), the American Technology Preeminence Act of 1991 (Public Law 102–245), and the National

Technology Transfer and Advancement Act of 1995 (Public Law

104–113), among others.

In 1980, the Committee also reported the University and Small

Business Patent Procedures Act, now commonly referred to as the

Bayh-Dole Act (Public Law 96–517). The Bayh-Dole Act permits

universities, not-for-profit organizations, and small businesses to

obtain title to scientific inventions developed with federal government support. The Bayh-Dole Act also allows federal agencies to license government-owned patented scientific inventions nonexclusively, partially exclusively, or exclusively, depending upon which

license is determined to be the most effective means for achieving

commercialization. Additionally, the Committee reported out

amendments to the Bayh-Dole Act in the Trademark Clarification

Act of 1984 (Public Law 98–620), which permitted decisions on the

awarding of licenses for patents to be made at the laboratory level

in a Government-owned and Contractor-operated laboratory

(GOCO).

Critical pressures prompted the passage of the Bayh-Dole Act.

Prior to its 1980 enactment, many discoveries resulting from federally-funded scientific research were not commercialized for the

American public’s benefit. Since the federal government lacked the

resources to market new inventions, and private industry was reluctant to make high-risk investments without the protection of

patent rights, many valuable innovations were left unused on the

shelf of federal laboratories.

With its success licensing federal inventions, the Bayh-Dole Act

is widely viewed as an effective framework for federal technology

transfer. For example, in a report submitted to the Committee, the

Association of University Technology Managers (AUTM) conducted

a 1996 study on the effect of the Bayh-Dole Act. AUTM concluded

that the law garnered tremendous economic benefits not just for

the universities and private industry directly involved in each partnership, but more importantly, for the United States economy as

a whole. The AUTM report documented that the impact of the

Bayh-Dole Act represented a very real gain to federal agencies and

the Nation since it not only encourages the commercialization of

government-owned patents that would otherwise gather dust on

the shelf, but it also brings in revenues to the federal government

through licensing fees.

Accordingly, the process for the licensing of government-owned

patents should continue to be refined by streamlining the procedures and by removing the uncertainty associated with the licensing process. Both past and prospective private industry partners,
7

however, have voiced their concerns regarding the licensing process. The private sector has demonstrated strong interest in the

strategic advantages of acquiring intellectual property rights by entering into a Cooperative Research and Development Agreement

(CRADA) with a federal laboratory or by the licensing of government-owned technology, but they are deterred by the delays and

uncertainty often-associated with the lengthy federal technology

transfer process. These procedural barriers and delays are often incompatible with the private sector’s need for a swift commercialization calendar and can also increase transaction costs.

The present regulations have also made it difficult for a Government-owned, Government-operated laboratory (GOGO) to bring existing scientific inventions into a CRADA even when inclusion

would create a more complete technology package. A GOGO does

not have the flexibility that small businesses and non-profits have

in managing their inventions under the Bayh-Dole Act. Also, a

GOGO, unlike a GOCO, currently faces statutory notification provisions when granting exclusive licenses, and more importantly, it

cannot include existing inventions in a CRADA under the Federal

Technology Transfer Act of 1986.

By reducing the delay and uncertainty created by existing procedural barriers and by lowering the transactional costs associated

with licensing federal technologies from the government could

greatly increase participation by the private sector in its technology

transfer programs. This approach would expedite the commercialization of government-owned inventions and through royalties

could reduce the cost to the American taxpayer for the production

of new technology-based products created in our Nation’s federal

laboratories.

IV. SUMMARY OF HEARINGS

September 25, 1997: ‘‘Promoting Technology Transfer by Facilitating Licenses to Federally Owned Inventions’’

On September 25, 1997, the Subcommittee on Technology held a

hearing on ‘‘Promoting Technology Transfer by Facilitating Licenses to Federally Owned Inventions.’’ The hearing discussed the

effectiveness of our federal technology transfer laws and methods

in which they may be improved, and to review The Technology

Transfer Commercialization Act, which seeks to promote technology transfer by facilitating licenses to federally-owned inventions. Witnesses included, Mr. Joe Allen, Vice President, Market

and Technology Assessment, National Technology Transfer Center,

Wheeling, WV; Mr. C. Dan Brand, Chair, Federal Laboratory Consortium, Jefferson, AR; Mr. Dan Passeri, Vice President, Business

Development and Intellectual Property, Gene Logic, Inc., Columbia,

MD; Mr. John G. Mannix, Associate General Counsel, National

Aeronautics and Space Administration, NASA Headquarters,

Washington, DC.

Mr. Joe Allen, testifying as Vice President, Market and Technology Assessment, National Technology Transfer Center, stated

that linking federal laboratories and universities with American Industry holds great promise for our future economic prosperity. Mr.

Allen asserted that the passage of the Bayh-Dole Act in 1980, ini-
8

tially considered a bold and radical idea, is now a model that our

economic competitors are emulating. The Technology Transfer

Commercialization Act holds the same promise. Mr. Allen believes

that in order to license government-owned inventions, the Congress

must ease the current complex system which a company must endure. For example, a company must currently publish in the Federal Register its intention to pursue a federally-owned license.

Companies, however, are reluctant to do this as it effectively gives

away their marketing strategy. In conclusion, Mr. Allen recommended taking a well-thought out and incremental approach,

such as the Technology Transfer Commercialization Act, that simplifies current procedures while retaining important safeguards.

Mr. Daniel R. Passeri, testifying as Vice President, Gene Logic,

Inc., testified to the importance of streamlining the procedures and

removing the uncertainty associated with the licensing determination process. In doing so, the federal government will foster an attractive environment for corporate investment and partnering efforts. Mr. Passeri believes that under the current system there is

a tension between the needs of industry to rapidly respond to market demands and opportunities, and the procedural requirements of

federal agencies in regards to the exclusive licensing of high risk,

early state technology, He states that these procedural barriers create increased transaction costs, delays in obtaining the license, as

well as the uncertainty of actually being granted the license. The

barriers, however, do not exist in university technology transfer. In

conclusion, Mr. Passeri welcomed the improvements in the Technology Transfer Commercialization Act to the current law and indicated that in their current form, they will address the frustrations

of industry.

Mr. C. Dan Brand, testifying as Chair, Federal Laboratory Consortium, spoke of the Federal Laboratory Consortium’s (FLC) importance as the nationwide network of federal laboratories that

provide a forum to develop strategies and opportunities for linking

government technology to the marketplace. Mr. Brand stated that

in advance of this hearing, the FLC solicited and received comments from a number of their members about removing legal obstacles to license federally-owned inventions effectively. He cautioned

that these comments are not ‘‘official’’ department or agency positions, but rather an initial assessment. Mr. Brand stated the comments received by the FLC indicated that the Technology Transfer

Commercialization Act’s amendments to Bayh-Dole will serve to

speed the transfer and commercialization of technologies to industry, while maintaining a fair and open competitive environment.

Mr. Brand further cautioned that while the initial input from member laboratories was largely positive, the subcommittee should also

consider the views of the FLC Legal Issues Committee and the National Institutes of Health.

Mr. John G. Mannix testifying as Associate General Counsel, Intellectual Property, National Aeronautics and Space Administration, began by stating that neither NASA nor the Administration

had an opportunity to review the proposed legislation fully so neither has had an opportunity to formulate a detailed position. Mr.

Mannix highlighted the two major improvements to the federal licensing process that he has seen during his career. First, he cited
9

the increased personal involvement of technical experts and individuals with marketing, negotiation, and business experience in the

licensing process. Second, he emphasized the importance of the

statutory authority given to NASA negotiators to require written

business plans and yearly status reports describing progress toward commercialization. Additionally, Mr. Mannix emphasized the

importance of providing some form of notice of the availability of

federally owned licenses. Without such notice, Mr. Mannix maintained, we will always be subject to claims of favoritism.

March 17, 1998: ‘‘Facilitating Licenses to Federally-Owned Inventions: A Legislative Hearing on The Technology Transfer Commercialization Act’’

On March 17, 1998, the Subcommittee on Technology held a

hearing on ‘‘Facilitating Licenses to Federally-Owned Inventions: A

Legislative Hearing on The Technology Transfer Commercialization

Act.’’ Witnesses included: The Honorable Ray Kammer, Director,

National Institute of Standards and Technology, Gaithersburg, MD;

Mr. Randolph J. Guschl, Director of Technology Acquisitions, Central Research and Development, DuPont Chemical Company, Wilmington, DE; and Ms. Elizabeth Kraftician, Chief Executive Officer, Touchstone Research Laboratory, Tridelphia, WV.

The Honorable Ray Kammer, testifying as the Director of the National Institute of Standards and Technology discussed the newly

reconstituted Interagency Committee on Technology Transfer and

their support of the Technology Transfer Commercialization Act.

Specifically, Mr. Kammer emphasized the need to pay closer attention to the output side of R&D spending. While a greater pecuniary

commitment to R&D spending is laudable, enabling the end results

to make its way to the marketplace is equally as important, for it

can result in important societal benefits. Mr. Kammer also spoke

of the Interagency Committee’s suggestions regarding certain provisions of the legislation. For example, the agencies suggest that licensees be subject to the current notification requirements and that

certain current requirements for licensees to submit development

or marketing plans be retained. He emphasized the importance of

utilizing business plans as an objective basis for deciding whether

the prospective licensee is likely to bring the innovation to market

quickly. Additionally, ‘‘bundling’’ innovations should be addressed

in the legislation. Bundling similar innovations together can provide for licensees to derive maximum commercial benefit. In conclusion, Mr. Kammer indicated that industry and the government are

still learning how to work together better in commercializing the

American people’s investment in R&D.

Mr. Randolph J. Guschl, testifying as the Director of the Technology Acquisitions, Central Research and Development, DuPont in

Wilmington, DE, expressed support for the legislation and highlighted the fact that the Technology Transfer Commercialization

Act puts the discoveries of Government-owned and Government-operated (GOGO) laboratories on equal terms with Governmentowned, Contractor operated (GOCO) laboratories. However, Mr.

Guschl indicated he had a couple ideas regarding the legislation.

First, revise the requirement for United States manufacture. He

suggested language to require the earliest possible deployment in
10

the United States, but not to require it to be manufactured substantially in this country. This would allow our nation’s businesses

to compete globally, thereby strengthening the U.S. components of

multi-national companies. Second, he supported the bill’s recognition of exclusivity. This provision has been used in GOCO labs and

should also be used in GOGO labs. Third, he supported the bill’s

shift from 90+60 day notification process to a 30 day notification

process. Fourth, retain requiring submission of a business and marketing plan. This allows an agency to determine the commitment

of a prospective licensee. Lastly, empower the technology transfer

directors to make quick and final decisions for their labs but also

to allow for a quick appeals process. In conclusion, Mr. Guschl indicated his support for the Technology Transfer Commercialization

Act and commended it as an improvement to the federal technology

transfer process.

Ms. Elizabeth Kraftician, Chief Executive Officer, Touchstone Research Laboratory, offered her strong support for The Technology

Transfer Commercialization Act. Ms. Kraftician believes the legislation will have a strong impact in moving federal technologies to

the marketplace. Additionally, Ms. Kraftician expressed support for

this legislation as a way to benefit small businesses in this technology transfer process. Small businesses have traditionally been

locked out of the technology transfer arena by the slow, cumbersome, bureaucratic, and oftentimes anti-small business process

used to commercialize federal inventions. Ms. Kraftician applauded

the Act’s notification procedures that allowed for advertising and

announcements in a wider variety of venues, such as the Internet.

She indicated that this would give federal laboratories greater

flexibility and would no longer force small businesses to rely exclusively on the Federal Register for notice. In conclusion, Ms.

Kraftician emphasized that in order for this legislation to work,

public institutions must be held accountable for how they wield

their new authorities and public agencies must be willing to make

decisions and to take risks for successful commercialization of federal inventions.

V. COMMITTEE ACTIONS

Congresswoman Constance A. Morella of Maryland introduced

H.R. 209 on January 6, 1999 in the 106th Congress. On March 25,

1999, the Science Committee considered H.R. 209. The Committee

adopted an en bloc amendment and ordered H.R. 209 reported, as

a single amendment in the nature of a substitute, by voice vote.

In the previous Congress, the Technology Subcommittee held two

hearings on H.R. 2544, the predecessor bill to H.R. 209 in the

105th Congress. On September 25, 1997, the subcommittee held a

hearing entitled, ‘‘Promoting Technology Transfer By Facilitating

Licenses to Federally-Owned Inventions.’’ The subcommittee followed up with a second hearing on March 17, 1998, entitled, ‘‘Facilitating Licenses To Federally-Owned Inventions: A Legislative

Hearing on H.R. 209, The Technology Transfer Commercialization

Act.’’

On March 26, 1998, the Technology Subcommittee unanimously

reported H.R. 209 favorably to the Science Committee, and on May

13, 1998, the committee reported the bill. The House of Represent-
11

atives subsequently passed H.R. 209 on July 14, 1998, and on October 20, 1998 in the waning days of the 105th Congress, passed its

amended version, H.R. 4859. Both bills were unable to clear the

Senate before its sine die adjournment.

VI. SUMMARY OF MAJOR PROVISIONS OF THE BILL

The goal of H.R. 209, The Technology Transfer Commercialization Act, is to remove the procedural obstacles and to the greatest

extent possible within the public interest, the uncertainty involved

in the licensing of federally patented inventions created in a Government-owned, Government-operated (GOGO) laboratory, by applying the successful Bayh-Dole Act provisions to a GOGO.

As a result, the Technology Transfer Commercialization Act provides federal laboratories with two important new tools for effectively commercializing on-the-shelf, government-owned inventions:

(1) the bill’s revised authorities of Section 209 of the Bayh-Dole

Act; and (2) the ability to license technology as part of a CRADA.

Both mechanisms make federal technology transfer programs much

more attractive to United States private companies that seek to

form partnerships with federal laboratories. H.R. 209, as amended,

also makes a number of smaller adjustments to the Bayh-Dole Act

and the Stevenson-Wydler Act that improve these laws and reflect

a series of consensus ‘‘lessons learned’’ from 19 years of practical

application of our current federal technology transfer laws.

VII. SECTION-BY-SECTION SUMMARY (BY TITLE AND SECTION)

SECTION 1. SHORT TITLE

The Act may be cited as the ‘‘Technology Transfer Commercialization Act of 1999.’’

SECTION 2. FINDINGS

Congress has demonstrated a commitment to foster technology

transfer from our federal laboratories and to promote partnerships

with industry to enhance our international competitiveness, thereby strengthening the ability of the United States to compete in the

global marketplace. Federal technology licensing procedures should

balance the public policy needs of adequately protecting the rights

of the public, encouraging companies to develop existing government inventions, and making the entire system of developing government technologies more consistent and simple.

SECTION 3. COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS

Section 3 amends the Stevenson-Wydler Technology Innovation

Act of 1980 by setting out the circumstances under which federal

laboratories may license existing patented inventions as part of a

Cooperative Research and Development Agreement (CRADA). The

federal laboratory may grant, subject to Section 209 of Title 35 of

the United States Code, a license to a federally-owned invention

that was created prior to the signing of the CRADA and directly

related to the scope of the work under the agreement.
12

SECTION 4. LICENSING FEDERALLY OWNED INVENTIONS

Section 4 rewrites Section 209, Title 35 of the United States Code

to preserve existing preferences while streamlining notice and

other procedural requirements.

Subsection 4(a) provides that a federal agency may grant an exclusive or partially exclusive license to a federally owned invention

if granting the license is a reasonable and necessary incentive for

commercialization or to promote the invention’s application by the

public. The federal agency must find that the public will be served

by the granting of the license, as indicated by the applicant’s intentions, plans, and ability to bring the invention to practical application within a reasonable time or otherwise to promote the invention’s application by the public. The scope of the exclusive or partially exclusive license should not be greater than reasonably necessary to promote the invention’s public application. The applicant

must make a commitment to achieve practical application of the invention within a reasonable time. The granting of the license

should not substantially lessen competition or create or maintain

a violation of the federal antitrust laws, and in the case of an invention covered by a foreign patent application or patent, the license must enhance the interests of United States industry in foreign commerce.

Subsection 4(b) provides that licenses should be granted only to

a licensee who agrees that any products embodying the invention

or produced through the use of the invention will be substantially

manufactured in the United States.

Subsection 4(c) provides that the first preference for the granting

of exclusive or partially exclusive licenses should be given to small

businesses that have an equal or greater likelihood as other applicants to bring the invention to commercialization within a reasonable time.

Subsection 4(d) provides certain terms and conditions required

for licenses, as the granting agency considers appropriate. These

include: retaining a nontransferable, irrevocable, paid-up license

for a federal agency to practice the invention or to have the invention practiced throughout the world by or on behalf of the United

States; periodic reporting on the use of the invention and commercialization efforts by the licensee, but only to the extent necessary

to enable the federal agency to determine whether the terms of the

license are being complied with and such reports shall be treated

as privileged and confidential, not subject to the Freedom of Information Act; and providing ‘‘march-in rights’’ that empower a federal agency to terminate the license, in whole or in part, if it determines that the licensee is not adequately executing its commitment

to achieve practical application of the invention within a reasonable

time, if the licensee is in breach of the substantial United States

manufacture requirement, if termination is necessary to meet the

public use requirements specified by federal regulations issued

after the grant of the license, or if the licensee has been found by

a competent authority to have violated federal antitrust laws.

Subsection 4(e) provides that no exclusive or partially exclusive

license may be granted unless public notice of the intention to

grant such a license has been provided in an appropriate manner
13

at least 15 days before the license is granted and the federal agency has considered all comments received in response to that public

notice. This subsection, however, shall not apply to the licensing of

inventions made under a CRADA entered into under Section 12 of

the Stevenson-Wydler Technology Innovation Act of 1980 (15

U.S.C. 3710a).

Section 4(f) provides that a federal agency may grant a license

on a federally-owned invention only if the licensee has supplied a

basic business plan for development or marketing of the invention.

Such a plan shall be treated as privileged and confidential, not subject to the Freedom of Information Act.

SECTION 5. TECHNICAL AMENDMENTS TO BAYH-DOLE ACT

Section 5 provides that a federal agency, employing a coinventor

of any invention made under a funding agreement with a non-profit organization or small business, may consolidate rights in the invention to ease commercialization of the invention. Consolidation

under Section 5 may occur either by a federal agency licensing or

assigning rights or by the federal agency acquiring rights related

to the invention.

SECTION 6. TECHNICAL AMENDMENTS TO THE STEVENSON-WYDLER

TECHNOLOGY INNOVATION ACT OF 1980

Section 6 clears up am ambiguity in current law by providing

that the rights of the inventors must be assigned to the federal

government in order for the inventors to share royalties and that

the federal agency may retain royalty income for two succeeding

fiscal years.

SECTION 7. REVIEW OF COOPERATIVE RESEARCH AND DEVELOPMENT

AGREEMENT PROCEDURES

Section 7 provides that federal agencies with laboratories that

are engaged in a Cooperative Research and Development Agreement (CRADA) shall report to the Congress and the Committee on

National Security of the National Science and Technology Council,

within 90 days after the date of enactment, to review the general

policies and procedures used by that agency for a major CRADA involving critical national security technology or may have a significant impact on domestic or international competitiveness. Additionally, the Committee on National Security of the National Science

and Technology Council shall, within one year after the date of enactment, in consultation with relevant federal agencies and national laboratories, determine the adequacy of existing procedures

and methods for interagency coordination and awareness, and establish and distribute to appropriate federal agencies specific criteria to indicate the necessity for gathering and considering the

views of other agencies and additional procedures, if any, for carrying out such gathering and considering of agency views. Any subsequent procedures established shall be designed, to the extent possible, to use or modify existing procedures, to minimize burdens on

federal agencies, to encourage industrial partnerships with national laboratories, and to minimize delay in the approval process

for collaborative relationships with federal laboratories and private
14

industry. An existing CRADA or joint work statement should not

be affected by any subsequent procedures established under this

section.

SECTION 8. INCREASED FLEXIBILITY FOR FEDERAL LABORATORY

PARTNERSHIP INTERMEDIARIES

Section 8 provides that institutions of higher education may

enter into a contract or memorandum of understanding with a federal laboratory to perform services that increase the likelihood of

success in the conduct of cooperative or joint activities.

VIII. COMMITTEE VIEWS

SECTION 1. SHORT TITLE

The Committee shall refer to the Act as ‘‘The Technology Transfer Commercialization Act of 1999.’’

SECTION 2. FINDINGS

The Committee has advocated initiatives making federal technology transfer more ‘‘industry friendly,’’ because governmentowned inventions could not be commercialized effectively without

the significant resources and value-added input of private industry.

This commercialization, in turn, can create new jobs would boost

our Nation’s ability to compete in the global marketplace. The

Committee has adopted the landmark Bayh-Dole Act, that was enacted in 1980, as a successful framework for removing bureaucratic

barriers and for allowing federal agencies to have greater flexibility

in finding licensees for the patented inventions that are now in the

federal government’s patent portfolio.

SECTION 3. COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS

The Committee recognizes the success of Cooperative Research

and Development Agreements (CRADA) for federal technology

transfer. Since the inception in 1986 of the CRADA legislation,

thousands have been signed, resulting in the transfer of technology,

knowledge, and expertise back and forth between our federal laboratories and the private sector. The Committee believes that the

broadening of CRADA licensing authority to include pre-existing

inventions will make a CRADA more attractive to private industry

and increase the transfer of federal technology.

SECTION 4. LICENSING FEDERALLY OWNED INVENTIONS

While it is the intention to eliminate any unnecessary and wasteful delays built into the process of issuing exclusive or partially exclusive licenses, the Committee also recognize the importance of

public notice. Public notice should be designed equitably to alert all

potential licensees that a licensing opportunity is available and

provides for an opportunity to comment once a license has been

granted. The Committee understands that this notice and comment

period sometimes has helped federal agencies find additional or

more qualified licensees than those first proposing to license a government-owned invention.
15

The Committee is more concerned, however, with the effectiveness of notice rather than its form. For example, the requirement

for public notice should not be construed merely to require publication in the Federal Register. Other available forms of making public the intention to grant an exclusive or partially exclusive license

to a federally owned invention, including electronic posting on the

Internet, should also be vigorously pursued and methods of notice

should be updated as communications technology advances. The

Committee strongly encourages federal agencies to use the Internet, to explore new electronic mediums, and to push the frontiers

of cutting-edge information technologies to meet the public notice

requirement in the Act.

The Committee also recognizes that requiring a basic business

plan as part of the application for a license gives the federal agencies an objective basis for selecting the private company best suited

to commercialize the invention. The exercise of preparing the plan

is also of considerable use in assisting companies, especially small

businesses, in defining their own focus with respect to the invention; it also gives agencies valuable insights into the comparative

abilities of companies competing for a single license and a more

precise understanding of the specific field of use needed to execute

a company’s commercialization plan. The Committee strongly believes, however, the basic business plan should not be an overly

burdensome bureaucratic requirement. A business plan under this

section should not be required to include extraneous materials but

rather should be specifically focused on providing the federal agency the information it needs to make licensing decisions and to understand the development and commercialization milestones the

company plans to meet.

The Committee believes that business plans submitted by a private company in the licensing process, as well as progress reports

under the license such as reports on application and application efforts should be treated by the federal agency as commercial and financial information not subject to the Freedom of Information Act

and should be entitled to protection from disclosure. The Committee understands that, absent protection of its proprietary information, a private company would otherwise be very reluctant to partner with federal laboratories which would cause a chilling effect on

federal technology licensing.

SECTION 5. TECHNICAL AMENDMENTS TO BAYH-DOLE ACT

The Bayh-Dole Act defines the patent rights of small business

and non-profit organizations receiving federal government funding.

A significant percentage of government inventions are co-invented

with federally-funded parties, most commonly university researchers. It is often necessary to consolidate rights to such co-inventions,

under appropriate licenses or assignments, to achieve public benefit through commercialization. Depending on the specific circumstances, it may be advantageous for the unified rights and patent prosecution responsibility to reside with either the co-inventing

entity or the federal agency. The Committee believes that the

Bayh-Dole Act should be amended to make it clear that both the

agency and the co-inventing entity have authority to enter into license agreements with one another in these circumstances.
16

While Bayh-Dole currently provides specific authority for the federal government to assign its rights in a subject co-invention to the

co-inventing entity, it does not mention the licensing of such rights.

The Committee understands that the absence of specific authority

to license in those circumstances has resulted in inconsistent rulings by federal agencies, with some approving such licenses while

other reject them. Furthermore, under the Bayh-Dole Act, some

small businesses and non-profits have ended up with the right to

patent and license potentially valuable inventions without possessing the skills to do effectively. The Bayh-Dole Act is accordingly

amended to provide a mechanism whereby the non-federal inventing entity can voluntarily transfer its rights by license or assignment to the federal agency in return for a share of any subsequent

income.

The Committee understands that it is increasingly necessary for

an agency to be able to offer a potential licensee access to related

inventions in order to practice a government-owned invention.

There is, however, no mechanism whereby an agency can ‘‘in-license’’ the rights to related inventions, in return for the payment

of a share of any subsequent royalties, so that they can be ‘‘bundled’’ with a government-owned invention and licensed together for

commercialization.

This section adds in such language.

SECTION 6. TECHNICAL AMENDMENTS TO THE STEVENSON-WYDLER

TECHNOLOGY INNOVATION ACT OF 1980

The Committee understands that there have been widely differing federal agency interpretations regarding whether the rights of

the inventors must be assigned to the federal government in order

for them to share royalties. For example, some federal agencies

share with all inventors even though they have not assigned their

rights to the federal government, while other do not share with

non-government inventors who have assigned their rights. Under

this section, royalty shares will be due only after assignment of

rights by the inventor or coinventor.

The Committee also understands that there is confusion on how

long an agency may retain royalty income. Accordingly, the Committee clarified that federal agencies should be given two fiscal

years to retain royalty income before transferring outstanding royalty income, if any, to the general treasury.

SECTION 7. REVIEW OF COOPERATIVE RESEARCH AND DEVELOPMENT

AGREEMENT PROCEDURES

The Committee is pleased with the blossoming of the CRADA

concept into a major tool for industry-government cooperation. At

the same time, in limited cases of a major, far-reaching CRADA,

the Committee has heard concerns that these collaborations may

now have outgrown the current CRADA approval process. As originally envisioned at the time of the passage of the Federal Technology Transfer Act of 1986, a CRADA was designed to help move

individual ideas from the federal laboratories into the private sector or lead to cooperation between industry and government labs

in areas of mutual interest. A common benefit of such agreements

has been the acquisition by small businesses of the technological
17

expertise necessary to succeed that otherwise may not have been

available to them. Such a CRADA, in these instances, is generally

small enough that they do not raise national issues. The appropriate approval process for an average CRADA, therefore, is executed quickly without necessary high level approvals at each stage.

This is the traditional federal approval method of a typical CRADA.

In recent years, however, there have been instances of CRADA

involving cutting edge technology, the world’s largest companies,

and occasionally a consortia of federal laboratories. Some of these

recent examples are important enough that they have the potential

to affect the future direction of entire industries including their

suppliers. Generally, such a CRADA positively benefits both the

federal laboratory and the companies that participate in them. Engaging in a CRADA should continue to be encouraged, but the

issues raised by a major CRADA may go beyond the expertise of

a laboratory’s agency if it involves critical national security technology (such as classified technology or technology subject to export

controls), domestic competitiveness issues (creating a competitive

advantage for market leaders), or international competitiveness

(material participation by foreign companies or foreign suppliers).

The Committee understands that there are instances where foreign participation and special relations with market leaders are desirable or even essential to the success of a CRADA, but other values within the jurisdiction of other agencies, like the effect on other

United States companies and the impact on present and future jobs

within our National should be considered. The Committee, therefore, believes that a careful review and upgrading of existing approval procedures, if necessary, for a major CRADA with interagency consequences is in order.

In conducting this review of CRADA procedures, special care

should be taken to understand the needs of private sector parties.

Criteria should be developed to separate out the small minority of

what would constitute a major CRADA that requires interagency

review from an average CRADA that does not. For instance, it

makes sense to review only a very large CRADA for domestic competitiveness issues. This review should be undertaken with the goal

of understanding the procedures that currently apply to a major

CRADA and the extent that they may lead to a satisfactory airing

of national security, domestic competitiveness, and international

competitiveness issues.

The Committee expects that the adequacy of existing procedures

and the methods for interagency coordination and awareness

should be reviewed and refined. Any recommended changes should

solve potential problems involving a major CRADA through better

interagency coordination and should not inadvertently add layers of

bureaucratic review. New procedures should be recommended only

to the extent that existing procedures are inadequate and to ensure

that any new procedures will lead to expedited, substantive interagency decisions within the spirit of the CRADA concept.

It is the intention of the Committee that any interagency review

of a CRADA, as outlined in this section, should apply only to a

major CRADA, and not to an average CRADA, such as those involving United States small business partners. The Committee believes that the added time, cost, and complexity associated with
18

such interagency reviews could be overly burdensome for United

States small businesses or could deter them from entering into a

CRADA.

Additionally, the Committee does not intend to modify any statutory deadlines for CRADA approval and does not grant authority

to any federal agencies to establish a review board or other new bureaucratic structure to carry out this section. The Committee also

does not intend to overturn or disapprove an existing CRADA

through the implementation of any procedural recommendations.

SECTION 8. INCREASED FLEXIBILITY FOR FEDERAL LABORATORY

PARTNERSHIP INTERMEDIARIES

The Committee supports the current law that permits federal

laboratories to interact with partnership intermediaries, such as a

State or local government, or a nonprofit entity owned in whole or

part by, or operated in whole or in part by or behalf of a State or

local government, that assists, counsels, advises, evaluates, or otherwise cooperates with small business firms that need or can make

demonstrably productive use of technology-related assistance from

a federal laboratory. The Committee believes that there should be

increased flexibility for federal laboratory partnership intermediaries and that institutions of higher education should qualify

to be a partnership intermediary for educational or scientific purposes.

IX. COMMITTEE COST ESTIMATE

Rule XIII, clause 3(d)(2) of the House of Representatives requires

each committee report accompanying each bill or join resolution of

a public character to contain: (1) an estimate, made by such committee, of the costs which would be incurred in carrying out such

bill or joint resolution in the fiscal year in which it is reported, and

in each of the five fiscal years following such fiscal year (or for the

authorized duration of any program authorized by such bill or joint

resolution, if less than five years); (2) a comparison of the estimate

of costs described in subparagraph (1) of this paragraph made by

such committee with an estimate of such costs made by any government agency and submitted to such committee; and (3) when

practicable, a comparison of the total estimated funding level for

the relevant program (or programs) with the appropriate levels

under current law. However, House Rule XIII, clause 3(d)(3)(B)

provides that this requirement does not apply when a cost estimate

and comparison prepared by the Director of the Congressional

Budget Office under section 403 of the Congressional Budget Act

of 1974 has been timely submitted prior to the filing of the report

and included in the report pursuant to House Rule XIII, clause

3(c)(3). A cost estimate and comparison prepared by the Director of

the Congressional Budget Office under section 403 of the Congressional Budget Act of 1974 has been timely submitted prior to the

filing of this report and is included in Section X of this report pursuant to House Rule XIII, clause 3(c)(3).

Rule XIII, clause 3(c)(2) of the House of Representatives requires

each committee report that accompanies a measure providing new

budget authority (other than continuing appropriations), new
19

spending authority, or new credit authority, or changes in revenues

or tax expenditures to contain a cost estimate, as required by section 308(a)(1) of the Congressional Budget Act of 1974 and, when

practicable with respect to estimates of new budget authority, a

comparison of the total estimated funding level for the relevant

program (or programs) to the appropriate levels under current law.

H.R. 209 does not contained any new budget authority, credit authority, or changes in revenues or tax expenditures.

X. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, April 8, 1999.

Hon. F. JAMES SENSENBRENNER, Jr.,

Chairman, Committee on Science,

House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 209, the Technology

Transfer Commercialization Act of 1999.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contact is Kathleen Gramp.

Sincerely,

DAN L. CRIPPEN, Director.

Enclosure.

H.R. 209—Technology Transfer Commercialization Act of 1999

H.R. 209 would amend existing law regarding the licensing of

technologies developed with federal resources. This bill would

change the terms and procedures governing such licenses and

would expand the scope of inventions that could be included in a

license. Royalties collected by federal agencies would be available

for obligation for two years after they are received rather than for

the one year allowed under current law. The bill also would direct

the National Science and Technology Council (NSTC) to analyze

and recommend policies regarding major cooperative research and

development agreement (CRADAs) within one year after enactment.

CBO estimates that implementing H.R. 209 would have no significant effect on the federal budget over the 2000–2004 period.

Based on information from NSTC, we expect that preparing the report on CRADAs would involve little additional cost because most

of the analyses required by the bill are being done under current

law. Provisions affecting the collection and spending of royalties by

federal agencies would affect direct spending, so pay-as-you-go procedures would apply to this bill, but CBO estimates that the effects

would not be significant. Although receipts from royalties could increase if more licenses are issued as a result of this legislation, any

additional collections would be offset by an increase in direct

spending by agencies for payments to investors or for related agency programs. Likewise, giving agencies an additional year to obligate royalty income would have little effect on direct spending, because agencies obligate virtually all of the receipts within the oneyear limit specified in current law.
20

H.R. 209 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would

impose no costs on state, local, or tribal governments.

The CBO staff contact for this estimate is Kathleen Gramp. This

estimate was approved by Robert A. Sunshine, Deputy Assistant

Director for Budget Analysis.

XI. COMPLIANCE WITH PUBLIC LAW 104–4

H.R. 209 contains no unfunded mandates.

XII. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

Rule XIII, clause 3(c)(1) of the House of Representatives requires

each committee report to include oversight findings and recommendations required pursuant to clause 2(b)(1) of rule X. The

Committee has no oversight findings.

XIII. OVERSIGHT FINDINGS AND RECOMMENDATIONS BY THE

COMMITTEE ON GOVERNMENT REFORM

Rule XIII, clause 3(c)(4) of the House of Representatives requires

each committee report to contain a summary of the oversight findings and recommendations made by the House Government Reform

Committee pursuant to clause 4(c)(2) of rule X, whenever such findings and recommendations have been submitted to the Committee

in a timely fashion. The Committee on Science has received no

such findings or recommendations from the Committee on Government Reform.

XIV. CONSTITUTIONAL AUTHORITY STATEMENT

Rule XIII, clause 3(d)(1) of the House of Representatives requires

each report of a committee on a bill or joint resolution of a public

character to include a statement citing the specific powers granted

to the Congress in the Constitution to enact the law proposed by

the bill or joint resolution. Article I, section 8 of the Constitution

of the United States grants Congress the authority to enact H.R.

209.

XV. FEDERAL ADVISORY COMMITTEE STATEMENT

H.R. 209 does not authorize the creation of any new advisory

committees.

XVI. CONGRESSIONAL ACCOUNTABILITY ACT

The Committee finds that H.R. 209 does not relate to the terms

and conditions of employment or access to public services or accommodations within the meaning of Section 102(b)(3) of the Congressional Accountability Act (Public Law 104–1).

XVII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In Compliance with clause 3 of rule XIII of the Rules of the

House of Representatives, changes in existing law made by the bill,

as reported, are shown as follows (existing law proposed to be omit-
21

ted is enclosed in black brackets, new matter is printed in italic,

existing law in which no change is proposed is shown in roman):

STEVENSON–WYDLER TECHNOLOGY INNOVATION ACT

OF 1980

* * * * * * *

SEC. 4. DEFINITIONS.

As used in this Act, unless the context otherwise requires, the

term—

(1) * * *

* * * * * * *

(4) ‘‘Centers’’ means Cooperative Research Centers established under øsection 6 or section 8¿ section 7 or 9 of this Act.

* * * * * * *

(6) ‘‘Federal laboratory’’ means any laboratory, any federally

funded research and development center, or any center established under øsection 6 or section 8¿ section 7 or 9 of this Act

that is owned, leased, or otherwise used by a Federal agency

and funded by the Federal Government, whether operated by

the Government or by a contractor.

* * * * * * *

SEC. 5. COMMERCE AND TECHNOLOGICAL INNOVATION.

(a) * * *

* * * * * * *

(c) DUTIES.—The Secretary, through the Under Secretary, as appropriate, shall—

(1) * * *

* * * * * * *

(11) encourage and assist the creation of centers and other

joint initiatives by State øof¿ or local governments, regional organizations, private businesses, institutions of higher education, nonprofit organizations, or Federal laboratories to encourage technology transfer, to stimulate innovation, and to

promote an appropriate climate for investment in technologyrelated industries;

* * * * * * *

SEC. 9. NATIONAL SCIENCE FOUNDATION COOPERATIVE RESEARCH

CENTERS.

(a) ESTABLISHMENT AND PROVISIONS.—The National Science

Foundation shall provide assistance for the establishment of Cooperative Research Centers. Such Centers shall be affiliated with a

university or other nonprofit institution, or a group thereof. The objective of the Centers is to enhance technological innovation as provided in section ø6(a)¿ 7(a) through the conduct of activities as provided in section ø6(b)¿ 7(b).

(b) PLANNING GRANTS.—The National Science Foundation is authorized to make available nonrenewable planning grants to uni-
22

versities or nonprofit institutions for the purpose of developing the

plan as described under section ø6(c)(3)¿ 7(c)(3).

* * * * * * *

SEC. 11. UTILIZATION OF FEDERAL TECHNOLOGY.

(a) * * *

* * * * * * *

(e) ESTABLISHMENT OF FEDERAL LABORATORY CONSORTIUM FOR

TECHNOLOGY TRANSFER.—(1) There is hereby established the Federal Laboratory Consortium for Technology Transfer (hereinafter

referred to as the ‘‘Consortium’’) which, in cooperation with Federal

øLaboratories¿ laboratories and the private sector, shall—

(A) * * *

* * * * * * *

(i) RESEARCH EQUIPMENT.—The Director of a laboratory, or the

head of any Federal agency or department, may loan, lease, or give

research equipment that is excess to the needs of the laboratory,

agency, or department to an educational institution or nonprofit organization for the conduct of technical and scientific education and

research activities. Title of ownership shall transfer with a gift

under øthe¿ this section.

SEC. 12. COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS.

(a) * * *

(b) ENUMERATED AUTHORITY.—(1) Under an agreement entered

into pursuant to subsection (a)(1), the laboratory may grant, or

agree to grant in advance, to a collaborating party patent licenses

or assignments, or options thereto, in any invention made in whole

or in part by a laboratory employee under the agreement, or, subject to section 209 of title 35, United States Code, may grant a license to an invention which is federally owned, for which a patent

application was filed before the signing of the agreement, and directly within the scope of the work under the agreement, for reasonable compensation when appropriate. The laboratory shall ensure,

through such agreement, that the collaborating party has the option to choose an exclusive license for a pre-negotiated field of use

for any such invention under the agreement or, if there is more

than one collaborating party, that the collaborating parties are offered the option to hold licensing rights that collectively encompass

the rights that would be held under such an exclusive license by

one party. In consideration for the Government’s contribution

under the agreement, grants under this paragraph shall be subject

to the following explicit conditions:

* * * * * * *

SEC. 14. DISTRIBUTION OF ROYALTIES RECEIVED BY FEDERAL AGENCIES.

(a) IN GENERAL.—(1) Except as provided in paragraphs (2) and

(4), any royalties or other payments received by a Federal agency

from the licensing and assignment of inventions under agreements

entered into by Federal laboratories under section 12, and from the

licensing of inventions of Federal laboratories under section 207 of

title 35, United States Code, or under any other provision of law,
23

shall be retained by the laboratory which produced the invention

and shall be disposed of as follows:

(A)(i) The head of the agency or laboratory, or such individ- ual’s designee, shall pay each year the first $2,000, and thereafter at least 15 percent, of the royalties or other payments, other than payments of patent costs as delineated by a license

or assignment agreement, to the inventor or coinventors, if the

inventor’s or coinventor’s rights are assigned to the United

States.

* * * * * * *

(B) The balance of the royalties or other payments shall be

transferred by the agency to its laboratories, with the majority

share of the royalties or other payments from any invention

going to the laboratory where the invention occurred. The royalties or other payments so transferred to any laboratory may

be used or obligated by that laboratory during the fiscal year

in which they are received or during the øsucceeding fiscal

year¿ 2 succeeding fiscal years—

* * * * * * *

(2) If, after payments to inventors under paragraph (1), the royalties or other payments received by an agency in any fiscal year

exceed 5 percent of the budget of the øGovernment-operated¿ laboratories of the agency for that year, 75 percent of such excess

shall be paid to the Treasury of the United States and the remaining 25 percent may be used or obligated under paragraph (1)(B).

Any funds not so used or obligated shall be paid into the Treasury

of the United States.

* * * * * * *

(b) CERTAIN ASSIGNMENTS.—If the invention involved was one assigned to the Federal agency—

(1) * * *

(2) by an employee of the agency who was not working in the

laboratory at the time the øinventon¿ invention was made,

the agency unit that was involved in such assignment shall be considered to be a laboratory for purposes of this section.

* * * * * * *

SEC. 22. SPENDING AUTHORITY.

No payments shall be made or contracts shall be entered into

pursuant to the provisions of this Act (other than sections ø11, 12,

and 13¿ 11, 12, and 14) except to such extent or in such amounts

as are provided in advance in appropriation Acts.

SEC. 23. USE OF PARTNERSHIP INTERMEDIARIES.

(a) AUTHORITY.—Subject to the approval of the Secretary or head

of the affected department or agency, the Director of a Federal laboratory, or in the case of a federally funded research and development center, the Federal employee who is the contract officer,

may—

(1) enter into a contract or memorandum of understanding

with a partnership intermediary that provides for the partnership intermediary to perform services for the Federal laboratory that increase the likelihood of success in the conduct of co-
24

operative or joint activities of such Federal laboratory with

small business firms, institutions of higher education as defined in section 1201(a) of the Higher Education Act of 1965 (20

U.S.C. 1141(a)), or educational institutions within the meaning

of section 2194 of title 10, United States Code; and

* * * * * * *

(c) DEFINITION.—For purposes of this section, the term ‘‘partnership intermediary’’ means an agency of a State or local government, or a nonprofit entity owned in whole or in part by, chartered

by, funded in whole or in part by, or operated in whole or in part

by or on behalf of a State or local government, that assists, counsels, advises, evaluates, or otherwise cooperates with small business firms, institutions of higher education as defined in section

1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1141(a)), or

educational institutions within the meaning of section 2194 of title

10, United States Code, that need or can make demonstrably productive use of technology-related assistance from a Federal laboratory, including State programs receiving funds under cooperative

agreements entered into under section 5121(b) of the Omnibus

Trade and Competitiveness Act of 1988 (15 U.S.C. 2781 note).

* * * * * * *

CHAPTER 18 OF TITLE 35, UNITED STATES CODE

CHAPTER 18—PATENT RIGHTS IN INVENTIONS MADE

WITH FEDERAL ASSISTANCE

Sec.

200. Policy and objective.

* * * * * * *

ø209. Restrictions on licensing of federally owned inventions.¿

209. Licensing federally owned inventions.

* * * * * * *

§ 202. Disposition of rights

(a) * * *

* * * * * * *

ø(e) In any case when a Federal employee is a coinventor of any

invention made under a funding agreement with a nonprofit organization or small business firm, the Federal agency employing such

coinventor is authorized to transfer or assign whatever rights it

may acquire in the subject invention from its employee to the contractor subject to the conditions set forth in this chapter.¿

(e) In any case when a Federal employee is a coinventor of any

invention made with a nonprofit organization, a small business

firm, for a non-Federal inventor, the Federal agency employing such

coinventor may, for the purpose of consolidating rights in the invention or if it finds that it would expedite the development of the

invention—

(1) license or assign whatever rights it may acquire in the

subject invention to the nonprofit organization, small business
25

firm, or non-Federal inventor in accordance with the provisions

of this chapter; or

(2) acquire any rights in the subject invention from the nonprofit organization, small business firm, or non-Federal inventor, but only to the extent the party from whom the rights are

acquired voluntarily enters into the transaction and no other

transaction under this chapter is conditioned on such acquisition.

* * * * * * *

§ 207. Domestic and foreign protection of federally owned inventions

(a) Each Federal agency is authorized to—

(1) * * *

(2) grant nonexclusive, exclusive, or partially exclusive licenses under federally owned øpatent applications, patents, or

other forms of protection obtained¿ inventions, royalty-free or

for royalties or other consideration, and on such terms and conditions, including the grant to the licensee of the right of enforcement pursuant to the provisions of chapter 29 of this title

as determined appropriate in the public interest;

(3) undertake all other suitable and necessary steps to protect and administer rights to federally owned inventions on behalf of the Federal Government either directly or through contract, including acquiring rights for and administering royalties to the Federal Government in any invention, but only to the

extent the party from whom the rights are acquired voluntarily

enters into the transaction, to facilitate the licensing of a federally owned invention; and

* * * * * * *

ø§ 209. Restrictions on licensing of federally owned inventions

ø(a) No Federal agency shall grant any license under a patent or

patent application on a federally owned invention unless the person

requesting the license has supplied the agency with a plan for development and/or marketing of the invention, except that any such

plan may be treated by the Federal agency as commercial and financial information obtained from a person and privileged and confidential and not subject to disclosure under section 552 of title 5

of the United States Code.

ø(b) A Federal agency shall normally grant the right to use or

sell any federally owned invention in the United States only to a

licensee that agrees that any products embodying the invention or

produced through the use of the invention will be manufactured

substantially in the United States.

ø(c)(1) Each Federal agency may grant exclusive or partially exclusive licenses in any invention covered by a federally owned domestic patent or patent application only if, after public notice and

opportunity for filing written objections, it is determined that—

ø(A) the interests of the Federal Government and the public

will best be served by the proposed license, in view of the applicant’s intentions, plans, and ability to bring the invention to
26

practical application or otherwise promote the invention’s utilization by the public;

ø(B) the desired practical application has not been achieved,

or is not likely expeditiously to be achieved, under any nonexclusive license which has been granted, or which may be

granted, on the invention;

ø(C) exclusive or partially exclusive licensing is a reasonable

and necessary incentive to call forth the investment of risk

capital and expenditures to bring the invention to practical application or otherwise promote the invention’s utilization by

the public; and

ø(D) the proposed terms and scope of exclusivity are not

greater than reasonably necessary to provide the incentive for

bringing the invention to practical application or otherwise

promote the invention’s utilization by the public.

ø(2) A Federal agency shall not grant such exclusive or partially

exclusive license under paragraph (1) of this subsection if it determines that the grant of such license will tend substantially to lessen competition or result in undue concentration in any section of

the country in any line of commerce to which the technology to be

licensed relates, or to create or maintain other situations inconsistent with the antitrust laws.

ø(3) First preference in the exclusive or partially exclusive licensing of federally owned inventions shall go to small business firms

submitting plans that are determined by the agency to be within

the capabilities of the firms and equally likely, if executed, to bring

the invention to practical application as any plans submitted by applicants that are not small business firms.

ø(d) After consideration of whether the interests of the Federal

Government or United States industry in foreign commerce will be

enhanced, any Federal agency may grant exclusive or partially exclusive licenses in any invention covered by a foreign patent application or patent, after public notice and opportunity for filing written objections, except that a Federal agency shall not grant such

exclusive or partially exclusive license if it determines that the

grant of such license will tend substantially to lessen competition

or result in undue concentration in any section of the United States

in any line of commerce to which the technology to be licensed relates, or to create or maintain other situations inconsistent with

antitrust laws.

ø(e) The Federal agency shall maintain a record of determinations to grant exclusive or partially exclusive licenses.

ø(f) Any grant of a license shall contain such terms and conditions as the Federal agency determines appropriate for the protection of the interests of the Federal Government and the public, including provisions for the following:

ø(1) periodic reporting on the utilization or efforts at obtaining utilization that are being made by the licensee with particular reference to the plan submitted: Provided, That any

such information may be treated by the Federal agency as commercial and financial information obtained from a person and

privileged and confidential and not subject to disclosure under

section 552 of title 5 of the United States Code;
27

ø(2) the right of the Federal agency to terminate such license

in whole or in part if it determines that the licensee is not executing the plan submitted with its request for a license and the

licensee cannot otherwise demonstrate to the satisfaction of the

Federal agency that it has taken or can be expected to take

within a reasonable time, effective steps to achieve practical

application of the invention;

ø(3) the right of the Federal agency to terminate such license

in whole or in part if the licensee is in breach of an agreement

obtained pursuant to paragraph (b) of this section; and

ø(4) the right of the Federal agency to terminate the license

in whole or in part if the agency determines that such action

is necessary to meet requirements for public use specified by

Federal regulations issued after the date of the license and

such requirements are not reasonably satisfied by the licensee.¿

§ 209. Licensing federally owned inventions

(a) AUTHORITY.—A Federal agency may grant an exclusive or partially exclusive license on a federally owned invention under section

207(a)(2) only if—

(1) granting the license is a reasonable and necessary incentive to—

(A) call forth the investment capital and expenditures

needed to bring the invention to practical application; or

(B) otherwise promote the invention’s utilization by the

public;

(2) the Federal agency finds that the public will be served by

the granting of the license, as indicated by the applicant’s intentions, plans, and ability to bring the invention to practical application or otherwise promote the invention’s utilization by the

public, and that the proposed scope of exclusivity is not greater

than reasonably necessary to provide the incentive for bringing

the invention to practical utilization, as proposed by the applicant, or otherwise to promote the invention’s utilization by the

public;

(3) the applicant makes a commitment to achieve practical

utilization of the invention within a reasonable time, which

time may be extended by the agency upon the applicant’s request and the applicant’s demonstration that the refusal of such

extension would be unreasonable;

(4) granting the license will not tend to substantially lessen

competition or create or maintain a violation of the Federal

antitrust laws; and

(5) in the case of an invention covered by a foreign patent application or patent, the interests of the Federal Government or

United States industry in foreign commerce will be enhanced.

(b) MANUFACTURE IN UNITED STATES.—A Federal agency shall

normally grant a license under section 207(a)(2) to use or sell any

federally owned invention in the United States only to a licensee

who agrees that any products embodying the invention or produced

through the use of the invention will be manufactured substantially

in the United States.
28

(c) SMALL BUSINESS.—First preference for the granting of any exclusive or partially exclusive licenses under section 207(a)(2) shall

be given to small business firms having equal or greater likelihood

as other applicants to bring the invention to practical application

within a reasonable time.

(d) TERMS AND CONDITIONS.—Any licenses granted under section

207(a)(2) shall contain such terms and conditions as the granting

agency considers appropriate, and shall include provisions—

(1) retaining a nontransferrable, irrevocable, paid-up license

for any Federal agency to practice the invention or have the invention practiced throughout the world by or on behalf of the

Government of the United States;

(2) requiring periodic reporting on utilization of the invention, and utilization efforts, by the licensee, but only to the extent necessary to enable the Federal agency to determine whether the terms of the license are being complied with, except that

any such report shall be treated by the Federal agency as commercial and financial information obtained from a person and

privileged and confidential and not subject to disclosure under

section 552 of title 5 of the United States Code; and

(3) empowering the Federal agency to terminate the license in

whole or in part if the agency determines that—

(A) the licensee is not executing its commitment to

achieve practical utilization of the invention, including

commitments contained in any plan submitted in support

of its request for a license, and the licensee cannot otherwise demonstrate to the satisfaction of the Federal agency

that it has taken, or can be expected to take within a reasonable time, effective steps to achieve practical utilization

of the invention;

(B) the licensee is in breach of an agreement described in

subsection (b);

(C) termination is necessary to meet requirements for

public use specified by Federal regulations issued after the

date of the license, and such requirements are not reasonably satisfied by the licensee; or

(D) the licensee has been found by a court of competent

jurisdiction to have violated the Federal antitrust laws in

connection with its performance under the license agreement.

(e) PUBLIC NOTICE.—No exclusive or partially exclusive license

may be granted under section 207(a)(2) unless public notice of the

intention to grant an exclusive or partially exclusive license on a

federally owned invention has been provided in an appropriate

manner at least 15 days before the license is granted, and the Federal agency has considered all comments received before the end of

the comment period in response to that public notice. This subsection shall not apply to the licensing of inventions made under a

cooperative research and development agreement entered into under

section 12 of the Stevenson-Wydler Technology Innovation Act of

1980 (15 U.S.C. 3710a).

(f) PLAN.—No Federal agency shall grant any license under a patent or patent application on a federally owned invention unless the

person requesting the license has supplied the agency with a plan
29

for development or marketing of the invention, except that any such

plan shall be treated by the Federal agency as commercial and financial information obtained from a person and privileged and confidential and not subject to disclosure under section 552 of title 5

of the United States Code.

* * * * * * *

XVIII. COMMITTEE RECOMMENDATIONS

On March 25, 1999, a quorum being present, the Committee favorably reported H.R. 209, the Technology Transfer Commercialization Act of 1999, by a voice vote, and recommends its enactment.

XIX. EXCHANGE OF COMMITTEE CORRESPONDENCE

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SCIENCE,

Washington, DC, May 4, 1999.

Hon. HENRY HYDE,

Chairman, House Committee on the Judiciary,

Washington, DC.

DEAR MR. CHAIRMAN: Thank you for agreeing to help us bring to

the floor H.R. 209, the ‘‘Technology Transfer Commercialization Act

of 1999.’’ I appreciate your willingness to waive your Committee’s

right to a referral on this bill. In so doing, we recognize the Judiciary Committee’s jurisdictional prerogatives regarding patent matters and by agreeing to expedite floor consideration of H.R. 209 in

no way diminishes your rightful claims to the bill.

Should a conference occur on H.R. 209 or similar legislation, the

Committee on Science will support your request to have conferees

on this or similar legislation which falls within the Committee on

Judiciary’s jurisdiction.

Historically the Committees on Science and Judiciary have

worked together to improve the disposition of intellectual property

rights flowing from government funded research. I look forward to

working together on these matters in the future.

Sincerely,

F. JAMES SENSENBRENNER, Chairman.

HOUSE OF REPRESENTATIVES

COMMITTEE ON THE JUDICIARY,

Washington, DC, May 6, 1999.

Hon. F. JAMES SENSENBRENNER, Chairman, Committee on Science, House of Representatives,

Rayburn House Office Building, Washington, DC.

DEAR CHAIRMAN SENSENBRENNER: Thank you for your letter of

May 4, 1999, in which you address the jurisdiction of the Committee on the Judiciary as it relates to H.R. 209, the ‘‘Technology

Transfer Commercialization Act of 1999.’’

I have reviewed the legislation and have determined that it is

not necessary for the Committee on the Judiciary to conduct a

markup on the bill. As you stated in your letter, the Committee on
30

the Judiciary does not waive any of its jurisdictional prerogative in

this area.

I appreciate your cooperation with the Committee on the Judiciary and I look forward to working together on issues in the future.

Sincerely,

HENRY J. HYDE, Chairman.

XX. PROCEEDINGS OF THE COMMITTEE MARKUP

THURSDAY, MARCH 25, 1999, U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON SCIENCE, WASHINGTON, DC

H.R. 209, Technology Transfer Commercialization Act of 1999

Chairman SENSENBRENNER. The second item of business is the

Technology Transfer Commercialization Act of 1999, H.R. 209. The

Chair will recognize himself for five minutes.

In the past two decades, Congress, by direction of the Science

Committee, has established a system to transfer and commercialize

technology from our federal laboratories to enhance our Nation’s

ability to compete in the global marketplace. From the StevensonWydler Technology Innovation Act of 1980 to the National Technology Transfer and Advancement Act of 1995, this Committee has

strengthened and improved the process of technology transfer from

our Nation’s federal labs. H.R. 209 continues the Science Committee’s long and rich history of advancing technology transfer to help

boost United States international competitiveness. H.R. 209 is yet

another important step in refining our Nation’s technology transfer

laws to remove existing impediments to enhanced Government and

industry collaboration.

I will recognize the gentleman from California for an opening

statement, if he would like to make one.

Mr. BROWN. Thank you very much, Mr. Chairman. I have a general opening statement which I would like to request be inserted

at this point in the record.

Chairman SENSENBRENNER. Without objection.

[The statement of Mr. Brown follows:]

OPENING STATEMENT OF HON. GEORGE E. BROWN, JR.

Mr. Chairman, on behalf of the Democratic side of this Committee, I wish to commend you on the steps you are taking to permit the committee to establish strong

legislative and oversight agendas. I think you will find, as the year goes on, that

our Democratic members are a very talented group who will contribute significantly

to this work and that our Democratic Subcommittee and Committee leadership

stand ready to work as full partners in moving the balance of the Committee’s legislative agenda through subcommittee and full committee as the Congress progresses.

I feel today’s markup roster shows that we are making progress. We have an ambitious oversight agenda and three solid bills to consider today.

With regard to the oversight agenda, only so much can be fit on a single chart

and many of the details appear yet to be determined. We are happy to support this

chart as a general outline, and we plan to be full partners as this outline is translated into actual projects.

We appreciate the flexibility of Congresswoman Morella and her staff on H.R. 209,

the Technology Transfer Commercialization Act of 1999 and Congressman Barcia for

his persistence in perfecting this bill. Technology transfer is an issue that has been

of great interest to me since before the days of the original Stevenson-Wydler Act,

and it is a topic we have always approached bipartisanly. The bill before us does

a good job of readying the Bayh-Dole Act for the 21st century and of making improvements based on almost two decades of agency and industry experience with the

licensing of Federal technology. I am convinced also that the CRADA improvements,
31

added to this bill by Congresswoman Tauscher, will permit this form of doing business, which has worked so well for small businesses, to work smoothly on the largest of CRADAs as well.

Those of us who live in areas which are high risk for earthquakes appreciate your

willingness to bring forward enhanced funding for the NEHRP program under H.R.

1184, the Earthquake Hazards Reduction Authorization Act of 1999. We are especially pleased that you have provided nearly $170 million over 5 years

for upgrades to the Advanced Seismic Monitoring System. This is a vital program

which has faced chronic underfunding. Three of our Members will offer small

amendments to make this good bill even better so we will save our detailed comments for later in this meeting.

Before I begin my comments on H.R. 1183, I want to thank you, Mr. Chairman,

for working closely with me to address our concerns as we developed H.R. 1183 and

the en bloc amendment to be offered by Mrs. Morella and Mr. Barcia. This has been

a difficult process. And I want to commend the majority and industry representatives for being responsive to issues that have been raised. I would also like to commend Dr. James Hill of NIST for the thoroughness, integrity, and dedication of his

work on the Commence Department’s report on the FQA. I have heard nothing but

praise for his efforts by industry groups for his conscientious and objective efforts.

When the Congress passed the Fastener Quality Act ten years ago, we had a significant problem with importation of fraudulent fasteners, the procurement practices

of Federal agencies, and the level of quality of fastener manufacturing. Much has

happened during the past ten years: Federal agencies have significantly improved

their procurement practices for fasteners, and the level of quality in manufacturing

has improved tremendously, even though the FQA has never been implemented. I

believe that the passage of the FQA, in part, contributed to these improvements

which is why I have objected to simply repealing the FQA. I am supporting H.R.

1183 and the en block amendments because I believe they update the statute to

take into consideration these changes. They will reduce the regulatory burden of the

original FQA, continue to encourage improved manufacturing processes, and ensure

the traceability of all high-strength fasteners.

Mr. BROWN. I will just make a few brief comments. First, commending you for the expeditious way in which you have brought

these three important bills before the Committee for action. I note

from reading Roll Call this morning that the Speaker is anxious to

demonstrate that we have a workhorse operation going on here. It

seems to me that the Science Committee is making their contribution to getting the work of the Congress done.

None of these three bills are absolutely new or earth shattering,

but as the Chair has said, they represent solid progress that has

been made over the years. We hope to continue with that kind of

progress with these three bills.

I particularly note the H.R. 209, the Technology Transfer Commercialization Act, which is in many ways a follow-on to the Stevenson-Wydler Act, which this Committee worked on a generation

ago, and at that time, we went to great pains to assure that that

was a bipartisan action, bi-cameral action. We have a Democratic

Senator and the Ranking Republican on this Committee as the coauthors of that bill. We would like to see that kind of attitude reflected at least part of the time in the operations that we are doing

today.

The action that you have taken is encouraging. I want to commend you both for the promise with which you have brought these

bills up, and the comprehensive nature of the oversight plan, which

of course is subject to modification, as the situation requires it. But

we conformed to the rules by adopting this plan. I am happy to see

us doing that.

We want to continue a program of close cooperation with the

Chair. Let me say that we have a lot of new members on our side

who are eager to make a contribution. Without wanting to insert
32

a sour note, we do have a feeling that on occasion, you may even

be moving a little too fast on some of these things. The fact that

we sometimes hear about a committee meeting being called from

the witnesses who have already been called and we haven’t heard

about, indicates that our communication could be improved a little

bit. We hope that we can work to achieve that. That concludes my

brief remarks.

Chairman SENSENBRENNER. If the gentleman will yield, and it

will be.

Mr. BROWN. Yes.

Chairman SENSENBRENNER. The Chair intends to recognize Mrs.

Morella and Mr. Barcia for opening statements. Without objection,

other members may place opening statements in the record at this

point.

The gentlewoman from Maryland, Ms. Morella.

Mrs. MORELLA. Thank you, Mr. Chairman. I must say that I do

think that this Committee has a reputation for working in a bipartisan manner. We do in our subcommittees and the full committee.

I think the rest of Congress could do well to emulate it, and I appreciate what you say about communication.

As a result of technology transfer legislation advanced by this

Committee, in almost two decades, the ability of the United States

to compete globally has been strengthened, and a new paradigm for

greater collaboration among the scientific enterprises that conduct

our Nation’s research and development, Government, industry, and

universities, has been developed. By spinning off and commercializing technology developed in our Nation’s over 700 federal laboratories, the results of our federal research and development enterprise is successfully being used today to improve our ability to compete internationally.

Given the importance and benefits of technology transfer, the

Technology Transfer Subcommittee has continued to refine the

technology transfer process in order to facilitate greater Government, university, and industry collaboration. Most recently, in

1996, we enhanced and simplified the process for cooperative research and development agreements with the enactment of the National Technology Transfer and Advancement Act. Many of you remember that.

Now with H.R. 209, the Technology Transfer Commercialization

Act of 1999, we have attempted to remove the obstacles to effectively license federally-owned inventions which are created in Government-owned, Government-operated laboratories by adopting the

successful Bayh-Dole Act as a framework.

Under the bill, agencies would be provided with two important

new tools for effectively commercializing on-the-shelf federallyowned technologies, either licensing them as stand-alone inventions

under the bill’s revised authorities of section 209 of the Bayh-Dole

Act, or by including them as part of a larger package under the

CRADA, the Cooperative Research and Development Agreement. In

doing so, this will make both mechanisms much more attractive to

U.S. companies that are striving to form partnerships with federal

laboratories.

In the past Congress, the Technology Subcommittee held two legislative hearings on this issue. Witnesses enthusiastically endorsed
33

the bill’s intent to streamline technology licensing to make it more

effective. We heard from the Administration, large corporations,

small businesses, federal laboratories, technology transfer organizations, among others that these provisions will substantially improve the process to license federal technology for commercial applications and make it more attractive for industry to partner with

Government.

Mr. Chairman, I am pleased that we have worked closely with

the members of the minority and with the Administration, to reach

consensus since the bill was originally introduced in the past Congress. Some of these consensus revisions are contained in the en

bloc amendment that will soon be offered on behalf of myself and

Mr. Barcia, the Ranking Minority Member of the Technology Subcommittee. This bipartisan en bloc amendment simply contains a

new section of Congressional findings and a few other technical

amendments.

I look forward to continue working with you, Mr. Chairman and

members of the minority, as well as the Administration on having

the Technology Transfer Commercialization Act signed into law in

the coming months. I will make sure we are all invited to the

White House for the signing. I yield back, Mr. Chairman.

Chairman SENSENBRENNER. Does that include me? [Laughter.]

The Chair notes the presence of a reporting quorum. The question is on reporting favorably the oversight plan upon which the

previous question has already been ordered. All those in favor signify by saying aye.

Opposed, no.

The ayes have it, and the oversight plan is adopted.

The gentleman from Michigan.

Mr. BARCIA. Thank you very much, Mr. Chairman. I want to echo

the comments of the distinguished Chairwoman of the Subcommittee on Technology with regard to the bipartisan effort on this issue.

In the interests of time, Mr. Chairman, I have a statement on behalf of the Morella-Barcia amendments which I would like to submit for the record in the interests of time, and also due to the fact

that I have a news conference or press conference at 10:30 in Longworth.

Chairman SENSENBRENNER. Without objection.

Mr. BARCIA. Thank you.

Chairman SENSENBRENNER. All further opening statements will

be placed in the record by unanimous consent at this point.

[The information follows:]
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51

Chairman SENSENBRENNER. I ask that the members proceed with

the amendments in the order on the roster.

The first amendment that I note on the roster is an en bloc

amendment by Mrs. Morella and Mr. Barcia. The Chair recognizes

the gentlewoman from Maryland.

Mrs. MORELLA. I have the en bloc amendment at the desk.

Chairman SENSENBRENNER. The clerk will report the amendment.

The CLERK. ‘‘En bloc amendment to H.R. 209 offered by Mrs.

MORELLA and Mr. BARCIA.’’——

Mrs. MORELLA. Mr. Chairman, I ask that the amendment be accepted as read.

Chairman SENSENBRENNER. Accepted or considered?

Mrs. MORELLA. Considered. Considered as read.

Chairman SENSENBRENNER. Without objection, the amendment is

considered as read and open for amendment at any point.

[The information follows:]
52
53
54
55
56
57

Chairman SENSENBRENNER. The Chair recognizes the gentlewoman from Maryland for five minutes.

Mrs. MORELLA. Well, actually, the en bloc amendment is really

pretty technical. It revises the granting of a license for which a patent application to an invention was filed before the signing of the

agreement in CRADA. It has a few other little amendments. It exempts the reports required to be submitted by the licensee of an

invention. The information in that report shall be considered commercial and financial.

So I would submit, unless there are any questions, that it really

is a technical en bloc amendment.

Chairman SENSENBRENNER. Does the gentlewoman yield back

the balance of her time?

Mrs. MORELLA. I yield back, Mr. Chairman.

Chairman SENSENBRENNER. Further discussion on the amendment?

Mr. ROHRABACHER. Mr. Chairman?

Chairman SENSENBRENNER. Who is seeking——

Mr. ROHRABACHER. Mr. Chairman, right here.

Chairman SENSENBRENNER. The gentleman from California.

Mr. ROHRABACHER. This is just a general question.

Chairman SENSENBRENNER. The gentleman is recognized for five

minutes.

Mr. ROHRABACHER. A general question to Mrs. Morella. This

hasn’t of course gone through my subcommittee, so I am not fully

aware of the details and I have not studied this. So I would like

to just ask whether or not—of course of the purpose of this is to

ensure that technology developed by our national labs receives a

chance for commercialization and gets out into the private sector.

Is there adequate controls to ensure that it is the American companies that are the ones who are getting a hold of this technology and

commercializing?

Mrs. MORELLA. Yes, Mr. Rohrabacher, it is. It is one that deals

with CRADA, the Cooperative Research and Development Act.

Now let me indicate that the base text of this bill is very similar

to the one that not only passed the Subcommittee, the full Committee, passed the Floor in the last Congress. In fact, it passed the

House twice. The en bloc amendment that we have added today

simply includes a new section of Congressional findings and a few

technical revisions made at the suggestion of the Senate Judiciary

Committee. So we hope we will get it through. But indeed, yes, it

is not international. It doesn’t involve the technology transfer problem that we have had that the Caucus committee et al has looked

into.

Mr. ROHRABACHER. But you are satisfied that as the law would

be in place after the passage of this legislation that you are proposing today, that the products of our national lab are going to be

commercialized by American companies and not by foreign companies?

Mrs. MORELLA. Yes, indeed. Yes, indeed. It was intended to be

that way, and it will. Thank you. Thank you for asking the question.

Mr. ROHRABACHER. Thank you very much. Thank you, Mr. Chairman.
58

Chairman SENSENBRENNER. The gentleman yields back the balance of his time.

Is there further discussion on the technical en bloc amendment?

[No response.]

Hearing none, all those in favor will say aye.

Opposed, no.

The ayes appear to have it. The ayes have it, and the amendment is agreed to.

Are there further amendments to the bill? The gentlewoman

from Illinois.

Mrs. BIGGERT. Thank you, Mr. Chairman. I would just like to

submit language for the report, and ask your permission to address

the Committee briefly with regard to the issue of CRADA.

Chairman SENSENBRENNER. The clerk will report the proposed

report language and distribute it to members.

The CLERK. ‘‘Committee report addition. Section 6. Review of Cooperative Research and Development Agreement procedures. This

legislation is intended to improve the ability of federal agencies to

license federally-owned inventions, including those made under cooperative Research and Development Agreements. In doing so, it

requires federal agencies to give preference for the granting of any

exclusive or partially exclusive licenses to small business firms.

Section 3(c). It is the intent of the Science Committee that any

inter-agency review of Cooperative Research and Development

Agreements’’——

Chairman SENSENBRENNER. Since all of the members have got

copies of the proposed report language, I ask unanimous consent it

be considered as read.

[The information follows:]
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Chairman SENSENBRENNER. The gentlewoman from Illinois is

recognized for five minutes.

Mrs. BIGGERT. Thank you very much, Mr. Chairman. The Technology Transfer Commercialization Act improves the ability of federal agencies to license federally-owned inventions, including those

made under Cooperative Research and Development Agreements.

In doing so, the bill requires federal agencies to give preference for

the granting of any exclusive or partially exclusive licenses to U.S.

small business firms. It is my understanding, based on our work

on this issue, that the Science Committee intends that inter-agency

reviews of CRADA should apply only to major Cooperative Research and Development Agreements, and not to minor cooperative

agreements.

I would like to ask Mrs. Morella if this is her understanding.

Mrs. MORELLA. Yes, indeed. It is my understanding, Ms. Biggert.

Mrs. BIGGERT. Then I would like permission to work with the

Committee and your Subcommittee to ensure that the report language included with the bill further clarifies this issue. That is the

report that I have submitted, particularly the intent of the Committee that time, cost, and complexity of such inter-agency reviews

are not intended to add to the burdens of our Nation’s small employers and businesses.

Do you have any comment on that?

Mrs. MORELLA. Mr. Chairman, I do share the concern that has

been expressed by the gentleman from Illinois, that the inter-agency reviews provided for in this act should certainly not deter businesses, large or small, from entering into these CRADAs. So I am

very happy to work with the gentlewoman to insert language such

as the language that she distributed to us today, and to make sure

that the whole Committee’s intent is fully articulated.

Mr. BROWN. Will the gentlelady yield?

Mrs. MORELLA. Yes, indeed.

Mr. BROWN. We think that we are in agreement with the suggested modifications which you have been discussing, and concur

with the idea that a brief discussion between the two sides would

resolve any remaining difficulties, if there are any, and I’m not

sure there are any. But I just wanted to make sure that we do get

a chance to look at the final product.

Mrs. BIGGERT. I think that is why I have requested that, you

know, have permission to work with the Committee and this Subcommittee on the report language.

Mrs. MORELLA. And I agree too, Mr. Brown, that we can do that

pretty quickly, and indeed, we always share. I yield back.

Chairman SENSENBRENNER. Does the gentlewoman yield back

the balance of her time?

Mrs. BIGGERT. Yes.

Chairman SENSENBRENNER. Are there further amendments or report language suggestions?

[No response.]

Hearing none, the question is on the bill. Those in favor will signify by saying aye.

Opposed, no.

The ayes appear to have it. The ayes have it. The motion is

agreed to.
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The Chair now recognizes the gentleman from Michigan, Mr.

Barcia, to make a motion to report the bill.

Mr. BARCIA. Yes. Mr. Chairman, I move that the Committee report the bill H.R. 209 as amended. Furthermore, I move to instruct

the staff to prepare the legislative report to make technical and

conforming amendments, and that the Chairman take all necessary

steps to bring the bill before the House for its consideration.

Chairman SENSENBRENNER. The question is on the motion made

by the gentleman from Michigan. Is there any discussion?

[No response.]

The Chair notes the presence of a reporting quorum. All those in

favor will signify by saying aye.

Opposed, no.

The ayes appear to have it. The ayes have it, and the bill is reported. All members will have two subsequent calendar days in

which to submit supplemental, minority or additional views on the

measure. Without objection, pursuant to clause 1 of rule 22 of the

rules of the House of Representatives, the Committee authorizes

the Chairman to offer such motions as may be necessary in the

House to go to conference with the Senate on the bill H.R. 209.

Without objection, it is so ordered.

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