GAO

Results in Brief

United States

General Accounting Office
Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-242438

April 3, 1991

The Honorable Joseph R. Biden
Chairman, Committee on the Judiciary
United States Senate

The Honorable Jack Brooks

Chairman, Committee on the Judiciary

House of Representatives

The Honorable George E. Brown, Jr.
Chairman, Committee on Science, Space,

and Technology

House of Representatives

The Patent and Trademark Amendments of 1980 (P.L. 96-517) require us to report annually on federal agencies' implementation of section 6 of the act, which amended the law to promote the use of federally funded inventions. This report provides information on agencies' implementation of provisions that enable them to grant licenses to make, use, or sell government-owned inventions. As agreed with your offices, we are providing (1) patenting and licensing data for fiscal years 1981 through 1990 for 12 federal agencies and 16 of the Department of Energy's contractor-operated laboratories and (2) federal patent attorneys' and licensing officials' perceptions of possible ways to facilitate their agencies' patent licensing efforts. The 12 federal agencies we surveyed funded about $16.2 billion of the estimated $16.7 billion obligated for research and development at government laboratories in fiscal year 1990 and are the principal patenting and licensing agencies.

On an annual average between fiscal years 1987 and 1990, the 12 federal agencies and 16 contractor-operated laboratories filed 1,578 patent applications, were issued 979 patents by the U.S. Patent and Trademark Office, and granted 164 licenses. In comparison, on an annual average between fiscal years 1981 and 1986, these agencies and laboratories filed 1,559 patent applications, were issued 1,193 patents, and granted 130 licenses. The agencies and laboratories increased the percentage of licenses requiring royalty payments from less than 50 percent of the licenses granted in the early 1980s to 95 percent of the licenses granted in fiscal year 1990. A royalty-bearing license generally indicates a significant commitment by the licensee to invest in commercializing a licensed invention.

The federal patent attorneys and licensing officials interviewed said
that the Patent and Trademark Amendments' requirements to protect
the public's interest and ensure fairness may discourage businesses from
seeking to obtain licenses for government-owned inventions, in part
because the requirements lengthen the time needed to negotiate a license
agreement. However, these officials generally support the purpose of
these requirements and, while offering a few individual views, did not
uniformly suggest any changes to laws or regulations to facilitate their
patent licensing efforts. The officials did note that the Federal Register,
in which agencies are required to publish official notices, does not effec-
tively get information to company managers who might be interested in
commercializing an invention. The officials further noted that only three
agencies make this information readily available through computerized
data bases.

Background

The Patent and Trademark Amendments of 1980 were among the first
of several laws enacted in the 1980s to stimulate the transfer of feder-
ally funded technology to U.S. businesses and other organizations. Sec-
tion 6 of the amendments amended title 35 of the U.S. Code by (1)
authorizing federal agencies to issue licenses granting exclusive, par-
tially exclusive, or nonexclusive rights to make, use, or sell government-
owned inventions' and (2) giving small business and nonprofit recipients
of federal funding, with few exceptions, the option to retain title to their
inventions. Public Law 98-620, enacted in November 1984, extended this
coverage to most of the nonprofit contractors of Energy's contractor-
operated laboratories. Subsequent laws, particularly the Federal Tech-
nology Transfer Act of 1986 (P.L. 99-502) and sections 3131 to 3133 of
the National Defense Authorization Act for Fiscal Years 1990 and 1991
(P.L. 101-189), were intended to further stimulate the transfer of tech-
nology developed at federal government-operated and contractor-oper-
ated laboratories. These laws authorized such laboratories to enter into
cooperative research and development agreements and required agen-
cies to share royalty and other income with the federal inventor(s).

The Department of Commerce's governmentwide regulations for licensing government-owned inventions require that, before granting an exclusive license, federal agencies (1) obtain an applicant's plans for

1Under an exclusive license, only one licensee has the right to make, use, or sell an invention during the patent's 17-year life. Under a partially exclusive license, the number of licensees, term of exclusivity, field of use, or territory of use may be restricted.