II

Calendar No. 668

105TH CONGRESS

2D SESSION S. 2120

[Report No. 105–358]

To improve the ability of Federal agencies to license federally-owned

inventions.

IN THE SENATE OF THE UNITED STATES

MAY 22, 1998

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

SEPTEMBER 30, 1998

Reported by Mr. MCCAIN, with an amendment

[Omit the part struck through and insert the part printed in italic]

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 1998’’.
2

•S 2120 RS

1 SEC. 2. COOPERATIVE RESEARCH AND DEVELOPMENT

2 AGREEMENTS.

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

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

5 amended by inserting ‘‘or, subject to section 209 of title

6 35, United States Code, may grant a license to an inven7 tion which is Federally owned, made before the signing

8 of the agreement, and directly related to the scope of the

9 work under the agreement,’’ after ‘‘under the agree10 ment,’’.

11 SEC. 3. LICENSING FEDERALLY-OWNED INVENTIONS.

12 (a) AMENDMENT.—Section 209 of title 35, United

13 States Code, is amended to read as follows:

14 ‘‘§ 209. Licensing federally-owned inventions

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

16 exclusive or partially exclusive license on a federally-owned

17 invention only if—

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

19 necessary incentive to—

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

21 expenditures needed to bring the invention to

22 practical application; or

23 ‘‘(B) otherwise promote the invention’s uti24 lization by the public;

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

26 will be served by the granting of the license, as indi-
3

•S 2120 RS

1 cated by the applicant’s intentions, plans, and ability

2 to bring the invention to practical application or oth3 erwise promote the invention’s utilization by the

4 public, and that the proposed scope of exclusivity is

5 not greater than reasonably necessary to provide the

6 incentive for bringing the invention to practical utili7 zation, as proposed by the applicant, or otherwise to

8 promote the invention’s utilization by the public;

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

10 achieve practical utilization of the invention within a

11 reasonable time;

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 any license to use or sell any

21 federally-owned invention in the United States only to a

22 licensee who agrees that any products embodying the in23 vention or produced through the use of the invention will

24 be manufactured substantially in the United States.
4

•S 2120 RS

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

2 granting of any exclusively or partially exclusive licenses

3 under this section shall be given to small business firms

4 having equal or greater likelihood as other applicants to

5 bring the invention to practical application within a rea6 sonable time.

7 ‘‘(d) TERMS AND CONDITIONS.—Any licenses grant8 ed under section 207 shall contain such terms and condi9 tions as the granting agency considers appropriate. Such

10 terms and conditions—

11 ‘‘(1) shall include provisions—

12 ‘‘(A) retaining a nontransferable, irrev13 ocable, paid-up license for the Federal agency

14 to practice the invention or have the invention

15 practiced throughout the world by or on behalf

16 of the Government of the United States;

17 ‘‘(B) requiring periodic reporting on utili18 zation of the invention, and utilization efforts,

19 by the licensee, but only to the extent necessary

20 to enable the Federal agency to determine

21 whether the terms of the license are being com22 plied with; and

23 ‘‘(C) empowering the Federal agency to

24 terminate the license in whole or in part if the

25 agency determines that—
5

•S 2120 RS

1 ‘‘(i) the licensee is not executing its

2 commitment to achieve practical utilization

3 of the invention, including commitments

4 contained in any plan submitted in support

5 of its request for a license, and the licensee

6 cannot otherwise demonstrate to the satis7 faction of the Federal agency that it has

8 taken, or can be expected to take within a

9 reasonable time, effective steps to achieve

10 practical utilization of the invention;

11 ‘‘(ii) the licensee is in breach of an

12 agreement described in subsection (b);

13 ‘‘(iii) termination is necessary to meet

14 requirements for public use specified by

15 Federal regulations issued after the date of

16 the license, and such requirements are not

17 reasonably satisfied by the licensee; or

18 ‘‘(iv) the licensee has been found by a

19 competent authority to have violated the

20 Federal antitrust laws in connection with

21 its performance under the license agree22 ment.

23 ‘‘(e) PUBLIC NOTICE.—No exclusive or partially ex24 clusive license may be granted under this section unless

25 public notice of the intent to grant such a license has been
6

•S 2120 RS

1 provided at least 30 days before the license is granted,

2 and the Federal agency has considered all comments re3 ceived in response to that public notice.

4 ‘‘(f) DEVELOPMENT PLAN.—A Federal agency may

5 grant a license on a federally-owned invention only if the

6 person requesting the license has supplied to the agency

7 a basic business plan with development or commercializa8 tion milestones. Each Federal agency, in consultation with

9 the Small Business Administration, shall develop consist10 ent standards for exempting small business firms from the

11 requirements of this subsection for non-exclusive licenses.

12 ‘‘(g) NONDISCLOSURE OF CERTAIN INFORMATION.—

13 An application shall include, as an independent subdocu14 ment a detailed description of the applicant’s plan for de15 velopment or marketing (or both) of the invention. The

16 subdocument, which is exempt from disclosure under sec17 tion 552 of title 5, United States Code, shall include only

18 a statement—

19 ‘‘(1) of the time, nature, and amount of antici20 pated investment of capital and other resources

21 which the applicant believes will be required to bring

22 the invention to practical application;

23 ‘‘(2) as to the applicant’s capability and inten24 tion to fulfill the plan, including information regard-
7

•S 2120 RS

1 ing manufacturing, marketing, financial, and tech2 nical resources;

3 ‘‘(3) of the fields of use for which the applicant

4 intends to practice the invention; and

5 ‘‘(4) of the geographic areas—

6 ‘‘(A) in which the applicant intends to

7 manufacture any product embodying the inven8 tion;

9 ‘‘(B) where the applicant intends to use or

10 sell the invention; or

11 ‘‘(C) both.’’.

12 (b) CONFORMING AMENDMENT.—The item relating

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

14 title 35, United States Code, is amended to read as fol15 lows:

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

16 SEC. 4. REVIEW OF COOPERATIVE RESEARCH AND DEVEL17 OPMENT AGREEMENT PROCEDURES.

18 (a) REVIEW.—The Director of the Office of Science

19 and Technology Policy, in consultation with the Office of

20 Management and Budget, relevant Federal agencies, na21 tional laboratories, and any other person the Director con22 siders appropriate, shall review the procedures used by

23 Federal agencies to gather and consider the views of other

24 agencies before final approval or disapproval of—
8

•S 2120 RS

1 (1) a joint work statement under section

2 12(c)(5)(C) or (D) of the Stevenson-Wydler Tech3 nology Innovation Act of 1980 (15 U.S.C.

4 3710a(c)(5)(C) or (D)); or

5 (2) in the case of a laboratory described in sec6 tion 12(d)(2)(A) of the Stevenson-Wydler Tech7 nology Innovation Act of 1980 (15 U.S.C.

8 3710a(d)(2)(A)), a cooperative research and develop9 ment agreement under such section 12, that involves

10 national security, or relates to a project which may

11 have a significant impact on domestic or inter12 national competitiveness.

13 (b) PROCEDURES.—Within 1 year after the date of

14 enactment of this Act, the Director of the Office of Science

15 and Technology Policy shall establish and distribute to ap16 propriate Federal agencies—

17 (1) specific criteria to indicate the necessity for

18 interagency review of an approval or disapproval de19 scribed in subsection (a); and

20 (2) procedures for carrying out such inter21 agency review.

22 (b) PROCEDURES.—Within 1 year after the date of en23 actment of this Act, the Director of the Office of Science

24 and Technology Policy, in consultation with relevant Fed25 eral agencies and national laboratories, shall—
9

•S 2120 RS

1 (1) determine the adequacy of existing proce2 dures and methods for interagency coordination and

3 awareness; and

4 (2) establish and distribute to appropriate Fed5 eral agencies—

6 (A) specific criteria to indicate the necessity

7 for gathering and considering the views of other

8 agencies on joint work statements or cooperative

9 research and development agreements as de10 scribed in subsection (a); and

11 (B) additional procedures, if any, for carry12 ing out such gathering and considering of agency

13 views.

14 Procedures established under this subsection shall be de15 signed to the extent possible to use or modify existing pro16 cedures, to minimize burdens on Federal agencies, and to

17 minimize delay in the approval or disapproval of the joint

18 work statement or cooperative research and development

19 agreement under interagency review.

20 SEC. 5. 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:
10

•S 2120 RS

1 ‘‘(e) In any case when a Federal employee is a co2 inventor of any invention made under a funding agreement

3 with a nonprofit organization or small business firm, the

4 Federal agency employing such coinventor may, for the

5 purpose of consolidating rights in the invention—

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

7 acquire in the subject invention to the nonprofit or8 ganization or small business firm; or

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

10 from the nonprofit organization or small business

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

12 the rights are acquired voluntarily enters into the

13 transaction.’’; and

14 (2) in section 207(a)—

15 (A) by striking ‘‘patent applications, pat16 ents, or other forms of protection obtained’’ and

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

18 (B) by inserting ‘‘, including acquiring

19 rights for the Federal Government in any in20 vention, but only to the extent the party from

21 whom the rights are acquired voluntarily enters

22 into the transaction, to facilitate the licensing

23 of a federally-owned invention’’ after ‘‘or

24 through contract’’ in paragraph (3).
11

•S 2120 RS

1 SEC. 6. TECHNICAL AMENDMENTS TO THE STEVENSON2 WYDLER TECHNOLOGY INNOVATION ACT OF

3 1980.

4 Section 14(a)(1) of the Stevenson-Wydler Technology

5 Innovation Act of 1980 (15 U.S.C. 3710c(a)(1)) is amend6 ed—

7 (1) in subparagraph (A)(i), by inserting ‘‘, if

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

9 the United States’’ after ‘‘inventor or coinventors’’;

10 and

11 (2) in subparagraph (B), by striking ‘‘succeed12 ing fiscal year’’ and inserting ‘‘2 succeeding fiscal

13 years’’.
Calendar No. 668

105TH CONGRESS

2D SESSION S. 2120

[Report No. 105–358]

A BILL

To improve the ability of Federal agencies to

license federally-owned inventions.

SEPTEMBER 30, 1998

Reported with an amendment