Federal Labs and Stakeholders Identified Challenges in Patent Licensing, and Agencies Have Taken Some Steps to Address Them, but NIST Has Not Fully Reported Such Challenges

Federal agency and lab officials and external stakeholders have identified  challenges across the federal patent licensing process, but NIST has not  fully reported such challenges. DOD, DOE, NASA, and NIH officials said they are taking steps to address  companies’ concerns about the time it takes to negotiate a license  agreement. For example, according to agency officials,  NIST engages with agencies to inform them about new requirements in  technology transfer and helps them identify their successes in conducting  technology transfer activities. NIST officials stated that they were generally  aware of the challenges identified by agency and lab officials and external  stakeholders but had not considered including such challenges to a  greater degree in the summary reports to Congress. By fully reporting the range of  challenges in federal patent licensing—such as those outlined in this  report—and including that information in its annual summary reports to  Congress, NIST has the opportunity to further ensure that Congress is  more aware of challenges that limit agencies’ efforts in patent licensing  and ways for potentially addressing those challenges. Federal Agencies and Labs Have Limited Information on Processes, Goals, and Comparable Licenses to Guide Establishing Financial Terms in Patent Licenses

Federal agencies and labs have limited information on processes, goals,  and comparable licenses to guide establishing the financial terms in  patent licenses. Commerce has delegated to NIST  the authority to promulgate implementing regulations pertaining to  patenting and licensing at federal labs—that is, regulations that indicate  how agencies are to implement statutory provisions, including the goal of,  among other things, promoting commercial use of inventions. Labs at DOE and DOD are generally responsible for tracking  their own licenses and do not have access to information on comparable  licenses from other labs in their agencies. Some agency and lab officials and a few stakeholders stated that it would  be valuable for federal labs to have greater access to information on  financial terms in government licenses to help establish a benchmark for  financial terms. NIST plays a leading role in  these interagency collaborative efforts on patent licensing, including  gathering and sharing information among the labs. Recommendations for Executive Action

We are making seven recommendations, including three to Commerce  and one each to DOD, DOE, NASA, and NIH:
The Secretary of Commerce should instruct NIST to fully report the  range of challenges in federal patent licensing, such as those outlined  in this report, by, for example, leveraging its survey of practices at  federal technology transfer offices, past FLC studies, and agency  reports and including that information in its summary reports to  Congress. Appendix II: Selected Descriptions of Challenges Federal Labs Face in Patent Licensing

The following are additional descriptions of challenges in the seven areas  of the patent licensing process as well as challenges in prioritizing patent  licensing faced by federal laboratories (lab) that were identified by  external stakeholders and by agency and lab officials at the Department  of Defense (DOD), Department of Energy (DOE), National Aeronautics  and Space Administration (NASA), and the National Institutes of Health  (NIH)—as well as steps agencies and labs have taken to address those  challenges. Officials  from DOD and the departments describe the systems as inadequate to  keep track of the agency’s inventions. Negotiating the License Agreement

Agency and lab officials and stakeholders noted that federal labs face  challenges in negotiating the license agreement because the process is  (1) lengthy and (2) uniquely regulated, which can deter companies from  licensing federal inventions. DOD, DOE, NASA, and NIH agency and lab officials cited limited  resources to conduct the range of activities related to patent licensing.
Why GAO Did This Study

The federal government spends approximately $137 billion annually on research and development—mostly at DOD, DOE, NASA, and NIH—to further agencies' missions, including at federal labs. Multiple laws have directed agencies and labs to encourage commercial use of their inventions, in part by licensing patents, to private sector companies and others that aim to further develop and bring the inventions to market.
GAO was asked to review agency practices for managing inventions developed at federal labs, with a particular focus on patent licensing. This report examines (1) challenges in licensing patents and steps taken to address and report them and (2) information to guide establishing financial terms in patent licenses at DOD, DOE, NASA, and NIH. GAO reviewed relevant literature, laws, and agency documents, including patent licenses from 2014, to match the most recent NIST summary report when the licenses were requested, and GAO interviewed agency officials and knowledgeable stakeholders, including organizations that assist federal labs in licensing patents.

What GAO Found

Federal agency and laboratory (lab) officials identified challenges in licensing patents across the federal government, and agencies have taken some steps to address and report them. Patent licensing is a technology transfer activity that allows, for example, federal inventions to be legally transferred to the private sector for commercial use. Specifically, officials at the Departments of Defense (DOD) and Energy (DOE), National Aeronautics and Space Administration (NASA), and National Institutes of Health (NIH), as well as external stakeholders, noted challenges in having researchers identify potentially patentable inventions. DOD, DOE, and NIH officials also cited having inadequate internal systems to keep track of inventions developed in the labs. In addition, several stakeholders stated that licensing patented inventions can be lengthy and bureaucratic, which may deter companies from licensing. The agencies reported taking steps to address these challenges, such as implementing model license agreements across labs to expedite the process.
The Department of Commerce has delegated to its National Institute of Standards and Technology (NIST) to annually report agencies' technology transfer activities, including patent licensing. Although NIST has reported some challenges, it has not fully reported the range of challenges identified by agency and lab officials and stakeholders. NIST officials stated that they were generally aware of the challenges but had not considered including them to a greater degree in their annual reports to Congress. By fully reporting the range of challenges in federal patent licensing, NIST has the opportunity to further ensure that Congress is more aware of challenges that limit agencies' efforts and ways for potentially addressing those challenges.
Federal agencies and labs have limited information to guide officials when establishing the financial terms of patent licenses. For example, while federal labs can use comparable licenses to help establish financial terms, their access to information on comparable licenses from other labs varies, and such information is not formally shared among the agencies. Based on its established interagency role, NIST is best positioned to assist agencies in sharing information on comparable licenses, in accordance with leading practices for interagency collaboration. By doing so, NIST would provide federal agencies and labs with useful information that can help them better establish financial terms and successfully license inventions.

What GAO Recommends

GAO is making seven recommendations, including that Commerce instruct NIST to fully report the range of challenges in federal patent licensing in its annual reports to Congress and facilitate information sharing among agencies. Commerce, DOD, DOE, NASA, and NIH generally agreed with GAO's recommendations and are taking steps to implement them.