II

106TH CONGRESS

1ST SESSION S. 804

To improve the ability of Federal agencies to license federally owned

inventions.

IN THE SENATE OF THE UNITED STATES

APRIL 14, 1999

Mr. ROCKEFELLER (for himself and Mr. FRIST) introduced the following bill;

which was read twice and referred to the Committee on Commerce,

Science, and Transportation

A BILL

To improve the ability of Federal agencies to license federally

owned inventions.

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 Commercialization Act of 1999’’.

6 SEC. 2. COOPERATIVE RESEARCH AND DEVELOPMENT

7 AGREEMENTS.

8 Section 12(b)(1) of the Stevenson-Wydler Technology

9 Innovation Act of 1980 (15 U.S.C. 3710a(b)(1)) is

10 amended by inserting ‘‘or, subject to section 209 of title
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1 35, United States Code, may grant a license to an inven2 tion which is federally owned, for which a patent applica3 tion was filed before the granting of the license, and di4 rectly within the scope of the work under the agreement,’’

5 after ‘‘under the agreement,’’.

6 SEC. 3. LICENSING FEDERALLY OWNED INVENTIONS.

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

8 States Code, is amended to read as follows:

9 ‘‘§ 209. Licensing federally owned inventions

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

11 exclusive or partially exclusive license on a federally owned

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

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

14 necessary incentive to—

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

16 expenditures needed to bring the invention to

17 practical application; or

18 ‘‘(B) otherwise promote the invention’s uti19 lization by the public;

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

21 will be served by the granting of the license, as indi22 cated by the applicant’s intentions, plans, and ability

23 to bring the invention to practical application or oth24 erwise promote the invention’s utilization by the

25 public, and that the proposed scope of exclusivity is
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1 not greater than reasonably necessary to provide the

2 incentive for bringing the invention to practical utili3 zation, as proposed by the applicant, or otherwise to

4 promote the invention’s utilization by the public;

5 ‘‘(3) the applicant makes a commitment to

6 achieve practical utilization of the invention within a

7 reasonable time, which may be extended by the

8 agency upon the applicant’s request and the appli9 cant’s demonstration that the refusal of such an ex10 tension would be unreasonable as specified in the li11 cense;

12 ‘‘(4) granting the license will not tend to sub13 stantially lessen competition or create or maintain a

14 violation of the Federal antitrust laws; and

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

16 foreign patent application or patent, the interests of

17 the Federal Government or United States industry

18 in foreign commerce will be enhanced.

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

20 agency shall normally grant a license under section

21 207(a)(2) to use or sell any federally owned invention in

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

23 products embodying the invention or produced through the

24 use of the invention will be manufactured substantially in

25 the United States.
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1 ‘‘(c) SMALL BUSINESS.—First preference for the

2 granting of any exclusive or partially exclusive licenses

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

4 firms having equal or greater likelihood as other appli5 cants to bring the invention to practical application within

6 a reasonable time.

7 ‘‘(d) TERMS AND CONDITIONS.—Any licenses grant8 ed under section 207(a)(2) shall contain such terms and

9 conditions as the granting agency considers appropriate.

10 Such terms and conditions shall include provisions—

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

12 paid-up license for any Federal agency to practice

13 the invention or have the invention practiced

14 throughout the world by or on behalf of the Govern15 ment of the United States;

16 ‘‘(2) requiring periodic reporting on utilization

17 of the invention, and utilization efforts, by the li18 censee, but only to the extent necessary to enable

19 the Federal agency to determine whether the terms

20 of the license are being complied with; and

21 ‘‘(3) empowering the Federal agency to termi22 nate the license in whole or in part if the agency de23 termines that—

24 ‘‘(A) the licensee is not executing its com25 mitment to achieve practical utilization of the
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1 invention, including commitments contained in

2 any plan submitted in support of its request for

3 a license, and the licensee cannot otherwise

4 demonstrate to the satisfaction of the Federal

5 agency that it has taken, or can be expected to

6 take within a reasonable time, effective steps to

7 achieve practical utilization of the invention;

8 ‘‘(B) the licensee is in breach of an agree9 ment described in subsection (b);

10 ‘‘(C) termination is necessary to meet re11 quirements for public use specified by Federal

12 regulations issued after the date of the license,

13 and such requirements are not reasonably satis14 fied by the licensee; or

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

16 court of competent jurisdiction to have violated

17 the Federal antitrust laws in connection with

18 its performance under the license agreement.

19 ‘‘(e) PUBLIC NOTICE.—No exclusive or partially ex20 clusive license may be granted under section 207(a)(2) un21 less public notice of the intention to grant an exclusive

22 or partially exclusive license on a federally owned invention

23 has been provided in an appropriate manner at least 15

24 days before the license is granted, and the Federal agency

25 has considered all comments received before the end of
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1 the comment period in response to that public notice. This

2 subsection shall not apply to the licensing of inventions

3 made under a cooperative research and development

4 agreement entered into under section 12 of the Stevenson5 Wydler Technology Innovation Act of 1980 (15 U.S.C.

6 3710a).

7 ‘‘(f) PLAN.—No Federal agency shall grant any li8 cense under a patent or patent application on a federally

9 owned invention unless the person requesting the license

10 has supplied the agency with a plan for development and/

11 or marketing of the invention, except that any such plan

12 may be treated by the Federal agency as commercial and

13 financial information obtained from a person and privi14 leged and confidential and not subject to disclosure under

15 section 552 of title 5 of the United States Code.’’.

16 (b) CONFORMING AMENDMENT.—The item relating

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

18 title 35, United States Code, is amended to read as fol19 lows:

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

20 SEC. 4. TECHNICAL AMENDMENTS TO BAYH-DOLE ACT.

21 Chapter 18 of title 35, United States Code (popularly

22 known as the ‘‘Bayh-Dole Act’’), is amended—

23 (1) by amending section 202(e) to read as fol24 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 or small business firm, the Federal agency employing

4 such coinventor may, for the purpose of consolidating

5 rights in the invention and if it finds it would expedite

6 the development of the invention—

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

8 acquire in the subject invention to the nonprofit or9 ganization or small business firm; or

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

11 from the nonprofit organization or small business

12 firm, but only to the extent the party from whom

13 the rights are acquired voluntarily enters into the

14 transaction and no other transaction under this

15 chapter is conditioned on such acquisition.’’; and

16 (2) in section 207(a)—

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

18 applications, patents, or other forms of protec19 tion obtained’’ and inserting ‘‘inventions’’; and

20 (B) in paragraph (3), by inserting ‘‘, in21 cluding acquiring rights for the Federal Gov22 ernment in any invention, but only to the extent

23 the party from whom the rights are acquired

24 voluntarily enters into the transaction, to facili-
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1 tate the licensing of a federally owned inven2 tion’’ after ‘‘or through contract’’.

3 SEC. 5. TECHNICAL AMENDMENTS TO THE STEVENSON4 WYDLER TECHNOLOGY INNOVATION ACT OF

5 1980.

6 The Stevenson-Wydler Technology Innovation Act of

7 1980 is amended—

8 (1) in section 4(4) (15 U.S.C. 3703(4)), by

9 striking ‘‘section 6 or section 8’’ and inserting ‘‘sec10 tion 7 or 9’’;

11 (2) in section 4(6) (15 U.S.C. 3703(6)), by

12 striking ‘‘section 6 or section 8’’ and inserting ‘‘sec13 tion 7 or 9’’;

14 (3) in section 5(c)(11) (15 U.S.C. 3704(c)(11)),

15 by striking ‘‘State of local governments’’ and insert16 ing ‘‘State or local governments’’;

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

18 (A) striking ‘‘section 6(a)’’ and inserting

19 ‘‘section 7(a)’’;

20 (B) striking ‘‘section 6(b)’’ and inserting

21 ‘‘section 7(b)’’; and

22 (C) striking ‘‘section 6(c)(3)’’ and insert23 ing ‘‘section 7(c)(3)’’;

24 (5) in section 11(e)(1) (15 U.S.C. 3710(e)(1)),

25 by striking ‘‘in cooperation with Federal Labora-
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1 tories’’ and inserting ‘‘in cooperation with Federal

2 laboratories’’;

3 (6) in section 11(i) (15 U.S.C. 3710(i)), by

4 striking ‘‘a gift under the section’’ and inserting ‘‘a

5 gift under this section’’;

6 (7) in section 14 (15 U.S.C. 3710c)—

7 (A) in subsection (a)(1)(A)(i), by inserting

8 ‘‘, if the inventor’s or coinventor’s rights are as9 signed to the United States’’ after ‘‘inventor or

10 coinventors’’;

11 (B) in subsection (a)(1)(B), by striking

12 ‘‘succeeding fiscal year’’ and inserting ‘‘2 suc13 ceeding fiscal years’’; and

14 (C) in subsection (b)(2), by striking ‘‘in15 vention’’ and inserting ‘‘invention’’; and

16 (8) in section 22 (15 U.S.C. 3714), by striking

17 ‘‘sections 11, 12, and 13’’ and inserting ‘‘sections

18 12, 13, and 14’’.

19 SEC. 6. REVIEW OF COOPERATIVE RESEARCH AND DEVEL20 OPMENT AGREEMENT PROCEDURES.

21 (a) REVIEW.—Within 90 days after the date of the

22 enactment of this Act, each Federal agency with a feder23 ally funded laboratory that has in effect on that date of

24 enactment 1 or more cooperative research and develop25 ment agreements under section 12 of the Stevenson-
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1 Wydler Technology Innovation Act of 1980 (15 U.S.C.

2 3710a) shall report to the Committee on National Security

3 of the National Science and Technology Council and the

4 Congress on the general policies and procedures used by

5 that agency to gather and consider the views of other

6 agencies on—

7 (1) joint work statements under section

8 12(c)(5) (C) or (D) of the Stevenson-Wydler Tech9 nology Innovation Act of 1980 (15 U.S.C.

10 3710a(c)(5)(C) or (D)); or

11 (2) in the case of laboratories described in sec12 tion 12(d)(2)(A) of the Stevenson-Wydler Tech13 nology Innovation Act of 1980 (15 U.S.C.

14 3710a(d)(2)(A)), cooperative research and develop15 ment agreements under such section 12,

16 with respect to major proposed cooperative research and

17 development agreements that involve critical national se18 curity technology or may have a significant impact on do19 mestic or international competitiveness.

20 (b) PROCEDURES.—

21 (1) IN GENERAL.—Within 1 year after the date

22 of the enactment of this Act, the Committee on Na23 tional Security of the National Science and Tech24 nology Council, in conjunction with relevant Federal

25 agencies and national laboratories, shall—
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1 (A) determine the adequacy of existing

2 procedures and methods for interagency coordi3 nation and awareness with respect to coopera4 tive research and development agreements de5 scribed in subsection (a); and

6 (B) establish and distribute to appropriate

7 Federal agencies—

8 (i) specific criteria to indicate the ne9 cessity for gathering and considering the

10 views of other agencies on joint work state11 ments or cooperative research and develop12 ment agreements as described in sub13 section (a); and

14 (ii) additional procedures, if any, for

15 carrying out such gathering and consid16 ering of agency views with respect to coop17 erative research and development agree18 ments described in subsection (a).

19 (2) PROCEDURE DESIGN.—Procedures estab20 lished under this subsection shall be designed to the

21 extent possible to—

22 (A) use or modify existing procedures;

23 (B) minimize burdens on Federal agencies;

24 (C) encourage industrial partnerships with

25 national laboratories; and
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1 (D) minimize delay in the approval or dis2 approval of joint work statements and coopera3 tive research and development agreements.

4 (c) LIMITATION.—Nothing in this Act, nor any proce5 dures established under this section shall provide to the

6 Office of Science and Technology Policy, the National

7 Science and Technology Council, or any Federal agency

8 the authority to disapprove a cooperative research and de9 velopment agreement or joint work statement, under sec10 tion 12 of the Stevenson-Wydler Technology Innovation

11 Act of 1980 (15 U.S.C. 3710a), of another Federal agen12 cy.

13 SEC. 7. INCREASED FLEXIBILITY FOR FEDERAL LABORA14 TORY PARTNERSHIP INTERMEDIARIES.

15 Section 23 of the Stevenson-Wydler Technology Inno16 vation Act of 1980 (15 U.S.C. 3715) is amended—

17 (1) in subsection (a)(1) by inserting ‘‘, institu18 tions of higher education as defined in section

19 1201(a) of the Higher Education Act of 1965 (20

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

21 the meaning of section 2194 of title 10, United

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

23 (2) in subsection (c) by inserting ‘‘, institutions

24 of higher education as defined in section 1201(a) of

25 the Higher Education Act of 1965 (20 U.S.C.
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1 1141(a)), or educational institutions within the

2 meaning of section 2194 of title 10, United States

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

4 SEC. 8. REPORTS ON UTILIZATION OF FEDERAL TECH5 NOLOGY.

6 (a) AGENCY ACTIVITIES.—Section 11 of the Steven7 son-Wydler Technology Innovation Act of 1980 (15 U.S.C.

8 3710) is amended—

9 (1) by striking the last sentence of subsection

10 (b);

11 (2) by inserting after subsection (e) the fol12 lowing:

13 ‘‘(f) AGENCY REPORTS ON UTILIZATION.—

14 ‘‘(1) IN GENERAL.—Each Federal agency which

15 operates or directs one or more Federal laboratories

16 or which conducts activities under sections 207, 208,

17 and 209 of title 35, United States Code, shall report

18 annually to the Office of Management and Budget,

19 as part of the agency’s annual budget submission,

20 on the activities performed by that agency and its

21 Federal laboratories under the provisions of this sec22 tion and of sections 207, 208, and 209 of title 35,

23 United States Code.

24 ‘‘(2) CONTENTS.—The report shall include—
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1 ‘‘(A) an explanation of the agency’s tech2 nology transfer program for the preceding year

3 and the agency’s plans for conducting its tech4 nology transfer function for the upcoming year,

5 including its plans for managing its intellectual

6 property so as to advance the agency’s mission

7 and benefit the competitiveness of United

8 States industry; and

9 ‘‘(B) information on technology transfer

10 activities for the preceding year, including—

11 ‘‘(i) the number of patent applications

12 filed;

13 ‘‘(ii) the number of patents received;

14 ‘‘(iii) the number of executed royalty15 bearing licenses, both exclusive and non-ex16 clusive, and the time elapsed from the date

17 the license was requested to the date the li18 cense was issued;

19 ‘‘(iv) the total earned royalty income

20 including such statistical information as

21 the total earned royalty income of the top

22 1 percent, 5 percent, and 20 percent of the

23 licenses, the range of royalty income, and

24 the median;
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1 ‘‘(v) the number of licenses termi2 nated; and

3 ‘‘(vi) any other parameters or discus4 sion that the agency deems relevant or

5 unique to its practice of technology trans6 fer.

7 ‘‘(3) COPY TO SECRETARY; CONGRESS.—The

8 agency shall transmit a copy of the report to the

9 Secretary of Commerce for inclusion in the annual

10 report to Congress and the President as set forth in

11 subsection (g)(2) below.

12 ‘‘(4) PUBLIC AVAILABILITY.—The agency is

13 also strongly encouraged to make the required infor14 mation available to the public through web sites or

15 other electronic means.’’;

16 (3) by striking subsection (g)(2) and inserting

17 the following:

18 ‘‘(2) REPORTS.—

19 ‘‘(A) ANNUAL REPORT REQUIRED.—The

20 Secretary shall submit each fiscal year, begin21 ning one year after enactment of the Tech22 nology Transfer Commercialization Act of 1999,

23 a summary report to the President and the

24 Congress on the use by the agencies and the

25 Secretary of the authorities specified in this Act
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1 and in sections 207, 208, and 209 of title 35,

2 United States Code.

3 ‘‘(B) CONTENT.—The report shall—

4 ‘‘(i) draw upon the reports prepared

5 by the agencies under subsection (f);

6 ‘‘(ii) discuss technology transfer best

7 practices, lessons learned, and successful

8 approaches in the licensing and transfer of

9 technology in the context of the agencies’

10 missions; and

11 ‘‘(iii) discuss the progress made to12 ward development of useful measures of

13 the outcomes of these programs.

14 ‘‘(C) PUBLIC AVAILABILITY.—The Sec15 retary shall make the report available to the

16 public through Internet websites or other elec17 tronic means.’’; and

18 (4) by inserting after subsection (g) the fol19 lowing:

20 ‘‘(h) DUPLICATION OF REPORTING.—The reporting

21 obligations imposed by this section—

22 ‘‘(1) are not intended to impose requirements

23 that duplicate requirements imposed by the Govern24 ment Performance and Results Act of 1993 (31

25 U.S.C. 1101 nt); and
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1 ‘‘(2) are to be implemented in coordination with

2 the implementation of that Act.’’.

3 (b) ROYALTIES.—Section 14(c) of the Stevenson4 Wydler Technology Innovation Act of 1980 (15 U.S.C.

5 3710c(c)) is amended to read as follows:

6 ‘‘(c) REPORTS.—At least once every 5 years, begin7 ning one year after enactment of the Technology Transfer

8 Commercialization Act of 1999, the Comptroller General

9 shall transmit a report to the appropriate committee of

10 the Senate and House of Representatives on the effective11 ness of the various programs in this Act, including find12 ings, conclusions, and recommendations for improvements

13 in such programs.’’.

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