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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.