1. 2009 Presentation to Federal Laboratory Consortium Mid- Atlantic Region Annual Meeting DOE Laboratory Operating Contracts Paul Gottlieb Assistant General Counsel for Tech. Transfer & IP Department of Energy 202-586-3439 (fax 2805) Paul.Gottlieb@HQ.DOE.GOV

2. DOE has been blessed: Laboratory Technology Transfer Laws Stevenson-Wydler Technology Innovation Act of 1980 Trademark Clarification Act of 1984 (amended Bayh- Dole) Federal Technology Transfer Act of 1986 (amended Stevenson-Wydler) National Competitiveness Technology Transfer Act of 1989 (amended Stevenson-Wydler) National Defense Authorization Act for Fiscal Year 1994 (amended Stevenson-Wydler) Technology Transfer Commercialization Act of 2000 National Defense Authorization Act of 2000 (amended Stevenson-Wydler) EPACT 2005 Executive Order 12591

3. M&O contract: Patents Bayh-Dole Act amended in 1984 to mandate application to GOCO labs run by Universities, non profits and SB –Naval reactors excluded and weapons funded inventions at weapons labs excluded –Royalty sharing with inventors required but amount not specified –Uses of royalties specified but not location of use

4. M&O contract: Patents E.O. 12591 in 1987: empower lab directors to be in charge of tech transfer NCTTA of 1989: authorized contractor operated labs to do CRADAs, made TT mission of DOE labs. DOE directed to issue new contract clauses to implement the TT mission.

5. The lab M&O contract 48 CFR 970.5227-3 Tech Transfer Mission Authorized Activities –Protecting IP –Licensing IP –Negotiating Agreements –Enter into Non-Federal Work for Others (WFO) –Enter into CRADAs –Enter into User Agreements Allowable Costs: –“costs in any fiscal year shall not exceed an amount equal to 0.5 percent of the operating funds included in the Federal research and development budget (including Work For Others) of the Laboratory for that fiscal year without written approval of the contracting officer.” –The Contractor's participation in litigation to enforce or defend Intellectual Property claims incurred in its technology transfer efforts shall be as provided in the clause entitled "Insurance-Litigation and Claims" of this contract.

6. The lab M&O contract 48 CFR 970.5227-3 Tech Transfer Mission Conflicts of Interest plan approved by DOE Fairness of Opportunity: Widespread Notice of availability of technologies suited for transfer U.S Industrial Competitiveness must be addressed in Licenses and CRADAs Product Liability clause required Disposition of Income –Inventor’s royalty share –Use of remainder at lab Transfer of IP to successor contractor Records maintained WFO and User agreements subject to class waivers Ombuds required

7. Lab Patent clause Bayh-Dole clause 5 year or more contract: Unilateral right to amend contract to be subject to treaties and international agreements Unilateral right to amend contract to be subject to exceptional circumstances –Uranium enrichment –Next Generation Lighting

8. Licensing Technology license –not subject to Federal Licensing regulations, same freedom as university to license –No DOE approval of licenses except in conflict situations: affiliates, lab employees –Entrepreneurial leave OK –What can be licensed: Patents Copyrights in software (restrictive and open source), biological materials thru bailments, trademarks classified technology (inorganic membrane)

9. Licensing Subject to fairness of opportunity (Recent IG report questioned the interpretation of this clause) Subject to Government License, march-in rights. Subject to US competitiveness and U.S. Preference Conflicts and fairness review by DOE if license to employee, ex employee or affiliate Product liability indemnity Choice of exclusive or non exclusive left to lab Equity may be obtained in lieu of royalties: Export control notice Licenses exempt from FOIA: not government owned record at lab.

10. Licensing: Equity in lieu of royalty is allowed e.g. Bioenergy Research Centers. –Virtual lab –IP management plan –60% of royalties returned to virtual lab UC rules –No more than 10% – No members of board –Time of sale of equity predetermined

11. Licensing No licensing of “know how” Shouldn’t warrant validity of patent or that it won’t infringe Liabilities come out of overhead or royalties Can sue for infringement Inventor receiving royalties COI: manage not eliminate No license to future inventions or grant back except software updates to be used by lab or govt.

12. Technology Transfer Partnering Transactions with DOE Laboratories Work For others: access to unique capability, private sponsor pays full cost and owns new IP, DOE Order & Manual 481.1, class waiver determines title to IP, DOE approves CRADA: Collaborative Research of benefit to DOE mission DOE Order & Manual 483.1, statute determines title to IP, IP negotiable, lab may not provide funds to sponsor,, Guarantees partner option to negotiate an exclusive license in lab inventions, protected data, DOE approves User Agreements

13. WFO Statutory basis: See Economy Act of 1932, as amended, 31 U.S.C. 1535; see also sections 31-33 of the Atomic Energy Act of 1954, as amended, 42 U.S.C. 2051-2053. § 2053. Research for others; charges Where the Commission finds private facilities or laboratories are inadequate for the purpose, it is authorized to conduct for other persons, through its own facilities, such of those activities and studies of the types specified in section 2051 of this title as it deems appropriate to the development of energy. To the extent the Commission determines that private facilities or laboratories are inadequate for the purpose, and that the Commission’s facilities, or scientific or technical resources have the potential of lending significant assistance to other persons in the fields of protection of public health and safety, the Commission may also assist other persons in these fields by conducting for such persons, through the Commission’s own facilities, research and development or training activities and studies. The Commission is authorized to determine and make such charges as in its discretion may be desirable for the conduct of the activities and studies referred to in this section.2051

14. WFO M&O contract: Even though work is being performed by lab employees, rights to IP determined by DOE class waiver not Bayh-Dole. Class waiver issued in 1982: sponsor gets title to lab employee inventions if –Work not subject to international agreement or Govt. award –Not enough interest to DOE to justify DOE providing funds –Full cost recovery –Exceptions: Research tool, Foreign sponsor get’s special attention, field of use limitation to maximize use of lab –No exception where there has been substantial prior investment by Government and Background portfolio

15. WFO May not respond to solicitations of other agencies that involve head to head competition, BAAs OK is consistent with or complementary to missions of DOE/NNSA and the facility to which the work is to be assigned, will not adversely impact programs assigned to the facility, will not place the facility in direct competition with the domestic private sector, and will not create a detrimental future burden on DOE/NNSA resources.

16. WFO Agreements requirements Advance payments: 90 days, shorter for small business –Some labs have their own revolving funds from royalties or fees –DOE tried to get statutory approval to have a revolving fund. Overhead charged including LDRD and added factor Standard of performance is best efforts Indemnity: General, IP infringement (no authorization and consent) and Product liability. All to the extent permitted by state law for State agencies Class waiver ? title to inventions addressed Data: Lab may offer that data produced by lab may be proprietary to sponsor.

17. Cooperative Research and Development Agreement (CRADA) Technology transfer statutes authorize federal laboratories to enter into research and development agreements with other federal agencies, state or local government entities, foundations, universities and for-profit corporate entities with flexible intellectual property rights. 15 U.S.C. 3710a. The federal laboratory does not compensate the collaborating party with funds, but instead provides licenses, assignments, or options in any intellectual property owned by or assigned to the laboratory. 15 U.S.C. § 3710a(a)(2). The private party can provide funds, personnel, services, and property in the CRADA. 15 U.S.C. § 3710a(b)(1).

18. CRADA Agreements requirements If funds in: Advance payments: 90 days, shorter for small business If DOE is funding, lab performance must have approval of the DOE program –Block funding –Advanced approval in funding authorization Standard of performance is best efforts Indemnity: Product liability to the extent permitted by state law for State agencies Title to inventions: each party owns their own inventions –Sponsor guaranteed the option to obtain through negotiation an exclusive license in field of use for royalties where appropriate Data: Lab may offer that data produced by lab may be protected from public release for up to 5 years. Software may be protected through copyright Costs of obtaining IP protection March-in rights U.S competitiveness must be addressed up front as part of CRADA not as part future license. U.S manufacture for world wide sales or net benefit to US economy Background IP licensed required to be negotiated separately Special attention to foreign sponsors: Consult with USTR per Executive Order 12591.

19. 100% funds in CRADAS vs. WFO Statutory disposition of IP rights Lab owns title to own inventions Participant has option to obtain an exclusive license in a field of use to lab inventions at a royalty. License would have business plan US comp. Max 5 year data protection NO requirement that lab not competing No General Indemnity or patent indemnity Advanced payments Must notify partner of options Policy decides IP rights Sponsor owns title or exclusive rights in field of use to lab inventions Normally no US comp., exception is Freedom CAR Max data protection is lab data proprietary to sponsor Lab must not compete General Indemnity and patent indemnity Advanced payments Most universities retain title when doing reimbursable work 37 CFR 401.1(g) recognizes that WFO is not subject to Bayh-Dole Must notify partner of options

20. Non-Proprietary User Agreements General scope of work directed toward precompetitive research that advances the state of the art in the user’s area of interest, rather than toward producing a specific commercial end result (e.g., a marketable product); Use of unique equipment or collaborative research. Intend to publish their research results in the open scientific literature; Do not require the data protection available in a CRADA, Work for Others Agreement, or Proprietary User Agreement. The converse of each of the above factors factors would be indicia that the work to be performed is beyond the preliminary research stage and would be more appropriately covered under a CRADA, WFOA or Proprietary User Agreement. User pays for its own costs; DOE funds DOE machine and scientists’ time. This agreement is complementary to a WFO or CRADA, which are more complex, more difficult to negotiate and require DOE approval.

21. Non-Proprietary User Agreements Any changes to Standardized User Agreement require DOE approval –Streamlines negotiations –Promotes uniformity –Nature of these agreements makes this approach acceptable to virtually all users Allocation of Intellectual Property Rights: – Lab may elect title to its Subject Inventions per the M&O contract – USER may elect title to its Subject Inventions subject to: Government Use License March In Rights and US Preference apply no US Competitiveness provision –No restriction on publication of Technical Data that is produced

22. Class Waiver for Proprietary User Agreements Scope of Class Waiver covers User who fully funds DOE’s costs for machine time and its own costs. Research is that of the sponsor not DOE No research collaboration with Lab personnel Lab personnel may need to assist in operating the Lab equipment

23. Proprietary User Agreements Allocation of Intellectual Property Rights: – There should be no lab inventions. If there are, Lab may elect title to its Subject Inventions per the M&O contract – USER may elect title to its Subject Inventions subject to no government rights: No Government Use License No March In Rights and No US Preference apply no US Competitiveness provision –Technical Data that is produced may be treated as the proprietary data of the sponsor.

24. Transactions with DOE Laboratories (all labs) Type of Agreement 2008 Active WFO2611 revenue$231m. Active CRADAS 689 revenue$69m Active Tech licenses 1604 Lic. income$43m.

25. Comparison of GOGO and GOCO Technology Transfer Activities Gov’t OperatedContractor Operated Exclusive LicensingOnly after publicationNo publication required Software Licensing Not permitted (by law)Permitted Royalties 1 st $2000, 15% of Rest,No-cap – follow Capped @ $150k/yr/ contractor’s policy invention (universities as high as 50%) CRADA SelectionPreference toSame small businesses; U.S. firms for U.S. mfg. RoyaltiesLab R&D andSame Licensing expenses

26. Secretarial Policy Statement Guiding PrinciplesGuiding Principles –Direct involvement of Lab, rely primarily on lab implementation –Fairness of opportunity, promote domestic economy, prevent inappropriate competition, and protect national security –Involve partners with substantial business plans –Leverage resources –Royalties are not the measure of success; incentive –Promote access by small business including entrepreneurs –Absent mission objectives, there should be consistency and transactions should be done in timely way –Lessons learned forums

27. Policy Statement ResponsibilitiesResponsibilities –Coordinator and Board develop framework, execution plan, performance measures and program guidance –Research funders shall have a tt plan –Cognizant Secretarial Official responsible for overseeing and evaluating tt efforts at facility. TT should be addressed in performance plans. –Each Under Secretary shall approve tt performance plans for their facilities before submittal to the Coordinator. –All programs should encourage dual use of technology

28. JUNE 2009 GAO Report on DOE labs Tech transfer Clearer priorities needed Does definition of tt include work for other federal agencies?