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R2: Public Policy Project

Overview

 

Federal legislation provides many benefits to industry and citizens of the United States but it is worthwhile to examine whether this legislation has had a substantial impact on A/T manufacturers and people with disabilities that they serve. [6] For example, technologies developed in federal laboratories are often not "ready" for commercial application. Coperative research and development agreements (CRADA) provide a mechanism for collaboration between A/T manufacturers and federal laboratories. However, the federal laboratory must accrue some return such as gaining access to advanced R&D capabilities or expertise, an infusion of funds, or future license royalties. Due to the limited size and scope of A/T manufacturers, it makes it difficult to provide these benefits. The SBIR and STTR programs have driven innovation and product commercialization by small manufacturers. However, program support is tied to the sponsoring agency's mission and the impact on A/T manufacturers may be limited. Similarly, the impact of technology licensing from universities on the A/T industry and product development is unclear.

Introduction

Following World War II federal agencies, such as the Departments of Defense and Energy, created laboratories to develop technology to meet their specific missions. When necessary, these agencies contracted with private firms but retained ownership of all technology produced. It was assumed that some mission-oriented technology with commercial potential would subsequently be licensed (spun-off) to manufacturers in the private sector - creating new products and jobs and fueling a healthy economy. However this assumption was unfounded. By the mid-70s, the United States experienced its first trade deficit, and it became clear that technology spin-off from Federal Laboratories was not sufficient to maintain U.S. industrial preeminence. Beginning in 1980, major federal legislation was introduced that first improved supply-side technology transfer mechanisms ("technology push" from federal labs and federally funded universities to the private sector) and later improved demand-side technology transfer mechanisms ("market pull" via private sector manufacturers pursuing business opportunities).

The Technology Innovation Act of 1980 (also known as the "Stevenson-Wydler Act") established technology transfer as a mission of the federal government, required federal labs to disseminate information on lab resources and intellectual property, and established Offices of Research and Technology Application (ORTA) at large federal labs to facilitate licensing of lab technology to private sector manufacturers and state and local governments. The Patent and Trademark Amendments Act of 1980 (also known as the "Bayh-Dole Act") and subsequent amendments granted federally funded labs, universities, and other non-profit entities exclusive rights to patent their 'inventions,' required these entities to market their intellectual property; and made it possible to receive license royalties or other compensation in return.

The Stevenson-Wydler and Bayh-Dole legislation provided mechanisms and incentives for public sector entities to transfer technology to the private sector - primarily through technology license agreements. These legislative acts facilitated the supply-side approach to technology transfer, however significant barriers must still be overcome to bring this technology to market. Federal labs perform basic research leading to mission-oriented technology applications that may lack commercial applications or differ substantially from the embodiment required for commercial applications. Most manufacturers acquire federal technology via non-exclusive licenses and the technology is licensed to small manufacturers. A report from the General Accounting Office suggests that about 1800 federal technologies were licensed to manufacturers (mostly non-exclusive licenses to U.S. manufacturers) through 1999. Excluding NIH biotechnologies about 500 of these technologies were licensed to small manufacturers amongst which A/T manufacturers are represented. [4]

The Small Business Innovation Research Act (1982) required large federal departments and agencies (extramural funding of $100 million or more) to set aside funds 2.5% of their federal funding (totaling more than $1 billion in fiscal year 2000) to implement SBIR programs supporting their department or agency mission. The SBIR program involves small business in meeting department or agency missions (technology developed in the private sector transfers to the public sector) and increases private sector commercialization of innovations developed with federal funding. Some of these agencies allocate funds to address the needs of disability populations. Today, this funding source provides powerful opportunities for technology transfer by small A/T companies.

The Federal Technology Transfer Act of 1986 and later the National Competitiveness Technology Transfer Act of 1989 allowed government owned labs to enter into Cooperative Research and Development Agreements (CRADA), negotiate advance agreements on title of invention (prior to the completion of any work), grant and waive rights to inventions and intellectual property, protect from disclosure information and innovations developed under a CRADA, and require that inventors (lab scientists) share in license royalties. CRADA provide a mechanism by which Federal Laboratories and private sector manufacturers can leverage each other's finances, technical expertise, intellectual property, and facilities. The Federal Laboratory Consortium was formally chartered to facilitate lab based technology transfer activities and now has more than 700 members.

Research universities are a major and growing contributor to the U.S. economy. According to the Association of University Technology Managers there were 18,617 active licenses and options for university technology in 1999, supporting 207,000 jobs and generating $40.9 billion in economic activity. There were 344 new company startups and 417 new products introduced into the marketplace based upon academic discovery. Of the 2,922 company startups since 1980, approximately 70% (1,934) are still operational. In 1999, newly formed and existing small companies accounted for 62% of university licenses and options and provided financial returns to these universities (from license royalties, milestone payments, cashed in equity and other fees) totaling more than $862 million in fiscal year 1999. [1, 2] This market sector provides immense opportunity for collaborations in technology transfer.

In recognition of the academic sector's role in economic development, the Small Business Technology Transfer Act of 1992 mandated that five federal departments and agencies (Departments of Defense, Energy and Health, NASA, and NSF) provide a portion of their R&D funding (totaling $70 million in fiscal year 2001) for the STTR programs to support R&D partnerships between small businesses and non-profit research institutions including universities, non-profit research centers, and federally funded research centers. [5] The Small Business Administration (SBA) was established to help small businesses gain access to SBIR and STTR resources and monitor program performance.

In 1998, Congress amended the Rehabilitation Act to require that Federal agencies make their electronic and information technology accessible to people with disabilities. Section 508 establishes accessibility guidelines for information technology (e.g. computers, software applications) and telecommunications (e.g. cell phone) products. Federal Procurement Requirements were subsequently tied to Section 508 - generally requiring that the Federal entities purchase the most accessible IT and telecommunications products available. These products can be intrinsically accessible or utilize companion A/T products. Federal procurement has created a major incentive for product development by mainstream and A/T manufacturers, both of which stand to significantly impact the lives of people with disabilities.

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