Small Business Innovation Act of 1980

(Reported to House from the Committee on Small Business with amendment, H. Rept. 96-1006 (Part I))

Small Business Innovation Act of 1980 - =Title I: Amendments to the Small Business Act= - Amends the Small Business Act to empower the Small Business Administration to provide management assistance in addition to technical assistance to small business concerns to obtain government contracts for research and development. Directs the SBA to consult and cooperate with other Government agencies in furthering the purposes of the Small Business Act.

Directs each Federal agency to target at least 15 percent of its research and development budget for prime contract awards, both direct and indirect, in each fiscal year beginning with fiscal year 1981, to small business concerns. Specifies a formula for computation of each annual award. Directs each agency to fully utilize procurement methods authorized under this Act in order to achieve the target levels.

Requires each Federal agency having a research and development budget of $100,000,000 or more to initiate and conduct a small business innovation research competitive solicitation program. Directs that funding for such program shall be made available from each agency's budget and that each agency, utilizing applicable procurement methods, award to small business concerns at least 50 percent of its annual target for prime contracts.

Directs each agency to conduct its program in accordance with such rules and regulations as are established by the SBA, including: (1) identifying specific and definable categories of projects; (2) establishing a simplified, standardized acquisition process; and (3) developing solicitation release schedules for notifying small business of contract opportunities. Requires the SBA to develop and maintain a master solicitation release schedule, source file, and informational program to facilitate small business participation in federally funded research and development. Directs the National Science Foundation and the Office of Federal Procurement Policy to provide advice and assistance to the SBA in the promulgation of such regulations.

Requires the Administrator of the Office of Federal Procurement Policy, in cooperation with the SBA, to insure that such regulations provide the maximum practicable opportunity for small business concerns to perform federally funded research and development contracts. Provides that such regulations shall include: (1) the elimination of cost-sharing requirements and the allowance of negotiated fees on all contracts; (2) the opportunity for fair and equitable competition for contract awards; (3) a fair and prompt review of unsolicited proposals and the opportunity to receive sole source awards; (4) the consideration of independent research and development and bid and proposal costs as expenses under the contract in the fiscal year in which they occur; (5) the requirement for the Departments of Defense and Energy and the National Aeronautics and Space Administration to conduct periodic breakout reviews of all proposed large-scale systems contracts; (6) the opportunity for women-owned and minority business firms to be considered for research and development contracts; (7) the evaluation of procurement personnel performance in the award of contracts to small and minority business concerns; and (8) the responsibility to identify, study, and eliminate discrimination practices in procurement systems.

Requires all Federal agencies to promulgate regulations which, insofar as practicable, impose the least amount of regulatory burden on small businesses.

Directs the Securities and Exchange Commission to conduct an annual review of its rules and regulations which have the effect of restricting small business concerns from access to securities markets and to report to the appropriate congressional committees relative to the results of such review.

=Title II: Amendments to the Internal Revenue Code of 1954= - Amends the Internal Revenue Code to provide procedures for sales and exchanges of interests in qualified small business concerns. Allows a taxpayer who sells an equity interest in any such business and purchases replacement property within 18 months, to elect that the gain from such sale be recognized only to the extent that the amount realized exceeds the cost of the replacement property. Requires that such election be filed with the Secretary of the Treasury in such manner as the Secretary may prescribe.

Requires, for purposes of this Act, that an exchange of equity interest shall be treated as a sale of such interest and the acquisition of replacement property on such exchange shall be treated as a purchase of such property.

Requires that the determination of whether there is an equity interest in a small business concern be made at the time such interest is acquired by the taxpayer.

Provides limitations on stock sales with respect to any equity interest in a qualified small business concern.

Requires a reduction of the basis of replacement property by the amount of gain not recognized from the sale of an equity interest in qualified small business concerns.

Provides a statute of limitations for the assessment of any tax deficiency attributable to gain from the sale of equity interest in such business concerns.

Defines small business concern as a business that is independently owned and operated, not dominant in its field of operation, and which has less than 500 employees.

Provides technical and conforming amendments to the Internal Revenue Code applicable to provisions of this Act.

Permits employees of qualified small concerns to exercise stock options within ten years after the date such option was granted.

Provides for a reduction of capital gains tax for such business concerns held by a taxpayer for at least five years.

Grants a capital loss carryover to a taxpayer to the extent such loss is attributable to an investment in such business concern for the ten succeeding years after the loss year.

Allows a tax deduction for contributions to research and experimental expenditure reserves equal to the amount of such cash contribution during the taxable year, subject to specified limitations. Provides that such reserves shall be considered tax-exempt organizations under provisions of the Internal Revenue Code. Requires that amounts distributed to any person from such reserve shall be included in the gross income of such person, unless such amount relates to a research and experimental expenditure expense.

Amends the definition of small business corporations under the Code to specify that such corporation does not have more than 100 shareholders and does not have as a shareholder a person who is not an individual or corporation.

Removes limitations on amounts allowable for tax losses with respect to stock issued by qualified small business concerns.

Sets forth effective dates for amendments made under this Act.

Allows a qualified small business concern to treat research and experimental expenditures for the acquisition or improvement of property as currently deductible expenses. Allows such concerns to treat such expenditures for any property subject to a depreciation or depletion allowance as deferred expenses, and in the case of a building such deferred expense shall be allowed ratably over a period of 120 months.

=Title III: Patents and Inventions= - States that it is the objective of this Act to amend existing patent procedures in order to promote the marketing of inventions developed under federally supported research and development projects by nonprofit organizations and small business firms.

Permits any such organization or firm to elect, within a reasonable amount of time, to retain title to such inventions. Permits Federal agencies which have supported such projects to retain title to inventions through their funding agreements in specified circumstances, including, when necessary, to conduct foreign intelligence or counterintelligence activities. Requires review of agency determinations that such circumstances exist by the Comptroller General and the Chief Counsel for Advocacy of the Small Business Administration. Directs the Comptroller General to report to Congress on the implementation of this Act by Federal agencies.

Enumerates provisions which must be included in funding agreements between a Federal agency and a small business firm or nonprofit organization including provisions: (1) to insure the rights of the Federal Government under this Act; (2) to provide that the agency shall have a nonexclusive, nontransferable, irrevocable and paid-up license to use the invention; (3) to prohibit a nonprofit organization from assigning rights to the invention without the approval of the Federal agency; (4) to prohibit such an organization, other than small business firms, from granting exclusive rights from the earlier of five years from the first commercial use of the invention or eight years from the date of invention; and (5) to require such organizations to use their royalties and earnings to support scientific research or education. Provides that the first commercial use with respect to a product of the invention shall not end the exclusive period to different subsequent products covered by the invention.

Requires the head of a Federal agency to approve provisions of a funding agreement which require the licensing to third parties of inventions owned by the contractor. Sets forth terms and conditions under which such approval may be granted.

Authorizes a Federal agency to transfer or assign its rights, acquired from an agency employee as coinventor, to an inventor electing to acquire title to an invention.

Empowers any Federal agency to require inventors or their assigns to grant licenses in order to: (1) achieve practical application of the invention in its field of uses; (2) alleviate health or safety needs; (3) meet requirements for public use specified by Federal regulations; or (4) achieve participation by United States industry in the manufacturing of an invention.

Entitles the government to 15 percent of all net income in excess of $70,000 gross income received by a contractor after a patent application is filed on a subject invention. Provides that if a contractor receives a gross income of $1,000,000, the government shall be entitled to a share of the excess of $1,000,000 that shall be negotiated, but not to exceed five percent of such excess. Limits the government share of any such excesses to its contributions under the funding agreement. Authorizes and directs the Director of the Office of Federal Procurement Policy to revise the government entitlements in light of changes in the Consumer Price Index or other indices at least every three years. Declares such government entitlements applicable to subject inventions upon which United States patents are granted and in effect.

Restricts the assignment and licensing of rights by patent holders to foreign owned or controlled firms unless such persons agree that any products embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States where commercially feasible.

Authorizes Federal agencies to withhold information on inventions from public disclosure.

Specifies the authority of Federal agencies with respect to obtaining patents, granting licenses, and transferring custody of patents.

Authorizes the Administrator of General Services to promulgate regulations specifying the terms upon which any federally-owned invention may be licensed.

Sets forth the procedure whereby Federal agencies may grant exclusive or partially exclusive licenses in any invention covered by a federally-owned domestic patent or patent application.

Prohibits licensing which lessens competition. Directs that business firms be given preference in exclusive or partially exclusive licensing.

Enumerates provisions which must be contained in any grant of a license by a Federal agency.

Declares that this Act shall take precedence over any other Act in the disposition of inventions.

Directs the Commissioner of Patents and Trademarks to establish regulations governing: (1) the citation to the Patent and Trademark Office of prior art patents or publications which are pertinent to a later patent; and (2) the reexamination of a patent to determine whether such a prior patent or publication has any bearing on the patentability of any claim of such patent. Authorizes any individual to: (1) cite to the Office any such prior patent; and (2) request such a reexamination.

Requires the Commissioner within 90 days of such a request to make a determination as to whether the cited prior patent raises a new question of the patentability of any claim of the later patent. Authorizes the Commissioner on his or her own initiative to make such a determination at any time. States that a determination that no new question is raised shall be final. Directs the Commissioner, upon determining that there is a new question of patentability, to order and conduct a reexamination. Requires that the patent owner be provided at least two months to file a statement on such question and that the person making the reexamination request be provided two months to respond to such statement.

Declares that the patent owner shall be provided an opportunity in any reexamination to amend any claim of the patent in order to distinguish the claim from the prior patent cited, or in response to a decision adverse to the patentability of the claim. Authorizes the owner to appeal any adverse decision.

Directs the Commissioner, upon the conclusion of any reexamination or appeal proceeding, to issue and publish a certificate cancelling any unpatentable claim, confirming any valid claim, and incorporating any amended claim in the patent.

Declares that no prior patent or publication may be relied upon as evidence of nonpatentability in a civil action involving the validity or infringement of a patent unless: (1) the prior patent or publication was cited by or to the Office regarding application or reexamination proceedings for the patent; or (2) the court concludes that consideration of the prior patent or publication in such proceedings is unnecessary for adjudication.

Sets forth circumstances under which a court may stay the proceedings of a civil action involving the infringement or validity of a patent to enable either party to such action to secure a determination on a request for reexamination of the patent by the Patent and Trademark Office. Provides the moving party in such action the right to dismiss the complaint commencing such action.

=Title IV: Effective Date= - Sets October 1, 1980, as the effective date of this Act.