HR 209 undermines the public's rights in taxpayer funded inventions

[James Love <love@cptech.org>]

May 11, 1999

The House just passed HR 209 by a voice vote.  It contains
several changes in federal laws, making it easier to get
exclusive rights to taxpayer funded inventions, eliminates
the public's right to know even the royalty rate on a
license, and eliminates the requirement that the scope
of exclusive licensing be limited to terms "not greater
than reasonably necessary to provide the incentive" for
development.

CPT comment:	HR 209 undermines the public's rights in 
          	taxpayer funded inventions

1.      In the new Section 209 of the Bayh-Dole Act, the bill
would permit exclusive licensing of federally funded
inventions after a public notice of only 15 days, making a
mockery of the public notice requirements.  Federal agencies
would no longer be required to publish such notices in the
Federal Register.  Even this notice would not apply to
licenses granted under CRADAs.


2.      The US government would be constrained in the types of
reports that it could require from the patent owner, and all
financial information would be secret from the public,
including the rate or amount of royalties on the license. 
Even Congress could not find out how much money Bristol-
Myers Squibb is paying for its exclusive ddI or Taxol
patents, for example.

3.      The new Section 209 eliminated a number of important public
interest protections on the use of exclusive licensing.  For
example, it deletes the requirement that an agency determine
that develop would not be obtained under non-exclusive
licensing, and it eliminates the requirement that the
proposed terms and scope of exclusivity be "not greater than
reasonably necessary to provide the incentive" for development.

                [Struck out->][ 209 (c)(1)(B) the desired practical
        application has not been achieved, or is not likely
        expeditiously to be achieved, under any nonexclusive
        license which has been granted, or which may be
        granted, on the invention;][<-Struck out]

                [Struck out->][ 209 (c)(1)(D) the proposed terms and
        scope of exclusivity are not greater than reasonably
        necessary to provide the incentive for bringing the
        invention to practical application or otherwise promote
        the invention's utilization by the public. ][<-Struck
        out]

        Under this change, agencies that in the past have often
issued partial term patent licenses will be encouraged to
issue life of patent licenses, extending the monopoly on
taxpayer funded inventions.  This is an important issue,
because many important government pharmaceutical inventions
have been licensed for less than the full term.


4.      The bill somewhat narrows the grounds for rejecting exclusive
	licenses based upon anticompetitive effects:

                [Struck out->][ (2) A Federal agency shall not grant
        such exclusive or partially exclusive license under
        paragraph (1) of this subsection if it determines that
        the grant of such license will tend substantially to
        lessen competition or result in undue concentration in
        any section of the country in any line of commerce to
        which the technology to be licensed relates, or to
        create or maintain other situations inconsistent with
        the antitrust laws. ][<-Struck out]

        The new standard is: 

                `(4) granting the license will not tend to
                substantially lessen competition or create or maintain  
                a violation of the Federal antitrust laws; and


5.      The new Section 209 would make it more difficult for the
	federal government to terminate a license for cause.

6.      The grounds under which the government could issue its own
        license for government use would be restricted to cases
        where the government use would not be  "reasonably satisfied
        by the licensee."  This seems to be a major restriction on the
        government's rights in its own inventions.



-- 
James Love, Director, Consumer Project on Technology
I can be reached at love@cptech.org, by telephone 202.387.8030,
by fax at 202.234.5176. CPT web page is http://www.cptech.org