The Department of Energy (DoE) is one of the largest Federal research funding agencies, but a new report out today from the Government Accountability Office (GAO) finds that DoE needs to better understand whether or not a recent policy change is actually protecting U.S.-funded technologies from foreign acquisition.
In 2021, DoE changed its policy on the licensing of technologies developed with DoE research funding to ensure that more of the technologies were subjected to U.S. manufacturing requirements. However, GAO explains that DoE does not have a strategy or approach to assess the effects of this policy, noting that it may have “unintended consequences.”
“We did talk with all 17 national labs in about 20 universities, and heard a range of concerns from them about the policy change,” Candice Wright, who led work for the report, explained in a GAO podcast accompanying the report.
“In particular, there was concern that the policy change could have a chilling effect on whether or not third-party companies would even seek to license the technologies that are funded by DoE,” Wright added. “And so, there was a concern that this could then have unintended consequences and such chilling effects can be difficult to overcome.”
Wright went on to explain that the national labs and universities were concerned that the policy change may make them less likely to patent these inventions “because if there aren’t going to be companies seeking to license it, then it may not be a good investment on their part.”
Nevertheless, the labs and universities are taking steps to protect DoE-funded inventions from foreign acquisition. For instance, they require that licensees periodically report information such as changes in company ownership or management.
However, GAO’s report finds that their approaches are inconsistent and not always thorough. For example, the labs and universities don’t always monitor whether foreign acquisition of the companies took place after licensing.
“Without consistent risk management practices, DoE cannot ensure that inventions it funds are sufficiently protected from the risk of foreign control,” the report says. “This is particularly important for critical and emerging technologies, such as renewable energy generation and storage.”
GAO is making six recommendations, including that DoE evaluate its U.S. manufacturing policy, review university licensing practices, and provide guidance to labs and universities about managing the risk of licensee foreign ownership. DoE concurred with all of the recommendations.
