An In-Depth Look Into Intellectual Property: Part Three

The NIST intellectual property (IP) portfolio, like any resource waiting to be utilized, is filled with potential and promise. Proper management of IP is essential to ensure the greatest realization of impact in scientific, societal and/or economic value. To realize the commercial value of an invention, NIST needs to license its rights of a promising invention to a partner. As a federal laboratory, NIST does not have the authority, or resources, to take research results to the marketplace. We must rely on partners who license NIST’s rights and take on the risks and costs to attempt to commercialize an invention. There is a NIST order for licensing, much like patents.

Licensing of federally developed technologies is one of the primary mechanisms used to create incentives for industry to invest the resources necessary to develop and commercialize cutting-edge technologies. Successful development and commercialization create benefits to the economy and contributes to competitiveness and domestic economic growth. The ability to grant licenses to the nonfederal sector to develop and commercialize government-owned technologies helps protect federally developed innovations, which wouldn’t be further developed into commercial products or services otherwise. The terms and conditions, under which federal IP is licensed, varies depending on many factors, including: the extent of development of the technology, the financial resources needed to further develop the technology for consumer use, fields of use, and projected market impact.

The goal of federal patents is to achieve practical application, which broadly means commercialization.  There are many routes to achieve commercialization, but NIST must carefully mesh the various interests to achieve the optimal results. 

Licensing is the complement to a patent right. While the patent excludes others, licensing grants permission. Federal licensing must follow the procedures in 35 USC 209 and 37 CFR 404.  At NIST, and like other federal agencies, the Technology Partnerships Office negotiates the license agreements. This allows for both management of the IP portfolio and accommodates the Department of Commerce Ethics Division’s guidance regarding conflicts of interest for inventors. 

The general preference across the federal government, by statute, is to non-exclusively license technologies. Further, NIST is required to give preference to small businesses.  In practice this depends on many factors.  Some items to consider include:

• How the products or services deliver on the NIST mission
• Whether the patent is a base build new work
• The stage of development (e.g., technical readiness level)
• Resources required by the partner to achieve commercialization
• Ability of the licensee to attract external capital
• The continuing research interest at NIST
• Availability of NIST researchers to support development
• Competitive market, domestic and global
• A need to support domestic manufacturing
• Ability of the partner to achieve a commercial result
• Potential fields of use
• External rights
• Overall IP portfolio and potential for future growth 

Inventors can, and should, discuss the technical aspects of the inventions with interested companies and notify TPO of potential interest. Once steps are taken to secure IP, this should be noted in articles, press and presentations. Simply noting the technology is patented, or that NIST has filed a patent application, is generally sufficient. This notice helps others understand how they will collaborate with NIST. Once NIST begins the patent process, the IP must be managed as part of a portfolio and licensed following the required statutory/regulatory process to allow use. There is a need for care for an exclusive license. NIST grants exclusive licensees the ability to enforce the patent against infringement by other parties. While the government enjoys a use right to its inventions (e.g., allows further research), NIST needs to be careful it does not induce infringement by others. 

Licensing is not the end point for IP.  In many cases, it is appropriate for NIST to have a follow-up form of collaboration to support the launch and growth of the new technology.  Cooperative Research and Development Agreements (CRADAs) are a particularly useful tool that can be used in conjunction with a license agreement. The concept of NIST inventors or other NIST staff continuing to work with a business is well within the scope of the CRADA authority. Follow-up agreements can help overcome technical hurdles and may even result in new products as the business pivots to meet the needs of the marketplace. This information provides direct market feedback for future NIST research, while supporting the creation of new jobs. In addition to CRADAs, businesses can apply for direct funding support to further develop products and services through new research under certain programs. These include the NIST Small Business Innovation Research or the Measurement Science and Engineering Research Grant Program. 

Measuring Success

There are several factors that need to be considered in measuring successful program outcomes. NIST is required by statute to report on several of these factors and has a lead role in coordinating and reporting metrics in this area across the government. Typical output measures that are reported include:

• invention disclosures
• patent applications
• patents issued
• CRADAs

The portfolio also needs to be considered in terms of the patents issued versus those that are licensed. Each patent that goes unlicensed represents both a cost to the taxpayer and a potentially missed opportunity for commercialization. 

Licensing statistics are similar but tend to indicate a business outcome, rather than simply an output. Licensing requires the action of an external party and license reporting. Income is used to continue to ensure practical application, as well as provide incentives for future inventions. Measures include:

• licenses issued
• license royalties

In addition to measures that simply count progress, it is important to review and study economic gains. NIST can perform economic analyses to study the eventual commercial and economic performance of products and to inform future decisions about patenting and licensing.