oversight

Technology Transfer: Copyright Law Constrains Commercialization of Some Federal Software

Published by the Government Accountability Office on 1990-06-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      i.

                              United      States   General   Accounting   Office
                          +   Report to the Chairman, Subcommitke-•.
                              on Courts, Intellectual Property and the
                    *.        Administration of Justice,Conkittee



                 . . .,
_,.        ‘/’
                              TRANSFER.
                              copyright Law
                              Constrains
                              Commercialization of
                              Some Federal Softiare
Resources, Community,   and
Economic Development    Division

B-238912.2

June 1,199O

The Honorable Robert W. Kastenmeier
Chairman, Subcommittee on Courts,
  Intellectual Property and the
  Administration of Justice
Committee on the Judiciary
House of Representatives

Dear Mr. Chairman:

As requested, this report discusses federal agencies’ efforts to comply with the prohibition
on copyrighting government works, the extent to which copyright law has constrained the
transfer of federal computer software and other new technologies, and the pros and cons of
amending copyright law to allow federal agencies to copyright software. The report contains
a matter for congressional consideration for stimulating the transfer and use of federal
software with commercial applications.

As agreed with your office, we are sending copies of this report to the Director, Office of
Management and Budget and other interested parties. Copies will be made available to others
upon request.

This report was prepared under the direction of John M. Ols, Jr., Director, Housing and
Community Development Issues, who may be contacted at (202) 275-5525. Other major
contributors to this report are listed in appendix III.




J. Dexter Peach
Assistant Comptroller General
Executive Summary


             Responding to rising concern about the U.S. trade deficit and the ability
firpose      of U.S. businesses to compete in world markets, the Congress and the
             administration have acted to strengthen the links between the nation’s
             research and technology base and U.S. industry. Their actions include
             stimulating the transfer of technology to U.S. businesses from federal
             government-operated laboratories, which funded about $15.8 billion for
             research and development (F&D) in fiscal year 1989. However, in a
             March 1988 report,’ GAO identified copyright law as a constraint to the
             transfer of federal computer software to U.S. businesses.

             The Chairman, Subcommittee on Courts, Intellectual Property and the
             Administration of Justice, House Committee on the Judiciary, requested
             that GAO follow up on this report by examining (1) federal agencies’
             efforts to comply with the prohibition on copyrighting government
             works, (2) the extent to which copyright law has constrained the trans-
             fer of federal software and other new technologies, and (3) the pros and
             cons of amending copyright law to allow federal agencies to copyright
             software.


             Copyrights protect literary and artistic expression by giving authors the
Background   exclusive right for a limited time to, among other things, reproduce and
             sell copies of their work. However, under 17 U.S.C. 105, copyright protec-
             tion is unavailable for any U.S. government work-including        publica-
             tions, computer software, and data bases-and unclassified and
             nonsensitive software is generally disseminated. Also, the Semiconduc-
             tor Chip Protection Act of 1984 (P.L. 98-620) provided new protection
             for “mask” works-patterns       used in fabricating integrated circuits on
             semiconductor chips-but prohibited protection of federal mask works.

             Legislation enacted during the past 10 years has stimulated the transfer
             of technology from federal laboratories to U.S. businesses by authoriz-
             ing federal agencies to (1) grant nonexclusive, partially exclusive, or
             exclusive patent licenses, (2) negotiate rights to intellectual property
             under a cooperative R&D agreement, and (3) give federal inventors gen-
             erally at least 15 percent of any royalties from licensed inventions.
             However, this legislation has not facilitated the commercialization of
             federal software-computer      programs and supporting documentation-
             which currently cannot be copyrighted.


                            r: Gmstraints Perceived by Federal Laboratory and Agency Offkials (GAO/




             Page 2                         GAO/RCED9@146 Technology Transfer and Copyright Law
                            ExecutiveSummary




                            To examine the impact of the copyright prohibition, GAO interviewed
                            senior administrators and patent counsels at the Departments of Agri-
                            culture, Commerce, Energy, and Defense; the Environmental Protection
                            Agency; the National Aeronautics and Space Administration; and the
                            National Institutes of Health (NIH). In fiscal year 1989, these seven agen-
                            cies funded about $14.3 billion for F&D at federal government-operated
                            laboratories-about    90 percent of all such funding.


                                 found no evidence that federal agencies have improperly copy-
Results in Brief            GAO
                            righted software developed by federal workers. However, senior offi-
                            cials at six of the seven agencies believe their efforts to transfer
                            computer software with potential commercial applications to US. busi-
                            nesses have been constrained to a significant but not precisely determi-
                            nable extent because the government cannot copyright and license
                            software. Officials at four of these agencies stated that a conservative
                            estimate would be that this software represented 10 percent of all the
                            software developed.

                            Copyright and licensing authorities would stimulate the transfer of fed-
                            eral software with commercial applications to U.S. businesses by provid-
                            ing protection for their investments, according to agency officials and
                            executives from two businesses that have considered commercializing
                            federal software. Royalty-sharing authority also would give federal
                            researchers an incentive to further develop and document the software.
                            However, officials of the Information Industry Association, which repre-
                            sents businesses that distribute information, expressed concern that
                            authority to copyright and license software could limit access to federal
                            scientific and demographic data bases that software provides.



Principal Findings

Federal Agencies’ Efforts   GAO   found no evidence that federal agencies have improperly copy-
                            righted government software. However, in a few cases, federal software
to Comply With the          distribution centers have restricted (1) foreign access to the software
Copyright Prohibition       and/or (2) customers’ rights to further disseminate software without the
                            center’s permission. Federal laboratories also have provided software to
                            some businesses for further development. However, since this software
                            is not fully developed and documented, the laboratories have not made



                            Page 3                      GAO/BCED9@14S Technology Transfer and Copyright Law
                           Executive Summary




                                                                                                               -
                           it generally available, and it is unclear whether this software would be
                           made available to subsequent requesters.


Copyright Law Constrains   According to officials at the seven federal agencies GAO reviewed, most             .
                           software is developed for specific scientific applications and is ade-
Transfer of Certain        quately disseminated. Senior Energy officials said the copyright prohibi-
Federal Software           tion has not constrained their transfer efforts because almost all of
                           Energy’s research-related software has been developed by its contrac-
                           tor-operated laboratories, which are not directly affected by the copy-
                           right prohibition for U.S. government works.
                                                                                                               I
                           However, senior officials at the other six agencies stated that their
                           inability to copyright software and grant a partially exclusive or exclu-
                           sive license for it has significantly constrained the transfer and use of
                           software with wider commercial applications. The officials stated that,
                           as with commercializing inventions, further development is needed
                           before the federal software can be marketed, and businesses are unwill-
                           ing to invest in this software without copyright protection and some
                           guarantee of exclusivity. Executives from two businesses that have con-
                           sidered commercializing federal software stated that their companies
                           would require copyright protection and exclusivity to prevent competi-
                           tors from marketing alternative software packages that are potentially
                           less developed and less expensive. Agencies’ experiences in negotiating
                           cooperative R&D agreements also indicate their difficulties in commer-
                           cializing software. For example, NIH is negotiating its first agreement
                           that has a major software component after entering into about 130
                           agreements, and of the 140 agreements that the Agricultural Research
                           Service has signed or is negotiating, none focuses on software.
                           Only a few federal laboratories conduct F&D involving semiconductor
                           mask works, and agency officials identified no cases in which the trans-
                           fer of mask works was constrained. Also, NIH officials suggested consid-
                           ering new intellectual property protection that would be faster and less
                           expensive to obtain than currently available patent protection for cells
                           and microorganisms developed through biomedical research.


Pros and Cons of           According to senior officials at the six agencies concerned about the
                           copyright law, the government should be allowed to copyright and
Amending the Copyright     exclusively license software and federal researchers should be able to
Law for Federal Software   share in any royalties from licensed software. These authorities would              _
                           improve the transfer and use of federal software with commercial



                           Page 4                      GAO/RCIEIMO-146 Technology Transfer and Copyright Law
                       Executive Summary




                       applications because businesses could protect their investment and fed-
                       eral researchers would have an incentive to work with businesses in
                       developing and documenting the software. These authorities also
                       (1) would provide federal computer programmers with opportunities for
                       career, financial, and intellectual rewards similar to those provided to
                       federal inventors and (2) could enhance public access to some federal
                       software because the software might not otherwise be sufficiently
                       developed and documented for general dissemination. Several agency
                       and laboratory officials stated that with copyright authority they could
                       better control the quality and distribution of software related to their
                       mission of improving public health and safety.

                       However, in the view of some federal laboratory managers and
                       researchers, copyrighting and licensing authorities would (1) distract
                       researchers from the laboratory’s basic research mission and (2) inter-
                       fere with informal exchanges among federal and university scientists. In
                       addition, Information Industry Association officials are concerned that
                       agencies might use authority to copyright software to either restrict
                       access or give favored access to federal data bases.


                       To effectively transfer and use federal computer software while accom-
Matters for            modating concerns about access to federal data bases and federal labo-
Consideration by the   ratories’ basic research mission, it may be appropriate to provide
Congress               copyright and licensing authorities for federal software with wider com-
                       mercial applications that need further investment to be effectively
                       transferred. This change could be accomplished by amending (1) the
                       copyright law to allow federal agencies to copyright and grant nonexclu-
                       sive, partially exclusive, or exclusive licenses to software on a case-by-
                       case basis if such protection would stimulate its effective transfer and
                       use or (2) the Federal Technology Transfer Act to authorize agencies to
                       copyright and grant licenses to federal software under a cooperative R&D
                       agreement. Under either option, consideration should be given to
                       extending the Federal Technology Transfer Act’s royalty-sharing
                       authority to include federal software. If the copyright law is amended,
                       consideration should be given to instituting procedures like those
                       required for granting patent licenses to ensure fairness.



                       the seven federal agencies, who agreed with the report’s technical accu-
                       racy. However, at the Subcommittee’s request, GAO did not obtain com-
                       ments on a draft of this report.


                       Page 6                     GAO/RCED-90-148 Technology Transfer and Copyright Law
Contents


Executive Summary                                                                                  2

Chapter 1                                                                                          8
Introduction           Intellectual Property Protection
                       Protection of Computer Software
                                                                                                   8
                                                                                                  10
                       Legislation Stimulating Federal Technology Transfer                        11
                       Public Dissemination of Federal Computer Software                          12
                       Prior GAO and Commerce Reports                                             14
                       Objectives, Scope, and Methodology                                         15

Chapter 2                                                                                         19
Federal Agencies’      Software Disseminated Through Federal Software
                            Centers
                                                                                                  19
Efforts to Comply      Federal Laboratories’ Efforts to Transfer Software                         23
With the Prohibition   Software Developed Under a Contract, Grant, or                             25
                            Cooperative Agreement
on Copyrighting
Government Works
Chapter 3                                                                                         28
Copyright Law          Constraints to Transferring Federal Computer Software
                       Constraints to Transferring Other Federal Technology
                                                                                                  29
                                                                                                  34
Constraints on the     Computer Data Bases                                                        35
Transfer of Certain    Copyright Authority for All Government Works                               36
Federal Technology
Chapter 4                                                                                         37
The Pros and Cons of   Transfer and Use of Software With Commercial
                            Applications
                                                                                                  37
Amending Copyright     Impact on Federal Researchers                                              39
Law to Stimulate the   Facilitating Public Access                                                 40
                       Furthering Agencies’ Health and Safety Mission                             41
Transfer and Use of    Protecting the Government’s Interests                                      42
Federal Computer       Conclusion                                                                 43
Software               Matters for Consideration by the Congress                                  44




                       Page 6                     GAO/RCED9@145 Technology Transfer and Copyright Law
             Content.23




Appendixes   Appendix I: Alternative Legislative Issues and                              46
                 Approaches for Establishing Sui Generis Protection
                 for Cells and Other Microorganisms as an Alternative
                 to Patent Protection
             Appendix II: Alternative Legislative Issues and                             48
                 Approaches for Stimulating the Transfer and Use of
                 Federal Computer Software and Semiconductor Mask
                 Works
             Appendix III: Major Contributors to This Report                             51

Table        Table 2.1: NTIS Software Sales, 1987-89                                      21




             Abbreviations

             CFR          Code of Federal Regulations
             COSMIC       Computer Software Management and Information Center
             DOD          Department of Defense
             DOE          Department of Energy
             EPA          Environmental Protection Agency
             GAO          General Accounting Office
             NASA         National Aeronautics and Space Administration
             NESC         National Energy Software Center
             NM           National Institutes of Health
             NTIS         National Technical Information Service
             Pm           Patent and Trademark Office
             R.&D         research and development
             U.S.C.       United States Code


             Page 7                      GAO/RCED9CL146 Technology Transfer and Copyright Law
Chapter 1

Introduction


                        During the past 10 years, the Congress has passed legislation and the
                        President has issued an executive order to stimulate the transfer of
                        technology from federal laboratories to U.S. businesses and other
                        organizations. The legislation has encouraged businesses to commercial-
                        ize federal technology by allowing agencies to (1) grant nonexclusive,
                        partially exclusive, or exclusive licenses to patents for federal inven-
                        tions and (2) collaborate on research and development (R&D). However,
                        the legislation has not addressed federal computer software, which busi-
                        nesses typically protect by copyrighting.


                        The federal government provides protection to individuals and organiza-
Intellectual Property   tions for intellectual property primarily through copyrights, patents,
Protection              and trademarks.’ Alternatively, a business can protect technology by
                        treating it as a proprietary trade secret. The purpose of copyrights and
                        patents is to promote the progress of science and useful arts by provid-
                        ing to authors and inventors for limited times the exclusive right to their
                        respective writings and discoveries.


Copyright and Related   The Copyright Office, in the Library of Congress, administers the copy-
                        right registration program under Title 17 of the United States Code. A
Protection              copyright protects original works of authorship fixed in any tangible
                        medium of expression, including literary works, musical works, dra-
                        matic works, pantomimes and choreographic works, motion pictures and
                        other audiovisual works, and sound recordings. The author of an origi-
                        nal work may, but need not, register the work with the Copyright Office
                        to claim copyright protection. Subject to the limitations in 17 USC. 107
                        through 118, the copyright owner has the exclusive right to do or
                        authorize certain activities, including (1) reproducing the copyrighted
                        work, (2) preparing derivative works based upon the copyrighted work,
                        and (3) distributing copies or phonorecords of the copyrighted work to
                        the public by sale or other transfer of ownership, rental, lease, or
                        lending.

                        A copyright protects the form of expression rather than the subject mat-
                        ter of the work. For example, the description of an invention could be
                        copyrighted as a literary work. However, copyright protection would
                        prevent others only from copying the description but not from writing
                        an alternative description or from making and using the invention.

                        ‘Ballentine’s Law Dictionary defies intellectual property as those property rights rewlting from the
                        physical manifestation of original thought.



                        Page 8                               GAO,WXDW146          Technology Transfer and Copyright Law
                       chapter 1
                       Introduction




                       Effective January 1978, copyright protection for the work of a single,
                       known author is for the author’s life plus 50 years. For a work made for
                       hire, including one prepared by an employee within the scope of employ-
                       ment, copyright protection is 75 years from first publication or 100
                       years from the work’s creation, whichever expires first. For a joint work
                       prepared by two or more authors who did not work for hire, copyright
                       protection is for the life of the last surviving author plus 50 years.

                       The Copyright Office also is responsible for registering claims of protec-
                       tion for mask works under the Semiconductor Chip Protection Act of
                       1984 (17 U.S.C. 901 et seq.). Mask works are patterns used in fabricating
                       integrated circuits on semiconductor chips. In establishing separate pro-
                       tection for mask works, the act provided that an owner, subject to cer-
                       tain limitations, has the exclusive right to perform or authorize certain
                       activities, including (1) reproducing the mask work by optical, elec-
                       tronic, or any other means and (2) importing or distributing a semicon-
                       ductor chip product in which the mask work is embodied. A mask work
                       is protected for 10 years after registration or its first commercial
                       exploitation, whichever occurs first. Copyright Office regulations
                       require a mask work owner to deposit identifying material upon regis-
                       tration but allow the owner to block out material it considers a trade
                       secret, provided it is less than 50 percent of the total.


Patent and Trademark   The Patent and Trademark Office (P’I~) in the Department of Commerce
                       administers the patent and trademark programs under Title 35 of the
Protection             United States Code. w will issue a patent to any person who invents or
                       discovers any new and useful process, machine, manufacture, or compo-
                       sition of matter, or any new and useful improvements thereof. To deter-
                       mine whether an invention meets these criteria, FW examines a patent
                       application’s claims and “prior art” (prior discoveries) to determine
                       whether the invention is novel, nonobvious, and has utility. This exami-
                       nation takes about 18 months on average, including in many cases an
                       initial rejection of the application to which the applicant may respond
                       by refiling. In granting a patent, the government gives the patent holder
                       the right to exclude others from making, using, or selling the invention
                       for a period of 17 years, subject to the payment of maintenance fees. In
                       return, P?Dpublishes the specifications and accompanying drawings of
                       the patent upon issuance.

                       FW provides trademark protection for any word, name, symbol, or
                       device used to indicate the source or origin of the goods in interstate or
                       foreign commerce and to distinguish them from the goods of others. PR)


                       Page 9                      GAO/RCED9@146 Technology Transfer aud Copyright Law
                    Chapter 1
                    Introduction




                    similarly issues service marks for use in the sale or advertising of ser-
                    vices. Trademark and service mark rights may be used to prevent others
                    from using a confusingly similar mark but not to prevent others from
                    making the same goods or from selling them under a nonconfusing mark.


                    Computer software can be copyrighted,2 and in some instances computer
Protection of       programs included in inventions are patentable. The Computer Software
Computer Software   Copyright Act of 1980 (section 10 of P.L 96-517) extended copyright
                    protection to computer programs, which are defined as sets of state-
                    ments or instructions to be used directly or indirectly in a computer in
                    order to bring about a certain result. This definition does not include
                    data bases or supporting manuals, which can be copyrighted separately.
                    To register a computer program, the Copyright Office requires the
                    author to submit the first 25 and last 25 pages of the program and states
                    the best representation of authorship is a listing of the program in
                    “source code,” which enables programmers to read and manipulate the
                    program’s instructions. If the computer program is longer than 50 pages,
                    the middle part of the program does not have to be revealed and can, in
                    effect, become a trade secret.

                    PTDconsiders computer software to be a mathematical algorithm-a
                    procedure for solving a given type of mathematical problem. FW does
                    not issue patents for computer software alone because it considers a
                    mathematical algorithm as similar to a law of nature and therefore not
                    falling within one of m’s four statutory classes of subject matter-pro-
                    cess, machine, manufacture, or composition of matter.

                    In Diamond v. Diehr (450 U.S. 175 (1981)), however, the Supreme Court
                    held that a patentable process for curing rubber did not become unpat-
                    entable because of the inclusion of a mathematical algorithm or com-
                    puter program. Since this decision, P?Dhas issued patents for inventions
                    that include a computer program, which it defines as a step-by-step pro-
                    cedure to arrive at a given result wherein a computer physically per-
                    forms one or more of the recited process steps. In its September 5, 1989,
                    Official Gazette, P?Dprovided the following two-part test for determin-
                    ing whether an application of a mathematical formula to a known struc-
                    ture or process is patentable:

                    1. Does the claim directly or indirectly recite a mathematical algorithm?

                    2As defined in this report, computer software includes computer programs and related documentation
                    but not separable data bases.



                    Page 10                             GAO/RCED9@146 Technology Transfer and Copyright Law
                      Chapter 1
                      Introduction




                      2. Is the algorithm applied in any manner to physical elements or pro-
                      cess steps? This test may be made by determining whether the claims
                      without the algorithm is otherwise patentable.

                      PTOstates that the protection offered by patent and copyright statutes
                      are not mutually exclusive. Accordingly, someone could patent a novel
                      and nonobvious computer process and copyright the software for imple-
                      menting the process. Because PX) does not have a single classification
                      for inventions using computer processes, it does not have statistics on
                      the number of patents issued for these inventions.


                      Beginning in 1980, the Congress passed several laws to increase U.S.
Legislation           industry’s access to and use of federally funded technology. This legisla-
Stimulating Federal   tion provided greater authority for federal laboratories to license
Technology Transfer   patents for inventions and collaborate with businesses on R&D. In fiscal
                      year 1989, the federal government obligated an estimated $6 1.9 billion
                      for R&D, including about $15.8 billion at federal government-operated
                      laboratories and about $6.3 billion at federal contractor-operated
                      laboratories.

                      In 1980 the Congress enacted two laws to stimulate federal technology
                      transfer. The Stevenson-Wydler Technology Innovation Act of 1980 (15
                      U.S.C.3701 et seq.) took a first step to improve the utilization of federal
                      government-operated laboratory technology by directing federal labora-
                      tories to establish offices of research and technology applications to dis-
                      seminate information about federal products, processes, and services.
                      The Patent and Trademark Amendments of 1980 (35 U.S.C.200 et seq.)
                      encouraged the licensing of federal inventions by authorizing federal
                      agencies to grant nonexclusive, partially exclusive, or exclusive licenses
                      if they determine that it is appropriate to do so and in the public inter-
                      est. Implementing regulations for federal patent licensing (37 C.F.R. Part
                      404) further require that agencies announce their intent to grant an
                      exclusive or partially exclusive license in the Federal Register and pro-
                      vide opportunity for filing written objections within a 60-day period.

                      The Federal Technology Transfer Act of 1986 (P.L. 99-502) amended the
                      Stevenson-Wydler Act in part, by authorizing federal agencies to permit
                      their government-operated laboratories to collaborate on R&D with other
                      organizations including businesses, through a cooperative R&D agree-
                      ment. The act defines a cooperative R&D agreement as one in which a
                      federal laboratory and its partner(s) contribute resources (except that
                      the government cannot contribute funds in agreements with nonfederal


                      Page 11                     GAO/RCJZD-90-145 Technology Transfer and Copyright Law
                       Chapter 1
                       Introduction




                       entities) for a joint R&D project that must be consistent with the labora-
                       tory’s mission. The definition further states that a cooperative R&D
                       agreement is not a procurement contract or a cooperative agreement as
                       those terms are used in 31 USC. 6303,6304, and 6305.

                       Under the Federal Technology Transfer Act, a laboratory can grant a
                       collaborator title or licensing rights to any resulting invention; but if the
                       collaborator takes title to an invention, the government is required to
                       retain a nonexclusive, royalty-free license for its use by or on behalf of
                       the government. The Stevenson-Wydler Act subsequently was amended
                       in 1988 to authorize laboratory directors to determine rights to other
                       intellectual property developed under a cooperative R&D agreement. In
                       1989 the act was amended to authorize contractor-operated federal lab-
                       oratories to enter into cooperative R&Dagreements.

                       The Federal Technology Transfer Act also provided incentives for fed-
                       eral employees to promote technology transfer by directing federal
                       agencies to (1) pay an employee inventor at least 15 percent of any roy-
                       alties or other income received, up to $100,000 per year, for an inven-
                       tion3 and (2) establish a cash awards program for inventions,
                       innovations, or other outstanding scientific or technological contribu-
                       tions of value to the United States because of their commercial applica-
                       tion or contributions to the missions of the agency or government.

                       In April 1987 the President issued Executive Order 12591, Facilitating
                       Access to Science and Technology. The order implements the Federal
                       Technology Transfer Act by directing the heads of agencies, to the
                       extent permitted by law, to delegate authority to their government-oper-
                       ated federal laboratories to enter into cooperative R&D agreements and
                       license, assign, or waive rights to intellectual property.


                       Since 1895, the law has prohibited the assertion of copyright in a pub-
Public Dissemination   lished federal government work. Current copyright law (17 U.S.C.105)
of Federal Computer    states that copyright protection is not available for any work of the U.S.
Software               government,4 but that the government is not precluded from receiving
                       and holding copyrights transferred to it by assignment, bequest, or


                       3Altematively, federal agencies may promulgate regulations provided, in part, that the employee
                       inventor(s) receives more than 16 percent of total agency royalties in any given foal year.

                       4Copyright law defines a “work of the US. government” as a work prepared by an officer or
                       employee of the U.S. government as part of that person’s official duties.



                        Page 12                             GAO/RCED90-145 Technology Transfer and Copyright Law
Chapter 1
Introduction




otherwise. The legislative history for the Act for the General Revision of
the Copyright Law (P.L. 94-553) stated,

The effect of section 105 is intended to place all works of the United States Govern-
ment, published or unpublished, in the public domain. This means that the individ-
ual Government official or employee who wrote the work could not secure copyright
in it or restrain its dissemination by the Government or anyone else...5

The only exception to this prohibition is under 15 U.S.C. 290(e), which
permits the Secretary of Commerce to obtain copyrights for any stan-
dard reference data. In addition, the prohibition may not apply to works
created by Postal Service employees. According to the Copyright
Office’s General Counsel, the United States is the only developed coun-
try that has an extensive prohibition on copyrighting national govern-
ment works.

Federal policy is to publicly disseminate unclassified and nonsensitive
computer software by making it generally available. Accordingly, fed-
eral agencies distribute computer software primarily through (1) Com-
merce’s National Technical Information Service (NTIS), (2) the National
Aeronautics and Space Administration’s (NASA) Computer Software
Management and Information Center (COSMIC), and/or (3) the Depart-
ment of Energy’s (DOE) National Energy Software Center (NBC). In addi-
tion, federal researchers who develop software may provide it to
colleagues.

Commerce operates NTIS as a clearinghouse for the collection and dis-
semination of scientific, technical, and engineering information, includ-
ing computer software. The Secretary of Commerce is authorized to
establish a schedule of reasonable fees for services performed, docu-
ments, and other publications. NTIS’operations are to be self-sustaining
to the fullest extent feasible.

The University of Georgia operates COSMICunder contract with NASA to
make available to potential users NASA-developed computer programs
and related documentation. COSMIC   is operated to be self-supporting, but
NASA has subsidized its activities.

Argonne National Laboratory operates NBC under contract with DOE’S
Office of Scientific and Technical Information to promote the sharing of
unclassified scientific and technical computer software among DOE and

 6HouseReport 1476,94th Gong.,2nd Sew..69 (1976).



 Page 13                           GAO/‘R~~143      Technology Transfer and Copyright Law
                  Chapter 1
                  Introduction




                  DOEcontractors and disseminate DoE-sponsored scientific and technical
                  software to private industry, the public, and foreign requesters. DOE’S
                  policy is for NE% to recover full cost for materials and services sold to
                  persons and organizations outside the federal government. Under an
                  inter-agency agreement, NESCsoftware is advertised through NTIS.

                  Although computer programs can be patented under certain circum-
                  stances, federal agencies generally have not patented computer
                  software. The federal patent attorneys we interviewed stated that they
                  rarely file patent applications for software because (1) software has a
                  short commercial life and patenting takes too long; (2) prosecuting a
                  patent application is expensive; and (3) they are uncertain in some cases
                  whether P?Dwill consider the computer program to be part of a
                  patentable invention.


                  We reported in March 1988 that federal officials identified the copyright
Prior GAO and     law’s prohibition on copyrighting federal works as one of four con-
CommerceReports   straints to the transfer of federal technology to U.S. businesses and
                  other organizations.6 While recent changes in the law allow federal labo-
                  ratories to patent and exclusively license inventions, unclassified and
                  nonsensitive federal software generally is publicly disseminated; thus
                  businesses may not have an incentive to fully develop and market it.

                  Similarly, Commerce stated in a May 1988 report to the President and
                  the Congress that the current legal provisions denying the government
                  copyright protection for works created by its employees constitutes a
                  substantial barrier to successful technology transfer.7 The report stated
                  that firms will be unwilling to commercialize software in the public
                  domain without copyright protection because of the high costs associ-
                  ated with readying it for the market. These costs include preparing doc-
                  umentation and training materials, “debugging” the computer program,
                  and establishing user support systems. The report recommended that
                  study should be immediately given to examining the need for legislation
                  to (1) allow the government to have and convey necessary protection to
                  computer software and (2) reward the creating scientist with a percent-
                  age of the resulting royalties.

                  6Technology Transfer: Constraints Perceived by Federal Laboratory and Agency Officials (GAO/
                        88-l 16BR, Mar. 4,1988).

                  7Report to the President and Congress Required by the Technology Transfer Act of 1986 on Barriers
                  to the Commercialization of Federal Computer Software and Feasibility and Cost of Compiling an
                  Inventory of Federally Funded Training Software, U.S. Department of Commerce (May 1988).



                  Page 14                              GAO/RCED-90-145 Technology Trausfer and Copyright Law
                            Chapter 1
                            Introduction




                            In July 1989 the Secretary of Commerce reported that federal agencies
                            had concluded more than 100 cooperative R&D agreements but pointed
                            out that the Federal Technology Transfer Act does not provide a suita-
                            ble basis for commercializing the valuable software that is often pro-
                            duced at federal laboratories8 The report noted that virtually none of
                            the Department of Agriculture’s cooperative R&D agreements signed or
                            under negotiation dealt with expert systems, artificial intelligence, or
                            other forms of knowledge engineering, even though systems approaches
                            and software-derived technology reflected a growing portion of its
                            research. The report reaffirmed Commerce’s position that the prohibi-
                            tion on copyrighting government works is a constraint to transferring
                            federal software and added that the same limitation applies to semicon-
                            ductor mask works.


                            In a July 19, 1989, letter, the Chairman, Subcommittee on Courts, Intel-
Objectives, Scope,and       lectual Property and the Administration of Justice, House Committee on
Methodology                 the Judiciary, requested that we follow up on our report, Technology
                            Transfer: Constraints Perceived by Federal Laboratory and Agency Offi-
                            e,    which identified copyright law as a constraint to the transfer of
                            federal software to U.S. businesses. Specifically, the Chairman asked
                            that we examine

                        l   federal agencies’ efforts to comply with the prohibition on copyrighting
                            government works;
                        l   the extent to which copyright law has constrained the transfer of fed-
                            eral software and any other new technologies; and
                        l   the positive and negative impacts of amending copyright law to permit
                            federal agencies to copyright software and any other similar works,
                            including the impact of (1) differences between federal patent and copy-
                            right policies on technology transfer and the recognition of federal
                            inventors and software developers and (2) providing copyright and
                            licensing authorities on the protection of the federal government’s
                            interests.

                            To assess agencies’ efforts to comply with the copyright law, we (1)
                            reviewed the applicability of the prohibition on copyrighting works of
                            the federal government by examining the legislative history for the Act
                            for the General Revision of the Copyright Law and relevant court cases,


                            ‘The Federal Technology Transfer Act of 1986: The First 2 Years, Report to the President and the
                            Congress from the Secretary of Commerce (July 5, 1989).



                            Page 16                              GAO/RCED-So-146 Technology Transfer and Copyright Law
                          Chapter 1
                          Introduction




                          (2) interviewed officials and reviewed sales agreements at the three pri-
                          mary federal software distribution centers, (3) interviewed patent attor-
                          neys at federal agencies and some government-operated laboratories
                          and reviewed any licensing and cooperative R&D agreements involving
                          federal computer software, and (4) interviewed federal attorneys
                          involved in revising the Defense Federal Acquisition Regulation Supple-
                          ment and the Federal Acquisition Regulation in response to recent legis-
                          lation and executive actions.

                          To determine the extent to which the copyright prohibition has con-
                          strained the transfer of federal software and other new technologies, we
                          (1) reviewed mid-1988 correspondence from federal agencies to congres-
                          sional oversight committees on their efforts to implement the Federal
                          Technology Transfer Act, including the agencies’ perceived constraints
                          to transferring federal software, and (2) interviewed senior administra-
                          tors responsible for technology transfer and patent counsels at the
                          Departments of Agriculture, Commerce, Energy, and Defense-includ-
                          ing the Air Force, the Army, and the Navy; the Environmental Protec-
                          tion Agency (EPA); NASA; and the National Institutes of Health (NH).
                          These seven agencies obligated about $14.3 billion in fiscal year 1989
                          for R&D at federal government-operated laboratories-about      90 percent
                          of the $15.8 billion obligated by all federal agencies.

                          To identify the pros and cons of amending copyright law to stimulate
                          federal technology transfer, we interviewed senior administrators and
                          patent counsels at the seven federal agencies and, at their suggestion,
                          laboratory research managers, researchers, technology transfer offi-
                          cials, and patent counsels involved in developing and/or attempting to
                          transfer software and other new technologies to U.S. businesses or other
                          organizations. We interviewed officials at the following offices and labo-
                          ratories at each of the seven agencies.


Federal Agencies in Our   Agriculture
                          Agricultural Research Service
Study                     Office of General Counsel

                          Commerce
                          National Institute of Standards and Technology
                          National Technical Information Service
                          Office of Federal Technology Management
                          Office of General Counsel



                          Page 16                     GAO/RCEDW145   Technology Transfer and Copyright Law
Chapter   1
lutroduction




Defense
Air Force
 Command Headquarters Technology Transfer Office
 Office of the Judge Advocate General

AMY
 Army Corps of Engineers
 Army Materiel Command
 Construction Engineering Research Laboratory
 Harry Diamond Laboratories
 Office of the Judge Advocate General

Navy
 Data Automation Office
 Naval Research Laboratory
 Naval Surface Warfare Center
 Office of General Counsel, Office of the Chief of Naval Research

Office of the Secretary of Defense
 Research and Advanced Technology

Energy
Defense Programs
Office of General Counsel
Office of Scientific and Technical Information

Environmental Protection Agency
Environmental Research Laboratory
Office of General Counsel
Office of Research and Development

Health and Human Services
National Institutes of Health
 Division of Computer Research and Technology
 National Library of Medicine
 Office of the Director
 Office of General Counsel
 Office of Invention Development




 Page 17                    GAO/RCED4@145 Technology Transfer and Copyright Law
Chapter 1
Introduction




National Aeronautics and Space Administration
Goddard Space Flight Center
Information Resources Management
Office of General Counsel
Computer Software Management and Information Center

We also obtained the views of intellectual property attorneys outside the
government about the pros and cons of amending copyright law or alter-
native legislation to stimulate the transfer of federal computer software.
Among those we interviewed were officials of the American Bar Associ-
ation’s section on patent, copyright, and trademark and the American
Intellectual Property Law Association; executives from two businesses
that have considered commercializing federal software; the Computer
and Business Equipment Manufacturers Association; and the Informa-
tion Industry Association.

Webster’s Dictionary defines computer software as the entire set of pro-
grams, procedures, and related documentation associated with a com-
puter system. We use this definition throughout the report to include
computer programs and supporting documentation but not separable
data bases. Discussion of the transfer of federal computer software in
this report is intended to apply to unclassified software that can be pub-
licly disseminated but not to either classified or sensitive software.

We discussed the information included in this report with officials from
the seven federal agencies, who agreed with the report’s technical accu-
racy. However, at the Subcommittee’s request, we did not obtain official
agency comments on a draft of this report. Our review was performed in
accordance with generally accepted government auditing standards
between July 1989 and February 1990.




Page 18                     GAO/RCED-90-146 Technology Transfer and Copyright Law
Federal Agencies’Efforts to Comply With the
Prohibition on Copyrighting GovernmentWorks

                       Federal policy has been to publicly disseminate unclassified and nonsen-
                       sitive government computer software by making it generally available.
                       We found no evidence that federal agencies have copyrighted software
                       developed by federal workers. However, Commerce’s NTIS and NASA'S
                       COSMIC have included restrictive provisions in nonexclusive licensing
                       agreements for a small percentage of the software they distribute. In
                       addition, some DOD laboratories have transferred software to businesses
                       through cooperative R&D agreements. Since this software is not fully
                       developed and documented, the laboratories have not made it generally
                       available through NTIS. Further, it is unclear whether this software
                       would be made available to others who might subsequently request it.

                       The prohibition on copyrighting government works does not, on its face,
                       apply to works developed under federal contracts, grants, or coopera-
                       tive agreements. The Department of Defense (DOD) and civilian agencies
                       take different approaches to permitting contractors and grantees to
                       copyright and commercialize technical data and computer software that
                       they develop with federal funds.


                       Under its current policy, the government generally disseminates unclas-
Software               sified and nonsensitive federal software by making it available to any
Disseminated Through   interested users through NTIS, COSMIC, or DOE’S NESC. These distribution
Federal Software       centers require that software provided by federal agencies and laborato-
                       ries at a minimum must be documented and usable by an external user.
Centers                Federal R&D software typically is developed for an immediate agency
                       need or an R&D project that leads to the publication of an article in a
                       scientific journal. In many cases, federal laboratories do not send
                       software to a federal software distribution center for dissemination
                       because the effort to further develop and document the software is
                       given lower priority than publishing the research results and pursuing
                       other R&D projects.

                       NTIS, COSMIC, and NESC normally sell software to customers. Their market-
                       ing efforts are relatively passive and are primarily aimed at researchers
                       who use software that federal laboratories have developed as part of
                       their R&D mission.’ NTIS, COSMIC, and NFSC sales may not fully indicate the
                       extent to which federal software is disseminated because (1) customers
                       can copy and further disseminate or market the software and (2) federal
                       laboratory researchers provide copies of software to colleagues. For

                       10fficials noted that their agencies typically procure software for administrative functions from con-
                       tractors rather than developing it internally.



                       Page 19                               GAO/RCED90146        Technology Transfer and Copyright Law
                 Chapter 2
                 Federal Agencies’ Efforts to Comply With the
                 Prohibition on Copyrighting
                 Government Works




                 example, one NIH researcher mentioned distributing 300 copies of a com-
                 puter program to requesters at no cost, while a company marketed the
                 software for $600 per copy.

                 Agency officials stated that most of their software is adequately dissem-
                 inated to users by making it generally available through federal
                 software distribution centers and by laboratory researchers. This
                 software typically has specific scientific applications that are useful pri-
                 marily to other researchers. Alternatively, some federal software, such
                 as the National Library of Medicine’s Grateful Med program for physi-
                 cians and DOD'S vocational training software used to train technicians, is
                 developed and documented sufficiently enough to be readily used by
                 outside organizations. The Director of the National Library of Medicine
                 and a DOD official stated that the government’s and the public’s interests
                 may be best served by making this software directly available to outside
                 users rather than by providing a company with an exclusive license to
                 market it.

                 NTIS, COSMIC,  and NEX recognize that copyright protection is not availa-
                 ble for government works. However, NTIS sells about 5 percent of its
                 software under a nonexclusive licensing agreement in which the licensee
                 agrees not to further distribute the software without obtaining NTIS'
                 prior permission. In addition, COSMIC has used a lease arrangement to
                 restrict foreign access to and limit further distribution of software that
                 has very high utility and value.


NTIS’ Software   NTIS is the primary clearinghouse for federal agencies’ software, techni-
                 cal publications, and data bases. NTIS advertises software through its
Dissemination    catalogue and newsletter, which provide brief abstracts, and has begun
                 advertising in technical journals and through mailings to targeted cus-
                 tomers NTIS requires that a federal laboratory or agency submit a user’s
                 manual or guide with the software, and it verifies that the software
                 operates on specified computer systems. However, NTIS provides no
                 additional services, such as training, and will refer users with questions
                 about software applications to the originating laboratory for assistance.

                 Table 2.1 shows NTIS' sales of microcomputer diskettes and magnetic
                 tapes between 1987 and 1989. According to NTIS' manager for software
                 sales, the declining value of software sales reflects (1) a reduction in
                 1988 of the average price per microcomputer diskette from $75 to $50
                 and (2) a decline in the number of magnetic tapes that agencies have
                 sent to NTIS. The software sales manager added that about 5 percent of


                 Page 20                           GAO/RCED-90-146 Technology Transfer and Copyright Law
                                          Chapter 2
                                          Federal Agencies’ Efforta to Comply With the
                                          Prohibition on Copyrighting
                                          Government Works




                                          the software accounts for a large volume of sales, including widely dis-
                                          seminated National Library of Medicine diskette programs such as
                                          Grateful Med. For the remaining 95 percent of the software, NTIS typi-
                                          cally sells about 25 to 30 copies of each microcomputer diskette and
                                          about 10 copies of each magnetic tape. Table 2.1 also indicates that
                                          about 7 percent of NTIS’ software sales in 1989 were to foreign custom-
                                          ers. NTIS sells the source code, which computer programmers need to
                                          readily improve the software, to both U.S. and foreign customers, if the
                                          sale is in compliance with the Export Control Act.

Table 2.1: NTIS Software Sales, 1987-89
                                          Dollars In thousands
                                                                                                       Software sales
                                                                                                1987            1988        1989
                                          Microcomputer    diskettes                            $249            $197        $167
                                          Magnetic tapes                                         333             402         228
                                            Total                                                582             599         395
                                          U.S. sales                                             544             533         366
                                          Foreign sales                                           38              66          29
                                          Source: NTIS

                                          While NTIS sells most software without restrictions, it uses a nonexclu-
                                          sive license agreement for about 5 percent of the software, typically
                                          magnetic tapes, that contains the following restriction:

                                          “A. Except for purposes of inhouse use, customer will not resell, copy, or otherwise
                                          reproduce; have reproduced; or willfully allow employees, customers or other par-
                                          ties, to resell, copy, or otherwise reproduce any portion of the software in machine-
                                          readable form without advance written permission from NTIS.”

                                          According to the manager of software sales, NTIS includes this provision
                                          only at the request of the agency supplying the software. For example,
                                          the National Institute of Standards and Technology has requested the
                                          restriction to maintain the quality of its metrology standards software
                                          that is distributed to users. A Commerce attorney stated that NTIS’
                                          restriction is based on contract law rather than on copyright protection.


COSMIC’sSoftware                          COSMIC’Smarketing coordinator    told us that COSMICsells scientific
                                          software to a specialized market of universities and other scientific
Dissemination                             institutions. While a few of the computer programs COSMICsells are very
                                          popular, a typical program is acquired by only 10 companies over its
                                          lifetime.


                                          Page 21                           GAO/RCED-So-145 Technology Transfer and Copyright Law
                  Chapter 2
                  Federal Agencies’ Efforta to Comply With the
                  Prohibition on Copyrighting
                  Government Works




                  NASA’Smanagement instruction for distributing computer programs
                  states that COSMICshall make a program (1) generally available without
                  restriction if the program has relatively limited utility by others or was
                  previously published or released without restrictions, (2) available on a
                  restricted basis and normally for domestic use if the program has signif-
                  icant utility and value and warrants only domestic distribution for a
                  period of time, typically 1 year, or (3) available under a lease agreement
                  with appropriate fees and restrictions, which normally include limiting
                  its use to domestic organizations for 2 or more years, if the program has
                  very high utility and value.

                  At NASA's request, COSMIChas leased 18 of about 1,200 computer pro-
                  grams through an agreement that limits the licensees’ use and reproduc-
                  tion of the program. As part of the agreement, the licensee agrees to (1)
                  not disclose or remove the program outside of its prime installation, (2)
                  release or disclose only machine-readable code outside the United States,
                  (3) make additional copies of the program only after obtaining COSMIC’S
                  permission, (4) refrain from changing or removing any indication of
                  ownership of the program, copies, or computer output, (5) remove and
                  return, or otherwise dispose of, all program tapes, copies, and documen-
                  tation upon termination of the agreement.

                  A NASA attorney told us that COSMIC’Srestrictions were based on contract
                  law. The attorney added that NASA’S policy giving preference to U.S.
                  organizations is based on the declaration of policy and purpose in the
                  National Aeronautics and Space Act of 1958 (42 U.S.C.2451(c)), which
                  states that the aeronautical and space activities of the United States
                  shall be conducted so as to contribute materially to the preservation of
                  the role of the United States as a leader in aeronautical and space tech-
                  nology and its application to the conduct of peaceful activities within
                  and outside the atmosphere.


NESC’s Software   NEST  primarily distributes software developed by DOE’S contractor-
                  operated laboratories. According to a DOE official, NE!% relies on its cus-
Dissemination     tomers’ voluntary agreement that they will not further disseminate fed-
                  erally developed computer programs without NFSC'S approval. Our
                  October 1987 report on NFLXshowed that from October 1985 through
                  March 1987, the center distributed 2 or more copies of 41 scientific and




                  Page 22                           GAO/RCELHO-1% Technology Transfer and Copyright Law
                      Chapter 2
                      Federal Agencies’ Effort.9 to Comply With the
                      Prohibition on Copy-righting
                      Government Works




                      engineering computer programs to U.S. organizations and 2 or more cop-
                      ies of 24 scientific and engineering computer programs to foreign
                      organizations.2

                      In May 1988 DOE issued Acquisition Letter 88-l on software policy. This
                      letter established new procedures for its contractor-operated laborato-
                      ries to obtain a release from DOE to copyright software with commercial
                      potential. If DOE grants this release, the contractor can copyright and
                      exclusively license the software but must make an abstract of the
                      software available to the public through NESC. DOE’s Assistant General
                      Counsel for Patents stated that his office has received about 10 requests
                      for releases under the new policy. Patent attorneys for contractors that
                      operate four DOE laboratories told us, however, that the contractors
                      decided not to amend their operating contracts to adopt the new
                      software policy because the disadvantages outweighed the advantages,
                      citing these examples: (1) under the new software policy, a contractor
                      cannot obtain a release to copyright other works, such as engineering
                      drawings and (2) the copyright could automatically revert to DOE if req-
                      uisite letters, for whatever reason, are not in DOE’S files. The patent
                      attorney for another contractor-operated laboratory that amended its
                      contract stated that the laboratory had applied for only three waivers
                      under DOE’S software policy mainly because the policy was administra-
                      tively burdensome, requiring the contractor to make too many represen-
                      tations and certifications.




Efforts to Transfer   businesses to enter into cooperative R&D agreements to further develop
Software              and commercialize software. Some DOD laboratories have transferred
                      software to businesses through cooperative R&D agreements. Since this
                      software is not fully developed and documented, the laboratories have
                      not made it generally available through NTIS. Further, it is unclear
                      whether this software would be made available to others who might
                      subsequently request it.

                      The Army Corps of Engineers has entered into or is negotiating nine
                      cooperative R&D agreements to further develop Corps software for com-
                      mercial applications. According to Corps of Engineers officials, the
                      Corps publicized these opportunities through Commerce Business Daily

                      %oftware Distribution: Review of the Department of Energy’s National Energy Software Center
                      (GAO/IMTEG88-2, Oct. 14,1987).



                      Page 23                             GAO/RCRD-90-1% Technology Transfer and Copyright Law
chapter 2
Federal Agencies’ Efforts to Comply With the
Prohibition on Copyrighting
Government Works




and in other ways. A Corps of Engineers attorney stated that, while
copyright protection cannot be provided for federal software serving as
the basis of a cooperative R&D agreement, the collaborator could copy-
right a jointly developed, derivative work. The Corps of Engineers may
not make software involved in a cooperative R&D agreement available to
others by sending it to NTIS because the software would be insufficiently
developed and documented for NTIS' standards. For example, the Con-
struction Engineering Research Laboratory has not sent to NTIS two
software programs serving as the bases for ongoing cooperative R&D
agreements negotiated in 1988. A Corps of Engineers attorney also
noted that the Corps may turn down any subsequent requests for the
original Corps’ software either as part of another cooperative R&D agree-
ment or under the Freedom of Information Act.

A patent attorney at the Naval Surface Warfare Center told us that the
center has used Federal Technology Transfer Act authorities in two
instances to transfer its software. Although the transfer in each case
was initially conducted through a nonexclusive licensing agreement, the
Navy is converting each to a cooperative R&D agreement. According to a
Kavy attorney, the Navy would not use a cooperative R&D agreement as
the basis for withholding the Naval Surface Warfare Center software
from another business requesting access. However, the Naval Surface
Warfare Center has not sent this software to NTIS because (1) it has not
been sufficiently developed and documented and (2) laboratory manag-
ers do not perceive that making software generally available through
NTIS is a sufficiently effective means to transfer the software to justify
the added resources and time needed to meet NTIS requirements.

Officials at several other agencies have sought to attract businesses to
commercialize their laboratories’ software that was insufficiently devel-
oped and documented for external use. However, these officials indi-
cated that they have had difficulty in transferring this software,
particularly through cooperative R&D agreement because (1) businesses
are unwilling to put the time and money into commercializing federal
software without adequate intellectual property protection and the
assurance of some kind of exclusivity and (2) the extent to which the
copyright prohibition applies to software developed jointly by federal
and nonfederal effort has to be reviewed on a case-by-case basis.




Page 24                           GAO/RCED90-146 Technology Transfer and Copyright Law
                           Chapter 2
                           Federal Agencies’ Efforts to Comply With the
                           Prohibition on Copyrighting
                           Government Works




                           Federal agencies’ policies for allowing contractors and grantees to copy-
Software Developed         right and commercialize software do not appear to contravene federal
Under a Contract,          copyright law. On its face, the copyright prohibition (17 U.S.C.105)
Grant, or Cooperative      applies only to a “work of the United States government,” which is
                           defined as one prepared by an officer or employee of the U.S. govern-
Agreement                  ment as part of that person’s official duties. The copyright law is silent
                           on whether this restriction is applicable also to works funded by federal
                           agencies but produced by private entities. However, the legislative his-
                           tory for the Act for the General Revision of the Copyright Law indicates
                           that decisions on whether to allow copyrights of works produced under
                           contracts, grants, or cooperative agreements should be left to the discre-
                           tion of the funding agency:

                           A more difficult and far-reaching problem is whether the definition [of a work of the
                           U.S. government] should be broadened to prohibit copyright in works prepared
                           under U.S. Government contracts or grant. As the bill is written, the Government
                           agency concerned could determine in each case whether to allow an independent
                           contractor or grantee, to secure copyright in works prepared in whole or in part
                           with the use of Government funds...

                           The bill deliberately avoids making any sort of outright, unqualified prohibition
                           against copyright in works prepared under Government contract or grant. There
                           may well be cases where it would be in the public interest to deny copyright in the
                           writings generated by Government research contracts and the like...However, there
                           are almost certainly many other cases where the denial of copyright protection
                           would be unfair or would hamper the production and publication of important
                           works.. .3

                           Judicial opinion also has confirmed that works made on commission for
                           the U.S. government may be copyrighted by the contracting party
                           (Schnapper v. Foley, 667 F2d 102 (D.C. Cir. 1981) cert. den’d. 455 U.S.
                           948 (1982)).

                           DOD  and the civilian federal agencies have developed separate
                           approaches in their acquisition regulations regarding the rights of con-
                           tractors and grantees to copyright and exclusively commercialize techni-
                           cal data and computer software that they developed under a federal
                           contract, grant, or cooperative agreement.


DOD’s Interim Regulation   On October 28, 1988, DOD issued an interim rule revising its policies and
                           procedures relating to the acquisition of, rights in, and copyrights of

                           3SenateReport 473,94th Gong.. 2nd Fess.56-57 (1976) and House Report 1476,94th Gong., 2nd Sess.
                           59 (1976).



                           Page 26                            GAO/RCED90146      Technology Transfer and Copyright Law
Chapter 2
Federal Agencies’ Efforts to Comply With the
Prohibition on Copyrighting
Government Works




technical data, other data, and computer software under a DOD contract.4
DOD’S policy, to be codified under part 227.480(c), is to allow a contrac-
tor to copyright any work of authorship developed under a contract,
unless the work is designated a “special work.“5 In return, the contrac-
tor is required to grant to the government and authorize the government
to grant to others a nonexclusive, paid-up, worldwide license for govern-
ment purposes in any work of authorship first prepared, produced,
originated, developed, or generated under the contract.

The scope of the government’s license corresponds to the rights the gov-
ernment has obtained under the contract. For software, the government
typically will acquire “unlimited” rights if software is developed exclu-
sively at government expense or “restricted” rights if the software is
developed exclusively at the contractor’s expense. For technical data,
the government typically will acquire (1) “unlimited” rights if the tech-
nical data are developed exclusively at government expense, (2) “lim-
ited” rights if the technical data are developed exclusively at the
contractor’s expense, or (3) “government purpose license” rights if the
technical data are developed with joint funding.

According to DOD procurement attorneys, the government’s unlimited
rights to software or technical data, in effect, could make them gener-
ally available to others. If the government has limited or restricted
rights, it cannot release or disclose such data outside the government or
use the data for manufacture without the contractor’s written permis-
sion. Government purpose license rights are a combination of limited
and unlimited rights.

DOD  procurement attorneys told us that DOD historically obtained unlim-
ited rights to jointly funded technical data and software. However, vari-
ous amendments to the rights in technical data provision in 10 U.S.C.
2320 have changed DOD’S right to jointly funded technical data. In par-
ticular, section 953 of the Defense Acquisition Improvement Act of 1986
(P.L. 99-661) required that DOD’S rights to jointly funded technical data
be negotiated. Section 808 of the National Defense Authorization Act for
Fiscal Years 1988 and 1989 (P.L. 100-180) further clarified a DOD con-
tractor’s rights to these data. Because the technical data provision does
not cover software, DOD’S rights to jointly developed software generally

“63 Fed. Reg. 43698 (Oct. 28,1988), which is to be codified at 48 C.F.R. Parts 227 and 252.

5The contractor may not assert any rights or claim to copyright in special works, such as departmen-
tal histories or works pertaining to recruiting, morale, training, or career guidance. Special works are
used in all contracts where the government needs ownership and control of the work to be generated.



Page 26                                GAO/RCED-!N%145 Technology Transfer and Copyright Law
                      Chapter 2
                      Federal Agencies’ J3fort.a to Comply With the
                      Prohibition on tipyrishting
                      Government Works




                      have not been affected. Reflecting these amendments, DOD’S interim reg-
                      ulation provides for a government purpose license right, which limits
                      the government’s right to use, duplicate, or disclose data (and computer
                      software in the Small Business Innovation Research program) or permit
                      others to do so for government purposes only, including competitive
                      procurement.” The interim regulation further states that the government
                      purpose license rights, which generally are to be negotiated in advance,
                      should be time limited-normally     for 1 to 5 years after the estimated
                      date for the contractor’s delivery of the product to which the data per-
                      tain. However, a longer period may be negotiated to provide the contrac-
                      tor a reasonable opportunity to recover its investment. The government
                      retains unlimited rights to the data after the time period expires.


Federal Acquisition   Under the Federal Acquisition Regulation (48 C.F.R. Part 27.404(f)) for
                      federal civilian agencies, a contractor or grantee generally is required to
Regulation            obtain the permission of the contracting officer to establish a copyright
                      claim subsisting in data, including technical data and software, first
                      developed in the performance of a contract. However, prior approval
                      usually is not required for claims to copyrights in technical or scientific
                      articles based on or containing data first produced in the performance of
                      a work under a contract and published in academic, technical or profes-
                      sional journals, symposia proceedings, and similar works. Blanket per-
                      mission to establish copyright claims is required to be used under
                      certain circumstances in contracts for basic or applied research to be
                      performed solely by colleges and universities.

                      When a contractor establishes claim to a copyright in data (other than
                      software) first produced in the performance of a contract, the govern-
                      ment is granted a paid-up, non-exclusive, irrevocable, worldwide license
                      to reproduce, prepare derivative works, distribute to the public, perform
                      publicly and display publicly by or on behalf of the government any
                      such data. For software, the scope of the government’s license does not
                      include the right to distribute it to the public.




                      “The government purpose license right was introduced in 1987 (48 C.F.R. Part 227.471).



                      Page 27                              GAO/RCED-90-146 Technology Transfer and Copyright Law
Copyright La-wCmstraints on the Transfer of
certain Federal Technology

               According to officials we interviewed at seven federal agencies, most of
               their agencies’ computer software is adequately transferred to users
               through federal software distribution centers and by laboratory
               researchers. However, senior officials at six of the agencies stated that
               the copyright law’s prohibition on copyrighting federal works has con-
               strained their efforts to transfer software with broader commercial
               applications to a significant but not precisely determinable extent.1
               These officials told us that their agencies would like to stimulate the
               transfer and use of this software through copyright and licensing
               authorities, which are important for attracting businesses to invest in
               developing and marketing it. DOE officials said that the copyright prohi-
               bition has not constrained their efforts to transfer computer software
               because almost all of their research-related software is developed by
               contractor-operated laboratories, which can obtain a release from DOE on
               a case-by-case basis to copyright commercially useful software.

               NASA and some DOD officials believe that authority  to protect and license
               semiconductor mask works would be useful for their efforts to transfer
               this technology in the future. However, only a few federal laboratories
               conduct R&D involving semiconductor mask works, and the officials did
               not identify any examples in which the transfer of mask works had been
               constrained. In addition, National Institutes of Health (NM) officials sug-
               gested considering new intellectual property protection that would be
               faster and less expensive to obtain than currently available patent pro-
               tection for cells and other microorganisms developed through biomedical
               research.

               Some agency officials we interviewed proposed amending copyright law
               to permit the government to copyright data bases as a way to partially
               recoup costs for maintaining, enhancing, and distributing the data bases.
               The officials suggested that the funds be used to supplement available
               funds for maintaining and enhancing the data bases and disseminating
               data base information. Several agency officials suggested repealing the
               federal copyright prohibition, stating that public access to and further
               dissemination of government information could be protected by alterna-
               tive means.




               ‘These agencies obligated about $14 billion for R&D at government-operated laboratories in fiscal
               year 1989-about 89 percent of all such R&D obligations.



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                            Chapter 3
                            Copyright Law Con&rainta on the Transfer of
                            Certain Federal Technology




                            Senior administrators, patent attorneys, and technology transfer offi-
Constraints to              cials we interviewed at Agriculture; Commerce; DOD, including Air Force,
Transferring Federal        Army, and Navy; EPA; NASA; and NIH stated that the prohibition on copy-
Computer Software           righting federal works has significantly constrained their efforts to
                            transfer certain software to U.S. businesses and other organizations.
                            These officials told us that federal software could be more effectively
                            transferred and more widely used if agencies had authorities similar to
                            those for commercializing federal inventions to (1) copyright software
                            and grant a partially exclusive or exclusive license for it and (2) provide
                            an incentive to federal researchers to further develop and document the
                            software by allowing them to share in any royalties received from
                            licensing it.

                            DOE officials told us that the prohibitionon copyrighting government
                            works has not constrained their efforts to transfer software because DOE
                            employees develop very little software. Contractor-operated laborato-
                            ries have generated almost all of DOE'S research-related software. Under
                            DOE'S software policy, a contractor can obtain a release from DOE to cop-
                            yright and commercialize software.


BusinessesWant to Protect   Agency officials believe a substantial portion of their laboratories’
                            software has broader commercial applications and this software could
Investments in              be transferred most effectively if the government had the authority to
Commercializing             copyright it and grant partially exclusive or exclusive licenses. Agricul-
Technologies                ture, EPA, NASA, and NIH officials stated that a conservative estimate of
                            software with potential commercial applications would be 10 percent of
                            all of the software developed. Agency officials distinguished software
                            from traditior sl copyrightable works such as publications or data bases,
                            stating that software is technology that can be modified for other com-
                            mercial applications. For example, a growing number of federal R&D pro-
                            grams provide artificial intelligence for improving decisions made by,
                            among others, doctors diagnosing diseases and prescribing drugs, farm-
                            ers growing cotton in the southern United States, or architects designing
                            buildings for fire safety. In addition, in some cases the laboratories have
                            developed graphics and other applications programs with commercial
                            potential.

                            The agency officials told us that software would be commercialized most
                            effectively by providing copyright protection and then either (1) licens-
                            ing it to a U.S. business that specializes in developing and marketing
                            software or (2) signing a cooperative R&D agreement with a business to



                            Page 29                           GAO/RCEDsO-14s Technology Transfer and Copyright Law
    Chapter 3
    Copyright Law C4mstraints on the Transfer of
    Certain Federal Technology




    further develop and commercialize it. According to the Director of Clas-
    sification and Technology Policy for DOE's Defense Programs, DOE's con-
    tractor-operated laboratories can better commercialize software that
    they develop than DOE’S National Energy Software Center can because
    they (1) will more aggressively transfer the software, which needs to be
    commercialized quickly because of its short lifespan, and (2) can better
    determine the value of getting, for example, free upgrades of the pro-
    grams as opposed to higher royalties in negotiating a licensing
    agreement.

    The agency officials added that, like patent protection for inventions,
    copyright protection is important for attracting a business to commer-
    cialize federal software for the following reasons:

l The federal computer program may have been developed only for the
  laboratory’s R&D need and may not be immediately usable for commer-
  cial applications. A business would have to invest money to (1) enhance
  the program for commercial applications, (2) debug and simplify the
  program, (3) develop manuals and other documentation, and (4) provide
  support services for users, such as training and a hotline to respond to
  questions.
l Before commercializing federal technology, a business would want to
  protect its investment. In the case of an invention, the business may
  negotiate an exclusive or partially exclusive license to the patent that
  would exclude others from practicing or using the invention. Under cur-
  rent copyright law, however, a business that commercializes federal
  software can copyright only the derivative work that it contributes. The
  business does not have the exclusive right to use or market parts of the
  computer program that federal employees developed.
. Other organizations, including potential competitors and customers, can
  gain access to completed federal software through         or another fed-
                                                                 NTIS


  eral software distribution center. Alternatively, the agency that devel-
  oped the software may provide it through a request under the Freedom
  of Information Act. Without copyright protection, competitors and cus-
  tomers could market or use the federal software, reducing the potential
  market for the software and a company’s return on investment.

    Similarly, a Control Data Corporation executive told us that copyright
    protection and exclusivity are essential for protecting his company’s
    investment in developing software for commercial applications. Control
    Data would seek to commercialize a computer program only with ade-
    quate protection, unless market demand for it was known to be large.
    The Control Data executive pointed out that another company could


    Page 30                           GAO/RCEUMO-146 Technology Transfer and Copyright Law
                                    Chapter 3
                                    Copyright Law Chwtrainta on the Transfer of
                                    Certain Federal Technology




                                    obtain publicly available software, make minimal changes and/or pro-
                                    vide documentation, and start competing. Control Data would then be
                                    competing against a company that has a product of lower quality that
                                    could be sold at a lower price. At a minimum, this would create confu-
                                    sion in the market until customers could differentiate between the value
                                    provided by each product, eroding Control Data’s ability to sell the
                                    software and get its return on investment, which is absolutely time-
                                    sensitive.


Examples of Constrai,nts   to       Federal agency and laboratory officials stated that they cannot pre-
                                    cisely determine the extent to which the transfer of their laboratories’
Transferring Federal                software has been constrained. Many federal researchers and outside
Software                            businesses know the government cannot copyright software and there-
                                    fore they do not seek to commercialize the software either by licensing it
                                    or through a cooperative R&D agreement. In other cases, senior labora-
                                    tory administrators, technology transfer officials, and patent attorneys
                                    never learn of opportunities to transfer laboratory software because
                                    preliminary negotiations, which occur at lower levels within the labora-
                                    tory, fall apart early on since copyright protection for the federal
                                    software is unavailable.

                                    Laboratory and agency officials identified several specific instances in
                                    which the transfer of their laboratories’ software was constrained
                                    because a business could not protect it by a copyright. The following are
                                    two examples of such cases:

                                l   The lack of copyright protection has constrained efforts to commercial-
                                    ize a computer program, jointly developed by an NIH researcher and a
                                    practicing dermatologist, according to an NIH laboratory manager. This
                                    program would assist dermatologists in prescribing medications and
                                    other treatments for medical problems, such as acne, and providing
                                    advice and information to patients. The NIH official told us that because
                                    the software needed to be tested among larger groups of dermatologists
                                    before it could be marketed, NIH sought a business that would assume
                                    this responsibility. An executive for Clinical Reference System, Inc., a
                                    small business located in Colorado, stated that his company was inter-
                                    ested in the software, but it was clearly an early version that would
                                    have had to be further developed before it could be marketed. His com-
                                    pany decided not to try to commercialize the software because it
                                    believed dermatologists were not ready to accept and use the software.
                                    Another important factor in the company’s decision was its inability to
                                    obtain copyright protection, which created uncertainty over whether it


                                    Page 31                           GAO/RCElHO-146 Technology Transfer and Copyright Law
  Chapter 3
  Copyright Law Chwtrainta on the Transfer of
  Certain Federal Technology




  could sufficiently protect its investment from a competitor who might
  be able to obtain the software from NIH or NTIS.NIH has not further
  developed the software and has yet to attract a business partner to com-
  mercialize it. NIH also has not sent the software to NTIS for public dissem-
  ination because it is not sufficiently developed and documented.
. Establishing a mechanism for marketing the Gossym-COMAX computer
  program has taken several years of concerted effort, which could have
  been saved if federal agencies had the authority to copyright and exclu-
  sively license software, according to the Agricultural Research Service’s
  Assistant Administrator for Cooperative Interactions. Researchers at
  the Agricultural Research Service, Mississippi State University, and
  Clemson University jointly developed Gossym-COMAX over a period of
  more than 10 years to maximize cotton yields in the southern United
  States by assisting farmers in deciding, for example, when to irrigate,
  fertilize, and defoliate their cotton crops. Because of their uncertainty
  about whether the jointly developed software could be copyrighted and
  licensed, Agriculture, Mississippi State, and Clemson mutually agreed to
  initially distribute Gossym-COMAX in Mississippi through Mississippi
  State University’s cooperative extension service. However, their efforts
  to expand distribution beyond Mississippi met resistance in some states
  that had not participated in developing the software and associated the
  program with Mississippi.

  Subsequently, in February 1989, Mississippi State and Clemson jointly
  copyrighted the Gossym-COMAX program. Agriculture officials sup-
  ported copyright registration because they believed the contributions of
  researchers from the Agricultural Research Service, Mississippi State,
  and Clemson were sufficiently intermingled; no discernable federal por-
  tion existed. Agriculture, Mississippi State, and Clemson also have tenta-
  tively agreed to use the National Cotton Council of America, a nonprofit
  organization representing all segments of the cotton industry, to help
  Gossym-COMAX gain wider acceptance among state extension services
  and cotton growers. In addition, a software house has expressed interest
  in marketing Gossym-COMAX provided it could obtain copyright protec-
  tion and an exclusive license. No final decision has been made on how to
  market and service Gossym-COMAX. Two Agriculture officials told us
  that another year could pass before such a decision is made because a
  large number of organizations, including federal and state extension ser-
  vices, are now involved in the dissemination effort. Agriculture officials
  noted that the Agricultural Research Service is developing similar com-
  puter programs in other areas, such as soy beans, semi-arid lands, and
  food processing.



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                          Copyright Law Constraint9 on the Tramfer of
                          Certain Federal Technology




                          Agency officials also told us that businesses generally have been unwill-
                          ing to enter into cooperative R&D agreements to further develop federal
                          laboratories’ software because the businesses could not protect the fed-
                          eral laboratory’s portion of the software. According to the NIH'S Direc-
                          tor, Office of Invention Development, while I& has signed about 130
                          cooperative F&D agreements, it is negotiating its first. agreement with a
                          major software component. Similarly, the Agricultural Research Ser-
                          vice’s Assistant Administrator for Cooperative Interactions stated that
                          software is not the focus of any of about 140 cooperative R&D agree-
                          ments that the Agricultural Research Service has signed or is negotiat-
                          ing. An EPA official also stated that none of EPA'S nine cooperative R&D
                          agreements focus on software.

                          In contrast, Army Corps of Engineers attorneys told us that 9 of the 26
                          cooperative R&D agreements that the Corps of Engineers has entered into
                          or is negotiating are to further develop software. Nevertheless, Corps
                          attorneys stated that the inability to copyright federal software has con-
                          strained cooperative F&D agreement negotiations. Businesses and other
                          organizations are seeking to negotiate cooperative F&D agreements with
                          the Corps of Engineers, in part because the Water Resources Develop-
                          ment Act of 1988 (P.L. 100-676) authorized the Corps to fund up to 50
                          percent of costs for approved cooperative R&D agreements under a new
                          Construction Productivity Advancement Research program. According
                          to a Corps of Engineers attorney, joint F&D funding is an important ele-
                          ment for three software agreements with nonprofit organizations, which
                          plan to make the final software products generally available. In addi-
                          tion, as discussed in chapter 2, it is unclear whether Corps would make
                          software that is the basis for a cooperative R&D agreement available to
                          others who might subsequently request it.


Providing Researchersan   Agency officials stated that, as in the case of federal inventions, the
                          transfer and use of computer software would be stimulated further by
Incentive to Further      allowing federal researchers to share in any royalties generated by
Develop Computer          licensing the software. The researchers who developed the software
Software                  would best know how it functions and how to modify it for commercial
                          applications. Royalty sharing would provide researchers with an incen-
                          tive to collaborate with a licensee or a cooperative R&D agreement part-
                          ner to debug, simplify, enhance, and document the computer program.




                           Page 33                          GAO/RCED-9@145 Technology Transfer and Copyright Law
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                           Copyright Law Constraints on the Transfer of
                           Certain Federal Technology




Potential Additional       NTIS officials support extending copyright authority   to all federal
                           software because NTIS, which receives no appropriations, relies on sales
Revenueto Fund NTIS’       revenues to operate its distribution and archive programs. According to
Dissemination Activities   the officials, copyright protection would enable NTIS to increase its
                           software customer base and sales, in part by preventing companies from
                           reselling federal software. The officials added that NTIS probably would
                           not increase its software prices unless it was required to pay royalties
                           back to agencies that developed the software. COSMIC’S marketing coordi-
                           nator stated that copyright authority would not affect COSMIC’S activities
                           because COSMIC primarily sells software to a small scientific market.


                           Some federal agency and laboratory officials identified two technologies
Constraints to             in addition to software that they believe are constrained by intellectual
Transferring Other         property laws.
Federal Technology

Semiconductor Mask         While many federal agencies develop software as part of their R&D pro-
                           grams, only a few government-operated laboratories conduct R&D on
Works                      semiconductor manufacturing technology. Army, Navy, and NASA offi-
                           cials support amending the prohibition on protecting federal mask
                           works (17 U.S.C.903) to allow federal agencies to protect semiconductor
                           mask works. Although they did not identify examples in which the pro-
                           hibition on protecting government mask works had constrained the
                           transfer of this technology to U.S. businesses, these officials believe that
                           mask works protection would improve their future technology transfer
                           efforts. However, some business representatives stated that advances in
                           semiconductor manufacturing technology has reduced the utility of pro-
                           tecting mask works under the Semiconductor Chip Protection Act.


New Protection for Cells   Cells and other microorganisms developed in a laboratory can be pat-
                           enteds These include cell lines and hybridoma, which are used to pro-
and Other Microorganisms   duce unlimited quantities of monoclonal antibodies at a low cost. These
                           monoclonal antibodies may be useful in immunology research for
                           preventing cancer and other diseases. However, because patenting and
                           commercializing a cell line or a hybridoma is a high-cost, high-risk pro-
                           position, NM officials suggested that consideration be given to establish-
                           ing additional intellectual property protection for cells and

                           21nDiamond v. Chakrabq     (447 U.S. 303 (1980)), the Supreme Court held that living, man-made
                           microorganisms were patentable subject matter.



                           Page 34                             GAO/RCED90-146 Technology Transfer and Copyright Law
                      Chapter 3
                      Copyright hw Con&raint9 on the Transfer of
                      Certain Federal Technology




                      microorganisms that is less costly and faster than obtaining patent pro-
                      tection. According to NIH officials, the commercial utility of a cell or
                      microorganism is uncertain because many, if not most, of the thousands
                      of cells or microorganisms that can be created will have no commercial
                      utility. The NIH officials perceive patenting as too costly and taking too
                      long to protect this biotechnology unless an immediate commercial appli-
                      cation is known or expected.

                      Sui generis, or unique, protection for cells and other microorganisms
                      could be established by amending the patent statute (Title 35) to add a
                      new chapter that provides patent-like protection. This patent-like pro-
                      tection could be administered by the Patent and Trademark Office or,
                      alternatively, an agency that conducts biomedical F&D. For example,
                      Agriculture administers sui generis protection for sexually reproducing
                      plants under the Plant Variety Protection Act (7 USC. 2321 et seq.).
                      (App. I presents alternative legislative issues and approaches that NIH
                      officials identified for sui generis protection for cells and other
                      microorganisms.)


                      Some officials at DOD, the Agricultural Research Service, and NTIS sug-
Computer Data Bases   gested that consideration be given to amending copyright law to permit
                      federal agencies to copyright and license data bases, principally to
                      recover costs associated with maintaining and better disseminating the
                      data base’s information. A DOD official stated that in some cases DOD may
                      decide not to maintain or publicize a data base because it has insuffi-
                      cient funds available to cover the associated costs. Similarly, two Agri-
                      cultural Research Service officials mentioned that tight R&D budgets and
                      competing priorities constrain their agency’s ability to further develop a
                      data base and provide better services for responding to individual
                      requests for special analyses. NTISofficials stated that copyright author-
                      ity would enable NTIS to increase its customer base and revenues by
                      preventing companies from reselling federal computer data bases with-
                      out approval.

                      Officials of the Information Industry Association, which represents
                      businesses that create and distribute information, believe that federal
                      data bases should continue to be available to the public. They oppose
                      allowing federal agencies to copyright data bases because the agencies
                      could (1) restrict access or give favored access to a data base and (2)
                      compete with businesses in providing specialized services to customers.
                      As discussed in chapter 4, the officials also believe that software should



                      Page 35                          GAO/RCEDBO-145 Technology Transfer and Copyright Law
                          Chapter 3
                          Copyright Law Cm13tminta on the Transfer of
                          Certain Federal Technology




                          continue to be available to the public, noting that a fine line exists
                          between software and computerized data bases.


                          Several agency officials we interviewed proposed repealing the copy-
Copyright Authority       right prohibition for all federal government works. In addition to
for All Government        improving technology transfer for federal software, the officials cited
Works                     the following reasons for their views:

                      l Copyright authority would allow the federal agency to prevent third
                        parties from misrepresenting the authorship of a federal government
                        work.
                      l Computer technology allows (1) the ready expression of ideas in differ-
                        ent media, such as computer diskettes or publications, and (2) storage on
                        diskettes of both a data base and the computer program to retrieve and
                        cross-index it. If the government were allowed to copyright only com-
                        puter software, a federal laboratory could decide to disseminate technol-
                        ogy as a computer program instead of as a publication solely because it
                        could be copyrighted. In addition, federal agencies would have to deter-
                        mine on a case-by-case basis whether works containing both computer
                        programs and data bases could be copyrighted.
                      l Publishers have turned down contributions written by DOD professors at
                        the military academies and other universities. The publishers expressed
                        concern about copyright protection for a book that includes works that
                        cannot be copyrighted.
                      l The United States is the only major developed country that has an
                        extensive prohibition on copyrighting national government works.
                      . NTISdoes not receive appropriations and, consequently, is funded solely
                        by its sales revenue. Copyright authority would enable       to increase
                                                                                          NTIS


                        revenue by preventing companies from reselling federal software, data
                        bases, and publications.

                          According to some agency officials, alternative mechanisms could be
                          used to protect the public’s access to and use of these works. For exam-
                          ple, government works that need no protection could display a label
                          indicating that they are dedicated to the public and are therefore
                          exempt from copyright enforcement.




                          Page 36                           GAO/lWEMWl%   Technology Transfer and Copyright Law
Chapter 4

The Pros and Consof Amending copyright Law
to Stimulate the Transfer and Use of Federal
Computer Software
                      According to senior officials we interviewed at six federal agencies, the
                      copyright law should be amended to permit the government to copyright
                      and grant partially exclusive and exclusive licenses for computer
                      software. The officials also support amending the Federal Technology
                      Transfer Act to enable federal researchers to share in any royalties gen-
                      erated by licensing the software. They believe these changes would (1)
                      improve the transfer and use of federal software with commercial appli-
                      cations because U.S. businesses and other organizations could protect
                      their investment, (2) provide federal researchers who develop software
                      similar opportunities as those available to federal inventors for career,
                      financial, and intellectual recognition, (3) facilitate public access to fed-
                      eral software in certain instances, and (4) further agencies’ mission to
                      improve public health and safety. (App. II identifies alternative legisla-
                      tive issues and approaches that patent attorneys at the seven federal
                      agencies identified for stimulating the transfer and use of federal
                      software and semiconductor mask works.)

                      Some federal laboratory managers and researchers, however, oppose
                      amending copyright law. They are concerned that copyrighting and
                      licensing federal software would (1) distract researchers from the labo-
                      ratory’s basic research mission, (2) interfere with informal exchanges of
                      information and software among federal and university scientists, and
                      (3) interfere with the existing government policy of publicly disseminat-
                      ing technical information. In addition, Information Industry Association
                      officials oppose allowing federal agencies to copyright software because
                      agencies might either restrict access or give favored access to federal
                      scientific and demographic data bases provided by software.


Transfer and Use of   Army, and Navy; EPA; NASA; and NIH support amending copyright law to
Software With         allow the government to copyright and license computer software and
Commercial            federal researchers to share in any resulting royalties. According to the
                      officials, software is a technology that in many instances needs to be
Applications          further developed before it can be marketed. They added that these
                      authorities, which are needed to protect such development, are a logical
                      extension of legislative changes enacted in the past 10 years for inven-
                      tions. The agency officials perceived copyright and licensing authorities
                      as tools to improve their agencies’ technology transfer efforts because
                      (1) with copyright protection for their value added, businesses would be
                      more willing to further develop and market federal software and (2) the
                      opportunity to share at least 15 percent of any royalties would give fed-
                      eral researchers greater incentive to work with businesses to develop


                      Page 37                      GAO/RCED9@1% Technology Transfer and Copyright Law
Chapter 4
The Proe and Cons of Amending Copyright
Law to Stimulate the Transfer and Use of
Federal Computer Software




commercial software products. As a result, the officials believe this
software would be more widely used for commercial applications than
under current government policy.

Private intellectual property attorneys and business executives con-
firmed the importance of providing a business intellectual property pro-
tection for its investment in commercializing a technology. One attorney
stated that companies are concerned about speed and certainty in licens-
ing technology, adding that if an agreement cannot be closed within 6
months or if ownership rights are clouded, the business is likely to find
alternative projects for its funds. A Control Data Corporation executive
strongly agreed with this statement, adding that exclusive intellectual
property rights to federal software are an essential prerequisite for his
company to invest in commercializing it, unless the software is known to
have a large market.

In addition, NASA and Agricultural Research Service officials support
copyrighting and licensing commercially useful federal software to give
preference to U.S. businesses and farmers. The Agriculture officials
noted that software distributed through NTIS is equally available to US.
and foreign customers, even though only U.S. taxpayers paid for the
R&D. They added that, alternatively, licensing the software could con-
tractually limit its distribution to U.S. organizations.

One senior EPA laboratory manager and officials of the Information
Industry Association expressed concern that allowing federal agencies
to copyright and exclusively license computer software might restrict
access and/or increase the cost to the public for access to this software.
They stated that federal agencies would be less likely to publicly dissem-
inate the software by sending it to NTIS or another software distribution
center.’ The Information Industry Association officials also noted that a
fine line exists between software and computerized data bases. They
stated that because more and more government information of all kinds
is maintained only in electronic formats, the association is concerned
that even the possibility that federal agencies could claim copyright in
such data bases would constrict public access to government informa-
tion and chill development of private sector information products based
on such information. In addition, the EPA laboratory manager stated that



‘It is also unclear whether members of the public could get access to this software through a Freedom
of Information Act request because some agencies deny requests for software, deeming it a tool
rather than a record.



Page 38                              GAO/RCED9O-1% Technology Transfer and Copyright Law
                        Chapter 4
                        The Proa and Cons of Amending Copyright
                        Law to Stimulate the Transfer and Use of
                        Federal Computer Software




                        providing exclusivity would make U.S. users pay twice for the software
                        since taxpayers paid for the development of the original software.


                        Almost all of the federal laboratory and agency officials and many of
Impact on Federal       the researchers we interviewed support amending copyright law for fed-
Researchers             eral software to provide increased recognition for federal researchers
                        who develop software for the following reasons:

                    . Current law treats federal researchers unequally. As in the case of a
                      federal researcher who makes an invention, a federal researcher who
                      develops software should be eligible to share in any royalties from
                      licensing the copyrighted software.
                    l In making career advancement decisions, federal laboratory administra-
                      tors give great weight to the publications and patents of researchers.
                      However, they do not give similar weight to researchers’ efforts to
                      develop and document software with commercial applications.
                    l Companies can market federal software in the public domain under their
                      own name without authorization from the originating laboratory and
                      without recognizing the federal researchers who developed the
                      software. Alternatively, in some instances companies have advertised
                      that a federal laboratory developed the software to add to the com-
                      pany’s credibility, but because the company modified the software, the
                      federal researchers and laboratory did not wish to be associated with
                      this new product.

                        In addition to providing greater recognition for federal researchers who
                        develop software, copyright and licensing authority may reduce the
                        time a researcher is obliged to take away from research to respond to
                        users’ questions, according to some officials. The Director of the
                        National Library of Medicine cited an NM researcher who described an
                        algorithmic software program he developed in a national medical jour-
                        nal. The researcher subsequently received a large number of requests
                        for help and training in applying the program, which could have been
                        transferred to a company that would service the software under a copy-
                        right licensing agreement. According to agency patent attorneys, copy-
                        right and licensing authorities for software would add only marginally
                        to their office’s administrative responsibilities. They noted that register-
                        ing for copyright protection does not require the specialized legal skills
                        needed to prosecute a patent application.

                        Some of the federal researchers and laboratory managers we inter-
                        viewed expressed concern about providing researchers with greater


                        Page 39                            GAO/RCED-9&l%   Technology Transfer and Copyright Law
                              Chapter 4
                              The Pros and Cona of Amending Copyright
                              Law to Stimulate the Transfer and Use of
                              Federal Computer Software




                              incentives for transferring software because further developing the
                              software would detract from the laboratory’s R&D mission and open
                              exchanges among researchers:

                      l       One research manager stated that 90 percent of the effort in developing
                              commercial software goes into the last 10 percent of the development
                              and documentation effort. The manager believed that federal research-
                              ers should focus on generating and publishing ideas and leave to indus-
                              try the responsibility for developing commercial software applications.
                      l       Similarly, some researchers told us that emphasis on copyrighting and
                              licensing software would shift priorities from basic research to applied
                              research with commercial applications, which they considered to have
                              less long-term importance for advancing the field of research.
                      l       A research manager and a researcher were concerned that commercializ-
                              ing federal software would inhibit the free flow of ideas within a labora-
                              tory or among researchers at different institutions because researchers
                              would withhold information that might be commercially valuable. The
                              researcher mentioned that this also could affect the availability of
                              software for researchers through computer bulletin boards.
                          l   A research manager pointed out that assigning royalties for software is
                              likely to be more complex than for inventions because many more peo-
                              ple are likely to be involved in the stages of its development.


                              Agency officials support allowing the government to copyright and
Facilitating Public           license federal software with commercial applications to stimulate its
Access                        dissemination to and use by U.S. businesses and other organizations. In
                              many cases federal laboratories do not send research-related software to
                              federal software distribution centers for general dissemination. For
                              example, officials at two DOD laboratories told us that their laboratories
                              generally do not send software to NTIS.According to one of the officials,
                              his laboratory has little incentive to develop and document it suffi-
                              ciently to meet NTIS’ minimum requirements. Similarly, Agricultural
                              Research Service and NIH officials stated that they normally rely on
                              their researchers to provide software to colleagues and others upon
                              request. As shown in table 2.1 in chapter 2, NTIS’ software sales declined
                              from $582,000 in 1987 to $395,000 in 1989. An important reason for the
                              decline is that agencies are sending fewer large computer programs to
                              NTIS, which typically sells only about 10 copies of these programs.

                              Copyright and licensing authorities also are likely to increase the dis-
                              semination and use of federal software because a licensee typically



                               Page 40                           GAO/RCED9&1%   Technology Transfer and Copyright Law
                       chapter 4
                       The Pros and Cone of Amending Copyright
                       Law to Stimulate the Transfer and Use of
                       Federal Computer Software




                       would provide enhanced versions of the software and user support ser-
                       vices, such as training and hotlines. For example, NASA'S NASTRAN
                       software is available through COSMICand a former NASA contractor that
                       developed it. Users prefer the contractor’s version of NASTRAN even
                       though it is substantially more expensive and even though UXMIC pro-
                       vides user support services for its version.2 The reason for this prefer-
                       ence, according to COGMIC’S marketing coordinator, is that the
                       contractor’s version is easier to use, has more enhanced modules for spe-
                       cific commercial applications, and is better advertised. An Army Corps
                       of Engineers researcher involved in two software cooperative R&D agree-
                       ments also pointed out that the Corps and its contractors benefit from
                       the transfer of software because they can get access to the enhanced
                       versions of the software and support services that the cooperative R&D
                       agreement partner subsequently provides.

                       In addition, NIH’Spatent attorney stated that copyright protection could
                       protect the public’s access to federal software, citing an example of
                       National Cancer Institute software for diagnosing cancer that NIH put in
                       the public domain and distributed to medical schools. An outside com-
                       pany modified the software, copyrighted the derivative work, and
                       threatened to sue the medical schools for copyright infringement unless
                       they licensed the company’s software. The patent attorney stated that
                       (1) because the software was in the public domain and had no registra-
                       tion date from the Copyright Office, the schools could not readily
                       demonstrate that they were using the NM version and (2) NIH has insuffi-
                       cient resources to act against companies that try to exploit its software.


                       Officials of the Agricultural Research Service, the Air Force, the Army
Furthering Agencies’   Corps of Engineers, the National Library of Medicine, the National Insti-
Health and Safety      tute of Standards and Technology, and the Naval Research Laboratory
Mission                stated that copyright protection would enable federal agencies to fur-
                       ther their mission of promoting public health and safety by controlling
                       the distribution of health and safety-related software. For example,
                       these officials noted that their laboratories’ artificial intelligence
                       software is targeted for skilled practitioners, such as doctors, to diag-
                       nose diseases; architects, to design fire safety in buildings; and land use
                       planners, to control erosion. However, because federal software is put in
                       the public domain under current policy, the federal laboratories have no
                       control over a company that obtains the software regarding (1) to whom

                       2NASTRANis one of about six computer programs for which COSMIC or NASA provides user support
                       services.



                       Page 41                            GAO/WED-9@-145 Technology Transfer and Copyright Law
                 Chapter 4
                 The Pros and Cona of Amending Copyright
                 Law to StimuIate the Transfer and Use of
                 Federal Computer Software




                 it sells the software, (2) any modifications it makes to the software, (3)
                 whether customers are trained to use the software properly, and (4)
                 whether customers are notified of the federal agency’s updates to the
                 software, including corrections of any mistakes in it. Army Corps of
                 Engineers attorneys mentioned, for example, that companies have
                 advertised in construction industry magazines the availability for sale of
                 Hydrological Engineering Center software, known as HEC I and II, with-
                 out the Corps’ authorization.3

                 The Director of the National Institute of Standards and Technology cited
                 as an example Hazard I, an artificial intelligence program for planning
                 fire prevention in a building by analyzing how a fire would spread.4 The
                 National Institute has licensed Hazard I to the National Fire Protection
                 Association but also has made the software available through NTIS. The
                 director expressed concern about the government’s liability if (1) Haz-
                 ard I was marketed by a company that obtained it through NTIS, (2) He;;-
                 ard I was then incorrectly applied by a customer who had insufficient
                 knowledge of the software and the building being analyzed, and (3) a
                 subsequent fire caused greater property damage and/or personal inju-
                 ries because Hazard I had been misused.

                 Although copyright protection is not available, federal agencies can use
                 trademark protection to prevent unauthorized companies that market
                 their software from using its formal name. NASA has registered trade-
                 marks for COSMICand some of its software. According to the NIH patent
                 attorney, the National Library of Medicine and the National Cancer
                 Institute similarly have used trademark protection. In addition, the
                 Agricultural Research Service and its partners are considering register-
                 ing the Gossym-COMAX name.


                 Patent attorneys for Agriculture, DOD, NASA, and NM told us that federal
Protecting the   agencies would need authorities similar to those for licensing patents (35
Government’s     U.S.C.209) to protect the government’s and the public’s interest. These
Interests        authorities (1) require agencies to grant an exclusive or partially exclu-
                 sive license only if, after providing public notice and the opportunity for
                 filing written objections, it determines that such a license best serves the

                 3HEC I models runoff from rainfall and snowmelt and HEC II models the impact of rainfall and
                 snowmelt on a river’s floodplain.

                 4The software analyzes information about a bullding’s structure, number of occupants, and location
                 of the flue to calculate how the fire and gases will move, the extent of damage to the building, and the
                 number of people who could be kilkd or iqjured.



                 Page 42                                GAO/RC3ED~l~         Technology Transfer and Copyright Law
             Chapter 4
             The Pros and Cons of Amending Copyright
             Law to Stimdate the Transfer and Use of
             Federal Computer Software




             interests of the federal government and the public, (2) require potential
             licensees to submit a plan for developing and/or marketing the software
             and periodic utilization reports, and (3) provide for the agency’s right to
             terminate the license in whole or in part if the licensee does not dili-
             gently execute the submitted plan.

             According to several federal patent licensing officials, the decision
             whether to issue a nonexclusive, partially exclusive, or exclusive license
             should be made on a case-by-case basis after considering factors such as
             the potential licensee’s investment in developing and servicing the
             software and the size of the potential market. The patent licensing offi-
             cials also believe that the government’s rights to derivative works as
             opposed to a percentage of royalties would best be negotiated case-by-
             CaSe.



             According to senior officials at six federal agencies, copyrighting, licens-
Conclusion   ing, and royalty sharing authorities will stimulate the transfer and use
             of federal software with commercial applications by providing busi-
             nesses protection for the investment of their resources and by providing
             federal researchers with an incentive to further develop and document
             the software. The officials stated that, as in the case of commercializing
             inventions, businesses are unwilling to invest in developing and market-
             ing federal software without copyright protection. Executives from two
             businesses that have considered commercializing federal software, not-
             ing that return on investment is time-sensitive, said that their companies
             would require copyright protection and exclusive rights to federal
             software before further developing commercial applications to prevent
             competitors from getting access to the federal software. In some cases,
             copyright authority also would facilitate public access to federal
             software and further the missions of agencies to improve public health
             and safety.

             The senior agency officials noted, however, that most of their agencies’
             software has specific scientific applications and is adequately trans-
             ferred through federal software distribution centers and by laboratory
             researchers. Some federal laboratory managers and researchers opposed
             amending copyright law, expressing concern that copyrighting and
             licensing federal software would distract researchers from the labora-
             tory’s basic research mission or interfere with informal exchanges of
             information and software among federal and university scientists. In
             addition, Information Industry Association officials opposed allowing



             Page 43                          GAO/RCEDW146   Technology Transfer and Copyright Law
                       Chapter 4
                       The Fros and Cons of Amending Copyright
                       Law to Stimulate the Transfer and Use of
                       Federal Computer Software




                       federal agencies to copyright software because agencies might either
                       restrict access or give favored access to federal data bases.


                       To effectively transfer and use federal computer software while accom-
Matters for            modating concerns about access to federal data bases and shifting fed-
Consideration by the   eral laboratories’ basic research mission, it may be appropriate to
Congress               provide copyright and licensing authorities for federal software with
                       wider commercial applications that needs further investment to be
                       effectively transferred. This change could be accomplished by amending
                       (1) the copyright law (17 USC. 105) to allow federal agencies to copy-
                       right and grant nonexclusive, partially exclusive, or exclusive licenses to
                       computer software on a case-by-case basis if such protection would
                       stimulate its effective transfer and use or (2) the Federal Technology
                       Transfer Act (15 USC. 3710a) to authorize agencies to copyright and
                       grant licenses to federal software under a cooperative R&D agreement.

                       Under either option, consideration should be given to extending the Fed-
                       eral Technology Transfer Act’s royalty-sharing authority (15 U.S.C.
                       3710~) to include federal software. In addition, if the copyright law is
                       amended, it would be appropriate to include procedures similar to those
                       required for granting patent licenses (35 U.S.C.209) to ensure fairness in
                       granting an exclusive or partially exclusive license for federal software
                       to a nonfederal entity and diligence by the licensee in commercializing
                       the software.




                       Page 44                           GAO/BCED-90-146 Technology Transfer and Copyright Law
Page 46   GAO/RCED9@146 Technology Transfer and Copyright Law
Appendix I

Alternative Legislative Issuesand Approaches
for Establishing Sui GenerisProtection for Cells
and Other Microorganismsas an Alternative to
Patent Protection1
                   In establishing sui generis protection for cells, including cell lines and
                   hybridomas, and other microorganisms, the following approaches and
                   issues may be considered:

                   What agency should administer                     the program?

               . 1. The Patent and Trademark Office. An NM attorney we interviewed
                 supported amending the patent statute (Title 35) by adding a new chap-
                 ter that would give PTDadministrative responsibility.
               l 2. Health and Human Services or another agency that conducts biomedi-
                 cal research. The Plant Variety Protection Act gave Agriculture respon-
                 sibility for administering sui generis protection for sexually reproducing
                 plants by amending Agriculture’s statute (7 U.S.C. 2321 et seq.).

                   What should be required                for protection?

               . 1. Registration similar to copyrights and semiconductor mask works.
               l 2. Examination of the application for novelty. This would be similar to
                 the approach of the Plant Variety Protection Act, which requires an
                 examination for novelty but does not require that a new plant be
                 nonobvious.

                   What should be the period                of protection?

               . 1. Patent protection is for 17 years, and plant variety protection is for
                 18 years. The NIH attorney believed that 17 years would be appropriate,
                 given the time needed for Food and Drug Administration’s regulatory
                 review.
               l 2. A shorter term. The term for semiconductor mask work protection is
                 10 years.
               l 3. A longer term. The term for copyright protection typically is the life
                 of the author plus 50 years.

                   Should recipients of sui generis protection    be required to maintain
                   a sample of the cell or microorganism    and/or deposit a sample in a
                   central depository?

               l   1. The recipient of protection should be required to either (a) make suf-
                   ficient disclosure about the creation of a cell or microorganism or (b)



                   ‘NIH officials identified alternative approaches for sui generis protection.



                   Page 46                                GAO/RCED-9@146 Technology Transfer and Copyright Law
    Appendix I
    Alternative Legldatlve Issuea and
    Approaches for E&abliahing Sui Generia
    Protection for Cells and Other
    Mlcroorganl.9ms as an Alternative to
    Patent Protection




    deposit the cell or microorganism at a central depository to provide pub-
    lic access to it. This is similar to the Patent and Trademark Office’s
    requirement upon issuance of a patent for a cell or microorganism.
l   2. The recipient of protection should be required to retain a sample of
    the cell or microorganism for the duration of the protection period, but
    should be provided with the option of sharing the cell or microorganism
    with others for research purposes.

    (It is unclear whether businesses would use a sui generis protection with
    a depository requirement. They may prefer trade secret or patent pro-
    tection Under 37 C.F.R. Part 211.5, the Copyright Office allows a semi-
    conductor mask work registrant to block out material considered a trade
    secret, provided it is less than 50 percent of the total.)




    Page 47                           GAO/RCEW@145 Technology Transfer and Copyright Law
Ppe

GTkative Legislative Issuesand Approaches
for Stimulatig the Transfer and Use of Federal
Computer Software and SemiconductorMask
Work?
                      What legislative         alternatives         exist for providing        copyright
                      authority?

              l       1. Almost all of the federal patent attorneys supported amending 17
                      U.S.C.105 to permit federal agencies to copyright computer software.
                      Coverage could include:

                      a. All federal computer software.

                      b. Computer software if the head of the agency determines, on a case-
                      by-case basis, that copyright protection will (1) stimulate the software’s
                      transfer to and use by businesses or other organizations in the United
                      States, (2) facilitate public access to the software, or (3) further the
                      agency’s mission to improve public health and safety.

              l       2. Some federal patent attorneys supported amending the Federal Tech-
                      nology Transfer Act (15        3710a) to allow agencies to copyright and
                                                        U.S.C.


                      license software that is part of cooperative R&D agreements.

                      Should federal agencies copyright                   supporting       documentation          for
                      computer programs?

              l       1. Limit authority to computer programs. Under 17          101, a com-  U.S.C.


                      puter program is defined as “a set of statements or instructions to be
                      used directly or indirectly in a computer in order to bring about a cer-
                      tain result.” This definition does not include data bases or documenta-
                      tion such as users manuals.
              l       2. Some patent counsels supported allowing federal agencies to copy-
                      right computer programs and associated documentation, suggesting as
                      an example an interagency committee’s proposed definition for the Fed-
                      eral Acquisition Regulation:

                      Computer programs, computer program documentation, and any other data that
                      would enable a computer program to be recreated, reproduced, or recompiled. The
                      term does not include computer data bases.

                      If Title   17 is amended,         what other authorities             should be considered?

                  l   1. Amend 17 U.S.C.903 to allow federal agencies to protect federal semi-
                      conductor mask works.

                      ‘Attorneys who are responsiblefor intellectual property protection at seven federal agencies identi-
                      fied these alternative legislative approaches and issues.



                      Page 48                                    GAO/RCEDW-1%    Technology Transfer and Copyright Law
        Appendix Jl
        AIternative Legiskive Issues and
        Approaches for Stimulating the Transfer and
        Use of Federal Computer Sofhvare and
        Semiconductor Mask Works’




l       2. Conform 17 U.S.C.105 and 903 with provisions of 35 U.S.C.207-209

        a. Provide authority for federal agencies to issue exclusive, partially
        exclusive, or nonexclusive licenses, including the grant to the licensee of
        the right of enforcement.

        b. Provide protection of the government’s and the public’s interests, par-
        ticularly by requiring (1) agencies to publicly advertise the availability
        of copyrights for licensing, (2) a plan for development and/or marketing
        the software or semiconductor mask works, (3) periodic utilization
        reports, and (4) an agency’s right to terminate the license.

        (The government’s rights to any derivative works that the licensee
        develops would be subject to agencies’ implementing regulations and/or
        negotiation of the licensing agreement.)

l       3. Address the relationship of the copyright amendments with the Free-
        dom of Information Act.

        a. Permit federal software and semiconductor mask works to be subject
        to a Freedom of Information Act request. The licensee would use the
        copyright protection to prevent competitors from marketing the
        software.

        b. Exclude from a Freedom of Information Act request software and
        semiconductor mask works that are licensed on either an exclusive or
        partially exclusive basis or for which a license is being negotiated.

l       4. Address the federal agency’s vs. the employee author’s right to the
        copyright title either in legislation or an Executive Order.

        a. Provide rights in accordance with the copyright act’s definition of a
        “work of the U.S. government,” which is defined as one prepared by an
        officer or employee of the government as part of that person’s official
        duties.

        b. Provide rights that are similar to those for inventions. Executive
        Order 10096 defines in detail the government’s rights to inventions
        made by federal employees.

    l   5. Consider whether to extend the provisions of 35 U.K. 200-204,206,
        and 210 to copyrightable technologies. Under the Federal Acquisition
        Regulation for civilian agencies, contractors must request a waiver of


        Page 49                           GAO/RCED9@1% Technology Transfer and Copyright Law
  Appendix II
  Altematlve Legldative hues and
  Approaches for Stimulating the Transfer and
  Use of Federal Computer Software and
  Semiconductor Mask Works’




  title from the funding agency for data, including software and
  semiconductor mask works.

  a. 35 USC. 202 permits nonprofit and small business contractors and
  grantees to elect to retain title to subject inventions. Consider whether
  this election should be extended to (1) any software and/or semiconduc-
  tor mask works or (2) software or mask works that the contractor deter-
  mines would have commercial potential. In addition or alternatively,
  consider whether this technology should revert back to the federal
  agency after a specified period of time (2 to 5 years) for public dissemi-
  nation if it is not licensed or otherwise commercialized. (Agencies could
  be permitted to waive reversion if the contractor is taking adequate
  steps to commercialize the technology.)

  b. 35 U.S.C.202(c)(4) provides for the government’s royalty-free license.

  c. 35 U.S.C.203 provides for government march-in rights.

  d. 35 U.S.C.204 provides a preference for U.S. industry.

  e. 35 U.S.C.206 provides for uniform clauses and regulations.

  f. Provide a precedence of chapter section similar to 35 U.S.C.210.

. 6. Amend 17 U.S.C.403 to exclude any software for which a government
  agency obtains a copyright. The section requires publications that bear a
  notice of copyright to identify any portions of the work that incorporate
  U.S. government works.

  Should royalty sharing be extended            to federal employees        who
  develop software or semiconductor             mask works that are
  commercialized?

. 1. Almost all of the federal officials we interviewed support amending
  15 U.S.C.3710~ to include federal employees who developed software.
. 2. Royalty-sharing authority could also be extended to federal employ-
  ees who develop semiconductor mask works.




  Page 60                           GAO/ICED-!Wl46   Technology Transfer and Copyright Law
Appendix III

Major Contributors to This Report


                        Lowell Mininger, Assistant Director
Resources,              Richard Cheston, Evaluator-in-Charge
Community, and          Angela Sanders, Staff Evaluator
Economic
Development Division,
Washington, D.C.
                        Mindi Weisenbloom, Senior Attorney
Office of the General
Counsel, Washington,
D.C.




(006759)                Page S1                    GAO/RCED-9@1% Technology Transfer and Copyright Law