February 24, 2015

Submission and Maintenance of Patents at Sandia National Laboratories

The National Nuclear Security Administration is responsible for the management of the nation's weapons complex, which includes Sandia National Laboratories, operated by Sandia Corporation. Sandia Corporation's Technology Transfer Program involves the submission of patent applications resulting from Sandia National Laboratories' research and development efforts. Once a patent is assigned, Sandia Corporation must maintain the patent to protect the underlying intellectual property and associated rights. Commercial enterprises, especially small businesses, negotiate licensing agreements for patented technologies, and Sandia Corporation collects related fees.

Our inspection determined that, for the most part, the processes for submitting and maintaining patents appeared to have been implemented in a manner that protected the interests of the Department of Energy and Sandia Corporation. However, we found that Sandia Corporation failed to pay the periodic maintenance fees for 14 of the approximate 1,540 patents it maintained. This resulted in the lapse of patents and the loss of associated intellectual property rights, requiring Sandia Corporation to reimburse four companies approximately $112,000 for licensing fees and royalty payments made for patents, funds to which Sandia Corporation would have otherwise been entitled. In addition, one inventor was paid $7,000 for lost royalty income.

Our review found that the failure by Sandia Corporation to pay the periodic maintenance fees occurred because of a change in software packages used by Sandia Corporation to track and maintain the status of patents. The change in software necessitated a data transfer of patent-related information. During the data transfer, data affecting 14 patents was corrupted, and the corrupted data was not detected. Because Sandia Corporation relied on this data to alert it to when maintenance fees were due, the absence of the alert in these instances caused Sandia Corporation to miss the payment of periodic maintenance fees.
 

Topic: Management & Administration