Tech firms reluctant to conduct R&D with the government

Many technology businesses are reluctant to conduct research and development with the government because of uncertainties about who would receive the intellectual property that results from the ventures, government and private-sector contracting officials told a House Government Reform subcommittee this week. Technology and Procurement Policy Subcommittee Chairman Tom Davis, R-Va., noted that the government's share of R&D funding dwindled from two-thirds to one-third from 1960 to 1999. "At the same time that government is no longer driving technological innovation," he said, "many commercial firms that invest billions in R&D every year are refusing to do business with the government. This has serious implications for the well being of the United States." The government's right to hold patents as a result of such research is "one of the major barriers preventing commercial companies from performing research and development for the government," said Richard Kuyath, an attorney with 3M. The inability to develop trade secrets resulting from government-commercial collaboration, the government's ability to obtain a royalty-free license and other restrictions on patents companies obtained as a result of such collaboration are among the key problems. The ability of universities and businesses to obtain patents on federally funded research became possible with the passage of the 1980 Bayh-Dole Act. Other speakers reiterated the same message. "I have learned firsthand how essential intellectual property is and the challenges of dealing with [it] in the federal context," said Richard Carroll, CEO of defense contractor Digital Systems Resources. Precisely because of the importance of such legal protection, he said, companies that cannot receive unambiguous rights to their discoveries are turning away from Defense Department contracting. "The real loss from the non-participation from leading commercial research and development firms in Defense Department programs is the loss of alternatives, the loss of ideas and the loss of competitive solutions," Carroll said. "If DOS [programming language] was given away three years after Microsoft introduced it, it wouldn't have turned out to be the paradigm shifter it turned out to be," he continued. "Take America Online. If after two or three years on the market, everyone had it, then AOL wouldn't have changed the way we look at the world." Davis said he would like to prod procurement officials to be more flexible in waiving the government's patent interests. He said he would introduce legislation as part of a procurement package that would broaden federal officials' waiver authority under the Bayh-Dole Act. "I would hope the goal in procurement would be that the largest innovators--the ones with the most patents--could contract with the government," Davis said. He applauded an April Defense Department report--"Intellectual Property: Navigating Through Commercial Waters"--for encouraging government officials not to insist that contractors waive their patent rights. But while Kuyath and Carroll urged modification of Bayh-Dole, Jack Brock, managing director of the acquisition and sourcing management division of the General Accounting Office, disagreed on the need for legislation. Brock said procurement officials have flexibility but are not using it adequately.