In sum, from the standpoint of foreign economic policy, the Department prefers S. 1809 to the other two bills. As indicated in the foregoing, however, we have a few suggestions for modification of S. 1809. First, we suggest that its provision on licensing of contractor-owned inventions be revised by addition of "or for the Government for governmental purposes." Second, we suggest that this provision also extend to use on behalf of foreign governments if it applies to use by foreign governments, pursuant to treaties or agreements, but further study of the proper approach to the licensing problem connected with treaties and agreements is warranted. Third, we hope also that its provision on license retained by the Government when the Government waives rights to secure foreign patents on Government-owned inventions can be revised as we have suggested. Finally, we propose a revision of the bill to facilitate technological help to developing countries. The Bureau of the Budget advises that from the standpoint of the administration's program there is no objection to the submission of this report. Sincerely yours, DOUGLAS MACARTHUR II, Assistant Secretary for Congressional Relations. Hon. JAMES O. EASTLAND, Chairman, Committee on the Judiciary, TENNESSEE VALLEY AUTHORITY, DEAR SENATOR EASTLAND: This is in response to your letters of May 6 requesting reports on S. 789, S. 1809, and S. 1899, bills dealing with the disposition of inventions made through the expenditure of public funds. Since all of these bills relate to the same subject we are providing our views in a single letter. S. 1899 S. 1899 would establish a uniform Government-wide policy with respect to the ownership and disposition of inventions made in the performance of their duties by employees of the Federal Government and employees of firms doing work for the Government under contract. The bill provides in general that the United States shall have title to all such inventions but that its proprietary interest can be waived under certain conditions. A new independent establishment, the Federal Inventions Administration, would be created in the executive branch to administer the policy. Under the bill, all actions in connection with the disposition of such inventions, including the acquisition of patents or the granting of licenses, would be taken by the Administrator of the Federal Inventions Administration. Thus, the Administrator would determine for all departments and agencies of the Government (1) whether the Government shall acquire title to an invention made by a Government employee or the employee of a Government contractor, (2) whether the Government shall waive its proprietary rights. (3) whether application for a patent shall be made, (4) to whom and under what conditions licenses for the practice of the invention may be granted, (5) the form of provision to be included in Government contracts to protect the Government's proprietary interest, and (6) awards to be made to persons on account of scientific, technical, or medical contributions of significant value to national defense, pub lic health, or any program administered by a Government agency. We understand that one of the primary objectives of the proposed legislation is to preserve for public use and benefit the inventions or discoveries which are made through public-financed research and development work and to avoid the windfalls which have sometimes accrued in the past to those engaged in such research and development work under contract with the Government. This is a commendable purpose and we are fully in accord with it. There is no such problem, however, with respect to inventions made in connection with TVA's activities. TVA's policy on inventions, which was established many years ago pursuant to the provisions of the TVA Act, provides for ownership by TVA of all inventions made by its employees or contractors in the course of their services for TVA. This policy has been commended not only for its protection of the public investment in TVA's research and its fairness to TVA employees but also for its effec tiveness as an aid in carrying out the TVA program. We believe that a system involving transfer of all authority and responsibility with respect to the disposition of inventions made as the result of TVA research and development from TVA to a central agency in Washington would be administratively unsound and would impair the conduct of TVA program activities of which the making and use of inventions are an integral part. TVA conducts a program of research and development designed to discover new and better fertilizers and to find better and cheaper methods of fertilizer production. The ultimate objective, of course, is to make it possible for the farmers to fertilize their lands more effectively and economically. It seems evident that when new discoveries or improvements are made as the result of such research and development, TVA is in a better position to determine how and on what terms they should be made available to the fertilizer industry than an agency in Washington with no responsibility for the program and presumably with no special interest or experience in it. TVA is also in a better position to determine whether any invention developed in the program is of such character or importance as to warrant seeking patent protection on it. Getting an invention into productive and beneficial use, which is the ultimate objective, cannot be achieved simply by giving notice of the invention's existence to people or firms having a possible interest in it. The technical staff of TVA's Chemical Development Division spends a great deal of time and effort in acquainting people in the fertilizer industry with the developments made in TVA's laboratory and experimental plants. Some of this educational work is done through technical publications and trade journals, press releases, conferences or demonstrations; but a great part of it is done through correspondence with the fertilizer industry and through visits by industry representatives to TVA's chemical plants and laboratory at Muscle Shoals, Ala., where they view TVA's developments and discuss with TVA technicians the problems of practical industrial application. In fiscal year 1964, some 1,200 persons having a technical interest in TVA's fertilizer research and developments visited our plants. We answered more than 2,200 direct written inquiries in this field during the same period and supplied approximately 10,000 copies of technical material, ranging from data sheets to complete technical reports. TVA's inventions policy has been successful in getting the results of its fertilizer research and developmental work into use. This is demonstrated by the fact that as of June 30, 1964, a total of 382 licenses had been granted to 242 firms for use of such developments in 370 plants in the United States. Since World War II the average analysis of fertilizer produced in this country has increased from less than 22 percent to about 34 percent available plant food, while at the same time the cost to the farmer per unit of plant nutrient has decreased. TVA does not claim that this remarkable improvement in quality is due entirely to its activities but its substantial contribution to the advance in fertilizer technology is evidenced by the fact that more than three-fourths of the granular mixed fertilizer is made each year in the United States is produced under TVA licenses. Thus TVA's research and developmental work, of which the patenting and licensing of resulting inventions are an integral part, is helping TVA to achieve the objectives set out in the TVA Act of improving and cheapening the production of fertilizer for the benefit of the farmers. Assignment of the control and disposition of such inventions to another agency inevitably would hinder the accomplishment of these objectives. S. 1899 would also tend to impair relationships between TVA and its employees. The provision of the bill for determination by the Administrator of the Federal Inventions Administration whether the Government or a TVA employee has title to an invention developed by him in the course of his work or whether the Government's proprietary interest may be waived in favor of the employee would tend to give an adversary flavor to such proceedings and to disrupt the normal cooperative relationship maintained between TVA and its employees. These questions are directly related to the employee's work assignments and achievements and can be settled most effectively, we believe, within the normal supervisory and administrative channels of TVA. Section 12 of the bill would provide for a determination by the Administrator as to whether the inventive contribution of an employee has been of significant value to the program of the agency or to national defense or public health and for payment by the Administrator of a commensurate monetary award to the employee. This section would also tend to impair TVA's system of personnel administration. TVA has never established or favored a program of incentive monetary awards, even with administration by its own staff. It is TVA's view that such a program tends to overemphasize and encourage the direction of inventive effort toward developments which can be valued in dollars and cents; that it encourages dissociation of effort among employees rather than cooperation; and that evaluation of employee contributions on a uniformly equitable basis is impossible. Moreover, TVA feels that there are other ways of rewarding employees for their contribution to the work of the agency, such as promotion and public acknowledgment, that are more satisfying and productive in the longrun than monetary awards. Clearly, an awards program that is administered by an outside agency would not be a constructive device for work improvement. While S. 1899 would permit delegation to the program agencies of some of the functions of the Federal Inventions Administrator, there is no assurance that delegations would be made to TVA on a basis that would permit it to continue its present successful policy and procedures. We urge, therefore, that the provisions of S. 1899 not be made applicable to TVA. This could be accomplished by inserting the words "other than the Tennessee Valley Authority" on page 2 after the word "corporation" in line 6, and by deleting all of subsection (e) of section 14 on page 32. S. 789 AND S. 1809 Unlike S. 1899 which would cover inventions made by Government employees in the course of their work as well as those arising out of Government research and development contracts, S. 1809 and S. 789 appear to be concerned only with the latter. S. 1809 sets forth criteria for determining whether title to inventions arising out of such contracts shall be vested in the Government or in the contractor, with the Government acquiring in all cases the royalty-free right to use the invention for Government purposes. These criteria contained in S. 1809 are practically identical to those contained in the President's statement of patent policy issued October 10, 1963, and there are similar criteria in S. 789. Since the provisions of section 5 (i) of the TVA Act which provides for Government ownership of all inventions made by TVA employees in the course of their employment would not be affected by S. 1899 or S. 789 and TVA currently does not obtain any patent-oriented research and development work by contract, enactment of S. 1809 or S. 789 would have little, if any, effect on TVA's operations. We would suggest, however, that since the President's statement of policy covering this field has been in effect less than 2 years, further time might well be allowed to see if it does not adequately resolve the problem. In any event, as far as TVA is concerned, we would urge for the reasons stated in connection with S. 1899 that any new legislation on the subject be limited to inventions arising out of the performance of research and development contracts. Because of the limitation on the time for submittal of our report, we are transmitting this letter to you without having first obtained the Bureau of the Budget's advice as to the relationship of the views we have expressed to the President's program. DEAR MR. CHAIRMAN: This is in response to your request for the views of the Department of the Treasury on S. 789 entitled, "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 U.S. 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." The bill would provide that, subject to certain specified exceptions, the patent rights to inventions made during the performance of Government research, developmental, and experimental contracts must be determined at the time the contract is negotiated; establishes standards for determining the disposition, use and waiver of such rights and assures the United States the right to use any invention which is developed. Provision is also made for incentive awards for patentable suggestions to the Government and for administrative and judicial review of agency decisions. The only bureau of this Department which contracts for any significant amount of research and development work of the type contemplated is the U.S. Coast Guard. The amount is very limited and pertains to its responsibilities for promoting safety at sea. Its expenditures for such scientific, technological, or development research are very small in comparison with those of other branches of the armed services. In time of war or national emergency the Coast Guard operates directly under the Department of the Navy and for that reason its policy on patent matters should conform to those of the Department of Defense. In view of its minimal involvement in the area to which the bill is directed, the provisions of S. 789 would not adversely affect the operations of the Treasury Department. It therefore defers to the views of those agencies primarily concerned. The Department has been advised by the Bureau of the Budget that there is no objection from the standpoint of the administration's program to the submission of this report to your committee. Sincerely yours, Hon. JAMES O. EASTLAND, FRED B. SMITH, Acting General Counsel. THE GENERAL COUNSEL OF THE TREASURY, Chairman, Committee on the Judiciary, DEAR MR. CHAIRMAN: This is in response to your request for the views of the Department of the Treasury on S. 1809, entitled "A bill to establish a uniform national policy concerning property rights in inventions made through the expenditure of public funds, and for other purposes." The bill would grant to the Government the principal rights in inventions arising from research and development contracts relating to public health, welfare, and safety; operation of a Government facility; development of items the use of which is required by Government regulation or are intended for commercial use by the general public; or in a research area where most of the funds have been provided by the Government, or in which it has been a pioneer in a new scientific field. In exceptional circumstances, the contractor could be granted the principal rights if this was in the public interest and would ordinarily acquire the principal rights in inventions which do not fall in the above categories. Sections of the bill provide for the determination of title and the judicial review of the administrative decisions. The only bureau of this Department which contracts for any significant amount of research and development work of the type contemplated is the U.S. Coast Guard. The amount is very limited and pertains to its responsibilities for promoting safety at sea. Its expenditures for such scientific, technological, or development research are very small in comparison with those of other branches of the armed services. In time of war or national emergency the Coast Guard operates directly under the Department of the Navy and for that reason its policy on patent matters should conform to those of the Department of Defense. In view of its minimal involvement in the area to which the bill is directed. the provisions of S. 1809 would not adversely affect the operations of the Treasury Department. It therefore defers to the views of those agencies primarily concerned. The Department has been advised by the Bureau of the Budget that there is no objection from the standpoint of the administration's program to the submission of this report to your committee. Sincerely yours, FRED B. SMITH, Acting General Counsel. Hon. JAMES O. EASTLAND, THE GENERAL COUNSEL OF THE TREASURY, Chairman, Committee on the Judiciary, DEAR MR. CHAIRMAN: This is in response to your request for the views of the Department of the Treasury on S. 1899, entitled "A bill to prescribe a national policy with respect to the acquisition, disposition, and use of proprietary rights in inventions made, and in scientific information obtained, through the expenditure of public funds, and for other purposes." The bill would grant to the United States exclusive title to any invention made by Federal employees in the course of their duties or to which the Government has made specified contributions. It would also give the United States exclusive title to any inventions made by persons in the performance of any contract, lease, or grant on behalf of any executive agency in respect to scientific or technological research, development, or exploration. To implement the purposes of the bill, a new agency would be established to, among other duties, administer, protect, promote, and, in certain circumstances, waive the patent rights which would accrue to the United States. The only bureau of this Department which contracts for any significant amount of research and development work of the type contemplated in the U.S. Coast Guard. The amount is very limited and pertains to its responsibilities for promoting safety at sea. Its expenditures for such scientific, technological, or development research are very small in comparison with those of other branches of the armed services. In time of war or national emergency the Coast Guard -operates directly under the Department of the Navy and for that reason its policy on patent matters should conform to those of the Department of Defense. In view of its minimal involvement in the area to which the bill is directed, the provisions of S. 1899 would not adversely affect the operations of the Treasury Department. It therefore defers to the views of those agencies primarily concerned. The Department has been advised by the Bureau of the Budget that there is no objection from the standpoint of the administration's program to the submission of this report to your committee. Sincerely yours, FRED B. SMITH, Acting General Counsel. Hon. JAMES O. EASTLAND, U.S. ARMS CONTROL AND DISARMAMENT AGENCY, Chairman, Committee on the Judiciary, DEAR MR. CHAIRMAN: This is in reply to your letters of May 6, 1965, requesting from the Arms Control and Disarmament Agency comments in triplicate on Senate bills 789, 1809, and 1899, which would establish a uniform patent policy for all Government agencies. ACDA has had no experience with many aspects of patents covered by one or more of the bills; such as the rights of the United States in inventions made by Government employees, and we believe that detailed comments on those aspects should be handled by the agencies with extensive experience. Our comments will be confined to the area in which this Agency has had experience, the allocation between the Government and the contractor of the principal rights to inventions made during work under a Government contract. The standard patent article in ACDA's research contracts requires contractors to disclose to the Agency any inventions or discoveries conceived or first reduced to practice in the performance of the contract. The Agency retains the right to require the assignment to the Government of full and entire right, title, and interest in and to the discoveries or inventions. If no such assignment is required, the Agency retains an irrevocable, nonexclusive, nontransferable, royalty-free license for the United States to practice the discoveries and inventions throughout the world. |