[House Report 106-129]
[From the U.S. Government Publishing Office]
106th Congress Rept. 106-129
HOUSE OF REPRESENTATIVES
1st Session Part 1
======================================================================
TECHNOLOGY TRANSFER COMMERCIALIZATION ACT OF 1999
_______
May 6, 1999.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Sensenbrenner, from the Committee on Science, submitted the
following
R E P O R T
[To accompany H.R. 209]
[Including cost estimate of the Congressional Budget Office]
The Committee on Science, to whom was referred the bill
(H.R. 209) to improve the ability of Federal agencies to
license federally owned inventions, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
I. Amendment.......................................................2
II. Purpose of the Bill.............................................5
III. Background and Need for the Legislation.........................5
IV. Summary of Hearings.............................................7
V. Committee Actions..............................................10
VI. Summary of Major Provisions of the Bill........................11
VII. Section-by-Section Analysis (By Title and Section).............11
VIII. Committee Views................................................14
IX. Committee Cost Estimate........................................18
X. Congressional Budget Office Cost Estimate......................19
XI. Compliance with Public Law 104-4...............................20
XII. Committee Oversight Findings and Recommendations...............20
XIII. Oversight Findings and Recommendations by the Committee on
Government Reform..............................................20
XIV. Constitutional Authority Statement.............................20
XV. Federal Advisory Committee Statement...........................20
XVI. Congressional Accountability Act...............................20
XVII. Changes in Existing Law Made by the Bill, as Reported..........20
XVIII.Committee Recommendations......................................29
XIX. Exchange of Committee Correspondence...........................29
XX. Proceedings from Committee Markup of H.R. 209..................30
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Technology Transfer
Commercialization Act of 1999''.
SEC. 2. FINDINGS.
The Congress finds that--
(1) the importance of linking our unparalleled network of
over 700 Federal laboratories and our Nation's universities
with United States industry continues to hold great promise for
our future economic prosperity;
(2) the enactment of the Bayh-Dole Act in 1980 was a landmark
change in United States technology policy, and its success
provides a framework for removing bureaucratic barriers and for
simplifying the granting of licenses for inventions that are
now in the Federal Government's patent portfolio;
(3) Congress has demonstrated a commitment over the past 2
decades to fostering technology transfer from our Federal
laboratories and to promoting public/private sector
partnerships to enhance our international competitiveness;
(4) Federal technology transfer activities have strengthened
the ability of United States industry to compete in the global
marketplace; developed a new paradigm for greater collaboration
among the scientific enterprises that conduct our Nation's
research and development--government, industry, and
universities; and improved the quality of life for the American
people, from medicine to materials;
(5) the technology transfer process must be made ``industry
friendly'' for companies to be willing to invest the
significant time and resources needed to develop new products,
processes, and jobs using federally funded inventions; and
(6) Federal technology licensing procedures should balance
the public policy needs of adequately protecting the rights of
the public, encouraging companies to develop existing
government inventions, and making the entire system of
developing government technologies more consistent and simple.
SEC. 3. COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS.
Section 12(b)(1) of the Stevenson-Wydler Technology Innovation Act of
1980 (15 U.S.C. 3710a(b)(1)) is amended by inserting ``or, subject to
section 209 of title 35, United States Code, may grant a license to an
invention which is federally owned, for which a patent application was
filed before the signing of the agreement, and directly within the
scope of the work under the agreement,'' after ``under the
agreement,''.
SEC. 4. LICENSING FEDERALLY OWNED INVENTIONS.
(a) Amendment.--Section 209 of title 35, United States Code, is
amended to read as follows:
``Sec. 209. Licensing federally owned inventions
``(a) Authority.--A Federal agency may grant an exclusive or
partially exclusive license on a federally owned invention under
section 207(a)(2) only if--
``(1) granting the license is a reasonable and necessary
incentive to--
``(A) call forth the investment capital and
expenditures needed to bring the invention to practical
application; or
``(B) otherwise promote the invention's utilization
by the public;
``(2) the Federal agency finds that the public will be served
by the granting of the license, as indicated by the applicant's
intentions, plans, and ability to bring the invention to
practical application or otherwise promote the invention's
utilization by the public, and that the proposed scope of
exclusivity is not greater than reasonably necessary to provide
the incentive for bringing the invention to practical
utilization, as proposed by the applicant, or otherwise to
promote the invention's utilization by the public;
``(3) the applicant makes a commitment to achieve practical
utilization of the invention within a reasonable time, which
time may be extended by the agency upon the applicant's request
and the applicant's demonstration that the refusal of such
extension would be unreasonable;
``(4) granting the license will not tend to substantially
lessen competition or create or maintain a violation of the
Federal antitrust laws; and
``(5) in the case of an invention covered by a foreign patent
application or patent, the interests of the Federal Government
or United States industry in foreign commerce will be enhanced.
``(b) Manufacture in United States.--A Federal agency shall normally
grant a license under section 207(a)(2) to use or sell any federally
owned invention in the United States only to a licensee who agrees that
any products embodying the invention or produced through the use of the
invention will be manufactured substantially in the United States.
``(c) Small Business.--First preference for the granting of any
exclusive or partially exclusive licenses under section 207(a)(2) shall
be given to small business firms having equal or greater likelihood as
other applicants to bring the invention to practical application within
a reasonable time.
``(d) Terms and Conditions.--Any licenses granted under section
207(a)(2) shall contain such terms and conditions as the granting
agency considers appropriate, and shall include provisions--
``(1) retaining a nontransferrable, irrevocable, paid-up
license for any Federal agency to practice the invention or
have the invention practiced throughout the world by or on
behalf of the Government of the United States;
``(2) requiring periodic reporting on utilization of the
invention, and utilization efforts, by the licensee, but only
to the extent necessary to enable the Federal agency to
determine whether the terms of the license are being complied
with, except that any such report shall be treated by the
Federal agency as commercial and financial information obtained
from a person and privileged and confidential and not subject
to disclosure under section 552 of title 5 of the United States
Code; and
``(3) empowering the Federal agency to terminate the license
in whole or in part if the agency determines that--
``(A) the licensee is not executing its commitment to
achieve practical utilization of the invention,
including commitments contained in any plan submitted
in support of its request for a license, and the
licensee cannot otherwise demonstrate to the
satisfaction of the Federal agency that it has taken,
or can be expected to take within a reasonable time,
effective steps to achieve practical utilization of the
invention;
``(B) the licensee is in breach of an agreement
described in subsection (b);
``(C) termination is necessary to meet requirements
for public use specified by Federal regulations issued
after the date of the license, and such requirements
are not reasonably satisfied by the licensee; or
``(D) the licensee has been found by a court of
competent jurisdiction to have violated the Federal
antitrust laws in connection with its performance under
the license agreement.
``(e) Public Notice.--No exclusive or partially exclusive license may
be granted under section 207(a)(2) unless public notice of the
intention to grant an exclusive or partially exclusive license on a
federally owned invention has been provided in an appropriate manner at
least 15 days before the license is granted, and the Federal agency has
considered all comments received before the end of the comment period
in response to that public notice. This subsection shall not apply to
the licensing of inventions made under a cooperative research and
development agreement entered into under section 12 of the Stevenson-
Wydler Technology Innovation Act of 1980 (15 U.S.C. 3710a).
``(f) Plan.--No Federal agency shall grant any license under a patent
or patent application on a federally owned invention unless the person
requesting the license has supplied the agency with a plan for
development or marketing of the invention, except that any such plan
shall be treated by the Federal agency as commercial and financial
information obtained from a person and privileged and confidential and
not subject to disclosure under section 552 of title 5 of the United
States Code.''.
(b) Conforming Amendment.--The item relating to section 209 in the
table of sections for chapter 18 of title 35, United States Code, is
amended to read as follows:
``209. Licensing federally owned inventions.''.
SEC. 5. TECHNICAL AMENDMENTS TO BAYH-DOLE ACT.
Chapter 18 of title 35, United States Code (popularly known as the
``Bayh-Dole Act''), is amended--
(1) by amending section 202(e) to read as follows:
``(e) In any case when a Federal employee is a coinventor of any
invention made with a nonprofit organization, a small business firm,
for a non-Federal inventor, the Federal agency employing such
coinventor may, for the purpose of consolidating rights in the
invention or if it finds that it would expedite the development of the
invention--
``(1) license or assign whatever rights it may acquire in the
subject invention to the nonprofit organization, small business
firm, or non-Federal inventor in accordance with the provisions
of this chapter; or
``(2) acquire any rights in the subject invention from the
nonprofit organization, small business firm, or non-Federal
inventor, but only to the extent the party from whom the rights
are acquired voluntarily enters into the transaction and no
other transaction under this chapter is conditioned on such
acquisition.''; and
(2) in section 207(a)--
(A) by striking ``patent applications, patents, or
other forms of protection obtained'' and inserting
``inventions'' in paragraph (2); and
(B) by inserting ``, including acquiring rights for
and administering royalties to the Federal Government
in any invention, but only to the extent the party from
whom the rights are acquired voluntarily enters into
the transaction, to facilitate the licensing of a
federally owned invention'' after ``or through
contract'' in paragraph (3).
SEC. 6. TECHNICAL AMENDMENTS TO THE STEVENSON-WYDLER TECHNOLOGY
INNOVATION ACT OF 1980.
The Stevenson-Wydler Technology Innovation Act of 1980 is amended--
(1) in section 4(4) (15 U.S.C. 3703(4)), by striking
``section 6 or section 8'' and inserting ``section 7 or 9'';
(2) in section 4(6) (15 U.S.C. 3703(6)), by striking
``section 6 or section 8'' and inserting ``section 7 or 9'';
(3) in section 5(c)(11) (15 U.S.C. 3704(c)(11)), by striking
``State of local governments'' and inserting ``State or local
governments'';
(4) in section 9 (15 U.S.C. 3707), by--
(A) striking ``section 6(a)'' and inserting ``section
7(a)'';
(B) striking ``section 6(b)'' and inserting ``section
7(b)''; and
(C) striking ``section 6(c)(3)'' and inserting
``section 7(c)(3)'';
(5) in section 11(e)(1) (15 U.S.C. 3710(e)(1)), by striking
``in cooperation with Federal Laboratories'' and inserting ``in
cooperation with Federal laboratories'';
(6) in section 11(i) (15 U.S.C. 3710(i)), by striking ``a
gift under the section'' and inserting ``a gift under this
section'';
(7) in section 14 (15 U.S.C. 3710c)--
(A) in subsection (a)(1)(A)(i), by inserting ``,
other than payments of patent costs as delineated by a
license or assignment agreement,'' after ``or other
payments'';
(B) in subsection (a)(1)(A)(i), by inserting ``, if
the inventor's or coinventor's rights are assigned to
the United States'' after ``inventor or coinventors'';
(C) in subsection (a)(1)(B), by striking ``succeeding
fiscal year'' and inserting ``2 succeeding fiscal
years'';
(D) in subsection (a)(2), by striking ``Government-
operated''; and
(E) in subsection (b)(2), by striking ``inventon''
and inserting ``invention''; and
(8) in section 22 (15 U.S.C. 3714), by striking ``sections
11, 12, and 13'' and inserting ``sections 12, 13, and 14''.
SEC. 7. REVIEW OF COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT
PROCEDURES.
(a) Review.--Within 90 days after the date of the enactment of this
Act, each Federal agency with a federally funded laboratory that has in
effect on that date of enactment one or more cooperative research and
development agreements under section 12 of the Stevenson-Wydler
Technology Innovation Act of 1980 (15 U.S.C. 3710a) shall report to the
Committee on National Security of the National Science and Technology
Council and the Congress on the general policies and procedures used by
that agency to gather and consider the views of other agencies on--
(1) joint work statements under section 12(c)(5) (C) or (D)
of the Stevenson-Wydler Technology Innovation Act of 1980 (15
U.S.C. 3710a(c)(5)(C) or (D)); or
(2) in the case of laboratories described in section
12(d)(2)(A) of the Stevenson-Wydler Technology Innovation Act
of 1980 (15 U.S.C. 3710a(d)(2)(A)), cooperative research and
development agreements under such section 12,
with respect to major proposed cooperative research and development
agreements that involve critical national security technology or may
have a significant impact on domestic or international competitiveness.
(b) Procedures.--Within one year after the date of the enactment of
this Act, the Committee on National Security of the National Science
and Technology Council, in conjunction with relevant Federal agencies
and national laboratories, shall--
(1) determine the adequacy of existing procedures and methods
for interagency coordination and awareness with respect to
cooperative research and development agreements described in
subsection (a); and
(2) establish and distribute to appropriate Federal
agencies--
(A) specific criteria to indicate the necessity for
gathering and considering the views of other agencies
on joint work statements or cooperative research and
development agreements as described in subsection (a);
and
(B) additional procedures, if any, for carrying out
such gathering and considering of agency views with
respect to cooperative research and development
agreements described in subsection (a).
Procedures established under this subsection shall be designed to the
extent possible to use or modify existing procedures, to minimize
burdens on Federal agencies, to encourage industrial partnerships with
national laboratories, and to minimize delay in the approval or
disapproval of joint work statements and cooperative research and
development agreements.
(c) Limitation.--Nothing in this Act, nor any procedures established
under this section shall provide to the Office of Science and
Technology Policy, the National Science and Technology Council, or any
Federal agency the authority to disapprove a cooperative research and
development agreement or joint work statement, under section 12 of the
Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 3710a),
of another Federal agency.
SEC. 8. INCREASED FLEXIBILITY FOR FEDERAL LABORATORY PARTNERSHIP
INTERMEDIARIES.
Section 23 of the Stevenson-Wydler Technology Innovation Act of 1980
(15 U.S.C. 3715) is amended--
(1) in subsection (a)(1) by inserting ``, institutions of
higher education as defined in section 1201(a) of the Higher
Education Act of 1965 (20 U.S.C. 1141(a)), or educational
institutions within the meaning of section 2194 of title 10,
United States Code'' after ``small business firms''; and
(2) in subsection (c) by inserting ``, institutions of higher
education as defined in section 1201(a) of the Higher Education
Act of 1965 (20 U.S.C. 1141(a)), or educational institutions
within the meaning of section 2194 of title 10, United States
Code,'' after ``small business firms''.
II. Purpose of the Bill
The purpose of H.R. 209, as reported, is to promote the
transfer and commercialization of the technology created in our
Nation's system of over 700 federal laboratories, thereby
increasing scientific collaboration between federal
laboratories and private industry. Specifically, the bill would
improve and streamline the ability of federal agencies to
license government-owned inventions.
III. Background and Need for the Legislation
For nearly two decades, the Committee has encouraged the
transfer to United States private industry of unclassified
technology created in our federal laboratories. Our federal
laboratories have long been considered one of our greatest
scientific research and development resources, employing one of
every six scientists in the country and encompassing one-fifth
of the country's laboratory and equipment capabilities.
Effectively capturing this wealth of ideas and technology from
our federal laboratories through the transfer to private
industry for commercialization has helped to bolster our
Nation's ability to compete in the global marketplace.
By permitting effective collaboration between our federal
laboratories and private industry, new technologies can be
rapidly commercialized. Federal technology transfer stimulates
the American economy, enhances the competitive position of
United States industry internationally, and promotes the
development and use of new technologies developed under
taxpayer funded research so those innovations are incorporated
rapidly and effectively into practice to the benefit of the
American public.
To help further these goals, the Committee first reported
the Stevenson-Wydler Technology Innovation Act of 1980 (Public
Law 96-480). The Committee expanded on that landmark
legislation with the passage of the Federal Technology Transfer
Act of 1986 (Public Law 99-502), the National Competitiveness
Technology Transfer Act of 1989 (Public Law 101-189), the
American Technology Preeminence Act of 1991 (Public Law 102-
245), and the National Technology Transfer and Advancement Act
of 1995 (Public Law 104-113), among others.
In 1980, the Committee also reported the University and
Small Business Patent Procedures Act, now commonly referred to
as the Bayh-Dole Act (Public Law 96-517). The Bayh-Dole Act
permits universities, not-for-profit organizations, and small
businesses to obtain title to scientific inventions developed
with federal government support. The Bayh-Dole Act also allows
federal agencies to license government-owned patented
scientific inventions nonexclusively, partially exclusively, or
exclusively, depending upon which license is determined to be
the most effective means for achieving commercialization.
Additionally, the Committee reported out amendments to the
Bayh-Dole Act in the Trademark Clarification Act of 1984
(Public Law 98-620), which permitted decisions on the awarding
of licenses for patents to be made at the laboratory level in a
Government-owned and Contractor-operated laboratory (GOCO).
Critical pressures prompted the passage of the Bayh-Dole
Act. Prior to its 1980 enactment, many discoveries resulting
from federally-funded scientific research were not
commercialized for the American public's benefit. Since the
federal government lacked the resources to market new
inventions, and private industry was reluctant to make high-
risk investments without the protection of patent rights, many
valuable innovations were left unused on the shelf of federal
laboratories.
With its success licensing federal inventions, the Bayh-
Dole Act is widely viewed as an effective framework for federal
technology transfer. For example, in a report submitted to the
Committee, the Association of University Technology Managers
(AUTM) conducted a 1996 study on the effect of the Bayh-Dole
Act. AUTM concluded that the law garnered tremendous economic
benefits not just for the universities and private industry
directly involved in each partnership, but more importantly,
for the United States economy as a whole. The AUTM report
documented that the impact of the Bayh-Dole Act represented a
very real gain to federal agencies and the Nation since it not
only encourages the commercialization of government-owned
patents that would otherwise gather dust on the shelf, but it
also brings in revenues to the federal government through
licensing fees.
Accordingly, the process for the licensing of government-
owned patents should continue to be refined by streamlining the
procedures and by removing the uncertainty associated with the
licensing process. Both past and prospective private industry
partners, however, have voiced their concerns regarding the
licensing process. The private sector has demonstrated strong
interest in the strategic advantages of acquiring intellectual
property rights by entering into a Cooperative Research and
Development Agreement (CRADA) with a federal laboratory or by
the licensing of government-owned technology, but they are
deterred by the delays and uncertainty often-associated with
the lengthy federal technology transfer process. These
procedural barriers and delays are often incompatible with the
private sector's need for a swift commercialization calendar
and can also increase transaction costs.
The present regulations have also made it difficult for a
Government-owned, Government-operated laboratory (GOGO) to
bring existing scientific inventions intoa CRADA even when
inclusion would create a more complete technology package. A GOGO does
not have the flexibility that small businesses and non-profits have in
managing their inventions under the Bayh-Dole Act. Also, a GOGO, unlike
a GOCO, currently faces statutory notification provisions when granting
exclusive licenses, and more importantly, it cannot include existing
inventions in a CRADA under the Federal Technology Transfer Act of
1986.
By reducing the delay and uncertainty created by existing
procedural barriers and by lowering the transactional costs
associated with licensing federal technologies from the
government could greatly increase participation by the private
sector in its technology transfer programs. This approach would
expedite the commercialization of government-owned inventions
and through royalties could reduce the cost to the American
taxpayer for the production of new technology-based products
created in our Nation's federal laboratories.
IV. Summary of Hearings
September 25, 1997: ``Promoting Technology Transfer by Facilitating
Licenses to Federally Owned Inventions''
On September 25, 1997, the Subcommittee on Technology held
a hearing on ``Promoting Technology Transfer by Facilitating
Licenses to Federally Owned Inventions.'' The hearing discussed
the effectiveness of our federal technology transfer laws and
methods in which they may be improved, and to review The
Technology Transfer Commercialization Act, which seeks to
promote technology transfer by facilitating licenses to
federally-owned inventions. Witnesses included, Mr. Joe Allen,
Vice President, Market and Technology Assessment, National
Technology Transfer Center, Wheeling, WV; Mr. C. Dan Brand,
Chair, Federal Laboratory Consortium, Jefferson, AR; Mr. Dan
Passeri, Vice President, Business Development and Intellectual
Property, Gene Logic, Inc., Columbia, MD; Mr. John G. Mannix,
Associate General Counsel, National Aeronautics and Space
Administration, NASA Headquarters, Washington, DC.
Mr. Joe Allen, testifying as Vice President, Market and
Technology Assessment, National Technology Transfer Center,
stated that linking federal laboratories and universities with
American Industry holds great promise for our future economic
prosperity. Mr. Allen asserted that the passage of the Bayh-
Dole Act in 1980, initially considered a bold and radical idea,
is now a model that our economic competitors are emulating. The
Technology Transfer Commercialization Act holds the same
promise. Mr. Allen believes that in order to license
government-owned inventions, the Congress must ease the current
complex system which a company must endure. For example, a
company must currently publish in the Federal Register its
intention to pursue a federally-owned license. Companies,
however, are reluctant to do this as it effectively gives away
their marketing strategy. In conclusion, Mr. Allen recommended
taking a well-thought out and incremental approach, such as the
Technology Transfer Commercialization Act, that simplifies
current procedures while retaining important safeguards.
Mr. Daniel R. Passeri, testifying as Vice President, Gene
Logic, Inc., testified to the importance of streamlining the
procedures and removing the uncertainty associated with the
licensing determination process. In doing so, the federal
government will foster an attractive environment for corporate
investment and partnering efforts. Mr. Passeri believes that
under the current system there is a tension between the needs
of industry to rapidly respond to market demands and
opportunities, and the procedural requirements of federal
agencies in regards to the exclusive licensing of high risk,
early state technology, He states that these procedural
barriers create increased transaction costs, delays in
obtaining the license, as well as the uncertainty of actually
being granted the license. The barriers, however, do not exist
in university technology transfer. In conclusion, Mr. Passeri
welcomed the improvements in the Technology Transfer
Commercialization Act to the current law and indicated that in
their current form, they will address the frustrations of
industry.
Mr. C. Dan Brand, testifying as Chair, Federal Laboratory
Consortium, spoke of the Federal Laboratory Consortium's (FLC)
importance as the nationwide network of federal laboratories
that provide a forum to develop strategies and opportunities
for linking government technology to the marketplace. Mr. Brand
stated that in advance of this hearing, the FLC solicited and
received comments from a number of their members about removing
legal obstacles to license federally-owned inventions
effectively. He cautioned that these comments are not
``official'' department or agency positions, but rather an
initial assessment. Mr. Brand stated the comments received by
the FLC indicated that the Technology Transfer
Commercialization Act's amendments to Bayh-Dole will serve to
speed the transfer and commercialization of technologies to
industry, while maintaining a fair and open competitive
environment. Mr. Brand further cautioned that while the initial
input from member laboratories was largely positive, the
subcommittee should also consider the views of the FLC Legal
Issues Committee and the National Institutes of Health.
Mr. John G. Mannix testifying as Associate General Counsel,
Intellectual Property, National Aeronautics and Space
Administration, began by stating that neither NASA nor the
Administration had an opportunity to review the proposed
legislation fully so neither has had an opportunity to
formulate a detailed position. Mr. Mannix highlighted the two
major improvements to the federal licensingprocess that he has
seen during his career. First, he cited the increased personal
involvement of technical experts and individuals with marketing,
negotiation, and business experience in the licensing process. Second,
he emphasized the importance of the statutory authority given to NASA
negotiators to require written business plans and yearly status reports
describing progress toward commercialization. Additionally, Mr. Mannix
emphasized the importance of providing some form of notice of the
availability of federally owned licenses. Without such notice, Mr.
Mannix maintained, we will always be subject to claims of favoritism.
March 17, 1998: ``Facilitating Licenses to Federally-Owned Inventions:
A Legislative Hearing on The Technology Transfer
Commercialization Act''
On March 17, 1998, the Subcommittee on Technology held a
hearing on ``Facilitating Licenses to Federally-Owned
Inventions: A Legislative Hearing on The Technology Transfer
Commercialization Act.'' Witnesses included: The Honorable Ray
Kammer, Director, National Institute of Standards and
Technology, Gaithersburg, MD; Mr. Randolph J. Guschl, Director
of Technology Acquisitions, Central Research and Development,
DuPont Chemical Company, Wilmington, DE; and Ms. Elizabeth
Kraftician, Chief Executive Officer, Touchstone Research
Laboratory, Tridelphia, WV.
The Honorable Ray Kammer, testifying as the Director of the
National Institute of Standards and Technology discussed the
newly reconstituted Interagency Committee on Technology
Transfer and their support of the Technology Transfer
Commercialization Act. Specifically, Mr. Kammer emphasized the
need to pay closer attention to the output side of R&D
spending. While a greater pecuniary commitment to R&D spending
is laudable, enabling the end results to make its way to the
marketplace is equally as important, for it can result in
important societal benefits. Mr. Kammer also spoke of the
Interagency Committee's suggestions regarding certain
provisions of the legislation. For example, the agencies
suggest that licensees be subject to the current notification
requirements and that certain current requirements for
licensees to submit development or marketing plans be retained.
He emphasized the importance of utilizing business plans as an
objective basis for deciding whether the prospective licensee
is likely to bring the innovation to market quickly.
Additionally, ``bundling'' innovations should be addressed in
the legislation. Bundling similar innovations together can
provide for licensees to derive maximum commercial benefit. In
conclusion, Mr. Kammer indicated that industry and the
government are still learning how to work together better in
commercializing the American people's investment in R&D.
Mr. Randolph J. Guschl, testifying as the Director of the
Technology Acquisitions, Central Research and Development,
DuPont in Wilmington, DE, expressed support for the legislation
and highlighted the fact that the Technology Transfer
Commercialization Act puts the discoveries of Government-owned
and Government-operated (GOGO) laboratories on equal terms with
Government-owned, Contractor operated (GOCO) laboratories.
However, Mr. Guschl indicated he had a couple ideas regarding
the legislation. First, revise the requirement for United
States manufacture. He suggested language to require the
earliest possible deployment in the United States, but not to
require it to be manufactured substantially in this country.
This would allow our nation's businesses to compete globally,
thereby strengthening the U.S. components of multi-national
companies. Second, he supported the bill's recognition of
exclusivity. This provision has been used in GOCO labs and
should also be used in GOGO labs. Third, he supported the
bill's shift from 90+60 day notification process to a 30 day
notification process. Fourth, retain requiring submission of a
business and marketing plan. This allows an agency to determine
the commitment of a prospective licensee. Lastly, empower the
technology transfer directors to make quick and final decisions
for their labs but also to allow for a quick appeals process.
In conclusion, Mr. Guschl indicated his support for the
Technology Transfer Commercialization Act and commended it as
an improvement to the federal technology transfer process.
Ms. Elizabeth Kraftician, Chief Executive Officer,
Touchstone Research Laboratory, offered her strong support for
The Technology Transfer Commercialization Act. Ms. Kraftician
believes the legislation will have a strong impact in moving
federal technologies to the marketplace. Additionally, Ms.
Kraftician expressed support for this legislation as a way to
benefit small businesses in this technology transfer process.
Small businesses have traditionally been locked out of the
technology transfer arena by the slow, cumbersome,
bureaucratic, and oftentimes anti-small business process used
to commercialize federal inventions. Ms. Kraftician applauded
the Act's notification procedures that allowed for advertising
and announcements in a wider variety of venues, such as the
Internet. She indicated that this would give federal
laboratories greater flexibility and would no longer force
small businesses to rely exclusively on the Federal Register
for notice. In conclusion, Ms. Kraftician emphasized that in
order for this legislation to work, public institutions must be
held accountable for how they wield their new authorities and
public agencies must be willing to make decisions and to take
risks for successful commercialization of federal inventions.
V. Committee Actions
Congresswoman Constance A. Morella of Maryland introduced
H.R. 209 on January 6, 1999 in the 106th Congress. On March 25,
1999, the Science Committee considered H.R. 209. The Committee
adopted an en bloc amendment and ordered H.R. 209 reported, as
a single amendment in the nature of a substitute, by voice
vote.
In the previous Congress, the Technology Subcommittee held
two hearings on H.R. 2544, the predecessor bill to H.R. 209 in
the 105th Congress. On September 25, 1997, the subcommittee
held a hearing entitled, ``Promoting Technology Transfer By
Facilitating Licenses to Federally-Owned Inventions.'' The
subcommittee followed up with a second hearing on March 17,
1998, entitled, ``Facilitating Licenses To Federally-Owned
Inventions: A Legislative Hearing on H.R. 209, The Technology
Transfer Commercialization Act.''
On March 26, 1998, the Technology Subcommittee unanimously
reported H.R. 209 favorably to the Science Committee, and on
May 13, 1998, the committee reported the bill. The House of
Representatives subsequently passed H.R. 209 on July 14, 1998,
and on October 20, 1998 in the waning days of the 105th
Congress, passed its amended version, H.R. 4859. Both bills
were unable to clear the Senate before its sine die
adjournment.
VI. Summary of Major Provisions of the Bill
The goal of H.R. 209, The Technology Transfer
Commercialization Act, is to remove the procedural obstacles
and to the greatest extent possible within the public interest,
the uncertainty involved in the licensing of federally patented
inventions created in a Government-owned, Government-operated
(GOGO) laboratory, by applying the successful Bayh-Dole Act
provisions to a GOGO.
As a result, the Technology Transfer Commercialization Act
provides federal laboratories with two important new tools for
effectively commercializing on-the-shelf, government-owned
inventions: (1) the bill's revised authorities of Section 209
of the Bayh-Dole Act; and (2) the ability to license technology
as part of a CRADA. Both mechanisms make federal technology
transfer programs much more attractive to United States private
companies that seek to form partnerships with federal
laboratories. H.R. 209, as amended, also makes a number of
smaller adjustments to the Bayh-Dole Act and the Stevenson-
Wydler Act that improve these laws and reflect a series of
consensus ``lessons learned'' from 19 years of practical
application of our current federal technology transfer laws.
VII. Section-by-Section Summary (by Title and Section)
section 1. short title
The Act may be cited as the ``Technology Transfer
Commercialization Act of 1999.''
section 2. findings
Congress has demonstrated a commitment to foster technology
transfer from our federal laboratories and to promote
partnerships with industry to enhance our international
competitiveness, thereby strengthening the ability of the
United States to compete in the global marketplace. Federal
technology licensing procedures should balance the public
policy needs of adequately protecting the rights of the public,
encouraging companies to develop existing government
inventions, and making the entire system of developing
government technologies more consistent and simple.
section 3. cooperative research and development agreements
Section 3 amends the Stevenson-Wydler Technology Innovation
Act of 1980 by setting out the circumstances under which
federal laboratories may license existing patented inventions
as part of a Cooperative Research and Development Agreement
(CRADA). The federal laboratory may grant, subject to Section
209 of Title 35 of the United States Code, a license to a
federally-owned invention that was created prior to the signing
of the CRADA and directly related to the scope of the work
under the agreement.
section 4. licensing federally owned inventions
Section 4 rewrites Section 209, Title 35 of the United
States Code to preserve existing preferences while streamlining
notice and other procedural requirements.
Subsection 4(a) provides that a federal agency may grant an
exclusive or partially exclusive license to a federally owned
invention if granting the license is a reasonable and necessary
incentive for commercialization or to promote the invention's
application by the public. The federal agency must find that
the public will be served by the granting of the license, as
indicated by the applicant's intentions, plans, and ability to
bring the invention to practical application within a
reasonable time or otherwise to promote the invention's
application by the public.The scope of the exclusive or
partially exclusive license should not be greater than reasonably
necessary to promote the invention's public application. The applicant
must make a commitment to achieve practical application of the
invention within a reasonable time. The granting of the license should
not substantially lessen competition or create or maintain a violation
of the federal antitrust laws, and in the case of an invention covered
by a foreign patent application or patent, the license must enhance the
interests of United States industry in foreign commerce.
Subsection 4(b) provides that licenses should be granted
only to a licensee who agrees that any products embodying the
invention or produced through the use of the invention will be
substantially manufactured in the United States.
Subsection 4(c) provides that the first preference for the
granting of exclusive or partially exclusive licenses should be
given to small businesses that have an equal or greater
likelihood as other applicants to bring the invention to
commercialization within a reasonable time.
Subsection 4(d) provides certain terms and conditions
required for licenses, as the granting agency considers
appropriate. These include: retaining a nontransferable,
irrevocable, paid-up license for a federal agency to practice
the invention or to have the invention practiced throughout the
world by or on behalf of the United States; periodic reporting
on the use of the invention and commercialization efforts by
the licensee, but only to the extent necessary to enable the
federal agency to determine whether the terms of the license
are being complied with and such reports shall be treated as
privileged and confidential, not subject to the Freedom of
Information Act; and providing ``march-in rights'' that empower
a federal agency to terminate the license, in whole or in part,
if it determines that the licensee is not adequately executing
its commitment to achieve practical application of the
invention within a reasonable time, if the licensee is in
breach of the substantial United States manufacture
requirement, if termination is necessary to meet the public use
requirements specified by federal regulations issued after the
grant of the license, or if the licensee has been found by a
competent authority to have violated federal antitrust laws.
Subsection 4(e) provides that no exclusive or partially
exclusive license may be granted unless public notice of the
intention to grant such a license has been provided in an
appropriate manner at least 15 days before the license is
granted and the federal agency has considered all comments
received in response to that public notice. This subsection,
however, shall not apply to the licensing of inventions made
under a CRADA entered into under Section 12 of the Stevenson-
Wydler Technology Innovation Act of 1980 (15 U.S.C. 3710a).
Section 4(f) provides that a federal agency may grant a
license on a federally-owned invention only if the licensee has
supplied a basic business plan for development or marketing of
the invention. Such a plan shall be treated as privileged and
confidential, not subject to the Freedom of Information Act.
section 5. technical amendments to bayh-dole act
Section 5 provides that a federal agency, employing a
coinventor of any invention made under a funding agreement with
a non-profit organization or small business, may consolidate
rights in the invention to ease commercialization of the
invention. Consolidation under Section 5 may occur either by a
federal agency licensing or assigning rights or by the federal
agency acquiring rights related to the invention.
section 6. technical amendments to the stevenson-wydler technology
innovation act of 1980
Section 6 clears up am ambiguity in current law by
providing that the rights of the inventors must be assigned to
the federal government in order for the inventors to share
royalties and that the federal agency may retain royalty income
for two succeeding fiscal years.
section 7. review of cooperative research and development agreement
procedures
Section 7 provides that federal agencies with laboratories
that are engaged in a Cooperative Research and Development
Agreement (CRADA) shall report to the Congress and the
Committee on National Security of the National Science and
Technology Council, within 90 days after the date of enactment,
to review the general policies and procedures used by that
agency for a major CRADA involving critical national security
technology or may have a significant impact on domestic or
international competitiveness. Additionally, the Committee on
National Security of the National Science and Technology
Council shall, within one year after the date of enactment, in
consultation with relevant federal agencies and national
laboratories, determine the adequacy of existing procedures and
methods for interagency coordination and awareness, and
establish and distribute to appropriate federal agencies
specific criteria to indicate the necessity for gathering and
considering the views of other agencies and additional
procedures, if any, for carrying out such gathering and
considering of agency views. Any subsequent procedures
established shall be designed, to the extent possible, to use
or modifyexisting procedures, to minimize burdens on federal
agencies, to encourage industrial partnerships with national
laboratories, and to minimize delay in the approval process for
collaborative relationships with federal laboratories and private
industry. An existing CRADA or joint work statement should not be
affected by any subsequent procedures established under this section.
section 8. increased flexibility for federal laboratory partnership
intermediaries
Section 8 provides that institutions of higher education
may enter into a contract or memorandum of understanding with a
federal laboratory to perform services that increase the
likelihood of success in the conduct of cooperative or joint
activities.
VIII. Committee Views
section 1. short title
The Committee shall refer to the Act as ``The Technology
Transfer Commercialization Act of 1999.''
section 2. findings
The Committee has advocated initiatives making federal
technology transfer more ``industry friendly,'' because
government-owned inventions could not be commercialized
effectively without the significant resources and value-added
input of private industry. This commercialization, in turn, can
create new jobs would boost our Nation's ability to compete in
the global marketplace. The Committee has adopted the landmark
Bayh-Dole Act, that was enacted in 1980, as a successful
framework for removing bureaucratic barriers and for allowing
federal agencies to have greater flexibility in finding
licensees for the patented inventions that are now in the
federal government's patent portfolio.
section 3. cooperative research and development agreements
The Committee recognizes the success of Cooperative
Research and Development Agreements (CRADA) for federal
technology transfer. Since the inception in 1986 of the CRADA
legislation, thousands have been signed, resulting in the
transfer of technology, knowledge, and expertise back and forth
between our federal laboratories and the private sector. The
Committee believes that the broadening of CRADA licensing
authority to include pre-existing inventions will make a CRADA
more attractive to private industry and increase the transfer
of federal technology.
section 4. licensing federally owned inventions
While it is the intention to eliminate any unnecessary and
wasteful delays built into the process of issuing exclusive or
partially exclusive licenses, the Committee also recognize the
importance of public notice. Public notice should be designed
equitably to alert all potential licensees that a licensing
opportunity is available and provides for an opportunity to
comment once a license has been granted. The Committee
understands that this notice and comment period sometimes has
helped federal agencies find additional or more qualified
licensees than those first proposing to license a government-
owned invention.
The Committee is more concerned, however, with the
effectiveness of notice rather than its form. For example, the
requirement for public notice should not be construed merely to
require publication in the Federal Register. Other available
forms of making public the intention to grant an exclusive or
partially exclusive license to a federally owned invention,
including electronic posting on the Internet, should also be
vigorously pursued and methods of notice should be updated as
communications technology advances. The Committee strongly
encourages federal agencies to use the Internet, to explore new
electronic mediums, and to push the frontiers of cutting-edge
information technologies to meet the public notice requirement
in the Act.
The Committee also recognizes that requiring a basic
business plan as part of the application for a license gives
the federal agencies an objective basis for selecting the
private company best suited to commercialize the invention. The
exercise of preparing the plan is also of considerable use in
assisting companies, especially small businesses, in defining
their own focus with respect to the invention; it also gives
agencies valuable insights into the comparative abilities of
companies competing for a single license and a more precise
understanding of the specific field of use needed to execute a
company's commercialization plan. The Committee strongly
believes, however, the basic business plan should not be an
overly burdensome bureaucratic requirement. A business plan
under this section should not be required to include extraneous
materials but rather should be specifically focused on
providing the federal agency the information it needs to make
licensing decisions and to understand the development and
commercialization milestones the company plans to meet.
The Committee believes that business plans submitted by a
private company in the licensing process, as well as progress
reports under the license such as reports on application and
application efforts should be treated by the federal agency as
commercial and financial information not subject to the Freedom
of Information Act and should be entitled to protection from
disclosure. The Committee understands that, absent protection
of its proprietary information, a private company would
otherwise be very reluctant to partner with federal
laboratories which would cause a chilling effect on federal
technology licensing.
section 5. technical amendments to bayh-dole act
The Bayh-Dole Act defines the patent rights of small
business and non-profit organizations receiving federal
government funding. A significant percentage of government
inventions are co-invented with federally-funded parties, most
commonly university researchers. It is often necessary to
consolidate rights to such co-inventions, under appropriate
licenses or assignments, to achieve public benefit through
commercialization. Depending on the specific circumstances, it
may be advantageous for the unified rights and patent
prosecution responsibility to reside with either the co-
inventing entity or the federal agency. The Committee believes
that the Bayh-Dole Act should be amended to make it clear that
both the agency and the co-inventing entity have authority to
enter into license agreements with one another in these
circumstances.
While Bayh-Dole currently provides specific authority for
the federal government to assign its rights in a subject co-
invention to the co-inventing entity, it does not mention the
licensing of such rights. The Committee understands that the
absence of specific authority to license in those circumstances
has resulted in inconsistent rulings by federal agencies, with
some approving such licenses while other reject them.
Furthermore, under the Bayh-Dole Act, some small businesses and
non-profits have ended up with the right to patent and license
potentially valuable inventions without possessing the skills
to do effectively. The Bayh-Dole Act is accordingly amended to
provide a mechanism whereby the non-federal inventing entity
can voluntarily transfer its rights by license or assignment to
the federal agency in return for a share of any subsequent
income.
The Committee understands that it is increasingly necessary
for an agency to be able to offer a potential licensee access
to related inventions in order to practice a government-owned
invention. There is, however, no mechanism whereby an agency
can ``in-license'' the rights to related inventions, in return
for the payment of a share of any subsequent royalties, so that
they can be ``bundled'' with a government-owned invention and
licensed together for commercialization.
This section adds in such language.
section 6. technical amendments to the stevenson-wydler technology
innovation act of 1980
The Committee understands that there have been widely
differing federal agency interpretations regarding whether the
rights of the inventors must be assigned to the federal
government in order for them to share royalties. For example,
some federal agencies share with all inventors even though they
have not assigned their rights to the federal government, while
other do not share with non-government inventors who have
assigned their rights. Under this section, royalty shares will
be due only after assignment of rights by the inventor or
coinventor.
The Committee also understands that there is confusion on
how long an agency may retain royalty income. Accordingly, the
Committee clarified that federal agencies should be given two
fiscal years to retain royalty income before transferring
outstanding royalty income, if any, to the general treasury.
section 7. review of cooperative research and development agreement
procedures
The Committee is pleased with the blossoming of the CRADA
concept into a major tool for industry-government cooperation.
At the same time, in limited cases of a major, far-reaching
CRADA, the Committee has heard concerns that these
collaborations may now have outgrown the current CRADA approval
process. As originally envisioned at the time of the passage of
the Federal Technology Transfer Act of 1986, a CRADA was
designed to help move individual ideas from the federal
laboratories into the private sector or lead to cooperation
between industry and government labs in areas of mutual
interest. A common benefit of such agreements has been the
acquisition by small businesses of the technological expertise
necessary to succeed that otherwise may not have been available
to them. Such a CRADA, in these instances, is generally small
enough that they do not raise national issues. The appropriate
approval process for an average CRADA, therefore, is executed
quickly without necessary high level approvals at each stage.
This is the traditional federal approval method of a typical
CRADA.
In recent years, however, there have been instances of
CRADA involving cutting edge technology, the world's largest
companies, and occasionally a consortia of federal
laboratories. Some of these recent examples are importantenough
that they have the potential to affect the future direction of entire
industries including their suppliers. Generally, such a CRADA
positively benefits both the federal laboratory and the companies that
participate in them. Engaging in a CRADA should continue to be
encouraged, but the issues raised by a major CRADA may go beyond the
expertise of a laboratory's agency if it involves critical national
security technology (such as classified technology or technology
subject to export controls), domestic competitiveness issues (creating
a competitive advantage for market leaders), or international
competitiveness (material participation by foreign companies or foreign
suppliers).
The Committee understands that there are instances where
foreign participation and special relations with market leaders
are desirable or even essential to the success of a CRADA, but
other values within the jurisdiction of other agencies, like
the effect on other United States companies and the impact on
present and future jobs within our National should be
considered. The Committee, therefore, believes that a careful
review and upgrading of existing approval procedures, if
necessary, for a major CRADA with interagency consequences is
in order.
In conducting this review of CRADA procedures, special care
should be taken to understand the needs of private sector
parties. Criteria should be developed to separate out the small
minority of what would constitute a major CRADA that requires
interagency review from an average CRADA that does not. For
instance, it makes sense to review only a very large CRADA for
domestic competitiveness issues. This review should be
undertaken with the goal of understanding the procedures that
currently apply to a major CRADA and the extent that they may
lead to a satisfactory airing of national security, domestic
competitiveness, and international competitiveness issues.
The Committee expects that the adequacy of existing
procedures and the methods for interagency coordination and
awareness should be reviewed and refined. Any recommended
changes should solve potential problems involving a major CRADA
through better interagency coordination and should not
inadvertently add layers of bureaucratic review. New procedures
should be recommended only to the extent that existing
procedures are inadequate and to ensure that any new procedures
will lead to expedited, substantive interagency decisions
within the spirit of the CRADA concept.
It is the intention of the Committee that any interagency
review of a CRADA, as outlined in this section, should apply
only to a major CRADA, and not to an average CRADA, such as
those involving United States small business partners. The
Committee believes that the added time, cost, and complexity
associated with such interagency reviews could be overly
burdensome for United States small businesses or could deter
them from entering into a CRADA.
Additionally, the Committee does not intend to modify any
statutory deadlines for CRADA approval and does not grant
authority to any federal agencies to establish a review board
or other new bureaucratic structure to carry out this section.
The Committee also does not intend to overturn or disapprove an
existing CRADA through the implementation of any procedural
recommendations.
section 8. increased flexibility for federal laboratory partnership
intermediaries
The Committee supports the current law that permits federal
laboratories to interact with partnership intermediaries, such
as a State or local government, or a nonprofit entity owned in
whole or part by, or operated in whole or in part by or behalf
of a State or local government, that assists, counsels,
advises, evaluates, or otherwise cooperates with small business
firms that need or can make demonstrably productive use of
technology-related assistance from a federal laboratory. The
Committee believes that there should be increased flexibility
for federal laboratory partnership intermediaries and that
institutions of higher education should qualify to be a
partnership intermediary for educational or scientific
purposes.
IX. Committee Cost Estimate
Rule XIII, clause 3(d)(2) of the House of Representatives
requires each committee report accompanying each bill or join
resolution of a public character to contain: (1) an estimate,
made by such committee, of the costs which would be incurred in
carrying out such bill or joint resolution in the fiscal year
in which it is reported, and in each of the five fiscal years
following such fiscal year (or for the authorized duration of
any program authorized by such bill or joint resolution, if
less than five years); (2) a comparison of the estimate of
costs described in subparagraph (1) of this paragraph made by
such committee with an estimate of such costs made by any
government agency and submitted to such committee; and (3) when
practicable, a comparison of the total estimated funding level
for the relevant program (or programs) with the appropriate
levels under current law. However, House Rule XIII, clause
3(d)(3)(B) provides that this requirement does not apply when a
cost estimate and comparison prepared by the Director of the
Congressional Budget Office under section 403 of the
Congressional Budget Act of 1974 has been timely submitted
prior to the filing of the report and included in the report
pursuant to House Rule XIII, clause 3(c)(3). A cost estimate
andcomparison prepared by the Director of the Congressional
Budget Office under section 403 of the Congressional Budget Act of 1974
has been timely submitted prior to the filing of this report and is
included in Section X of this report pursuant to House Rule XIII,
clause 3(c)(3).
Rule XIII, clause 3(c)(2) of the House of Representatives
requires each committee report that accompanies a measure
providing new budget authority (other than continuing
appropriations), new spending authority, or new credit
authority, or changes in revenues or tax expenditures to
contain a cost estimate, as required by section 308(a)(1) of
the Congressional Budget Act of 1974 and, when practicable with
respect to estimates of new budget authority, a comparison of
the total estimated funding level for the relevant program (or
programs) to the appropriate levels under current law. H.R. 209
does not contained any new budget authority, credit authority,
or changes in revenues or tax expenditures.
X. Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 8, 1999.
Hon. F. James Sensenbrenner, Jr.,
Chairman, Committee on Science,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 209, the
Technology Transfer Commercialization Act of 1999.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kathleen
Gramp.
Sincerely,
Dan L. Crippen, Director.
Enclosure.
H.R. 209--Technology Transfer Commercialization Act of 1999
H.R. 209 would amend existing law regarding the licensing
of technologies developed with federal resources. This bill
would change the terms and procedures governing such licenses
and would expand the scope of inventions that could be included
in a license. Royalties collected by federal agencies would be
available for obligation for two years after they are received
rather than for the one year allowed under current law. The
bill also would direct the National Science and Technology
Council (NSTC) to analyze and recommend policies regarding
major cooperative research and development agreement (CRADAs)
within one year after enactment.
CBO estimates that implementing H.R. 209 would have no
significant effect on the federal budget over the 2000-2004
period. Based on information from NSTC, we expect that
preparing the report on CRADAs would involve little additional
cost because most of the analyses required by the bill are
being done under current law. Provisions affecting the
collection and spending of royalties by federal agencies would
affect direct spending, so pay-as-you-go procedures would apply
to this bill, but CBO estimates that the effects would not be
significant. Although receipts from royalties could increase if
more licenses are issued as a result of this legislation, any
additional collections would be offset by an increase in direct
spending by agencies for payments to investors or for related
agency programs. Likewise, giving agencies an additional year
to obligate royalty income would have little effect on direct
spending, because agencies obligate virtually all of the
receipts within the one-year limit specified in current law.
H.R. 209 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Kathleen Gramp.
This estimate was approved by Robert A. Sunshine, Deputy
Assistant Director for Budget Analysis.
XI. Compliance With Public Law 104-4
H.R. 209 contains no unfunded mandates.
XII. Committee Oversight Findings and Recommendations
Rule XIII, clause 3(c)(1) of the House of Representatives
requires each committee report to include oversight findings
and recommendations required pursuant to clause 2(b)(1) of rule
X. The Committee has no oversight findings.
XIII. Oversight Findings and Recommendations by the Committee on
Government Reform
Rule XIII, clause 3(c)(4) of the House of Representatives
requires each committee report to contain a summary of the
oversight findings and recommendations made by the House
Government Reform Committee pursuant to clause 4(c)(2) of rule
X, whenever such findings and recommendations have been
submitted to the Committee in a timely fashion. The Committee
on Science has received no such findings or recommendations
from the Committee on Government Reform.
XIV. Constitutional Authority Statement
Rule XIII, clause 3(d)(1) of the House of Representatives
requires each report of a committee on a bill or joint
resolution of a public character to include a statement citing
the specific powers granted to the Congress in the Constitution
to enact the law proposed by the bill or joint resolution.
Article I, section 8 of the Constitution of the United States
grants Congress the authority to enact H.R. 209.
XV. Federal Advisory Committee Statement
H.R. 209 does not authorize the creation of any new
advisory committees.
XVI. Congressional Accountability Act
The Committee finds that H.R. 209 does not relate to the
terms and conditions of employment or access to public services
or accommodations within the meaning of Section 102(b)(3) of
the Congressional Accountability Act (Public Law 104-1).
XVII. Changes in Existing Law Made by the Bill, As Reported
In Compliance with clause 3 of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
STEVENSON-WYDLER TECHNOLOGY INNOVATION ACT OF 1980
* * * * * * *
SEC. 4. DEFINITIONS.
As used in this Act, unless the context otherwise requires,
the term--
(1) * * *
* * * * * * *
(4) ``Centers'' means Cooperative Research Centers
established under [section 6 or section 8] section 7 or
9 of this Act.
* * * * * * *
(6) ``Federal laboratory'' means any laboratory, any
federally funded research and development center, or
any center established under [section 6 or section 8]
section 7 or 9 of this Act that is owned, leased, or
otherwise used by a Federal agency and funded by the
Federal Government, whether operated by the Government
or by a contractor.
* * * * * * *
SEC. 5. COMMERCE AND TECHNOLOGICAL INNOVATION.
(a) * * *
* * * * * * *
(c) Duties.--The Secretary, through the Under Secretary, as
appropriate, shall--
(1) * * *
* * * * * * *
(11) encourage and assist the creation of centers and
other joint initiatives by State [of] or local
governments, regional organizations, private
businesses, institutions of higher education, nonprofit
organizations, or Federal laboratories to encourage
technology transfer, to stimulate innovation, and to
promote an appropriate climate for investment in
technology-related industries;
* * * * * * *
SEC. 9. NATIONAL SCIENCE FOUNDATION COOPERATIVE RESEARCH CENTERS.
(a) Establishment and Provisions.--The National Science
Foundation shall provide assistance for the establishment of
Cooperative Research Centers. Such Centers shall be affiliated
with a university or other nonprofit institution, or a group
thereof. The objective of the Centers is to enhance
technological innovation as provided in section [6(a)] 7(a)
through the conduct of activities as provided in section [6(b)]
7(b).
(b) Planning Grants.--The National Science Foundation is
authorized to make available nonrenewable planning grants to
universities or nonprofit institutions for the purpose of
developing the plan as described under section [6(c)(3)]
7(c)(3).
* * * * * * *
SEC. 11. UTILIZATION OF FEDERAL TECHNOLOGY.
(a) * * *
* * * * * * *
(e) Establishment of Federal Laboratory consortium for
Technology Transfer.--(1) There is hereby established the
Federal Laboratory Consortium for Technology Transfer
(hereinafter referred to as the ``Consortium'') which, in
cooperation with Federal [Laboratories] laboratories and the
private sector, shall--
(A) * * *
* * * * * * *
(i) Research Equipment.--The Director of a laboratory, or the
head of any Federal agency or department, may loan, lease, or
give research equipment that is excess to the needs of the
laboratory, agency, or department to an educational institution
or nonprofit organization for the conduct of technical and
scientific education and research activities. Title of
ownership shall transfer with a gift under [the] this section.
SEC. 12. COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS.
(a) * * *
(b) Enumerated Authority.--(1) Under an agreement entered
into pursuant to subsection (a)(1), the laboratory may grant,
or agree to grant in advance, to a collaborating party patent
licenses or assignments, or options thereto, in any invention
made in whole or in part by a laboratory employee under the
agreement, or, subject to section 209 of title 35, United
States Code, may grant a license to an invention which is
federally owned, for which a patent application was filed
before the signing of the agreement, and directly within the
scope of the work under the agreement, for reasonable
compensation when appropriate. The laboratory shall ensure,
through such agreement, that the collaborating party has the
option to choose an exclusive license for a pre-negotiated
field of use for any such invention under the agreement or, if
there is more than one collaborating party, that the
collaborating parties are offered the option to hold licensing
rights that collectively encompass the rights that would be
held under such an exclusive license by one party. In
consideration for the Government's contribution under the
agreement, grants under this paragraph shall be subject to the
following explicit conditions:
* * * * * * *
SEC. 14. DISTRIBUTION OF ROYALTIES RECEIVED BY FEDERAL AGENCIES.
(a) In General.--(1) Except as provided in paragraphs (2) and
(4), any royalties or other payments received by a Federal
agencyfrom the licensing and assignment of inventions under
agreements entered into by Federal laboratories under section 12, and
from the licensing of inventions of Federal laboratories under section
207 of title 35, United States Code, or under any other provision of
law, shall be retained by the laboratory which produced the invention
and shall be disposed of as follows:
(A)(i) The head of the agency or laboratory, or such
individual's designee, shall pay each year the first
$2,000, and thereafter at least 15 percent, of the
royalties or other payments, other than payments of
patent costs as delineated by a license or assignment
agreement, to the inventor or coinventors, if the
inventor's or coinventor's rights are assigned to the
United States.
* * * * * * *
(B) The balance of the royalties or other payments
shall be transferred by the agency to its laboratories,
with the majority share of the royalties or other
payments from any invention going to the laboratory
where the invention occurred. The royalties or other
payments so transferred to any laboratory may be used
or obligated by that laboratory during the fiscal year
in which they are received or during the [succeeding
fiscal year] 2 succeeding fiscal years--
* * * * * * *
(2) If, after payments to inventors under paragraph (1), the
royalties or other payments received by an agency in any fiscal
year exceed 5 percent of the budget of the [Government-
operated] laboratories of the agency for that year, 75 percent
of such excess shall be paid to the Treasury of the United
States and the remaining 25 percent may be used or obligated
under paragraph (1)(B). Any funds not so used or obligated
shall be paid into the Treasury of the United States.
* * * * * * *
(b) Certain Assignments.--If the invention involved was one
assigned to the Federal agency--
(1) * * *
(2) by an employee of the agency who was not working
in the laboratory at the time the [inventon] invention
was made,
the agency unit that was involved in such assignment shall be
considered to be a laboratory for purposes of this section.
* * * * * * *
SEC. 22. SPENDING AUTHORITY.
No payments shall be made or contracts shall be entered into
pursuant to the provisions of this Act (other than sections
[11, 12, and 13] 11, 12, and 14) except to such extent or in
such amounts as are provided in advance in appropriation Acts.
SEC. 23. USE OF PARTNERSHIP INTERMEDIARIES.
(a) Authority.--Subject to the approval of the Secretary or
head of the affected department or agency, the Director of a
Federal laboratory, or in the case of a federally funded
research and development center, the Federal employee who is
the contract officer, may--
(1) enter into a contract or memorandum of
understanding with a partnership intermediary that
provides for the partnership intermediary to perform
services for the Federal laboratory that increase the
likelihood of success in the conduct of cooperative or
joint activities of such Federal laboratory with small
business firms, institutions of higher education as
defined in section 1201(a) of the Higher Education Act
of 1965 (20 U.S.C. 1141(a)), or educational
institutions within the meaning of section 2194 of
title 10, United States Code; and
* * * * * * *
(c) Definition.--For purposes of this section, the term
``partnership intermediary'' means an agency of a State or
local government, or a nonprofit entity owned in whole or in
part by, chartered by, funded in whole or in part by, or
operated in whole or in part by or on behalf of a State or
local government, that assists, counsels, advises, evaluates,
or otherwise cooperates with small business firms, institutions
of higher education as defined in section 1201(a) of the Higher
Education Act of 1965 (20 U.S.C. 1141(a)), or educational
institutions within the meaning of section 2194 of title 10,
United States Code, that need or can make demonstrably
productive use of technology-related assistance from a Federal
laboratory, including State programs receiving funds under
cooperative agreements entered into under section 5121(b) of
the Omnibus Trade and Competitiveness Act of 1988 (15 U.S.C.
2781 note).
* * * * * * *
----------
CHAPTER 18 OF TITLE 35, UNITED STATES CODE
CHAPTER 18--PATENT RIGHTS IN INVENTIONS MADE WITH FEDERAL ASSISTANCE
Sec.
200. Policy and objective.
* * * * * * *
[209. Restrictions on licensing of federally owned inventions.]
209. Licensing federally owned inventions.
* * * * * * *
Sec. 202. Disposition of rights
(a) * * *
* * * * * * *
[(e) In any case when a Federal employee is a coinventor of
any invention made under a funding agreement with a nonprofit
organization or small business firm, the Federal agency
employing such coinventor is authorized to transfer or assign
whatever rights it may acquire in the subject invention from
its employee to the contractor subject to the conditions set
forth in this chapter.]
(e) In any case when a Federal employee is a coinventor of
any invention made with a nonprofit organization, a small
business firm, for a non-Federal inventor, the Federal agency
employing such coinventor may, for the purpose of consolidating
rights in the inventionor if it finds that it would expedite
the development of the invention--
(1) license or assign whatever rights it may acquire
in the subject invention to the nonprofit organization,
small business firm, or non-Federal inventor in
accordance with the provisions of this chapter; or
(2) acquire any rights in the subject invention from
the nonprofit organization, small business firm, or
non-Federal inventor, but only to the extent the party
from whom the rights are acquired voluntarily enters
into the transaction and no other transaction under
this chapter is conditioned on such acquisition.
* * * * * * *
Sec. 207. Domestic and foreign protection of federally owned inventions
(a) Each Federal agency is authorized to--
(1) * * *
(2) grant nonexclusive, exclusive, or partially
exclusive licenses under federally owned [patent
applications, patents, or other forms of protection
obtained] inventions, royalty-free or for royalties or
other consideration, and on such terms and conditions,
including the grant to the licensee of the right of
enforcement pursuant to the provisions of chapter 29 of
this title as determined appropriate in the public
interest;
(3) undertake all other suitable and necessary steps
to protect and administer rights to federally owned
inventions on behalf of the Federal Government either
directly or through contract, including acquiring
rights for and administering royalties to the Federal
Government in any invention, but only to the extent the
party from whom the rights are acquired voluntarily
enters into the transaction, to facilitate the
licensing of a federally owned invention; and
* * * * * * *
[Sec. 209. Restrictions on licensing of federally owned inventions
[(a) No Federal agency shall grant any license under a patent
or patent application on a federally owned invention unless the
person requesting the license has supplied the agency with a
plan for development and/or marketing of the invention, except
that any such plan may be treated by the Federal agency as
commercial and financial information obtained from a person and
privileged and confidential and not subject to disclosure under
section 552 of title 5 of the United States Code.
[(b) A Federal agency shall normally grant the right to use
or sell any federally owned invention in the United States only
to a licensee that agrees that any products embodying the
invention or produced through the use of the invention will be
manufactured substantially in the United States.
[(c)(1) Each Federal agency may grant exclusive or partially
exclusive licenses in any invention covered by a federally
owned domestic patent or patent application only if, after
public notice and opportunity for filing written objections, it
is determined that--
[(A) the interests of the Federal Government and the
public will best be served by the proposed license, in
view of the applicant's intentions, plans, and ability
to bring the invention to practical application or
otherwise promote the invention's utilization by the
public;
[(B) the desired practical application has not been
achieved, or is not likely expeditiously to be
achieved, under any nonexclusive license which has been
granted, or which may be granted, on the invention;
[(C) exclusive or partially exclusive licensing is a
reasonable and necessary incentive to call forth the
investment of risk capital and expenditures to bring
the invention to practical application or otherwise
promote the invention's utilization by the public; and
[(D) the proposed terms and scope of exclusivity are
not greater than reasonably necessary to provide the
incentive for bringing the invention to practical
application or otherwise promote the invention's
utilization by the public.
[(2) A Federal agency shall not grant such exclusive or
partially exclusive license under paragraph (1) of this
subsection if it determines that the grant of such license will
tend substantially to lessen competition or result in undue
concentration in any section of the country in any line of
commerce to which the technology to be licensed relates, or to
create or maintain other situations inconsistent with the
antitrust laws.
[(3) First preference in the exclusive or partially exclusive
licensing of federally owned inventions shall go to small
business firms submitting plans that are determined by the
agency to be within the capabilities of the firms and equally
likely, if executed, to bring the invention to practical
application as any plans submitted by applicants that are not
small business firms.
[(d) After consideration of whether the interests of the
Federal Government or United States industry in foreign
commerce will be enhanced, any Federal agency may grant
exclusive or partially exclusive licenses in any invention
covered by a foreign patent application or patent, after public
notice and opportunity for filing written objections, except
that a Federal agency shall not grant such exclusive or
partially exclusive license if it determines that the grant of
such license will tend substantially to lessen competition or
result in undue concentration in any section of the United
States in any line of commerce to which the technology to be
licensed relates, or to create or maintain other situations
inconsistent with antitrust laws.
[(e) The Federal agency shall maintain a record of
determinations to grant exclusive or partially exclusive
licenses.
[(f) Any grant of a license shall contain such terms and
conditions as the Federal agency determines appropriate for the
protection of the interests of the Federal Government and the
public, including provisions for the following:
[(1) periodic reporting on the utilization or efforts
at obtaining utilization that are being made by the
licensee with particular reference to the plan
submitted: Provided, That anysuch information may be
treated by the Federal agency as commercial and financial information
obtained from a person and privileged and confidential and not subject
to disclosure under section 552 of title 5 of the United States Code;
[(2) the right of the Federal agency to terminate
such license in whole or in part if it determines that
the licensee is not executing the plan submitted with
its request for a license and the licensee cannot
otherwise demonstrate to the satisfaction of the
Federal agency that it has taken or can be expected to
take within a reasonable time, effective steps to
achieve practical application of the invention;
[(3) the right of the Federal agency to terminate
such license in whole or in part if the licensee is in
breach of an agreement obtained pursuant to paragraph
(b) of this section; and
[(4) the right of the Federal agency to terminate the
license in whole or in part if the agency determines
that such action is necessary to meet requirements for
public use specified by Federal regulations issued
after the date of the license and such requirements are
not reasonably satisfied by the licensee.]
Sec. 209. Licensing federally owned inventions
(a) Authority.--A Federal agency may grant an exclusive or
partially exclusive license on a federally owned invention
under section 207(a)(2) only if--
(1) granting the license is a reasonable and
necessary incentive to--
(A) call forth the investment capital and
expenditures needed to bring the invention to
practical application; or
(B) otherwise promote the invention's
utilization by the public;
(2) the Federal agency finds that the public will be
served by the granting of the license, as indicated by
the applicant's intentions, plans, and ability to bring
the invention to practical application or otherwise
promote the invention's utilization by the public, and
that the proposed scope of exclusivity is not greater
than reasonably necessary to provide the incentive for
bringing the invention to practical utilization, as
proposed by the applicant, or otherwise to promote the
invention's utilization by the public;
(3) the applicant makes a commitment to achieve
practical utilization of the invention within a
reasonable time, which time may be extended by the
agency upon the applicant's request and the applicant's
demonstration that the refusal of such extension would
be unreasonable;
(4) granting the license will not tend to
substantially lessen competition or create or maintain
a violation of the Federal antitrust laws; and
(5) in the case of an invention covered by a foreign
patent application or patent, the interests of the
Federal Government or United States industry in foreign
commerce will be enhanced.
(b) Manufacture in United States.--A Federal agency shall
normally grant a license under section 207(a)(2) to use or sell
any federally owned invention in the United States only to a
licensee who agrees that any products embodying the invention
or produced through the use of the invention will be
manufactured substantially in the United States.
(c) Small Business.--First preference for the granting of any
exclusive or partially exclusive licenses under section
207(a)(2) shall be given to small business firms having equal
or greater likelihood as other applicants to bring the
invention to practical application within a reasonable time.
(d) Terms and Conditions.--Any licenses granted under section
207(a)(2) shall contain such terms and conditions as the
granting agency considers appropriate, and shall include
provisions--
(1) retaining a nontransferrable, irrevocable, paid-
up license for any Federal agency to practice the
invention or have the invention practiced throughout
the world by or on behalf of the Government of the
United States;
(2) requiring periodic reporting on utilization of
the invention, and utilization efforts, by the
licensee, but only to the extent necessary to enable
the Federal agency to determine whether the terms of
the license are being complied with, except that any
such report shall be treated by the Federal agency as
commercial and financial information obtained from a
person and privileged and confidential and not subject
to disclosure under section 552 of title 5 of the
United States Code; and
(3) empowering the Federal agency to terminate the
license in whole or in part if the agency determines
that--
(A) the licensee is not executing its
commitment to achieve practical utilization of
the invention, including commitments contained
in any plan submitted in support of its request
for a license, and the licensee cannot
otherwise demonstrate to the satisfaction of
the Federal agency that it has taken, or can be
expected to take within a reasonable time,
effective steps to achieve practical
utilization of the invention;
(B) the licensee is in breach of an agreement
described in subsection (b);
(C) termination is necessary to meet
requirements for public use specified by
Federal regulations issued after the date of
the license, and such requirements are not
reasonably satisfied by the licensee; or
(D) the licensee has been found by a court of
competent jurisdiction to have violated the
Federal antitrust laws in connection with its
performance under the license agreement.
(e) Public Notice.--No exclusive or partially exclusive
license may be granted under section 207(a)(2) unless public
notice of the intention to grant an exclusive or partially
exclusive license on a federally owned invention has been
provided in an appropriate manner at least 15 days before the
license is granted, and the Federal agency has considered all
comments received before the end of the comment period in
response to that public notice. This subsection shall not apply
to the licensing of inventions made under a cooperative
research and development agreement entered into under section
12 of the Stevenson-Wydler Technology Innovation Act of 1980
(15 U.S.C. 3710a).
(f) Plan.--No Federal agency shall grant any license under a
patent or patent application on a federally owned invention
unless the person requesting the license has supplied the
agency with a plan for development or marketing of the
invention, except that any such plan shall be treated by the
Federal agency as commercial and financial information obtained
from a person and privileged and confidential and not subject
to disclosure under section 552 of title 5 of the United States
Code.
* * * * * * *
XVIII. Committee Recommendations
On March 25, 1999, a quorum being present, the Committee
favorably reported H.R. 209, the Technology Transfer
Commercialization Act of 1999, by a voice vote, and recommends
its enactment.
XIX. Exchange of Committee Correspondence
House of Representatives,
Committee on Science,
Washington, DC, May 4, 1999.
Hon. Henry Hyde,
Chairman, House Committee on the Judiciary,
Washington, DC.
Dear Mr. Chairman: Thank you for agreeing to help us bring
to the floor H.R. 209, the ``Technology Transfer
Commercialization Act of 1999.'' I appreciate your willingness
to waive your Committee's right to a referral on this bill. In
so doing, we recognize the Judiciary Committee's jurisdictional
prerogatives regarding patent matters and by agreeing to
expedite floor consideration of H.R. 209 in no way diminishes
your rightful claims to the bill.
Should a conference occur on H.R. 209 or similar
legislation, the Committee on Science will support your request
to have conferees on this or similar legislation which falls
within the Committee on Judiciary's jurisdiction.
Historically the Committees on Science and Judiciary have
worked together to improve the disposition of intellectual
property rights flowing from government funded research. I look
forward to working together on these matters in the future.
Sincerely,
F. James Sensenbrenner,
Chairman.
------
House of Representatives
Committee on the Judiciary,
Washington, DC, May 6, 1999.
Hon. F. James Sensenbrenner,
Chairman, Committee on Science, House of Representatives,
Rayburn House Office Building, Washington, DC.
Dear Chairman Sensenbrenner: Thank you for your letter of
May 4, 1999, in which you address the jurisdiction of the
Committee on the Judiciary as it relates to H.R. 209, the
``Technology Transfer Commercialization Act of 1999.''
I have reviewed the legislation and have determined that it
is not necessary for the Committee on the Judiciary to conduct
a markup on the bill. As you stated in your letter, the
Committee on the Judiciary does not waive any of its
jurisdictional prerogative in this area.
I appreciate your cooperation with the Committee on the
Judiciary and I look forward to working together on issues in
the future.
Sincerely,
Henry J. Hyde, Chairman.
XX. Proceedings of the Committee Markup
Thursday, March 25, 1999, U.S. House of Representatives, Committee on
Science, Washington, DC
H.R. 209, Technology Transfer Commercialization Act of 1999
Chairman Sensenbrenner. The second item of business is the
Technology Transfer Commercialization Act of 1999, H.R. 209.
The Chair will recognize himself for five minutes.
In the past two decades, Congress, by direction of the
Science Committee, has established a system to transfer and
commercialize technology from our federal laboratories to
enhance our Nation's ability to compete in the global
marketplace. From the Stevenson-Wydler Technology Innovation
Act of 1980 to the National Technology Transfer and Advancement
Act of 1995, this Committee has strengthened and improved the
process of technology transfer from our Nation's federal labs.
H.R. 209 continues the Science Committee's long and rich
history of advancing technology transfer to help boost United
States international competitiveness. H.R. 209 is yet another
important step in refining our Nation's technology transfer
laws to remove existing impediments to enhanced Government and
industry collaboration.
I will recognize the gentleman from California for an
opening statement, if he would like to make one.
Mr. Brown. Thank you very much, Mr. Chairman. I have a
general opening statement which I would like to request be
inserted at this point in the record.
Chairman Sensenbrenner. Without objection.
[The statement of Mr. Brown follows:]
Opening Statement of Hon. George E. Brown, Jr.
Mr. Chairman, on behalf of the Democratic side of this Committee, I
wish to commend you on the steps you are taking to permit the committee
to establish strong legislative and oversight agendas. I think you will
find, as the year goes on, that our Democratic members are a very
talented group who will contribute significantly to this work and that
our Democratic Subcommittee and Committee leadership stand ready to
work as full partners in moving the balance of the Committee's
legislative agenda through subcommittee and full committee as the
Congress progresses.
I feel today's markup roster shows that we are making progress. We
have an ambitious oversight agenda and three solid bills to consider
today.
With regard to the oversight agenda, only so much can be fit on a
single chart and many of the details appear yet to be determined. We
are happy to support this chart as a general outline, and we plan to be
full partners as this outline is translated into actual projects.
We appreciate the flexibility of Congresswoman Morella and her
staff on H.R. 209, the Technology Transfer Commercialization Act of
1999 and Congressman Barcia for his persistence in perfecting this
bill. Technology transfer is an issue that has been of great interest
to me since before the days of the original Stevenson-Wydler Act, and
it is a topic we have always approached bipartisanly. The bill before
us does a good job ofreadying the Bayh-Dole Act for the 21st century
and of making improvements based on almost two decades of agency and
industry experience with the licensing of Federal technology. I am
convinced also that the CRADA improvements, added to this bill by
Congresswoman Tauscher, will permit this form of doing business, which
has worked so well for small businesses, to work smoothly on the
largest of CRADAs as well.
Those of us who live in areas which are high risk for earthquakes
appreciate your willingness to bring forward enhanced funding for the
NEHRP program under H.R. 1184, the Earthquake Hazards Reduction
Authorization Act of 1999.
We are especially pleased that you have provided nearly $170
million over 5 years for upgrades to the Advanced Seismic Monitoring
System. This is a vital program which has faced chronic underfunding.
Three of our Members will offer small amendments to make this good bill
even better so we will save our detailed comments for later in this
meeting.
Before I begin my comments on H.R. 1183, I want to thank you, Mr.
Chairman, for working closely with me to address our concerns as we
developed H.R. 1183 and the en bloc amendment to be offered by Mrs.
Morella and Mr. Barcia. This has been a difficult process. And I want
to commend the majority and industry representatives for being
responsive to issues that have been raised. I would also like to
commend Dr. James Hill of NIST for the thoroughness, integrity, and
dedication of his work on the Commence Department's report on the FQA.
I have heard nothing but praise for his efforts by industry groups for
his conscientious and objective efforts.
When the Congress passed the Fastener Quality Act ten years ago, we
had a significant problem with importation of fraudulent fasteners, the
procurement practices of Federal agencies, and the level of quality of
fastener manufacturing. Much has happened during the past ten years:
Federal agencies have significantly improved their procurement
practices for fasteners, and the level of quality in manufacturing has
improved tremendously, even though the FQA has never been implemented.
I believe that the passage of the FQA, in part, contributed to these
improvements which is why I have objected to simply repealing the FQA.
I am supporting H.R. 1183 and the en block amendments because I believe
they update the statute to take into consideration these changes. They
will reduce the regulatory burden of the original FQA, continue to
encourage improved manufacturing processes, and ensure the traceability
of all high-strength fasteners.
Mr. Brown. I will just make a few brief comments. First,
commending you for the expeditious way in which you have
brought these three important bills before the Committee for
action. I note from reading Roll Call this morning that the
Speaker is anxious to demonstrate that we have a workhorse
operation going on here. It seems to me that the Science
Committee is making their contribution to getting the work of
the Congress done.
None of these three bills are absolutely new or earth
shattering, but as the Chair has said, they represent solid
progress that has been made over the years. We hope to continue
with that kind of progress with these three bills.
I particularly note the H.R. 209, the Technology Transfer
Commercialization Act, which is in many ways a follow-on to the
Stevenson-Wydler Act, which this Committee worked on a
generation ago, and at that time, we went to great pains to
assure that that was a bipartisan action, bi-cameral action. We
have a Democratic Senator and the Ranking Republican on this
Committee as the coauthors of that bill. We would like to see
that kind of attitude reflected at least part of the time in
the operations that we are doing today.
The action that you have taken is encouraging. I want to
commend you both for the promise with which you have brought
these bills up, and the comprehensive nature of the
oversightplan, which of course is subject to modification, as the
situation requires it. But we conformed to the rules by adopting this
plan. I am happy to see us doing that.
We want to continue a program of close cooperation with the
Chair. Let me say that we have a lot of new members on our side
who are eager to make a contribution. Without wanting to insert
a sour note, we do have a feeling that on occasion, you may
even be moving a little too fast on some of these things. The
fact that we sometimes hear about a committee meeting being
called from the witnesses who have already been called and we
haven't heard about, indicates that our communication could be
improved a little bit. We hope that we can work to achieve
that. That concludes my brief remarks.
Chairman Sensenbrenner. If the gentleman will yield, and it
will be.
Mr. Brown. Yes.
Chairman Sensenbrenner. The Chair intends to recognize Mrs.
Morella and Mr. Barcia for opening statements. Without
objection, other members may place opening statements in the
record at this point.
The gentlewoman from Maryland, Ms. Morella.
Mrs. Morella. Thank you, Mr. Chairman. I must say that I do
think that this Committee has a reputation for working in a
bipartisan manner. We do in our subcommittees and the full
committee. I think the rest of Congress could do well to
emulate it, and I appreciate what you say about communication.
As a result of technology transfer legislation advanced by
this Committee, in almost two decades, the ability of the
United States to compete globally has been strengthened, and a
new paradigm for greater collaboration among the scientific
enterprises that conduct our Nation's research and development,
Government, industry, and universities, has been developed. By
spinning off and commercializing technology developed in our
Nation's over 700 federal laboratories, the results of our
federal research and development enterprise is successfully
being used today to improve our ability to compete
internationally.
Given the importance and benefits of technology transfer,
the Technology Transfer Subcommittee has continued to refine
the technology transfer process in order to facilitate greater
Government, university, and industry collaboration. Most
recently, in 1996, we enhanced and simplified the process for
cooperative research and development agreements with the
enactment of the National Technology Transfer and Advancement
Act. Many of you remember that.
Now with H.R. 209, the Technology Transfer
Commercialization Act of 1999, we have attempted to remove the
obstacles to effectively license federally-owned inventions
which are created in Government-owned, Government-operated
laboratories by adopting the successful Bayh-Dole Act as a
framework.
Under the bill, agencies would be provided with two
important new tools for effectively commercializing on-the-
shelf federally-owned technologies, either licensing them as
stand-alone inventions under the bill's revised authorities of
section 209 of the Bayh-Dole Act, or by including them as part
of a larger package under the CRADA, the Cooperative Research
and Development Agreement. In doing so, this will make both
mechanisms much more attractive to U.S. companies that are
striving to form partnerships with federal laboratories.
In the past Congress, the Technology Subcommittee held two
legislative hearings on this issue. Witnesses enthusiastically
endorsed the bill's intent to streamline technology licensing
to make it more effective. We heard from the Administration,
large corporations, small businesses, federal laboratories,
technology transfer organizations, among others that these
provisions will substantially improve the process to license
federal technology for commercial applications and make it more
attractive for industry topartner with Government.
Mr. Chairman, I am pleased that we have worked closely with
the members of the minority and with the Administration, to
reach consensus since the bill was originally introduced in the
past Congress. Some of these consensus revisions are contained
in the en bloc amendment that will soon be offered on behalf of
myself and Mr. Barcia, the Ranking Minority Member of the
Technology Subcommittee. This bipartisan en bloc amendment
simply contains a new section of Congressional findings and a
few other technical amendments.
I look forward to continue working with you, Mr. Chairman
and members of the minority, as well as the Administration on
having the Technology Transfer Commercialization Act signed
into law in the coming months. I will make sure we are all
invited to the White House for the signing. I yield back, Mr.
Chairman.
Chairman Sensenbrenner. Does that include me? [Laughter.]
The Chair notes the presence of a reporting quorum. The
question is on reporting favorably the oversight plan upon
which the previous question has already been ordered. All those
in favor signify by saying aye.
Opposed, no.
The ayes have it, and the oversight plan is adopted.
The gentleman from Michigan.
Mr. Barcia. Thank you very much, Mr. Chairman. I want to
echo the comments of the distinguished Chairwoman of the
Subcommittee on Technology with regard to the bipartisan effort
on this issue. In the interests of time, Mr. Chairman, I have a
statement on behalf of the Morella-Barcia amendments which I
would like to submit for the record in the interests of time,
and also due to the fact that I have a news conference or press
conference at 10:30 in Longworth.
Chairman Sensenbrenner. Without objection.
Mr. Barcia. Thank you.
Chairman Sensenbrenner. All further opening statements will
be placed in the record by unanimous consent at this point.
[The information follows:]
Chairman Sensenbrenner. I ask that the members proceed with
the amendments in the order on the roster.
The first amendment that I note on the roster is an en bloc
amendment by Mrs. Morella and Mr. Barcia. The Chair recognizes
the gentlewoman from Maryland.
Mrs. Morella. I have the en bloc amendment at the desk.
Chairman Sensenbrenner. The clerk will report the
amendment.
The Clerk. ``En bloc amendment to H.R. 209 offered by Mrs.
Morella and Mr. Barcia.''----
Mrs. Morella. Mr. Chairman, I ask that the amendment be
accepted as read.
Chairman Sensenbrenner. Accepted or considered?
Mrs. Morella. Considered. Considered as read.
Chairman Sensenbrenner. Without objection, the amendment is
considered as read and open for amendment at any point.
[The information follows:]
Chairman Sensenbrenner. The Chair recognizes the
gentlewoman from Maryland for five minutes.
Mrs. Morella. Well, actually, the en bloc amendment is
really pretty technical. It revises the granting of a license
for which a patent application to an invention was filed before
the signing of the agreement in CRADA. It has a few other
little amendments. It exempts the reports required to be
submitted by the licensee of an invention. The information in
that report shall be considered commercial and financial.
So I would submit, unless there are any questions, that it
really is a technical en bloc amendment.
Chairman Sensenbrenner. Does the gentlewoman yield back the
balance of her time?
Mrs. Morella. I yield back, Mr. Chairman.
Chairman Sensenbrenner. Further discussion on the
amendment?
Mr. Rohrabacher. Mr. Chairman?
Chairman Sensenbrenner. Who is seeking----
Mr. Rohrabacher. Mr. Chairman, right here.
Chairman Sensenbrenner. The gentleman from California.
Mr. Rohrabacher. This is just a general question.
Chairman Sensenbrenner. The gentleman is recognized for
five minutes.
Mr. Rohrabacher. A general question to Mrs. Morella. This
hasn't of course gone through my subcommittee, so I amnot fully
aware of the details and I have not studied this. So I would like to
just ask whether or not--of course of the purpose of this is to ensure
that technology developed by our national labs receives a chance for
commercialization and gets out into the private sector. Is there
adequate controls to ensure that it is the American companies that are
the ones who are getting a hold of this technology and commercializing?
Mrs. Morella. Yes, Mr. Rohrabacher, it is. It is one that
deals with CRADA, the Cooperative Research and Development Act.
Now let me indicate that the base text of this bill is very
similar to the one that not only passed the Subcommittee, the
full Committee, passed the Floor in the last Congress. In fact,
it passed the House twice. The en bloc amendment that we have
added today simply includes a new section of Congressional
findings and a few technical revisions made at the suggestion
of the Senate Judiciary Committee. So we hope we will get it
through. But indeed, yes, it is not international. It doesn't
involve the technology transfer problem that we have had that
the Caucus committee et al has looked into.
Mr. Rohrabacher. But you are satisfied that as the law
would be in place after the passage of this legislation that
you are proposing today, that the products of our national lab
are going to be commercialized by American companies and not by
foreign companies?
Mrs. Morella. Yes, indeed. Yes, indeed. It was intended to
be that way, and it will. Thank you. Thank you for asking the
question.
Mr. Rohrabacher. Thank you very much. Thank you, Mr.
Chairman.
Chairman Sensenbrenner. The gentleman yields back the
balance of his time.
Is there further discussion on the technical en bloc
amendment?
[No response.]
Hearing none, all those in favor will say aye.
Opposed, no.
The ayes appear to have it. The ayes have it, and the
amendment is agreed to.
Are there further amendments to the bill? The gentlewoman
from Illinois.
Mrs. Biggert. Thank you, Mr. Chairman. I would just like to
submit language for the report, and ask your permission to
address the Committee briefly with regard to the issue of
CRADA.
Chairman Sensenbrenner. The clerk will report the proposed
report language and distribute it to members.
The Clerk. ``Committee report addition. Section 6. Review
of Cooperative Research and Development Agreement procedures.
This legislation is intended to improve the ability of federal
agencies to license federally-owned inventions, including those
made under cooperative Research and Development Agreements. In
doing so, it requires federal agencies to give preference for
the granting of any exclusive or partially exclusive licenses
to small business firms. Section 3(c). It is the intent of the
Science Committee that any inter-agency review of Cooperative
Research and Development Agreements''----
Chairman Sensenbrenner. Since all of the members have got
copies of the proposed report language, I ask unanimous consent
it be considered as read.
[The information follows:]
Chairman Sensenbrenner. The gentlewoman from Illinois is
recognized for five minutes.
Mrs. Biggert. Thank you very much, Mr. Chairman. The
Technology Transfer Commercialization Act improves the ability
of federal agencies to license federally-owned inventions,
including those made under Cooperative Research and Development
Agreements. In doing so, the bill requires federal agencies to
give preference for the granting of any exclusive or partially
exclusive licenses to U.S. small business firms. It is my
understanding, based on our work on this issue, that the
Science Committee intends that inter-agency reviews of CRADA
should apply only to major Cooperative Research and Development
Agreements, and not to minor cooperative agreements.
I would like to ask Mrs. Morella if this is her
understanding.
Mrs. Morella. Yes, indeed. It is my understanding, Ms.
Biggert.
Mrs. Biggert. Then I would like permission to work with the
Committee and your Subcommittee to ensure that the report
language included with the bill further clarifies this issue.
That is the report that I have submitted, particularly the
intent of the Committee that time, cost, and complexity of such
inter-agency reviews are not intended to add to the burdens of
our Nation's small employers and businesses.
Do you have any comment on that?
Mrs. Morella. Mr. Chairman, I do share the concern that has
been expressed by the gentleman from Illinois, that the inter-
agency reviews provided for in this act should certainly not
deter businesses, large or small, from entering into these
CRADAs. So I am very happy to work with the gentlewoman to
insert language such as the language that she distributed to us
today, and to make sure that the whole Committee's intent is
fully articulated.
Mr. Brown. Will the gentlelady yield?
Mrs. Morella. Yes, indeed.
Mr. Brown. We think that we are in agreement with the
suggested modifications which you have been discussing, and
concur with the idea that a brief discussion between the two
sides would resolve any remaining difficulties, if there are
any, and I'm not sure there are any. But I just wanted to make
sure that we do get a chance to look at the final product.
Mrs. Biggert. I think that is why I have requested that,
you know, have permission to work with the Committee and this
Subcommittee on the report language.
Mrs. Morella. And I agree too, Mr. Brown, that we can do
that pretty quickly, and indeed, we always share. I yield back.
Chairman Sensenbrenner. Does the gentlewoman yield back the
balance of her time?
Mrs. Biggert. Yes.
Chairman Sensenbrenner. Are there further amendments or
report language suggestions?
[No response.]
Hearing none, the question is on the bill. Those in favor
will signify by saying aye.
Opposed, no.
The ayes appear to have it. The ayes have it. The motion is
agreed to.
The Chair now recognizes the gentleman from Michigan, Mr.
Barcia, to make a motion to report the bill.
Mr. Barcia. Yes. Mr. Chairman, I move that the Committee
report the bill H.R. 209 as amended. Furthermore, I move to
instruct the staff to prepare the legislative report to make
technical and conforming amendments, and that the Chairman take
all necessary steps to bring the bill before the House for its
consideration.
Chairman Sensenbrenner. The question is on the motion made
by the gentleman from Michigan. Is there any discussion?
[No response.]
The Chair notes the presence of a reporting quorum. All
those in favor will signify by saying aye.
Opposed, no.
The ayes appear to have it. The ayes have it, and the bill
is reported. All members will have two subsequent calendar days
in which to submit supplemental, minority or additional views
on the measure. Without objection, pursuant to clause 1 of rule
22 of the rules of the House of Representatives, the Committee
authorizes the Chairman to offer such motions as may be
necessary in the House to go to conference with the Senate on
the bill H.R. 209. Without objection, it is so ordered.