II

105TH CONGRESS

2D SESSION S. 2120

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

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’’.

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, made before the signing

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

4 work under the agreement,’’ after ‘‘under the agree5 ment,’’.

6 SEC. 3. LICENSING FEDERALLY OWNED INVENTIONS.

7 (a) AMENDMENT.—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 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

4 to 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;

8 ‘‘(4) granting the license will not tend to sub9 stantially lessen competition or create or maintain a

10 violation of the Federal antitrust laws; and

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

12 foreign patent application or patent, the interests of

13 the Federal Government or United States industry

14 in foreign commerce will be enhanced.

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

16 agency shall normally grant any license to use or sell any

17 federally owned invention in the United States only to a

18 licensee who agrees that any products embodying the in19 vention or produced through the use of the invention will

20 be manufactured substantially in the United States.

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

22 granting of any exclusively or partially exclusive licenses

23 under this section shall be given to small business firms

24 having equal or greater likelihood as other applicants to
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1 bring the invention to practical application within a rea2 sonable time.

3 ‘‘(d) TERMS AND CONDITIONS.—Any licenses grant4 ed under section 207 shall contain such terms and condi5 tions as the granting agency considers appropriate. Such

6 terms and conditions—

7 ‘‘(1) shall include provisions—

8 ‘‘(A) retaining a nontransferable, irrev9 ocable, paid-up license for the Federal agency

10 to practice the invention or have the invention

11 practiced throughout the world by or on behalf

12 of the Government of the United States.

13 ‘‘(B) requiring periodic reporting on utili14 zation of the invention, and utilization efforts,

15 by the licensee, but only to the extent necessary

16 to enable the Federal agency to determine

17 whether the terms of the license are being com18 plied with; and

19 ‘‘(C) empowering the Federal agency to

20 terminate the license in whole or in part if the

21 agency determines that—

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

23 commitment to achieve practical utilization

24 of the invention, including commitments

25 contained in any plan submitted in support
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1 of its request for a license, and the licensee

2 cannot otherwise demonstrate to the satis3 faction of the Federal agency that it has

4 taken, or can be expected to take within

5 a reasonable time, effective steps to achieve

6 practical utilization of the invention;

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

8 agreement described in subsection (b);

9 ‘‘(iii) termination is necessary to meet

10 requirements for public use specified by

11 Federal regulations issued after the date of

12 the license, and such requirements are not

13 reasonably satisfied by the licensee; or

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

15 competent authority to have violated the

16 Federal antitrust laws in connection with

17 its performance under the license agree18 ment.

19 ‘‘(e) PUBLIC NOTICE.—No exclusive or partially ex20 clusive license may be granted under this section unless

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

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

23 and the Federal agency has considered all comments re24 ceived in response to that public notice.
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1 ‘‘(f) DEVELOPMENT PLAN.—A Federal agency may

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

3 person requesting the license has supplied to the agency

4 a basic business plan with development or commercializa5 tion milestones. Each Federal agency, in consultation with

6 the Small Business Administration, shall develop consist7 ent standards for exempting small business firms from the

8 requirements of this subsection for non-exclusive licenses.

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

10 An application shall include, as an independent subdocu11 ment a detailed description of the applicant’s plan for de12 velopment or marketing (or both) of the invention. The

13 subdocument, which is exempt from disclosure under sec14 tion 552 of title 5, United States Code, shall include only

15 a statement—

16 ‘‘(1) of the time, nature, and amount of antici17 pated investment of capital and other resources

18 which the applicant believes will be required to bring

19 the invention to practical application;

20 ‘‘(2) as to the applicant’s capability and inten21 tion to fulfill the plan, including information regard22 ing manufacturing, marketing, financial, and tech23 nical resources;

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

25 intends to practice the invention; and
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1 ‘‘(4) of the geographic areas—

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

3 manufacture any product embodying the inven4 tion;

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

6 sell the invention; or

7 ‘‘(C) both.’’.

8 (b) CONFORMING AMENDMENT.—The item relating

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

10 title 35, United States Code, is amended to read as fol11 lows:

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

12 SEC. 4. REVIEW OF COOPERATIVE RESEARCH AND DEVEL13 OPMENT AGREEMENT PROCEDURES.

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

15 and Technology Policy, in consultation with the Office of

16 Management and Budget, relevant Federal agencies, na17 tional laboratories, and any other person the Director con18 siders appropriate, shall review the procedures used by

19 Federal agencies to gather and consider the views of other

20 agencies before final approval or disapproval of—

21 (1) a joint work statement under section

22 12(c)(5)(C) or (D) of the Stevenson-Wydler Tech23 nology Innovation Act of 1980 (15 U.S.C.

24 3710a(c)(5)(C) or (D)); or
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1 (2) in the case of a laboratory described in sec2 tion 12(d)(2)(A) of the Stevenson-Wydler Tech3 nology Innovation Act of 1980 (15 U.S.C.

4 3710a(d)(2)(A)), a cooperative research and develop5 ment agreement under such section 12, that involves

6 national security, or relates to a project which may

7 have a significant impact on domestic or inter8 national competitiveness.

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

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

11 and Technology Policy shall establish and distribute to ap12 propriate Federal agencies—

13 (1) specific criteria to indicate the necessity for

14 interagency review of an approval or disapproval de15 scribed in subsection (a); and

16 (2) procedures for carrying out such inter17 agency review.

18 Procedures established under this subsection shall be de19 signed to the extent possible to use or modify existing pro20 cedures, to minimize burdens on Federal agencies, and to

21 minimize delay in the approval or disapproval of the joint

22 work statement or cooperative research and development

23 agreement under interagency review.
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1 SEC. 5. TECHNICAL AMENDMENTS TO BAYH-DOLE ACT.

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

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

4 (1) by amending section 202(e) to read as fol5 lows:

6 ‘‘(e) In any case when a Federal employee is a co7 inventor of any invention made under a funding agreement

8 with a nonprofit organization or small business firm, the

9 Federal agency employing such coinventor may, for the

10 purpose of consolidating rights in the invention—

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

12 acquire in the subject invention to the nonprofit or13 ganization or small business firm; or

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

15 from the nonprofit organization or small business

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

17 the rights are acquired voluntarily enters into the

18 transaction.’’; and

19 (2) in section 207(a)—

20 (A) by striking ‘‘patent applications, pat21 ents, or other forms of protection obtained’’ and

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

23 (B) by inserting ‘‘, including acquiring

24 rights for the Federal Government in any in25 vention, but only to the extent the party from

26 whom the rights are acquired voluntarily enters
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1 into the transaction, to facilitate the licensing

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

3 through contract’’ in paragraph (3).

4 SEC. 6. TECHNICAL AMENDMENTS TO THE STEVENSON5 WYDLER TECHNOLOGY INNOVATION ACT OF

6 1980.

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

8 Innovation Act of 1980 (15 U.S.C. 3710c(a)(1)) is amend9 ed—

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

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

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

13 and

14 (2) in subparagraph (B), by striking ‘‘succeed15 ing fiscal year’’ and inserting ‘‘2 succeeding fiscal

16 years’’.

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