09/20/93 13:55 913 864 5272 RGSPS/RSGA 002 From: KU Lawrence 1.SMTP."jcrowley@MIT.EDU" To: KU Lawrence 1.RGSPS (CCROSS) Date: 9/17/93 5:30 pm Subject: Re: Bayh-Dole Status Received: from TMS-E40-PORT-5.MIT.EDU by MIT.EDU with SMTP id AA12158; Fri, 17 Sep 93 17:57:52 EDT > X-Mailer: WordPerfect Office 4.0 > Date: Fri, 17 Sep 1993 13:42:41 - 0600 > From: CCross@POBOX.CC.UKANS.EDU > To: jcrowley@EAGLE.MIT.EDU > Subject: Bayh-Dole Status > > > > > > > > > > > We have a meeting next Tuesday with E. Stanley (Staff) > in Dole's office regarding two issues (Crime Bill/IDC and > Bayh-Dole). Could you tell me the most current info. on > MIT's position vis-a-vis NIST-ADP. In Boulder we talked and > you indicated that MIT might go forth with the suit; would > other such as Maryland go with you. Will your actions > parallel ACE or proceed them. > > We would like to be clear with Stanley about where the > situation is and what we might be asking Dole to do. > > Thanks in advance for the info. We'll let you know. CAC > ***** Carolyn: I will fax to you a set of briefing documents and then let's talk on Monday. Shelly Steinbach of ACE spoke recently talked with David Wilson of Dole's staff and found interest. He would like to talk with you before you go in. His number is 939-9355. I'm copying Karen Hersey, MIT's intellectual property officer. You and she also may want to talk. In short, we have provided NIST with a draft amendment which has been endorsed by COGR last week and are awaiting feedback. Meanwhile, House and Senate staff have some language in hand which I have not seen and which does not appear to be fully responsive to our concerns. We may yet need Senator Dole's assistance. Thank you for the note. Talk to you on Monday. Jack CC: KU Lawrence 1.SMTP ("HERSEY@MIT.EDU") handwritten on page: 9/20/93 JERRY - I got this message from Jack Crowley at MIT this morning. CAC. 09/20/93 13:56 913 864 5272 RGSPS/RSGA 003 09/17/93 16:33 202 789 1830 M.I.T. WASHINGTON --> RGSPS/RSGA 005 WHY SHOULD UNIVERSITIES OWN INTELLECTUAL PROPERTY? Prior to 1980, patents resulting from Federally sponsored research were owned by the government and were essentially in the public domain. The government track record in technology transfer was dismal. The Bayh-Dole Act of 1980 (PL 96-517) was passed to address the following problems: * Academic technology was not being used by industry. * A. 1968 study showed that no drug on which the government held the patent had ever been commercialized. * By 1978 the government held 28,000 patents; only 5% had ever been licensed. * In most cases, placing research results with commercial potential in the public domain tends to destroy intellectual property, because no one will make the substantial investment necessary to bring a product to the market. The Bayh-Dole Act allowed universities, non-profit organizations, and small business firms to retain title to intellectual property they developed with federal support. It is also better for universities to own patents developed with private support. The following are among the reasons. * Owning the technology provides an incentive to the inventor, the inventor's department or laboratory, and to the inventor's university to explore the commercial potential of the research they carry out and to take it far enough along the road that a patent can be obtained. Royalty income and/or equity participation in start up companies provide financial resources to universities; although rarely large, they are important because they are flexible. * Universities are obligated to disseminate research results both by academic tradition and by Federal regulations relating to tax exempt institutions. They cannot, therefore, conduct research in the same manner as a private laboratory that accepts work for hire and provides the contracting company with confidential results and ownership in intellectual property. Especially where the public interest requires that a basic patent be made broadly available, a university provides an effective vehicle for licensing in the public interest. Companies owning basic patents are unlikely to license them in this manner. There are numerous examples of companies patenting basic technology and making it available only at high license fees. The universities license in the public interest of seeing the technology developed. They usually retain "march in" rights to be excercised if the licensee does not make progress in developing a product after a period of time (usually five years). University ownership of inventions is necessary in order to control patenting and ensure that any licenses granted on an exclusive basis contain due diligence requirements that will preclude suppression of the technology. September 10, 1993 09/20/93 13:57 913 864 5272 RGSPS/RSGA 004 09/17/93 16:34 202 789 1830 M.I.T. WASHINGTON --? RGSPS/RSGA 006 * University ownership minimizes conflicts between sponsors on related research. The mode of research at universities involves multiple sponsorship, including core support of major laboratories and programs by the Federal government, with both basic and applied research funding from industrial sponsors. Research funded by the government is subject to Federal patent legislation which requires that title to inventions conceived in whole or in part with Federal funds must be retained by the university or assigned to the government, and may be transferred to third parties only with government approval. If the university gave up title to industrial sponsors, the sorting of patent rights would be difficult; industrial research would have to be segregated from that sponsored by the Federal government and a research team could not work on both without creating conflicts in patent rights. When the university retains title, these potential conflicts are minimized and the university can more effectively resolve conflicts and recognize the equities of multiple sponsors through licensing mechanisms. * The basic tenet of both U.S. Patent and U.S. Copyright law provides that ownership of discoveries and originally written works resides in the creator. Severing of patent ownership and licensing from the creators removes any incentives for university scientists to invent, disclose and cooperate in the patenting process. Involvement in the patenting process is an important link between universities and industry. Each learns from the other through the interaction of patent licensing. A link is forged that is often continued in the form of ongoing research activities. The company gains knowledge needed to get to the market faster and with a better product. The faculty inventor gains real world industrial experience that is passed on to students. The output of most university research is a raw form which needs substantial further refinement and development to be technically useful. Therefore a relationship between the company and the university inventor is vital if a company is to continue with effective development of basic inventions and this can best be established through the licensing of university inventions to an industrial sponsor. * Inventions are a by-product and not the purpose of university research. They may result at any time during the course of an on-going research effort which, over a period of time, may involve many sponsors, both Federal and private, as well as the use of university resources. The sponsor at the time the invention is made may have supported only the most recent phase or only one aspect of the over-all research program. For that reason, it is M.I.T.'s view that the sponsor at that particular point in time has not "paid for" full ownership and title in the invention and that the rights of the sponsor can be equitably and fairly recognized in most situations by providing the sponsor the exclusive right to use that invention in the field of the sponsor's interest. This should be done at a reasonable cost. September 10, 1993 09/20/93 13:57 913 864 5272 RGSPS/RSGA 005 09/17/93 16:34 202 789 1830 M.I.T. WASHINGTON --? RGSPS/RSGA 007 * The relationship between the university and an industrial research sponsor will be for a limited term whereas the ongoing research program may be the primary long-term interest and focus of the principal investigator and/or the laboratory in which it is conducted. Relinquishing ownership of inventions as they occur will progressively eliminate the research team's ability to use key technologies in the continuing program. It is unlikely that any company will sponsor further research by that team or laboratory if a prior sponsor owns key patents. It is also unlikely that another sponsor will fund further research where an earlier sponsor holds an exclusive license to a broad or dominant patent. Consequently, it is M.I.T. policy to limit exclusive licenses to the field of use in which the sponsor is interested. September 10. 1993 09/20/93 13:58 913 864 5272 RGSPS/RSGA 006 09/17/93 16:35 202 789 1830 M.I.T. WASHINGTON --? RGSPS/RSGA 008 COPY OFFICE OF THE VICE PRESIDENT AND DEAN FOR RESEARCH CAMBRIDGE, MASSACHUSETTS 02139 ROOM (illegible) (817) 253 6931 (617) 253-8358 August 31, 1993 Advanced Technology Program Rule Comments Technology Administration U.S. Department of Commerce Room A402, Administration Building Gaithersburg, MD 20899 Ladies and Gentlemen: The Massachusetts Institute of Technology (M.I.T.) herewith submits its comments in response to proposed rulemaking regarding the Advanced Technology Program published in the Federal Register, 58 FR 41069, dated August 2, 1993. We are deeply concerned about several aspects of the proposed rules. First, we are concerned that the rules violate the most basic tenet of both U.S. Patent and U.S. Copyright law, which provides that ownership of discoveries and originally written works resides in the creator. Second, the rules disregard precedent established under Public Law 96-517 and its subsequent amendments. Third, the rules lead to a potentially serious diminishing of academic freedom both in freedom of inquiry in the research topics which an investigator may choose and in freedom to publish the results of the research. We believe that the basis for the rules proposed by NIST is to implement the Advanced Technology Program legislation found at Title 15 CFR 295. However, we see nothing in that legislation or subsequent amendments indicating an intent by Congress to so disadvantage universities that their participation with industrial partners under the Advanced Technology Program requires them to abandon principles which have contributed greatly to U.S. industrial growth and competitiveness over the past 13 years. M.I.T. views this as a constructive opportunity to encourage NIST to modify the proposed rules to recognize a basic partnering relationship between industry and nonprofit organizations. This is a model which has served this country well over the past decade as basic research has flowed from the university and nonprofit research community to power the biotechnology and computer industries, to strengthen small 09/20/93 13:59 913 864 5272 RGSPS/RSGA 007 09/17/93 16:36 202 789 1830 M.I.T. WASHINGTON --? RGSPS/RSGA 009 Advanced Technology Program Rule Comments Page 2 August 31, 1993 businesses, allowing them to achieve niche markets, and to fuel industrial product development and job creation. We urge a restructuring of the rules along the following lines. * Title to Intellectual Property Including Copyrights While we and other universities would prefer to see 37 CFR 401 (Bayh-Dole) clearly mandated as precedence for nonprofits participating under the ATP program, we understand NIST's interest in seeking to minimize government intrusion into the mechanics of this program. We recognize the ATP as a financial assistance program which seeks primarily to benefit U.S. industry and to encourage industrial participation without fear of losing privately developed technology to federal rights. For that reason, M.I.T. supports the ATP as an exception to Bayh-Dole as long as program rules clearly affirm the fundamental principle that intellectual property belongs to its creator. The current NIST interpretation on patent title, as well as a restrictive reading of the proposed rules applicable to copyrighted works and data, is contrary to this principle. We urge NIST to establish clearly initial ownership rights in the creators with disposition of such rights subject to agreement among the program participants. If the goal of the government under the ATP program is to be non-intrusive, it should remain so with respect to all participants. If NIST feels that it cannot modify its position on patent title because of prior congressional action, we urge that legislative clarification be sought. The rule on ownership of copyright and data could easily be revised by clarifying the terin "funding recipient" to include all recipients of financial assistance under the ATP program, both direet and indirect, or by revising §295.8(b) to provide that each participating organization may establish a claim of copyright to its own work. Nowhere does the legislation indicate, or even imply, that the disposition of rights should be determined solely by the industrial participants, and we believe it is entirely inappropriate for the rules to propose this interpretation. 09/20/93 14:00 913 864 5272 RGSPS/RSGA 008 09/17/93 16:36 202 789 1830 M.I.T. WASHINGTON --? RGSPS/RSGA 010 Advanced Technology Program Rule Comments Page 3 August 31, 1993 * Government Licenses to Software We do not believe it is necessary for NIST to take license rights to software developed under the program that are beyond the current government purpose license rights which other agencies, such as ARPA, are recognizing. We would like to see the rules more clearly establish that commercialization will be left to the owning organizations and the joint venture. Certainly universities, and no doubt industry, will be more willing to make use of privately developed systems and code under ATP programs if the government's rights are less intrusive. * Publication Rights We urge the same correction on publication rights (§295.8(c)) as suggested for intellectual property rights. The determination of whether or not to publish research results should, at a minimum, allow participation by the organization generating those results. Placing the decision of publication of research results with the industry funding recipient to the exclusion of the nonprofit violates the principles of academic freedom, imperils science by removing it from peer review, and creates great potential for conflict of interest by removing from public scrutiny data and research results in which the taxpaying public has an interest. It serves no purpose, except to encourage trade secrets to be held by industry. We agree that trade secrets or confidentiality are appropriate competitive tools of industry when applied to their own information, but we see the intrusion by industry into the open academic environment under proposed rules to be counter to an overriding public interest in preserving academic freedom. Surely, it should be left up to the participants in a program to decide among themselves how and when research results shall be published. * Inconsistency with other Federal Assistance Programs We believe that NIST should look carefully at the proposed rules to see if they are compatible with other Federal assistance programs. Our review of the differences in patent and copyright ownership, data ownership and publication rights between these proposed rules and other Federal assistance programs, shows the ATP to be inconsistent with virtually all other federal programs. We are greatly concerned that efforts to combine ATP funding with programs originating from other agencies will produce a tangle of rights for nonprofits that is incapable of reconciliation. 09/20/93 14:01 913 864 5272 RGSPS/RSGA 009 09/17/93 16:37 202 789 1830 M.I.T. WASHINGTON --? RGSPS/RSGA 011 Advanced Technology Program Rule Comments Page 4 August 31, 1993 Finally, M.I.T. reiterates its concern that a major initiative from the Department of Commerce, guided by legislation that is clearly intended to benefit U.S. industry with university participation, would inadvertently provide such an unfavorable environment for American research universities. No university should be placed in a position of having to compromise its effectiveness as a public resource for scientific research in order to participate in a Federal assistance program. Yours truly, (signature) J. David Litster Vice President for Research 09/20/93 14:01 913 864 5272 RGSPS/RSGA 010 09/17/93 16:38 202 789 1830 M.I.T. WASHINGTON --? RGSPS/RSGA 012 DRAFT AMENDMENT (Clarifying patent title ownership under the Advanced Technology Program) Section 28(d)(11)(A) of the National Institute of Standards and Technology Act (15 U.S.C. 278n(d)(11)(A)) is revised to read as follows: "(11)(A) Notwithstanding the provisions of Section 202 of title 35 of the United States Code, to which this law is set forth as an exception granting greater rights to recipients of federal assistance, and subject to such terms and conditions as the Director deems appropriate for the protection of the Federal Government and the public: (i) each member of a United States joint research and development venture including all organizations authorized to participate in such joint ventures under Section 28 (b)(1) shall be entitled to retain title to intellectual property made by such member arising from assistance to the venture provided under subsection (b)(1) or such member may make such other disposition of title, within the joint venture, as it may agree. (ii) any party receiving assistance through a contract, grant or cooperative agreement, either directly or indirectly under subsection (b)(2), shall be entitled to retain title to intellectual property made by such party, or may make such other disposition of title among the parties receiving assistance through such contract, grant or cooperative agreement as it may agree, provided, however, that intellectual property created under Cooperative Research and Development Agreements entered into pursuant to section 3710a of title 15 of the United States Code shall not be deemed to arise from assistance made under subsection (b)(2). (iii) The United States shall have a nonexclusive, nontransferable, irrevocable paid- up license to practice or have practiced for or on behalf of the United States, in connection with any such intellectual property, but shall not, in the exercise of such license, publically disclose proprietary information related to the license. 09/20/93 14:02 913 864 5272 RGSPS/RSGA 011 09/17/93 16:38 202 789 1830 M.I.T. WASHINGTON --? RGSPS/RSGA 013 DRAFT COMMENTARY: The 1991 Amendments to the Advanced Technology Program (ATP) (P.L. 102-245) added a provision to the enabling legislation for the ATP (the U.S. Trade and Competitiveness Act of 1988. P.L. 100-418) that requires title to patentable inventions be held by companies incorporated in the United States. The amendment was silent on the disposition of patents held by universities and nonprofit organizations which, under the enabling statute, were entitled to retain patent title as provided by laws and regulations applicable to Federal Assistance Programs, namely, Public Law 96-517, the Presidential Memorandum on Government Patent Policy Dated February 18, 1983, Public Law 98-620, 37 CFR 401 and DOC regulations governing patents. Recognizing the intent of Congress to establish this Program to foster rapid commercialization of advanced technology products and processes with minimal government intrusion, this amendment will clarify a treatment of intellectual property title, applicable to both for-profit and nonprofit organizations authorized to participate under the Program, which is consistent with congressional intent that the goals of the ATP program will more likely be achieved by participants receiving greater rights to their intellectual property than provided under government procurement regulations. Therefore, this amendment clearly establishes the rights of all Program participants to hold and dispose of title to their intellectual property, within the rules otherwise set forth in the applicable ATP statutes and such other terms and conditions as the Director deems appropriate for the benefit of the public good. The amendment will also remove any inconsistency between the ATP program and other federal assistance programs which provide that nonprofit recipients of federal assistance whether such assistance is direct or indirect, are entitled to elect to retain title to their intellectual property.