GOVERNMENT PATENT POLICY

TUESDAY, JUNE 1, 1965

U.S. SENATE,

SUBCOMMITTEE ON PATENTS,

TRADEMARKS, AND COPYRGHTS OF THE

COMMITTEE ON THE JUDICIARY,

Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 3302, New Senate Office Building, Senator John L. McClellan presiding. Present: Senators McClellan, Hart, and Burdick.

Also present: Thomas C. Brennan, chief counsel; Edd N. Williams, assistant counsel; and Stephen G. Haaser, chief clerk, Subcommittee on Patents, Trademarks, and Copyrights.

Senator MCCLELLAN. The committee will come to order.

This hearing by the Subcommittee on Patents, Trademarks, and Copyrights has been called for the consideration of four bills concerned with various aspects of Government patent policy. Three of these bills-S. 789, introduced by Senator Saltonstall; S. 1809, introduced by myself; and S. 1899, introduced by Senator Long of Louisiana-are primarily concerned with the disposition of property rights in inventions resulting from Government-financed research and development. The fourth bill before the subcommittee is S. 1047,1 by Senator Williams of New Jersey, which deals with the procurement by the Government of products which have been produced in violation of U.S. patents. Senators Saltonstall, Long, and Williams have indicated that they will appear at tomorrow's hearings of the subcommittee.

This subcommittee has been engaged for some time in a study of the patent policies and practices of the various departments and agencies. A number of studies have been published by the subcommittee, and extensive hearings have previously been conducted.

In recent years the Congress has frequently considered the inclusion of patent provisions in legislation authorizing new Government research programs. However, not every agency is subject to specific statutory patent policies and diversities of patent practices developed among the various departments and agencies.

From the attention which Congress has given to this subject it is clearly its intent that the basic guidelines of Government patent policy should be determined by the Congress. In an effort to find a basis for a reasonable solution of this complex question, I introduced, during the 88th Congress, S. 1290. After the introduction of my bill, President John F. Kennedy issued a memorandum of Government patent policy. I then indicated that I regarded President Kennedy's statement as a constructive contribution which would be of considerable

1 The testimony relating to S. 1047 is printed separately under the title "Patent Infringement."

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assistance, but that the need for legislation persisted. I believe subsequent events have amply confirmed the desirability of Congress discharging its constitutional responsibility in patent matters by enacting a comprehensive Government patent policy.

These hearings are scheduled for today and tomorrow. In view, however, of the large number of witnesses who have indicated a desire to testify, the Chair, at the moment, is a bit doubtful that the hearings can be concluded in 2 days' time. It, therefore, may be necessary to schedule another day, or more, in order to permit those to be heard who should be heard and who desire to be heard. We will proceed and expedite the hearings as well as we can.

Senator Hart, any statement?

Senator HART. No, sir. I think the Senate is in your debt for your willingness to take on this difficult assignment. The business community and the general public will be the better for it.

Senator MCCLELLAN. Well, I hope we can come out with something constructive to serve the public. Senator Burdick?

Senator BURDICK. No statement.

Senator MCCLELLAN. Very well. We are ready to proceed.

Mr. BRENNAN. Mr. Chairman, I would like to offer at this time for insertion in the record the notice of this hearing which appeared May 17 in the Congressional Record.

Senator MCCLELLAN. Very well; it may be inserted at this point in the record.

(The document referred to follows:)

[From the Congressional Record, May 17, 1965]

NOTICE OF PUBLIC HEARING ON GOVERNMENT PATENT POLICY

Mr. MCCLELLAN. Mr. President, as chairman of the standing Subcommittee on Patents, Trademarks, and Copyrights of the Committee on the Judiciary, I wish to announce that the subcommittee has scheduled a public hearing on S. 789, S. 1809, and S. 1899, bills to establish a uniform Government patent policy, and S. 1047, a bill to amend section 1498 of title 28, United States Code, relating to the use by or for the United States, of any invention covered by a patent of the United States. The hearings will be held on Tuesday, June 1, and Wednesday, June 2, commencing at 10 a.m., in room 3302, New Senate Office Building. Anyone who wishes to testify or file a statement for the record should communicate immediately with the office of the subcommittee, room 349-A, Senate Office Building, Washington, D.C., telephone 225–2268.

The subcommittee consists of the Senator from Michigan Mr. Hart, the Senator from North Dakota Mr. Burdick, the Senator from Pennsylvania Mr. Scott, the Senator from Hawaii Mr. Fong, and myself.

Mr. BRENNAN (continuing). To be followed by copies of the four bills before the subcommittee.

Senator MCCLELLAN. Without objection, the three bills dealing with Government patent policy, which the Chair has referred to, will be printed in the Record at this point. The fourth bill, S. 1047, will be printed in the hearings entitled "Patent Infringement."

(The bills referred to, S. 789, S. 1809, and S. 1899, follow :)

[S. 789, 89th Cong., 1st sess.]

A BILL To prescribe a national policy with respect to the determination and disposition of property rights to inventions made in the course of experimental, developmental, and research work conducted under contracts or arrangements with the United States Government; to promote the public interest through widespread use and benefit from such inventions; to provide incentives to invention by rewarding inventors; and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "National Inventions Act".

SEC. 2. As used in this Act—

DEFINITIONS

(a) The term "executive department" includes any executive or military department of the United States.

(b) The term "agency" denotes any independent establishment in the executive branch of the Government, the Government Printing Office, the Library of Congress, and any wholly owned Government corporation.

(c) The term "head" used in conjunction with executive department or agency denotes the head of such executive department or agency, except that the Secre tary of Defense shall be the head of the Department of Defense and of each military department thereof, and in the case of any authority, commission, or other agency, control over which is exercised by more than one individual, such term means the body exercising such control.

(d) The term "contract" means any contract, grant, agreement, commitment, or understanding entered into between any executive department or agency and any other person where a purpose of the contract is the conduct of experimental, developmental, or research work. Such term includes any assignment, substitution of parties, or subcontract of any tier entered into or executed for or in connection with the performance of that contract.

(e) The term "person" includes any individual, corporation, partnership, firm, association, institution, or other legal entity.

(f) The term "invention" means any invention, innovation, discovery, or improvement without regard to the patentability thereof.

(g) The term "inventive contribution" means—

(1) any plan or proposal for the improvement of management procedure or technique within any executive department or agency; or

(2) any plan or proposal for the application of any patented or unpatented item or technical data for use by any executive department or agency.

PROPERTY RIGHTS

SEC. 3. The Congress hereby declares it to be the policy of the United States that

(a) Each contract entered into by an executive department or agency of the United States and each subcontract at all tiers thereunder, which has as one of its principal purposes the performance of experimental, developmental, or research work, shall contain provisions which assure to the Government the right to use for governmental purposes all inventions and inventive contributions made in the performance of the work. Further, each such contract shall provide, in terms prescribed by such executive department or agency for the disposition of property rights in and to inventions made in the performance of the work under such contracts. Said provisions shall state that the contract is subject to the terms and conditions of this Act. Said provisions shall not require grant to the United States of a proprietary interest greater than that set forth in subsection (b) of this section in any invention first conceived or first actually reduced to practice in the performance of such work unless the contract

(1) is in a field in which the Government has been, at the time of contracting, the sole or prime developer and in which the national security, public health or safety requires close control of further development of such invention and its use; or

(2) is in a field in which the Government had been, at the time the contract was entered into, the sole or prime developer of the field of science or technology involved, and had provided all or substantially all of the funds required for research, development, or exploration activities; or

(3) requires development of a field of technology which is entirely new without significant commercial or private history and would not be likely to be developed in the foreseeable future without substantial Government financing; or

(4) shows the likelihood that any inventions actually reduced to practice under the contract will have depended to a substantial degree upon the prior or parallel conceptions and work of other parties under Government contracts where Government financial assistance has been utilized; or

(5) is intended to produce one or more end items the use of which is likely to be required by law in furtherance of the national security or the public health and safety.

In those cases where the Government shall retain a proprietary interest greater than that set forth in subsection (b) of this section in any invention first conceived or first actually reduced to practice in the performance of a contract subject to this Act, said invention shall be made available and the technological advances covered thereby brought into being in the shortest time possible through dedication and shall be listed in official Government publications or otherwise.

(b) As to all other contracts under this Act, but not within the purview of subsection (a) (1) through (5), there shall be reserved to the United States in all instances an irrevocable, nonexclusive, nontransferable, royalty-free license for the practice throughout the world, by or on behalf of the United States or by any foreign government pursuant to any treaty or other agreement with the Government of the United States, or for the Government for governmental purposes, of each such invention which results from a contract.

(c) Except for the provisions of subsection (a) of this section, acquisition of the rights specified in subsection (b) of this section shall be deemed sufficient in all cases for the protection of the public interest, so that additional rights shall not be required by any executive department or agency except upon certification by the head of such executive department or agency with respect to particular inventions that such additional rights are required under section 7 hereof.

(d) The acquisition of a proprietary interest greater than that set forth in subsection (b) of this section by the Government to an invention shall be subject to the reservation of a worldwide, nonexclusive, royalty-free license to the contractor and to its existing and future associated and affiliated enterprises, if any, which license shall be assignable to the successor of that part of the contractor's business to which such invention pertains.

(e) Subject to the provisions of subsection (b) of this section, an executive department or agency may, whenever a contract provides for the taking of rights to an invention by the United States under subsection (a) of this section, waive the rights of the United States to such invention at any time on such terms and conditions as may be determined to be in the best interests of the United States. Waiver shall be granted where the following criteria are established:

(1) that the contractor has had substantial experience and background in the field of technology and the invention would have been a probable result of acquired skill or experience; or

(2) that the invention is a natural adjunct to other inventions, the patents for which are owned by the contractor, and which in the course of time would probably have been developed by the contractor; or

(3) that the invention is of such character that its commercialization would depend upon speculative investment to a substantial degree of a kind ordinarily facilitated by protection afforded by ownership of a patent; or

(4) that the invention has resulted from the continuation of development work in which the contractor has invested amounts which are substantial in comparison to amounts allocated to such development by the Government under the contract; or

(5) that the invention has been developed by a small business concern, within the meaning of section 3 of the Small Business Act, whose economic welfare and competitive position would be enhanced through acquisition of title to the invention.