I

105TH CONGRESS

2D SESSION H. R. 4859

To improve the ability of Federal agencies to license federally owned

inventions.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 20, 1998

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

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

2 35, United States Code, may grant a license to an inven3 tion which is federally owned, for which a patent applica4 tion was filed before the granting of the license, and di5 rectly within the scope of the work under the agreement,’’

6 after ‘‘under the agreement,’’.

7 SEC. 3. LICENSING FEDERALLY OWNED INVENTIONS.

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

9 States Code, is amended to read as follows:

10 ‘‘§ 209. Licensing federally owned inventions

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

12 exclusive or partially exclusive license on a federally owned

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

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

15 necessary incentive to—

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

17 expenditures needed to bring the invention to

18 practical application; or

19 ‘‘(B) otherwise promote the invention’s uti20 lization by the public;

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

22 will be served by the granting of the license, as indi23 cated by the applicant’s intentions, plans, and ability

24 to bring the invention to practical application or oth25 erwise promote the invention’s utilization by the
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1 public, and that the proposed scope of exclusivity is

2 not greater than reasonably necessary to provide the

3 incentive for bringing the invention to practical utili4 zation, as proposed by the applicant, or otherwise to

5 promote the invention’s utilization by the public;

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

7 achieve practical utilization of the invention within a

8 reasonable time, which time may be extended by the

9 agency upon the applicant’s request and the appli10 cant’s demonstration that the refusal of such exten11 sion would be unreasonable;

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 a license under section

21 207(a)(2) to use or sell any federally owned invention in

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

23 products embodying the invention or produced through the

24 use of the invention will be manufactured substantially in

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

2 granting of any exclusive or partially exclusive licenses

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

4 firms having equal or greater likelihood as other appli5 cants to bring the invention to practical application within

6 a reasonable time.

7 ‘‘(d) TERMS AND CONDITIONS.—Any licenses grant8 ed under section 207(a)(2) shall contain such terms and

9 conditions as the granting agency considers appropriate.

10 Such terms and conditions shall include provisions—

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

12 paid-up license for any Federal agency to practice

13 the invention or have the invention practiced

14 throughout the world by or on behalf of the Govern15 ment of the United States;

16 ‘‘(2) requiring periodic reporting on utilization

17 of the invention, and utilization efforts, by the li18 censee, but only to the extent necessary to enable

19 the Federal agency to determine whether the terms

20 of the license are being complied with; and

21 ‘‘(3) empowering the Federal agency to termi22 nate the license in whole or in part if the agency de23 termines that—

24 ‘‘(A) the licensee is not executing its com25 mitment to achieve practical utilization of the
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1 invention, including commitments contained in

2 any plan submitted in support of its request for

3 a license, and the licensee cannot otherwise

4 demonstrate to the satisfaction of the Federal

5 agency that it has taken, or can be expected

6 to take within a reasonable time, effective steps

7 to achieve practical utilization of the invention;

8 ‘‘(B) the licensee is in breach of an agree9 ment described in subsection (b);

10 ‘‘(C) termination is necessary to meet re11 quirements for public use specified by Federal

12 regulations issued after the date of the license,

13 and such requirements are not reasonably satis14 fied by the licensee; or

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

16 court of competent jurisdiction to have violated

17 the Federal antitrust laws in connection with

18 its performance under the license agreement.

19 ‘‘(e) PUBLIC NOTICE.—No exclusive or partially ex20 clusive license may be granted under section 207(a)(2) un21 less public notice of the intention to grant an exclusive

22 or partially exclusive license on a federally owned invention

23 has been provided in an appropriate manner at least 15

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

25 has considered all comments received before the end of
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1 the comment period in response to that public notice. This

2 subsection shall not apply to the licensing of inventions

3 made under a cooperative research and development

4 agreement entered into under section 12 of the Stevenson5 Wydler Technology Innovation Act of 1980 (15 U.S.C.

6 3710a).

7 ‘‘(f) PLAN.—No Federal agency shall grant any li8 cense under a patent or patent application on a federally

9 owned invention unless the person requesting the license

10 has supplied the agency with a plan for development and/

11 or marketing of the invention, except that any such plan

12 may be treated by the Federal agency as commercial and

13 financial information obtained from a person and privi14 leged and confidential and not subject to disclosure under

15 section 552 of title 5 of the United States Code.’’.

16 (b) CONFORMING AMENDMENT.—The item relating

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

18 title 35, United States Code, is amended to read as fol19 lows:

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

20 SEC. 4. 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 or small business firm, the Federal agency employing

4 such coinventor may, for the purpose of consolidating

5 rights in the invention and if it finds that it would expedite

6 the development of the invention—

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

8 acquire in the subject invention to the nonprofit or9 ganization or small business firm in accordance with

10 the provisions of this chapter; or

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

12 from the nonprofit organization or small business

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

14 the rights are acquired voluntarily enters into the

15 transaction and no other transaction under this

16 chapter is conditioned on such acquisition.’’; and

17 (2) in section 207(a)—

18 (A) by striking ‘‘patent applications, pat19 ents, or other forms of protection obtained’’ and

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

21 (B) by inserting ‘‘, including acquiring

22 rights for the Federal Government in any in23 vention, but only to the extent the party from

24 whom the rights are acquired voluntarily enters

25 into the transaction, to facilitate the licensing
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1 of a federally owned invention’’ after ‘‘or

2 through contract’’ in paragraph (3).

3 SEC. 5. TECHNICAL AMENDMENTS TO THE STEVENSON4 WYDLER TECHNOLOGY INNOVATION ACT OF

5 1980.

6 The Stevenson-Wydler Technology Innovation Act of

7 1980 is amended—

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

9 striking ‘‘section 6 or section 8’’ and inserting ‘‘sec10 tion 7 or 9’’;

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

12 striking ‘‘section 6 or section 8’’ and inserting ‘‘sec13 tion 7 or 9’’;

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

15 by striking ‘‘State of local governments’’ and insert16 ing ‘‘State or local governments’’;

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

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

19 ‘‘section 7(a)’’;

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

21 ‘‘section 7(b)’’; and

22 (C) striking ‘‘section 6(c)(3)’’ and insert23 ing ‘‘section 7(c)(3)’’;

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

25 by striking ‘‘in cooperation with Federal Labora-
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1 tories’’ and inserting ‘‘in cooperation with Federal

2 laboratories’’;

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

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

5 gift under this section’’;

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

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

8 ‘‘, if the inventor’s or coinventor’s rights are as9 signed to the United States’’ after ‘‘inventor or

10 coinventors’’;

11 (B) in subsection (a)(1)(B), by striking

12 ‘‘succeeding fiscal year’’ and inserting ‘‘2 suc13 ceeding fiscal years’’; and

14 (C) in subsection (b)(2), by striking

15 ‘‘inventon’’ and inserting ‘‘invention’’; and

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

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

18 12, 13, and 14’’.

19 SEC. 6. REVIEW OF COOPERATIVE RESEARCH AND DEVEL20 OPMENT AGREEMENT PROCEDURES.

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

22 enactment of this Act, each Federal agency with a feder23 ally funded laboratory that has in effect on that date of

24 enactment one or more cooperative research and develop25 ment agreements under section 12 of the Stevenson-
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1 Wydler Technology Innovation Act of 1980 (15 U.S.C.

2 3710a) shall report to the Committee on National Security

3 of the National Science and Technology Council and the

4 Congress on the general policies and procedures used by

5 that agency to gather and consider the views of other

6 agencies on—

7 (1) joint work statements under section

8 12(c)(5) (C) or (D) of the Stevenson-Wydler Tech9 nology Innovation Act of 1980 (15 U.S.C.

10 3710a(c)(5)(C) or (D)); or

11 (2) in the case of laboratories described in sec12 tion 12(d)(2)(A) of the Stevenson-Wydler Tech13 nology Innovation Act of 1980 (15 U.S.C.

14 3710a(d)(2)(A)), cooperative research and develop15 ment agreements under such section 12,

16 with respect to major proposed cooperative research and

17 development agreements that involve critical national se18 curity technology or may have a significant impact on do19 mestic or international competitiveness.

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

21 the enactment of this Act, the Committee on National Se22 curity of the National Science and Technology Council, in

23 conjunction with relevant Federal agencies and national

24 laboratories, shall—
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1 (1) determine the adequacy of existing proce2 dures and methods for interagency coordination and

3 awareness with respect to cooperative research and

4 development agreements described in subsection (a);

5 and

6 (2) establish and distribute to appropriate Fed7 eral agencies—

8 (A) specific criteria to indicate the neces9 sity for gathering and considering the views of

10 other agencies on joint work statements or co11 operative research and development agreements

12 as described in subsection (a); and

13 (B) additional procedures, if any, for car14 rying out such gathering and considering of

15 agency views with respect to cooperative re16 search and development agreements described

17 in subsection (a).

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, to en21 courage industrial partnerships with national laboratories,

22 and to minimize delay in the approval or disapproval of

23 joint work statements and cooperative research and devel24 opment agreements.
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1 (c) LIMITATION.—Nothing in this Act, nor any proce2 dures established under this section shall provide to the

3 Office of Science and Technology Policy, the National

4 Science and Technology Council, or any Federal agency

5 the authority to disapprove a cooperative research and de6 velopment agreement or joint work statement, under sec7 tion 12 of the Stevenson-Wydler Technology Innovation

8 Act of 1980 (15 U.S.C. 3710a), of another Federal agen9 cy.

10 SEC. 7. INCREASED FLEXIBILITY FOR FEDERAL LABORA11 TORY PARTNERSHIP INTERMEDIARIES.

12 Section 23 of the Stevenson-Wydler Technology Inno13 vation Act of 1980 (15 U.S.C. 3715) is amended—

14 (1) in subsection (a)(1) by inserting ‘‘, institu15 tions of higher education as defined in section

16 1201(a) of the Higher Education Act of 1965 (20

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

18 the meaning of section 2194 of title 10, United

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

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

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

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

23 1141(a)), or educational institutions within the

24 meaning of section 2194 of title 10, United States

25 Code,’’ after ‘‘small business firms’’.
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1 SEC. 8. STUDY AND REPORT ON BIOLOGICAL DEPOSITS IN

2 SUPPORT OF BIOTECHNOLOGY PATENTS.

3 (a) IN GENERAL.—Not later than 6 months after the

4 date of the enactment of this Act, the General Accounting

5 Office, in consultation with the United States Patent and

6 Trademark Office, shall conduct a study and submit a re7 port to Congress on the potential risks to the United

8 States biotechnology industry relating to biological depos9 its in support of biotechnology patents.

10 (b) CONTENTS.—The study conducted under this sec11 tion shall include—

12 (1) an examination of the risk of export and the

13 risk of third-party transfer of biological deposits,

14 and the risks posed by the change to 18-month pub15 lication requirements;

16 (2) an analysis of comparative legal and regu17 latory regimes; and

18 (3) any related recommendations.

19 (c) CONSIDERATION OF REPORT.—In drafting regu20 lations affecting biological deposits (including any modi21 fication of 37 Code of Federal Regulations 1.801 et seq.),

22 the United States Patent and Trademark Office shall con23 sider the recommendations of the study conducted under

24 this section.
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1 SEC. 9. PROVISIONAL APPLICATIONS.

2 (a) ABANDONMENT.—Section 111(b)(5) of title 35,

3 United States Code, is amended to read as follows:

4 ‘‘(5) ABANDONMENT.—Notwithstanding the ab5 sence of a claim, upon timely request and as pre6 scribed by the Commissioner, a provisional applica7 tion may be treated as an application filed under

8 subsection (a). Subject to section 119(e)(3) of this

9 title, if no such request is made, the provisional ap10 plication shall be regarded as abandoned 12 months

11 after the filing date of such application and shall not

12 be subject to revival thereafter.’’.

13 (b) TECHNICAL AMENDMENT RELATING TO WEEK14 ENDS AND HOLIDAYS.—Section 119(e) of title 35, United

15 States Code, is amended by adding at the end the follow16 ing:

17 ‘‘(3) If the day that is 12 months after the filing date

18 of a provisional application falls on a Saturday, Sunday,

19 or Federal holiday within the District of Columbia, the

20 period of pendency of the provisional application shall be

21 extended to the next succeeding secular or business day.’’.

22 (c) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to a provisional application filed

24 on or after June 8, 1995.

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