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Utilization Reporting
January 23, 2002
To: Grantee/Contractor Organizations Registered
for Interagency Edison
From: Chief, Extramural Inventions and Technology
Resources Branch
Office of Policy for Extramural Research Administration
National Institutes of Health
Subject: Bayh-Dole Invention Utilization Reporting
On July 21,1999 the Extramural Inventions and Technology
Resources Branch of the Office of Policy for Extramural
Research Administration (OPERA), NIH distributed an
e-mail notification to all grantee/contractor organizations
now using the Interagency Edison invention reporting
system. The purpose of the e-mail was to encourage
organizations to practice due diligence in the submission
of invention utilization reports.
Since the e-mail was sent there has been a significant
expression of concern regarding the basis for requiring
utilization reports, the scope of information that
is specified, as well as inquiries as to how the government
will use the information. The reaction has prompted
an extensive analysis of the requirements for reporting
invention utilization, detailed discussions with representatives
of the Association for University Technology Managers
(AUTM) and the Council on Governmental Relations (COGR),
as well as patent counsels from various federal agencies
through the auspices of the Department of Commerce.
While recognizing that utilization reporting is mandated
within the Bayh-Dole regulatory provisions (37 CFR
401.14), the objective of these discussions has been
to iterate the purpose of the report and further standardize
the reporting requirements so as make them more widely
applicable across the government.
The result of the discussions was a proposal put forward
in May 2000 to codify consensus requirements, and
promote consistent utilization reporting to cognizant
federal agencies, either via paper or electronically
using Interagency Edison. The remainder of this memo
will describe the basis in law for utilization reporting,
and introduce the corresponding reporting requirements
that have been discussed with the AUTM Government
Affairs Committee, and COGR Technology Transfer and
Research Ethics Committee. As of May 2001, and based
on suggestions for clarification, the first 8 data
elements in the proposed report were finally agreed
upon by the respective committees.
Within the last several months a ninth element has
been introduced, based on a recommendation by Senator
Ronald Wyden. This recommendation was for the utilization
report to include the commercial name of any product
arising from the invention that has reached the market.
The basis for including this information request is
discussed below.
Reporting on Utilization of Subject Inventions
The principal objective of the Bayh-Dole Act is to
stimulate the commercialization of federally-funded
inventions by ensuring the transfer of federally-funded
technology to the private sector. Provisions of the
Act, as promulgated by implementing regulations at
37CFR Section 401 et seq., allow for retention of
rights by the grantee/contractor organization to any
invention conceived or first reduced to practice through
federal funding agreements (i.e. grants, cooperative
agreements and contracts). This retention of rights,
however, requires pursuit by the organization of the
timely and effective transfer of the technology. Progress
toward this end is formally acknowledged through two
types of reporting activities as outlined in Section
401.14 of 37 CFR. First, language in this section
provides guidance on identification of subject inventions
and subsequent activities leading to transfer of technology,
including timeframe for election of title, acknowledgement
of patent application submission, the need for execution
of a "government confirmatory license" and
inclusion of a "government support clause"
within the patent text.
The second type of reporting requirement, "Reporting
on Utilization of Subject Inventions" is discussed
at Section 401.14(h). While the paragraph does define
the types of information items that pertain to the
utilization report, the purpose of the report is not
indicated in the regulation. The implication however
is that reporting of the status of licensing and compensation
received from federally-funded inventions provides
an indicator of the success of the Bayh-Dole Act.
Consistent with this notion, the NIH worked with AUTM
and COGR representatives during the design phase of
the Edison system (http://edison.gov) , in 1994, in
an effort to define the scope of the utilization report.
The essence of the report as defined in Edison, and
now in Interagency Edison (http://iedison.gov) , is
a "snap shot" of the utilization activity
within a given fiscal year. So long as the fiscal
year for the each affected invention is indicated,
respective records can be archived and tracked as
a cumulative profile of each invention.
Recent discussions with COGR and AUTM have reiterated
the overall purpose of the utilization report. What
with the increased scrutiny that federally-funded
intellectual property is receiving from within the
government and the private sector, it appears crucial
to emphasize the benefits of the transfer of technology
that derives from subject inventions. Changes in the
information requirements that are now being adopted
provide for further flexibility in reporting with
emphasis on indicators of progress in the transfer
of technology, rather than maintaining an exhaustive
set of information about each subject invention.
Proposed Utilization Reporting Requirements
Based on language in 37CFR 401.14(h) and additional
subsections, as well as recurring requests by government
regulatory authorities (e.g. GAO and OIG), the following
reporting requirements are being adopted. The 1994
version of the requirements that were implemented
as part of Edison, and have been adopted by all 16
agencies involved in Interagency Edison, included
an indicator of the relevant fiscal year plus 8 information
items for each applicable subject invention. The current
changes affect the content of 8 of the 9 items, and
one has been deleted. In addition a new item has been
added. The entire set of proposed requirements with
citation of the relevant CFR paragraphs and justifications
follows.
1. Frequency of Utilization Reporting
It is proposed that the utilization report be submitted
annually. While the provision does allow for submissions
less frequent than annually, in deference to annual
cycles for governmental legislative concerns and business,
annual reporting seems justified, and not at odds
with language in 37CFR 401.14(h).
"The grantee institution/contractor agrees to
submit on request periodic reports no more frequently
than annually on the utilization of a subject invention
or on efforts at obtaining such utilization that are
being made by the grantee institution or its licensees
or assignees...."
A related issue involves the timing of receipt of
the annual report. In the original Edison design,
the decision was made to standardize the submission
according to the government fiscal year. Accordingly,
it was prescribed that the utilization report should
be submitted at the end of the government fiscal year,
September 30. This decision was made to acknowledge
the principal purpose of the information as part of
reports to various Congressional oversight authorities.
When the General Accounting Office or the Office of
Inspector General requests such information of government
agencies, the format of the data is routinely specified
according to government fiscal year. Thus, capturing
the raw data from grantee/contractor organizations
on a similar basis greatly facilitates analysis and
preparation of reports.
It has been pointed out on many occasions since the
original introduction of this requirement that adhering
to the government fiscal year for reporting of utilization
is frequently at odds with the fiscal year by which
grantee/contractor organizations collect and analyze
records. To encourage compliance in light of this
potential conflict, the requirements have been relaxed.
It is now proposed that instead of being expected
to conform to the government fiscal year as an annual
reporting cycle, grantee/contractor organizations
may report for the most recent 12-month period of
their choosing.
2. An indication of the status of development of any
products related to a particular invention.
An obvious indicator of the success of the Bayh-Dole
Act's objective is provided by the status of the development
of any products related to a particular subject invention.
It would appear to be with this outcome in mind that
37CFR 401.14(h) specifically requires this type of
information: "Such reports shall include information
regarding the status of development...." In an
attempt to standardize the responses to this request,
the original requirement as presented in the Edison
system provided a pick list of terms including: Basic
R and D, Pre-clinical, Prototype, FDA (NDA/PLA), Clinical,
Market.
In revisiting this list it has become apparent that
such milestones are weighted toward the development
of pharmaceuticals or other biomedically-related subject
inventions, consistent with the initial deployment
of Edison as a system to support NIH funded inventions.
After much discussion to both define milestones that
are more generally applicable to any subject invention,
as well as to recognize the difficulties inherent
in having to monitor the progress of the development
of products through multiple milestone events, it
was decided that the purpose of the regulation could
still be aptly met with a much simplified set of milestones.
Accordingly, the proposed status of development stages
will be: not licensed, licensed, and commercialized.
Extensive help text has also been crafted to assist
with explanations of these generic indicators of progress
in the transfer of technology. To further simplify
this task, the user will be requested to provide only
the latest stage of development, rather than having
to maintain records to indicate when each stage was
achieved.
3. The dollar amount of income received from a particular
invention.
This requirement can also be found in 37CFR Section
401.14(h): "...Such reports shall include information
regarding... gross royalties received by the grantee
institution/contractor...." The only distinction
that has been made in the current requirements relative
to what was agreed upon in 1994 is a more all-inclusive
reference to potential sources of income beyond just
royalties. Specific mention is made of option agreements
in light of the growing relevance of this alternative
to standard royalties-based licensing agreements.
The request for information will state: "In the
designated reporting period, what was the total income
received as a result of license or option agreements?
Do not include specific patent costs
reimbursement."
4. Date of first commercial sale or use of any products
that result from a particular invention.
Experience from licensing professionals suggest that
it is difficult to accurately identify the exact date
of first commercial sale or use as is specified in
37CFR Section 401.14(h): "...Such reports shall
include information regarding... date of first commercial
sale or use...." In an effort to limit inaccuracy,
while still having this type of information as a further
indicator of progress in the transfer of technology,
the proposed requirement is limited to providing the
calendar year of first commercial sale. It is acknowledged
that this does to some extent compromise the degree
of detail that might be rendered. However, by lessening
the requirement a greater degree of compliance is
anticipated.
5. Requests for waiver of the U.S. manufacture requirements.
In addition to the 4 elements provided for in Section
401.14(h) as described above, additional information
relating to invention utilization is specified in
other paragraphs of 37CFR Section 401.14. Section
401.14(i) refers to a preference for licensing to
domestic manufacturers. As stated:
"Notwithstanding any other provision of this
clause, the grantee institution agrees that neither
it nor any assignee will grant to any person the exclusive
right to use or sell any subject inventions in the
United States unless such person agrees that any products
embodying the subject invention or produced through
the use of the subject invention will be manufactured
substantially in the United States. However, in individual
cases, the requirement for such an agreement may be
waived by the federal agency upon a showing by the
grantee institution or its assignee that reasonable
but unsuccessful efforts have been made to grant licenses
on similar terms to potential licensees that would
be likely to manufacture substantially in the United
States or that under the circumstances domestic manufacture
is not commercially feasible."
This provision argues for the reporting of information
to indicate that the grantee/contractor organization
has taken steps to recognize the importance of domestic
manufacturing in the licensing of products. The proposed
requirement has not changed substantively from the
version that was included in the original Edison implementation.
Recommendations from COGR and AUTM have resulted in
changing the wording of this item so as to clarify
interpretation of the requirement. The exact wording
that is being implemented is: "In the designated
reporting period, did the grantee organization/contractor
or any of the exclusive licensees request a waiver
of the U.S. manufacturing requirements? If yes, how
many such waivers were obtained?
6. Licenses and/or options executed by businesses
with less than 500 people at the time the license
is executed.
A preference for the transfer of technology to the
small business community is also represented in 37CFR.
Section 401.14(k) offers special provisions for grants/contracts
with Non-profit organizations. Paragraph (k.4) specifies
that:
"The Non-Profit organization will make efforts
that are reasonable under the circumstances to attract
licensees of subject invention that are small business
firms and that it will give a preference to a small
business firm when licensing a subject invention if
the grantee institution determines that the small
business firm has a plan or proposal for marketing
the invention which, if executed, is equally as likely
to bring the invention to practical application as
any plans or proposals from applicants that are not
small business firms; provided, that the grantee institution
is also satisfied that the small business firm has
the capability and resources to carry out its plan
or proposal. The decision whether to give a preference
in any specific case will be at the discretion of
the grantee institution. However, the grantee institution
agrees that the Secretary may review the grantee institution's
licensing program and decisions regarding small business
applicants, and the grantee institution will negotiate
changes to its licensing policies, procedures, or
practices with the Secretary when the Secretary's
review discloses that the grantee institution could
take reasonable steps to implement more effectively
the requirements of this paragraph (k)(4)."
The only substantive change to this requirement relative
to what has appeared in Edison and Interagency Edison
since 1995 is the added recognition of options as
a type of agreement that could be entered into with
small businesses. Wording for the request has been
modified to reflect this possibility. The exact wording
of the requirement is: "In the designated reporting
period, how many licenses and/or options of any type
were awarded to small businesses (< 500 employees)?"
Help text that has been written to accompany this
item indicates that while any particular business
may exceed small business status during the course
of the license, the reporting of this change is not
required.
7. Exclusive licenses and/or options that result from
a particular invention.
This item is the first of two being proposed that
are not based on specific requirements stated within
37CFR Section 401.14, but on recommendations that
stem in part from a Congressional inquiry held in
1993 that involved invention reporting compliance
practices at the NIH. As one outcome of the inquiry,
the Congressional committee requested information
of the NIH as to the numbers of both exclusive and
non-exclusive licenses that had been executed by grantee/contractor
organizations in relation to federally funded inventions.
The inclusion of this information as part of the Edison
implementation in 1994 was acknowledged by both COGR
and AUTM. The request for this data has been retained
in light of the Congress' continued interest in licensing
statistics as an indicator of Bayh-Dole success. In
an effort to keep this information within the "snap-shot"
paradigm, grantee/contractor organizations will not
be expected to indicate licenses that have expired,
nor distinguish between full licenses and option agreements.
8. Non-exclusive licenses and/or options that result
from a particular invention.
This item represents the companion to information
related to numbers of exclusive licenses and/or options
discussed in #7, above. The same parameters for reporting
of non-exclusive licenses and/or option agreements
will pertain.
9. Gross dollar sales of all products resulting from
a particular invention.
As was indicated for the exact date of first commercial
sale, licensing professionals similarly acknowledged
that it is not feasible to identify the gross dollar
sales of all products resulting from a particular
invention. They suggested that most licensees consider
such information confidential. In recognition of this
fact, and the consequent likelihood that data would
not be accurate, if reported at all, the decision
was made to omit this requirement. Further, it was
agreed that omission of this question does not detract
significantly from the overall objective of the utilization
report. Gross sales is but one of several indicators
of the transfer of technology to the private sector.
10. Commercial name of any product arising from the
invention.
Recently, there has been an expressed interest by
congress to be able to determine a relative rate of
return on the investment of taxpayer's resources.
In the case of intellectual property that has been
derived using federal funds, one way in which the
value of the investment can be recognized is through
the identification of specific products that result.
It is not possible to conduct a complete analysis
of rate of return for any product of this type due
to the proprietary nature of the financial information
involved [See 37 CFR Section 401.8(b)]. Income attributable
to royalties is considered proprietary and therefore
not subject to public release by companies that have
developed, manufactured or marketed a product. As
an alternative, one can at least see the value of
the investment through the identification of important
healthcare-related products that have resulted. Toward
this end, and in deference to recommendations made
by congress, the utilization report has been modified
to now request the commercial name of any FDA-approved
product arising from the invention that has reached
the market.
In summary, these nine information items account for
the entire content of the invention utilization report
have been accepted and implemented through Interagency
Edison for compliance by the extramural grantee/contractor
organization community. In the earliest information
requirements definition phase of the Edison system
design, six years ago, the proposed amount of information
was much more extensive, including names of individual
licensees, duration of license agreements, the existence
of sub-licensing agreements, royalty percentages,
etc. This approach was not taken to honor a consensus
that was arrived upon through discussions with grantee
organization representatives of AUTM and COGR. The
point of view expressed by these organizations, with
concurrence by NIH, was that unless the requirements
were clearly stated in the regulations, or unless
the NIH could adequately justify the need and routine
use of information, the submission of that information
was not warranted. The current changes in utilization
reporting continues in the same vein. The re-evaluation
of the requirements has led to more flexibility in
the way that information can be reported, and a reduction
in the amount of information requested.
The burden associated with gathering and providing
utilization information as part of Bayh-Dole Act-related
reporting is fully recognized by federal agencies.
Frequent audits place agencies too in the position
of having to devote significant resources to administer
invention utilization records. The apparent escalation
in concern over utilization stems from impressions
that future government audits could well focus on
invention utilization information: data that document
the success of the Bayh-Dole Act. As a critical step
in the formal adoption of these requirements, it is
crucial for grantee/contractor organizations to devote
attention and resources to utilization reporting.
As the agency that first developed Edison, and now
administers the Interagency Edison system, we at the
NIH want to work with grantee/contractor organizations
now in anticipation of congressionally-mandated requests
for invention utilization information. Consistent
with arrival at a broad consensus by the grantee/contractor
organization community, NIH has worked with the Department
of Commence to achieve formal adoption of the standardized
set of requirements by all cognizant government agencies.
APPROVED CHANGES IN UTILIZATION REPORTING REQUIREMENTS
|
Previous Implementation |
Approved/New Implementation |
1 |
Report according to the government
fiscal year (Oct. 1 - Sept. 30) |
Report according to grantee/contractor-defined
12-month reporting cycle |
2 |
Latest stage of development
of any product arising from any Invention Disclosure
Number/patent: Basic R and D/Pre-clinical/Prototype/FDA
(NDA/PLA) /Clinical /Market |
Please indicate the latest
stage of development of any product arising
from this invention, according to the following
categories: Not Licensed/Licensed/Commercialized |
3 |
Total income from all licenses
under this Invention Disclosure Number/Patent(s): |
In the designated reporting
period, what was the total income received as
a result of license or option agreements? Do
not include specific patent costs reimbursement. |
4 |
Date of the first commercial
sale of any product arising from any Invention
Disclosure Number/patent: |
If any product arising from
this invention has reached the market, what
was the calendar year of the first commercial
|
5 |
How many of the exclusive licenses
that have been awarded do not have a domestic
manufacturing provision? |
In the designated reporting
period, did the grantee organization/contractor
or any of the exclusive licensees request a
waiver of the U.S. manufacturing requirements?
If yes, how many such waivers were obtained?
In the designated reporting period, did the
grantee organization/contractor or any of the
exclusive licensees request a waiver of the
U.S. manufacturing requirements? Yes /No. If
yes, how many such waivers were obtained? |
6 |
How many licensees are small
businesses? (< 500 employees) |
In the designated reporting
period, how many licenses and/or options of
any type were awarded to small businesses (<
500 employees)? |
7 |
How many exclusive licenses
have been awarded in any field of use or territory? |
In the designated reporting
period, how many exclusive licenses and/or options
have been awarded? In the designated reporting
period, how many exclusive licenses and/or options
have been awarded? |
8 |
How many non-exclusive licenses
have been awarded? |
In the designated reporting
period, how many non-exclusive licenses and/or
options have been awarded? |
9 |
Gross dollar sales of all products
under this Invention Disclosure Number: |
OMIT |
10 |
Not applicable |
Please provide the commercial
name of any FDA-approved products, utilizing
this invention, that have reached the market
during the designated reporting period. |
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