Statement
of
Benjamin
H. Wu
Deputy
Under Secretary for Technology
Technology Administration
Before the
Committee on Government
Reform
Subcommittee on Technology
and Procurement Policy
House of Representatives
“Intellectual Property and
Government R&D”
TESTIMONY OF
BENJAMIN H. WU
DEPUTY UNDER SECRETARY FOR
TECHNOLOGY
BEFORE THE
SUBCOMMITTEE ON TECHNOLOGY AND
PROCUREMENT POLICY
HOUSE COMMITTEE ON GOVERNMENT REFORM
Good morning, Chairman Davis and Members of the Subcommittee. I am Ben Wu, Deputy Under Secretary for Technology at the Department of Commerce and I am pleased to be here with you today to discuss the Department’s efforts on government research and development (R&D) and intellectual property rights – especially relating to the transfer of government technology to the private sector for commercialization. This issue is particularly important as our nation is marshaling our R&D resources towards our national priority of protecting our homeland security and defense.
In my testimony, I will review the Department of Commerce roles and responsibilities in technology transfer, the importance of intellectual property rights in creating greater innovation partnerships with the Federal government, recent technology transfer laws and its impact on intellectual property rights, and offer some suggestions regarding the future of technology transfer.
The Department of Commerce Roles and
Responsibilities in Technology Transfer
The Department of Commerce’s Technology
Administration has specific roles and responsibilities in the area of
technology transfer, particularly through two of its component bureaus: the
Office of Technology Policy and NIST.
These functions are detailed below.
Technology
Administration, Office of Technology Policy (OTP)
The
Office of Technology Policy plays a significant role in the development,
implementation, and analysis of technology transfer policies and practices, in
close consultation with Congress and other agencies. As the Administration's focal point for
discussion of technology transfer issues, OTP also coordinates and works
closely with the Inter-Agency Working Group on Technology Transfer (IAWG). This group is made up of technology transfer
practitioners and coordinators from all federal agencies with extramural
research programs. With OTP leadership,
the IAWG discusses a wide range of agency activities and issues related to
technology transfer, recommends policies related to technology transfer, and
coordinates the submission of data for congressional reports.
OTP's statutory responsibilities include:
- Assisting agencies in the implementation
of relevant laws, including the Bayh-Dole Act and the Stevenson-Wydler
Act;
- Developing policies and issuing
regulations governing the ownership of patents arising from federally
funded research and the licensing of federally owned inventions (see
implementing arrangements in 37 CFR Parts 401 and 404); and
- Compiling and analyzing information and
reporting on agency implementation of technology transfer mechanisms such
as Cooperative Research and Development Agreements (CRADA) and patent licenses.
Through FY 2000, the Office of Technology Policy was responsible for producing a biennial report to Congress on the technology transfer activities of all federal agencies. Requirements in the Technology Transfer Commercialization Act of 2000 (TTCA) shifted this reporting responsibility to an annual basis. Beginning in the current fiscal year and based on the law, each agency with a federal laboratory must produce with its budget submission an annual report on its technology transfer activities and outcomes. In addition, the Secretary of Commerce is required to prepare a government-wide summary report, based on agency submissions.
The Office of Technology Policy is responsible for: (1) coordinating the submission of the Department of Commerce’s annual technology transfer report, and (2) producing the Secretary’s summary report to the President and the Congress each year after the President's budget request for the next fiscal year becomes public.
In the role of coordinator and leader of the IAWG, OTP has crafted administration support for a number of technology transfer-related provisions and legislation, including the recently passed Technology Transfer Commercialization Act of 2000. As the Administration considers ways to improve the efficiency and speed of technology transfer, it is important to consult the technology transfer practitioners throughout the government, as well as their counterparts in industry and universities. TA's experience and relationship with the IAWG has been, and will no doubt continue to be, a strong asset in organizing such consultations, identifying recommendations, and prioritizing appropriate administrative or regulatory action.
Technology Administration, NIST
NIST’s
mission is to develop and promote measurement, standards, and technology to
enhance productivity, facilitate trade, and improve the quality of life. The NIST laboratories develop and disseminate
measurement techniques, reference data, test methods, standards, and other
infrastructural technologies and service that support U.S. industry, scientific
research, and the activities of many federal agencies. NIST works directly with industry partners
(and consortia), universities, associations, and other government agencies, and
utilizes diverse mechanisms to transfer the knowledge and technologies that
result from its laboratory research.
In
keeping with its mission, NIST’s technology transfer activities are focused on
pursuing the most efficient and effective path to utilization and
commercialization, which often necessitates the broad dissemination of research
results, rather than the creation of intellectual property and associated
licenses.
Activities
carried out by NIST related to technology transfer include:
·
NIST’s Office of Technology Partnerships manages NIST’s formal
technology transfer activities, such as CRADA participation and the protection
and licensing of intellectual property.
·
Pursuant to the Technology Transfer Commercialization Act of 2000, NIST
will report on its technology transfer activities annually to the Technology
Administration’s Office of Technology Policy.
This information will be incorporated into a report submitted with the
Department’s annual budget documents. A
copy of NIST’s FY 2001 report submission is attached, for your
information.
·
NIST works closely with the Office of Technology Policy on other
technology transfer-related issues, through participation in the IAWG, the
Federal Laboratory Consortium for Technology Transfer (FLC), and informal
consultation.
The
Importance of Intellectual Property Rights in Creating Greater Innovation
Partnerships with the Federal Government through Technology Transfer
Mr. Chairman, I appreciate your review of this important issue. As you have stated before, since government has ceased to be the sole driving force in United States R&D, we need to ensure that our Federal policies and procedures must reflect a growing government partnership innovation role.
Indeed, for many decades, R&D was a decidedly government affair. That world as we knew it is now gone and has been replaced by a global science and technology enterprise, dominated by the private sector, generating new developments at an accelerating rate, changing the very foundations on which we build our economy and our security.
Driven by the Cold War and the Space Race, in the 1960’s, Federal R&D investments exceeded industry R&D by a factor of 2 to 1. Today, things are quite different. U.S. industry now outspends the Federal government on R&D by more than 2 to 1, reversing the Cold War/Space Race-era ratio.
As
a result of these trends, Federal government funding of R&D, while still
very important, is no longer the primary driver of United States science and
technology investment. Thus, the primary
focus on how to improve the overall effectiveness of U.S. R&D, and the broader
environment for innovation must shift from a focus on Federal science and
technology programs to the broader view of U.S. R&D and innovation.
The drivers of technological advancement increasingly reside in the private sector. As a result, this has significant implications for policies related to our economy. We must pay greater attention to how technology gets developed and how the results of research and technology development make their way to the marketplace or get deployed throughout the economy – including the important impact of intellectual property rights in these priorities.
Technology transfer tools such as Cooperative Research and Development Agreements (CRADA) and patent licensing are relative simple ways for U.S. businesses to develop Federally funded innovations into commercially useful products and processes. Congress created these tools in the 1980’s at a time of unprecedented technological challenge to U.S. industry, but they are useful even in today’s dynamic technology markets.
The manner in which the Federal government works with the private sector in developing and diffusing technologies changed in fundamental ways with the passage of the Bayh-Dole, Stevenson-Wydler, and Federal Technology Transfer Acts. The agencies and the private sector began to find ways to partner in the development of technologies that both furthered agency missions and advanced the competitiveness of industry and the strength of our economy.
Federal technology transfer has helped
develop everyday products such as stronger and lighter materials for more fuel
efficient cars, the Global Positioning System (GPS) that offers precise
pinpoint precise locations for navigation on the seas or on the highways, and
the HIV home test kit that allows people to conduct a preliminary test in the
privacy of their own home. These are
just a few of the many hundreds of examples of technologies that the Federal
government originally held intellectual property title, and either licensed out
the technology or have collaborated with industry to commercialize. These examples demonstrate the power of
Federal technology transfer stimulating our American economy.
Recent Technology Transfer Laws and Intellectual Property Rights
Congress has a rich and long history of promoting
technology transfer. Federal technology
transfer began with the Stevenson-Wydler Technology Innovation Act in 1980
(P.L. 96-480). The Stevenson-Wydler Act
required Federal laboratories to take an active role in partnering with
industry and established technology transfer offices at all major Federal
laboratories.
That landmark legislation was expanded
considerably with the Federal Technology Transfer Act of 1986 (P.L. 99-502) and
the National Competitiveness Technology Transfer Act of 1989 (P.L.
101-189). The Federal Technology
Transfer Act of 1986 allowed a government-owned, government-operated
laboratory, which we know as a GOGO, to enter into a Cooperative Research and
Development Agreement (CRADA) with industry, universities, and others. A CRADA allows a laboratory and an industrial
partner to negotiate patent rights and royalties before they conduct joint
research. This gives the company patent
protection for any inventions and products that result from the
collaboration. This patent protection
provides an incentive for the companies to invest in turning laboratory ideas
into commercial products.
A CRADA also provides a Federal laboratory,
in fulfilling its mission, with valuable insights into the needs and priorities
of industry, and with the expertise available only in industry. The National Competitiveness Technology
Transfer Act of 1989 extended the CRADA authority to a government-owned,
contractor-operated (GOCO) laboratory such as the Department of Energy
labs. It also protected information and
innovations, brought into and created through a CRADA, from disclosure.
Since 1986, over 2,000 CRADA’s have been
signed, resulting in the transfer of technology, knowledge, and expertise back
and forth between our Federal laboratories and the private sector. Under current law, the work done under a
CRADA must not detract from the mission responsibilities of a Federal
laboratory.
Yet despite the success of the CRADA
legislation, there were existing impediments for companies that Congress felt
needed to be addressed. The law was
originally designed to provide a great deal of flexibility in the negotiation
of intellectual property rights to both the private sector partner and the
Federal laboratory. However, it
provided, little guidance to either party on the adequacy of those rights a
private sector partner should receive in a CRADA.
Agencies were given broad discretion in the
determination of intellectual property rights under CRADA legislation. This often resulted in laborious negotiations
of patent rights for certain laboratories and their partners each time they
discussed a new CRADA. With options
ranging from assigning the company full patent title to providing the company
with only a nonexclusive license for a narrow field of use, both sides had to
undergo this negotiation on the range of intellectual property rights for each
CRADA.
This uncertainty of intellectual property
rights, coupled with the time and effort required in negotiation, hindered
collaboration by the private sector with Federal laboratories. The fact is companies are reluctant to enter
into CRADA’s, or equally important, to commit substantial investments to
commercialize CRADA inventions, unless they have some assurance they will
control important intellectual property rights.
The enactment of the National Technology
Transfer and Advancement Act of 1995 (Public Law 104-113) enhanced the
possibility of commercialization of technology and industrial innovation, by
providing assurances that sufficient rights to intellectual property will be
granted to the private sector partner with a Federal laboratory. The Act guarantees to the private sector
partner the option, at minimum, of selecting an exclusive license in a field of
use for a new invention created in a CRADA.
The company would then have the right to use the new invention in
exchange for reasonable compensation to the laboratory.
In addition, the Act addresses concerns about
government rights to an invention created in a CRADA. It provides that the Federal government will
retain minimum statutory rights to use the technology for its own
purposes.
Another
one of the most successful legislative frameworks for advancing Federal
technology transfer has been the Bayh-Dole Act of 1980 (P.L. 96-517, Patent and
Trademark Act Amendments of 1980). The Bayh-Dole Act permits universities,
not-for-profit organizations, and small businesses to obtain title to
inventions developed with Federal 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.
Critical pressures originally prompted the passage
of the Bayh-Dole Act. Prior to its
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, the Association of University Technology Managers (AUTM) conducted a
study on the effect of the Bayh-Dole Act.
AUTM said that the Bayh-Dole Act 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.
Nevertheless, both past and prospective
private industry partners voiced their concerns regarding the Federal
technology licensing process. The
private sector has already demonstrated a strong interest in the strategic
advantages of partnering with a Federal laboratory through a Cooperative Research
and Development Agreement (CRADA) or through the licensing of Government-owned
technology.
Companies were deterred, however, by the
delays and uncertainty often associated with the lengthy Federal technology
transfer process. These procedural
barriers and delays could increase transaction costs and are often incompatible
with the private sector’s need for a swift commercialization calendar. The regulations governing Federal technology
transfer also made it difficult for a Government-owned, Government-operated
laboratory (GOGO) to bring existing scientific inventions into a CRADA even
when its inclusion would create a more complete technology package.
A GOGO did not have the flexibility that
small business and non-profits had in managing their inventions under the
Bayh-Dole Act. Also, a GOGO, unlike a
GOCO, faced statutory notification provisions when granting exclusive licenses,
and more importantly, it could not include existing inventions in a CRADA.
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, Congress
believed it 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.
As a
result, the Technology Transfer Commercialization Act of 2000 (P.L. 106-404)
was enacted. The law sought to remove
the procedural obstacles and, to the greatest extent possible within the pubic
interest, the uncertainty involved in the licensing of Federally patented
inventions created in a Government-owned, Government-operated laboratory, by
applying the successful Bayh-Dole Act provisions to a GOGO. The
ability of the United States to compete 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 – is being created.
Conclusions
Successful technology transfer is a
constantly evolving effort. In its
biennial technology transfer report entitled Tech Transfer 2000, the
Department of Commerce’s Office of Technology Policy found the following:
- Managing
intellectual property must become more of an agency priority;
- More help is
needed to make it easier for industry partners to find the right laboratory;
- A CRADA can
be used effectively in many different circumstances and is an extremely
flexible instrument; and
- Measures of
success in technology transfer must be developed by agencies in
partnership with the business community.
Additionally, Arden Bement, the Director of NIST, performed a recent technology transfer review at his laboratory to determine where NIST could streamline or improve the processes for technology transfer. For example, NIST is considering: (1) if there is a need to clarify our licensing regulations, particularly with regard to definitional issues associated with the “substantially manufactured” and “reasonable and necessary” requirements; (2) establish time limits on the appeals process that both preserve the right of appeal of an aggrieved party, while at the same time preserving the ability of an agency to proceed with the granting of an exclusive license; and (3) In addition, efforts already are underway, as a result of the Technology Transfer Commercialization Act of 2000 (TTCA), to improve the annual reporting procedures of agencies. This also provides an opportunity for agencies to identify the efficacy of their technology transfer programs, and provide information demonstrating how the technology transfer tools employed support each agency's unique mission. Of course, we have to remember that the preparation of reports is a time-consuming task. We need to avoid imposing too much detail requirements; otherwise laboratory and management personnel are diverted from fulfilling the agency’s key mission.
For NIST, technology transfer activities are focused on pursuing the most efficient and effective path to utilization and commercialization, which often necessitates the broad dissemination of research results, rather than the creation of intellectual property and associated licenses. To reflect the diverse ways in which NIST transfers technology and knowledge to its customers, NIST’s FY 2001 report provides data for Cooperative Research and Development Agreements (CRADA), invention disclosures, licenses, and license income, but also for other important tools utilized by the laboratories, such as Standard Reference Materials available, technical publications produced, items calibrated, and guest researcher collaborations.
Thank you, Mr. Chairman. The Department of Commerce plays a
significant role in promoting effective technology transfer and I appreciate
the opportunity to present our views today on R&D and intellectual property
rights from a technology transfer viewpoint.
I will be pleased to answer any questions that you and the other members
of the Committee may have.
DEPUTY UNDER SECRETARY FOR
TECHNOLOGY
U.S. DEPARTMENT OF COMMERCE
TECHNOLOGY ADMINISTRATION
BENJAMIN H. WU
Benjamin H. Wu was sworn in as Deputy Under Secretary for Technology at the U.S. Department of Commerce on November 6, 2001. In this capacity, he works along side Under Secretary Phillip J. Bond in advising Commerce Secretary Don Evans in science and technology policies to maximize technology's contribution to America's economic growth.
The Office of the Under Secretary for Technology supervises policy development and direction among the Office of Technology Policy (OTP), the National Institute of Standards and Technology (NIST), the National Technical Information Service (NTIS), the Office of Space Commercialization (OSC), and other areas.
Prior to joining Commerce, Mr. Wu held senior staff positions in the U.S. Congress for thirteen years. Most recently, from 1995 until his current appointment, Ben led on technology issues with the Technology Subcommittee of the House Science Committee. He began his Congressional service in 1988, having served as Counsel to Congresswoman Constance A. Morella of Maryland and on the Science Committee, first serving on the Investigations and Oversight Subcommittee staff in 1993.
Ben has extensive experience working on issues affecting United States technology and competitiveness policy. Specifically, he focused on information technology, biomedical technology, and technology transfer policy. He was the primary congressional staff member for legislation affecting federal intellectual property and federal technology transfer. Additionally, Ben worked on Technology Administration issues since TA's inception in 1989, with particular emphasis on the National Institute of Standards and Technology. Ben was also the most senior member and the lead Committee staff of the House Y2K Task Force that directed congressional efforts to correct the Year 2000 computer problem.
Ben received a Bachelor of Arts from New York University in 1985 and a Juris Doctor from the University of Pittsburgh in 1988.