A long, Hard Journey: From Bayh-Dole to the Federal Technology Transfer Act

Son of Bayh-Dole, the Federal Technology Transfer Act

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Son of Bayh-Dole, the Federal Technology Transfer Act
It quickly became apparent that without specific authorization, federally owned and operated laboratories were not going to be able to implement Bayh-Dole type systems.
As we have seen, the Bayh-Dole Act allowed the federal government to license its inventions on a more effective basis. Government inventors were also receiving a percentage of resulting royalties under administrative policies. However, the Office of Personnel Management ruled that such royalty sharing for federal inventors would no longer be permitted since there was no specific legislative authority for them.
When the new Congress reconvened in 1985, Senator Dole left the Senate Judiciary Committee to become Senate Majority Leader. This was the Committee with oversight for the Bayh-Dole Act.
Senator Slade Gorton (R-WA) picked up the mantel for a uniform 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 bill covering federally owned and operated laboratories as an amendment to the Stevenson-Wydler Act. That law fell under the jurisdiction of the Senate Commerce Committee where Gorton served.
Since Stevenson-Wydler also dealt with federal technology management, it was a good fit for expanding technology transfer policies to the remaining federal laboratory system. However, the political reason for this tactical decision was not widely appreciated. To the casual observer it appeared that Congress was creating a new system for federal laboratories separate from Bayh-Dole. Thus, the common heritage of the two systems in the Bayh-Dole Act was eclipsed.
A fortuitous event paralleled the introduction of the Gorton bill. The success of the Bayh-Dole Act interested regional leaders in aggressively incorporating their publicly funded research institutions as drivers for local economic development. In what was being called the “Rust Belt” of America the economy was in particularly bad shape.
Peoria, Illinois is the home of Caterpillar tractor that due to stiff foreign competition was laying off workers. Community leaders identified complimentary university/ federal laboratory biotechnology research that could be the basis for forming an important new research consortium. The problem was that the local federal laboratory lacked the legal authorities to participate.
This led Peoria city leaders to visit the Department of Commerce to discuss the situation. Informed that the discarded provisions of the 1984 Dole bill were required to achieve their goal, the delegation next met with their Congressman Bob Michel (R-IL).

Rep. Michel was the House Minority Leader and was well respected on both sides of the aisle. Michel pledged to help secure passage of new legislation. This interest brought an important new ally into the fight to extend the missing legislative authorities to federally-owned and operated laboratories.

Soon legislation titled the Federal Technology Transfer Act was pending in the House and Senate allowing federally owned and operated laboratories to license their inventions and conduct cooperative R&D with industry. Since the legislation was originally intended to fall under the Bayh-Dole Act it incorporated decentralized technology management with the local federal laboratory director as the key decision maker. The law also stipulated that royalties to the lab should be used to defray technology transfer costs, fund new research and reward federal inventors. It also gave a preference to partnering with small companies and those who would manufacture resulting products in the U.S. as is the case under Bayh-Dole.
With the impact of university technology transfer growing before its eyes, Congress did not have the same philosophical debate over whether or not public/private technology partnerships were good policy or not. That they were essential to the nation’s future prosperity was now a given. Instead, a small group of large companies was concerned that sharing royalties with government inventors represented a dangerous precedent that might be extended to their own employees. Countries like Germany had laws controlling how industrial inventors must be rewarded. Some companies feared that the pending bill was a dangerous precedent for rewarding employed inventors that must be neutered.
These companies succeeded initially in removing the royalty sharing provisions from the House bill. They also tried to persuade Department of Commerce Secretary Malcolm Baldrige to reign in his staff from supporting the Senate bill. Baldrige rejected these overtures.
The Senate and House staff eventually resolved the differences in the bills restoring royalty sharing for government inventors. A provision was included requiring the Comptroller General to report back to Congress on the royalty sharing programs of the various agencies along with recommendations for improving them.
The new bill became the Federal Technology Transfer Act of 1986 (FTTA). The FTTA is essentially Bayh-Dole for federally owned and operated laboratories.
The 1986 law says that agencies may permit directors of government-owned and operated labs to enter into cooperative research and development agreements and negotiate licenses for inventions made in their facilities. The overall authority was made permissive because of opposition from NASA that it did not want to operate under the new statute, preferring its existing authorities of the 1958 Space Act.
The FTTA requires that agencies share royalties with their inventors and allows them to pay administrative costs associated with technology transfer. The majority of remaining dollars goes back to the individual laboratory to fund more research or to reward other employees associated with the project.
Preferences are given to small businesses and to companies manufacturing resulting inventions in the U.S. as is the case under Bayh-Dole.
Agency headquarters have 30 days to approve or modify an agreement but must give a written explanation for any changes.
To track agency use of the new law, Congress charged the Department of Commerce with assisting other agencies develop and share models and to report to the President and Congress every two years on how the Act is being utilized.
President Reagan made the new law the centerpiece of Executive Order 125914 (which remains the guiding document on federal technology transfer policies) making clear that he expected all agencies to use these new authorities. Thus, the President said that the heads of federal agencies, to the extent permitted by law, shall delegate the authorities of the Federal Technology Transfer Act to the directors of its government-owned and operated laboratories.

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