II

106TH CONGRESS

1ST SESSION S. 999

To amend chapter 18 of title 35, United States Code, to improve the ability

of Federal agencies to patent and license federally owned inventions,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 11, 1999

Mr. HATCH introduced the following bill; which was read twice and referred

to the Committee on the Judiciary

A BILL

To amend chapter 18 of title 35, United States Code, to

improve the ability of Federal agencies to patent and

license federally owned inventions, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Technology Transfer

5 Act of 1999’’.
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1 SEC. 2. LICENSING FEDERALLY OWNED OR PATENTED IN2 VENTIONS.

3 (a) IN GENERAL.—Section 209 of title 35, United

4 States Code, is amended to read as follows:

5 ‘‘§ 209. Licensing federally patented or owned inven6 tions

7 ‘‘(a) AUTHORITY.—A Federal agency may grant an

8 exclusive or partially exclusive license on a federally owned

9 invention under section 207(a)(2) only if—

10 ‘‘(1) granting the license is a reasonable and

11 necessary incentive to—

12 ‘‘(A) call forth the investment capital and

13 expenditures needed to bring the invention to

14 practical application; or

15 ‘‘(B) otherwise promote the invention’s uti16 lization by the public;

17 ‘‘(2) the Federal agency finds that the public

18 will be served by the granting of the license, as indi19 cated by the applicant’s intentions, plans, and ability

20 to bring the invention to practical application or oth21 erwise promote the invention’s utilization by the

22 public, and that the proposed scope of exclusivity is

23 not greater than reasonably necessary to provide the

24 incentive for bringing the invention to practical utili25 zation, as proposed by the applicant, or otherwise to

26 promote the invention’s utilization by the public;
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1 ‘‘(3) the applicant makes a commitment to

2 achieve practical utilization of the invention within a

3 reasonable time, which time may be extended by the

4 agency upon the applicant’s request and the appli5 cant’s demonstration that the refusal of such exten6 sion would be unreasonable;

7 ‘‘(4) granting the license will not tend to sub8 stantially lessen competition or create or maintain a

9 violation of the Federal antitrust laws; and

10 ‘‘(5) in the case of an invention covered by a

11 foreign patent application or patent, the interests of

12 the Federal Government or United States industry

13 in foreign commerce will be enhanced.

14 ‘‘(b) MANUFACTURE IN UNITED STATES.—A Federal

15 agency shall normally grant a license under section

16 207(a)(2) to use or sell any federally owned invention in

17 the United States only to a licensee who agrees that any

18 products embodying the invention or produced through the

19 use of the invention will be manufactured substantially in

20 the United States.

21 ‘‘(c) SMALL BUSINESS.—First preference for the

22 granting of any exclusive or partially exclusive licenses

23 under section 207(a)(2) shall be given to small business

24 firms having equal or greater likelihood as other appli-
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1 cants to bring the invention to practical application within

2 a reasonable time.

3 ‘‘(d) TERMS AND CONDITIONS.—Any licenses grant4 ed under section 207(a)(2) shall contain such terms and

5 conditions as the granting agency considers appropriate.

6 Such terms and conditions shall include provisions—

7 ‘‘(1) retaining a nontransferable, irrevocable,

8 paid-up license for any Federal agency to practice

9 the invention or have the invention practiced

10 throughout the world by or on behalf of the Govern11 ment of the United States;

12 ‘‘(2) requiring periodic reporting on utilization

13 of the invention, and utilization efforts, by the li14 censee, but only to the extent necessary to enable

15 the Federal agency to determine whether the terms

16 of the license are being complied with; and

17 ‘‘(3) empowering the Federal agency to termi18 nate the license in whole or in part if the agency de19 termines that—

20 ‘‘(A) the licensee is not executing its com21 mitment to achieve practical utilization of the

22 invention, including commitments contained in

23 any plan submitted in support of its request for

24 a license, and the licensee cannot otherwise

25 demonstrate to the satisfaction of the Federal
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1 agency that it has taken, or can be expected to

2 take within a reasonable time, effective steps to

3 achieve practical utilization of the invention;

4 ‘‘(B) the licensee is in breach of an agree5 ment described in subsection (b);

6 ‘‘(C) termination is necessary to meet re7 quirements for public use specified by Federal

8 regulations issued after the date of the license,

9 and such requirements are not reasonably satis10 fied by the licensee; or

11 ‘‘(D) the licensee has been found by a

12 court of competent jurisdiction to have violated

13 the Federal antitrust laws in connection with

14 its performance under the license agreement.

15 ‘‘(e) TREATMENT OF REPORT INFORMATION.—Any

16 report required under subsection (d)(2) shall be treated

17 by the Federal agency as commercial and financial infor18 mation obtained from a person and is privileged and con19 fidential and not subject to disclosure under section 552

20 of title 5.

21 ‘‘(f) PUBLIC NOTICE.—No exclusive or partially ex22 clusive license may be granted under section 207(a)(2) un23 less public notice of the intention to grant an exclusive

24 or partially exclusive license on a federally owned invention

25 has been provided in an appropriate manner at least 15
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1 days before the license is granted, and the Federal agency

2 has considered all comments received before the end of

3 the comment period in response to that public notice. This

4 subsection shall not apply to the licensing of inventions

5 made under a cooperative research and development

6 agreement entered into under section 12 of the Stevenson7 Wydler Technology Innovation Act of 1980 (15 U.S.C.

8 3710a).

9 ‘‘(g) PLAN.—No Federal agency shall grant any li10 cense under a patent or patent application on a federally

11 owned invention unless the person requesting the license

12 has supplied the agency with a plan for development or

13 marketing of the invention, except that any such plan shall

14 be treated by the Federal agency as commercial and finan15 cial information obtained from a person and privileged and

16 confidential and not subject to disclosure under section

17 552 of title 5.’’.

18 (b) AMENDMENTS TO CHAPTER 18 OF TITLE 35,

19 UNITED STATES CODE.—Chapter 18 of title 35, United

20 States Code, is amended—

21 (1) in section 200 by inserting ‘‘without unduly

22 encumbering future research and discovery’’ after

23 ‘‘free competition and enterprise;’’;

24 (2) by amending section 202(e) to read as fol25 lows:
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1 ‘‘(e) In any case when a Federal employee is a co2 inventor of any invention made with a nonprofit organiza3 tion, small business firm, or a non-Federal inventor, the

4 Federal agency employing such coinventor may, for the

5 purpose of consolidating rights in the invention and if it

6 finds that it would expedite the development of the

7 invention—

8 ‘‘(1) license or assign whatever rights it may

9 acquire in the subject invention to the nonprofit or10 ganization, small business firm, or non-Federal in11 ventor in accordance with sections 200 through 204

12 (including this section); or

13 ‘‘(2) acquire any rights in the subject invention

14 from the nonprofit organization, small business firm,

15 or non-Federal inventor, but only to the extent the

16 party from whom the rights are acquired voluntarily

17 enters into the transaction and no other transaction

18 under this chapter is conditioned on such acquisi19 tion.’’; and

20 (3) in section 207(a)—

21 (A) in paragraph (2), by striking ‘‘patent

22 applications, patents, or other forms of protec23 tion obtained’’ and inserting ‘‘inventions’’; and

24 (B) in paragraph (3), by inserting ‘‘, in25 cluding acquiring rights for and administering
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1 royalties to the Federal Government in any in2 vention, but only to the extent the party from

3 whom the rights are acquired voluntarily enters

4 into the transaction, to facilitate the licensing

5 of a federally owned invention’’ after ‘‘or

6 through contract’’.

7 (c) CONFORMING AMENDMENT.—The item relating

8 to section 209 in the table of sections for chapter 18 of

9 title 35, United States Code, is amended to read as fol10 lows:

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

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