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is unique in the sense that we're going to the Federal laboratory and we're also going to the State universities and we're looking for their crown jewel ideas. But it became very apparent to me, and it would be apparent to anyone who ever sat in on some of our meetings, that there are research proposals that are on occasion recommended to us, in which certain member companies reflectively back away from, and it's obvious what those reasons are. And so it is a potential problem.

I don't think the problem is associated with a sharing of a base technology, because I think most of the major companies, certainly the ones that are involved in our consortium, feel confident enough that if given a basic technology, they can outrun their competitors, including their fellow members. There is certainly an ego factor involved here.

The concern is—two things. The public—The Freedom of Information Act, and the fact that that apparently, at least based on my limited experience, is not universally interpreted as to what you can release and to what degree we, for example, BRDC, if we enter into an agreement with a Federal laboratory, have the right to request a sanitization of what is released, so that some of our best research ideas aren't going out to the competitors. And then the other point, again, that Dr. Adler made, there is concern on some of our member companies of the ill-defined rights that the Government retains in any research and technology that is developed under these joint cooperative research agreements.

Mr. CAMPBELL. Mr. Chairman, in view of the imminent vote, I will yield back my time. But I do just want to thank the panel and note for the Chairman's interest-I'm sure you share with me that-I picked up some very insightful points from this panel, particularly on the prospects of FOIA and the prospects of a royaltyfree license obligation, which might cause less than the optimal amount of participation in the consortium that we would like. But I yield back my time. Thank you. Mr. WALGREN. I thank the gentleman.

The Chair recognizes the gentlelady from Maryland, Mrs. Morella.

Mrs. MORELLA. Thanks, Mr. Chairman, and I also appreciate the panel being here, and I'll talk fast because we have to go and vote.

But I'm honored to represent the district that includes the National Institutes of Health and includes NIST, where you've got so much of the technology transfer agreements that are taking place. And I'm curious, since there seems to be a downside to everything, why, when we talk about the need for intellectual property rights and software, what's the downside on that? Maybe Dr. Adler, anyone who wants to comment on that. It seems like such a natural thing to do, and I know the committee is looking into it.

Dr. ADLER. I'm not really aware of a downside in the case of technology-oriented software, things that have commercial value. As I understand the copyright provisions, originally the Government wasn't in the business of creating technologically useful software and the policy was to make the results of Government work publishable freely and copiable by everyone. I think the times perhaps have changed a little bit, and I frankly don't see a downside at the present time in this area.

Mrs. MORELLA. I just wondered why it hadn't been done sooner, why we were now looking at doing that?

Also, in your testimony, Dr. Adler, on page 15, I was trying to figure out a sentence under 2, the very last few sentences, “...unpatentable research material is not licensed to industry, although most universities actively license such technology." But it really links up with the sentence before that, which says "Because the FTTA appears to authorize only the licensing of intellectual property rights, the Patent Policy Board has not permitted the licensing of technology, generally."

Can you explain what that means?

Dr. ADLER. Well, the Technology Transfer Act, which refers to transfer of technology in some of the broad policy statements about transferring technology, include a universe of research results, a subset of which are inventions or patent applications. So in terms of moving useful technology generically to industry, this includes biological materials that may not be patentable. The specific authorization in the FTTA speaks to licensing of patent rights. So that universities that might develop a virus, for instance, or a cell line useful for screening compounds, can license a cell line or a virus or a test tube. We have interpreted FTTA to grant us the right to license a patent application. Mrs. MORELLA. I see.

A question probably to Dr. Schmid. Has there been any attempt to distribute this so-called model policy to other labs so that they could follow it?

Dr. SCHMID. Yes. And, in fact, a lot of that occurs in training sessions, which are at the request of our members, on targeted sorts of things. For example, at our last national meeting, there was a training session on Cooperative Research and Development Agreements. Some of the experience that the panel members here have had in that area were presented as part of that training.

Mrs. MORELLA. (Presiding.) Can you mention some of the agencies?

Dr. SCHMID. Some of the agencies that have participated in the training have been like the Army, the agricultural—the people here on this panel.

Mrs. MORELLA. So the major agencies that have been involved in technology transfer agreements that, you know

Dr. SCHMID. Right, and, of course, those who are receiving that sort of information are many of our other member laboratories from other agencies, like the Department of Energy, Air Force, National Science Foundation, those sorts of groups.

Mrs. MORELLA. Do you have plans to expand?

Dr. SCHMID. Yes. That has been through some of the surveys that we've conducted of our members, is training has been one of the aspects that they did want us to enlarge our efforts on.

Mrs. MORELLA. Dr. Adler, how has the industry reacted to the NIH guidelines? I mean, what kinds of questions have come up? Dr.

ADLER. The preeminent question which came up with an earlier draft of the guidelines related to the kinds of rights that the Government would retain in inventions made solely by employees of the collaborating company. Originally, our language in the policy guidelines repeated the reservation of rights as would be required for inventions made by Government employees under the FTTA or under the patent law. That was the primary source of concern. We ended up changing the types of reserved rights to rights for research purposes for inventions made solely by collaborators.

The issue of retained rights, I think, was the largest concern.

Mrs. MORELLA. Dr. Stern, can you tell us more about how you put together the CRDA teams? I mean, how do you select the research areas? Do you go out and solicit industry participation?

Mr. STERN. Well, we have been working in technology transfer over the years. This is just an enhancement, a strengthening really of technology transfer. In our particular niche of electronics, we have been working in-house on these things, on these projects in electronics, and also through contracts, and we're in intimate contact with universities and academia and with industry in our particular area and we know the field. We have been workingnetworking with these people for years, so really, unofficially, we have been doing technology transfer without the Act ever since, and we're just enhancing that situation now, where we can bring these people into work officially with our people, and it was really a very smooth transition, something that really was going on. It's just an enlargement, enhancement of what we have been doing in the past. We're just formalizing it.

Mrs. MORELLA. Dr. Schmid, I guess one last question, and then I've got to run off and vote.

I wondered about your relationship with the States, and then probably as a second part to the question, a little bit more about the draft agreement that you have with NIST.

Dr. SCHMID. Okay. We've conducted a couple of demonstration experiments with the States. One was the vocational education group in Oklahoma, where we worked with them on a process similar that we-but modified-that we have used with large industries, where we use them as a service group to get together with the small businesses and use that service organization as a mechanism to interact with the small businesses.

In the case of NIST, we have a draft agreement where we would support them in their technical extension service work in terms of outreach efforts to the service organization in the various States, giving them information on how to better access the expertise and capabilities that are available in the laboratories. We've been involved with them in their planning for a clearinghouse in some of the studies that they're doing in that area. We look forward to these sort of mechanisms to better reach the small businesses in the States.

Another experience we had was out in California with NASA's Industrial Applications Center, where linking with that particular network, we made available not only the information resources that NASA has, but also the other Federal laboratory technologies where the small businesses can go to the Small Business Development Centers in 15 States and, through that mechanism, then get into the NASA network as well as the full Consortium network.

Mrs. MORELLA. I want to thank you very much for your response. I want to thank the entire panel for appearing before us. Please know that we sometimes have three meetings going on simultaneously, so that members of the subcommittee do, in fact, read the testimony. We may have a few questions to submit to you for the record. But on behalf of the Chairman and the Subcommittee, I want to thank the panel.

When the Chairman comes back, he's going to start with Panel 3. Thank you very much for what you are doing for our country.

(Whereupon, the subcommittee was in recess.]

Mr. WALGREN. (presiding.) Let me call us to order again, if I might, and call the third panel. As you know, we are operating under a deadline this morning, when we will have an interruption for the services for Senator Pepper that we certainly will hold to. But if we are efficient about it, I think we can get the testimony that each of you has to give, certainly in some full summary form, into the record, and then, if there are points that the Committee would like to raise with you, we could raise them in writing.

So let me introduce for the record Dr. George Millburn, Deputy Under Secretary of Defense, with the Research and Advanced Technology group; George Singley, Director, Research and Technology, with the Office of the Secretary of the Army; Richard Rumpf, the Acting Assistant Secretary of Navy for Research and Engineering and Systems; and General John Douglass, the Acting Director for Science and Technology with the Office of the Assistant Secretary of the Air Force for Acquisition.

Gentlemen, welcome to our proceedings. We have a-If you could shoot for five minutes each, I think we can meet the deadlines that we have to. So let's go through your testimony in the order in which I introduced you to the record, and start with Dr. Millburn. STATEMENTS OF GEORGE P. MILLBURN, DEPUTY DIRECTOR, DE


Dr. MILLBURN Thank you, Mr. Chairman. I am very happy to be here, and with your permission, I will summarize the statement I have submitted for the record.

First I would like to comment on some of the discussion I heard this morning about the fraction of research and development work that's done in the Department. Of the total of approximately 40 billion dollars that's spent in RDT&E, only about six or seven billion dollars, depending on how much we account for the SDIO, actually goes into the science and technology program, which I believe is of primary interest in the technology transfer function. The rest goes into development of specific weapons systems and their testing and their evaluation.

I want to say that the Department is a firm and very enthusiastic supporter of the technology transfer efforts. We have our DOD regulation in effect which requires adherence to the Federal Technology Transfer Act of 1986, and Executive Order 12591. I believe that the Department has a long history of successful technology transfer from defense fields to commercial applications. Perhaps the most outstanding is in the aircraft industry, particularly the development of the jet engines which throughout the years has kept the United States in the forefront of that field.

Materials developments. Also, we have a carbon-carbon material that we developed primarily for use in rocket nozzles. It's now being applied by the commercial firms as brake pads for jetliners. They get two to three times as many landings per brake pad as they used to.

Similarly, historically radio navigation developed by the Defense Department has been widely used in the new global positioning system and it will introduce a whole new capability in that field. In the field of integrated circuits, computers, lasers and the like, we have been, of course, in the forefront.

A very interesting possibility in the future is a red blood cell sub stitute that is being developed by the Navy. If this proves out to be effective, it's certainly going to be very, very useful in the civil field as well as in the military field.

Again, I believe an important area is in training and testing. The Department of Defense probably sponsors and spends more money on training than any other agency in the world, and most of this is readily available to the private sector and has been used very effectively.

In the past we have depended upon our industries to do the technology transfer. About-approximately 75 percent of the total R&D program in the Department is performed by private industry, and we have looked to them to expedite the transfer. Now we're becoming more proactive as a result of the Technology Transfer Act of 1986.

In addition, we have a university research initiative, and in that we have a research initiative program which favors joint efforts between the laboratories, the universities, and other civil endeavors.

We have a policy of releasing all DOD reports which are not restricted for security reasons to the National Technical Information Service, and these are available for purchase by the private sector.

We are in the process of developing a database of areas of technical expertise in our laboratories so that we can refer commercial inquiries to the proper expert within the laboratories.

Just in summary, I would like to say that we firmly believe that the national security requires a strong national economy. The DOD research and development program has provided valuable spinoffs for commercial application, and we are prepared to work with Congress, other Executive branches and industry, to maximize spinoff benefits of our research in order to strengthen the United States competitiveness.

Thank you, Mr. Chairman.
[The prepared statement of Dr. Millburn follows:)

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