Federal Research: Additional Actions Needed to Improve Licensing of Patented Laboratory Inventions

GAO-18-327 Published: Jun 19, 2018. Publicly Released: Jun 19, 2018.
Jump To:
Fast Facts

Cell-phone cameras have their roots in a federal lab—thanks to laws encouraging commercial use of federal inventions.

The federal government spends about $137 billion a year researching and developing inventions. The government can license the patents on these inventions to private companies to further develop and bring the technologies to market.

Federal agencies and labs said that identifying patentable inventions was difficult, with some citing inadequate tracking systems. Stakeholders said that the bureaucracy and length of the patent licensing process could deter companies.

We made 7 recommendations to address these and other challenges.

The digital image sensors used in cell-phone cameras were developed in the 1990s at the Jet Propulsion Laboratory under NASA.

Photo of a person holding up a cell phone to take a photo of boats.

Photo of a person holding up a cell phone to take a photo of boats.

Skip to Highlights
Highlights

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.

Selected Challenges in Licensing Federal Inventions and Steps Taken to Address Them

Selected Challenges in Licensing Federal Inventions and Steps Taken to Address Them

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.

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.

Skip to Recommendations

Recommendations

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.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Commerce 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 Federal Laboratory Consortium studies, and agency reports and including that information in its summary reports to Congress. (Recommendation 1)
Open
In its FY 2017 Federal Laboratory Technology Transfer report, released in August 2021, NIST took initial steps to implement this recommendation by including an addendum summarizing actions taken to report on challenges in the patent licensing process across federal labs. However, information summarizing federal patent licensing challenges was not included in the FY 2018 report, released in August 2022. We will reassess the status of this recommendation once NIST provides additional information, including on whether it plans to include information on federal patent licensing challenges in future reports.
Department of Commerce The Secretary of Commerce should instruct NIST to clarify the link between establishing patent license financial terms and the goal of promoting commercial use, through appropriate means, such as the upcoming rule-making process and updating relevant guidance. (Recommendation 2)
Open
Commerce responded in January 2020 that NIST would implement this recommendation by clarifying the link between establishing patent license financial terms and the goal of promoting commercial use through upcoming amendments to federal regulations. In January 2021, Commerce issued a Notice of Proposed Rulemaking to request comments on the potential changes; however a final rule has not been issued as of September 2022. We will reassess the status of this recommendation once NIST provides additional information on any further plans to implement it.
Department of Commerce The Secretary of Commerce should instruct NIST to facilitate formal information sharing among the agencies to provide federal labs with information on financial terms in comparable patent licenses, as appropriate. (Recommendation 3)
Closed – Implemented
The Department of Commerce concurred with GAO's June 2018 recommendation. In February 2021, NIST reported the launch of the Licensing Best Practices Forum on the Federal Laboratory Consortium website. According to NIST, the purpose of the forum-open only to consortium members-is to inform a community of practice to share expertise across agencies. This website will allow the dissemination of relevant material-such as information posted by NIST-to help members determine royalty rates. By facilitating the formal sharing of comparable license information, NIST improves its ability to provide agencies and labs with benchmarks for evaluating which financial terms are best suited to successfully license inventions.
Department of Defense The Secretary of Defense should ensure that the agency or its labs document processes for establishing license financial terms, while maintaining flexibility to tailor the specific financial terms of each license. (Recommendation 4)
Closed – Implemented
In September 2022, DOD published revisions to DODI 5535.08 that require military departments and defense agencies to instruct their laboratories to document their licensing processes as appropriate. Specifically, heads of DOD components overseeing technology transfer activities are to establish policies "for licensing intellectual property, including guidance and processes for establishing financial terms to license innovation."
Department of Energy The Secretary of Energy should ensure that the agency or its labs document processes for establishing license financial terms, while maintaining flexibility to tailor the specific financial terms of each license. (Recommendation 5)
Closed – Implemented
In April 2019, DOE assembled documents describing the approaches of DOE labs to 8 areas in the patent licensing process, including establishing patent license terms, created a summary of them, and posted the documents and the summary on a public website. DOE coordinated with the national labs in the development of this documentation on common practices, to (1) make consistent some of the approaches to negotiating patent license financial terms, (2) to mitigate some inconsistencies and (3) to ease inefficiencies across the national labs.
National Aeronautics and Space Administration The Administrator of NASA should ensure that the agency or its labs document processes for establishing license financial terms, while maintaining flexibility to tailor the specific financial terms of each license. (Recommendation 6)
Closed – Implemented
In November 2018, NASA's Space Technology Mission Directorate developed a website containing a section that specifically describes NASA's approach to establishing patent license terms. The website is accessible to the public and was shared with NASA licensing managers.
National Institutes of Health The Director of NIH should ensure that the agency or its labs document processes for establishing license financial terms, while maintaining flexibility to tailor the specific financial terms of each license. (Recommendation 7)
Closed – Implemented
In response to our recommendation, in late summer and fall of 2018, NIH officials (1) collected written materials detailing aspects of the processes used to help establish financial terms at the agency, (2) created a new internal website to post them, (3) made them accessible agency-wide, and (4) advertised their existence to technology transfer staff.

Full Report

GAO Contacts