STANFORD

party has royalty-free rights to its use of the end technology on any application.

We have been informed by numerous companies that they would rather contract efforts to universities or consultants even at the risk of obtaining lower quality results than help pay for a total technology development and pay again for permission to use it in each future instance. We have three suggestions that we think would help alleviate these technical issues.

First, a new definition of technology transfer should be adopted by the labs. Current thinking in the DOE labs considers successful technology transfer and deployment to have occurred when a single exclusive license is granted to one company. This is contrary to what most experts and our trading partners consider to be efficient and successful transfer. Successful technology transfer should be defined in terms of the number of companies adopting the technology in a specified timeframe which meets or exceeds the current practices in other countries. Also, all exclusive rights to anything originating from DOE work should be stopped. There should be a time limit similar to the NCMS practice of a 30-month limit on exclusivity as opposed to the current practice of perpetual exclusive rights or 14-year patent rights.

Second, establishment of special CRADA provisions for collaborative projects. CRADA guidelines should treat projects that involve R&D work with multiple industrial partners or with a consortia as a special provision. The benefits to the country in working with and through industrial consortia are very great. Consortia offer the best and most reliable vehicle for the transfer and deployment of technology results.

Finally, consortia-sponsored projects tend to be larger and have larger potential impact on society than do projects with single companies. We propose that current lab contractor requirements for special intellectual property rights be set aside by legislation when working with multiple collaborations. In the NCMS agreements, for example, all participants have full, royalty-free, nontransferable licenses to all developments in the project and may make full use of the results as desired. Companies which compete on the open marketplace generally have no problem in working together on precompetitive technologies under this NCMS umbrella. The corporations and institutions that operate the DOE facilities should be required to participate on a flat playing field with the other industrial partners.

The third recommendation, development of a new facility resource database. The DOE facilities have many current overlapping and unidentified capabilities. There are 5,000 to 10,000 workers in the DOE facilities who could contribute to various CRADA tasks. The problem faced by any company in locating the best talent from this group for their project is formidable. The Department of Energy should work with each facility and develop a resource base of available capabilities and interests. Companies should be able to call a central point of contact and be directed to the proper source of help.

I am going to move on quickly now to my second topic, the legal matters. By way of example, let me relate one that impacts not only business with DOE but all other agencies as well. As you are

quite aware, the demanding competitiveness battle that is being waged today is global in nature. We cannot and will not solve the competitiveness challenge if we only look introspectively. We must and do look throughout the world to benchmark our status against the best.

Benchmarking involves the collection of data and information, much of it in written format, from allies and adversaries alike. To some extent, more or less, all agencies collect data. The problem that arises both for the Government and for industry relates to the act of translating these materials. Quite simply, unless a copyright permission is obtained, the act of translating a document is illegal. While the easy solution might appear to be securing a valid copyright permission, the lack of adequate international copyright clearance mechanisms prevents this. In fact, it can be easily demonstrated that several of our trading partners, including Japan, use the lack of a copy clearance mechanism as defensive tactics in the competitiveness arena. U.S. copyright permissions are readily available to our trading partners.

I mention this problem because on several NCMS projects, some involving collaboration with DOE and the Department of Defense, we have determined that foreign-source data and information could be of considerable value. While we have the materials in hand and have taken steps to translate some of the materials, we have not been able to secure copyright permission, despite the passage of lengthy periods of time, well over a year. This renders the materials useless and results in larger expenses to both Government and industry in trying to resolve the issues and problems. A mechanism must be developed to resolve this and related issues in a timely fashion.

Finally, I am going to get to the issues of funding which deal with all three of your recommendations. Funding, along with the proper authority and accountability, are critical points for success, as put forth in the committee's proposed legislation. Each of the three components is equally essential for the labs to be successful in their interactions with industry.

On the part of funding, the budget for each facility should have support for technology transfer programs separately identified, as you have mentioned in your proposal. Subtracting unspent amounts from the following year's facility budget is an appropriate incentive for fully implementing the technology transfer program, and we believe it will be effective. We suggest that a certain portion of this funding, however, be allocated for collaborative work in not-for-profit, consortia-sponsored projects.

On the issue of authority, each facility should have full, legal, autonomous authority to search for, negotiate, sign, execute, and fund CRADA's with industry.

Third, on accountability, success of the facility's technology transfer efforts should be an important part of the director's job description, and a significant part of the director's performance review. In regards to performance review, we also suggest that a clear set of performance measurements be generated. Performance evaluation must not be allowed to fall into a CRADA counting contest. Measurement criteria must be generated that will indicate how widespread a facility's technology has been transferred to the

relevant sector of industry or how well new procedures are adapted by businesses due to interactions with the DOE facility.

The establishment of valid performance metrics for the director is critical. Valid evaluation criteria will determine whether technology transfer is a worthwhile activity or just based on good intentions with poor implementation.

In summary, I would like to congratulate the subcommittee members for their clear vision for rebuilding American industrial competitiveness by enhancing the DOE technology transfer capabilities. Issues that we have spoken of today are indeed serious impediments which need to be addressed before the vast resources of the national labs can be utilized by the industrial community.

Mr. Chairman, this concludes my remarks. I would be pleased to answer any of your questions.

[Mr. Miller's statement, presented by Mr. Cummins, may be found in the appendix.]

Chairman WYDEN. Mr. Cummins, thank you. It was an excellent statement. We will have some questions in a moment. I do want to ask our witnesses if we can keep you all to 5 minutes or so for your prepared remarks because we have a long panel. We will make your full statement a part of the record. Dr. Shanley, welcome.

TESTIMONY OF CHARLES SHANLEY, DIRECTOR, TECHNOLOGY

PLANNING, MOTOROLA

Dr. SHANLEY. Thank you, Mr. Chairman. I would like to express my appreciation to the subcommittee for the opportunity to comment on Motorola's experience with the national labs which we view as a significantly underutilized national resource. I would like to begin by noting that as this is a subcommittee of the Committee of Small Business, one question is why testimony is needed from a $14-billion company such as Motorola. In fact, Motorola is a relatively decentralized company which may be viewed as a federation of small businesses, each acting semiautonomously, with a minimum of corporate oversight. From the point of view of a divisional laboratory manager contemplating participation in a CRADA, the resources available to him or her are comparable to those of a small- or medium-sized company. As far as CRADA's are concerned, each Motorola lab may be regarded as its own small busi

ness.

Now, for a few case histories. I would first like to comment that, despite our many problems in completing these agreements, there has been goodwill and enthusiasm on the part of both Motorola and the national labs. In all cases where I have dealt with laboratory technology transfer personnel, I have found them to be committed to working with industry but frustrated by their own bureaucracy. In several cases they have made innovative suggestions as to how to get around that bureaucracy.

Let me describe our attempts to do a CRADA with Lawrence Berkeley Laboratory. In May 1991, Motorola made contact with a researcher at LBL who had an idea for a novel optoelectric component in which Motorola was interested. Because of Motorola's inexperience in that particular field, we would not have been able to do the research ourselves. As such, this CRADA is an ideal example of

how the national labs can contribute to industrial competitiveness through technology transfer. Negotiations based on the DOE model CRADA dragged on for over a year due to the problems with the model CRADA described in the written testimony. We were about to abandon all hope of doing any CRADA's with DOE when the CSPP model CRADA was publicized in July 1992. With the help of the LBL technology transfer office, we quickly recast the CRADA as a CSPP model and resubmitted it to LBL.

By early October, we had a complete agreement on all sides, and we were ready to sign. LBL sent the CRADA to DOE for their approval. To both Motorola's and LBL's surprise, the CRADA was rejected by DOE headquarters because they did not want to permit some portions of the CSPP model to be applied to Motorola which had not been part of the CSPP organization.

I made a personal appeal to Dr. William Happer, and, as a result of his intervention, the CRADA was approved and will be signed by Motorola. I am entirely convinced that without his help

Chairman WYDEN. Can I interrupt for just a second, Dr. Shanley, so I know where we are at this point. After 20 months of this Dr. SHANLEY. That was 18 months.

Chairman WYDEN. After 18 months of this drip-by-drip, elongated, back-and-forth process, we look like we are done, is that right? Dr. SHANLEY. Yes, Mr. Chairman.

Chairman WYDEN. Good. Thank you.

Dr. SHANLEY. It was an extremely frustrating experience. I had an entire head of hair back then.

Chairman WYDEN. I understand. I was just dying to know if we were actually at the end of the line because Mr. Jenning, the gentleman on my right, is a very patient and capable soul, and I kept saying, "Steve, are they done?" It is nice to hear that it will be signed fairly shortly, in the next few weeks.

Dr. SHANLEY. Indeed, it arrived by courier about an hour before I left to catch the plane to come here. At this point, that is to say right now, the CRADA has taken 20 months and a vast amount of time on the part of Motorola and the LBL technology transfer office. I doubt that a small business would be able to persevere for this long.

Now for Sandia. Motorola has at least four major CRADA's that we would like to establish with Sandia and all these proposed CRADA's have been on hold awaiting resolution of the CSPP model CRADA issue. We are still unsure whether DOE will let us use the CSPP model for these CRADA's. Another potentially very difficult problem arises from the intellectual property arrangements between Sandia and their contractor, AT&T. CRADA's from Sandia have a provision whereby any technology Sandia develops and patents in conjunction with a CRADA is automatically licensed free of charge to AT&T.

Now, Mr. Chairman, AT&T is one of our most respected competitors. One can envision a situation where Sandia patents, which arise as a result of this CRADA, are not available to Motorola at a reasonable price but were given free to AT&T. At the very least, this arrangement prevents Motorola from negotiating for an exclusive license to patents based on work we helped perform. We will not participate in CRADA's under these circumstances.

In addition, problems resulting from the length of time that it takes to negotiate a CRADA have resulted in Motorola dropping certain proposed CRADA's with Sandia. In the case of the LBL CRADA described earlier, Motorola was still willing to participate after 20 months of waiting. This is not usually the case. We abandoned one CRADA proposal with Sandia after 5 months of negotiations, for example, because the Motorolans involved could no longer wait for the negotiations to be completed and had to find other ways to get the research done. Motorola agrees with the subcommittee that legislation or other initiatives could help the labs increase the competitiveness of the U.S. industry.

The subcommittee is already considering giving individual DOE labs the authority to enter into CRADA's, allocating a specific fraction of DOE funds to technology transfer, and providing for accountability on the part of the lab directors and the DOE in matters of technology transfer. Motorola supports all these initiatives. We offer the following additional suggestions for the committee's consideration: First, provide that the contractors in GOCO labs not automatically receive rights to intellectual property created under the CRADA; second, provide for the general use of the CSPP model CRADA for all high technology CRADA's entirely replacing the current DOE model CRADA; third, provide clear guidance as to how in-kind work should be measured in a CRADA. A possible suggestion is to have the work done defined in person hours rather than dollars, which is perhaps easier to audit. Fourth, Motorola has generally found that specific goals often help improve performance. We suggest a formal goal of 4 weeks from the time of an agreement on the CRADA work statement on the part of both parties and the signing of the CRADA.

Chairman WYDEN. Too logical. Can't do that.

Dr. SHANLEY. We would like to work on it, Mr. Chairman.
Chairman WYDEN. Excellent idea.

Dr. SHANLEY. Progress toward this goal should be part of the performance measurement of the lab director. Naturally, this will require the empowerment of the lab director to approve CRADA's as has already been proposed by the subcommittee. Such a goal will likely have to be phased in over some period of time and will require adjustments on both sides.

For example, it is unlikely that Motorola itself could complete the process in the 4 weeks as things are right now. We believe, with the cooperation of DOE and perhaps the right legislative encouragement, that we together could make this happen. Motorola is willing to commit to such a goal if DOE is willing to do so. That concludes my statement.

[Dr. Shanley's statement may be found in the appendix.]

Chairman WYDEN. Doctor, thank you, excellent statement. Very helpful. I will have some questions here in a moment. Let me welcome you now if I could, Mr. Eagleson.

TESTIMONY OF JEFFREY EAGLESON, DIRECTOR, PUBLIC

AFFAIRS, LANXIDE CORP.

Mr. EAGLESON. Thank you. Thanks for the opportunity to testify today. My name is Jeff Eagleson. I am director of Public Affairs for