IIB

106TH CONGRESS

1ST SESSION H. R. 209

IN THE SENATE OF THE UNITED STATES

MAY 12, 1999

Received

SEPTEMBER 29, 1999

Read twice and referred to the Committee on Commerce, Science, and

Transportation

AN ACT

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,
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1 SECTION 1. SHORT TITLE.

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

3 Commercialization Act of 1999’’.

4 SEC. 2. FINDINGS.

5 The Congress finds that—

6 (1) the importance of linking our unparalleled

7 network of over 700 Federal laboratories and our

8 Nation’s universities with United States industry

9 continues to hold great promise for our future eco10 nomic prosperity;

11 (2) the enactment of the Bayh-Dole Act in

12 1980 was a landmark change in United States tech13 nology policy, and its success provides a framework

14 for removing bureaucratic barriers and for simpli15 fying the granting of licenses for inventions that are

16 now in the Federal Government’s patent portfolio;

17 (3) Congress has demonstrated a commitment

18 over the past 2 decades to fostering technology

19 transfer from our Federal laboratories and to pro20 moting public/private sector partnerships to enhance

21 our international competitiveness;

22 (4) Federal technology transfer activities have

23 strengthened the ability of United States industry to

24 compete in the global marketplace; developed a new

25 paradigm for greater collaboration among the sci26 entific enterprises that conduct our Nation’s re-
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1 search and development—government, industry, and

2 universities; and improved the quality of life for the

3 American people, from medicine to materials;

4 (5) the technology transfer process must be

5 made ‘‘industry friendly’’ for companies to be willing

6 to invest the significant time and resources needed

7 to develop new products, processes, and jobs using

8 federally funded inventions; and

9 (6) Federal technology licensing procedures

10 should balance the public policy needs of adequately

11 protecting the rights of the public, encouraging com12 panies to develop existing government inventions,

13 and making the entire system of licensing govern14 ment technologies more consistent and simple.

15 SEC. 3. COOPERATIVE RESEARCH AND DEVELOPMENT

16 AGREEMENTS.

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

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

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

20 35, United States Code, may grant a license to an inven21 tion which is federally owned, for which a patent applica22 tion was filed before the signing of the agreement, and

23 directly within the scope of the work under the agree24 ment,’’ after ‘‘under the agreement,’’.
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1 SEC. 4. LICENSING FEDERALLY OWNED INVENTIONS.

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

3 States Code, is amended to read as follows:

4 ‘‘§ 209. Licensing federally owned inventions

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

6 exclusive or partially exclusive license on a federally owned

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

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

9 necessary incentive to—

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

11 expenditures needed to bring the invention to

12 practical application; or

13 ‘‘(B) otherwise promote the invention’s uti14 lization by the public;

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

16 will be served by the granting of the license, as indi17 cated by the applicant’s intentions, plans, and ability

18 to bring the invention to practical application or oth19 erwise promote the invention’s utilization by the

20 public, and that the proposed scope of exclusivity is

21 not greater than reasonably necessary to provide the

22 incentive for bringing the invention to practical ap23 plication, as proposed by the applicant, or otherwise

24 to promote the invention’s utilization by the public;

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

26 achieve practical application of the invention within
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1 a reasonable time, which time may be extended by

2 the agency upon the applicant’s request and the ap3 plicant’s demonstration that the refusal of such ex4 tension would be unreasonable;

5 ‘‘(4) granting the license will not tend to sub6 stantially lessen competition or create or maintain a

7 violation of the Federal antitrust laws; and

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

9 foreign patent application or patent, the interests of

10 the Federal Government or United States industry

11 in foreign commerce will be enhanced.

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

13 agency shall normally grant a license under section

14 207(a)(2) to use or sell any federally owned invention in

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

16 products embodying the invention or produced through the

17 use of the invention will be manufactured substantially in

18 the United States.

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

20 granting of any exclusive or partially exclusive licenses

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

22 firms having equal or greater likelihood as other appli23 cants to bring the invention to practical application within

24 a reasonable time.
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1 ‘‘(d) TERMS AND CONDITIONS.—Any licenses grant2 ed under section 207(a)(2) shall contain such terms and

3 conditions as the granting agency considers appropriate,

4 and shall include provisions—

5 ‘‘(1) retaining a nontransferrable, irrevocable,

6 paid-up license for any Federal agency to practice

7 the invention or have the invention practiced

8 throughout the world by or on behalf of the Govern9 ment of the United States;

10 ‘‘(2) requiring periodic reporting on utilization

11 of the invention, and utilization efforts, by the li12 censee, but only to the extent necessary to enable

13 the Federal agency to determine whether the terms

14 of the license are being complied with, except that

15 any such report shall be treated by the Federal

16 agency as commercial and financial information ob17 tained from a person and privileged and confidential

18 and not subject to disclosure under section 552 of

19 title 5 of the United States Code; and

20 ‘‘(3) empowering the Federal agency to termi21 nate the license in whole or in part if the agency de22 termines that—

23 ‘‘(A) the licensee is not executing its com24 mitment to achieve practical application of the

25 invention, including commitments contained in
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1 any plan submitted in support of its request for

2 a license, and the licensee cannot otherwise

3 demonstrate to the satisfaction of the Federal

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

5 take within a reasonable time, effective steps to

6 achieve practical application of the invention;

7 ‘‘(B) the licensee is in breach of an agree8 ment described in subsection (b);

9 ‘‘(C) termination is necessary to meet re10 quirements for public use specified by Federal

11 regulations issued after the date of the license,

12 and such requirements are not reasonably satis13 fied by the licensee; or

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

15 court of competent jurisdiction to have violated

16 the Federal antitrust laws in connection with

17 its performance under the license agreement.

18 ‘‘(e) PUBLIC NOTICE.—No exclusive or partially ex19 clusive license may be granted under section 207(a)(2) un20 less public notice of the intention to grant an exclusive

21 or partially exclusive license on a federally owned invention

22 has been provided in an appropriate manner at least 15

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

24 has considered all comments received before the end of

25 the comment period in response to that public notice. This
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1 subsection shall not apply to the licensing of inventions

2 made under a cooperative research and development

3 agreement entered into under section 12 of the Stevenson4 Wydler Technology Innovation Act of 1980 (15 U.S.C.

5 3710a).

6 ‘‘(f) PLAN.—No Federal agency shall grant any li7 cense under a patent or patent application on a federally

8 owned invention unless the person requesting the license

9 has supplied the agency with a plan for development or

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

11 be treated by the Federal agency as commercial and finan12 cial information obtained from a person and privileged and

13 confidential and not subject to disclosure under section

14 552 of title 5 of the United States Code.’’.

15 (b) CONFORMING AMENDMENT.—The item relating

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

17 title 35, United States Code, is amended to read as fol18 lows:

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

19 SEC. 5. MODIFICATION OF STATEMENT OF POLICY AND OB20 JECTIVES FOR CHAPTER 18 OF TITLE 35,

21 UNITED STATES CODE.

22 Section 200 of title 35, United States Code, is

23 amended by striking ‘‘enterprise;’’ and inserting ‘‘enter24 prise without unduly encumbering future research and dis25 covery;’’.
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1 SEC. 6. 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 with a nonprofit organiza8 tion, a small business firm, or a non-Federal inventor, the

9 Federal agency employing such coinventor may, for the

10 purpose of consolidating rights in the invention and if it

11 finds that it would expedite the development of the

12 invention—

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

14 acquire in the subject invention to the nonprofit or15 ganization, small business firm, or non-Federal in16 ventor in accordance with the provisions of this

17 chapter; or

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

19 from the nonprofit organization, small business firm,

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

21 party from whom the rights are acquired voluntarily

22 enters into the transaction and no other transaction

23 under this chapter is conditioned on such acquisi24 tion.’’; and

25 (2) in section 207(a)—
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1 (A) by striking ‘‘patent applications, pat2 ents, or other forms of protection obtained’’ and

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

4 (B) by inserting ‘‘, including acquiring

5 rights for and administering royalties to the

6 Federal Government in any invention, but only

7 to the extent the party from whom the rights

8 are acquired voluntarily enters into the trans9 action, to facilitate the licensing of a federally

10 owned invention’’ after ‘‘or through contract’’

11 in paragraph (3).

12 SEC. 7. TECHNICAL AMENDMENTS TO THE STEVENSON13 WYDLER TECHNOLOGY INNOVATION ACT OF

14 1980.

15 The Stevenson-Wydler Technology Innovation Act of

16 1980 is amended—

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

18 striking ‘‘section 6 or section 8’’ and inserting ‘‘sec19 tion 7 or 9’’;

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

21 striking ‘‘section 6 or section 8’’ and inserting ‘‘sec22 tion 7 or 9’’;

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

24 by striking ‘‘State of local governments’’ and insert25 ing ‘‘State or local governments’’;
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1 (4) in section 9 (15 U.S.C. 3707), by—

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

3 ‘‘section 7(a)’’;

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

5 ‘‘section 7(b)’’; and

6 (C) striking ‘‘section 6(c)(3)’’ and insert7 ing ‘‘section 7(c)(3)’’;

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

9 by striking ‘‘in cooperation with Federal Labora10 tories’’ and inserting ‘‘in cooperation with Federal

11 laboratories’’;

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

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

14 gift under this section’’;

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

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

17 ‘‘, other than payments of patent costs as delin18 eated by a license or assignment agreement,’’

19 after ‘‘or other payments’’;

20 (B) in subsection (a)(1)(A)(i), by inserting

21 ‘‘, if the inventor’s or coinventor’s rights are as22 signed to the United States’’ after ‘‘inventor or

23 coinventors’’;
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1 (C) in subsection (a)(1)(B), by striking

2 ‘‘succeeding fiscal year’’ and inserting ‘‘2 suc3 ceeding fiscal years’’;

4 (D) in subsection (a)(2), by striking ‘‘Gov5 ernment-operated laboratories of the’’; and

6 (E) in subsection (b)(2), by striking

7 ‘‘inventon’’ and inserting ‘‘invention’’; and

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

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

10 12, 13, and 14’’.

11 SEC. 8. REVIEW OF COOPERATIVE RESEARCH AND DEVEL12 OPMENT AGREEMENT PROCEDURES.

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

14 enactment of this Act, each Federal agency with a feder15 ally funded laboratory that has in effect on that date of

16 enactment one or more cooperative research and develop17 ment agreements under section 12 of the Stevenson18 Wydler Technology Innovation Act of 1980 (15 U.S.C.

19 3710a) shall report to the Committee on National Security

20 of the National Science and Technology Council and the

21 Congress on the general policies and procedures used by

22 that agency to gather and consider the views of other

23 agencies on—

24 (1) joint work statements under section

25 12(c)(5) (C) or (D) of the Stevenson-Wydler Tech-
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1 nology Innovation Act of 1980 (15 U.S.C.

2 3710a(c)(5)(C) or (D)); or

3 (2) in the case of laboratories described in sec4 tion 12(d)(2)(A) of the Stevenson-Wydler Tech5 nology Innovation Act of 1980 (15 U.S.C.

6 3710a(d)(2)(A)), cooperative research and develop7 ment agreements under such section 12,

8 with respect to major proposed cooperative research and

9 development agreements that involve critical national se10 curity technology or may have a significant impact on do11 mestic or international competitiveness.

12 (b) PROCEDURES.—Within one year after the date of

13 the enactment of this Act, the Committee on National Se14 curity of the National Science and Technology Council, in

15 conjunction with relevant Federal agencies and national

16 laboratories, shall—

17 (1) determine the adequacy of existing proce18 dures and methods for interagency coordination and

19 awareness with respect to cooperative research and

20 development agreements described in subsection (a);

21 and

22 (2) establish and distribute to appropriate Fed23 eral agencies—

24 (A) specific criteria to indicate the neces25 sity for gathering and considering the views of
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1 other agencies on joint work statements or co2 operative research and development agreements

3 as described in subsection (a); and

4 (B) additional procedures, if any, for car5 rying out such gathering and considering of

6 agency views with respect to cooperative re7 search and development agreements described

8 in subsection (a).

9 Procedures established under this subsection shall be de10 signed to the extent possible to use or modify existing pro11 cedures, to minimize burdens on Federal agencies, to en12 courage industrial partnerships with national laboratories,

13 and to minimize delay in the approval or disapproval of

14 joint work statements and cooperative research and devel15 opment agreements.

16 (c) LIMITATION.—Nothing in this Act, nor any proce17 dures established under this section shall provide to the

18 Office of Science and Technology Policy, the National

19 Science and Technology Council, or any Federal agency

20 the authority to disapprove a cooperative research and de21 velopment agreement or joint work statement, under sec22 tion 12 of the Stevenson-Wydler Technology Innovation

23 Act of 1980 (15 U.S.C. 3710a), of another Federal agen24 cy.
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1 SEC. 9. INCREASED FLEXIBILITY FOR FEDERAL LABORA2 TORY PARTNERSHIP INTERMEDIARIES.

3 Section 23 of the Stevenson-Wydler Technology Inno4 vation Act of 1980 (15 U.S.C. 3715) is amended—

5 (1) in subsection (a)(1) by inserting ‘‘, institu6 tions of higher education as defined in section

7 1201(a) of the Higher Education Act of 1965 (20

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

9 the meaning of section 2194 of title 10, United

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

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

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

13 the Higher Education Act of 1965 (20 U.S.C.

14 1141(a)), or educational institutions within the

15 meaning of section 2194 of title 10, United States

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

17 SEC. 10. REPORTS ON UTILIZATION OF FEDERAL TECH18 NOLOGY.

19 (a) AGENCY ACTIVITIES.—Section 11 of the Steven20 son-Wydler Technology Innovation Act of 1980 (15 U.S.C.

21 3710) is amended—

22 (1) by striking the last sentence of subsection

23 (b);

24 (2) by inserting after subsection (e) the fol25 lowing:

26 ‘‘(f) AGENCY REPORTS ON UTILIZATION.—
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1 ‘‘(1) IN GENERAL.—Each Federal agency which

2 operates or directs one or more Federal laboratories

3 or which conducts activities under sections 207 and

4 209 of title 35, United States Code, shall report an5 nually to the Office of Management and Budget, as

6 part of the agency’s annual budget submission, on

7 the activities performed by that agency and its Fed8 eral laboratories under the provisions of this section

9 and of sections 207 and 209 of title 35, United

10 States Code.

11 ‘‘(2) CONTENTS.—The report shall include—

12 ‘‘(A) an explanation of the agency’s tech13 nology transfer program for the preceding fiscal

14 year and the agency’s plans for conducting its

15 technology transfer function, including its plans

16 for securing intellectual property rights in lab17 oratory innovations with commercial promise

18 and plans for managing its intellectual property

19 so as to advance the agency’s mission and ben20 efit the competitiveness of United States indus21 try; and

22 ‘‘(B) information on technology transfer

23 activities for the preceding fiscal year,

24 including—
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1 ‘‘(i) the number of patent applications

2 filed;

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

4 ‘‘(iii) the number of fully-executed li5 censes which received royalty income in the

6 preceding fiscal year, categorized by

7 whether they are exclusive, partially-exclu8 sive, or non-exclusive, and the time elapsed

9 from the date on which the license was re10 quested by the licensee in writing to the

11 date the license was executed;

12 ‘‘(iv) the total earned royalty income

13 including such statistical information as

14 the total earned royalty income, of the top

15 1 percent, 5 percent, and 20 percent of the

16 licenses, the range of royalty income, and

17 the median, except where disclosure of

18 such information would reveal the amount

19 of royalty income associated with an indi20 vidual license or licensee;

21 ‘‘(v) what disposition was made of the

22 income described in clause (iv);

23 ‘‘(vi) the number of licenses termi24 nated for cause; and
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1 ‘‘(vii) any other parameters or discus2 sion that the agency deems relevant or

3 unique to its practice of technology trans4 fer.

5 ‘‘(3) COPY TO SECRETARY; ATTORNEY GEN6 ERAL; CONGRESS.—The agency shall transmit a

7 copy of the report to the Secretary of Commerce and

8 the Attorney General for inclusion in the annual re9 port to Congress and the President required by sub10 section (g)(2).

11 ‘‘(4) PUBLIC AVAILABILITY.—Each Federal

12 agency reporting under this subsection is also

13 strongly encouraged to make the information con14 tained in such report available to the public through

15 Internet sites or 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, in consultation with the Attorney

21 General and the Commissioner of Patents and

22 Trademarks, shall submit each fiscal year, be23 ginning one year after enactment of the Tech24 nology Transfer Commercialization Act of 1999,

25 a summary report to the President, the United
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1 States Trade Representative, and the Congress

2 on the use by Federal agencies and the Sec3 retary of the technology transfer authorities

4 specified in this Act and in sections 207 and

5 209 of title 35, United States Code.

6 ‘‘(B) CONTENT.—The report shall—

7 ‘‘(i) draw upon the reports prepared

8 by the agencies under subsection (f);

9 ‘‘(ii) discuss technology transfer best

10 practices and effective approaches in the li11 censing and transfer of technology in the

12 context of the agencies’ missions; and

13 ‘‘(iii) discuss the progress made to14 ward development of additional useful

15 measures of the outcomes of technology

16 transfer programs of Federal agencies.

17 ‘‘(C) PUBLIC AVAILABILITY.—The Sec18 retary shall make the report available to the

19 public through Internet sites or other electronic

20 means.’’; and

21 (4) by inserting after subsection (g) the fol22 lowing:

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

24 obligations imposed by this section—
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1 ‘‘(1) are not intended to impose requirements

2 that duplicate requirements imposed by the Govern3 ment Performance and Results Act of 1993 (31

4 U.S.C. 1101 note);

5 ‘‘(2) are to be implemented in coordination with

6 the implementation of that Act; and

7 ‘‘(3) are satisfied if an agency provided the in8 formation concerning technology transfer activities

9 described in this section in its annual submission

10 under the Government Performance and Results Act

11 of 1993 (31 U.S.C. 1101 note).’’.

12 (b) ROYALTIES.—Section 14(c) of the Stevenson13 Wydler Technology Innovation Act of 1980 (15 U.S.C.

14 3710c(c)) is amended to read as follows:

15 ‘‘(c) REPORTS.—The Comptroller General shall

16 transmit a report to the appropriate committees of the

17 Senate and House of Representatives on the effectiveness

18 of Federal technology transfer programs, including find19 ings, conclusions, and recommendations for improvements

20 in such programs. The report shall be integrated with, and
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1 submitted at the same time as, the report required by sec2 tion 202(b)(3) of title 35, United States Code.’’.

Passed the House of Representatives May 11, 1999.

Attest: JEFF TRANDAHL,

Clerk.