Part 1 of 3
Thirty-five years ago, the Patent and Trademark Law Amendments Act of 1980 (aka the ?Bayh-Dole Act?) ushered in what many will argue is the golden age of collaborative research. Through the Bayh-Dole Act and other reforms that followed, we now have a system, albeit a complex one, that enables entities to conduct research and development (?R&D?) activities, either in whole or in part, with federal funding while protecting their intellectual property interests.
Yet, many entities, both large and small, are reluctant to pursue such opportunities for fear of losing valuable intellectual property rights either to the public or to the government. Figuring out the wide variety of agreements under which such funding or assistance is provided, and the complex and various regulations and clauses governing ownership and use of data, software, and patents, is a daunting task.
In three articles, we will attempt to demystify the government contract process. This introductory article identifies and explains the agreements you may encounter when conducting a research project for which the government is providing funding or technical support. The subsequent articles will provide more detailed examinations of the regulations and clauses governing ownership and use of data, software, and patent rights, and provide basic guidelines and best practices for complying with them.
There are two basic categories of agreements that the U.S. government may use. Procurement contracts are used by government agencies to acquire goods and services directly to benefit the government. Non-procurement agreements, such as grants or cooperative agreements, are used by the government to transfer funding to a recipient to support research that addresses a public need.
Procurement contracts are, mostly, governed by the Federal Acquisition Regulations (?FAR?). Various other agencies (e.g., DOD, NASA, etc.) have issued additional acquisition regulations that supplement (not replace) the FAR. A procurement contract can take many forms (e.g., fixed price, cost, letter contracts) and imposes an array of standard clauses. Although compliance with these regulations may appear at first to be a daunting task, especially for a small business concern, compliance becomes easier over time and with practice and patience, because these contracts are based a standard set of regulations.
Of the two contracts, a procurement contract is not as flexible (from an R&D perspective). Payments are typically performance-based, and there are consequences for failure to perform.
Procurement contracts are often used by the government to procure a variety of robotics-related services, including R&D. Last year, NASA awarded a three-year contract to one company to develop simulation models, including in-orbit robotic manipulator systems, advanced future robotic systems, and vehicles for rendezvous operations, for Johnson Space Center in Houston. In another recent example, the Department of Defense funded the further testing and miniaturization of a company?s existing, internally developed, medical device for potential use by the military in the field.
Each year, Congress allocates funding for various forms of research and development not directly associated with a specific procurement need. Rather, these funds are intended to encourage private sector development of technology that addresses short, medium, and long term national interests consistent with an agency?s mission. These non-procurement agreements are aimed at addressing vexing problems that both the government and industry are facing or will face in the future.
According to the National Science Foundation, the federal government is the second-largest funder of U.S. R&D, providing an estimated $124 billion, or 31% of the U.S. total in 2009. The vast majority of funding for these types of agreement is issued by a relatively small number of agencies (e.g., DOD, DOE, NIH, NASA, etc.).
A grant is typically used when substantial involvement between the government agency and the recipient is not expected when conducting the research project. Conversely, a cooperative agreement is used when the funding agency expects to be substantially involved in the research project. Both can be issued to commercial organizations, nonprofit entities, and educational institutions.
Although grants and cooperative agreements are legal documents, neither is subject to the FAR or any of its supplements. Each issuing agency does, however, have a specific set of regulations that apply to grants and cooperative agreements. The DOE regulations encompassing its grant and cooperative agreement program can be found at 10 C.F.R. Part 600.
Besides grants and cooperative agreements, the DOD may issue an ?Other Transaction Agreement? (?OTA?) or a Technology Investment Agreement (?TIA?) for certain research projects. An OTA agreement is defined as an agreement other than a contract, grant, or cooperative agreement. The purpose of an OTA is to provide flexibility to the parties in creating the agreement.
TIAs are a class of assistance agreements that can be used to carry out basic, applied, and advanced research, when the research is to be performed by a for-profit firm or by a consortium that includes a for-profit firm. Because TIAs are used to develop commercial technologies for future defense needs by the DOD, TIAs are designed to reduce defense research barriers to commercial firms and provide DOD with the broadest possible access to technology.
Up to this point, this article has been examining the various agreements under which the U.S. government provides funding for research. However, given the complexity of the technological challenges facing industry today, many entities are also taking advantage of vast government non-monetary resources by jointly conducting research with government agencies and its national laboratories, through Cooperative Research and Development Agreements (?CRADAs?).
A CRADA enables a non-government entity to jointly pursue common research goals with government scientists and thus leverage its own R&D efforts. A CRADA makes government facilities, intellectual property, and expertise available for collaborative interactions to further the development of scientific and technological knowledge into useful, marketable products.
Although a federal laboratory may, under a CRADA, provide personnel and access to government technology and facilities, no federal funding can be used in conducting the research. The non-government entity must fund the government lab?s participation in the project. Each agency, and in some cases different offices within an agency, issues its own rules governing its participation in CRADAs, which generally provide contractual flexibility.
As many may know, the DOE maintains a network of national laboratories that offers access to exception personal, technology, and equipment. Besides CRADAs, the DOE offers other types of agreements (i.e., Work for Others (WFO) Agreements and User Agreements) for working with its national laboratories. A WFO is typically used when the non-government entity is hiring the laboratory to conduct a research project on its behalf, as opposed to the two parties jointly conducting a research project. As a general rule, a WFO covers a specific project that was created and designed by the non-government entity for which it hires a laboratory to conduct. As will be discussed in subsequent articles, a WFO generally provides far better intellectual property terms and conditions than a CRADA.
A User Agreement, on the other hand, sets forth the terms and conditions under which a laboratory will allow the non-government entity to use the laboratory?s equipment and facilities to experiment. A non-government entity can find a User Agreement to be of great value to its research program, given the National Laboratories? highly specialized facilities and equipment. Two types of User Agreements are offered by DOE laboratories (Proprietary and Non-Proprietary), each of which offer different intellectual property protection.
The U.S. government also has programs aimed at providing research opportunities to small business in the form of either procurement contracts or non-procurement agreements. Numerous resources are available on the Internet for researching such opportunities. The Small Business Innovation Research (?SBIR?) Small Business Technology Transfer website is just one of many sites that post solicitation opportunities for small business. Numerous other web sites offer business opportunities to entities large and small (e.g., FedBiz Opps.gov; and, DARPA Solicitations).
As previously noted, this article briefly summarizes the different research agreements used by government entities. In subsequent articles, we will discuss the complex patent, software, and data rights clauses found in these various types of research agreements and how they differ from one another, including what to watch out for.
About the Author
William H. Pratt is a partner in the Washington, DC, office of the intellectual property law firm Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. He focuses his practice on intellectual property transactions and licensing, government contracts, complex commercial transactions and the arbitration of intellectual property disputes in a wide array of technologies.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm’s clients.