Another change involves the amount of royalties or income retained and used by a contractor using a Government-owned-contractor-operated (GOCO) facility. What is a GOCO facility and why do they exist? Here is a discussion of U.S. Department of Energy GOCO facilities:
DOE’s national laboratories are “Government-Owned, Contractor-Operated” laboratories, managed under a unique legal relationship by a Management and Operating (M&O) contractor. Under this management model, which had its origins in the Manhattan project and was formalized by the Atomic Energy Commission, national laboratories are owned by the federal government and operated by university, non-profit or industrial contractors. The M&O/GOCO model was specifically selected because the “arm’s-length” relationship it created afforded far greater flexibility than other, more traditional contracting mechanisms in managing scientific institutions that must be able to attract world-class scientific talent and adapt quickly to changing national research priorities and advances in science and technology. The M&O/GOCO model allows the contractors to bring the best private sector personnel and research management practices to the national laboratories, and provides the laboratories with the flexibility necessary to broadly engage academia and the private sector.
National laboratory contractors are selected competitively, under a procurement policy designed to support robust performance management, and balance DOE’s interests in obtaining best value with the benefits of long-term relationships and stability for which the M&O/GOCO model was designed. The success of the M&O/GOCO model is demonstrated by the fact that the DOE laboratories, and the small number of major laboratories managed by other agencies using similar approaches, have been recognized as among the world’s leading research institutions, with records of sustained scientific excellence and critical contributions to the Nation’s security for as long as sixty years.
The Bayh-Dole Act, before the AIA change, essentially provided that the U.S. Treasury was to be paid 75% of the royalties or income from a government funded patented invention developed at a GOCO in certain circumstances. This obligation to pay 75% to the U.S. Treasury arises if after paying “patenting costs, licensing costs, payments to inventors, and other expenses,” the remaining royalties or income “exceeds 5% of the annual budget of the facility.” The remaining 25% “shall be used by the contractor for scientific research, development, and education consistent with the research and development mission and objectives of the facility, including activities that increase the licensing potential of other inventions of the facility . . ..” The AIA changes the percentages from 75% to the U.S. Treasury to 15% to the U.S. Treasury, and the 25% to the contractor to 85% to the contractor (for the above stated purposes). This is a substantial shift in the allocation of revenue for apparent “blockbuster” type developments paid for by public funding at a GOCO facility. Why the change? The House Judiciary Committee Report on the American Invents Act provides the answer. It states, in pertinent part:
The Senate Judiciary Committee considered testimony that the requirement to repay the government 75 percent of the excess on royalty payments may be causing a disincentive for universities and small businesses operating under the GOCO provisions to commercialize products. Based on these concerns, the Act maintains the essence of the agreement GOCOs made with the taxpayers when they received funding that they would reimburse the taxpayer if they are sufficiently successful in commercializing a product invented with taxpayer dollars, but which reduces the burden on universities and small businesses, thereby encouraging commercialization.
The effective date of the AIA for these changes was September 16, 2011. Has there been increased demand for GOCOs facilities and patented inventions? Has it been easier to find commercialization partners since the effective date of the AIA for these changes? Is it too early to find commercialized inventions arguably arising because of the changes? (probably so).
Post a Comment