Union Calendar No. 70

106TH CONGRESS

1ST SESSION H. R. 209

[Report No. 106–129, Part I]

A BILL

To improve the ability of Federal agencies to

license federally owned inventions.

MAY 6, 1999

Reported from the Committee on Science with an

M

amendment

AY 6, 1999

Referral to the Committee on the Judiciary extended for

a period not later than May 6, 1999

MAY 6, 1999

The Committee on the Judiciary discharged; committed

the Union and ordered to be printedto the Committee of the Whole House on the State of
IB

Union Calendar No. 70

106TH CONGRESS

1ST SESSION H. R. 209

[Report No. 106–129, Part I]

To improve the ability of Federal agencies to license federally owned

inventions.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 6, 1999

Mrs. MORELLA (for herself and Mr. BROWN of California) introduced the following bill; which was referred to the Committee on Science, and in addition to the Committee on the Judiciary, for a period to be subsequently

determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

MAY 6, 1999

Reported from the Committee on Science with an amendment

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

MAY 6, 1999

Referral to the Committee on the Judiciary extended for a period not later

than May 6, 1999

MAY 6, 1999

The Committee on the Judiciary discharged; committed to the Committee of

the Whole House on the State of the Union and ordered to be printed

[For text of introduced bill, see copy of bill as introduced on January 6, 1999]

A BILL

To improve the ability of Federal agencies to license federally

owned inventions.
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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. FINDINGS.

7 The Congress finds that—

8 (1) the importance of linking our unparalleled

9 network of over 700 Federal laboratories and our Na10 tion’s universities with United States industry con11 tinues to hold great promise for our future economic

12 prosperity;

13 (2) the enactment of the Bayh-Dole Act in 1980

14 was a landmark change in United States technology

15 policy, and its success provides a framework for re16 moving bureaucratic barriers and for simplifying the

17 granting of licenses for inventions that are now in the

18 Federal Government’s patent portfolio;

19 (3) Congress has demonstrated a commitment

20 over the past 2 decades to fostering technology trans21 fer from our Federal laboratories and to promoting

22 public/private sector partnerships to enhance our

23 international competitiveness;

24 (4) Federal technology transfer activities have

25 strengthened the ability of United States industry to
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1 compete in the global marketplace; developed a new

2 paradigm for greater collaboration among the sci3 entific enterprises that conduct our Nation’s research

4 and development—government, industry, and univer5 sities; and improved the quality of life for the Amer6 ican people, from medicine to materials;

7 (5) the technology transfer process must be made

8 ‘‘industry friendly’’ for companies to be willing to in9 vest the significant time and resources needed to de10 velop new products, processes, and jobs using federally

11 funded inventions; and

12 (6) Federal technology licensing procedures

13 should balance the public policy needs of adequately

14 protecting the rights of the public, encouraging com15 panies to develop existing government inventions, and

16 making the entire system of developing government

17 technologies more consistent and simple.

18 SEC. 3. COOPERATIVE RESEARCH AND DEVELOPMENT

19 AGREEMENTS.

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

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

22 by inserting ‘‘or, subject to section 209 of title 35, United

23 States Code, may grant a license to an invention which is

24 federally owned, for which a patent application was filed

25 before the signing of the agreement, and directly within the
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1 scope of the work under the agreement,’’ after ‘‘under the

2 agreement,’’.

3 SEC. 4. LICENSING FEDERALLY OWNED INVENTIONS.

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

5 States Code, is amended to read as follows:

6 ‘‘§ 209. Licensing federally owned inventions

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

8 exclusive or partially exclusive license on a federally owned

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

10 ‘‘(1) granting the license is a reasonable and nec11 essary incentive to—

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

13 expenditures needed to bring the invention to

14 practical application; or

15 ‘‘(B) otherwise promote the invention’s uti16 lization by the public;

17 ‘‘(2) the Federal agency finds that the public will

18 be served by the granting of the license, as indicated

19 by the applicant’s intentions, plans, and ability to

20 bring the invention to practical application or other21 wise promote the invention’s utilization by the public,

22 and that the proposed scope of exclusivity is not

23 greater than reasonably necessary to provide the in24 centive for bringing the invention to practical utiliza-
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1 tion, as proposed by the applicant, or otherwise to

2 promote the invention’s utilization by the public;

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

4 achieve practical utilization of the invention within a

5 reasonable time, which time may be extended by the

6 agency upon the applicant’s request and the appli7 cant’s demonstration that the refusal of such extension

8 would be unreasonable;

9 ‘‘(4) granting the license will not tend to sub10 stantially lessen competition or create or maintain a

11 violation of the Federal antitrust laws; and

12 ‘‘(5) in the case of an invention covered by a for13 eign patent application or patent, the interests of the

14 Federal Government or United States industry in for15 eign commerce will be enhanced.

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

17 agency shall normally grant a license under section

18 207(a)(2) to use or sell any federally owned invention in

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

20 products embodying the invention or produced through the

21 use of the invention will be manufactured substantially in

22 the United States.

23 ‘‘(c) SMALL BUSINESS.—First preference for the grant24 ing of any exclusive or partially exclusive licenses under

25 section 207(a)(2) shall be given to small business firms hav-
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1 ing equal or greater likelihood as other applicants to bring

2 the invention to practical application within a reasonable

3 time.

4 ‘‘(d) TERMS AND CONDITIONS.—Any licenses granted

5 under section 207(a)(2) shall contain such terms and condi6 tions as the granting agency considers appropriate, and

7 shall include provisions—

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

9 paid-up license for any Federal agency to practice the

10 invention or have the invention practiced throughout

11 the world by or on behalf of the Government of the

12 United States;

13 ‘‘(2) requiring periodic reporting on utilization

14 of the invention, and utilization efforts, by the li15 censee, but only to the extent necessary to enable the

16 Federal agency to determine whether the terms of the

17 license are being complied with, except that any such

18 report shall be treated by the Federal agency as com19 mercial and financial information obtained from a

20 person and privileged and confidential and not sub21 ject to disclosure under section 552 of title 5 of the

22 United States Code; and

23 ‘‘(3) empowering the Federal agency to terminate

24 the license in whole or in part if the agency deter25 mines that—
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1 ‘‘(A) the licensee is not executing its com2 mitment to achieve practical utilization of the

3 invention, including commitments contained in

4 any plan submitted in support of its request for

5 a license, and the licensee cannot otherwise dem6 onstrate to the satisfaction of the Federal agency

7 that it has taken, or can be expected to take

8 within a reasonable time, effective steps to

9 achieve practical utilization of the invention;

10 ‘‘(B) the licensee is in breach of an agree11 ment described in subsection (b);

12 ‘‘(C) termination is necessary to meet re13 quirements for public use specified by Federal

14 regulations issued after the date of the license,

15 and such requirements are not reasonably satis16 fied by the licensee; or

17 ‘‘(D) the licensee has been found by a court

18 of competent jurisdiction to have violated the

19 Federal antitrust laws in connection with its

20 performance under the license agreement.

21 ‘‘(e) PUBLIC NOTICE.—No exclusive or partially exclu22 sive license may be granted under section 207(a)(2) unless

23 public notice of the intention to grant an exclusive or par24 tially exclusive license on a federally owned invention has

25 been provided in an appropriate manner at least 15 days
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1 before the license is granted, and the Federal agency has

2 considered all comments received before the end of the com3 ment period in response to that public notice. This sub4 section shall not apply to the licensing of inventions made

5 under a cooperative research and development agreement

6 entered into under section 12 of the Stevenson-Wydler Tech7 nology Innovation Act of 1980 (15 U.S.C. 3710a).

8 ‘‘(f) PLAN.—No Federal agency shall grant any license

9 under a patent or patent application on a federally owned

10 invention unless the person requesting the license has sup11 plied the agency with a plan for development or marketing

12 of the invention, except that any such plan shall be treated

13 by the Federal agency as commercial and financial infor14 mation obtained from a person and privileged and con15 fidential and not subject to disclosure under section 552 of

16 title 5 of the United States Code.’’.

17 (b) CONFORMING AMENDMENT.—The item relating to

18 section 209 in the table of sections for chapter 18 of title

19 35, United States Code, is amended to read as follows:

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

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:
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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, a small business firm, for a non-Federal inventor, the

4 Federal agency employing such coinventor may, for the

5 purpose of consolidating rights in the invention or if it

6 finds that it would expedite the development of the

7 invention—

8 ‘‘(1) license or assign whatever rights it may ac9 quire in the subject invention to the nonprofit organi10 zation, small business firm, or non-Federal inventor

11 in accordance with the provisions of this chapter; or

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

13 from the nonprofit organization, small business firm,

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

15 party from whom the rights are acquired voluntarily

16 enters into the transaction and no other transaction

17 under this chapter is conditioned on such acquisi18 tion.’’; 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 and administering royalties to the

25 Federal Government in any invention, but only
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1 to the extent the party from whom the rights are

2 acquired voluntarily enters into the transaction,

3 to facilitate the licensing of a federally owned in4 vention’’ after ‘‘or through contract’’ in para5 graph (3).

6 SEC. 6. TECHNICAL AMENDMENTS TO THE STEVENSON7 WYDLER TECHNOLOGY INNOVATION ACT OF

8 1980.

9 The Stevenson-Wydler Technology Innovation Act of

10 1980 is amended—

11 (1) in section 4(4) (15 U.S.C. 3703(4)), by strik12 ing ‘‘section 6 or section 8’’ and inserting ‘‘section 7

13 or 9’’;

14 (2) in section 4(6) (15 U.S.C. 3703(6)), by strik15 ing ‘‘section 6 or section 8’’ and inserting ‘‘section 7

16 or 9’’;

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

18 by striking ‘‘State of local governments’’ and insert19 ing ‘‘State or local governments’’;

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

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

22 ‘‘section 7(a)’’;

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

24 ‘‘section 7(b)’’; and
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1 (C) striking ‘‘section 6(c)(3)’’ and inserting

2 ‘‘section 7(c)(3)’’;

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

4 striking ‘‘in cooperation with Federal Laboratories’’

5 and inserting ‘‘in cooperation with Federal labora6 tories’’;

7 (6) in section 11(i) (15 U.S.C. 3710(i)), by strik8 ing ‘‘a gift under the section’’ and inserting ‘‘a gift

9 under this section’’;

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

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

12 ‘‘, other than payments of patent costs as delin13 eated by a license or assignment agreement,’’

14 after ‘‘or other payments’’;

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

16 ‘‘, if the inventor’s or coinventor’s rights are as17 signed to the United States’’ after ‘‘inventor or

18 coinventors’’;

19 (C) in subsection (a)(1)(B), by striking

20 ‘‘succeeding fiscal year’’ and inserting ‘‘2 suc21 ceeding fiscal years’’;

22 (D) in subsection (a)(2), by striking ‘‘Gov23 ernment-operated’’; and

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

25 ‘‘inventon’’ and inserting ‘‘invention’’; and
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1 (8) in section 22 (15 U.S.C. 3714), by striking

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

3 13, and 14’’.

4 SEC. 7. REVIEW OF COOPERATIVE RESEARCH AND DEVEL5 OPMENT AGREEMENT PROCEDURES.

6 (a) REVIEW.—Within 90 days after the date of the en7 actment of this Act, each Federal agency with a federally

8 funded laboratory that has in effect on that date of enact9 ment one or more cooperative research and development

10 agreements under section 12 of the Stevenson-Wydler Tech11 nology Innovation Act of 1980 (15 U.S.C. 3710a) shall re12 port to the Committee on National Security of the National

13 Science and Technology Council and the Congress on the

14 general policies and procedures used by that agency to gath15 er and consider the views of other agencies on—

16 (1) joint work statements under section 12(c)(5)

17 (C) or (D) of the Stevenson-Wydler Technology Inno18 vation Act of 1980 (15 U.S.C. 3710a(c)(5)(C) or (D));

19 or

20 (2) in the case of laboratories described in sec21 tion 12(d)(2)(A) of the Stevenson-Wydler Technology

22 Innovation Act of 1980 (15 U.S.C. 3710a(d)(2)(A)),

23 cooperative research and development agreements

24 under such section 12,
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1 with respect to major proposed cooperative research and de2 velopment agreements that involve critical national security

3 technology or may have a significant impact on domestic

4 or international competitiveness.

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

6 the enactment of this Act, the Committee on National Secu7 rity of the National Science and Technology Council, in

8 conjunction with relevant Federal agencies and national

9 laboratories, shall—

10 (1) determine the adequacy of existing proce11 dures and methods for interagency coordination and

12 awareness with respect to cooperative research and de13 velopment agreements described in subsection (a); and

14 (2) establish and distribute to appropriate Fed15 eral agencies—

16 (A) specific criteria to indicate the necessity

17 for gathering and considering the views of other

18 agencies on joint work statements or cooperative

19 research and development agreements as de20 scribed in subsection (a); and

21 (B) additional procedures, if any, for car22 rying out such gathering and considering of

23 agency views with respect to cooperative research

24 and development agreements described in sub25 section (a).
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1 Procedures established under this subsection shall be de2 signed to the extent possible to use or modify existing proce3 dures, to minimize burdens on Federal agencies, to encour4 age industrial partnerships with national laboratories, and

5 to minimize delay in the approval or disapproval of joint

6 work statements and cooperative research and development

7 agreements.

8 (c) LIMITATION.—Nothing in this Act, nor any proce9 dures established under this section shall provide to the Of10 fice of Science and Technology Policy, the National Science

11 and Technology Council, or any Federal agency the author12 ity to disapprove a cooperative research and development

13 agreement or joint work statement, under section 12 of the

14 Stevenson-Wydler Technology Innovation Act of 1980 (15

15 U.S.C. 3710a), of another Federal agency.

16 SEC. 8. INCREASED FLEXIBILITY FOR FEDERAL LABORA17 TORY PARTNERSHIP INTERMEDIARIES.

18 Section 23 of the Stevenson-Wydler Technology Inno19 vation Act of 1980 (15 U.S.C. 3715) is amended—

20 (1) in subsection (a)(1) by inserting ‘‘, institu21 tions of higher education as defined in section

22 1201(a) of the Higher Education Act of 1965 (20

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

24 the meaning of section 2194 of title 10, United States

25 Code’’ after ‘‘small business firms’’; and
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1 (2) in subsection (c) by inserting ‘‘, institutions

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

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

4 1141(a)), or educational institutions within the

5 meaning of section 2194 of title 10, United States

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