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A Long, Hard Journey: From BCiyh-Dole to the FederalTechnology Transfer Act

A constant series of Congressional actions between 1980and 2000 directly link the evolution of federal patent policiesfrom universities straight to the federal laboratory system.Congress consciously modeled federal laboratory policies onthe 1980 Bayh-Dole Act.414§~.Q~1()r.Ql?I~.EJ,,~Q1r!~.~.EJ)(p.ClI1.~il1g._ ··1 'onnatted: 'ont: (Default) Mlal,16 pt

Bayh-Dole to cover the federal laboratory system in 1984. . {'onnatted: 'ont: (Default) ','al, 16 pt

That this did not happen and there are now separatestatutes for universities and most federal laboratories was anaccident of political history. Because this history is largelylost, many practitioners see the university technologytransfer system and the federal laboratory system as similarbut unrelated.

It also demonstrates that a key driver in the developmentand implementation of a comprehensive patent policy wasthe existence of an effective Executive branch oversightoffice .. That this oversight function is now absent raisesserious questions about the future of the U.S. technologytransfer system that has done so much to restore Americancompetitiveness by linking the best research minds inuniversities, federal laboratories and industry.

Prior to 1980, management of federally funded inventionswas covered under a mish mash of conflicting statutes,agency policies and presidential directives. Normally thefederal government took ownership of inventions createdunder its funding, making them available to all non­exclusively. Because creators and potential developers ofthese inventions lacked the authorities and incentives ofpatent ownership, most s!.,J(::tldisco\(~ri~s languished on theshelves of government agenci~s, Thiilack of return ontaxpayer investment, coupled with a serious decline in U.S.competitiveness led Senators Bayh (D-IN) and Dole (R-KS)to introduce legislation in 1978 to begin the overhaul offederal patent policies.

Hearings on the bill revealed that at least 20 different patentpolicies existed across the government, with some federalagencies having conflicting policies in various programs.Normally universities and contractors whose inventions weretaken by their funding agencies could petition to have patentownership rights restored to them. Such actions frequentlytook between 18 to 24 months to process. This did not implythat the result was necessarily favorable to the inventor.Obviously, such uncertain ownership coupled with seriousdelays in decision making made commercialization difficult.

A very successful administrative policy of the NationalInstitutes of Health grantfNg~gteht;r19h¥s''to universities withtechnology transfer offices was terminated by the CarterAdministration. NIH planned to revert back to the federalownership model then prevalent.

This action led several universities to approach SenatorsBayh and Dole separately asking them for a legislativesolution establishing for the first time a uniform patent policy

to encourage the commercialization of billions of dollars offederally funded R&D.

The result was the introduction of the University and SmallBusiness Patent Procedures Act seeking to "cut through thissea of red-tape" in the words of Senator Bayh. Because theunusual partnership of a liberal Democrat and a conservativeRepublican addressing what~as b~coming apressingcompetitiveness issue m;:lde si;ich a strong politicalimpression, the bill was quickly nicknamed "Bayh-Dole."

While the initial debate on the Bayh-Dole bill focused onpatent ownership by universities and small businesses,Congress was also developing a framework for moreeffective management of federally-funded R&D in general.The key principles were the decentralized management ofinventions by their creators, rewards for public sectorinventors along with funding more research in their facilitiesand the utilization of the incentives of the patent system toencourage industry to assume the risks of subsequentcommercial development.

Because of the unique role that universities and smallbusinesses have in fostering innovation, the Bayh-Dolelegislation focused on this element. However, it alsoprovided authority for licensing all government owned .inventions. The fact that tb~,gq.y~rn.l11e,l)trarely foundlicensees for more than ~8;()00patents"gathering dust onthe shelves" was a rallying cry for Bayh-Dole supporters.

Many of these inventions came from federal laboratorieseither operated by the governmentor its contractors. Toaddress this problem, Sections 207- 210 of the billauthorized the federal agencies to apply for patents andlicense them non-exclusively or exclusively as necessary for

commercial development. These provisions were thegenesis for the subsequent overhaul of patent policies forthe federal laboratory system.

During the Senate Judiciary Committee's deliberations, thelegislation's scope began to broaden in other ways as well.Early on Sen. Howard Metzenbaum (D-OH) asked SenatorBayh to expand coverage of the bill to nonprofit researchorganizations like the Battelle Memorial Institute. SenatorBayh was happy to make this change as it comported withthe intent of the bill and Senator Metzenbaum was thought tobe one of the most likely opponents of changing the oldpatent policies of putting inventions freely into the publicdomain. Subsequently, $en.,MetzeI'lQ<:lum.joined as a co-

. .0',__'.<: ':, .. ,'---..': <,,i't',~ -sponsor of the bill. ( '.....' . ',' . '.' .

Large companies were also closely following the SenateJudiciary Committee debate. Because many big defensecontractors were allowed to own resulting inventions underDepartment of Defense (DOD) administrative polices,General Electric (G.E.) requested that Senator Bayh insert aprovision stating that passage of Bayh-Dole was notintended to undercut DOD practices. If such language wasaccepted, G.E. pledged that it would not block passage ofBayh-Dole even though competing legislation by the CarterAdministration and Senator Stevenson (D-IL) was pendingfocusing on big business while also providing coverage touniversities.

Given such an offer from G.E., Senator Bayh inserted thefollowing provision into the bill:

Nothing in this chapr~rJs/ll1terid~'i:f)t'O'llmit the authorityof agencies . ..

to agree to the disposition of rights in inventions madein the

performance of work under funding agreements withpersons

other than nonprdtftro'rganizatiOl'lsdr small businessfirms in

accordance with the Statement of Government PatentPolicy

issued on August 23, 1971.

Thus, even in its original "pure" form, Bayh-Dole expandedthe definition of non-profit organizations beyond universities,assured large companies that they would not lose existingprotections under agency administrative policies and createdstatutory guidelines for the management of inventions madeby federal laboratories.

The Bayh-Dole Act also provided flexibility to agencies suchas the Department of Energy to extend the provisions of thelaw to its laboratories managed by non-profit organizations.Thus, Section 202, Disposition of Rights, states that patentrights will be left with non-profit organizations, but that:

'~l;;:'~; "ilt;;};H/~}: '_-~;,;:, ',';',,',. ~'!:~,::-,. "}'"a funding agreement ma}/(err'i'pha'sls Boded) provideotherwise when the funding agreement is for the operation ofa Government owned research or production facility."

Note that the language leaves the door open for an agencyto grant such rights if it is disposed to do so. This provisionset the stage for the next Congressional action expandingpatent policies to federal laboratories.

There were three basic schools of thought opposing Bayh­Dole:

(1) One was the "public interest" philosophy thatGovernment funded technologies should be put inthe public domain, freely available to all;

(2) Another was a belief that large companies weremore important than universities or smallcompanies in driving the economy and should bethe real focus of any new policy;

(3) There was OPP9siti0rJ to me decentralization oftechnology mahagernent,o'utofWashington, D.C.This belief was particularly strong at theDepartment of Energy (DOE).

To understand the motivation of DOE, it is important toreview its nature. Despite the name, the agency is home tothe laboratory system that developed the atomic bomb inWorld War II and devotes a large percentage of its R&D toweapons related research. The resulting culture emphasizedprotecting national security through close control of its .technology. Thus, it is easy to see why some in DOEviewed the decentralized approach of Bayh-Dole as aserious threat to its established culture.

Like most agencies, DOE had a policy of requiring case bycase petitions for ownership of inventions made by itscontractors or grantees. The Comptroller General of theUnited States, Elmer Staats, testified that it could easily takefrom 18- 24 months for s~pp,~e.quest~~9;PIS decided. Suchdelays were, of course, nornii3l1y fatal to commercializationefforts.

While muted at the hearings on Bayh-Dole, as the bill gainedmomentum in Congress, DOE became more active behind

the scenes opposing it. E;vel1!jJflIlYJ~erE1~jstance at DOEbecame a serious threat to\thEf'bilL"'iY'/"

When the Bayh-Dole Act was finally enacted in a "lameduck" session of Congress, it was widely rumored that DOEwas working behind the scenes urging President Carter notto sign it. Since Congress had adjourned its session, bysimply not the signing the law it was effectively "pocketvetoed," Frantic efforts were launched by the Small BusinessAdministration to the White House urging the President tosign Bayh-Dole. Finally, on the last day before it wouldexpire the bill was signed into law.

At the same time it was approving Bayh-Dole, Congress alsopassed additional legislation encouraging thecommercialization of federally-funded R&D. The Bayh-DoleAct falls under the legislative jurisdiction of the Senate andHouse JUdiciary Committees. The Senate CommerceCommittee and the House Science and TechnologyCommittee authored the$t~MEil1son-,Wo/d!er Act.3 This ..,/ Fonn.tted: font: (Defau!t)'".!, 16 pt

legislation also passed intthe'closirig days of th~~96t1inmmmmn._ Fonn.tted: font: (Defau!t).".!, 16 pt

Congress.

This bill sought to establish "Cooperative Research Centers"to encourage university-industry collaborations, requiredfederal laboratories to establish an "Office of Research andTechnology Applications" to promote technology transfer andgave Congressional recognition to the Federal LaboratoryConsortium for Technology Transfer which had beenestablished informally to help trade best practices among theagencies.

However, the Stevenson-Wydler Act did not remove many ofthe legal barriers preventing federal laboratory technologiesfrom being commercialized. The incoming Reagan

Administration declined to fund the "Cooperative ResearchCenters" authorized in the bill, preferring the Bayh-Doledecentralized technology management approachempowering universities to commercialize their owninventions.

Fighting to Implement Bayh-Dole::~ir__><" ;,~~\:, ;.)i{-":,<>',:s,,, ,: ~::',;

However, this did not mean that the fledgling Bayh-Dole Actwas out of the woods by any means. Just because a law isenacted does not necessarily mean it will be implemented asCongress intended. Creating the necessary regulationsinstructing the federal agencies how to apply the variousprovisions of Bayh-Dole were critical to its uniformapplication. If undermined by the bureaucracy, theregulations could provide sufficient loopholes to undo itsintent.

With Senator Bayh defeated in the 1980 election, the Senategoing from Democratic to Republican control, the defeat ofan incumbent President and the incoming President's teamnot firmly in place, there was plenty of opportunity formischief. What next ensued was a two year battle over theinitial regulations and with continuous bureaucraticskirmishing over the next five years.

That the original intent oi~th@r~.jjvvi:lg~r~~erved in theregulations was only because there was a strong oversightentity insuring that the intent of Congress was met. Thisoperation was headed by Norman Latker, former patentattorney for the National Institutes of Health. Mr. Latker wasintimately familiar with the problems in the old governmentpatent policies having seen first hand at NIH that unlessuniversities were allowed to manage their inventions,

taxpayers were not likely to see research turn into productsimproving public health and well being.

The impetus of the Bayh-Dole Act was the administrativeprogram Latker established allowing universities to retainpatient ownership of NIH funded inventions. Not only did theCarter Administration overturn this policy, it also sought tofire Latker. Mr. Latker only remained a federal employeedue to the strong intervention of Senators Bayh and Dole.Subseqently, Latker moved to the Office of FederalProcurement Policy (OFPP). Because of his presence there,Bayh and pole placed the regulatory authority for the newlaw at OFPP. That this confidence was well placed was soonborne out.

Because he understood both the language and intent ofBayh-Dole and the ins an<:fouts ofbur~aycratic infighting,Latker was able to go toe t6t6e'witi1' DOE over theimplementing regulations. Without this strong policyoversight, Bayh-Dole would have been smothered at birthunder the very red-tape it was designed to remove.

One significant fight was over DOE's attempted to use the"exceptionalcircumstances" provisions of the law (exemptingtitle to universities in extraordinary circumstances) to excludeany technologies listed under export control regulations fromthe law. Since the list of such technologies is very large, thiswould have seriously eroded the impact of Bayh-Dolecreating a dangerous precedent for other agencies to follow.Norm Latker was able to fight off DOE with assistance fromSenator Dole's office which closely followed theimplementation fight.

In addition to fighting the regulations, DOE made it clear thatit had no intention of usingt9(~r:8i,§P[xtiWL~Dder the law to

. J:,;";J:>,,-:~,;-

allow its university operated federal laboratories to managetheir inventions. Thus, the discretionary nature of the originalstatute was an insufficient carrot for change. Policy makersreached for the stick.

The ultimate purpose of federal support for R&D is todevelop

the science and technology base needed for a strongnational defense,

for the health and well-being of U.S. citizens, and for ahealthy U.S.

economy. Federal laboratories should recognize thatthey are an important

part of the partnership with universities and industry inmeeting this goal. A

strong cooperative relationship must exist betweenfederal laboratories, universities, industry and others ofthe laboratories' research results.

In the first term of President Reagan, it became apparentthat something significant was occurring under the Bayh­Dole Act helping the U.S. to restore its competitiveness. In1983, the President askeplDayicl P<:lcki3rclto report how toget similar results from the federal laboratories.~Dlt,,... m 'mm•••nmm••••••• m ••mnmm.nmm'n••m. m 00 mm•••"mm•••nm. 0000 m.m'. ~::.... ..~.]~1i!1i.l:il1.. ... '<--- Formatted: Font: (Default)Aria!, 16 pt

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Federallaboratories!laye,traditjqn;:llly felt that they are. . "ih-""'\,.:l<,"'::_'-<'.' -.,_,:,;j".,:.,.",,-~-

part of the government,' 'j .

committed to its highest service, and totally dependenton it for support. Theyperceive industry as an awkward partner with a differentvalue system. Althoughthe degree of interaction with universities and industryvaried among the laboratories visited, the Panel feelsthat this interaction could be increased at all

federal laboratories,

President Reagan accepted the Panel's recommendationI'~~-"~~--~ ...~- ..and issued a ~~~~S!i!!!:L~.tQ__~lLf~g_~r_~L //: '-li! G~ !!!?l1!l!1 .

agencies instructing that "to the extent permitted by law" "<,: Formatted: font: (Default) Arlal, 16 pt. . '. . . Formatted: Font: (Default) Anal, 16 pt

policies regarding the ownership of all federally fundedresearch should be treated under the principles of the Bayh­Dole Act. It was felt that such language wouldspur DOE to .overhaul its centralized management practices.

This was not the case.

Expanding Bayh-Dole to Cover University OperatedFederal Labs

Senator Dole was growing increasingly frustrated bycontinued resistance at OpE. As it became apparent that

."1•.;., .'" -:s., ". ".' 1:,.::., ',';-

legislation would be needed to compel change, Dole_introduced a bill specifically including federal laboratorieswithin the coverage of Bayh-Dole. This time DOE wasopenly opposing these efforts.

Finally fed up with an agency defying Administration policy,on August 24, 1984 Senator Dole wrote a lIBitQJIJ~__Qf.fi_~~ : __A~~m~-of Management and Budget with a copy to Vice President "::~-,: Formatted: Font (Default) Adal, 16 pI

B h Itid Formatted: Font: (Default) Anal, 16 pt

US. sal:

I write to call your attention to the existence ofcontinuing opposition within the Department of Energyto the implementation of the President's new policiesregarding contractor ownership of inventions developedunder federal research and development contracts, ..

The Administration and I have been seeking toestablish the concept of

contractor ownership of all Federally funded inventionsby law. Legislation

proposing contractor ownership and repealing DOE'sauthority, which has been ...

used by the agencyltogenerallyretain ownership, hasbeen endorsed in a Cabinet

Council Resolution, three letters from the President'sScience Advisor to congressional committee chairmen,and OMB approved testimony before House andSenate committees during the current and previoussession. In spite of this clear position, DOE staff haverecently been trying to influence Congress to excludeDOE from ... the current bills providing for changes inthe law needed to implement an agency-widecontractor ownership policy.

The 1984 Dole bill amended the Bayh-Dole Act to givefederal laboratories the authorities to manage theirinventions on the same basis as the original law provided foruniversities and small businesses.

The bill was approved by the Senate Judiciary Committeewith little debate. The nightiQ~fqr~ fu,I.I.§.en~te passage, DOEsent an Assistant Secretary; to try to dissUade Dole fromproceeding to passage. Summoning Department ofCommerce representatives to a late night showdown withDOE, Dole's staff made clear they had no intent of backingoff.

The bill was passed unanimously the next day and sent tothe House of Representatives.However, since the House companion bill was more limited,a compromise was reached as the Congressional sessionground to an end. The final law extended the provisions ofthe Bayh-Dole Act to university operated federal labs with

exceptions for DOE "naval nuclear propulsion or weaponsrelated programs." The other provisions of the Dole billcovering the remaining federal laboratories were dropped,leavirig resolution of this issue to the future.

Another important part of the Dole bill was maintaining astrong Executive branch oversight function for the expandedBayh-Dole Act. The Department of Commerce in the ReaganAdminlstration had formed a new technology policy officerecruiting Norman Latker as their patent policy expert.Ironically, the Departmen,t.stro!1~ly ()pposed Bayh-Dole in theCarter Administration, butth~neworganization under theleadership of Assistant Secretary Bruce Merrifield warmlyembraced the law and its philosophy. Thus, Senator Dolemoved oversight authorities for the law from the Office ofFederal Procurement Policies to the Commerce Department.

Commerce was given statutory authority to notify the head ofany federal agency if it believes "thatany pattern ofdeterminations is contrary to the policies and objectives ofthis chapter." If agencies still did not comply, Congressauthorized the issuance of additional regulations bringingthem into line.

This meant that the Department of Commerce was chargedwith insuring that all federal agencies applied the lawuniformly as Congress intended.

Son of Bayh-Dole, the Federal TechnologyTransfer Act

It quickly became apparent that without specificauthorization, federally owned and operated laboratorieswere not going to be able to implement Bayh-Dole typesystems.

As we have seen, the Bayh-Dole Act allowed the federalgovernment to license itsj~ve~tionsona more effectivebasis. Government inverttorswerealso'receiving apercentage of resulting royalties under administrativepolicies. However, the Office of Personnel Managementruled that such royalty sharing for federal inventors would nolonger be permitted since there was no specific legislativeauthority for them.

When the new Congress reconvened in 1985, SenatorDoleleft the Senate Judiciary Committee to become SenateMajority Leader.' This was the Committee with oversight forthe Bayh-Dole Act.

Senator Slade Gorton (R-WA) picked up the mantel for auniform technology transfer policy in the Senate. However,Senator Gorton was not on the Senate Judiciary Committee.His staff re-worked the provisions of the old Dole billcovering federally owned and operated laboratories as anamendment to the Stevenson-Wydler Act. That law fell underthe jurisdiction ofthe Sell;3,te,¢pmrflerqe.Committee whereGorton served. ' '. .,

Since Stevenson-Wydler also dealt with federal technologymanagement, it was a good fit for expanding technologytransfer policies to the remaining federal laboratory system.However, the political reason for this tactical decision wasnot widely appreciated. To the casual observer it appearedthat Congress was creating a new system for federallaboratories separate from Bayh-Dole. Thus, the commonheritage of the two systems in the Bayh-Dole Act waseclipsed.

A fortuitous event paralleled the introduction of the Gortonbill. The success of the Bayh-Dole Act interested regionalleaders in aggressively incorporating their publicly fundedresearch institutions as drivers for local economicdevelopment. In what was being called the "Rust Belt" ofAmerica the economy was in particularly bad shape.

Peoria, Illinois is the home of Caterpillar tractor that due tostiff foreign competition was laying off workers. Communityleaders identified complimentarY universityl federallaboratory biotechnology'r~search that'could bethe basis forforming an important new research consortium. Theproblem was that the local federal laboratory lacked the legalauthorities to participate.

This led Peoria city leaders to visit the Department ofCommerce to discuss the situation. Informed that thediscarded provisions of the 1984 Dole bill were required toachieve their goal, the delegation next met with theirCongressman Bob Michel (R-IL).Rep. Michel was the House Minority Leader and was wellrespected on both sides of the aisle. Michel pledged to help

.secure passage of new legislation. This interest brought animportant new ally into the fight to extend the missinglegislative authorities to federally-owned and operatedlaboratories.

Soon legislation titled the Federal Technology Transfer Actwas pending in the HOUS~9.nl:t.$en~,tl;l~llowing federallyowned and operated laboratories. to license their inventionsand conduct cooperative R&D with industry. Since thelegislation was originally intended to fall under the Bayh-DoleAct it incorporated decentralized technology managementwith the local federal laboratory director as the key decisionmaker. The law also stipulated that royalties to the lab

should be used to defraytechnol?gY,transfer costs, fund newresearch and reward federarihveritor~."lbalso gave apreference to partnering with small companies and thosewho would manufacture resulting products in the U.S. as isthe case under Bayh-Dole.

With the impact of university technology transfer growingbefore its eyes, Congress did not have the samephilosophical debate over whether or not public/privatetechnology partnerships were good policy or not. That theywere essential to the nation's future prosperity was now agiven. Instead, a small group of large companies wasconcerned that sharing royalties with government inventorsrepresented a dangerous precedent that might be extendedto their own employees. Countries like Germany had lawscontrolling how industrial inventors must be rewarded.Some companies feared that the pending bill was adangerous precedent for rewarding employed inventors thatmust be neutered.

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These companies succeede'dfnitiafly friYemoving the royaltysharing provisions from the House bill. They also tried topersuade Department of Commerce Secretary MalcolmBaldrige to reign in his stafffrom supporting the Senate bill.Baldrige rejected these overtures.

The Senate and House staff eventually resolved thedifferences in the bills restoring royalty sharing forgovernment inventors. A provision was included requiringthe Comptroller General to report back to Congress on theroyalty sharing programs of the various agencies along withrecommendations for improving them.

The new bill became the Federal Technology Transfer Act of1986 (FTTA). The FTTA is essentially Bayh-Dole forfederally owned and operated laboratories.

The 1986 law says that agencies may permit directors ofgovernment-owned and operated labs to enter intocooperative research and development agreements andnegotiate licenses for inventions made in their facilities. Theoverall authority was made permissive because of oppositionfrom NASA that it did not want to operate under the newstatute, preferring its exis,ting!'il-JthoriJiespf.the 1958 SpaceAct. ' '.'

The FTTA requires that agencies share royalties with theirinventors and allows them to pay administrative costsassociated with technology transfer. The majority ofremaining dollars goes back to the individual laboratory tofund more research or to reward other employeesassociated with the project.

Preferences are given to small businesses and to companiesmanufacturing resulting inventions in the U.S. as is the caseunder Bayh-Dole.

Agency headquarters have 30 days to approve or modify anagreement but must give a written explanation for anychanges.

To track agency use of th~neWlaw,9q!'!!:lress charged theDepartment of Commerc&:Vlil'tl1'ii!'ssistingbther agenciesdevelop and share models and to report to the President andCongress every two years on how the Act is being utilized.

President Reagan made the new law the centerpiece of .Executive Order12591~.c"",~i.~~.r:(3.I!1~ln.l?-.t~.~.g.~i9I.Qg.m.'..__" ..__•.../~:: :::::: ::::' :~::~::: :::::: :: ::

document on federal technology transfer policies) makingclear that he expected all agencies to use these newauthorities. Thus, the President said that the heads offederal agencies, to the extent permitted by law, shalldelegate the authorities of the Federal Technology TransferAct to the directors of its government-owned and operatedlaboratories.

Covering All Federal Labs, Providing New Tools forPartnerships

DOE continued to insist that it still lacked clear legislativeauthority to implement the President's Executive Order tomany of its contractor operated laboratories. Because oftheimportance of DOE laboratories such as Sandia and LosAlamos to New Mexico, Senator Domenici (R-NM) decidedto intervene. He pushedmrPl.J,QhCon~fe.s~ an amendmentto the Federal Technology TransferActin 1989.

Sen. Domenici included government-owned, contractoroperated (GOCO) laboratories under the FTTA. He alsoadded language permitting laboratories to keep information"that would be a trade secret or commercial or financialinformation that is privileged or confidential if the informationhad been obtained from a non-Federal party" that isgenerated under a cooperative R&D agreement (CRADA)exempt from release under the Freedom of Information Actfor up to 5 years. This provision underscored how farCongress had come from the old policies essentially puttingfederally funded R&D into the public domain without regardto impact on subsequent commercialization.

The law also signaled a shift in Congressional attention. Theemphasis was moving from provldinq authorities to partnerwith U.S. industry to an irwi~t,~.Qc~th~tfe,p~rallaboratories

.)?:,): ;'::'}:~i':;r;OI' "~i,'(":~t:F':~:-{:,' -c-

effectively use the technology transfer tools Congress hadprovided.

This is illustrated in the next step in our journey. Vocalcompanies began complaining of the difficulty in completingagreements with the laboratories in a timely manner toCongress. These concerns led Senator Ja Rockefeller (D­WV) to introduce

I believe that this ability by the Federal Government toclaim a right of ownership to intellectual propertydeveloped jointly with American companies hasinhibited the establishment of cooperative R&Dagreements and has retarded the commercialization offederally supported technology developments. Thisview is shared by the many research-intensive U.S.companies we contacted.

Rockefeller added:

The bill we are introducing today eliminates this optionbX directing F~d~ral,~R,?e!~~~,9ri'~~i~~)r~sure that theprivate sector IS assignedtltl,e:td"anYlnteliectualproperty arising from a CRADA...

This provision, in addition to putting technology in thecommercial sector where it can be commercialized, willgreatly speed up the negotiations of CRADAS. Undercurrent law, the most time-consuming, and often deal­breaking, part of the negotiation between Federallaboratories and the potential research partners is over

the ownership, assignment, licensing, restriction, etc. ofthe intellectual property rights. Our bill eliminates thisobstacle. (7)

In the House, Representative Connie Morella (R-MD) hadthe National Institutes of Health and the National Institute forStandards and Technology as major drivers of the economyof her district. She also wanted the laboratories to be moreaggressive in developing cooperative R&D agreements withindustry, but felt that wholesale assignment of title went toofar. She was concerned that a company might not beinterested in-- or even capable of -- commercializing aninvention in all its possible fields that could span manymarkets. Because of the.early~tag~nature of federal R&D,unexpected applicationsforatechnOlogycoUld easily arisethat might be neglected by a one size fits all approach.Representative Morella felt that improving licensing was abetter approach.

The result was an amendment requiring the laboratory toinsure "that the collaborating party has the option to choosean exclusive license for a pre-negotiated field of use for anysuch invention under the agreement..." This approach wasacceptable to the Senate and enacted into law. (8)

Continuing her interest in spurring on federal laboratories tomaximize the commercialization of their research, Rep.Morella authored the Technology TransferCommercialization Act of 2000 .•:Ib_~Jr1t~_r1L()fJl~",!_!~.gi~!~ti()_r1_~::/j Formatted: Font (Dera,")A".1, 16 pt

is laid out in the "Findings" section of the bill. In passing this oj Formatted: 'o,,"CDera,")A".1, 16pt

legislation, Congress again recognized the link of Bayh-Doleto the FTTA, with clear guidance on how the tools should beapplied:

The Congress tindstnet-

(1) the importance of linking our unparalleled networkofover 700 Federal laboratories and our Nation'suniversities with United States industry continues tohold great promisefpr; ourfutwewosperity;(2) the enactment oftheBayh-DoleAct of 1980 was alandmark change in United States technology policy,and its success provides a framework for removingbureaucratic barriers and for simplifying the granting oflicensees for inventions that are now in the FederalGovernment's patent portfolio;(3) Congress has demonstrated a commitment over thepast 2 decades to fostering technology transfer fromour Federal laboratories and to promoting public/privatesector partnerships to enhance our internationalcompetitiveness;(4) Federal technology transfer activities havestrengthened the ability of United States industry tocompete in the global marketplace; developed a newparadigm for greater collaboration among the scientificenterprises that conduct our Nation's research anddevelopment- government, industry, and universities;and improved the q/rlaJit¥iPfJiff;,lorttwAmerican people,from medicine to mJteiJals;' ,c"",

(5) the technology transfer process must be made"industry friendly" for companies to be willing to investthe significant times and resources needed to developnew products, processes, and jobs using federallyfunded inventions; and(6) Federal technology licensing procedures shouldbalance the public policy needs of adequatelyprotecting the rights of the public, encouragingcompanies to develop existing government inventions,and making the entire system of licensing qovemmenttechnologies more consistent and simple.

Demonstrating her concern that it was simply taking too longto license federal patents, Morella cut through a Gordianknot of required public notices. The Bayh-Dole Act requiresfederal agencies to place notices in the Federal Registerwhenever they want to license other than non-exclusively. Asecond notice is required when the agency had selected apotential licensee. Taken together, these two notice periodscould easily take five months to complete. The Morella Actauthorized agencies to combine both notices in one postingfor as short a time as 15 days. Thus, the agencies are nowable to significantly reduce the amount of time they mustspend on pUblicnotificatiq~l)'!

The law made clear that Congress was clearly expecting tosee results from its legislative actions. The Morella billrequired agencies to report annually on their technologytransfer programs, including how many patent applicationsthey filed, how many patents were issued, how manyinventions were successfully licensed, how much incomethey generated, how many licenses were non-exclusive orexclusive and "the time elapsed from the date on which thelicense was requested by the licensee in writing to the datethe license was executed."

Ironically, just as the federal laboratories receivedunprecedented authorities to transition their technologiesfrom the bench to the marketplace, the oversight function atthe Department of Commerce was fading away. Beginningin the Clinton Administration, Commerce re-organized theTechnology Administratiqo (where federal technology

~;L", . '.> ":'" '>::,'. ·.-0',"· ':' i> .....,management oversight resided)andinte'rE~st in federaltechnology transfer policy seemed to wane.

Next, the Department of Commerce exempted its ownAdvanced Technology Program (ATP),,:~cJEl~~i~g!'1~Elc:l..t9~J?!()':.r!()~tEl~__-: Fonnatted: Font: (Default)',;al, 16 pt

high risk technology partnerships, from the Bayh-Dole Act. ~~~~~ Fonnatted:Fonl:(Default)Mal,16pt

When enacting the ATP program, Congress wanted toensure that U.S. companies were the program's mainbeneficiaries. Thus, it inGlud~d'languagethat ownership of .resulting intellectual property would vest in businessesincorporated in the United States. The Department ofCommerce took this to imply that Congress meant to exemptthe program from the Bayh-Dole Act, brushing asidearguments that this was not the case.

The Commerce Department did not object when theDepartment of Defense created "other transactions" thangrants or contracts for funding research to be exempt fromBayh-Dole. In fact, in its report, Effective Partnering, theDepartment of Commerce urged agencies to use "whereavailable, 'other transactions' or comparable authoritypermitting the greatest possible flexibility" in R&Dpartnerships. Another recommendation was: "Whereappropriate, use the "exceptional circumstances" authority ofthe Bayh-Dole Act to permit industry to own or control therights to inventions resulting from federal funding, includinginventions of sUbcontractQr~)::,,,(?:1 ) ";',:, ,.. ,

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A precedent was being set away from the goal of creatinguniform patent policies across the agencies.

As the years passed, the Bayh-Dole oversightresponsibilities slipped from a policy office to the Commercegeneral counsel responding to specific questions oninterpreting the statute. Finally, in 2007 the Bush

.Administration and Congress agreed to abolish theTechnology Administration at Commerce all together. It

appears that Bayh-Dole and FTTA oversight will remain avery diminished function of the Department..

This does not bode well for preserving a policy perspectiveon the goals of the laws and subsequent agency practices.Time will only tell how this turns out.

Here ends our journey through a 30 year revolution in U.S.technology policies. It has taken us from a time when thelinkage between federally,fun?ed R&D~nd the developmentof new products benefitting' fl1'e'healtHmd well being ofAmerican taxpayers was Virtually non-existent toa timewhen the U.S. model for fostering public-private partnershipsbetween the best and brightest minds in universities, federallaboratories and industry is recognized world-wide. But it isunclear how this achievement will be maintained.

~erh3iP~h.e_~~~~.~.~.<:lJ.Pl,lt~J~E?.i~~.LJ13..lfl.~~13..~.e.~t P13.r~P13c::~i\f13: ...Ij.e.re.:~ ...~<::: .how the piece is introduced: "The reforms that unleashed F.,matted, Font' (Default)Anal,16 pI

A .' lnnoveii . th 1980' d ltd Formatted, Fonl' (Default)Anal,16 ptmencan nnova Ion In e s, an were emu a ewidely around the world, are under attack at home."

TQ summarized the contribution of the university and federallaboratory system this way:

Remember the technological malaise that befellAmerica in the late 1970's? Ja~an

was busy snuffing o~t,Ait1:sbu~gH'~;§teel mills, driVingDetroit off the road, and beginning its assault on SiliconValley. Only a decade later, things were verydifferent. Japanese industry was in reverse. Anexhausted Soviet Union threw in the towel. Europe satup and started investing heavily in America. Why thesudden reversal of fortunes? Across America, there

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had been a flowering of innovation unlike anything seenbefore.

Possibly the most inspired piece of legislation to beenacted in America

over the past half century was the Bayh-Dole Act of1980. Together

with amendments in 1984 and augmentation in 1986,this unlocked

all the inventions and discoveries that had been madein laboratories

throughout the United States with the help of taxpayers'money. More than anything, this single policy measurehelped to reverse America'sprecipitous slide into industrial irrelevance.

Before Bayh-Dole, the fruits of research supported bygovernment agenci~~A '> , .belonged strictly to the'Tede'ral'g(l'{{E1rnment. Nobodycould exploit such research' ' .without tedious negotiations with the federal agencyconcerned. Worse, companies found it nigh impossibleto acquire exclusive rights to a government-ownedpatent. And without that, few firms were willing to investmillions more of their own money to turn a raw researchidea into a marketable product.

Less quoted, but just as insightful, are TO's words ofwarning for the future:

There has always been a fringe that felt it was immoralfor the government to privatize the crown jewels ofacademic research. Why, they ask, should taxpayersbe charged for goods based on inventions they havealreadY paid for? .

That is easily answered. Invention, as TQ has stressedbefore, is in many ways the easy bit. A dollar's worth ofacademic invention or discovery requires upwards of$10,000 of private capital to bring to market. Far fromgetting a free lunch, companies that license ideas fromuniversities wind up paying over 99% of theinnovation's final cost...

Whatever the merits'oHheird$~;suffice it to say thatthe sole purpose of the Bayh-Dole legislation was toprovide incentives for academic researchers to exploittheir ideas. The culture of competitiveness created inthe process explains why America is, once again, pre­eminent in technology. A goose that lays such goldeneggs needs nurturing, not plucking for the pot.

I The Bayh-DoleAct of 1980(patent and TrademarkLaw Amendments of 1980,Public Law No. 96-517)now codified as 35 V.S,c. §§200-212. Regulations for implementing the Bayh-Dole Act are found at 37C.F.R. §§ 401.1-401.17.2 PublicLaw99-502amending the Stevenson.WydlerTechnology Innovation Act of 1980,P.L. 96-4803 Stevenson-Wydler TechnologyInnovationAct of 1980(publicLawNo. 96-480).Report of the White House Science Council's Federal Laboratory Review Panel, May20, 1983, p. 115 Senator Robert Dole to Frederick ~.Iq1egollri,AssociateI)irector,Natural Resources,Energy and Science, Office of ManagementandBudget.August 24, 19846 Executive Order 12591, Facilitating accessto science and technology, 52 Fed. Reg. 13,414IApr. 10, 1987). .

Statement of Senator Jay Rockefeller introducingS. 1537, the Technology Commercialization Act.of1993,October7,1993, CongressionalRecord,p. S. 132848 Public Law 104-1139TheTechnologyTransfer Commercialization Act of 2000 (PublicLaw No. 104...,.113).now codifiedas 15U.S.C §278nlOFederai Registernotice, Advanced Technology Program, August2,1993, p. 41069.

11 EffectivePartnering; A Report to Congress on Federal Technology Partnerships,U.S. Department ofCommerce,OfficeofTechnology Policy, April 1996,p, 15.

12 'Innovation's golden goose, The Economist Technology Quarterly, Dec. 14,2002