Calendar No. 665

103D CONGRESS

2D SESSION S. 1537

A BILL

To amend the Stevenson-Wydler Technology

Innovation Act of 1980.

SEPTEMBER 28 (legislative day, SEPTEMBER 12), 1994

Reported with an amendment
II

Calendar No. 665

103D CONGRESS

2D SESSION S. 1537

To amend the Stevenson-Wydler Technology Innovation Act of 1980.

IN THE SENATE OF THE UNITED STATES

OCTOBER 7 (legislative day, SEPTEMBER 27), 1993

Mr. ROCKEFELLER (for himself and Mr. DECONCINI) introduced the following

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

Science, and Transportation

SEPTEMBER 28 (legislative day, SEPTEMBER 12), 1994

Reported by Mr. HOLLINGS, with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]

A BILL

To amend the Stevenson-Wydler Technology Innovation Act

of 1980.

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 Commer5 cialization Act of 1993’’.

6 SEC. 2. FINDINGS.

7 The Congress finds and declares the following:
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1 (1) The commercialization of technology and in2 dustrial innovation are central to the economic, envi3 ronmental, and social well-being of citizens of the

4 United States.

5 (2) The Government can help United States

6 business to speed the development of new products

7 and processes by entering into Cooperative Research

8 and Development Agreements which make available

9 the assistance of the Federal laboratories to the pri10 vate sector, but the commercialization of technology

11 and industrial innovation in the United States de12 pends largely upon actions by business.

13 (3) Government action to claim a right of own14 ership to any invention or other intellectual property

15 developed under a Cooperative Research and Devel16 opment Agreement can inhibit the establishment of

17 such agreements with business and can prevent the

18 commercialization of technology and industrial inno19 vation by business.

20 (4) The commercialization of technology and in21 dustrial innovation in the United States will be en22 hanced if the ownership of any invention or other in23 tellectual property developed under a Cooperative

24 Research and Development Agreement belongs to a
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1 company or companies incorporated in the United

2 States.

3 SEC. 3. TITLE TO INTELLECTUAL PROPERTY ARISING

4 FROM COOPERATIVE RESEARCH AND DEVEL5 OPMENT AGREEMENTS.

6 Section 12 of the Stevenson-Wydler Technology Inno7 vation Act of 1980 (15 U.S.C. 3710a) is amended as

8 follows:

9 (1) In the text of subsection (b) immediately

10 preceding paragraph (1), strike ‘‘Government-oper11 ated Federal laboratory, and to the extent provided

12 in an agency-approved joint work statement, a Gov13 ernment-owned contractor-operated laboratory, may’’

14 and insert ‘‘Federal laboratory shall ensure that title

15 to any intellectual property arising from the agree16 ment, except intellectual property developed in whole

17 by a laboratory employee, is assigned to the collabo18 rating party or parties to the agreement in exchange

19 for reasonable compensation to the laboratory, and

20 may’’.

21 (2) In subsection (b)(2), strike ‘‘or in part’’.

22 (3) Amend subsection (b)(3) to read as follows:

23 ‘‘(3) retain a nonexclusive, nontransferable, ir24 revocable, paid-up license from the collaborating

25 party or parties for any intellectual property arising
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1 from the agreement, and have such license practiced

2 throughout the world by or on behalf of the Govern3 ment, but shall not, in the exercise of such license,

4 publicly disclose proprietary information related to

5 the license;’’.

6 (4) Amend subsection (b)(4) to read as follows:

7 ‘‘(4) retain the right, in accordance with proce8 dures provided in regulations promulgated under

9 this section, to require a collaborating party to grant

10 to a responsible applicant or applicants a

11 nonexclusive, partially exclusive, or exclusive license

12 to use the subject intellectual property in any field

13 of use, on terms that are reasonable under the cir14 cumstances, or if the collaborating party fails to

15 grant such a license, to grant the license itself if the

16 laboratory finds that—

17 ‘‘(A) the collaborating party has not taken,

18 and is not expected to take within a reasonable

19 time, effective steps to achieve practical applica20 tion of the subject intellectual property in the

21 field of use;

22 ‘‘(B) such action is necessary to meet

23 health or safety needs that are not reasonably

24 satisfied by the collaborating party;
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1 ‘‘(C) such action is necessary to meet re2 quirements for public use specified by Federal

3 regulations and such requirements are not rea4 sonably satisfied by the collaborating party; or

5 ‘‘(D) the collaborating party has not en6 tered into or is in breach of an agreement made

7 pursuant to subsection (c)(4)(B).’’.

8 (5) In subsection (d)(2), strike ‘‘and’’ at the

9 end;

10 (6) In subsection (d)(3), strike the period at the

11 end and insert ‘‘; and’’.

12 (7) At the end of subsection (d), insert the fol13 lowing new paragraph:

14 ‘‘(4) the term ‘intellectual property rights’

15 means—

16 ‘‘(A) in the case of government-owned,

17 government-operated Federal laboratories, pat18 ents; and

19 ‘‘(B) in the case of government-owned,

20 contractor-operated Federal laboratories, pat21 ents, copyrights, and computer chip mask work

22 registrations.’’.
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1 SEC. 4. DISTRIBUTION OF INCOME FROM INTELLECTUAL

2 PROPERTY RECEIVED BY FEDERAL LABORA3 TORIES.

4 Section 14 of the Stevenson-Wydler Technology Inno5 vation Act of 1980 (15 U.S.C. 3710c) is amended to read

6 as follows:

7 ‘‘SEC. 14. DISTRIBUTION OF INCOME FROM INTELLECTUAL

8 PROPERTY RECEIVED BY FEDERAL AGEN9 CIES OR LABORATORIES.

10 ‘‘(a) IN GENERAL.—

11 ‘‘(1) Except as provided in paragraphs (2) and

12 (4), any income received by a Federal agency or lab13 oratory from the licensing or assignment of intellec14 tual property under agreements entered into by Fed15 eral laboratories under section 12, and intellectual

16 property of Federal agencies or laboratories licensed

17 under section 207 of title 35, United States Code,

18 or under any other provision of law, shall be re19 tained by the agency or laboratory and shall be dis20 posed of as follows:

21 ‘‘(A)(i) The head of the agency or labora22 tory or his designee shall pay to the laboratory

23 employee or employees who have assigned their

24 rights in the intellectual property to the United

25 States, to the laboratory operator, or to a col-
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1 laborating party or parties to a research agree2 ment an amount equal to the sum of—

3 ‘‘(I) the first $10,000 received by the

4 agency or laboratory from the intellectual

5 property; and

6 ‘‘(II) 15 percent of any income re7 ceived by the agency or laboratory from

8 the intellectual property in excess of the

9 sum of the amount paid pursuant to item

10 (I) and the value of unreimbursed research

11 and development resources provided by the

12 laboratory under the terms of the agree13 ment.

14 ‘‘(ii) An agency or laboratory may provide

15 appropriate incentives from royalties to labora16 tory employees who contribute substantially to

17 the technical development of licensed or as18 signed intellectual property between the time

19 that the intellectual property rights are legally

20 asserted and the time of the licensing or assign21 ing of the intellectual property rights.

22 ‘‘(iii) The agency or laboratory shall retain

23 the income received from intellectual property

24 until the agency or laboratory makes payments

25 to laboratory employees under clause (i) or (ii).
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1 ‘‘(B) The balance of the income shall be

2 transferred to the agency’s laboratories, with

3 the majority share of the royalties or other in4 come going to the laboratory where the intellec5 tual property originated, and the income so

6 transferred to any such laboratory may be used

7 or obligated by that laboratory during the fiscal

8 year in which it is received or during the suc9 ceeding fiscal year—

10 ‘‘(i) for payment of not more than 15

11 percent of such income for expenses inci12 dental to the administration and licensing

13 of intellectual property by the agency or

14 laboratory with respect to intellectual prop15 erty which originated at that laboratory,

16 including the fees or other costs for the

17 services of other agencies, persons, or or18 ganizations for intellectual property man19 agement and licensing services;

20 ‘‘(ii) to reward scientific, engineering,

21 and technical employees of the laboratory,

22 including developers of sensitive or classi23 fied technology, regardless of whether the

24 technology has commercial applications;
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1 ‘‘(iii) to further scientific exchange

2 among the laboratories of the agency; or

3 ‘‘(iv) for education and training of

4 employees consistent with the research and

5 development mission and objectives of the

6 agency or laboratory, and for other activi7 ties that increase the potential for transfer

8 of the technology of the laboratories of the

9 agency.

10 All income retained by the agency or laboratory

11 after payments have been made pursuant to sub12 paragraphs (A) and (B) that is unobligated and un13 expended at the end of the fiscal year succeeding the

14 fiscal year in which the income was received shall be

15 paid into the United States Treasury.

16 ‘‘(2) If, after payments to employees under

17 paragraph (1), the intellectual property income re18 ceived by an agency and its laboratories in any fiscal

19 year exceeds 5 percent of the budget of the labora20 tories of the agency for that year, 75 percent of such

21 excess shall be paid to the United States Treasury

22 and the remaining 25 percent may be used or obli23 gated for the purposes described in clauses (i)

24 through (iv) of paragraph (1)(B) during that fiscal

25 year or the succeeding fiscal year. Any income not
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1 so used or obligated shall be paid into the United

2 States Treasury.

3 ‘‘(3) Any payment made to an employee under

4 this section shall be in addition to the regular pay

5 of the employee and to any other awards made to

6 the employee, and shall not affect the entitlement of

7 the employee to any regular pay, annuity, or award

8 to which the employee is otherwise entitled or for

9 which the employee is otherwise eligible, or limit the

10 amount thereof. Any payment made under this sec11 tion to any employee shall continue after the em12 ployee leaves the employment of the laboratory or

13 agency.

14 ‘‘(4) A Federal agency receiving income as a re15 sult of intellectual property management services

16 performed for another Federal agency or laboratory

17 under section 207 of title 35, United States Code,

18 may retain such income to the extent required to

19 offset the payment of income from intellectual prop20 erty under paragraph (1)(A)(i), and costs and ex21 penses incurred under paragraph (1)(B)(i), includ22 ing the cost of foreign protection of the intellectual

23 property of the other agency. All income remaining

24 after payment of the income, costs, and expenses de25 scribed in the preceding sentence shall be trans-
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1 ferred to the agency for which the services were per2 formed, for distribution in accordance with clauses

3 (i) through (iv) of paragraph (1)(B).

4 ‘‘(b) CERTAIN ASSIGNMENTS.—If the intellectual

5 property from which the income is derived was assigned

6 to the Federal agency—

7 ‘‘(1) by a contractor, grantee, or participant in

8 a cooperative agreement with the agency; or

9 ‘‘(2) by an employee of the agency who was not

10 working in the laboratory at the time the intellectual

11 property was originated;

12 the agency unit that was involved in such assignment shall

13 be considered to be a laboratory for purposes of this sec14 tion.

15 ‘‘(c) REPORTS.—

16 ‘‘(1) In making its annual submission to the

17 Congress, each Federal agency shall submit, to the

18 appropriate authorization and appropriations com19 mittee of both Houses of the Congress, a summary

20 of the amount of income received from intellectual

21 property and expenditures made (including employee

22 awards) under this section.

23 ‘‘(2) Not later than October 1, 1996, the Comp24 troller General shall review the effectiveness of the

25 various income-sharing programs established under
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1 this section and report to the appropriate commit2 tees of the House of Representatives and the Senate,

3 in a timely manner, the Comptroller General’s find4 ings, conclusions, and recommendations for improve5 ments in such programs.’’.

6 SEC. 5. AMENDMENT TO BAYH-DOLE ACT.

7 Section 210(e) of title 35, United States Code, is

8 amended by inserting ‘‘and the Technology Commer9 cialization Act of 1993’’ after ‘‘Federal Technology Trans10 fer Act of 1986’’.

11 SECTION 1. SHORT TITLE.

12 This Act may be cited as the ‘‘Technology Commer13 cialization Act of 1994’’.

14 SEC. 2. FINDINGS.

15 The Congress finds and declares the following:

16 (1) The commercialization of technology and in17 dustrial innovation are central to the economic, envi18 ronmental, and social well-being of citizens of the

19 United States.

20 (2) The Government can help United States busi21 ness to speed the development of new products and

22 processes by entering into cooperative research and

23 development agreements which make available the as24 sistance of Federal laboratories to the private sector,

25 but the commercialization of technology and indus-
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1 trial innovation in the United States depends largely

2 upon actions by business.

3 (3) The commercialization of technology and in4 dustrial innovation in the United States will be en5 hanced if companies, in return for reasonable com6 pensation to the Government, can more easily obtain

7 exclusive licenses to inventions which they develop

8 jointly with Federal laboratory scientists.

9 SEC. 3. TITLE TO INTELLECTUAL PROPERTY ARISING FROM

10 COOPERATIVE RESEARCH AND DEVELOP11 MENT AGREEMENTS.

12 Section 12(b) of the Stevenson-Wydler Technology In13 novation Act of 1980 (15 U.S.C. 3710a(b)) is amended to

14 read as follows:

15 ‘‘(b) ENUMERATED AUTHORITY.—

16 ‘‘(1) Under an agreement entered into pursuant

17 to subsection (a)(1) a laboratory shall ensure that a

18 collaborating party has the right of first refusal to an

19 exclusive license for one or more fields of use in any

20 invention jointly made by its employee and a labora21 tory employee under the agreement in exchange for

22 reasonable compensation to the laboratory and sub23 mission of a satisfactory plan to commercialize the

24 invention. In consideration for the Government’s con25 tribution under the agreement, the rights of the col-
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1 laborating party shall be subject to the following con2 ditions:

3 ‘‘(A) The agreement includes a nonexclusive,

4 nontransferable, irrevocable, paid-up license from

5 the collaborating party to the laboratory to prac6 tice the invention or have the invention practiced

7 throughout the world by or on behalf of the Gov8 ernment but, in the exercise of such license, the

9 Government shall not publicly disclose propri10 etary information related to the license.

11 ‘‘(B) The Government shall have the right to

12 require a collaborating party to grant to a re13 sponsible applicant or applicants a nonexclusive,

14 partially exclusive, or exclusive license to use the

15 invention in any field of use, on terms that are

16 reasonable under the circumstances, or if the col17 laborating party fails to grant such a license, to

18 grant the license itself if the Government finds

19 that—

20 ‘‘(i) the collaborating party has not

21 taken, and is not expected to take within a

22 reasonable time, effective steps to achieve

23 practical application of the invention in the

24 field of use;
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1 ‘‘(ii) the action is necessary to meet

2 health or safety needs that are not reason3 ably satisfied by the collaborating party;

4 ‘‘(iii) the action is necessary to meet

5 requirements for public use specified by

6 Federal regulations and such requirements

7 are not reasonably satisfied by the collabo8 rating party; or

9 ‘‘(iv) the collaborating party has failed

10 to comply with the agreement implementing

11 subsection (c)(4)(B).

12 ‘‘(2) Under an agreement entered into under sub13 section (a)(1), a laboratory may—

14 ‘‘(A) accept, retain, and use funds, person15 nel, services, and property from a collaborating

16 party and provide personnel, services, and prop17 erty to a collaborating party;

18 ‘‘(B) grant or agree to grant in advance, to

19 a collaborating party, a license or assignment, or

20 an option thereto, in any invention made solely

21 by a laboratory employee under the agreement,

22 subject to—

23 ‘‘(i) a nonexclusive, nontransferable,

24 irrevocable, paid-up license to practice the

25 invention or have the invention practiced
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1 throughout the world by or on behalf of the

2 Government and such other right as the lab3 oratory deems appropriate;

4 ‘‘(ii) the right of the Government to re5 quire a collaborating party to grant to a re6 sponsible applicant a nonexclusive, par7 tially exclusive, or exclusive license to use

8 the invention in any field of use, on terms

9 that are reasonable under the circumstances,

10 or, if the collaborating party fails to grant

11 such a license, to grant the license itself if

12 the Government makes a finding under

13 paragraph (1)(B); and

14 ‘‘(iii) the right of the laboratory to re15 quire a collaborating party to submit a sat16 isfactory plan to commercialize the inven17 tion;

18 ‘‘(C) determine a right in other intellectual

19 property developed under an agreement entered

20 into under subsection (a)(1);

21 ‘‘(D) to the extent consistent with any ap22 plicable agency requirement or standard of con23 duct, permit an employee or former employee of

24 the laboratory to participate in an effort to com25 mercialize an invention made by the employee or
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1 former employee while in the employment or

2 service of the Government; and

3 ‘‘(E) grant to a collaborating party, in an

4 exclusive license in any invention made under

5 the agreement, the right of enforcement under

6 chapter 29 of title 35, United States Code, if ap7 propriate and in the public interest.

8 ‘‘(3) Under an agreement entered into under sub9 section (a)(1), the laboratory shall ensure that a col10 laborating party may retain title to any invention

11 which is made solely by its employee in which the

12 Government may have any nontransferable, irrev13 ocable, paid-up license to practice the invention or

14 have the invention practiced throughout the world by

15 or on behalf of the Government and such other right

16 as the Government deems appropriate.

17 ‘‘(4) A Government-owned contractor-operated

18 laboratory that enters into a cooperative research and

19 development agreement under subsection (a)(1) may

20 use or obligate royalties or other income accruing to

21 the laboratory under an agreement with respect to

22 any invention only—

23 ‘‘(A) for payments to inventors;

24 ‘‘(B) for a purpose described in section

25 14(a)(1)(B)(i) or (iv) of this Act; or
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1 ‘‘(C) for scientific research and development

2 consistent with the research and development

3 mission and objective of the laboratory.’’.

4 SEC. 4. DISTRIBUTION OF INCOME FROM INTELLECTUAL

5 PROPERTY RECEIVED BY FEDERAL LABORA6 TORIES.

7 Section 14 of the Stevenson-Wydler Technology Inno8 vation Act of 1980 (15 U.S.C. 3710c) is amended—

9 (1) by striking ‘‘INCOME’’ in the section head10 ing and inserting ‘‘ROYALTIES’’,

11 (2) by striking ‘‘income’’ each place it appears

12 in subsection (a) and inserting ‘‘payments’’,

13 (3) by striking ‘‘inventions of Government-oper14 ated Federal laboratories licensed’’ in subsection

15 (a)(1) and inserting ‘‘the licensing of inventions of

16 Government-operated laboratories’’,

17 (4) by inserting ‘‘the first $2,000, and there18 after’’ after ‘‘pay’’ in subsection (a)(1)(A)(i),

19 (5) by inserting ‘‘or other payments’’ after ‘‘roy20 alties’’ in subsection (a)(2),

21 (6) by striking ‘‘the payment of royalties’’ in the

22 first sentence of subsection (a)(4) and inserting ‘‘pay23 ments to inventor’’,
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1 (7) by striking ‘‘payment of the royalties,’’ in the

2 second sentence of subsection (a)(4) and inserting

3 ‘‘offsetting the payments to inventors,’’,

4 (8) by amending paragraph (1) of subsection (b)

5 to read as follows:

6 ‘‘(1) by a contractor, grantee, participant, or

7 employee thereof, in an agreement or other arrange8 ment with the agency; or’’, and

9 (9) by striking ‘‘working in the laboratory’’ in

10 paragraph (2) of subsection (b) and inserting ‘‘re11 quired by any regulation to assign the invention to

12 the agency’’.

13 SEC. 5. AMENDMENT TO BAYH-DOLE ACT.

14 Section 210(e) of title 35, United States Code, is

15 amended by inserting ‘‘and the Technology Commercializa16 tion Act of 1994’’ after ‘‘Federal Technology Transfer Act

17 of 1986’’.