Chapter 3 Copyright Law Constraints on the Transfer of further develop and commercialize it. According to the Director of Classification and Technology Policy for DOE's Defense Programs, DOE's contractor-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 programs 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 commercialize federal software for the following reasons: • The federal computer program may have been developed only for the laboratory's R&D need and may not be immediately usable for commercial 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. 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 current 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 NTIS or another federal software distribution center. Alternatively, the agency that developed the software may provide it through a request under the Freedom of Information Act. Without copyright protection, competitors and customers could market or use the federal software, reducing the potential market for the software and a company's return on investment. Chapter 3 Copyright Law Constraints on the Transfer of obtain publicly available software, make minimal changes and/or provide 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 confusion 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 timesensitive. Examples of Constraints to Federal agency and laboratory officials stated that they cannot precisely determine the extent to which the transfer of their laboratories' software has been constrained. Many federal researchers and outside businesses know the government cannot copyright software and therefore they do not seek to commercialize the software either by licensing it or through a cooperative R&D agreement. In other cases, senior laboratory 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 laboratory, 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: • The lack of copyright protection has constrained efforts to commercialize 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 interested in the software, but it was clearly an early version that would have had to be further developed before it could be marketed. His company 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 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 commercialize it. NIH also has not sent the software to NTIS for public dissemination 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 exclusively 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 supported copyright registration because they believed the contributions of researchers from the Agricultural Research Service, Mississippi State, and Clemson were sufficiently intermingled; no discernable federal portion existed. Agriculture, Mississippi State, and Clemson also have tentatively 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 protection 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 services, are now involved in the dissemination effort. Agriculture officials noted that the Agricultural Research Service is developing similar computer programs in other areas, such as soy beans, semi-arid lands, and food processing. Chapter 3 Copyright Law Constraints on the Transfer of Providing Researchers an Software Agency officials also told us that businesses generally have been unwilling to enter into cooperative R&D agreements to further develop federal laboratories' software because the businesses could not protect the federal laboratory's portion of the software. According to the NIH's Director, Office of Invention Development, while NIH has signed about 130 cooperative R&D agreements, it is negotiating its first agreement with a major software component. Similarly, the Agricultural Research Service's Assistant Administrator for Cooperative Interactions stated that software is not the focus of any of about 140 cooperative R&D agreements that the Agricultural Research Service has signed or is negotiating. 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 constrained cooperative R&D agreement negotiations. Businesses and other organizations are seeking to negotiate cooperative R&D agreements with the Corps of Engineers, in part because the Water Resources Development 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 R&D funding is an important element for three software agreements with nonprofit organizations, which plan to make the final software products generally available. In addition, 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. Potential Additional Constraints to Semiconductor Mask New Protection for Cells and Other Microorganisms NTIS officials support extending copyright authority to all federal software because NTIS, which receives no appropriations, relies on sales revenues to operate its distribution and archive programs. According to 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 coordinator 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 in addition to software that they believe are constrained by intellectual property laws. While many federal agencies develop software as part of their R&D pro- |