bills or resolutions have been introduced in Congress seeking to establish a uniform patent policy for all Government departments and agencies, none has been passed to date.

I will not attempt to explain the reasons why so many bills have been introduced, why only a few were passed which established patent policies for a few agencies, and why we have been between 80 and 100 years in the process of arriving at a uniform Government patent policy. At least 2,000 printed pages of such explanations have been published to try to tell this story, and that's just counting the 3-volume, 1,000-page report of the U.S. Attorney General which appeared in 1947, my own book published in 1957 and 7 law review articles I have written since then which altogether totaled some 600 pages, the 100 or so pages of the dozen monographs published by the Senate Patents Subcommittee in the past 10 years, the more than 200 pages which have been devoted to the subject by the journal of the George Washington University's Patent, Trademark, and Copyright Research Institute, and some 100 pages of symposia in the Federal Bar Journal. I just don't have the time this morning to discuss the facts represented by all that material.

In view of the relatively short time I have in which to cover so much ground, I'd like to get right down to cases and review the situation as it exists today. Nothing could be more timely for, at this very moment, Congress appears much closer than it ever has been to the brink of passing some sort of uniform Government patent policy legislation. I'd like to try and boil down the issues for you, consider some of the suggested solutions, and perhaps make a point or two of my

own.

Our Government currently is spending at the rate of $15 billion per year on research and development. As an incidence of this work thousands of inventions are expected to be made and in fact are being made. Some of these inventions may have great potential of various kinds. Apart from their being useful in solving actual problems which the Government has in connection with its conduct of the Nation's defenses, development of our agriculture, and the improvement of our general health and welfare, the inventions may be important to the public in many other ways.

With the aid of these inventions the people may reap a whole harvest of new and better things with which to improve their way of life if some of those inventions are developed for commercial utilization. New plants may be built, new industries may spring up, employment may be given to countless thousands, and many more derivative benefits may result from these new developments. Assuming that this will be done by private interests rather than by the Government, entrepeneurs who invest in the development of these new products, who build the plants, hire and manage the people, and purchase the equipment for them to use, will also stand a good chance of profiting on their investment if their efforts prove successful.

There is one slight catch to all this, however. Inventions are peculiar things in that their very newness almost always connotes a sense of incompleteness or imperfection, like diamonds in the rough. Rarely are new inventions so simple and so complete that, with very little morey or effort, they can be rapidly readied for the market and quickly meet with commercial acceptance. More often than not, the inventions will have to undergo extensive developmental or product engineering, and this postinventive developmental phase may take tens and hundreds of thousands of dollars, perhaps even many millions of dollars.

This might not be a bothersome problem if each such investment carried with it some assurance of success. But the developments frequently may not turn out as expected; the products may not "catch on" with the public, etc. The expenditures in such cases may be so prohibitive as to discourage many people from such undertakings unless there was someway of guaranteeing a reasonable chance of success. At the very least, the guarantee should provide that when the new products or processes are fully perfected the one who took all the risks would have a period of time within which to try and recoup his investment, or at least a reasonable share thereof, before having to face the merciless onslaught of open-market competition from imitators who, having made no such expenditures for research and development, generally can sell at much lower prices. As a rule, the only way such assurances can be given is under the operation of our patent system. If the inventions are patentable, and if a prospective developer can be given the right to exclude others from practicing the invention for a limited period of time, the risks can be balanced against the thus enhanced prospects of investment recoupment, and the would-be entrepreneur can be more readily convinced to apply his capital, skills, and energies to such a development.

If we are interested in having as many of such inventions developed for commercial utilization as we possibly can, commonsense would seem to suggest that in those cases where the grant of such exclusive rights is a prerequisite to inducing entrepreneurs to tackle the developments we should try our best to make such grants available to them. If this were considered to be in the public interest there would, of course, still be certain other problems to consider. One is who should own the patent rights at the outset : The Government? The Government contractors? The Government employees? If it is the Government, the next problem is to determine the basis on which the Government should grant rights under those patents to a potential developer of the inventions in question. Such a determination can cause many political problems. Allegations of favoritism will be among the milder forms of criticism, and more such unpleasantries will be bound to occur. On the other hand, if it is decided to leave title with the Government's employees or contractors other questions must arise. Mainly they will concern the equities involved in the Government's forfeiture of claims to potentially valuable rights which, at first blush, would appear to belong to the Government (and hence to the taxpayers) since the inventions arose out of research and development which were at least in part paid for out of public funds. Until very recently, in considering the complex problems involved in determining a satisfactory Government patent policy, few people gave much thought to the inventions themselves. The inventions were just pawns in a political chess game. Almost no one seemed to care whether it was important, in the public interest, that as many as possible of the inventions in question should be developed for commercial utilization. Certain minority, but outspoken, factions in both the executive and legislative branches of the Government have demanded that it should take title to the inventions on the theory that Federal funds paid for the research from which the inventions were spawned, and the Government therefore should be entitled to receive all the fruits thereof, including full rights to all the inventions. In brief, they have said, the taxpayer should not be made to pay twice for the same inventions, once in the form of public funds for research and development contracts or salaries, and again in the form of royalties when the inventions are sold or licensed to a commercial operator.

What would happen to the inventions themselves after the Government took title? Several alternatives have been suggested. One is that the inventions should be placed in the public domain by publication and dedication. Another is that the Government would take out patents on the inventions and then license anyone on a nonexclusive basis, with or without a relatively modest royalty. Only recently has it been suggested that in some select cases the Government might find it desirable to license on an exclusive basis, again with or without the payment of a royalty, with the definite requirement that the licensee give evidence that it has brought the invention to the point of commercial acceptance in a stipulated period of time, or else forfeit the license. In some special few instances it has been proposed that the Government might undertake to manufacture important inventions itself, rather than chance their going undeveloped because private interests did not find them sufficiently attractive or too hazardous to tackle on their own.

Note that in all of these suggestions a principal objective is the utilization of the inventions. They differ from each other only in their methods of accomplishment. In effect, under one extreme the inventions would be completely outside the patent system, with no inducement to manufacturers in the form of advantages inherent in the right to operate on an exclusive basis for a limited period of time. At the other extreme, the inventions would be subjected to the protection afforded by the patent system, and the promoters of the inventions would have the help of a headstart over their competitors.

I do not mean to suggest that only inventions which are covered by patents, and which are exclusively licensed, will attract manufacturers and developers. There are, of course, numerous instances where the potential market is so enormous, the required investment for development relatively so small, and the risks of failure so limited, that many entrepreneurs will be attracted to practice inventions without the benefit of any exclusive rights. But the chances obviously are much greater that, if given some headstart or leadtime as can be done by exclusive patent rights, in many situations inventions will be manufactured which otherwise might remain completely unattractive to would-be manufacturers. I don't have to illustrate this point for you by examples. Just ask yourselves the question: Wouldn't you be more inclined to invest $10,000, or $100,000, or $1 million in the development of a new invention if you felt that you would have a fair chance to fight off imitators who are intent on pricing you out of the market

by copying your invention as soon as it is introduced into commerce? Wouldn't you feel it is only reasonable to have some protection against such imitators until you had gotten back some of your investment, and perhaps had "sold" the public on the merits of your invention before some cheap imitators might sour the consumer by putting out copies of your invention that won't work or last very long?

Yesterday, Dr. Hershey told how the Du Pont Co. felt about the importance of having a sound patent position before investing $1 million or sometimes $50 to $60 million in a new development. If a company of Du Pont's resources and preeminince in its field finds it must rely on patents, it should be obvious that a small concern or independent inventor needs that protection far more.

Some years ago the late Circuit Court Judge Jerome Frank, in commenting upon the then current abuses of the American patent system and the need for legislative reform to eliminate the opportunity for misusing patents, stated: *** but we must be careful not to throw out the baby with the bath water." Likening the patent system or patents to a baby calls to mind the Biblical story of King Solomon who was obliged to decide which of two wailing women, both of whom claimed to be the mother of an infant child, was the real mother. You'll recall he declared that, since he found it impossible to determine to whom the child rightfully belonged, he would be cut in two and give each woman a half. One of the women said that would be satisfactory to her, but the other said, "Oh no, my king, give her the child." Solomon then realized that the latter was the real mother, for she preferred to give up the child rather than permit it to be slain, and he awarded the child to her. In a similar way the controversy over who should own rights to inventions and patents arising out of Governmentsupported research and development makes one wonder if we don't need a modernday Solomon to pull the same sort of stunt all over again.

Too many people in Government circles are concerning themselves with the possibility of "giveaways" of patent rights to Government contractors. Believing that they are protecting the public interest, they are claiming that the public is the true "mother" or owner of the child (the "child" in this case being the patent rights arising out of Government contracts), and they want to cut up the child and hand over parts of it to as many people who want to claim a share. How much better to help the child grow to maturity, and to let the real "mother"— the public-share in the benefits of such fully developed children who can then make contributions of their own to the benefit of mankind.

According to the National Science Foundation, the Government now is putting up about 70 percent of all funds expended annually for research and development in this country. For the sake of discussion, let us assume that the proportion of dollars spent for research can be roughly correlated with the number of patentable inventions which arise out of the research. Let us further assume, in order to keep the numbers small enough for easy contemplation, that every year the total number of patentable inventions made in this country is 1,000. This would mean that each year approximately 700 out of 1,000 patentable inventions would be subject to whatever decisions are made with regard to the Government's patent policy. You can surely see that the way we handle those inventions will become mighty important to the progress and future of this country when you consider that the products of the inventive genius of this country are not unlimited. They are national assets which must be conserved and nurtured just like our timber reserves and our farmlands. We cannot afford to let them become decayed or eroded through lack of use. and utilize as many of them as we possibly can.

We must try

Those of you who have been intimately involved, or for other reasons have followed the great debates over Government patent policy in the past decade. probably are wondering why I haven't as yet said a word about the relative merits of the propositions that the Government should or should not take title to the inventions in question. Quite frankly. I have left that issue for last because it's the more complex one to deal with, and the one which is far more difficult to resolve to everyone's satisfaction. It's the issue that invariably brings up heated arguments, generally charged with emotionalism and not quite as much lucidity. What's more, in my humble judgment, it's the least important factor to consider from the public interest point of view. If we could all agree that, from the viewpoint of the Nation's welfare, it is more important to figure out how to maximize the utilization of the inventions than it is to worry about who should own the rights to them, I believe we would agree much more readily and

universally as to who should own title to the inventions, and whether any conditions should be attached to such ownership.

The sophisticates among you in this field of Government patent policy know the arguments which have been advanced by the Governments' contractors as to why they should be allowed to keep title. The main one is that the contractors usually sought by the Government are those who have had a good deal of background know-how in a given area of technology. They probably have had years of experience, and have plants, facilities, personnel, all of which were assembled with private investment. As a rule, they can be expected to solve the Government's research problems with the best possible solutions, in the shortest period of time, and therefore with the least possible cost to the Government. Inventions which may arise out of their contractual operations can be expected to be the product of their background know-how as well as of any advance in the art, or foreground developments, which they may chance to make in the course of working on the Government's assigned problems.

It will generally be impossible to determine how much of the background and how much of the foreground developmental efforts went into the making of the inventions. Whether considered in terms of cash, personnel time, facilities, or know-how, if the amount of investment by either the Government or the contractor is to be the basis for determining the respective equities in the inventions, the baby-dividing decision that King Solomon had to make becomes a single one by comparison. Obivously every contract situation will be different from every other one, and the equities may range from zero percent investment of background developments by the contractors in some instances, to perhaps 90 percent or more in others.

Apart from the obvious problems inherent in attempting to balance such nebulous equities, there are numerous other problems to be considered which I have time only to mention briefly. For example, the incentive of the contractors to report all inventions willingly and fully is bound to be less when the contractor does not keep title to them. If the Government takes title, there still is the job of evaluating the inventions, patenting them, deciding whether or not to license them, who to license, how to license, etc. Finding extremely hard to get patent and other technical personnel to review the contract records to make certain all inventions are reported, to evaluate them, to prepare and prosecute applications covering them will be a serious problem.

The cost of doing all this is a factor which should be given serious consideration. It has been suggested that to leave the rights to inventions with contractors is to give away benefits that belong to all the taxpayers. No one will be able to place a dollar value on that alleged giveaway, because no one can ever tell what the intrinsic value of such inventions are when they have not yet been developed for the marketplace, and the costs of such development and the ultimate price which the consumer is willing to pay for them have yet to be determined. But one can estimate with some reasonable accuracy just how much the taxpayer will pay in actual cash if the Government proceeds to take title to all inventions arising out of its contracts.

I have been advised that some Government agencies calculate their present average cost of evaluating, filing, and prosecuting a patent application to be $2,000. This is a direct cost which does not include overhead, but is presumed to cover such functions as liaison between the patent adviser and the inventor, followup of the contracts to obtain invention reports, searches in the Patent Office, drafting of drawings, preparation and prosecution of the application. In 1964 there were 11,000 inventions made by Government contractors and employees, according to the Patent Advisory Panel of the Federal Council for Science and Technology. At $2,000 per case, this would amount to some $22 million per year.

If promotion of these inventions to maximize their utilization is undertaken, the costs will increase by at least that same amount. In 1964 the National Aeronautics and Space Administration devoted some $3 million to promote some 1,500 inventions available for public use. At that rate, promotion of the Government-wide total of patents would run to $22 million. Thus the total bill, under the current practices of most Government agencies according to which title is taken only in a relatively small percentage of cases, would be over $44 million. If the legislation now pending on Congress should cause a sharp increase in the number of cases to which title is taken by the Government, probably amounting to many more thousands of inventions, the taxpayer will be paying on the order of perhaps $100 million or more each year for these programs.

Compared with such real, measurable expenditures, the so-called giveaways of nebulous patent rights might turn out to be so-called "chicken feed" by comparison. In a statement which I submitted to the Senate Patents Subcommitee 2 weeks ago, I suggesed that if any bill is to be enacted which plans to take title to many inventions and patents, as has been proposed, it would be desirable to have that law require an annual report to the Congress of each and every cost of administering that program. Then, in years to come, Congress can have some factual data on which to decide to continue or terminate the program.

Now, for some final and concrete observations. After a decade or so in which the whole matter has been gathering momentum in the Congress, the issue of a Government-wide, uniform national patent policy appears finally to have reached the decisionmaking point. Three bills in the 89th Congress at the present time are the focal points of this attention. Two of them are so close together in principle, namely Senator Saltonstall's S. 789 and Senator McClellan's S. 1809, they may be considered as representing the same general approach to the problem. The other one, S. 1899, introduced by Senator Long, of Louisiana, represents quite a different approach.

The McClellan and Saltonstall bills rather closely parallel a memo and statement on Government patent policy which former President John F. Kennedy issued on October 10, 1963. That directive, incidentally, currently is being followed by all Government departments and agencies which are not by statute bound to follow some other patent policy. These two bills, and the executive branch directive, incidentally, seem to be winning support and indorsement from most of the industrial and patent bar groups which testified at Senate Patent Subcommittee hearings held earlier this month. In essence, all three tend to leave title with Government contractors except in certain specified situations, e.g., where the field of research is a new one to the contractor and the Government has made or is making substantially all the financial investment involved, where the research is in the public health or welfare areas, where the contract is to develop or improve things intended for use by the general public, or where the contractor is to operate a Government-owned facility. Provisions are made for compelling the contractors who are permitted to retain title to bring the inventions to the point of practical application. Failure to do so may result in the voiding of rights given to the contractors or their being obliged to grant licenses to others to practice the inventions. Thus, by either compulsory working or compulsory licensing provisions, the present Kennedy directive and the proposed McClellan and Saltonstall bills are aimed at promoting utilization of the inventions to which the Government does not claim title. As to those inventions whose title is claimed by the Government, either exclusive or nonexclusive licenses may be granted under specified circumstances.

The Kennedy, McClellan, and Saltonstall approaches to the problem of settlement of the Government patent policy controversy are as close to being in the true public interest as any bill or regulation can be, and yet stand a reasonable chance of being enacted into law in the present political climate. Their only drawback is that, in attempting to resolve the so-called equities between the Government and the contractors, instead of providing for Solomons they are establishing Shylocks. In those cases where the Government's procurement officers are going to have to determine when to take title and when not they will be plagued to the awful responsibility of exacting just one pound of patent "flesh," no more and no less. Of course, if a contractor feels he has been made to bleed there are provisions for administrative or judicial review, and this might solve such problems in the best Shakespearean traditions.

The Long bill is essentially a title-in-the-Government approach, with practically no exceptions. Senator Long, unfortunately, has been completely sold on the notion that leaving any patent rights with contractors is sheer folly. For years he could only see them getting richer and bigger and stronger, as they are permitted to accumulate patent rights on inventions arising out of Government's contracts, and he decried the fact that this tends to make them more and more monopolistic. Only recently has he given consideration to the utilization of inventions which the Government would acquire by his current legislative proposal, and provision is made for licensing them, with or without royalties, under such terms as would be established by the administrator of any agency newly established for the purpose. In the long run, it is submitted, this type of