TTOs Grapple with New DOE Domestic Manufacturing Rules, Some Will Avoid Projects

A detailed article on the DOE’s new domestic manufacturing requirements and the issues it presents for TTOs appears in the December issue of Technology Transfer Tactics.

The Department of Energy’s new policy requiring inventions resulting from DOE-funded R&D to be “substantially manufactured” in the United States has tech transfer leaders studying how to comply, and some are determining that the burden is too great. Those programs are deciding to decline licensing of DOE-funded inventions altogether.

The DOE policy encourages domestic production of products developed from DOE funds and requires a suspension of rights to the IP when a licensee undergoes a significant change, such as a change in ownership, until the department provides written approval. In addition, tech transfer programs must submit manufacturing plans for DOE approval before a licensee is obtained or a product is created.

The Bayh-Dole Act has a U.S. Preference clause that requires domestic manufacture unless a waiver is provided, but the DOE guidance document for the new rule says that process has been “largely ineffective.” The new policy is founded on a “determination of exceptional circumstances” under the Bayh-Dole Act, with DOE saying the determination is intended to “revitalize and rebuild domestic manufacturing capability.”

The guidance document for the policy, which became effective October 1, 2021, says the new requirement will be implemented in “most” new R&D funding opportunities issued by DOE’s applied energy offices and Office of Science. The rule says that “any products embodying any subject invention or produced through the use of any subject invention will be manufactured substantially in the United States unless the contractor can show to the satisfaction of DOE that it is not commercially feasible.”

Under this rule, DOE is extending the domestic manufacturing requirement to non-exclusive licensees and to uses and sales beyond the domestic market. When any contractor or other recipient of the invention rights experiences a “change in ownership amounting to a controlling interest,” the rights are suspended unless DOE provides written approval for the change.

That requirement also comes into play when entities “sell, assign, or otherwise transfer title or exclusive rights in the invention.”

Even before the rule was enacted, the tech transfer community was concerned about the burden of compliance. The Bayh-Dole Coalition sent a letter to the DOE in August 2021 saying contractors’ and licensees’ uncertainty about the approval process would hinder commercialization of federally funded research.

“We understand and share DOE’s concern about the offshoring of emerging energy technologies of strategic importance to U.S. national security,” the letter said. “However, the ability of our member institutions to transfer such technologies to the private sector for further commercial development may be seriously impeded, if not eliminated, by these requirements.”

Though everyone seems to agree with the intent of the rule, compliance will be challenging and the end result may not be what DOE intends, notes Jennifer Gottwald, PhD, CLP, director of licensing with the Wisconsin Alumni Research Foundation (WARF) in Madison.

“We understand what DOE is trying to do here, and as Americans we want manufacturing here in our country. The pandemic has shown us that not only is that good for creating jobs, it also makes us a more resilient economy when things go wrong in the global supply chain,” Gottwald says. “However, we feel that the way DOE is going about this is very counterproductive and won’t result in more things being manufactured in America.”

Source: https://techtransfercentral.com/

Editor: IPRdaily-Rene