(d) The agency head shall transmit to the Congress in January of each year a report which shall include:

(1) a description of the activities of that agency head during the preceding calendar year under this Act;

(2) a statement of each waiver or exclusive license made under authority of this Act, including an identification of the contract, the contractor, the invention, and the period of time for which any exclusive license was granted;

(3) a summary of his actions in granting any nonexclusive license and the dedication of any inventions to the public; and

(4) a summary of any review of his determinations by the Patent Review Board or the courts and their final decision thereon; and

(5) such recommendations for additional legislation with respect to inventions and scientific and technological information related to research and development contracts financed by the Government as he may deem necessary or desirable.

HEARINGS BY AGENCY HEAD

SEC. 11. Except for determinations made under paragraph (f) of section 3, section 4, and section 5, the determinations made by the agency head under this Act shall be final, unless reviewed pursuant to section 13(d). Whenever the agency head is required to make a determination under paragraph (f) of section 3. section 4, or section 5, he shall cause to be published in the Federal Register the time and place of such determination at least thirty days before such time. Any person having a substantial interest in the determination to be made may file with the agency head prior to such time a statement of his interest and views relevant to the determination which shall be considered and made a part of the record if in the opinion of the agency head such a substantial interest is shown. The contractor, or the Attorney General, or any person having a substantial interest who is aggrieved by the determination, shall be afforded an opportunity for an expedited public hearing upon his written application setting forth the ground therefor filed with the agency head within thirty days after the determination. A complete record of all matters filed with the agency head pertinent to his determination, the hearing and his determination thereon shall be made and kept by the agency head.

PATENTS REVIEW BOARD ESTABLISHED

SEC. 12. (a) There is hereby established a Patents Review Board (referred to hereinafter as the "Board") composed of three members, of whom one shall be designated by the Chairman of the Federal Trade Commission from the officers and employees of the Commission, one shall be designated by the President from officers and employees of the United States who are specially qualified by training and experience in the field of science and technology, and one shall be designated by the Comptroller General from officers and employees of the General Accounting Office. Each member of the Board shall serve as such during the pleasure of the officer by whom he was designated. While so serving, each member of the Board whose compensation for services rendered as an officer or employee of the department or agency from which he was designated is fixed at a rate below that prescribed for level IV of the Federal Executive Salary Schedule shall receive from funds appropriated to the Board additional compensation at such rate as may be required to increase his aggregate compensation to that prescribed for that level.

(b) The Board shall select a Chairman from among its members. Two members of the Board shall constitute a quorum thereof. A vacancy in the membership of the Board shall not affect its power to perform its functions.

(c) Subject to the civil service laws and the Classification Act of 1949, as amended, the Board shall appoint and fix the compensation of an executive secretary and such other personnel as it shall determine to be required for the performance of its duties.

FUNCTION OF THE BOARD

SEC. 13. (a) Whenever any agency head determines under any provision of this Act that all or any part of the right, title, and interest of the United States in and to any invention as to which the United States possesses exclusive right, title, and interest should be assigned or otherwise transferred to any person,

or that an exclusive license to make, use, or vend should be granted to any person with respect to any such invention, such agency head shall transmit to the Board and to the Attorney General a written report which shall contain (1) a recitation of the terms of the proposed disposition, (2) a statement of the findings of fact relied upon in support thereof, and (3) all evidence upon which those findings are based, including a true and correct transcript of all evidence received in any hearing conducted by or on behalf of the agency head with respect to such transfer or grant.

(b) Upon the basis of such report, and upon the basis of evidence received at any hearing before the Board which it may determine in its discretion to be necessary, the Board may approve, disapprove, or modify the determination made by the agency head with respect to any such proposed transfer or grant. A record shall be kept of all hearings conducted by the Board. In any such hearing before the Board

(1) the Attorney General shall be entitled to present evidence and argument with respect to the proposed transfer or grant which is before the Board for consideration; and

(2) any other person who would be affected by the determination of the Board, including any duly authorized representative of any State or any political subdivision thereof, shall be entitled to present such evidence and argument if the Board determines that such person has a substantial interest in the proposed transfer or grant.

(c) The determination made by the Board under this section with respect to each application for the transfer of title to any invention, or for the granting of an exclusive license with respect to any invention, shall be transmitted promptly in writing to the agency head concerned, and to the applicant for such transfer or grant, together with a copy of a written report of the Board which shall set forth the findings of fact and conclusions upon which the determination of the Board was based.

(d) The Board may, upon application received from any interested party, including the Attorney General, or upon its own motion, review any determination made by an agency head not otherwise subject to review under this Act.

JUDICIAL REVIEW

SEC. 14. (a) Any applicant for the waiver of all or any part of the rights to any invention, or for the granting of an exclusive license with respect to any invention, pursuant to this Act who is aggrieved by a determination made thereon by an agency head or by the Board, or the Attorney General, shall be entitled to a judicial review of such determination upon the filing of a written petition for such review in the United States Court of Appeals for the District of Columbia, or in the Court of Appeals of the United States for the judicial circuit in which such person resides, and serving a true copy of the petition upon the determining authority and upon the Attorney General (where the Attorney General is not the petitioner) within sixty days after receipt of notice of such determination. Such authority thereupon shall certify and file in the court a true and correct transcript of the entire record of the proceedings upon which the determination was based, including all evidence relied upon and the findings and conclusions made by such authority thereon. The court shall have jurisdiction to hear and determine any such petition, and shall have power to affirm, modify, or set aside the determination of such authority. In any proceeding instituted under this section by any other person the Attorney General shall be entitled as of right to intervene in the proceeding.

(b) In any such review, the findings of fact made by the determining authority, if supported by evidence, shall be conclusive. If either party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such additional evidence is material, the court may order such additional evidence to be taken by the determining authority and to be considered in such manner and upon such terms and conditions as the court may deem proper. The determining authority may modify his or its findings as to the facts by reason of the additional evidence so taken. Such authority shall file with the court any such modified or new findings and recommendations which, if supported by evidence, shall be conclusive with respect to action in the matter under consideration. The judgment and decree of the court shall be final, except that it shall be subject to review by the Supreme Court upon certiorari, as provided in section 1254 of title 28, United States Code.

(c) Any determination made by a determining authority under section 4, section 5, or section 12 after a hearing shall become final

(1) upon the expiration of the time allowed for filing a petition for judicial review if no such petition has been duly filed within such time; or (2) upon the expiration of the time allowed for filing a petition for certiorari if the determination of the determining authority has been affirmed or the petition for judicial review has been dismissed by a United States court of appeals, and no petition for certiorari has been duly filed; or

(3) upon the denial of a petition for certiorari if the determination of the determining authority has been affirmed or the petition for review has been dismissed by a United States court of appeals; or

(4) upon the expiration of ten days from the date of issuance of the mandate of the Supreme Court if such Court directs that the determination of the determining authority be affirmed or that the petition for review be dismissed.

(d) As used in this section the term "determining authority", when used in relation to an administrative determination made upon an application under this Act for the transfer of title to an invention, means

(1) the agency head, in the case of a determination by an agency head denying such application; or

(2) the Board, in the case of a determination by the Board approving, disapproving, or modifying action upon such application which has been proposed by an agency head in a report transmitted to the Board pursuant to section 13 of this Act or a determination reviewed by the Board pursuant to section 13 (d).

TECHNICAL AMENDMENTS

SEC. 15. (a) Section 10(a) of the Act of June 29, 1935, as added by section 101 of the Act of August 14, 1946 (60 Stat. 1085, as amended; 7 U.S.C. 427i (a)), is amended by striking out the following language: "any contracts made pursuant to this authority shall contain requirements making the results of research and investigations available to the public through dedication, assignment to the Government, or such other means as the Secretary shall determine." (b) The National Science Foundation Act of 1950 is amended by striking out section 12 thereof (42 U.S.C. 1871).

(c) The Atomic Energy Act of 1954 is amended by striking out section 152 thereof (42 U.S.C. 2182).

(d) The National Aeronautics and Space Act of 1958 is amended by(1) striking out section 305 thereof (42 U.S.C. 2457); and

(2) by striking out section 306 thereof (42 U.S.C. 2458).

(e) The Coal Research and Development Act of 1960 (74 Stat. 336) is amended by striking out section 6.

(f) The Helium Act Amendments of 1960 (74 Stat. 918) is amended by striking out the following language in section 4: "Provided, however, That all research contracted for, sponsored, cosponsored, or authorized under authority of this Act shall be provided for in such a manner that all information, uses, products, processes, patents, and other developments resulting from such research developed by Government expenditure will (with such exceptions and limitations, if any, as the Secretary may find to be necessary in the interest of national defense) be available to the general public: And provided further, That nothing contained herein shall be construed as to deprive the owner of any background patent relating thereto to such rights as he may have thereunder."

(g) The Saline Water Conversion Act of 1961 (75 Stat. 628) is amended by striking out section 4(b).

(h) The Arms Control and Disarmament Act of 1961 (75 Stat. 631) is amended by striking out section 32.

(i) The Water Resources Research Act of 1964 (78 Stat. 329) is amended by striking out section 303.

(j) The Appalachian Regional Development Act of 1965 (79 Stat. 20) is amended by striking out section 302 (d).

EFFECTIVE DATE

SEC. 16. This Act shall take effect on the first day of the fourth month beginning after the date of enactment of this Act.

Mr. BRENNAN. Following the bills, Mr. Chairman, reports received and to be received, on these four bills from the executive departments and agencies.

Senator MCCLELLAN. All responses to requests from the Judiciary Committee to the agencies and departments for comment on these bills shall be printed in the record at this point.

(The document referred to follow :)

DEPARTMENT OF AGRICULTURE,
Washington, D.C., August 20, 1965.

Hon. JAMES O. EASTLAND,

Chairman, Committee on the Judiciary,
U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: This is in reply to your letter of May 6, 1965, requesting our views on S. 789, 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 Department of Agriculture does not recommend that S. 789 be passed. The pertinent portions of the bill which would affect our present policies and practices are as follows:

Section 3

Subsection (a) requires each contract for the performance of experimental, developmental, or research work to contain provisions which assure the Government the right to use all inventions made in the performance of the work and which provide for the disposition of the property rights in the invention. Subsection (a) further provides that the contract shall not require grant to the United States of a proprietary interest greater than an irrevocable, nonexclusive, nontransferable, royalty-free worldwide license, unless the purpose of the contract falls under one or more of five specified exceptions. These exceptions are when 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.

The foregoing exceptions principally appear to relate, for example, to the fields of atomic energy, space technology, or to air-traffic safety equipment. However, they do not relate to any of the programs of the Department of Agriculture. Thus, every contract entered into by this Department, pursuant to an auhorized program, would have to restrict the Government's rights to no more than a license. The Department of Agriculture has consistently expressed its opposition (e.g., reply to Representative Emanuel Celler, dated October 20, 1959, commenting on H.R. 5448, 86th Cong., 1st sess.; reply to Representative Harold D. Cooley, dated June 25, 1959, commenting on H.R. 7576, 86th Cong., 1st sess., particularly subsec. 9(b) of H.R. 7576) to legislation which would permit contractors to retain the patent rights in inventions arising from Department-financed research and development contracts.

The research carried out by this Department, whether in its own laboratories or in private laboratories under contract, is predominantly of a public service nature, as for example, to expand the uses of or to discover new uses for agricultural products, improve agricultural machinery, provide new and better insecticides and herbicides, and other similar objectives. Thus, agricultural research contracts usually lead to inventions in which the public interest is in terms of usefulness to farmers and to industries depending on agricultural products for raw materials. In the case of such inventions, a license to the Government is of no value in disseminating the advantages of the improvements or discoveries to the public if the public itself does not have free access to the inventions. Even in the case where the contract is to develop and procure a piece of research apparatus for use in our laboratories, such apparatus can be equally useful in private laboratories and the benefits of its development should be freely available.

Utilization of inventions resulting from this Department's research programs takes two forms: either (1) the direct practice of the invention by industry or (2) their use by industry as a jumping-off point for further research, development, and improvement, often resulting in additional patentable inventions by industry research workers. Such utilization is more readily achieved if the inventions by our employees or contractors are made as freely and widely available as possible.

This Department is, therefore, not in favor of enactment of subsection (a) of section 3 because it would substantially eliminate contracted work from our research programs.

We question the last paragraph of subsection (a), i.e., the paragraph contained in lines 9-17 on page 5 of the bill.

The portion referred to requires that, where the Government retains a proprietary interest greater than the license specified in subsection (b), the invention shall be made available in the shortest time possible through dedication. This is inconsistent with the licensing provisions in subsection (d) of section 3, subsection (c) of section 5, and subsection (b) of section 12. "Dedication" has a specific technical meaning in the patent law and refers to an act by a patent owner whereby he divests himself of legal and equitable title and places the invention in the public domain without restriction. The patent owner, by his act of dedication, gives up his exclusive rights and can no longer require or grant licenses for others to practice his invention. Therefore, to give meaning to the last paragraph of subsection (a) of section 3, and to eliminate the inconsistency with the licensing provisions of the bill, the words “or licensing" should be inserted after "dedication" at page 5, line 15.

Subsection (b) sets forth the general policy prescribed by the bill. Except for the specific five circumstances defined in subsection (a) in which the Government may acquire a greater proprietary interest, all other contracts would reserve to the United States no more than an irrevocable, nonexclusive, nontransferable, royalty-free, worldwide license to practice any resulting inventions for governmental purposes.

We are not in favor of enactment of subsection (b).

As already explained above, except for the relatively rare instances where a contract is made to build or develop equipment primarily for use by the Depart-. ment, the majority of our contracts are for the principal purpose of discovering new uses for agricultural products or to develop equipment for use by farmers or for that segment of industry which uses agricultural products as raw material. Examples of such equipment include farm machinery and machinery for use by the textile industry. Because the results of such research are not for use by the Government itself, the combined restrictions of subsections (a) and (b) would make it impossible for the Department to make the discoveries or inventions as widely available as possible. Our experience has shown that leaving the exclusive rights with the contractor is not essential to achieve wide commercial utilization where an invention is meritorious and meets a timely need. In fact, the numerous instances of multiple licenses granted under our patents indicates that, where an invention does have commercial value, it will be utilized competitively and profitably. It is our opinion, that the prohibition by subsection (b) of placing title in the Government could in some cases inhibit competition.

Subsection (c) provides that, except for the conditions enumerated in subsection (a), acquisition of only a license, as specified in subsection (b) shall be deemed sufficient to protect the public interest and that additional rights shall not be required unless the head of an executive department or agency certifies