TECH TRANSFER 2000:

MAKING PARTNERSHIPS WORK

Office of Technology Policy

Technology Administration

U.S. Department of Commerce

February 2000

Tech Transfer 2000: Making Partnerships Work 3

TECH TRANSFER 2000

MAKING PARTNERSHIPS WORK

TABLE OF CONTENTS

FOREWORD .................................................................................................. 5

ACKNOWLEDGMENTS .................................................................................. 6

CHAPTER 1: EXECUTIVE SUMMARY .............................................................. 7

Integrating Competitiveness Goals with Agency Missions ........ 7

More Help Needed in Finding the Right Laboratory ................... 8

Managing Intellectual Property Must Become an Agency

Priority............................................................................................. 8

CRADAs Can Be Used Effectively in Many Different

Circumstances ................................................................................ 8

Domestic Manufacture Requirements Pose Problems for

Global Companies ......................................................................... 9

CRADAs Have Not Been as Effective with State and Local

Governments and Universities as Other Cooperative

Arrangements ................................................................................ 9

Measures of Success in Technology Transfer Must Be

Developed by Agencies in Partnership with the Business

Community................................................................................... 10

CHAPTER 2: AGENCY IMPLEMENTATION OF TECHNOLOGY

TRANSFER AUTHORITIES ........................................................................ 11

Commercialization Objectives and Agency Missions ................ 11

Expedited Decision-making, Consistency, and Compliance

with Decisional Standards .......................................................... 12

CHAPTER 3: ISSUES IN FEDERAL TECHNOLOGY TRANSFER ......................... 13

Working with the Private Sector: Challenges in

Implementing the Technology Transfer Authorities ............. 13

Identifying, Protecting, and Managing Intellectual Property at

the Laboratories ........................................................................... 15

Intellectual Property and the CRADA......................................... 19

Intellectual Property and Agency Patent Licensing .................. 20

Confidentiality and Licensing of Information Generated

by a Laboratory under a CRADA ............................................. 22

Government Licenses to Private Sector Inventions................... 24

Recognizing the Diverse Uses of CRADAs ................................. 25

Dealing with U.S. Competitiveness Concerns and Product

Liability Issues.............................................................................. 29

Working with Other Public Sector Institutions .......................... 35
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CHAPTER 4: WHAT CONSTITUTES SUCCESS IN TECHNOLOGY TRANSFER? 43

APPENDIX A: IMPLEMENTING THE STEVENSON-WYDLER ACT AT

THE FEDERAL LABORATORIES: DIVERSITY IS THE NORM....................... 49

Department of Agriculture ............................................................. 49

Department of Commerce .............................................................. 51

Department of Defense ................................................................... 53

Department of Energy..................................................................... 56

Environmental Protection Agency ................................................ 61

Department of Health and Human Services ............................... 63

Department of the Interior ............................................................. 66

National Aeronautics and Space Administration ....................... 68

Department of Transportation ....................................................... 70

Federal Laboratory Consortium for Technology Transfer ......... 72

APPENDIX B: THE STEVENSON-WYDLER AND BAYH-DOLE ACTS:

A REVIEW OF THE EVOLUTION OF THE TECHNOLOGY TRANSFER

AUTHORITIES ......................................................................................... 75

Establishing the Technology Transfer Office ............................... 75

Licensing Laboratory Intellectual Property to Industry

Under Statutory Authority ......................................................... 76

Gaining New Technology Transfer Tools Through the Use of

Cooperative Research and Development Agreements .......... 77

Reinforcing Federal Technology Transfer Initiatives:

Executive Order 12591 ................................................................ 80

Granting CRADA Authority to Department of Energy

Laboratories and Other Amendments ...................................... 80

Establishing Minimum Expectations for Licensing of

CRADA Inventions ...................................................................... 81

Recent Legislative Proposals .......................................................... 82

APPENDIX C: AN UPDATE ON HISTORICAL PERFORMANCE

MEASUREMENTS .................................................................................... 83

APPENDIX D: SEEKING INDUSTRY’S PERSPECTIVE ON FEDERAL

TECHNOLOGY TRANSFER ....................................................................... 91
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FOREWORD

The manner in which the federal government works with the private

sector in developing and diffusing technologies changed in fundamental ways with passage of the Bayh-Dole, Stevenson-Wydler, and

Federal Technology Transfer Acts in the 1980s. The agencies and the

private sector began to find ways to partner in the development of

technologies that both furthered agency missions and advanced the

competitiveness of industry and the strength of our economy. Many

successful partnerships have been built and many technologies that had

their inception in the federal laboratories have now become important

parts of the commercial technology base.

The Office of Technology Policy is pleased to provide this review of agency

and private sector activities under these laws, pursuant to the StevensonWydler Act. In this report, we take a careful look at the ways in which the

Cooperative Research and Development Agreement (CRADA) authority

and the patent licensing authority are being used by the agencies. The

breadth and complexity of the federal research establishment and the wide

variety of partnerships formed with the private sector make it difficult to

provide a simple overview of the federal technology transfer system.

Indeed, that is one of the major insights to be gained from the report—that

the generic procedures for partnering and licensing provided by the

federal laws have taken on different shapes as they have been integrated

into the distinctive research missions of the agencies.

Subject to this important caveat, we have tried to present a comprehensive look at the principal issues currently being addressed by agencies

and their private sector partners. The data presented in Appendix C

concerning agency activities under the technology transfer laws is for

Fiscal Year 1998. In order to provide some comparability, the data concerning research budgets for the agencies discussed in Appendix A is also

for Fiscal Year 1998. Data for subsequent years will be presented in later

published reports and at our website, www.ta.doc.gov. Some of the

challenges identified have faced the programs since the start. Others are

new and, in many cases, the fruits of broader use of the programs. As a

part of our review, we have suggested goals we believe the agencies and

their partners should strive for in order to meet these challenges. We will

continue to work with the agencies and industry to ensure that these

important tools are used to accomplish the overriding goal of a strong

and competitive economy.

Kelly H. Carnes, Assistant Secretary for Technology Policy
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ACKNOWLEDGMENTS

The Office of Technology Policy was fortunate to have the assistance of

Gilbert (Gib) Marguth, of Sandia National Laboratory, in creating this

report. His knowledge of technology transfer and his insights into the

operation of the federal programs were invaluable in identifying the

issues to be addressed and putting the report together. The report also

benefited from the involvement of representatives of the technology

transfer organizations of the principal research-performing departments

and agencies (who are also participants in the Interagency Working

Group on Technology Transfer). Finally, discussions with the Industrial

Research Institute’s External Research Directors’ Network and research

work performed by Drs. David Roessner and Robert Carr of the Stanford

Research Institute helped to identify concerns of the laboratories’ private

sector partners.
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CHAPTER 1: EXECUTIVE SUMMARY

CRADAs and patent licensing, the technology transfer tools discussed

in this report, provide relatively simple ways for U.S. businesses to

develop federally funded innovations into commercially useful products

and processes. These tools were adopted at a time of unprecedented

technological challenge to U.S. industry but are useful even in today’s

dynamic technology markets.

Our review shows that CRADAs and patent licensing have been broadly

accepted by industry and the laboratories as a means of partnering in

technology transfer. Difficult issues remain to be addressed, many of

which are similar to those raised in our 1996 Effective Partnering report.

The principal challenge is for the agencies to develop, with their industry

partners and others, a set of measures for these activities-measures that

are based on a shared vision of the outcomes they can achieve.

Integrating Competitiveness Goals with Agency Missions

One of the principal lessons from our review is that CRADAs and patent

licensing have evolved in different ways within each agency—ways that

serve that agency’s mission as well as provide innovations of value to the

private sector. Where the agency mission aligns with the commercial

objectives of an industry sector, the potential for partnerships is particularly strong. In those circumstances, the tools not only benefit the industry and the economy, but also help accomplish the mission of the agency.

The National Institutes of Health and the Agricultural Research Service

are two agencies whose missions are often accomplished through the

activities of specific industry sectors and whose technology transfer

activities have been particularly fruitful, both in producing new commercial products and services and in achieving their agency goals. Other

agencies, like the Departments of Defense and Energy, receive mission

benefit from the tools in a different way. They work with many different

industry sectors interested in their broad-ranging research as a source of

innovations with commercial significance. These cooperative activities

also help discharge their missions—either by providing needed products

and services or building technical proficiency in a mission-related field.

It is particularly important to recognize these differences among the

agencies in assessing the results of CRADAs and patent licensing. In

addition to the benefits to industry and the economy generally contem-
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plated at the time of enactment, these tools have also helped the agencies

achieve mission objectives.

More Help Needed in Finding the Right Laboratory

Many of the challenges currently facing laboratory partnerships with the

private sector have been present from the start. Identifying the federal

laboratories with expertise in a particular field was an extremely difficult

challenge at the beginning of these programs. While the efforts of the

Federal Laboratory Consortium and the individual agencies have lessened the challenge, more needs to be done, especially for businesses new

to the federal laboratory system.

Managing Intellectual Property Must Become an Agency Priority

The management of intellectual property will always be an area of tension, given the differing perspectives of the agencies and their corporate

partners. As both sides have gained experience in such partnerships,

however, the issues have been refined and are more limited and specific.

The procedures applicable to exclusive licensing, including the notice

and comment procedure, have sometimes caused strain between the

agencies and their partners. Similarly, the application of the concept of

“subject inventions” under CRADAs to pre-existing inventions has

sometimes led to misunderstandings concerning the treatment of intellectual property. Although the CRADA law’s provisions for the confidential

treatment of CRADA data have been used by some agencies to protect

information needed by CRADA partners, there are limits to the scope of

protection that can be provided in this way. Finally, even though agencies

generally seek licenses in the inventions of their CRADA partners, private sector partners are not clear why such licenses are needed. Since the

agencies have been given discretion to forego such licenses, this subject

deserves further exploration.

CRADAs Can Be Used Effectively in Many Different

Circumstances

CRADAs are extremely flexible instruments. While their use in certain

circumstances has been challenged (e.g., where used as a substitute for a

contract subject to the procurement regulations), they are legitimately

used in an extremely broad range of circumstances (differing principally
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in the degree to which proprietary considerations are involved in the

research). Agencies need to be sensitive to these different types of cooperative research agreements and flexible in prescribing terms and conditions appropriate to each type. Several types of CRADAs particularly

useful for work in support of local and regional technology-based economic development initiatives have been developed, and the agencies’

“model” agreements of these types should be made more broadly available.

Domestic Manufacture Requirements Pose Problems for Global

Companies

The most serious industry/government issues discussed relate to US

competitiveness concerns embodied in CRADA and licensing law. The

most difficult issues involve the requirement of substantial domestic

manufacture of any products resulting from the CRADA or licensed

technology. Industry concerns center on the difficulty, if not impossibility,

of predicting the place of manufacture of possible future products at the

time of entering into a cooperative agreement to perform research that

may ultimately lead to such products. Finally, the treatment of liability

and indemnification issues in CRADA agreements has been troublesome

to industry because of the severity of the contractual clauses generally

proposed by the agencies and their apparent inflexibility in considering

alternatives.

CRADAs Have Not Been as Effective with State and Local

Governments and Universities as Other Cooperative

Arrangements

Research partnerships among the laboratories and both state and local

governments and universities have generally proven less popular than

anticipated at the time of passage of the CRADA legislation. The treatment of intellectual property has sometimes been an obstacle to CRADAs

with universities, although some agencies have been able to manage this

issue. Partnerships with state and local governments have been successful in supporting economic development but CRADAs have not been

generally effective as a tool for helping those governments meet their

own technology needs. Using CRADAs for this purpose may require

some changes in policies and practice both at the laboratories and among

the state and local governments.
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Measures of Success in Technology Transfer Must Be Developed

by Agencies in Partnership with the Business Community

Agencies need to consider, with their business partners, the direction they

want to take with CRADA and patent licensing procedures. We have

suggested four goals that the agencies should pursue, in partnership with

their business partners, to further improve their effectiveness:

■ First, the laboratories need to manage their intellectual resources

to ensure that maximum value is derived both for their agency

mission and for the economy as a whole. This will require regular

reviews of the advances produced by their work and an assessment of the appropriate treatment of these advances (i.e.,

publication, patent protection, or holding for further development).

■ A second goal is to make it easier for others (principally in the

private sector) to identify the capabilities of the laboratories to

solve specific problems.

■ Third, the agencies and their laboratories need to develop a process, in partnership with the private sector, and others, to identify

and address barriers to collaboration on a continuing basis.

■ Finally, we suggest that the federal government must develop the

measures needed to monitor the technology transfer process and

must have a system in place to collect and disseminate such information.
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CHAPTER 2: AGENCY IMPLEMENTATION OF TECHNOLOGY

TRANSFER AUTHORITIES

To understand the issues discussed in later sections of the report, it is

important to first consider the ways in which the agencies have

integrated their technology transfer authorities with their missions. First,

these new authorities required the agencies to consider how the goal of

furthering technological competitiveness squared with their traditional

missions, such as improving the public health or maintaining our national defense. Second, the agencies had to make decisions concerning

these new kinds of agreements at a pace that was satisfactory to their

private sector partners, without compromising consistency of agency

decision-making or ignoring the substantive requirements imposed on

them to further domestic competitiveness (and not simply strengthen an

individual company).

Commercialization Objectives and Agency Missions

The integration of these new private-sector-focused mechanisms into

agency missions has been a particularly complex process. All of the

agencies seek to disseminate the results of their research to the scientific

and technical community, to industry, and often to the general public

through publications, personnel exchanges, conferences, and many other

means. The manner in which the CRADA and licensing mechanisms are

integrated into the agency depends in large part on how the commercialization process meshes with the agency’s mission, and its preexisting

technology dissemination mechanisms.

For some agencies, the development of new commercial products and

services from their research can play an important part in furthering their

mission. The National Institutes of Health, for example, recognize the

need for commercial development of portions of their research in order

to produce new medicines that will improve the public health. In other

circumstances, the development of the commercial products from agency

research may not contribute directly to the agency mission but may

further the agency’s goals by creating a level of expertise in the research

area that can be drawn on for mission purposes. The Department of

Defense (DoD) encourages technology transfer in the case of technologies

with both defense and commercial applications, viewing such efforts as a

way of controlling costs of developing defense uses for new technologies.

Finally, there is a third situation, in which mission-related research leads

to a result with commercial applications that have little direct relevance
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to the mission of the agency but that may produce new products with

significant commercial potential.

As this brief review suggests, technology transfer, as practiced by the

agencies, is an activity that not only provides imprortant new technologies for private sector use but also furthers the missions of the agencies.

Expedited Decision-making, Consistency, and Compliance with

Decisional Standards

The Stevenson-Wydler Act sought to speed the agency decision process

with respect to CRADAs by encouraging decentralization of the authority to enter such agreements. At the same time, the agencies wished to

achieve consistency in their decision-making and to observe the standards that Congress had imposed on the use of the CRADA mechanism.

The manner in which the agencies balance these competing objectives is

affected by their organizational structure and by the size and complexity

of their laboratory systems, producing different technology transfer

systems at different agencies. The adjusting of that balance is a continuing process, responsive to the experiences of the agencies and the suggestions of their business partners.

The agencies have also worked together to address implementation

issues on an interagency basis through the Interagency Working Group

on Technology Transfer and the Federal Laboratory Consortium (FLC).

The Working Group was initiated and chaired by the Department of

Commerce, following passage of the Federal Technology Transfer Act in

1986. It provides a means of sharing experiences and insights in the

implementation of the law and of coordinating agency positions on

crosscutting policy issues. This report is itself a result of interagency

cooperation in the identification and analysis of some common issues.

The FLC was created by Congress to provide training in technology

transfer to federal laboratory employees, to provide a clearinghouse for

technical assistance, to advise and assist the agencies and laboratories

with their technology transfer programs, and to facilitate communication

and coordination between the federal laboratory technology transfer

offices. It carries out these activities through a national management

support office, regional coordinators, and an active membership of

federal technology transfer professionals.

A more complete description of the way in which the principal agencies

have implemented the laws is provided in Appendix A.

Technology transfer not

only provides important

new technologies for

private sector use but also

furthers the missions of

the agencies.

This report is itself a

result of interagency

cooperation in the

identification and

analysis of some common

issues.
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CHAPTER 3: ISSUES IN FEDERAL TECHNOLOGY TRANSFER

One of the keys to the strength of our economy is our innovation

system—our society’s ability to generate new ideas and then develop them into new products and services. Part of the strength of this

system comes from the complex relationships among American business,

federal laboratories, and the nation’s research universities. The interactions among these three groups range from the publication of research

results to the exchange of scientific and technical personnel, and from

public discussions at professional society meetings to cooperative development and licensing of inventions. The purpose of this report is to

consider one set of interactions—the ways in which the federal laboratories can work with businesses and other parties under the CRADA and

patent licensing provisions of the Bayh-Dole and Stevenson-Wydler Acts.

The discussion in this section begins with an examination of the ways in

which these mechanisms have affected cooperative activities between the

labs and their private sector partners, and concludes with a brief review

of cooperation among the laboratories and state and local governments

and universities.

Working with the Private Sector: Challenges in Implementing the

Technology Transfer Authorities

Since the passage of the Stevenson-Wydler and Bayh-Dole Acts in 1980,

representatives of U.S. businesses have helped identify areas for improvement in cooperative activities with the laboratories. They have led

groups organized by the agencies to review and assess agency and

laboratory procedures and have been important participants in legislative hearings leading to changes in the laws. This section relies, in large

part, on the observations of knowledgeable industry representatives to

identify challenges to the technology transfer mechanisms. The Office of

Technology Policy hopes that this report will lead to a continuing dialogue among the business community and the research agencies concerning these and other challenges to successful research partnerships.

Finding the Right Laboratory

From the outset of federal technology transfer, it has been difficult for

private sector partners to identify those laboratories with knowledge and

abilities relevant to their needs. For large businesses, corporate staff may

be assigned the task of contacting the laboratories to gain information

about their strengths and accessibility. Smaller businesses, without

resources to invest in such efforts, may not seek access to the laboratories.

If they do, they are likely to contact laboratories located near their place

of business or where they know a scientist or technologist.

One of the keys to the

strength of our

economy is our

innovation system.
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The agencies have begun to address this challenge by creating tools to

expedite access to their laboratories. For example, DoD has upgraded its

“Techtransit” Web site to provide simpler access to partnering opportunities within DoD.1

 In addition to information about technology transfer

programs within the department, the page contains links to DoD’s

individual laboratories and to specific business opportunities at those

laboratories, such as technology available for licensing, cooperative

research and development (R&D) opportunities, and other resources. In

its recent review of technology transfer policies and procedures, the

Department of Energy (DOE) Technology Transfer Working Group

identified the need to make “partnership opportunities more accessible,

easier to identify and quicker to initiate.” The Working Group suggested

establishing a “‘one-stop-shopping’ DOE Home Page Web site for Technology Partnerships with links to all elements of the DOE technology

transfer program ... and to all aspects of technology partnering.”2

Other agencies, with more centralized technology transfer operations,

have also used the Internet to improve access to their partnership and

licensing opportunities. The Department of Agriculture’s Agricultural

Research Service (ARS) provides access to the technologies available for

licensing through an online database. Similarly, the National Institutes of

Health maintain a Web page that provides access to technologies available for licensing, as well as its policies and standard CRADA and licensing agreements.

It is important that broader guidance be available as well. While each

agency aims to meet its internal and perceived external customer needs

through its own system of Web sites, many smaller businesses do not

know which agencies have expertise in specific technologies. The FLC

has attempted to meet this need through a number of informationsharing devices, including newsletters, a Web site, and a laboratory

locator service. Its Web site3

 includes links to agency sites, a database

search capability based on laboratory missions, and the ability to submit

requests to its locator service. The locator service is provided by FLC

personnel and helps identify laboratories with expertise in technology

areas of interest to the inquiring party. Requests for assistance increased

substantially in the past year, and the FLC is working to encourage

continued increases in use of the system.

While the FLC’s system has been useful to many parties, an even more

comprehensive approach may be needed to simplify private sector access

1 See http://www.dtic.mil/techtransit/

2 DOE, Partnering for Success: A Review of DOE Technology Transfer Policies and

Procedures (June 1999), p. 13.

3 See http://www.federallabs.org.

The Department of

Agriculture’s

Agricultural Research

Service (ARS) provides

access to the technologies

available for licensing

through an online

database.
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OFFICE OF TECHNOLOGY POLICY

to the agencies’ research capabilities. With the advances of Internet-based

systems for the management of information and knowledge, it should be

possible to establish an integrated system providing linkage to all relevant federal sites and databases, although keeping the information

timely and current will present a significant problem. It is unclear at this

point whether there may also be opportunities for value-added information to be provided on a for-profit basis by private sector information

providers.

Identifying, Protecting, and Managing Intellectual Property at

the Laboratories

The management of intellectual property has often been a subject of

misunderstanding in research partnerships between the private sector

and federal laboratories, although it now seems to be a less frequent and

less important issue than at the outset of federal technology transfer.

Companies and the laboratories approach the issue from very different

perspectives, and the differing provisions of the CRADA and patent

licensing laws and regulations add further complexity.

General Attitudes Toward Intellectual Property

Business Attitudes

The Stevenson-Wydler and Bayh-Dole Acts anticipated that the federal

laboratories contained technologies that businesses would be able to

develop commercially as a source of competitive advantage. While this

has proved true in many cases, it has not been the sole motivation for

industries to work with the laboratories. In fact, some research has

suggested that the private sector regards access to a laboratory’s knowledge base on a nonproprietary basis as more important than gaining

access to intellectual property resulting from the laboratory’s research.

As with most observations concerning federal technology transfer, the

answer may well vary from agency to agency and from one scientific

discipline to another. For example, a biotechnology or pharmaceutical

firm seeking to partner with the National Institutes of Health may well

have as its objective gaining access to an innovation that will lead to a

new product or therapy. By contrast, airlines entering into a CRADA

with the Federal Aviation Administration’s research facility are more

likely to focus on the development of nonproprietary knowledge that

will improve the safety or reliability of their services.

With the advances of

Internet-based systems

for the management of

information and

knowledge, it should be

possible to establish an

integrated system

providing linkage to all

relevant federal sites

and databases.
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The private sector partner’s attitude toward intellectual property issues

will be shaped by its objectives in partnering with the laboratory. If the

partner is interested mainly in making use of the laboratory’s knowledge

base, it is not likely to be concerned with intellectual property issues and

may, in fact, be partnering with other companies for the purpose of

sharing knowledge. Where the firm seeks technology to assist in the

development of a new product, it will be concerned with the protection

of the technology from unauthorized disclosure and with the reasonableness of the terms and conditions imposed by the agency on the firm’s use

of the technology. The terms and conditions are particularly important

because technologies from the federal laboratories tend to be at a relatively early stage of development and their commercialization requires

investments many times greater than initial agency research costs. If the

terms and conditions are too restrictive, there will be little incentive to

make such large investments.

Agency Attitudes

The manner in which agencies choose to make their knowledge and

inventions available to the private sector is most heavily influenced by

their mission responsibilities. In many circumstances, the agency’s

mission is to encourage the development and diffusion of new technologies into the economy in order to accomplish the agency’s objective, such

as improved public health or increased agricultural productivity. The

critical question is whether patenting will enhance the potential for

dissemination and use of the technology. In some situations, broad access

to the technology is the most effective way to ensure widespread use. In

other situations, the exclusivity provided by a patent may be necessary to

encourage its development and use.

In circumstances where commercially valuable technologies are suitable

for use without further research or development or need for exclusivity,

an agency may work collaboratively with its partners but may share the

results of the work broadly (e.g., through nonexclusive licensing or

publication of the results). Examples of these kinds of technology transfers can be found in the measurements and standards work of the National Institute of Standards and Technology (NIST),4

 as well as in some

In some situations,

broad access to the

technology is the most

effective way to ensure

widespread use.

4 NIST seeks to encourage the adoption of its infrastructure technologies

through publication; providing technical support to standards committee

work; working with industry consortia; informal technical assistance;

prototype construction; public forums and workshops; cooperative work via

CRADAs, personnel exchanges, and guest researcher arrangements; and

patenting and licensing of the technologies. NIST deems patenting to be

appropriate where it enhances the commercialization potential of the

technology.
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examples from the biomedical and other fields. The United States Public

Health Service (PHS), parent agency of NIH, the Food and Drug Administration, and the Centers for Disease Control, has noted that it does not

generally seek patent protection “where further research and development is not necessary to realize the technology’s primary use and future

therapeutic, diagnostic, or preventive uses are not reasonably anticipated.”5 The Department of Agriculture’s ARS, with a long and successful history of technology transfer to benefit agriculture and consumers,

notes that “[m]any excellent original ideas are best transferred to those

who need the information by scientific publications or other methods

that do not involve patenting.”6

In other situations, the dissemination and adoption of the technology

may be furthered by seeking patent protection and licensing the resulting

intellectual property. Examples of such partnerships frequently occur in

the medical and agricultural fields. The private sector is often the source

of the funding necessary to take new technologies to markets in the form

of commercial products that achieve the public health or agricultural

productivity missions of the agencies. PHS has stated that it generally

seeks to patent and license technologies “when a patent will facilitate and

attract investment by commercial partners for further research and

commercial development of the technology.”7

 Similarly, while the transfer of agricultural research is often made through publication or public

distribution, ARS recognizes that “the public good is best served by also

transferring certain discoveries to the private sector for commercialization as an intermediate step in getting the benefits to the ultimate users,

farmers and consumers.”8

5 Public Health Service, Technology Transfer Manual, Ch. 200, PHS Patent

Policy at http://www.nih.gov/od/ott/

6 Agricultural Research Service, Technology Transfer in ARS, p. 1 (1999).

7 Public Health Service, Technology Transfer Manual, Ch. 300, PHS Licensing

Policy at http://www.nih.gov/od/ott/. The Public Health Service has said

that it will seek patent protection on biomedical technologies “only when a

patent facilitates availability of the technology to the public for preventive,

diagnostic, therapeutic, or research use, or other commercial use. Generally a

patent is necessary to facilitate and attract investment by commercial partners

for further research and commercial development of the technology, such as

where the utility of the patentable subject matter is as a potential preventive,

diagnostic, or therapeutic product. However a patent also might be necessary

to encourage a commercial party to make available for research use important

materials or products.” Public Health Service, Technology Transfer Manual, Ch.

200, PHS Patent Policy at http://www.nih.gov/od/ott/200p06.htm

8 Agricultural Research Service, Technology Transfer in ARS, p. 1.
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A third category of transactions involves technologies that are or will be

used by the agency in carrying out its mission, but that also have commercial applications. In such circumstances, the mission-related applications (and the competency of the federal laboratories to develop such

applications) may be strengthened by participation in research or development relating to their commercial use. Partnerships in this category

often involve technologies with both defense and commercial applications, as well as many technologies used by DOE’s national laboratories

for nuclear and defense purposes. In these circumstances, intellectual

property protection and exclusivity in licensing is sometimes necessary to

bring about the private sector commitment to develop the technology for

commercial use.

The Department of Defense has expressed its support for this type of

technology transfer in its directive defining its technology transfer activities. Its directive states, “Consistent with national security objectives

under 10 USC § 2501 ..., domestic T2 activities are integral elements of

DoD pursuit of the DoD national security mission and concurrently

improve the economic, environmental, and social well-being of U.S.

citizens....”9

 The three types of technology transfer recognized by DoD

are spin-off, dual-use, and spin-on activities, defined in a related DoD

instruction as follows:

Spin-off activities ... shall demonstrate DoD technology; e.g., commercial

capability of technologies already developed or presently being

developed for U.S. security purposes. The primary purpose of those

activities, which encompass T2, shall be to promote and make available

existing DoD-owned or [DoD]-developed technologies and technical

infrastructure to a broad spectrum of non-DoD applications.

Dual-use science and technology and other activities ... develop

technologies that have both DoD and non-DoD applications.

Spin-on promotion activities ... shall demonstrate the U.S. security utility

of technologies developed outside of the Department of Defense. That

goal shall be to incorporate the innovative technology into military

systems to meet mission needs at a lower acquisition cost by taking

advantage of the economies of scale by purchasing from a larger

industrial base.10

9 DoD Directive 5535.3 (May 21, 1999), available at http://www.dtic.mil/

techntransit/ 10 DoD Instruction 5535.8 (May 14, 1999), available at http://www.dtic.mil/

techntransit/
Tech Transfer 2000: Making Partnerships Work 19

OFFICE OF TECHNOLOGY POLICY

Summary

It is important for each side of the partnership to understand the other’s

perspective. The private sector partner’s objectives may range from

tapping the general knowledge base of the laboratory for nonproprietary

applications, to securing exclusive access to laboratory research to develop a new product. In the latter circumstances, the partner will be

concerned with preserving preferential access to the innovation and

securing the most favorable terms and conditions for the time consuming

and expensive development of commercial applications. By contrast, the

agency will be primarily concerned with how the transfer of the technology helps to accomplish its mission, as well as with compliance with the

legal requirements imposed on its interactions with the private sector.

Intellectual Property and the CRADA

The Stevenson-Wydler Act anticipates that intellectual property may be

created by the CRADA collaboration. It gives the laboratory director

authority to negotiate licensing agreements, under the provisions of the

Bayh-Dole Act or other authorities, for lab inventions or “other intellectual property developed at the laboratory.” The law was amended in

1996 to ensure that the CRADA partner received sufficient rights to

intellectual property to warrant the investments needed for commercialization. The laboratory is now required to ensure the private sector

partner “has the option to choose an exclusive license for a pre-negotiated field of use for any such invention....”11

As discussed earlier, the extent to which inventions are produced as a

result of CRADA work seems to vary widely. Our general survey of the

agencies suggests that relatively few inventions have required the use of

the licensing provisions discussed above. On the other hand, NIH reports

that intellectual property is being generated at approximately the same

level in CRADA research as in non-CRADA research—about 15 percent

of projects. In addition, there may be other reasons why licensing of

inventions may not occur. It seems reasonable to anticipate that the

private sector partner may be a co-inventor in many cases and have no

need for a license from the laboratory. Even if a license is needed, the

partner may delay the licensing decision until later to avoid paying a

licensing fee at the same time it is supporting the CRADA.

11 Public Law 104-390 amending 15 USC § 3710a(b)(1).

The private sector

partner’s objectives may

range from tapping the

general knowledge base

of the laboratory for

nonproprietary

applications, to securing

exclusive access to

laboratory research to

develop a new product.
20 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

Where intellectual property arises under the CRADA agreement, several

areas of confusion may occur. The first involves the question of whether

the licensing of such intellectual property is subject to the procedural

requirements of the patent licensing provisions of the Bayh-Dole Act—

particularly the requirement that notice and an opportunity to object be

given where an exclusive license is contemplated. The agencies generally

do not interpret the government patent licensing law and regulations as

requiring the publication of notices for exclusive licenses or the application of other requirements of those regulations to inventions occurring

under the CRADA.

A second area of confusion is sometimes created by the application of the

concept of “subject inventions” in connection with the work. CRADA

agreements typically provide that both sides shall have certain defined

rights in “subject inventions,” a concept which usually includes any

invention “conceived or first actually reduced to practice in the performance of work” under the CRADA. This concept is contained in the

definition of “made” in the Stevenson-Wydler Act12 and is identical to the

language of the Bayh-Dole Act, in which the term is used to describe the

category of inventions for which a nonprofit organization or small business may elect to retain title.13

The concept may create confusion where an invention, already conceived

by one of the parties prior to the CRADA, is first reduced to practice as a

part of the CRADA work. In particular, where the private sector partner

to the CRADA first reduces a preexisting invention to practice during the

CRADA, the government partner may assert that the invention has

become a “subject invention” in which it is entitled to certain rights, such

as a license to use the patent for governmental purposes. Some agencies

attempt to address this issue by defining “subject inventions” under a

CRADA as relating only to inventions “conceived” under the CRADA,

eliminating those first reduced to practice under the agreement.

Intellectual Property and Agency Patent Licensing

The agency attitudes toward intellectual property discussed above will

influence its decision whether to patent a laboratory invention and will

influence the terms under which such patents may be licensed. The BayhDole Act specifies a number of factors that the agency must consider

12 15 USC § 3703(9).

13 35 USC § 201(e).
Tech Transfer 2000: Making Partnerships Work 21

OFFICE OF TECHNOLOGY POLICY

when granting a license and also prescribes procedures for the licensing

process. The procedures for granting exclusive licenses have been the

most frequent source of misunderstanding between the agencies and the

business community.

In order to be considered for a license, an applicant must present the

agency “with a plan for development and/or marketing of the invention.” 14 This plan provides a factual basis to which the agency may apply

the statutory criteria governing the licensing decision. These criteria

require a number of different determinations by the agency before the

license may be granted. The process for granting an exclusive license

includes additional requirements.

In granting an exclusive or partially exclusive license, the agency must

first provide public notice of its intention to grant the license and an

opportunity for others to file written objections to the license. It must

then determine that both the government’s interest and the public interest “will best be served by the proposed license, in view of the

applicant’s intentions, plans, and ability to bring the invention to practical application or otherwise promote the invention’s utilization by the

public.” The agency is also required to determine that exclusivity is

necessary to achieve practical application of the invention and that

exclusivity is “a reasonable and necessary incentive to call forth” the

investment needed to achieve practical application or promote utilization

of the invention. Finally, the agency must determine that “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.” 15

These detailed criteria for granting exclusive licenses reflect some of the

same considerations noted in discussing the role that agency missions

play in determining attitudes toward technology transfer. Agencies such

as NIH and the ARS place a special emphasis on the need to limit exclusivity to those circumstances where it is needed to encourage commercial

development of the licensed technology. They note that a technology may

have multiple applications but that a company applying for an exclusive

license to all of those applications may have competence in only one. In

those circumstances, the agencies believe that granting an exclusive

license to an applicant firm that cannot pursue the commercial development of all of the applications may prevent those other applications from

14 35 USC § 209(a).

15 35 USC § 209(c)(1)(A)-(D).

Agencies such as NIH

and the ARS place a

special emphasis on the

need to limit exclusivity

to those circumstances

where it is needed to

encourage commercial

development of the

licensed technology.
22 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

being developed and new products being brought to market. For these

reasons, they limit licensing to those applications for which a company

has a viable commercial plan and the capability to develop those applications into products.

Confidentiality and Licensing of Information Generated by a

Laboratory under a CRADA

One aspect of intellectual property management under a CRADA that

has received relatively little attention is the treatment of information

developed by a laboratory in the conduct of work under the CRADA.

Congress has authorized the laboratories to identify and protect, for up

to 5 years, certain laboratory information resulting from CRADA research

activities. The information may be protected if it is of a type that would

be “a trade secret or commercial or financial information that was privileged or confidential if [it] had been obtained from a non-Federal

party....”16 Some laboratories have used this provision as a basis for

granting a CRADA partner exclusive access to CRADA information for

up to 5 years for the purpose of its commercial development.

The use of the confidentiality protection has generally been limited to

those circumstances where the laboratory data truly require such protection. Where the focus of the CRADA is on nonproprietary research, with

no use of proprietary corporate data and little anticipation of resulting

intellectual property, there is little reason to restrict access to the data

generated by the work. However, where proprietary corporate data is

used or intellectual property results from the work, there may be value in

protecting CRADA-generated information, as well as any inventions.

Where this approach has been used, the laboratories have periodically

assessed the information produced by the CRADA work in cooperation

with their private sector partners (as is done with invention disclosures).

The purpose of the assessment is to see if it the CRADA-generated

information has matured to the point where patenting is appropriate or if

protection from disclosure is still justified.

Some recent litigation generally affirms the agency’s ability to protect

CRADA information but also suggests some limits, especially in the case

of general information generated by the agency. In Delorme Publishing Co.

16 15 USC § 3710a(c)(7)(B).
Tech Transfer 2000: Making Partnerships Work 23

OFFICE OF TECHNOLOGY POLICY

v. NOAA, 917 F.Supp. 867 (D. Me. 1996), the court agreed that the National Oceanic and Atmospheric Administration (NOAA) was not required to disclose CRADA files in response to a Freedom of Information

Act request. NOAA had designated the files, which contained data used

to generate nautical maps and included information developed by

NOAA prior to but in contemplation of the CRADA, as confidential

under the CRADA provisions. NOAA’s CRADA partner then used the

data to generate its own set of nautical maps that it sold commercially.

Limits to the types of data that can be protected under the CRADA laws

are suggested by a related ruling, Maptech, Inc. v. Pinpoint Systems Int’l,

L.L.C. (C. D. Cal. 1999). In Maptech, NOAA’s private sector CRADA

partner sued another firm, alleging that it was selling nautical maps

identical to those the partner had produced using the confidential NOAA

CRADA data. The Maptech court found that the CRADA map data were

“government works, and as such are not entitled to any copyright protection” and declined to enjoin the third party’s sales of its maps. The

court’s opinion suggested that any claim that the data were protected

under the CRADA provisions would require an examination of the time

periods involved (confidentiality may not be granted for more than 5

years) and of the nature of the data (the data may be protected only if

they would be confidential if obtained from a private party).

A more elaborate approach advanced by some laboratories builds on the

Stevenson-Wydler Act’s statement that the agencies and their laboratories “may negotiate licensing agreements under section 207 of Title 35,

or under other authorities ... for inventions made or other intellectual

property developed at the laboratories.”17 It is argued that the confidential information generated under the CRADA should be regarded as

“other intellectual property” and, therefore, licensable. While the authority for such licensing is not explicit in either the Bayh-Dole Act or the

Stevenson-Wydler Act, the confidentiality provisions of the StevensonWydler Act have been cited as a basis for licensing the laboratory’s

information, at least within the 5-year period authorized by that law.

In such an approach, the laboratory would presumably be required to

accord the CRADA partner the same rights to an exclusive license on

such information as the lab would accord for laboratory inventions.

17 15 USC § 3710a(a)(2).
24 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

Government Licenses to Private Sector Inventions

Another issue cited by business observers relates to the government’s

practice of claiming a license to inventions made by a private sector party

under a CRADA or other technology transfer agreement with a federal

laboratory. The Stevenson-Wydler Act requires the agencies to ensure

that the government is normally granted a license to practice or have

practiced on behalf of the government any invention made by the collaborating party.18 The use of the word “normally” in the 1996 amendment to the Stevenson-Wydler Act was intended to give the agencies

discretion to forego the license to the government. Under the Atomic

Energy and Space Acts, DOE and NASA may take title to inventions

made under practically any type of arrangement, although these laws

also state that the agency may waive these rights.

19 In practice, however,

business representatives complain that the government almost always

retains a government license.

As a recent Government Accounting Office report noted, it appears that

the government seldom uses its licenses arising from inventions by

universities under the Bayh-Dole Act, and it is reasonable to expect a

similar situation with respect to agency rights to CRADA inventions.20 In

some instances, it may make sense for the government to retain a research license. However, if the technology being developed under a

CRADA is based upon a company’s proprietary technologies or its

declared background intellectual property, the case for waiving all government rights is strengthened. Alternatively, the license might be limited

to the mission purposes of the agency, such as to protect public health

and safety.

18 15 USC § 3710a(b)(2) requires a laboratory entering into a CRADA to “ensure

that a collaborating party may retain title to any invention made solely by its

employee in exchange for normally granting the Government a nonexclusive,

nontransferable, irrevocable, paid-up license to practice the invention or have

the invention practiced throughout the world by or on behalf of the

Government for research or other Government purposes.”

19 42 USC § 2457 (NASA); 42 USC § 2182 (Energy).

20 GAO, Technology Transfer: Reporting Requirements for Federally Sponsored

Inventions Need Revision. RCED-99-242, Aug. 12, 1999. The report identified a

number of circumstances interfering with the agencies’ ability to make use of

such licenses, such as the failure of the research organizations to provide

necessary information, and the fact that the patented technology is only a

part of a final product sought by the agency.

The government seldom

uses its licenses arising

from inventions by

universities under the

Bayh-Dole Act.
Tech Transfer 2000: Making Partnerships Work 25

OFFICE OF TECHNOLOGY POLICY

Recognizing the Diverse Uses of CRADAs

The CRADA mechanism was intended by Congress to be flexible enough

to meet the diverse needs of the private sector and the agencies in performing cooperative research. With this objective in mind, it was placed

outside the usual categories of government research agreements (i.e.,

contracts, grants, and cooperative agreements) and outside the scope of

agency regulations governing those agreements. As a result, CRADAs

have been used in many different ways and for many different purposes

by the agencies and their private sector partners in the past 12 years.

The discussion in this section begins with recognition that there are

circumstances in which the CRADA is not appropriate, such as where it

is used as a substitute for a contract. In the remainder of the section, the

continuum of research relationships covered by CRADAs is discussed

and their differences noted. While it is important to preserve the flexibility of the CRADA to cover all of these situations, it is also important for

the agencies and their partners to recognize the diverse ways it has been

successfully employed and the need to suit the terms of the agreement to

the uses intended by the parties.

Legal Limits to the Use of CRADAs

Several possible limits on the use of CRADAs have been suggested in

litigation. One case suggests that the use of a CRADA as a substitute for a

normal contractual agreement may be suspect, especially where there

appears to be little collaborative research involved. The Environmental

Protection Agency (EPA) entered into a CRADA to develop, produce, and

distribute some EPA standard reference chemicals and was sued by a

company that had sought to participate in the CRADA but had not been

selected. The appellate court ruled that the reference chemicals to be

distributed via the CRADA had previously been made available to the

public through contract and ruled that EPA appeared to be bypassing the

procurement laws in its use of a CRADA for this purpose.21 The case was

settled before any further decision was rendered.

A second legal challenge, involving a CRADA entered into by the National Park Service (NPS), also appears to suggest the importance of

cooperative research as the focus of the CRADA. Edmonds Institute v.

Babbitt, 42 F.Supp 2nd 1 (1999), involved a CRADA awarded in 1997 by

the Interior Department’s NPS. The purpose of the CRADA was to allow

21 Chem Serv., Inc. v. Environmental Monitoring Sys. Lab., 12 F.3rd 1256 (3rd Cir.

1993).
26 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

the corporate partner to sample microorganisms at Yellowstone National

Park, which it would then analyze for possible medical uses. The

CRADA required the partner to share with NPS any revenue received in

connection with drugs derived from such microorganisms. The court

refused to dismiss the claim that NPS’s use of a CRADA violated the

Federal Technology Transfer Agreement and stopped further work under

the CRADA until an environmental assessment was conducted by the

agency.22

The Extensive Range of Research Relationships Covered by CRADAs

Today many different types of research relationships are encompassed

within the CRADA agreement. These relationships are a function of

differing agency mission objectives, differing private sector research

objectives, and differing levels of development of the technology that is

the subject of the CRADA.

Agencies interested in achieving a broad dissemination of the technology

being researched may favor the publication of project results. Where the

dissemination of the research is likely to take place through the marketing of commercial products and services, the agency is more likely to

support the patenting or confidential treatment of the project results.

Industry’s perspective is likely to be shaped largely by the degree to

which it is willing to share proprietary information with the laboratory as

a part of the project and its need for intellectual property rights or exclusive access to project results to encourage commercialization. The variables and corresponding levels of contractual engagement might be

expressed in three different types of arrangements:

1. Nonproprietary CRADAs: The laboratory is pursuing missionrelated R&D not requiring confidentiality or intellectual property protection for mission purposes. Companies wish to

participate in the research but do not view confidentiality or

intellectual property protection as necessary to protect their

interests. The parties wish to share the results of the work either

22 The court also questioned whether NPS was a laboratory as that term is

defined in FTTA. Although the government did not appeal the injunction,

there are still a number of issues to be resolved. The plaintiff also sued NPS

under the Freedom of Information Act to obtain a copy of the financial terms

of the NPS CRADA. No decision has yet been handed down on these aspects

of the case.

Today many different

types of research

relationships are

encompassed within the

CRADA agreement.
Tech Transfer 2000: Making Partnerships Work 27

OFFICE OF TECHNOLOGY POLICY

through written reports or nonproprietary technical briefings.

The companies provide support for the work, critique it as it

proceeds, and propose additional matters to be pursued.

2. First-level Proprietary CRADAs: The laboratory is pursuing

mission-related R&D that aligns with the commercial needs of a

company. The laboratory’s mission is best accomplished through

the commercialization of the technology and its use to produce

new products and services, either because availability of the

product or service will advance the mission or because development of the product or service will enhance other missionrelated uses of the technology. Most of the work will be based

upon the laboratory’s own knowledge base, and the company

will provide funding and participate in the research. The objective of the company is to gain a competitive, and hopefully

proprietary, advantage as a result of the project, based upon

intellectual property and the company’s own product and

market knowledge, some of which is shared with the laboratory.

3. Second-level Proprietary CRADAs: The laboratory has a special

competence or knowledge base, developed for mission purposes, that is needed to advance a specific aspect of the

company’s commercial work. Both parties bring intellectual

property to the project, and the company funds at least a portion

of the laboratory efforts. The agency’s mission will best be

advanced by the development of the technology into commercial products or services. There will be close collaboration, and

the parties will aggressively protect any intellectual property

generated by the work.

Although there are many possible variations on these three examples,

they serve to illustrate the different levels of engagement that may be

encompassed within CRADAs. In practice, some companies have actually moved through all three levels in pursuing a technology development at a laboratory, although the CRADA instruments covering the

work contained nearly identical provisions.

At some laboratories, the first example above could possibly be accomplished through informal interactions, without the use of a CRADA. But

at others, such as a DOE Defense Programs laboratory, the lack of a

CRADA could create problems for the private sector firms because of
28 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

DOE’s unique statutory authority to assert ownership rights to inventions

arising even under informal industry/laboratory arrangements.23

The agencies have attempted to expedite the negotiation process by

developing “model” CRADAs for use by their laboratories. If the diverse

uses of the CRADA mechanism are to be recognized, the agencies must

be certain these “models” have the flexibility needed to meet these

differing circumstances. For example, the intellectual property provisions, which are often the most time-consuming provisions to negotiate,

might be extremely simple at the first level of engagement discussed

here, enabling the parties to put an agreement in place more quickly.

Another area that might be both simplified and rationalized between

agencies relates to the financial commitments required of private sector

participants. Some laboratories, particularly the DOE governmentowned, contractor-operated (GOCO) laboratories, are required to secure

an industry “match” in funding equal to at least 50 percent of the total

cost for the project. In the “nonproprietary CRADA” example, where one

or more companies have a general interest in the laboratory’s missionrelated work, the financial contribution of the private sector

participant(s) is not likely to meet the funding requirement. In this and

other instances, a commonsense approach to private sector spending

commitments would be to base the rights on the contributions (financial

and in-kind) made by the parties.

Other Types of CRADAs

Several other types of CRADAs have proved useful in achieving the

goals of the technology transfer laws. These include the “blanket”

CRADA and the “technical assistance” CRADA. The DoD recognized

these variations in a recent report, expressing support for their use.24

The “blanket” or “umbrella” CRADA is designed to encourage the

development of relationships between a laboratory and businesses of a

specific type or in a specific region. These agreements may be entered

into with an organization that represents a broader group of businesses,

within either a specific sector or a specific geographical region. The

“blanket” agreement makes it easier for the individual businesses that are

members of the organization to become acquainted with the laboratory

and its expertise, with the hope that such acquaintance will ripen into

more ambitious cooperative research efforts.

23 42 USC § 2182.

24 DoD, Cooperative R&D Agreements: Value Added to the Mission, April 1999, at

http://www.dtic.mil/techtransit

If the diverse uses of the

CRADA mechanism are

to be recognized, the

agencies must be certain

these “models” have the

flexibility needed to meet

these differing

circumstances.

Several other types of

CRADAs have proved

useful in achieving the

goals of the technology

transfer laws. These

include the “blanket”

CRADA and the

“technical assistance”

CRADA.
Tech Transfer 2000: Making Partnerships Work 29

OFFICE OF TECHNOLOGY POLICY

A “technical assistance” CRADA is somewhat similar, creating a relationship between a laboratory and a local or regional organization concerned

with the competitiveness of the businesses in its area. The CRADA

creates a structure for the efficient delivery of technical assistance by the

laboratories to the individual businesses represented by the local or

regional organization.

In both of these types of agreements, the relationships created are relatively simple and the complex issues of intellectual property discussed

earlier are unlikely to arise. Development of “model” agreements for

these two categories of cooperation might help to further their use and to

broaden the scope of federal technology transfer.

Dealing with U.S. Competitiveness Concerns and Product

Liability Issues

The process of negotiating CRADAs and patent licenses has become

simpler for both businesses and government partners as they have begun

to understand one another’s needs and constraints. However, there are

still several areas in which the business community has difficulty understanding and accepting clauses that the laboratories seek to include in

technology transfer agreements. The principal concerns relate to clauses

designed to protect U.S. competitiveness and those governing the liability of the government in connection with the agreement. In the case of

U.S. competitiveness, the concerns often relate to the complexity of the

requirements and the apparent lack of flexibility in the criteria applied by

the laboratories. In the case of the liability and indemnification clause,

the concerns generally arise from the strictness of the clauses and the

agencies’ inability to offer alternatives.

U.S. Competitiveness Provisions

The CRADA and licensing authorities attempt to ensure domestic advantage from the development of the transferred technology. Both the BayhDole and Stevenson-Wydler Acts encourage the domestic manufacture of

products embodying the invention when those products are sold for

domestic consumption. Where a foreign party is involved in the transaction, additional requirements encourage domestic access to foreign

research collaborations, foreign protection of intellectual property, and

foreign export controls.

The precise application of these requirements is made more complicated

by the differences in treatment of government-owned, governmentThe process of

negotiating CRADAs

and patent licenses has

become simpler for both

businesses and

government partners as

they have begun to

understand one another’s

needs and constraints.
30 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

operated (GOGO) laboratories and GOCO laboratories. Many of the large

DOE laboratories, such as Los Alamos, Sandia, and Livermore, along

with Federally Funded Research and Development Centers (FFRDCs),

such as NASA’s Jet Propulsion Laboratory, fall into the GOCO category.

Intellectual Property Licensing with International Aspects

Licensing of Intellectual Property from Government-operated

Laboratories

In the case of intellectual property owned by a federal agency (as in the

case of inventions arising in GOGO laboratories), the Bayh-Dole Act

requires that the agency “normally” grant rights only to a licensee that

agrees to manufacture substantially in the United States “any products

embodying the invention or produced through the use of the invention.”25 The statute does not define the phrase “manufacture substantially.” The statement that such a requirement shall “normally” be imposed has been interpreted by the agencies to mean that exceptions to the

“substantial manufacture” test may be allowed, although the criteria for

such exceptions are not stated in the law.

The law and implementing regulations include several other provisions

that may be important in the international context. They provide a

preference for small business licensees and, in fact, the majority of licenses entered into by the agencies are with small businesses. They also

require the giving of public notice when an agency is contemplating the

granting of an exclusive license, thus affording interested parties an

opportunity to seek a license or to oppose the proposed grant of exclusivity. In the agencies’ experience, the notice procedure has been extremely

useful in helping to discharge their licensing responsibilities and, in some

instances, to identify small domestic firms able to commercialize the

technology better than are larger domestic and foreign applicants.

Licensing of Intellectual Property from Contractor-operated

Laboratories

Domestic manufacture requirements are also imposed on the licensing

activities of entities operating GOCO laboratories, although with some

small legal differences. In addition, there are some minor differences

between GOCO laboratories operated by nonprofit organizations (e.g.,

universities) and those operated by for-profit entities. If the operator of

the laboratory is a nonprofit organization, it is able to claim rights to its

inventions under the Bayh Dole Act and license those rights as provided

for by that law. The domestic manufacture provisions of the Bayh-Dole

25 35 U.S.C. § 209(b).
Tech Transfer 2000: Making Partnerships Work 31

OFFICE OF TECHNOLOGY POLICY

Act applicable to nonprofit organizations provide that neither such

entities, nor their assignees:

shall grant to any person the exclusive right to use or sell any subject

invention in the United States unless such person agrees that any

products embodying the subject invention or produced through the use

of the subject invention will be manufactured substantially in the United

States. However, in individual cases, the requirement for such an

agreement may be waived by the Federal agency under whose funding

agreement the invention was made upon a showing by the small

business firm, nonprofit organization, or assignee that reasonable but

unsuccessful efforts have been made to grant licenses on similar terms to

potential licensees that would be likely to manufacture substantially in

the United States or that under the circumstances domestic manufacture

is not commercially feasible.26

This language contains a clearer recognition than the law governing

agency licensing that the domestic manufacture preference may need to

be waived in certain circumstances, and also provides a clearer statement

of the basis and procedure for such waivers (as opposed to the GOGO

language discussed above).

Finally, some special considerations apply to the GOCO laboratories

operated for DOE by their contractors. In the case of most of its GOCO

laboratories, DOE provides the operators with rights similar to those

granted under the Bayh-Dole Act, but on the basis of patent waivers

granted by DOE. These waivers impose requirements of substantial

manufacture in the United States, consistent with the requirements

applicable to other federal laboratory operators.

Executive Order 12591

A second set of procedural requirements applicable to all licensing

transactions is contained in Executive Order 12591.27 That order, based on

the Federal Technology Transfer Act, the Bayh-Dole Act, and other

executive orders, contains special provisions designed “to ensure that the

United States benefits from and fully exploits scientific research and

technology developed abroad” in instances where CRADAs or licensing

arrangements are negotiated with foreign persons or industrial organizations. The order defines this category of foreign persons as “foreign

26 35 U.S.C. § 204.

27 52 Fed. Reg. 13414 (April 10, 1987).
32 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

persons or industrial organizations (where these entities are directly or

indirectly controlled by a foreign company or government).”28

In transactions involving such persons, agencies are directed to “give

appropriate consideration” “in consultation with the United States Trade

Representative” to several different factors:

1. whether such foreign companies or governments permit U.S.

participation in comparable cooperative research and licensing

arrangements,

2. whether the foreign governments “have policies to protect the

United States intellectual property rights,” and

3. whether the foreign governments have “adequate measures” to

prevent unauthorized transfers of technologies subject to U.S.

national security export controls.

CRADAs with International Aspects

A second set of laws governs the use of Cooperative Research and Development Agreements (CRADAs) by the federal GOGO and GOCO laboratories. Once again, there are differences in the standards and procedures

for the two categories of laboratories, and some special procedural

requirements for DOE laboratories.

The CRADA laws deal with international competitiveness issues by

requiring the agencies to give preference to businesses located in the

United States that agree to substantial domestic manufacture of resulting

products. The agencies read this language as effectively requiring that a

domestic manufacture requirement be included in the CRADA, subject to

the same possible exceptions already noted.29 Although the procedures

for exceptions to this requirement are not addressed in the statute, some

28 E.O. 12591, Sec. 4(a).

29 The agencies are required to “give preference to business units located in the

United States which agree that products embodying inventions made under

the cooperative research and development agreement or produced through

the use of such inventions will be manufactured substantially in the United

States and, in the case of any industrial organization or other person subject

to the control of a foreign company or government, as appropriate, to take

into consideration whether or not such foreign government permits United

States agencies, organizations, or other persons to enter into cooperative

research and development agreements and licensing agreements.” 15 U.S.C. §

3710a(c)(4)(B). The second part of this requirement is substantially similar to

one of the requirements of E.O. 12591.

The CRADA laws deal

with international

competitiveness issues

by requiring the agencies

to give preference to

businesses located in the

United States that agree

to substantial domestic

manufacture of resulting

products.
Tech Transfer 2000: Making Partnerships Work 33

OFFICE OF TECHNOLOGY POLICY

agencies have attempted to formulate standards and procedures to

govern such decisions.30

Once a CRADA is entered into, the laboratories are authorized to “negotiate licensing agreements” pursuant to the authorities of the StevensonWydler Act for CRADA-generated intellectual property.31 These licensing

agreements trigger the “substantial manufacturing” requirements and

other procedural requirements relating to agency licensing of intellectual

property discussed in the preceding section. The requirements of Executive Order 12591, discussed in the preceding section, are also applicable

to CRADAs.

The CRADA process has several special requirements applicable to

GOCO labs. Time limits are set for the approval of GOCO CRADAs (and

the related joint work statements used by the DOE laboratories as a

preliminary step to CRADAs).32 In addition, because of the complexity of

the process when GOCO laboratories are involved, agencies with GOCO

laboratories are required to develop “one or more model cooperative

research and development agreements, for the purpose of standardizing

practices and procedures, resolving common legal issues, and enabling

review of cooperative research and development agreements to be

carried out in a routine and prompt manner.” Pursuant to this requirement, DOE has developed and given broad circulation to a model

CRADA that has optional clauses designed to meet the different types of

cooperative activities and/or needs of the private sector participants.33

30 See DOE Model CRADA, Art. XXII.

31 More specifically, the laboratory is obligated “to 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, for reasonable compensation when appropriate.” 15

U.S.C. §3710a(a)(2) and (b)(1).

32 The joint work statement, which must clearly identify foreign entities

formally involved in a CRADA, must be submitted to the DOE for approval

prior to the execution of the CRADA and must be approved or rejected for

cause by the DOE within 90 days. The resulting CRADA must be reviewed by

the DOE and, if fully compliant with the joint work statement and approved

terms and conditions, be approved for signature by the laboratory director

within an additional 30 days after being submitted to the DOE by the

laboratory. 15 USC § 3710a(c)(5)(C).

33 See http://www.gc.doe.gov/gc-02/crada/toc.htm
34 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

Industry Concerns

The principal private sector concern has been the domestic manufacture

requirement generally imposed in both licensing and CRADA transactions.

Many firms with extensive international operations have stated that they are

unable to make commitments years in advance concerning the place of

manufacture of products that may emerge from these collaborations, emphasizing the shifting and fluid nature of the international supply chains used to

produce their products. They also suggest that the principal economic benefit

relating to the development of new products and services may come from

hosting the research and development in the United States, rather than from

conducting the manufacturing process domestically. Finally, the lack of clear

and uniform decisional criteria for the waiver of these provisions may cause

agency and laboratory decisions to appear arbitrary to the business community. As a result, many companies, particularly those with extensive international production operations, may find it difficult to enter into technology

transfer agreements with a federal laboratory.

Defining the domestic economic benefits that must be present in any

cooperative research relationship or intellectual property license is both

politically sensitive and factually demanding. Nevertheless, the increasingly global nature of commerce and the emerging importance of federal

technology transfer may make such a resolution necessary to effective

use of the transfer mechanisms.

Indemnification and Product Liability

Many CRADA and license agreements offered by a federal laboratory to

a prospective CRADA partner or licensee contain language requiring that

the private sector partner indemnify the government against any liability

that might arise from the research work or from products ultimately

resulting from that work. One such clause provides:

Except for any liability resulting from any negligent acts or omissions of

Contractor, Participant indemnifies the Government and the Contractor

for all damages, costs and expenses, including attorney’s fees, arising

from personal injury or property damage occurring as a result of the

making, using or selling of a product, process or service by or on behalf

of the Participant, its assignees or licensees, which was derived from the

work performed under 14 December 14, 1995 this CRADA. In respect to

this Article, neither the Government nor the contractor shall be

considered assignees or licensees of the Participant, as a result of

reserved Government and Contractor rights....34

34 Article VI, Department of Energy Modular CRADA, at http://

www.gc.doe.gov/gc-02/crada/art6.htm

Defining the domestic

economic benefits that

must be present in any

cooperative research

relationship or

intellectual property

license is both politically

sensitive and factually

demanding.
Tech Transfer 2000: Making Partnerships Work 35

OFFICE OF TECHNOLOGY POLICY

In a litigious society, private sector firms are sensitive to the legal and

financial risks arising from product liability and to the potential burden

of such an indemnification requirement. For this reason, companies

entering into technology transfer transactions with the agencies and

laboratories often hesitate to agree to indemnification and product

liability clauses offered by the agencies. The result is often extensive

delays, additional costs for the company (particularly for small businesses that pay hourly fees to outside attorneys) and strained relations

between the parties that may continue even after the work on the project

begins.

Many agencies and laboratories have been unwilling to show flexibility

in addressing this issue, arguing that the government must be protected

from any liability arising out of the commercial activities of the company.

At the same time, there has been no litigation in which such CRADArelated liability has been asserted against an agency.35 In these circumstances, it does not seem unreasonable for the agencies to show some

flexibility concerning this clause, especially in the case of nonprofit and

small-business partners. Defusing this issue early in the negotiations

might lower anxiety levels and minimize the potential for later negative

impacts on the negotiations.

Working with Other Public Sector Institutions

The Stevenson-Wydler Act encourages federal laboratories to use their

CRADA authority as a mechanism to work more closely with state and

local governments and with universities. However, attention over the

years has focused on federal laboratory collaborations with the private

sector. The benefits and challenges of partnering with other public institutions have not been as well explored. Because such partnerships are an

essential part of our technology infrastructure, it is important to have a

better understanding of the ways in which the agencies have used them.

35 Since CRADAs do not contain an “Authorization and Consent” clause

waiving sovereign immunity, it is not clear that the government could be

liable for any patent or copyright infringement or liable on the basis of any

theory of product liability even in the absence of the proposed clause.
36 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

Federal Laboratory Interactions with Universities:

Intellectual Property Issues

In passing the Stevenson-Wydler Act, Congress observed:

Many new discoveries and advances in science occur in universities

and federal laboratories, while the application of this new knowledge to

commercial and useful public purposes depends largely upon actions by

business and labor. Cooperation among academia, Federal laboratories,

labor, and industry, in such forms as technology transfer, personnel

exchanges, joint research projects, and others should be renewed,

expanded, and strengthened.36

Most agencies and their laboratories have close relationships, both institutional and individual, with the university community. Most regularly fund

university research, and many regularly host visiting university researchers—both professors and graduate students. In addition, many federal

researchers hold adjunct positions on university faculties. As noted in the

discussion of individual agency technology transfer efforts, many agencies have used the other partnership authorities available to them to

create research partnerships with universities.

Within the Department of Defense, the three Services have emphasized

the use of Educational Partnership Agreements. To date, DoD has over

200 formal partnerships with universities and community colleges as

well as local public school districts. These partnerships, as defined under

10 USC § 2194, are formal agreements between a laboratory and an

educational institution for the purpose of transferring or enhancing

technology applications, providing technical assistance, exchanging

personnel, or lending or donating educationally useful laboratory

equipment for all levels of education.

NIST has entered into a Memorandum of Understanding with the University of Maryland and Montgomery County, Maryland, to create the

Center for Advanced Research in Biotechnology (CARB) in Rockville,

Maryland. CARB allows academic, government, and industry scientists

to work together in a modern facility on problems of the greatest importance to biotechnology research in the field of protein structure, function,

and design. It also provides an ideal setting for the training of graduate

and postdoctoral students. The nearby location of many biotechnology

firms, as well as the laboratories of the National Institutes of Health and

NIST, also enables the center to work with industry through personnel

Most agencies and their

laboratories have close

relationships, both

institutional and

individual, with the

university community.

36 15 USC Sec. 3701 (3)
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OFFICE OF TECHNOLOGY POLICY

exchanges, support of the center’s research programs, and other relationships negotiated on a case-by-case basis.

NIST has created a similar partnership with the University of Colorado at

Boulder, originally named the Joint Institute for Laboratory Astrophysics

and now known simply as JILA. JILA’s mission now includes the development of new measurement methods and standards, the improvement

of industrial competitiveness, and the education of graduate students in

technology. It is a center for collaborative research, with a fellowship

program bringing distinguished scientists from around the world to the

institute. JILA also brings industry visitors to its facilities and applies

its technical expertise to help solve technical problems facing U.S.

companies.

Although many partnerships have been created between the laboratories

and universities, the data gathered for this report indicate that relatively

few federal laboratories have entered into CRADAs with universities.

The explanation most often offered for the lack of CRADAs with universities relates to the apparently conflicting approaches to intellectual

property management under the Bayh-Dole and Stevenson-Wydler Acts.

Under the Bayh-Dole Act, a university may generally retain title to any

invention made in the conduct of federally funded research. While a

funding laboratory or agency may deny those rights in “exceptional

circumstances,” laboratories and agencies are reluctant to do so, because

they need the knowledge of the university researchers and those researchers are unlikely to participate if they do not receive their BayhDole rights. In the case of a CRADA with a private sector partner, however, the situation may become more complicated, because the

Stevenson-Wydler Act requires the laboratory to offer the business

partner an option to license technology generated by the government

under the CRADA. If a university is a sole or joint inventor of technology

under the CRADA, the government would not be able to provide its

partner with rights to the university inventions. Several solutions to this

problem have been pursued by the agencies. For example, where the

private sector partner funds the university work, the provisions of the

Bayh-Dole Act are inapplicable. Even when the funding comes from the

agency, the issue may be addressed by negotiation of an agreement

between the university and the private sector partner, providing an

option for an exclusive license to any inventions on terms consistent with

the agency’s obligation. While these and other approaches may avoid the

Under the Bayh-Dole

Act, a university may

generally retain title to

any invention made in

the conduct of federally

funded research.
38 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

problem of fragmentation of intellectual property rights, many laboratories nevertheless appear reluctant to include universities or other entities

with Bayh-Dole rights in their CRADAs.37

Federal Laboratory Interactions with State and Local Governments

One of the reasons for the Stevenson-Wydler Act was to provide formal

authority for the laboratories to work more closely with state and local

governments. The Act states that “it is in the national interest to promote

the adaptation of [laboratory] technological innovations to State and local

government uses. [Such t]echnological innovations can improve services,

reduce their costs, and increase productivity in State and local governments.”38 The laboratories have continued their traditional, informal

cooperation with local government entities and many are now working

successfully with both state and local governments to support economic

development through CRADAs and a variety of other mechanisms.

One example of the successful linking of laboratories to state and local

economic development initiatives is the Technology Ventures Corporation (TVC), founded in 1993 by Lockheed-Martin, operator of the DOE’s

Sandia National Laboratory in Albuquerque, New Mexico. TVC was

established as a nonprofit economic development company to assist in

moving commercially valuable technologies from Sandia to the private

sector. In less than six years, 36 new companies have been started in and

around Albuquerque, including 22 based on Sandia technology. Over

$134 million in investment capital has been raised by client companies

and over 1900 new jobs have been created. In addition, nearly 500 private

sector firms have turned to TVC for technical or business assistance. In a

July 1999 report on regional economic development, the Milken Institute

identified Albuquerque as having the fastest growing high-technology

output in the country. Some of that success has been attributed to TVC’s

work.

37 A related problem has arisen with respect to those GOGO laboratories that

rely on contractors to perform some laboratory work. In an era of shrinking

budgets, GOGO laboratories are increasingly reliant on the use of contractors

to carry out routine laboratory tasks. If these contractors are tasked to carry

out work in connection with a CRADA, it is possible that the contractor

might become an inventor or co-inventor of inventions, entitled to claim title

to them under federal law, thus frustrating the laboratory’s ability to provide

its private sector partner with rights to all inventions arising under the

CRADA.

38 15 USC § 3701(9)
Tech Transfer 2000: Making Partnerships Work 39

OFFICE OF TECHNOLOGY POLICY

Another interesting example of collaboration aimed at achieving economic

development and involving a federal agency, state and local government,

universities, and industry is the Biotechnology Research and Development Corporation (BRDC). BRDC resulted from the collaborative efforts

of the Department of Agriculture’s Northern Regional Research Center,

local government authorities in Peoria, Illinois, and a number of private

sector companies interested in agricultural technologies. BRDC currently

has 10 publicly traded companies as shareholders. It helps to fund collaborative research at the Agriculture Research Service’s (ARS) laboratories and 26 universities, looking for embryonic technologies that it can

push to proof of concept. Early-stage commercial development is generally handled by finding a suitable private sector partner to work with the

inventors (generally a BRDC shareholder but sometimes a BRDC licensee). During 1998, BRDC filed 11 new patent applications, had 24

patents issued or applications allowed, and executed eight license and

option agreements.

Many interesting and important technical achievements have come out of

BRDC-backed research. ARS scientists, working with Dow Chemical

Company scientists, have developed a family of composite materials

derived from starches and flours that exhibit remarkable mechanical and

strength properties and can be fabricated into injection and compression

molded and extruded articles. Rights to certain uses of the materials have

been licensed to Dow. BRDC also funded research at Purdue University

producing a plant gene promoter useful in genetically engineered crops

and has granted licenses or options to license to nearly every major

agriculture biotechnology company in the world, as well as making it

available to researchers. This technology has generated more than 50

percent of BRDC’s licensing income. BRDC, in collaboration with the

University of Illinois, has also filed for the first patent on stem cell technology involving an animal other than the mouse. This technology may

provide means of reproducing superior genetic versions of production

animals. Licensing of this technology is now under way.

The Air Force Research Laboratory (AFRL) has successfully utilized

Partnership Intermediary Agreements (PIAs) as defined in 15 USC § 3715

to interact and leverage state and local government resources relative to

economic development and community outreach. AFRL has four PIAs

with the states of New York, Florida, Ohio, and New Mexico and has

leveraged over $12 million in state and local government funds and

resources for promoting AFRL capabilities providing small business

assistance and community outreach. For example, the AFRL PIA with

New Mexico has supported the development of over 50 small-business

Many interesting and

important technical

achievements have come

out of BRDC-backed

research.
40 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

CRADAs, provided technical assistance to over 150 SBIR awardees in

New Mexico, as well as supported the development of 53 CRADAs and

Educational Partnership Agreements with universities, community

colleges, and public school districts in New Mexico. The Air Force recognized the importance of these activities by granting them the General

Ronald Yates Technology Transfer Team Award for 1997.

A different approach to collaboration with the states is exemplified by the

Department of Commerce’s EPSCoT initiative (Experimental Program to

Stimulate Competitive Technology). This program was established in

1998 to support state and local efforts to promote technology-based

economic development. As such, EPSCoT has the flexibility to support

cooperative initiatives between technology developers and local entities

concerned with the diffusion and application of new technologies. Eligibility to apply for EPSCoT grants is restricted to “those states that have

historically received less Federal R&D funds than a majority of the

states.”39 In 1999, eligible states were those that ranked lower than 26th

in the distribution of Federal R&D funds between 1990 and 1996. The

program has had limited resources, however, awarding $2 million in

FY 1999. An evaluation program is currently under way to assess the

role the program has played in facilitating technology-based economic

development.

Although economic development has been a productive area for partnerships among the laboratories and state and local governments, transferring federal laboratory technologies to the states for their own use has

been less successful. Few state officials view federal laboratories as

sources of technology for their use and laboratories seldom pursue

opportunities to meet state and local government internal technology

needs. Even where such partnerships may be proposed, differing contracting practices among the states may pose obstacles to cooperation.

Boilerplate terms for state contracting are often at odds with federal

technology transfer laws and practices, and the intellectual property

rights sought by the states are reminiscent of those sought by the federal

government prior to the Bayh-Dole Act and Executive Order 12591. For

example, the states often seek to own laboratory inventions and project

data arising from cooperative work and want the laboratories to commit

to firm deliverables rather than “best efforts.” The states sometimes

39 15 USC § 3704(f))

EPSCoT has the

flexibility to support

cooperative initiatives

between technology

developers and local

entities concerned with

the diffusion and

application of new

technologies.
Tech Transfer 2000: Making Partnerships Work 41

OFFICE OF TECHNOLOGY POLICY

require indemnification from the federal laboratories against any liability

and may defer payments to the laboratories for work to be performed.

These terms are generally nonnegotiable.

The states and the federal laboratories have begun to find innovative

ways to cooperate to further economic development, using federal

technology resources, although they have not pursued partnering

through CRADAs to meet state government technical needs. The latter

situation might best be addressed by a greater understanding on both

sides of the potential benefits of such partnerships. In addition, the

prospect of such arrangements would be furthered by state adoption of

laws similar to the Bayh-Dole and Stevenson-Wydler Acts, thus providing complementary approaches at the state and federal levels on technology transfer and intellectual property practices. Enactment of these types

of laws might also invigorate the states’ ability to work with their own

universities both to meet their own technology-based needs and to

support economic development.
OFFICE OF TECHNOLOGY POLICY
Tech Transfer 2000: Making Partnerships Work 43

OFFICE OF TECHNOLOGY POLICY

CHAPTER 4: WHAT CONSTITUTES SUCCESS

IN TECHNOLOGY TRANSFER?

The question of how to measure the success of federal technology

transfer efforts under both the Stevenson-Wydler and Bayh-Dole Acts

has occupied the attention of the agencies, the business community,

interested members of Congress, and academic observers. Answering

this question requires an understanding of what results Congress sought

to achieve by authorizing these programs. The legislation suggests that

Congress’ ultimate objectives were to improve the competitiveness of

American industry by the introduction of new technologies, generate

new economic activity and new jobs within these industries, and

strengthen the scientific and technical capabilities of the federal laboratories and their ability to partner with U.S. industry. To accomplish these

ultimate objectives, the laws focused on a number of things that needed

to be done, e.g., making technology transfer an important mission of the

federal laboratories, creating a simple form of agreement for laboratories

to use in partnering with industry, and defining the criteria to be used in

selecting research partners or licensees for agency intellectual property.

Like most research-based activities, technology transfer produces its

ultimate results on a time scale much longer than the budgetary cycles of

the federal government. The exact consequences of these programs for

industrial competitiveness and their effect on industrial economic activity are not easily measured, especially in the first years following their

enactment. However, it has been possible to measure agency progress

toward the intermediate goals set by the legislation. In the first few years

following passage of the CRADA authority, laboratories celebrated the

signing of each CRADA and measured their success by the number of

CRADAs they had with the private sector. As time passed and it became

possible to identify specific outputs from these activities, especially

intellectual property, the focus of attention shifted to those outputs. The

laboratories and agencies counted invention disclosures, patent applications, the number of licenses and, as time passed, the amount of royalty

income received. In addition, scholars and others observing the agency

and laboratory activities attempted to measure other, more subjective

levels of activity and outputs needed to produce the economic outcomes

ultimately desired by Congress.40

40 For example, see Crow & Bozeman, Limited by Design: R&D Laboratories in the

U.S. National Innovation System, 1998. The Association of University

Technology Managers (AUTM) has faced a similar challenge in attempting to

assess the results of university intellectual property management under the

Bayh-Dole Act. It has begun to collect and report data from member

Technology transfer

produces its ultimate

results on a time scale

much longer than the

budgetary cycles of the

federal government.
44 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

These activities and outputs have been measured through relatively

objective data elements and have provided an adequate basis to assess

the initial implementation of the programs authorized by Congress.

However, with the passage of time and the increasing emphasis placed

on performance measures for government programs, there is a clear need

for better measures of the outputs under the laws and, as experience

accumulates, of progress toward the ultimate outcomes desired by

Congress. As we suggested in our last report, we need to “continue to

develop systems to measure program outputs, including the immediate

effects of the agency actions on private sector partners, as well as information concerning the longer term and broader economic effects of the

activity.”41 In working toward such measures, the goal is not simply to

demonstrate to Congress the success of technology transfer in improving

the competitiveness of the nation, but also to provide the agencies and

laboratories with the tools to manage their resources toward the achievement of the statutory objectives.

As a first step in the process of developing such a measurement system,

we wish to suggest some intermediate goals that the agencies and laboratories should aim for. We believe the achievement of these goals would

represent significant progress toward achieving the improved industrial

competitiveness envisioned by Congress. In connection with each goal,

we list the specific activities that the agencies and laboratories need to

engage in to achieve the goals. The five goals presented here are based on

the challenges to effective agency/industry partnering identified in this

report.

Goal 1. Federal laboratories should systematically manage their intellectual

resources and nurture their knowledge base.

Supporting Activities

■ Laboratories should require first-line technical managers and supervisors to undergo training in intellectual resource management

and to complete annual “refresher” courses.

universities and colleges that provide at least some estimates of the outputs

and outcomes being realized. From the data collected from licensees on

earned royalties, they estimate projected gross sales of their licensees and use

that number to estimate the number of jobs that such revenues are likely to

represent within the industry sectors being served by the licensees. See,

AUTM Licensing Survey FY 1998 at http://www.autm.net/ publications/

survey/index.html

41 Technology Administration, Effective Partnering, p. 76 (Washington, DC

1996).
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OFFICE OF TECHNOLOGY POLICY

■ Laboratory R&D projects should be assessed at least annually to

determine if such projects have potential commercial benefits.

■ Technology advances, characterized as innovations and/or inventions, should be formally identified, documented, and reported,

and nondisclosing abstracts should be made available on an open

network.

■ Technology advances should be periodically reviewed and assessed as to the appropriate disposition and application of the

information. Such application may be to publish, protect under

domestic and/or foreign patent laws, hold as having commercial

potential, or make available for release to the public.

■ In judging employee performance and deciding on promotions,

agencies and laboratories should recognize the contributions of

scientists, engineers, and technology transfer staff members to

the development, processing, and application of innovations and

inventions.

Goal 2. Decision makers in the public and private sectors can quickly, conveniently, and cost-effectively identify which federal laboratories have the intellectual resources, competencies, and capabilities to help solve specific, critical,

technology-based problems.

Supporting Activities

■ The agencies, their laboratories, and the FLC should work together to develop a government-wide, user-friendly management

information system for federal technology transfer.

■ The system (1) reports technical advances at laboratories; (2) describes projects having potential commercial applications; (3)

identifies intellectual properties available for licensing; and (4)

identifies unique laboratory facilities and capabilities available for

use by other federal agencies, state and local governments, and

the private sector.

■ The system should be linked to other databases, such as the

patent records maintained by the U.S. Patent and Trademark office, and to information maintained by individual agencies and

laboratories.
46 Tech Transfer 2000: Making Partnerships Work

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Goal 3. Industry, academia, and the federal agencies and laboratories should

continue to identify barriers to close collaboration and minimize or eliminate

such barriers to better ally with one other to solve technology-based problems

that impede progress for a company, an industry, the nation, or mankind.

Supporting Activities

■ Representatives of the agencies, the laboratories, and the business

community should regularly review CRADA and licensing terms

and conditions that cause difficulties in negotiations. These reviews will define industries’ needs and relevant government

policies. On this basis, contract terms can be revised or policies

are clarified, and the material can be made available to the agencies and laboratories for use. (Issues relating to U.S.

competitiveness, product liability and indemnification, and intellectual property rights have been identified in this report as

requiring this type of

review.)

■ Agencies should recognize that a variety of partnership opportunities may be addressed through a CRADA and that the terms of

the agreement must be appropriate to the specific opportunity.

The agencies and laboratories, in collaboration with business

representatives, have a range of CRADA terms to meet these differing situations. The laboratories and their private sector

partners are able to apply the most appropriate terms to expedite

the initiation of projects to meet the needs and interests of the

respective parties.

Goal 4. The federal government should develop the processes to monitor continuously the technology transfer performance of the federal agencies and laboratories and to identify areas in which performance could be improved. Once such

areas for improvement are identified, the necessary resources should be applied to

help implement the desired improvements.

Supporting Activities

■ The Interagency Working Group on Technology Transfer (IWG/

TT), together with its member agencies and the FLC, should facilitate the convening of workshops where federal technology

transfer professionals come together with industry representatives to develop and adopt a common set of principles and

practices to guide the laboratories in their technology transfer
Tech Transfer 2000: Making Partnerships Work 47

OFFICE OF TECHNOLOGY POLICY

activities with one another, universities, state and local governments, and the private sector.

■ The IWG/TT and its member agencies should work in cooperation with representatives of state governments to develop policies

that enable closer interactions and cooperation between the states

and the federal labs to support technology-based initiatives of

importance to states and their local governments.

■ The FLC (and other interested public or private entities) should

establish enhanced or new professional training courses for use

by labs, either individually or in groups. The training addresses

such diverse issues as export control regulations, international

technology transfer, knowledge and intellectual resource management, negotiating skills, utilization of an integrated

Technology Transfer Management Information System, and how

best to assist local communities in developing jobs and infrastructure. Particular emphasis is given to the training of first-line

technical managers and supervisors on intellectual resource

management.

Goal 5. The agencies and laboratories should agree to a system of output and

outcome measurements based on the goals stated here.

Supporting Activities

■ Through discussions among the member agencies of the IWG/

TT, the foregoing goals should be reviewed, revised as necessary,

and adopted to guide the management of federal technology

transfer programs.

■ The agencies should review, revise, and adopt lists of necessary

supporting activities for the goals and use those lists as a basis

for setting their own performance objectives.

■ The agencies should monitor their progress in carrying out the

activities and accomplishing the goals.

The goals presented in this section, along with the suggested supporting

activities, are not the ultimate outcomes sought by Congress in adopting

the technology transfer legislation. Achieving these goals will not guarantee that an improvement in industrial competitiveness has been

achieved through federal technology transfer. But we believe the goals
48 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

are the next steps the agencies need to take in working toward that

outcome. If the agencies can achieve these goals across the federal laboratory system, they will not only have addressed the issues identified in

this report but will have made important progress toward the outcome of

enhanced technological competitiveness.

We hope that these goals generate debate among the agencies, the business community, and legislators concerning the goals to be pursued.

Once goals are set, road maps of supporting activities can be developed

to help the agencies get there. From this exercise, meaningful measures of

performance can be defined that will provide a basis for assessing the

progress of the federal technology transfer programs. The Department of

Commerce is committed to working with the agencies through the IWG/

TT to carry out this plan.
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OFFICE OF TECHNOLOGY POLICY

APPENDIX A: IMPLEMENTING THE STEVENSON-WYDLER

ACT AT THE FEDERAL LABORATORIES: DIVERSITY

IS THE NORM

This Appendix discusses the missions of the principal agencies in

volved in research and development (R&D) and discusses the ways

in which the authorities of the Stevenson-Wydler and Bayh-Dole Acts

have been implemented by the agencies within the context of those

missions. A brief description of the activities of the agencies under these

authorities is also provided.

Department of Agriculture

The Department of Agriculture has been transferring technology to the

nation’s agricultural community since its creation in 1860. The establishment of the land-grant colleges and universities by the Morrill Act of

1862 laid the foundation for agricultural productivity with its emphasis

on teaching, research, and extension services. During the remainder of

the nineteenth century and much of the twentieth, agriculture was the

principal focus for federal R&D programs. Even today it is an important

science- and technology-based sector of our national economy.

Today the Department of Agriculture, through its many component

organizations, is dedicated to enhancing the quality of life for the American people by supporting production of agriculture, including ensuring a

food supply, caring for the lands, and supporting sound rural development. As part of that mission, the Department supports agricultural

research at its own laboratories and at external research organizations,

including universities. In fiscal year (FY) 1998, the Department had an

R&D budget of approximately $1.44 billion. The Agricultural Research

Service (ARS) received $757.9 million, largely for intramural research

programs. The Forest Service received $187.8 million, most of which

went for intramural research. The Cooperative State Research, Education

and Extension Service, the principal liaison with the university community, received $386.4 million, $366.5 million of which went to universities

and colleges.

The principal intramural research organization within the Department is

the ARS, which is charged with extending scientific knowledge in a

broad range of programs. The agency’s research work at present focuses

on three categories: animal production, natural resources, and crop
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production. These national research programs are developed in consultation with the agricultural community and carried out largely within the

national research facilities of ARS. The Forest Service conducts research

concerning new technologies that can be used to sustain the health,

productivity, and diversity of the nation’s forest and rangelands. This

new knowledge is intended to benefit private landowners in managing

their lands as well as to serve the needs of public land managers.

The Cooperative State Research, Education, and Extension Service

(CSREES) links the research and education programs of the Department,

working with the land grant institutions in each state and many other

educational institutions. CSREES seeks to advance research, extension

services, and education in food and agricultural sciences, working

through partnerships with public and private sector organizations. As

part of this work, CSREES sponsors research on agricultural product

development, plant and animal genome, integrated pest management,

and other topics of concern to the agricultural community. One of its

principal efforts is the National Research Initiative Competitive Grants

Program, which is charged with funding research on key problems in

biological, environmental, physical, and social sciences on a peer-reviewed competitive basis.

The Department’s long history of technology transfer in support of

agriculture has given it an opportunity to develop and refine an approach that suits its mission and the social and economic context in

which it operates. The Department recognizes that, in many circumstances, the results of its research are best disseminated through publication. As a result, the Department contributes nearly 9,000 publications

per year to the world’s knowledge base. In some situations, however,

patent protection is sought for the innovations produced in its research

programs. The Department decides whether to pursue patenting or other

legal protection for its inventions by determining whether transfer to the

private sector for development is necessary “as an intermediate step in

getting the benefits to the ultimate users, farmers and consumers.”42

In implementing the Stevenson-Wydler and Bayh-Dole Acts, the Department of Agriculture has created separate offices of technology transfer to

represent its two principal intramural research organizations-the ARS

and the Forest Service. Researchers within the ARS are served by the ARS

Office of Technology Transfer (OTT), headquartered in Washington.

Authority to enter into Cooperative Research and Development Agreements (CRADAs) on behalf of ARS and to license its patents has been

42 Agricultural Research Service, Technology Transfer in ARS, p. 1.
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delegated to OTT. Its staff includes technology transfer coordinators

located in six geographical areas across the country, who work with ARS

scientists to transfer technology. The ARS was the first federal laboratory

to sign a CRADA and has executed a cumulative total of 833 CRADAs

through the end of FY 1998.

In the Forest Service, authority to enter CRADAs has been delegated to

the Director of the Forest Products Laboratory and the directors of various field operations and experimental stations maintained by the Forest

Service. License agreements are negotiated and administered by the

Office of the Forest Service Patent Advisor at the Forest Products Laboratory in Madison, Wisconsin. For FY 1998, the combined technology

transfer staffs of the Department of Agriculture received 208 new invention disclosures, had 67 patents issued, received $2,415,000 from invention licensing, and entered into 98 new CRADAs.

Department of Commerce

The Department of Commerce works in partnership with business,

universities, communities, and workers to promote U.S. competitiveness

by strengthening economic infrastructure, by providing cutting-edge

science and technology and an information base, and by managing

national resources. The Department conducts research in support of

several parts of its broad mission, receiving $948.6 million in R&D funding in FY 1998.

The National Institute of Standards and Technology (NIST) received

approximately $394.4 million in research and development funding, with

$226 million used for its intramural research work. NIST is unique

among federal research facilities in having the mission of promoting

economic growth by working directly with industry to develop technology, measurements, and standards. It does this work through four interrelated programs: the Measurement and Standards Laboratories, the

Advanced Technology Program, the Manufacturing Extension Partnership, and the National Quality Program. The Measurements and Standards Laboratories provide technical leadership in a wide variety of

scientific, technical, and engineering fields. The Advanced Technology

Program provides cost-shared funding to industry for high-risk R&D

projects, and the Manufacturing Extension Partnership supports a nationwide network of locally managed extension centers offering technical

assistance to the nation’s smaller manufacturers.
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The National Oceanic and Atmospheric Administration (NOAA) received

more than $519 million in R&D funding in FY 1998 to support its two-fold

mission of environmental assessment and prediction and environmental

stewardship. Intramural research programs received $432 million of this

funding. NOAA’s research programs are carried out by five major divisions and numerous special program units. The divisions include the

National Weather Service, the Office of Oceanic and Atmospheric Research, the National Environmental Satellite, Data and Information Service, the National Ocean Service, and the National Marine Fisheries

Service. NOAA’s broad responsibilities are supported by a program of

research conducted primarily at NOAA laboratories, with additional

research supported at universities throughout the country. This research

work is focused on three main areas: tracking and warning of dangerous

weather systems; helping to guide the nation’s use and protection of

ocean and coastal resources; and improving our understanding of the

oceans and atmosphere that sustain life on the planet.

Research funding also went to the National Telecommunications and

Information Administration (NTIA) and to the Bureau of the Census.

NTIA received $25.5 million in R&D funding to support its mission as

principal adviser on telecommunications policies affecting economic and

technological advancement and telecommunications regulation. Some of

this research is carried out by the Institute for Telecommunication Sciences (ITS), the principal federal laboratory for telecommunications

science and engineering. ITS also provides specific telecommunications

planning and evaluation for federal agencies and U.S. industry.

The Bureau of Census, a part of the Economics and Statistics Administration, received $8.6 million in funding for its economic and social science

research. Census conducts most surveys for the executive branch, using

its business surveys as a basis for its periodic economic indicators and

also conducting the decennial census.

Each of these Commerce agencies is involved in technology transfer

activities of various kinds. Because of its mission of direct involvement

with industry, NIST is engaged in most of the agency’s industry/laboratory partnerships. Many of these partnerships are with consortia of

companies in specific sectors, seeking to explore an infrastructural issue

of common interest to the sector. In such consortia, the emphasis is

generally on a broad dissemination of research results within the sector,

rather than the creation of intellectual property and its licensing.
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The Department of Commerce has delegated authority to negotiate and

execute CRADAs and licenses to each of the organizations conducting

research. NIST has delegated that authority to each of its Measurements

and Standards laboratories while maintaining a central Office of Research

and Technology Applications (ORTA) at its principal facility in

Gaithersburg, Maryland. Patent licensing at NIST is handled by the

central ORTA. NOAA, which has laboratories throughout the United

States, also delegates authority to enter into CRADAs to its individual

laboratories, while maintaining its primary ORTA in Silver Spring,

Maryland. This ORTA handles patent licensing for NOAA with the Office

of General Counsel. ITS, the NTIA laboratory, has an ORTA but also

coordinates with a common ORTA in Boulder, Colorado, with NIST and

NOAA research facilities located there. ITS has been delegated authority

to enter into CRADAs and patent licenses. For FY 1998, Commerce’s

research organizations received 40 invention disclosures, had 19 patents

issued, received $240,000 from invention licenses, and entered into 77

new CRADAs.

Department of Defense

The Department of Defense (DoD) has the largest R&D budget of all

agencies (more than $34 billion in FY 1998) but the bulk of that funding

(more than $30 billion) is allocated to developmental work. DoD research

totaled approximately $3.9 billion in FY 1998, substantially less than the

research funding received by the Department of Health and Human

Services (HHS) or the National Aeronautics and Space Administration

(NASA).

A new paradigm for technology partnering with the private sector is

emerging at DoD as a result of current budgetary and technological

trends. The Department recognizes that the huge increases in private

sector research expenditures, both in the United States and around the

globe, have made it extremely difficult for it to stay on the cutting edge of

all of the technologies important to it. The new paradigm puts an emphasis on partnering with the private sector, other agencies, and academia to

leverage the Department’s position in militarily critical technologies.

As a result of these developments, DoD has committed itself to technology transfer of several sorts. Its technology transfer programs include

cost sharing of its research with the private sector (dual use technologies), integrating advanced commercial technologies into its work (spinon technologies), and making existing technologies more affordable
54 Tech Transfer 2000: Making Partnerships Work

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through spin-offs to the private sector. These methods of technology

transfer have been adopted as a basic part of DoD policy and are being

implemented throughout the DoD research system.43

DoD’s technology transfer program is decentralized, with more than 100

ORTAs and other technology transfer focal points within its large and

complex laboratory system. At the same time, the Department recognizes

its need to coordinate these and related activities and has created the

Office of Technology Transition in the Office of the Secretary of Defense,

pursuant to 10 USC § 2515, to meet this need. The office provides leadership within DoD on technology transfer programs under the StevensonWydler and Bayh-Dole Acts. It also manages related technology partnership programs, such as the Dual Use Science and Technology Program,

the SBIR Program, the Manufacturing Technology Program (ManTech),

portions of the information collection and dissemination activities of the

Defense Technical Information Center, the Independent Research and

Development program, the Title III program under the Defense Production Act, and the Commercial Operations and Support Savings Initiative.

The three service branches of DOD, the Army, Navy, and Air Force,

maintain laboratories with a wide range of state-of-the-art human and

physical resources. These resources include expertise in a number of

technical areas as well as world-class facilities and equipment, many of

which are unique. DOD differs from all of the other federal agencies in

that it has mission-related responsibilities that are equivalent to activities

at practically all of the other agencies and their laboratories. These responsibilities include space missions, medical research, land management, health care, telecommunications, weaponry, national security,

transportation, environmental management, and training.

The Army has delegated authority to enter into CRADAs and patent

license agreements to the commanders and directors of its laboratories,

R&D centers, test and evaluation centers, and medical institutes. Each of

these organizations has an ORTA that is the point of contact for potential

users of a laboratory’s technology infrastructure. The Army’s Domestic

Technology Transfer Program is intended to work through the decentralized, coordinated efforts of these ORTAs.

43 DoD, Directive 5535.8 (DoD Technology Transfer (T2) Program), May 14,

1999; DoD, Directive 5535.3 (DoD Domestic Technology Transfer (T2)

Program), May 21, 1999.
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For the Navy, signature authority for standard CRADAs and licenses has

been delegated to all major Navy facilities where R&D is done. However,

only slightly more than half of those facilities have formally established

ORTAs. For management and control purposes, the collection of licensing

fees and the distribution of royalties are performed at the Office of Naval

Research headquarters.

The Air Force has authorized commanders and directors of each of its

research, development, test, and evaluation centers to enter into

CRADAs and licensing agreements. It maintains 28 ORTA offices, with

others at each of its ten directorates and at other Air Force research

centers.

DoD’s OTT recently conducted a review of certain of the Department’s

CRADA activities to assess the benefits flowing from these agreements.

The study evaluated a sampling of CRADAs against the Department’s

guiding management principles for its space and technology program44

and found that the agreements satisfied these principles in a variety of

ways. The study produced a number of interesting findings. For example, the CRADAs, rather than leading directly to commercial products, typically “entail knowledge-share opportunities that facilitate

advances in research that lead to product or process improvements.” In

addition, there was broad acceptance of the CRADAs by the laboratories

as “mission extenders” that helped the laboratories to meet their technological needs by investigating commercial technologies to meet government needs. A particular example was a CRADA between the Walter

Reed Army Institute of Research and the Medical Technology and Practice Patterns Institute, Inc., relating to a transdermal vaccine delivery

system. The CRADA “provided a means for ideas that would have

otherwise been held captive in financially strapped laboratories to flourish in the commercial sector where there is interest and scientists available and ready to apply the technology.”

44 These principles are (1) Transition Technology to Address Warfighting

Needs; (2) Reduce Cost; (3) Strengthen the Industrial Base; (4) Promote

Basic Research and (5) Assure Quality. DoD, Cooperative R&D Agreements:

Value Added to the Mission, April 1999, at http://www.dtic.mil/techtransit
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In addition, the DoD continues its traditional involvement with local

governments and the communities in which their bases and laboratories

are located. The DoD laboratories also have an almost unique practice

among the federal laboratories through their formal partnering with

universities under CRADAs. In 1995, they entered into 65 CRADAs with

universities while all of the other federal agencies and their laboratories

had a combined total of 10 CRADAs with universities.

For FY 1998, the DoD received 1028 invention disclosures, had 579

patents issued, received $1,560,000 from invention licensing, and entered

into 399 new CRADAs. (For a breakdown of these numbers by Service

branch, see Appendix C.) In looking at these data, it is important to

recognize that DoD and its laboratories, like NASA and the Department

of Energy, have a long history of obtaining “defensive” patent protection

to ensure that patents obtained by others would not block its access to

militarily important technologies. As a result, the quantitative metrics

presented in this report show a disproportionately large number of

patents in relation to the number of licenses that the services grant each

year.

Department of Energy

The Department of Energy (DOE) is the science and technology agency

whose research supports our nation’s energy security, national security,

and environmental quality and contributes to a better quality of life. The

Department traces its origins to the Manhattan Project and the national

effort to develop an atomic bomb during World War II. Following the

war, Congress passed the Atomic Energy Act of 1946 that created the

Atomic Energy Commission (AEC) to take over the scientific and industrial complex related to work with nuclear energy. The AEC initially

focused on national security-related uses of atomic energy but the

Atomic Energy Act of 1954 gave birth to a commercial nuclear power

industry and gave the AEC regulatory authority over it. In 1974, the AEC

was abolished and two new agencies created—the Nuclear Regulatory

Agency to regulate the commercial nuclear power industry and the

Energy Research and Development Administration to manage the national-security-related programs.

In response to the challenges presented by the energy crisis of the 1970s,

the DOE was created to provide a unified federal approach to energy

issues. The new Department undertook responsibility for long-term,

high-risk research and development in energy technology, federal power
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marketing, energy conservation, nuclear weapons, and energy regulation.

During the 1970s the Department emphasized energy development and

regulation and in the 1980s shifted to an emphasis on nuclear weapons

research, development, and production. Since the end of the Cold War,

the Department has focused on environmental cleanup of the nuclear

weapons complex, nonproliferation and stewardship of the nuclear

stockpile, energy efficiency and conservation, technology transfer, and

industrial competitiveness.

The Department engages in a wide range of technology partnerships with

others as a part of its mission. Many of these partnerships are integral

parts of DOE programs. For example, the Office of Industrial Technologies (OIT), one of the components of the Office of Energy Efficiency and

Renewable Energy, creates partnerships among industry, trade groups,

government agencies, and other organizations to research, develop, and

deliver advanced energy efficiency, renewable energy, and pollution

prevention technologies for industrial customers. Through its “Industries

of the Future” program, OIT creates partnerships between industry,

government, and supporting laboratories and institutions to accelerate

technology research, development, and deployment. The strategy is being

implemented in nine energy- and waste-intensive industries, each of

which produces a document outlining its vision for the future, and a

technology roadmap to identify the technologies that will be needed to

reach those goals. OIT then works with the Department’s laboratories to

respond to the research needs by streamlining industries’ access to the

expertise and capabilities of the laboratories.

Similarly, the Office of Building Technology, State and Community Programs (BTS) is facilitating an industry-led initiative to develop technology

roadmaps focusing on various aspects of the building industry.

Roadmapping provides a framework for cooperative technology development efforts and market transformation activities that will help to

accelerate the adoption of new technologies and approaches in the

marketplace. It also helps to align government R&D resources with the

high-priority needs identified by industry.

The Office of Environmental Management (EM) within the Department

manages the largest environmental management program in the country—the cleanup of legacy wastes from nuclear weapons manufacturing.

EM provides science and technology, ranging from basic research to

technology development and demonstration, including deployment of

innovative remediation technologies. Technical assistance is provided to

successfully deploy innovative scientific and technological solutions to
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clean up the sites, while addressing long-term environmental stewardship

needs.

From EM’s investment in innovative remediation technology, some 220

new environmental remediation technologies are now available from

industry to address DOE, other federal agency, private sector, and global

environmental cleanup challenges. Within DOE, deployments of innovative remediation technologies have occurred at 10 sites, located in 10

states. Of those 220 remediation technologies, 160 have been deployed at

least once (73 percent), of which 67 (42 percent) have been used multiple

times, across multiple sites, or have become baseline cleanup methods.

EM’s accelerated deployment work has resulted in nearly 100 technology

deployments that could yield over $1.5 billion in cost savings. The environmental management industry is actively participating in developing

technologies for cleanup of DOE’s contaminated sites. Over 75 private

sector technology development firms from 31 states have participated,

more than two-thirds of which are small businesses.

In addition to these kinds of programmatic partnerships, the Department

supports technology transfer partnerships with the private sector built on

the capabilities and expertise of its laboratories and facilities. These

technology transfer partnerships use a variety of mechanisms, including

CRADAs and the licensing of intellectual property.45 The DOE has unique

statutory authority under which it conducts these technology transfer

45 The Department has identified the following mechanisms for achieving

technology transfer in this manner: (1) Cooperative Agreements (generally

cost-shared with industry, universities, or others); (2) Cost-Shared Contracts/

Subcontracts (procurement-based collaborations for mutual benefit); (3)

Personnel Exchange Programs (allowing government or laboratory staff to

work in industry facilities or industry personnel to work in government

labs); (4) R&D Consortia (arrangements involving multiple federal and

nonfederal parties working for a common R&D objective); (5) Technical

Assistance to Small Business (undertaken in response to an inquiry from an

individual or organization seeking to further knowledge, solve a specific

problem, or improve a process or product). DOE R&D Council Technology

Transfer Working Group, Partnering for Success: A Review of DOE

Technology Transfer Policies and Procedures (June 1999), App. A, available at

http://www.er.doe.gov/production/octr/aeptr/ttwg.htm
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activities. Under the Atomic Energy Act of 1954, the DOE was granted

authority to take title to all inventions made in the United States useful

solely in the utilization of special nuclear material or atomic energy in an

atomic weapon. DOE may also take title to all inventions useful in the

production or utilization of special nuclear material or atomic energy,

made or conceived under contracts or arrangements entered into for the

benefit of DOE, whether or not funds are expended.46 At the same time,

under that Act, DOE was directed to establish a program for the dissemination of scientific and technical information produced at its laboratories

for the advancement of science and industry. Thus the agency and its

laboratories have had dual roles—identifying and protecting sensitive or

classified information for the security of the nation while sharing its

other information with the public.

Unlike most other federal agencies, DOE carries out most of its mission

activities through a system of federal laboratories at government-owned,

contractor-operated (GOCO) facilities. These laboratories, referred to as

National Laboratories, are typically operated under 5-year, management

and operating contracts by universities, not-for-profit organizations, and

large businesses. This operating structure dates back to the 1940s when

the decision was made to keep the nuclear weapon laboratories separate

from the Defense Department, and to retain a workforce of nonfederal

employees.

The unique statutory authorities and the use of GOCO laboratories

introduce additional legal complexities into the Department’s technology

transfer efforts. DOE has, through its management and operating contracts, waived intellectual property rights to the inventions of its contractor-operators under terms that parallel those found in the Bayh-Dole and

Stevenson-Wydler acts. Since laboratory employees are not federal

employees, the GOCO operators may, with prior DOE approval, assert

their rights in copyrightable works, as well as patentable inventions, for

purposes of licensing for commercialization. In addition, under the

National Competitiveness Technology Transfer Act of 1990, Congress

granted the DOE the authority to delegate to their laboratories the authority to enter into CRADAs.

As a result of their advanced national security work, the DOE national

laboratories and its production facilities have developed unique competencies and capabilities that often exceed those found in the private

sector or in other laboratories. For example, as a part of their nuclear

46 42 USC §§ 2168, 2181-2183.
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weapons work, these laboratories pushed the domestic industry to

develop ever faster, more powerful computers and compatible information storage and telecommunications systems.

The approach to intellectual resources varies widely across the breadth of

the DOE laboratory system. Its weapons laboratories and production

facilities have a history of conducting R&D and protecting the results for

mission purposes. However, the DOE laboratories performing research in

environmental quality and energy efficiency and conservation have a

strong charge to share the results of the work with the public. These

differences in mission can lead to differences in approach to the use of

patenting, CRADAs, and patent licenses.

The DOE has delegated CRADA authority to its two government-owned,

government-operated (GOGO) fossil fuel laboratories and each of its

GOCO laboratories. Management of the technology transfer process for

DOE has been delegated to the Department’s field offices, which now

have authority to approve most CRADAs. Licensing practices at the DOE

contractor operated laboratories are similar to those followed by universities under the Bayh-Dole Act.

DOE recently conducted a review of its technology transfer activities

designed to “review, evaluate and recommend improvements to DOE’s

technology transfer programs conducted by the management and operating (M&O) contractors at DOE’s national laboratories, and the oversight

of such programs by DOE field and headquarters.”47 The report noted

that DOE and its labs had learned a great deal about effective technology

transfer in the 10 years since the DOE laboratories had been authorized

to establish technology transfer as a mission at its GOCO laboratories.

While challenges remained, “the challenges are more about how to bring

greater consistency across the complex in what is offered to DOE’s

partners, how to represent the program results to constituencies, and

how to manage a very large portfolio of relationships between laboratories and non-federal parties in an increasingly global economy.”

The report made several important observations concerning management

and oversight of the technology transfer program. First, it noted that

DOE had no senior-level point of contact at DOE headquarters “for

program offices to turn to on technology transfer issues for help in

47 DOE R&D Council Technology Transfer Working Group, Partnering for

Success: A Review of DOE Technology Transfer Policies and Procedures (June

1999), App. A, available at http://www.er.doe.gov/production/octr/aeptr/

ttwg.htm
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reconciling problems, raising issues to a higher level or for coordinating

Administration or Departmental positions during discussions with other

federal agencies or Congress.” To remedy this problem, the group recommended the creation of a leadership position at DOE headquarters for

technology transfer issues. Shortly after issuance of this report, Secretary

of Energy Richardson announced the appointment of a senior advisor for

technology policy to serve as the focal point for the Secretary’s involvement in technology transfer. The report also recommended a series of

improvements in the technology transfer programs, including improved

accessibility to partnership opportunities, optimization of the CRADA

negotiation and approval process, and the development and implementation of a system of performance and effectiveness measures.48

For FY 1998, the DOE received 1313 invention disclosures, and DOE’s

laboratories had 512 patents issued, received $10,536,000 from licensing,

and entered into 266 new CRADAs.

Environmental Protection Agency

The Environmental Protection Agency (EPA) is the principal federal

agency responsible for monitoring and regulating environmental quality.

Its mission is to protect human health and to safeguard the natural

environment, air, water, and land, upon which life depends. In support

of this broad mission and related regulatory authority, EPA conducts

research and development in relevant areas of science and technology

through its own system of laboratories and through the sponsoring of

external research by industry, universities and other research performers.

In FY 1998, EPA received $571.2 million in total research and development funding, with $255 million expended on intramural research.

Environmental research is critical for developing the scientific understanding and the technological tools to allow the nation to enhance

environmental quality for current and future generations. This investment will provide a scientific basis for developing cost-effective environmental policies, create the knowledge base for citizens to make wise

48 The other recommendations were to (1) Clarify, update and disseminate

DOE technology transfer policies and guidelines to ensure appropriate

consistency and uniformity across the DOE complex; (2) Promote the

effectiveness of ombuds capability at each R&D laboratory to assist industry

with issue resolution; (3) Encourage the use of sufficient resources and

incentives to adequately and appropriately stimulate technology

partnerships; and (4) Minimize the likelihood and perception of DOE

laboratories competing with the private sector.
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environmental decisions, and enable new and better approaches to environmental protection.

ORD maintains a number of research facilities around the country, including the National Center for Environmental Assessment, the National

Exposure Research Laboratory, the National Health & Environmental

Effects Research Laboratory, and the National Risk Management Research Laboratory. In addition to the ORD activities, research is also

conducted by the Office of Air and Radiation; Office of Water; Office of

Prevention, Pesticides, and Toxic Substances; and Office of Solid Waste

and Emergency Response. The work is done pursuant to a series of

research strategies and plans covering important environmental issues.

At present, the strategies relate to ecological research, environmental

monitoring and assessment, global change, particulate matter, pollution

prevention, and waste research.

EPA’s research programs cover a wide spectrum of environmental sciences and engineering disciplines consistent with its broad regulatory

authority. EPA has a strong commitment to share that research with

industry and the public to improve human health and the environment.

With the authority granted in the Federal Technology Transfer Act, EPA

actively shares its expertise and knowledge through several technology

transfer mechanisms including Cooperative Research and Development

Agreements (CRADAs), collegial interchanges, and the licensing of

intellectual property.

Through an innovative cooperative agreement with the Battelle Memorial Institute, the EPA established the Environmental Technology Commercialization Center (ETC2

) to facilitate the transfer of EPA technologies

and capabilities to industry, particularly small business. ETC2

 is a network of technology professionals dedicated to interact with EPA researchers to facilitate technology transfer initiatives and foster interaction

with state agencies, industry associations, and other stakeholders. The

Coordinator of the Federal Technology Transfer Act for EPA, located at

the ORD research facility in Cincinnati, Ohio, is responsible for this

initiative along with the other technology transfer mechanisms. For

FY1998, the EPA received 14 invention disclosures, had one patent issued, received $100,000 from invention licensing, and entered into 12

new CRADAs. For FY 1999, the EPA received 5 invention disclosures,

had 5 patents issued, received $100,000 from invention licensing, and

entered into 14 new CRADAs, receiving $114,000 and $1,044,500 in cash

and in-kind contributions respectively from CRADA partners.
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Department of Health and Human Services

The Department of Health and Human Services (HHS) is the principal

agency for protecting the health of Americans and providing essential

human services. HHS carries out this mission through more than 300

programs in such areas as medical and social science research, preventing

the outbreak of infectious disease, ensuring food and drug safety, managing the Medicare and Medicaid health insurance programs, running the

Head Start program, and managing many other programs for lowincome families, children, and older Americans. Many of its programs

are delivered through state and local government agencies and private

sector grantees. HHS is also the federal government’s largest grantmaking agency and operates the nation’s largest health insurance program.

HHS received $13.7 billion in R&D funding in FY 1998. The largest

recipient of funding was the National Institutes of Health (NIH) at $12.9

billion. NIH is the world’s premier medical research organization, annually supporting over 35,000 research projects. It includes 25 Institutes and

Centers, including 17 separate health institutes, the National Library of

Medicine, and the National Human Genome Research Institute. Of the

$12.9 billion received by NIH, $2.4 billion supported the intramural

research programs of the Institutes and the balance went to other research performers, principally universities and other nonprofit institutions.

The Centers for Disease Control and Prevention (CDC) received $343.6

million in R&D funding in FY 1998. The CDC provides a system of health

surveillance to monitor and prevent the outbreak of diseases, maintains

national health statistics, provides for immunization services, and guards

against international disease transmission. The other principal recipients

of HHS research funding were the Food and Drug Administration ($142.9

million), which ensures the safety of foods and cosmetics and the efficacy

of drugs and medical devices, and the Agency for Health Care and Policy

Research ($146.5 million), which supports cross-cutting research on

health care systems, quality, and cost.

The research conducted by NIH and other elements of the Public Health

Service (PHS) Operating Divisions of HHS probably has the greatest

potential for producing technologies that can be transferred to the private

sector for commercialization. A key part of the department’s mission is

protecting and improving the public health, which is often achieved

through the availability of new therapeutic and diagnostic drugs, vac-
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cines, therapies, and medical devices brought to market by private sector

companies. These new products and services are frequently based at least

in part on research work supported by PHS, and a transfer of technology

from these agencies often plays a critical role in bringing about this

result. The transfer may take the form of a biological sample provided

under a Material Transfer Agreement, a license to an invention made by a

HHS researcher, a CRADA in an area of mutual interest, or the authoring

of a technical paper for publication. As a result of the close coupling

between the department’s research and these dynamic industries, in FY

1998 PHS agencies accounted for nearly 70 percent of the royalty income

from all of the federal agencies.

The PHS agencies have articulated their approach to technology transfer

in several policy documents. These documents describe the agencies’

approach to patenting of new technologies emerging from their research,

to the licensing of those technologies, and to the establishment of

CRADAs.49 In explaining the circumstances in which a patent will be

sought, PHS policy states:

PHS generally seeks to patent and license biomedical technologies when

a patent will facilitate and attract investment by commercial partners for

further research and commercial development of the technology. This is

critical where the utility of the patentable subject matter is as a potential

preventive, diagnostic, or therapeutic product. However, it also could

occur when a patent is necessary to encourage a commercial partner to

keep important materials or products available for research use.50

The policy notes that in many circumstances patent protection will not be

sought:

Patent protection is generally not sought by PHS where further research

and development is not necessary to realize the technology’s primary use

and future therapeutic, diagnostic, or preventive uses are not reasonably

anticipated. For example, PHS will generally not seek patent protection

for research tools, such as transgenic mice, receptors, or cell lines. For

research tools, the public interest is served primarily by ensuring that the

tool is widely available to both academic and commercial scientists to

advance further scientific discovery. Secondarily, a financial return to the

49 U.S. Public Health Service, Technology Transfer Manual, Ch. 200, PHS

Patent Policy; Ch. 300, PHS Licensing Policy; Ch. 400, PHS CRADA Policy,

found at http://www.nih.gov/od/ott

50 U.S. Public Health Service, Technology Transfer Manual, Ch. 200, PHS

Patent Policy, found at http://www.nih.gov/od/ott
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public is obtained through royalties on the research tool that has

significant commercial value.

In addition, when commercialization and technology transfer can best

be accomplished without patent protection, such protection will not be

sought. For example, some technologies may be transferred to the

private sector most expeditiously through publication. For such

technologies, patenting and licensing are unnecessary and could inhibit

broad dissemination and application of the technology. Methods of

performing surgical procedures, for example, could fall within this

category.

There is also a PHS policy that explains the principles governing the

licensing of patented technologies. PHS licenses, rather than assigns, its

patents because it allows the agencies to “ensure the broadest and most

expeditious development of new products.” The agencies’ preference for

nonexclusive licenses is also explained:

The agencies prefer to negotiate non-exclusive or co-exclusive licenses

whenever possible. This allows more than one company to develop

products using a particular technology, products that may ultimately

compete with each other in the marketplace. PHS recognizes that

companies typically need an exclusive market position to offset the risk,

time and expense of developing biomedical diagnostic or therapeutic

products; however, companies do not necessarily need to achieve that

position by exclusively licensing a government technology used to

develop that product. Instead, they frequently are able to add their own

proprietary technologies to the technology licensed from the government

to ultimately achieve some level of uniqueness and exclusivity for the

product.51

Additionally, a PHS policy addresses the appropriate use of the CRADA

mechanism in the PHS labs. One of the primary concerns expressed

relates to the possible effect of the CRADA on the freedom of researchers

to discuss and share their ideas. The policy states, “[A] proposed CRADA

would not be appropriate if the fundamental mission of the PHS is

compromised by creating, either explicitly or indirectly, more than minimal constraints on research freedom and communication.” The policy

also cautions against excessive reliance on CRADA funding by the

laboratories, stating that CRADAs are “not intended to be a general

51 U.S. Public Health Service, Technology Transfer Manual, Ch. 300, PHS

Licensing Policy, found at http://www.nih.gov/od/ott
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funding mechanism to support directed research” at the laboratories. The

policy also discusses concerns relating to the dissemination of research

results, the requirement of an intellectual contribution from the collaborator, the avoidance of conflicts of interest, and the ensuring of fair access

to CRADA opportunities.

The authority for entering into CRADAs has been delegated to the heads

of the NIH, the CDC, and the Food and Drug Administration (FDA).

Within the NIH, Institute and Center Directors have signatory authority

to enter into CRADAs; however, all proposed CRADAs must undergo

review by the Director of the NIH.

The NIH serves as the lead agency for HHS in the formulation of technology transfer policy and provides patenting and licensing services for

NIH, FDA, and other PHS entities through a centralized OTT. Several

individual institutes within NIH also have created ORTA offices that

provide support to the scientists in their organization and negotiate

individual CRADAs. CDC provides the full range of technology transfer

services for its own laboratories.

For FY 1998, NIH received 287 invention disclosures, had 171 patents

issued, received $39,500,000 from invention licensing, and entered into 43

new CRADAs.

Department of the Interior

The Department of Interior (DOI) mission is to protect and provide

access to the nation’s natural and cultural heritage and to honor the

nation’s trust responsibilities to American Indian Tribes. The

Department’s activities include the management of public lands and of

mineral resources on the outer continental shelf, conserve and protect

fish and wildlife, preserve the National Park System, and provide reliable, impartial information concerning the earth.

The DOI received approximately $532 million in funding for research and

development in 1998. Of this funding, $464.1 million went to the U.S.

Geological Survey (USGS), which is responsible for monitoring ground

and surface water quality. USGS also provides scientific information

related to the environment, natural hazards, mineral, energy, water, and

biological resources, as well as serving as the principal civilian mapping

agency. The National Park Service received approximately $29.7 million

in research funding to support its mission of preserving the national park
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system. Funding for research also went to the Minerals Management

Service ($29.3 million) to support its mission of managing mineral resources on the outer continental shelf and to the Bureau of Reclamation

($8.8 million) to support its resource management mission and the

development of scientific and technical information for more effective

management of these resources.

Historically, DOI has worked closely with universities, industry, states,

and other departments of the federal government in carrying out its

research work. Since 1997 USGS and its scientists have been involved in

more than 1100 cooperative water resource projects and 60 national

mapping efforts. Within USGS, for example, the Cooperative Research

Unit Program has brought state fish and game agencies, universities, and

the Wildlife Management Institute together with the Biological Research

Division of USGS to conduct research on renewable natural resource

questions, as well as participate in education and provide technical

assistance. USGS has also sought private sector partners to produce

standard geospatial data products, offering a variety of conventional

partnership mechanisms. It is now seeking partners to participate in a

project to produce a new National Atlas of the United States. The partners are sought to collaborate in market research, software development,

and product distribution. The technology transfer emphasis in the past 5

years has spawned a variety of new programs such as National

Mapping’s Innovative Partnership Program-a cost shared program

focusing on technology exchange with universities and nonprofits.

Within the DOI, the four research agencies have delegated authority to

enter into CRADAs to their laboratories. In the Bureau of Reclamation,

the Denver Colorado Research and Laboratory Services Division has

been given this authority. Within the Fish and Wildlife Service, CRADA

authority has been given to the 13 Research and Development Centers. In

the National Park Service, individual parks are authorized to enter into

CRADAs. These organizations are supported by the Department’s

Solicitor’s Office. The largest of the research organizations, USGS is

considered one laboratory for purposes of the Act, with its ORTA in

Reston, Virginia. That office also oversees a technology maturation

program that invests the laboratory’s share of royalty income in laboratory projects to advance new technologies and inventions and its technology transfer mission. CRADA and licensing for the remaining DOI

Bureaus are coordinated by the DOI Solicitor’s Office. For FY 1998,

Interior received five invention disclosures, had three patents issued,

received $2 million from invention licensing, and entered into seven new

CRADAs.
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National Aeronautics and Space Administration

NASA was created in 1958 in response to concerns about our national

space programs resulting from the launching of the Soviet Sputnik

satellite. Over the years it has made the United States the leader in human space flight, aeronautics, space science, and space applications.

NASA currently operates four Strategic Enterprises to carry out its

mission. They are centered on aerospace, space science, earth science,

and human exploration and development of space. While carrying out its

missions over the past four decades, NASA has developed a system of

laboratories that are a significant part of the nation’s science and technology infrastructure. In addition to leading the exploration of space

through those laboratories, NASA has made contributions to the advancement of the aircraft industry, expanded our knowledge of the

universe including the planet Earth, and fostered the development of

scores of commercial products.

NASA received approximately $9.6 billion in FY 1998 to support its R&D

programs. Approximately $5.2 billion of this funding was for development and the remaining $4.4 billion was for research. NASA spent about

$2.4 billion of the research funding at its intramural facilities, with the

balance going to a variety of research performers (principally industrial

firms). NASA conducts its intramural research at 11 facilities throughout

the United States, including the Ames Research Center in California,

which is NASA’s center for research in information technology; the

Goddard Space Flight Center in Maryland, which conducts a range of

research relating to space flight; the Jet Propulsion Laboratory, operated

by the California Institute of Technology; and the Langley Research

Center in Virginia, responsible for research and development in structures and materials.52

From its creation, NASA has been charged by Congress with ensuring the

widest possible dissemination of its R&D results. While the bulk of this

work involves the sharing and transfer of technologies in the aeronautics

52 The other Centers are the Dryden Flight Research Center (Atmospheric

Flight Operations), Glenn Research Center (Turbomachinery), Independent

Validation and Verification Facility (Sophisticated Software Systems), Johnson

Space Center (Human Operations in Space), Kennedy Space Center (Launch

and Cargo Processing Systems), Marshall Space Flight Center (Space

Propulsion), Moffett Federal Airfield (Shared Federal Facility), Stennis Space

Center (Propulsion Testing Systems), Wallops Flight Facility (Suborbital

Research Programs), and White Sands Test Facility (Testing and Evaluating

Hazardous Materials, Components, and Rocket Propulsion Systems).
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and space industries, many technologies are produced that have commercial value in other sectors. To accomplish its commercial technology goals,

NASA created the Commercial Technology Network, building on its 10

field centers, its nationwide network of Regional Technology Transfer

Centers53, the National Technology Transfer Center, and other organizations and publications focused on NASA technologies.

NASA uses its own legal authorities as the primary basis for its cooperative research with the private sector. Under the Space Act of 1958, NASA

has broad authority to enter into “other agreements” with the private

sector and others. These agreements are not regarded as procurements,

grants, or cooperative agreements and are, like CRADAs, not subject to

the rules governing those types of agreements. NASA has used this

authority as a basis for technology transfer agreements ranging from

nondisclosure agreements to funded cooperative research projects.

Because of its use of the Space Act authority, NASA does not routinely

use CRADAs, believing its technology transfer objectives can be achieved

with greater flexibility through the use of the Space Act. NASA, however,

does have the authority to enter into CRADAs and will use them in

appropriate situations. NASA has an ORTA at each of its 10 research

centers, including the Jet Propulsion Laboratory located at and managed

by the California Institute of Technology.

The NASA Administrator, each of the Associate Administrators, the

Directors of NASA’s Centers, and the Manager of the NASA Management Office - Jet Propulsion Laboratory are authorized to enter into

Space Act agreements. NASA’s Space Act Agreement Manual is available

at http://www.hq.nasa/ogc/samanual.html.

For FY 1999, NASA received 554 invention disclosures, had 85 patents

issued, and received $1,226.000 from licensing of patents and copyrights.

53 The Regional Technology Transfer Centers include the Center for Technology

Commercialization, serving the Northeast from Westborough MA; the MidAtlantic Technology Applications Center, serving the mid-Atlantic region

from the University of Pittsburgh; the Southern Technology Applications

Center, located at the University of Florida in Alachua, Florida; the MidContinent Technology Transfer Center, located in College Station, Texas; the

Great Lakes Industrial Technology Center in Cleveland, Ohio; and the Far

West Regional Technology Transfer Center at the University of Southern

California in Los Angeles. NASA also supports the Research Triangle Institute

in North Carolina, the MSU-NASA TechLink Center in Bozeman, Montana,

and four technology incubators to assist start-up companies with

commercializing NASA technologies.
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The NASA General Counsel’s office is responsible for all of the Agency’s

licensing activities. Licenses are negotiated at the Centers and are signed

by the NASA General Counsel.

Department of Transportation

The Department of Transportation, the federal steward of the nation’s

transportation system, houses many transportation agencies and programs, all of which aim to use their R&D work to fulfill the key goals of

the Department’s strategic plan: improving safety, ensuring mobility,

fostering economic growth, enhancing the human and natural environment, and advancing our security interests.54

Nine of the agencies within Transportation support transportation research, with a total FY 1998 R&D budget of $566.1 million. The Federal

Highway Administration (FHWA) plays a key role in improving the

quality of the nation’s transportation systems, providing grants and an

aggressive research program to support the state and local agencies

primarily responsible for our highways. The research it sponsors explores

material, structural, and information technologies designed to promote

efficient and safe use of the highways. The Intelligent Transportation

System (ITS) is one of its most interesting programs, working with

industry, state, and local agencies and consumers to support research

applying information technologies to improve highway safety, increase

efficiency, and reduce energy use and adverse environmental impacts.

Many other programs promote the development and transfer of innovative transportation technologies to state and local agencies.

The Federal Aviation Administration (FAA) plays a variety of regulatory

roles in air transportation and carries out an extensive research and

technology program to support those responsibilities. The program is

carried out in cooperation with the regulated industries and other federal

agencies and includes research on air traffic control systems, weather

research, airport technology, aircraft safety technology, and airport

security technology. The National Highway Traffic Safety Administration

(NHTSA) also carries out a research program in support of its regulatory

responsibilities for motor vehicle and equipment safety. This research

relates to highway safety, including crashworthiness and crash avoidance

as well as participation in the ITS research program.

54 DOT Strategic Plan 1997-2002.
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The Federal Railroad Administration (FRA) promotes and enforces railroad safety, provides support to rail transportation, and supports R&D to

improve rail safety and to advance high-speed rail passenger technology.

Some of this research is conducted at the agency’s Transportation Technology Center, operated for FRA by a railroad industry association. The

Federal Transit Association (FTA) is the principal federal source of financial and technical support for public transportation. It provides grants and

other funding to support transportation systems and also provides

technical help to the systems through its research, development, and

demonstration programs.

The U.S. Coast Guard has a wide-ranging mission that includes setting

standards for commercial vessels, licensing seamen, safeguarding ports

and waterways, and providing radio-navigation systems. Its research

programs support all of these missions, including work on search and

rescue capabilities, marine navigation, marine safety, maritime law

enforcement, and integrated command, control, communications, computer, and intelligence systems. Finally, the Research and Special Programs Administration (RSPA) is responsible for intermodal transportation research, hazardous materials transportation standards, and pipeline

safety. It supports multimodal research conducted at 13 University

Transportation Centers and at six University Research Institutes. RSPA

also leads the Department’s efforts to coordinate transportation research

and served as the focal point for developing the National Transportation

Science and Technology Strategy—the first effort to coordinate transportation research at the federal level. RSPA also plays a key role, on behalf

of the Department of Transportation in the Partnership for a New Generation of Vehicles, a cooperative research program between federal

agencies and the automotive industry to triple fuel economy without

compromising safety or performance.

While the bulk of the Department’s research funds supports external

research, three bureaus operate R&D facilities of a type that warrant

participation in the CRADA and patent licensing programs. The FAA has

authorized its Technical Center at Atlantic City, New Jersey, to enter into

CRADAs. The FHWA has given similar authority to its laboratory in

McLean, Virginia. The United States Coast Guard delegates its technology transfer work to its Research and Development Center at Groton,

Connecticut. Departmental Patent Counsel coordinates patent licensing,

although some agencies, like the FAA, have patent counsel at their

laboratories to help with applications and paperwork. In FY 1998, the

Department of Transportation entered into 13 new CRADAs, received
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four invention disclosures from its researchers, and had one patent

issued, but received no income from invention licensing.

Federal Laboratory Consortium for Technology Transfer

The Federal Laboratory Consortium for Technology Transfer (FLC) was

established in 1974 by federal laboratory employees interested in promoting cooperation between the laboratories and the private and public

sectors, including state and local governments. It was formally chartered

by the Federal Technology Transfer Act of 1986 to promote and to

strengthen technology transfer from the federal laboratories and was

made a permanent organization by the National Technology Transfer and

Advancement Act of 1995.55

Today the FLC consists of more than 700 research laboratories and centers

from 16 federal departments and agencies. Since 1974, the FLC has

brought these laboratories together with potential users of governmentdeveloped technologies. The FLC also provides a network for laboratory

personnel to meet with their peers to exchange technology transfer

experiences through an annual conference, electronic distribution lists,

and other means.

The FLC’s mission is to help federal agencies, laboratories, and their

partners to accomplish the rapid integration of federal R&D resources

into the mainstream U.S. economy. In order to accomplish its mission and

statutory mandates, the FLC has three goals: to enhance communication,

to leverage R&D investments, and to improve and innovate the technology transfer process. More specifically, the FLC has the following objectives related to each goal:

Enhance Communication

■ Expand communication among member agencies and their laboratories.

■ Increase dialogue with state and local governments, businesses,

academia, and other external participants.

■ Publicize best practices, solutions, and success stories.

55 15 USC § 3710(e).
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Leverage R&D Investments

■ Explore innovative approaches to technical assistance and other

technology transfer activities.

■ Reduce time, cost, and risk of R&D projects.

■ Increase cost-sharing collaborations.

■ Increase use of federal technology by all participants.

Improve and Innovate Technology Transfer Process

■ Characterize and analyze agency technology transfer policy, procedures, and activities.

■ Address barriers identified by external participants and others.

■ Provide fundamental and advanced education and training to

enhance the technology transfer profession.

■ Provide federal agencies with an analysis of key performance

measurement elements and assessment options.

To administer its affairs and services on a national level, the FLC maintains a Management Support Office that helps to coordinate the FLC’s

national meeting, Web site, Laboratory Locator service, exhibits, awards

program, and various newsletters. All of these activities are conducted

under the guidance of the national FLC Chair, Vice Chair, and Executive

Board, which is composed of regional and deputy regional coordinators

and committee chairs. The FLC also has a Washington, DC, Representative and a National Advisory Group.

The FLC is divided into six geographical regions: Far West, Mid-Continent, Midwest, Southeast, Mid-Atlantic, and Northeast. The regional

coordinators and deputy coordinators serve as the operational link

between the FLC and potential outside technology interests. These

coordinators are located at member laboratories located within each

region. Periodic regional meetings and regional newsletters help the

member laboratories within each region develop close and effective

working relationships.
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FLC Strategies

■ The FLC national leadership, regional coordinators, and staff are

all carrying out the following strategies, which are key to implementing the FLC’s overall strategic plan: Creating Innovative

Partnerships. The FLC is listening to industry, interacting with

trade associations on a number of levels, and responding to their

specialized technological needs.

■ Influencing Technology Policy. The FLC is capitalizing on its experience and expertise in technology transfer to clarify the issues

effectively and influence the science and technology policy debate.

■ Optimizing Diverse Resources. The FLC is coordinating its various interagency efforts to develop improved strategies and

opportunities for moving government technologies to the market.

■ Strengthening the FLC Structure. As the FLC provides the forum

for agencies to collaborate, it is “reinventing” itself to match the

new and emerging technology needs of the 21st century.

■ Leading the Vision. As it heads in to the next century, the FLC is

sharing information on partnering and experience with policy

people to meet and anticipate the demands of changing inquiries

and resources to make the most of federal technology.

■ Projecting a Positive and Consistent Image. The FLC is continuing to develop strong industry-federal partnerships. It is also

raising awareness of successful technology transfer between

laboratories and industry. In addition to this, the FLC is further

raising awareness of the breadth and depth of the FLC itself as a

resource and is publicizing its mission and services.
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APPENDIX B: THE STEVENSON-WYDLER AND BAYHDOLE ACTS: A REVIEW OF THE EVOLUTION OF THE

TECHNOLOGY TRANSFER AUTHORITIES

Technology transfer between the federal laboratories and the private

sector as provided in the Stevenson-Wydler and Bayh-Dole Acts has

changed significantly since 1980. The continuing congressional review of

agency implementation of the legislation and the resulting amendments

have provided improved technology transfer tools to the federal laboratories with which they could better carry out this important mission.

Many of the changes in the law have arisen in response to problems that

industry identified as impediments to effective “partnering” with the

federal laboratories. The resulting amendments have been responsive to

the private sector while adding value to technology transfer tools available to the federal laboratories.

Establishing the Technology Transfer Office

Before any Congressional action in this area, many individuals at federal

laboratories carried out activities to support their local communities and

to assist private companies. These individuals formed an ad hoc, interlaboratory coordinating effort in 1974 that was later chartered by Congress as the Federal Laboratory Consortium (FLC). During 1979 and

1980, Congress sought ways to more effectively access the technologies at

the federal laboratories. In the Stevenson-Wydler Act of 198056, the government authorized the establishment of laboratory-based offices dedicated to fostering technology transfer among the laboratories, state and

local governments, and the private sector. Each federal laboratory with a

total annual budget of more than $20 million was required to assign at

least one full-time professional to staff an Office of Research and Technology Applications (ORTA). Beginning in fiscal year 1982, each agency was

to make available at least 0.5 percent of the agency’s research and development (R&D) budget to support the ORTAs at those laboratories.57

Establishment of the ORTAs at the federal laboratories was an important

first step in formally authorizing what had been informal technology

transfer activities. However, it had minimal impact at many laboratories,

56 P.L. 96-480, 15 USC § 3701-3714.

57 In 1986 the Act was amended to require an ORTA at any laboratory having

a staff of over 200 full-time equivalent scientific, engineering, and other

related positions. P.L. 99-502, amending 15 USC § 3710(b).
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which assessed how much money was being spent on activities that fell

within the purposes of the act, and found that they were already exceeding the 0.5 percent minimum expenditure. Through publishing papers,

attending conferences, and engaging in activities to support local schools,

businesses, and communities, many laboratories easily met the prescribed minimum expenditures. As a result, many regarded the Congressional mandate as fully satisfied by designating a laboratory employee to

fill the mandated ORTA position, without assigning additional funds for

the technology transfer mission. While the ORTA position lacked much

stature within the laboratories’ management structure in the early years,

the ORTA was given authority to interact with state and local governments and the private sector and to strengthen such activities through

inter-laboratory cooperation.

Licensing Laboratory Intellectual Property to Industry Under

Statutory Authority

At the same time the Stevenson-Wydler Act was being developed to

bolster laboratory technology transfer to industry, Congress was also

developing what became the Uniform Federal Patent Policy Act, referred

to as the Bayh-Dole Act.58 The Bayh-Dole Act sought to improve the

commercialization of federal research in two distinct ways. First, it

allowed nonprofit organizations (principally universities) and small

businesses to retain title to inventions arising from federally supported

R&D. Second, the Act authorized federal agencies to patent their inventions and to grant licenses.

The licensing provisions applicable to universities and federal agencies

are somewhat similar but the federal laboratories have somewhat more

restrictions on their activities. Both must honor a statutory preference for

small businesses and both retain “march-in rights” in the event a licensee

does not live up to its commercialization objectives.59 Both are required to

share royalties with their inventors but only the federal agencies are

required to share a specified minimum amount.60 However, the universities do not have to give public notice of their intention to grant exclusive

licenses as do the federal agencies.61 Although both must require the

domestic manufacture of products to be sold in the United States, this

58 P.L. 96-517, 35 USC §§ 200-211.

59 Cf. 35 USC § 202(c)(7)(D) and 35 USC § 209(c)(3) (small business

preference); 35 USC § 203 and 35 USC § 209(f)(2) (march-in rights).

60 Cf. 35 USC § 202(c)(7)(B) and 15 USC § 3710c.

61 35 USC § 209(d) (agency notice requirement).
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requirement is applicable to all government licenses but only to exclusive

licenses granted by universities.62 In addition, the process for waiving the

manufacturing requirement is more clearly stated for the universities.

In 1984, in an effort to strengthen the licensing activities of federal agencies, the Bayh-Dole Act was amended to give the Secretary of Commerce

new oversight authority.63 The Secretary was to assist federal agencies in

efforts to promote the protection, licensing, and utilization of government-owned inventions. The Secretary was authorized to issue regulations governing agency licensing practices and to provide assistance and

advice to the agencies in their efforts. The legislative history of the bill

stated:

The Secretary of Commerce is to develop guidelines and a number of

aids to help the agencies make best use of these authorities. These aids

will include techniques for evaluating the commercial potential of

inventions, instruction courses for laboratory employees on the

innovation process, model agreements covering the disposition of

inventions for use in establishing cooperative arrangements, and advice

and assistance to laboratory directors. The Secretary is to monitor the

results of the program and provide annual reports to the President and

the Congress.64

Gaining New Technology Transfer Tools Through the Use of

Cooperative Research and Development Agreements

Beginning in 1984, several bills were introduced in Congress to add

emphasis to the transfer of technology from the federal laboratories to

the private sector. As stated in the legislative history of P.L. 98-620,

“There is broad agreement that with about $17 billion going to the Federal laboratories, which employ about one-sixth of the nation’s research

workers, ways must be found to increase the flow of technology from

those laboratories to the private sector.” During Senate hearings on

62 Cf. 35 USC § 204 and 35 USC § 209(b).

63 Trademark Clarification Act of 1984, P.L. 98-620, Title V, § 501, amending 35

USC § 206. This legislation also amended the procedures by reducing some of

the requirements applicable to nonprofit organizations and small businesses

claiming rights in inventions arising under federal funding agreements.

64 S. Rep. No. 98-662 (October 5, 1984) reprinted in U.S. Code, Cong. & Ad.

News, 5799
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technology transfer legislation in 1984, several speakers argued that the

federal laboratories were an untapped resource.65

A common theme in these legislative proposals was the need for incentives for laboratory inventors to work with industry and for a formal

legal mechanism by which the federal laboratories could perform cooperative research with the private sector. On the basis of the positive

experiences with university licensing and the anticipated competitive

advantages to U.S. industry, Congress began to consider ways to better

leverage the intellectual property generated under the significant federal

R&D investments at the federal laboratories.

In 1986, the ideas were merged into a single bill that was enacted as the

Technology Transfer Act of 1986. Under the new authority, governmentowned, government-operated (GOGO) laboratories were empowered to

cooperate with industry and other nonfederal entities and to use technology transfer tools that heretofore had not been available to all GOGO

laboratories. Specific authorities granted under the act included:

■ Authority for the laboratories to enter into formal contracts

(called Cooperative Research and Development Agreements, or

CRADAs) with nonfederal entities to cooperate in the advancement of technologies toward commercial application,

■ Direction to the laboratories to identify, protect and license to the

CRADA partner inventions made at the laboratory under the

CRADA,

■ Authority for the laboratories to establish a cash awards program

to reward laboratory technical staff for inventions, innovations,

and other activities that promoted commercial and mission application of technologies and domestic technology transfer,

65 Governor Dick Thornburg of Pennsylvania said: “There are over 380 federal

laboratories in the United States. The eight in Pennsylvania are performing

research in areas ranging from coal and forestry to food quality. We should be

certain that we are taking maximum advantage of their resources and results

to stimulate economic growth in this country. Although these laboratories

perform a significant amount of the research taking place in our country

today, they have not always been as aggressive as they might be in

transferring their technology from the laboratory to the private sector.” S.

Rep. No. 98-662 (Oct. 5, 1984)
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■ Authority for the laboratories to retain income from licensing of

laboratory intellectual property to reward inventors and other

technical staff members who made technology transfer contributions and to fund mission-related education and training,

intellectual property management costs, or mission-related scientific R&D, and

■ Authority for agencies to waive their rights in inventions and

assign title to CRADA partners.

In addition, the Act provided important guidance to the laboratories

about the role that technology transfer should play in each laboratory’s

culture:

■ Technology transfer, consistent with mission responsibilities, was

to become a responsibility of each laboratory science and engineering professional.

■ Each laboratory director was to ensure that efforts to transfer

technology were considered positively in laboratory job descriptions, employee promotion policies, and evaluation of the job

performance of scientists and engineers in the laboratory.

■ Individuals filling positions in an ORTA were to be included in

the overall laboratory/agency management development program to ensure that highly competent technical managers were

full participants in the technology transfer process.

■ To enhance the effectiveness of laboratory-based technology

transfer programs, each ORTA was to prepare application assessments for selected R&D projects in which that laboratory was

engaged and which in the opinion of the laboratory might have

potential commercial applications.

■ Each laboratory was encouraged to participate, where feasible, in

regional, state, and local programs designed to facilitate or stimulate the transfer of technology to benefit the region, state, or local

jurisdiction in which the federal laboratory is located.

In 1988 Congress amended the Stevenson-Wydler Act to expand the scope

of intellectual property that could be licensed under a CRADA. The

amended law permitted laboratories “to negotiate license agreements ...

for inventions and other intellectual property developed at the labora-
80 Tech Transfer 2000: Making Partnerships Work

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tory.” 66 Congress explained the change as intended “to allow parties

negotiating a cooperative agreement to permit contractual considerations

of all intellectual property arising under the agreement.”

Reinforcing Federal Technology Transfer Initiatives: Executive

Order 12591

In 1987, President Reagan issued Executive Order 12591 to encourage

federal agencies and their laboratories to move knowledge from the

research laboratories into the development of new products and processes by fully implementing the statutory authorities granted by the

Bayh-Dole Act, Federal Technology Transfer Act, and related legislation.

The Order directed the agencies, to the extent permitted by law and

within funding allocations, to extend rights to all contractors, regardless

of size, to elect to retain title to all inventions made under federally

funded R&D. In addition, the Order recognized the international implications of these activities and set guidelines to ensure the protection and

preservation of U.S. interests in CRADAs or patent licenses involving

foreign entities. These guidelines require that agencies, “in consultation

with the United States Trade Representative, give appropriate consideration” to a series of factors relating to the foreign country whose entities

are involved in the transaction. These factors include the ability of U.S.

companies to participate in cooperative research and licensing in the

country, the country’s intellectual property protection policies, and the

adequacy of its export control measures.

Granting CRADA Authority to Department of Energy

Laboratories and Other Amendments

The National Competitiveness Technology Transfer Act of 198967 gave all

government-owned, contractor-operated (GOCO) laboratories authority

to enter into CRADAs under the Federal Technology Transfer Act. Most

of the GOCO laboratories were part of the Department of Energy (DOE)

laboratory system and this law effectively empowered all federal laboratories to participate in federal technology transfer activities. The Act

provided a number of special provisions applicable to the GOCO

CRADA process.

66 P.L. 100-519, amending 15 USC § 3710a(a).

67 P.L. 101-189, amending 15 USC §§ 3710a and 3710b.
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68 15 USC § 3710a(c)(7)(B).

69 P.L. 104-113, amending portions of 15 USC §§3710-3710d.

The Act also increased reporting requirements relating to intellectual

property management. The federal agencies were required to submit to

Congress, with their annual budget request, an explanation of the

agency’s technology transfer program for the preceding year and the

agency’s plans for conducting its technology transfer function for the

upcoming year. Plans for an upcoming year were to include provisions

for securing intellectual property rights in laboratory innovations with

commercial promise and plans for managing such innovations to benefit

U.S. industrial competitiveness.

Other significant changes in the 1989 Act related to the treatment of

proprietary information generated in connection with a CRADA. Congress believed that the threat of disclosure under the Freedom of Information Act of confidential information had been a significant impediment to corporate participation in CRADAs. For that reason, the Act

included language authorizing the laboratories to withhold from disclosure certain types of information either supplied by the private sector

partner or generated in the course of the CRADA activities. Congress

authorized the laboratories to protect from disclosure (including disclosure under the Freedom of Information Act) “information that results

from research and development activities” under the act for a period of

up to 5 years from its development. This CRADA information must be of

a type “that would be a trade secret or commercial or financial information that is privileged or confidential if the information had been obtained from a non-Federal party” participating in a CRADA.68

Establishing Minimum Expectations for Licensing of CRADA

Inventions

In 1995, legislation was introduced to provide statutory guidance to both

the laboratories and their private sector partners in licensing rights in

intellectual property generated under a CRADA. The National Technology Transfer and Advancement Act of 199569 ensures that a private sector

CRADA partner will have sufficient rights in laboratory inventions made

under the CRADA to obtain whatever competitive advantage may result

from commercializing the resulting technology. The law requires the

collaborating party be offered, at a minimum, “the option to choose an

exclusive license for a pre-negotiated field of use “ for any laboratory
82 Tech Transfer 2000: Making Partnerships Work

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invention under the agreement.70 In return, the laboratory is to receive a

license to practice the invention on behalf of the government and may

also, in certain defined circumstances, require the collaborator to license

others on reasonable terms.71

Recent Legislative Proposals

A bill to amend the Stevenson-Wydler Act was introduced in the 106th

Congress and passed by the House of Representatives.72 The bill is

expected to be considered by the Senate in the next session of Congress.

The bill was intended to streamline agency licensing practices, especially

in the case of exclusive licenses, and to make other improvements to the

laboratories’ ability to license their technologies. The bill would simplify

the notice requirements applicable to the granting of an exclusive or

partially exclusive license, requiring a minimum notice period of fifteen

days. It would also confirm the authority of the laboratories to grant

licenses to pre-existing intellectual property under a CRADA, subject to

the procedural requirements of the agency patent licensing authorities of

the Bayh-Dole Act. Other provisions of the bill would enable the federal

laboratories to work more effectively with universities and small businesses in bundling related pieces of intellectual property for licensing.

70 15 USC § 3710a(b)

71 The government may exercise such rights “only in exceptional

circumstances” and only if it determines that the collaborator has failed to

meet commitments intended to ensure economic benefit to the United States

or that certain other defined conditions are met. 15 USC § 3710a(b)(1)(B) and

(C).

72 H.R. 209, 106th Cong., 1st Sess.
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APPENDIX C: AN UPDATE ON HISTORICAL

PERFORMANCE MEASUREMENTS

During the past decade, the Department of Commerce gathered data

elements, which have served primarily to indicate how much technology transfer activity had occurred. In our previous reports, the point was

made that most of these data can be referred to as input data relating to

the technology transfer process, as opposed to outputs or outcomes from

technology transfer projects that serve the stated purposes of both the

Stevenson-Wydler and Bayh-Dole Acts. In addition to the data collected

by Commerce, the Office of Management and Budget and most laboratories and agencies have gathered supplemental technology transfer information, which they use for their own assessments.

Historically, the data elements gathered for the report to Congress and

the President accounted for the following items:

■ Number of inventions disclosed.

■ Number of patent applications filed.

■ Number of invention licenses granted by federal laboratories.

■ Income from licenses by federal laboratories and agencies.

■ Number of active CRADAs.

This year Commerce requested several other data elements on an optional basis and two that were required from all agencies. Those required

elements are:

■ Number of patents issued.

■ Number of new CRADAs initiated.

Of these seven data elements reported by all agencies, four could arguably be considered outputs: the number of inventions disclosed, the

number of licenses granted, the income from licensing, and the number

of CRADAs initiated. The other three, although important metrics, relate

primarily to the input side of the ledger.

The additional data elements requested from the agencies and the laboratories were intended to provide more insight into the outputs from the
84 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

technology transfer activities engaged in by the federal laboratories with

industry. A few of those additional data elements will be considered in

the following discussion as it relates to the data being reported.

From Figure 1, “Number of Federal Laboratory Inventions Disclosed,”*

there does not appear to have been a marked increase in the total number

of inventions disclosed since 1987, the time of the inclusion of technology

transfer as part of agency missions. Of course, the existence of these new

responsibilities and new agreements would not necessarily alter the rate

at which new discoveries occur.

The number of inventions disclosed changed somewhat at the Department of Energy (DOE). During the last half of the 1980s, DOE gave its

government-owned, contractor-operated (GOCO) laboratories the authority to elect title to inventions, which minimized the agency’s direct involvement in the patenting of inventions and shifted much of the responsibility for invention review and patenting to their laboratories. Thus, as

DOE’s laboratories assumed responsibility for intellectual property 

	

	


           





















 



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Figure 1. Number of Federal Laboratory Inventions

Disclosed

*Accompanying tables are presented at the end of this appendix.
Tech Transfer 2000: Making Partnerships Work 85

OFFICE OF TECHNOLOGY POLICY

management, the number of DOE disclosures fell below historic levels for

a few years, but are now rising to earlier levels.

Figure 2, “Number of Patent Applications on Federal Laboratory Inventions,” suggests that, as the government-owned, government-operated

laboratories expanded their involvement with industry under CRADAs,

more attention was paid to the commercial potential of inventions and the

laboratories became more active in their patenting activities. Similarly, as

DOE’s GOCO laboratories received their CRADA authority and began to

partner with industry, their patenting activities nearly tripled. Following

those early increases in activity, the number of applications has reached a

relatively constant rate. The data presented in Figure 3, “Number of

Patents Issued on Federal Laboratory Inventions,” indicate that Defense

and Energy laboratories file applications on a greater percentage of their

disclosures than most other agencies, and thus account for nearly 75

percent of all patents issued to federal agencies. It is likely that this

relates more to their tradition of “defensive patenting” than to the quality

of disclosures at the agencies.

Figure 2. Number of Patent Applications on

Federal Laboratory Inventions

           

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86 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

Figure 4, “Number of Licenses Granted for Federal Laboratory Inventions,” indicates that licensing is becoming part of the culture for at least

a few of the federal laboratories and that the laboratories are beginning to *&,



















 



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Figure 3. Number of Patents Issued

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Tech Transfer 2000: Making Partnerships Work 87

OFFICE OF TECHNOLOGY POLICY

           

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get results from their patent portfolios. Figure 5, “Income from Licenses

for Federal Laboratory Intellectual Property,” shows a steady increase

that reflects the results of proactive licensing efforts by a few laboratories.

Comparison with similar income data reported by the Association of

University Technology Managers (AUTM) suggests that an annual

growth rate of about 20 percent may be within normal expectations for

this phase of program development for licensing of federally funded

inventions. This is especially true considering that the agencies and their

laboratories have more restricted licensing opportunities (copyright is

unavailable to the laboratories) and must comply with more public

interest criteria in licensing their technologies than universities. As with

universities, a few laboratories and agencies have had early successes

and currently dominate the statistics. However, many laboratories are

beginning to invest more in the commercial assessment of their intellectual property portfolios and are training their staffs to become capable

licensing professionals. As a result, the number of licenses and the earned

income from royalties will probably continue to grow at a modest rate.

Additional data collected from agencies accounting for the bulk of the

licensing income show that about 65 percent of the royalties received

were for earned income from the sales or use of licensed inventions. This

tracks with the experience at universities, as reported by the AUTM

Figure 5. Income from Licenses for Federal Laboratory

Intellectual Property inThousands of Dollars
88 Tech Transfer 2000: Making Partnerships Work

OFFICE OF TECHNOLOGY POLICY

Figure 6. Number of Active CRADA

Projects at Federal Laboratories

           



















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survey, and is a more meaningful metric than total licensing income.

Accounting for earned royalties as opposed to license issue fees or minimum annual royalties is the best measure of commercial application of

licensed federal inventions.

Figure 6, “Number of Active CRADA Projects at Federal Laboratories,”

shows that the Department of Defense and DOE laboratories have attracted the greatest number of industry partners. This is to be expected

because of the historical relationships that their laboratories have had

with the defense industries and because of the substantial numbers of

scientists and engineers at their laboratories.

The marked decline of CRADAs at the DOE laboratories at the end of

1996 reflects a decision in 1994 by DOE to end its Technology Transfer

Initiative and to phase it out over a 2-year period beginning in 1996. The

Initiative, which provided funding for laboratory involvement in

CRADAs at both DOE’s Energy and Defense laboratories, was closely

linked to competencies at each individual laboratory. It had been managed at the laboratory levels until 1993 when management of the initiative was centralized at headquarters. When the decision was made to
Tech Transfer 2000: Making Partnerships Work 89

OFFICE OF TECHNOLOGY POLICY

Figure 7. Number of CRADA Projects

Initiated at Federal Laboratories

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phase out the Initiative, the number of CRADAs with industry declined

by 50 percent. Congress continues to fund the Defense Programs’ Initiative at about 20 percent of its peak funding and project prioritization and

selection have been returned to the laboratories.

Figure 7, “Number of CRADA Projects Initiated at Federal Laboratories,”

shows that the number of new CRADAs remains practically constant,

even when considered on an agency-by-agency basis. In some cases, the

laboratories may be at the saturation point, having absorbed as much

collateral work with the private sector as the level of appropriated funding will support. However, as data are collected in subsequent years,

there may be variations among agencies as a result of programmatic

shifts by agencies and their laboratories.
90 Tech Transfer 2000: Making Partnerships Work

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TABLE 1. Number of Federal Laboratory Inventions Disclosed

FY FY FY FY FY FY FY FY FY FY FY FY

Agency 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Agriculture 83 144 127 158 127 83 110 111 133 129 260 208

Commerce 43 31 49 46 30 55 66 51 65 71 58 40

Defense 953 1147 1153 1383 1383 1283 1189 1172 1168 1115 1150 1028

Air Force 83 90 169 160 102 160 140 140 200 190 138 121

Army 248 348 276 376 463 438 413 388 363 338 312 264

Navy 622 709 708 847 959 685 636 644 605 587 700 643

Energy 857 1003 1053 1335 1666 1698 1443 1588 1758 1886 1500 1313

EPA 0 0 0 12 20 9 22 19 15 20 9 14

HHS 194 226 209 215 215 311 282 307 307 305 268 287

Interior 3 6 3 26 26 1 2 2 2 2 5 5

NASA 496 462 532 538 570 416 384 457 532 550 550 554

Transport 0 0 0 1 2 1 1 1 0 4 2 4

VA 33 28 42 58 33 44 39 45 36 71 40 50

Total 2662 3047 3168 3772 4213 3901 3538 3753 4016 4153 3842 3503

TABLE 2. Number of Patent Applications on Federal Laboratory Inventions

FY FY FY FY FY FY FY FY FY FY FY FY

Agency 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Agriculture 44 50 71 76 110 70 68 40 80 91 56 64

Commerce 8 15 28 28 18 53 43 41 35 60 49 66

Defense 343 447 616 807 919 850 835 732 759 716 735 755

Air Force 49 47 122 145 178 155 161 122 148 108 100 116

Army 177 203 216 236 274 260 246 232 218 204 192 219

Navy 117 197 278 426 467 435 428 378 393 404 443 420

Energy 252 336 382 366 397 432 497 543 571 564 705 751

EPA 4 5 5 6 8 12 15 15 24 18 13 11

HHS 98 145 225 239 261 224 193 171 166 147 148 132

Interior 5 4 11 15 21 1 2 2 2 2 2 5

NASA 94 129 125 127 165 175 185 116 101 66 79 55

Transport 0 0 0 1 1 0 0 1 2 2 1 3

VA NA NA 3 8 NA 0 0 0 0 0 1 2

Total 848 1131 1466 1673 1900 1817 1838 1661 1740 1666 1789 1844
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TABLE 4. Number of Licenses Granted for Federal Laboratory Inventions

FY FY FY FY FY FY FY FY FY FY FY FY

Agency 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Agriculture 30 24 23 33 29 31 28 9 21 26 22 23

Commerce 0 0 1 0 2 5 3 3 4 10 11 17

Defense 10 10 14 15 25 12 17 16 22 22 34 34

Air Force 1 2 2 4 1 1 3 3 4 6 7 5

Army 3 6 2 3 9 7 3 12 12 19 14 13

Navy 6 2 10 8 15 11 14 13 18 16 13 16

Energy** 37 43 57 62 75 81 96 118 140 154 175 162

EPA 0 0 0 1 2 2 2 9 1 2 1 0

HHS 35 42 48 47 69 96 99 151 176 193 208 215

Interior 3 3 0 0 0 8 3 0 0

NASA 13 7 7 6 4 5 12 11 29 36 51 58

Transportation 0 0 0 0 0 0 1

VA 0 0 0 0 0

Total 128 129 150 164 206 239 260 337 408 462 502 510

**Does not include licenses for copyrighted works.

FY1997 FY1998

Agriculture 45 75

Commerce 23 19

Defense 554 579

Air Force 88 89

Army 169 168

Navy 297 322

Energy 384 512

EPA 12 1

HHS 152 171

Interior 1 3

NASA 72 85

Transport 0 1

VA

Total 1243 1446

TABLE 3. Number of Patents Issued on

Federal Laboratory Inventions
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TABLE 5. Income from Licenses for Federal Laboratory Intellectual Property

in Thousands of Dollars

FY FY FY FY FY FY FY FY FY FY FY FY

Agency 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Agriculture 133 120 420 559 836 1044 1483 1450 1635 2091 2300 2400

Commerce 34 81 62 52 26 0000 0.27 196 241

Defense 44 49 211 239 286 331 567 1081 646 836 924 1560

Air Force 27 31 27 44 43 47 90 59 102 142 190 212

Army 10 5 41 58 113 78 77 110 100 335 256 430

Navy 7 13 143 137 130 206 400 912 444 359 478 918

Energy 346 545 1499 2560 3193 2369 2703 2915 3455 4122 8009 10536

EPA 0 0 0 3 74 60 75 230 110 300 60 100

HHS 4245 5434 4804 5839 13384 10133 13584 18654 19727 27277 35692 39500

Interior 46 38 61 41 58 0 0 2000 2000 2000 2000 2000

NASA 73 79 84 113 292 133 158 311 349 343 1,053 1,226

Trans/VA 0 0 163 7 14 0 0

Others 4 2 33 16 0

Total 4925 6348 7337 9429 18163 14070 18570 26641 27922 36969 50234 57563

TABLE 6. Number of Active CRADA Projects at Federal Laboratories

FY FY FY FY FY FY FY FY FY FY FY FY

Agency 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Agriculture 9 51 98 128 177 172 172 208 229 244 273 288

Commerce 0 9 44 82 115 177 292 368 407 406 377 337

Defense 3 10 36 113 193 277 365 563 845 1086 1360 1424

Air Force 0 2 7 13 26 6 25 32 66 223 251 246

Army 3 8 27 80 115 212 260 389 549 531 740 817

Navy 0 0 2 20 52 59 80 142 230 332 369 361

Energy 0 0 0 1 43 250 582 1094 1392 1677 963 868

EPA 0 0 2 11 31 30 28 35 30 35 34 37

HHS* 22 28 89 110 144 146 149 147 152 158 161 163

Interior 0 0 1 12 11 1 3 9 15 22 23 30

Transport 0 0 0 1 9 17 30 38 37 43 36 39

VA 0 0 1 2 8 8 7 9 14 17 12 15

Total 34 98 271 460 731 1078 1628 2471 3121 3688 3239 3201

*In 1996 NIH began using CRADAs to transfer research samples into its laboratories.

The numbers presented here do not include “Material CRADAs.”
Tech Transfer 2000: Making Partnerships Work 93

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FY1997 FY1998

Agriculture 93 102

Commerce 90 77

Defense 408 399

Air Force 72 55

Army 189 210

Navy 147 134

Energy 274 266

EPA 11 12

HHS* 32 43

Interior 9 7

Transport 14 13

VA 6 9

Total 937 928

*In 1996 NIH began using CRADAs to transfer research samples into its laboratories.

The numbers presented here do not include “Material CRADAs.”

TABLE 7. Number of CRADA Projects

Initiated at Federal Laboratories
OFFICE OF TECHNOLOGY POLICY
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APPENDIX D: SEEKING INDUSTRY’S PERSPECTIVE

ON FEDERAL TECHNOLOGY TRANSFER

To prepare this report, OTP solicited the views of industry regarding

federal technology transfer issues. This was accomplished by identifying companies that had partnered with industry under a number of

different types of technology transfer agreements. As an initial activity,

agencies and their laboratories were asked to submit the names of private

sector firms who had participated with laboratories under CRADAs.

The purpose for engaging the outside CRADA participants was to:

■ Gain insight on how much impact the CRADAs have had on their

businesses and/or in advancing their technologies.

■ Identify issues that have made partnering with the federal laboratories difficult.

■ Seek to understand how close the coupling was between the laboratory and the outside participant.

■ Identify “best practices” among the various agencies and recognize ways that the outside participants believe the processes and

practices could be improved.

In gathering the information from industry, the National Science Foundation contracted with SRI International on behalf of the Department of

Commerce to provide expert assistance in developing interview regimes

and to conduct telephone conversations with private sector firms and to

facilitate a roundtable discussion with industry.

The telephone conversations were conducted using a collection of questions helped to carry out a meaningful dialogue. The conversations were

not a survey, but were intended to gain a sense of the diversity of industry/laboratory interactions and lessons learned. The following list of

topical questions was used by the consultants in carrying out the telephone conversations:

1. “Your company/university has engaged in ___ CRADA(s) with

a federal lab(s). Why did you decide to pursue a cooperative

project(s) with the lab(s)?”
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2. “How did you identify the lab(s) with which you wished to

engage in a cooperative agreement(s)?”

3. “When the scope of work was developed, was the work plan

one that you felt would be mutually beneficial, or was it focused

more on the interests of your company or the laboratory?”

4. “What were your expectations at the beginning of the project?”

5. “When the project was completed, had your expectations been

met? If not, please explain.”

6. “Did either your company or the laboratory identify and protect

intellectual property (IP) during the course of the project? (If the

laboratory did, ask “Did you formally license the IP from the

laboratory?”)”

7. “In negotiating the terms of the CRADA, did you find any

specific provisions as impediments to doing business with the

laboratory? How were those matters resolved?”

8. “When the CRADA was completed, did you remain in contact

with your laboratory technical staff member?”

9. “If you have had CRADAs with more than one laboratory/

agency, did you notice differences in the manner in which

negotiations or the actual project were conducted? If differences,

what were they and what was their effect?”

10. “Did the technology you received contribute directly or indirectly to your company’s success? If yes, how?

11. “Are there things that could be done to improve the technical or

business interactions between your company and the

laboratory(s)?”

12. “Would you enter into another CRADA with that laboratory, or

any laboratory? If not, why not?”

13. “Would you encourage others to enter into CRADAs?”

The companies contacted were:
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Arcturus Engineering

CMS Defense Systems

CryoGen, Inc.

General Atomics

Goodyear

Motorola Corporation

PG&E

Procter & Gamble

Smith-Kline Beecham

Spawr Industries

Superconductivity Components, Inc.

Vical, Inc.

When the telephone discussions with these companies were completed, a

series of issues was identified which would serve as topics for a

“roundtable discussion” with companies that had engaged in significant

industry/laboratory cooperative research. The External Research Directors’ Network (ERDN) of the Industrial Research Institute agreed to

participate in such a roundtable discussion at its planned meeting on

April 19, 1999. The title of the session was “The Industry Perspective,

Partnering with Federal Laboratories Through CRADAs.” In attendance

were 30 individuals representing 25 different companies.

The two consultants from SRI facilitated the meeting. A panel of ERDN

representatives from six major companies served as a forum to stimulate

broader discussions by the larger group. The questions used to focus the

meeting were the following:

■ How did you decide with which lab(s) to work?

■ What were your expectations going in?

■ Were your expectations met?

■ How close were the technical interactions?
98 Tech Transfer 2000: Making Partnerships Work

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■ Were there formal and/or regular communications between the

parties during the project?

■ How did this benefit your company?

■ Do you think the technology transfer benefited the laboratory?

■ Were there problems that you encountered either in doing the

agreement or in conducting the work?

■ If the work is complete, has there been any follow-on collaboration such as licensing?

■ What did you learn from the experience?

■ Is partnering with federal laboratories of continuing value to

your company? Why?

The results of the panel discussion and the telephone conversations were

the basis of much of the information contained in Section 3 of this report.

The companies represented at the ERDN roundtable were:

Air Products And Chemicals, Inc.

Alcoa Inc.

Akzo Nobel Chemicals

Armstrong World Industries, Inc.

The Dexter Corporation

The Dow Chemical Company

DuPont

Eastman Chemical Company

Eastman Kodak Company

Eaton Corporation

Ford Motor Company

General Electric Company

The Gillette Company

Hewlett-Packard Company

ICI Americas/Glidden

Industrial Research Institute, Inc.

Intel Corporation

Kellogg Company

Kraft Foods, Inc.

Lockheed Martin Corporation
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Nalco Chemical Company

The Procter & Gamble Company

Rohm And Haas Company

The Sherwin-Williams Company

UOP, Inc.