Let’s talk CRADA: Cooperative Research and Development Agreements

For contractors looking to engage with the Government in a commercial way, there are options beyond traditional procurements through the FAR. For example, my colleague Matt Moriarty just blogged on a very important topic: Other Transaction Authority (OTA). But there are even more options for the curious business. Here, I’d like to provide a brief overview of Cooperative Research and Development Agreements, or CRADA.

Let’s get one thing straight before proceeding: CRADA is not a procurement vehicle, but it is a contract with the Government. Nonetheless, a CRADA could ultimately result in a boon for your business.

What is a CRADA?

Governed by 15 U.S.C. § 3710a, a CRADA is an agreement between a federal laboratory and private companies (or other public or private entities) to perform research applicable to the laboratory’s mission, which may include commercializing Government research. So, the Government might initiate a CRADA with a private partner that can finalize an item for commercialization and market the product (or even stimulate a market for the product). Or, a private entity might initiate a CRADA to use the federal laboratory’s resources to develop a certain technology (that the federal laboratory finds interesting for its own purposes). So, in large part, a CRADA is technology transfer mechanism that benefits both parties.

No Funds Out

This point is important: while the federal laboratory may contribute personnel, services, facilities equipment, or intellectual property to the CRADA effort, it will never provide any funds to the non-federal partner. Again, this is not a procurement vehicle. The point is for the federal laboratory to bring its resources to the table to collaborate with a non-federal partner. But, the non-federal partner may contribute funds (and other resources, such as personnel and facilities) to the effort. And the Government can even charge for the use of its facilities.

In short, don’t conceptualize a CRADA is direct cash-generating venture. It’s not.

Intellectual Property

A CRADA provides a lot of flexibility in assigning intellectual property rights, such as patents. The parties can negotiate licenses for background patents (existing patents useful to the CRADA effort). They can also specify patent rights for inventions arising out of the CRADA effort.

But the Government always, by statute, gets one thing: a nonexclusive, nontransferable, irrevocable, paid-up license from the other party to practice the CRADA invention or have it practiced, on the Government’s behalf, throughout the world. Put simply, an ironclad license to use any invention resulting from the project is the Government’s payment for participating and contributing resources.

Intellectual property, however, is also where the non-federal partner can cash in. It too can obtain ownership or license rights in the CRADA invention (or other background patents) that it can then exploit commercially. That’s the real benefit of a CRADA from the non-federal partner’s perspective: capitalizing on patent rights in the private sector.

Other Important Points

Trade secrets and other confidential information supplied by the CRADA parties are protected from disclosure. Also, trade secrets and other confidential information developed during the CRADA effort are shielded from the Freedom of Information Act (FOIA) for five years.

A CRADA is not an open-ended instrument. For example, the parties must agree on a detailed joint work statement to govern the work. And a CRADA typically specifies a pre-determined expiration date.

Finally, CRADAs and small businesses are a winning combination. In fact, the statute requires federal laboratories must give small businesses special consideration when determining whether to enter a CRADA. Moreover, federal laboratories must also give special consideration to businesses agreeing to manufacture CRADA inventions in the United States.

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CRADAs offer a unique avenue to engage with federal resources and to profit from a research-driven relationship. If you have any questions about these contracts, please give us a call at 913-354-2630.