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36 Procurement Law. 1 (2000-2001)

handle is hein.journals/procurlw36 and id is 1 raw text is: t:l iqO! PUBLIC CONTRACT LAW , AMERICAN BAR ASSOCIATION VOLUMU 36, NUMIUR; I * FUL 200 Barriers to Federal Procurement: Patent Rights By RICHARD N. KUVATH Most of today's leading-edge technology is being devel- oied in commercial compa- nies, imile tile defense Itlustry is shrinking and becoming isolated fronm tlt broader national industrial base.' Asa result, Under Secretary of Defense for Acquisition and Technology Jacques Gansler has stated it is vital to both U.S. national security and international competitiveness interests to attract more commercial companies to do business with the Department of Defense (DoD).1 The present government R&D bttdget comprises a much smaller percentage of the total U.S. investment in R&D than it did in the 1980s. It is eytimated the govern- ment will fund only about 25 percent of the $266 billion in R&D forecasted to be performed in the U.S. in calen- dar year 2000. This is in contrast to 1980, when the gov- ernment funded about 50 percent of all R&D performed in the U.S.' DoD no longer drives technology development as it did in tie past. Many large commercial firms, which invest billions of dollars each year in internal R&D, refuse to do business with the government.4 Yet new national security threats will require the government to do business with commercial companies that are not part of its traditional R&D base. Examples include pharmaceutical and biotech- nology companies that are needed to develop a defense against biological and chemical warfare threats.5 A recent study compared DoD research, development, test, and evaluation (RDT&E) contract awards with the Richard N. Ktiyath is counsel in the Office of General Counsel of Min- nesora Mining anti Manufacturing Cmapany (3M). He gratefully acknuwledges die assistance provided for dtis artick by CaTrl L. Vacheta, painter, Piper Marbtory Rudnick & Wolfe LLP. The views expressed here are his on and do not necesiarily reflect the pition of 3M. Business Week R&D scorecard and the Fortune 500 Indus- trials. This study found that more than 92 percent of the industry leaders that invested the greatest percentage of their sales in R&D received Insignificant or no DoD RDT&E awards. These firms were usually the leaders in their ichsitry in technology development. In 1998, the iop five defense cmtractors received a total of 579 U.S. patents. In contrast, the top three inte- grated dual-use companies (IDGC)-IBM, Motorola, and Kodak-received a total of 5,187.' This is an exam- ple of the fact that the majority of research is now being conducted in commercial firms. To attract commercial companies to do government business, recent procurement reforms have attempted to eliminate many of the barriers that discourage such com- panies from doing business with the government. To st reamtline the federal procurement process, changes have been made to the Truth in Negotiations Act, the Cost Accounting Standards, and many other laws and regula- tions. However, one significant barrier has been left largely tntouched-intellectual property rights. The rigid and complex stattes and regulations govern. ing government intellectual property rights under tradi. tional federal procurement contracts, grants, and cooperative agreements prevent many commercial com- panies (or business units thereof) from performing govern- ment-funded R&D. This article addresses some of the (cuntinued on page 12) Chair's Column 2 2000 Model Procurement Code 4 News from the Committees 7 Construction Low Perspective 10 Letter from the Editor 26

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