pose managerial controls and commercial pressures where free, uninhibited inquiry is needed to promote the flow of science. In industrial laboratories research in the useful arts has been expanded rapidly, without a parallel growth in patenting activity. Moreover, the experience of a few firms, whose patent privileges have been recently abridged, indicates that these managements maintain and expand their industrial research in order to cope with problems of product and cost competition. The development of research in these and similar firms will bear close watching.

With or without a patent system, the efficient pursuit of knowledge in the universities and other nonprofit institutions will continue, within the limits of available resources, so long as the production of knowledge is treated as a sufficient end in itself. Industrial firms will continue to enlarge their research in the useful arts as dictated by competitive needs, with or without patent privileges. Henceforth, in the judgment of this writer, the main impetus for the promotion of science and the useful arts will come, not from the patent system, but from forces and factors that lie outside that system (pp. 61-62).

*

Senator LONG. We will now proceed and hear Mr. Anderson. STATEMENT OF ROLAND A. ANDERSON, ASSISTANT GENERAL COUNSEL FOR PATENTS, ATOMIC ENERGY COMMISSION; ACCOMPANIED BY PHILIP G. READ, SMALL BUSINESS SPECIALIST, AEC Mr. ANDERSON. I believe the committee has the prepared statement. If you would like me to skip over and merely hit some of the highlights I would be pleased to do so at the committee's request. Senator LONG. You may proceed as you wish."

Mr. ANDERSON. Mr. Chairman and members of the committee, it is a pleasure to present the present policies and practices of the United States Atomic Energy Commission.

THE COMMISSION CONTRACT POLICY

The Commission has pursued a policy in its funded research and development and operating contracts of employing patent provisions under which the Commission is in position to acquire all rights in inventions and discoveries in the atomic energy field. This policy was initially promulgated by the Commission's predecessor, the Mahattan Engineering District, and is in general, similar to the usual commercial and industrial practice where the private sponsoring company generally acquires all rights in inventions and discoveries that result from the privately sponsored and funded research and development work.

It is the Commission's view that where the Commission sponsors and pays for research and development in the field of atomic energy that the resultant inventions and discoveries should be the property of the Government for the benefit, not only of the particular contractor, but of the general public. This policy of the acquisition of all rights in inventions and discoveries in the atomic energy field together with a corollary technical data provision under which the Commission acquires rights in the data to use the same as it sees fit, has permitted the Commission and the Government generally, complete freedom of action as respects the dissemination of scientific and technological atomic energy information prepared and developed

23a Mr. Anderson read his complete statement.

under Commission contracts to the entire public, in the public interest and not just to contractors and other selected groups. The Commission's ownership of the rights in the discoveries and inventions in the atomic energy field has avoided the granting of special privileges and the establishment of preferred positions by contractors. While the AEC has a substantial number of research and development prime and subcontracts, as noted in the list of research and development prime and subcontracts reported during the 5-year period 1954-58, as set forth in appendix A,23b yet much of the programmatic research and development is performed by relatively few contractors. To the end of 1958 approximately 90 percent of the inventions reported under Commission contracts have been reported by some 14 Commission contractors, so that, if AEC had a policy of acquiring only a governmental license, the possibility of establishing preferred positions does exist.

One of the present effects of the AEC patent and technical data policy is that all unclassified technological and scientific information prepared and developed by the Commission and its contractors is presently available to every company presently engaged in atomic energy work. Everyone is entitled to use the scientific and technical data and the inventions and discoveries that have resulted from Commission contracts. This utilization of technology would not be possible under a program that provided only for royalty-free use by the Government.

This policy, although adopted during the early days of the MED project, has been implemented by the statutory provisions of the Atomic Energy Act of 1954. The 1954 act has three sections dealing specifically with the rights of the Commission in inventions and discoveries resulting from or arising out of Commission contracts— namely sections 152, 159, and 161 (g).

The specific patent article used by the Commission reserves to the Commission the right to determine the disposition of title to and rights in and to any inventions or discoveries made or conceived in the course of, in connection with, or under the terms of the contract. In instances where the contractor has an established industrial and patent position in the nonnuclear field and the research is conducted in other than a Commission laboratory or facility, the article employed provides for the contractor's retention of at least a nonexclusive license. Îf, in addition thereto the research and development work relates only incidentally to basic research of the Commission and results from more or less routine development work, the contract provision used provides for the retention of a sole license (except as against the Government) in the contractor for purposes other than for use in the production or utilization of special nuclear material or atomic energy. Where the Commission supports research in a field where the contractor has already done some research, which is generally described as a "background position," the Commission also acquires a nonexclusive license for governmental purposes or some other limited purpose in such background contributions. The scope of the background provision is dependent upon the facts of the situation and the particular purposes of the research and development work.

23b See exhibit X(A), p. 238.

There is one other contract patent provision which the Commission employs that may be of general interest, namely the patent indemnity provision in favor of the Government. Where the Commission purchases standard or commercial items or where the contract is for services to be performed in a manner normally utilized by the contractor, the Commission incorporates in such contracts or purchase orders, a provision under which the contractor indemnifies the Government in respect of patent infringements that result from the furnishing of such a standard or commercial components or items, or result from the performance of such standard services.

This, in brief, is the Commission's contract patent picture.

THE COMMISSION'S AUTHORITY TO LICENSE PRIVATE PATENTS

The Atomic Energy Act of 1954 has a unique provision that may be of interest to this committee, namely section 153 that provides for compulsory licensing of privately owned patents in the atomic energy field under unusual circumstances. The section was recently extended by section 114 of the AEC Authorization Act, Public Law 50, 86th Congress, so that provision, as extended, is in force as to any patent, the application for which is filed on or before September 1, 1964. The Commission has had no occasion to invoke the authority to date. The Commission considers it a reserve power which, if the occasion arises where, in the public interest, the Commission deems that (1) the invention is of primary importance in the production or utilization of special nuclear material or atomic energy and (2) the licensing is of primary importance to effectuate the policies and purposes of the act, the same could be invoked.

The very existence of the authority may have a salutary effect and prevent abusive and unhealthy situations. The restrictive conditions and procedures surrounding the exercise of the authority are such that it could only be used in comparatively rare and compelling cases where the patent owner refused to license a Commission authorized private activity.

One of the situations that could arise for employing said section 153 involves the private atomic power industry. A private company operating a power reactor generating electricity for some local community could find itself subject to a patent infringement charge on a fuel element covered by a patent which was issued subsequent to the construction and startup of the reactor. In such an instance, if the owner refused to license the company, the authority of the Commission under subsection 153a could be involved or the company could initiate proceedings under subsection 153c. If the company initiated a proceeding and the Commission found that the company's activities met the tests of "primary importance" under subsection 153e, the Commission could grant a license and if the patent owner and the company could not agree on a reasonable royalty the Commission could, after hearing, fix the reasonable royalties. The only benefit of the normal patent system that the owner of such a patent is denied by section 153 is the injunctive relief. Where the activities are of "primary importance" to the furtherance of the Atomic Energy Act it can be seriously questioned whether the public inconvenience and interest is not such as to warrant denial of injunctive relief.

THE LICENSING OF COMMISSION OWNED PATENTS

The Commission is authorized to hold patents and to license and otherwise treat with patents by sections 156 and 161 (g) of the Atomic Energy Act of 1954.

Section 156 provides for the establishment of standard specifications for the granting of licenses and the specifications have been promulgated and are set forth in 10 C.F.R. 81. The Commission has a portfolio of some 2,225 U.S. patents, several hundred foreign patents, and several thousand U.S. and foreign patent applications. In addition thereto several hundred domestic and foreign patent applications have been filed by contractors on inventions in which the Commission has rights. The domestic and foreign applications filed by the Commission and its contractors over the past 5 years are set forth in my exhibit (B). (See exhibit X(B), p. 238.)

The Commission has, to date, granted over 780 royalty-free licenses and in addition contractors have retained licenses in some 425 patents. The Commission's policy is to grant, upon request, royalty free, nonexclusive licenses on Commission-owned U.S. patents to all, and to grant the same type of nonexclusive license to U.S. industry on Commission foreign-owned patents.

The Commission's research and development contract articles include a provision that all technical data developed in the course of contract work become the property of the Commission, to be used by the Commission as it sees fit, so that the Commission may be in a position to fulfill its statutory responsibilities for dissemination of technical and scientific information under sections 3 and 141b of the Atomic Energy Act of 1954.

THE COMMISSION'S PUBLICATION POLICY

The Commission has a vigorous program for the dissemination and publication of such technological atomic energy information. In the past 3 years over 46,800 documents have been declassified and made available aside from the many thousand unclassified reports and documents released and disseminated either directly or through con

tractors.

It is hoped that the foregoing information as to the Atomic Energy Commission's patent policies will be found useful in the studies of your committee.

The documents referred to follow :)

EXHIBIT X(A)

Research and development prime and subcontracts reported to the Office of the Assistant General Counsel for Patents between the years 1954 and 1958, inclusive, in which was incorporated a patent provision in accordance with the Commission's policy

NOTE.-Those indicated as type A are contracts in which the Commission has the right to acquire all of the rights. Type B are those in which the contractor, by contract, retains at least a nonexclusive license. Type C are those in which the contractor, by contract, retains the exclusive rights (except as against the Government or its account) for purposes other than use in the production or utilization of special nuclear material or atomic energy.

EXHIBIT X(B)

Domestic and foreign patent applications filed by the Commission or its contractors between Jan. 1, 1955, and Nov. 15, 1959

NOTE.-In most of the applications filed by contractors the Commission has retained exclusive infield rights subject to a nonexclusive license in the contractor. In some of the applications filed by contractors the subject matter is deemed not of sufficient primary interest to the Commission's activities so that the Commission has only retained a nonexclusive license.

Senator LONG. Could you tell me how much classified material you are holding as compared to the amount of unclassified?

Mr. ANDERSON. I think today it is fair to say it is only that information which pertains to the military aspects of our program which is classified, and I would venture a guess that there is a very, very small percentage, somewhere less than probably 5 or 6 percent; and this is only a guess on my personal part, but I would say it was a very small part.

I think it is fair to say that all technological information in the field of atomic energy, except weapons information and production data is unclassified or declassifiable, as we call it.

Senator LONG. Do you believe the policy you are following in the Atomic Energy Commission is the best way to get ahead with this job by staying out in front of the Soviets and our competitors?

Mr. ANDERSON. I think in atomic energy we have a unique situation. We had a development that occurred during an emergency period of the Government.