legislation will not be in the true public interest for it will do far less to promote the utilization of inventions than will the McClellan, Saltonstall, and Kennedy approaches that encourage the original inventors or assignee-contractors to develop the inventions which their expertise helped to originate.

Although I do not believe that Senator Long's approach is in the public interest, I do believe that Senator Long has done this Nation a great service by carrying on a relentless and effective campaign to enact legislation which will embody his concepts of a uniform Government patent policy. Without his efforts there undoubtedly would not have been created the issues which spurred President Kennedy to issue his directive. His piecemeal legislative efforts, by which he has succeeded in tacking on Government patent-rights-title-takingamendments to several bills that have become law in the past few years, undoubtedly will prod the Senate to acting on whatever bills on the subject of a Government-wide uniform patent policy Senator McClellan's Subcommittee on Patents and its parent Judiciary Committee reports to the full Senate. At the same time, credit must be given to Senator McClellan for his painstaking efforts in resisting the hurried and harried piecemeal legislative approach, and his patient sifting of testimony and evidence in the quest of an acceptable Government-wide law. In this effort, of course, he is being aided by the considered interest and support of a number of members of his subcommittee. Only 2 weeks ago, incidentally, Senator McClellan successfully led a battle on the Senate floor to prevent adoption of Senator Long's amendment in connection with a vital NASA appropriations bill. In the course of that debate, by the way, several Senators vowed to do their utmost to promote the passage of a uniform Federal patent policy bill this year.

My one lament at the moment is that all the legislative proposals which purport to establish a uniform patent policy for the Government have omitted any reference to patent rights on inventions made by Government employees. They are currently being administered by the Patent Office pursuant to an executive order, in a more or less secretive manner, and apparently will continue to be so unless Congress does something about them too. If maximizing utilization of inventions arising out of Government-sponsored research is to be an objective of any legislation in the interest of giving the public the advantages of as many as possible of the inventions developed under the inducement of the benefits of the patent system, shouldn't this also apply to inventions of Government employees? Certainly, a truly uniform, national policy regarding rights to all inventions arising out of Government-subsidized research will not be achieved until the problem of those inventions is also disposed of by statute. Those inventions should not be treated like unwanted orphans; they are just as much a part of our national assets as inventions made by Government contractors.

In concluding, I will observe that it must be apparent that this whole area of Government patent policy is a difficult matter. It is confusing to people who cannot consider it from a broad philosophical outlook such as I have outlined for you this morning. I will cite one instance of such confusion that arises when almost any aspect of this subject is discussed. On April 8, I was privileged to serve as moderator of the symposium which opened the 175th anniversary of the patent system at the Sheraton-Park, here, in Washington. One of the three distinguished persons who spoke that morning was an internationally known labor leader whom I greatly admire and respect for his tremendous achievements in many fields of human relations and public welfare. In discussing our patent

system he pointed to many of its faults which prevent inventors as a whole from obtaining greater rewards for the products of their "blood, sweat, and tears." He had my complete sympathy there. But then he went on to indorse Senator Long's view that, in the field of Government contracts for research and development, inventions and patents obtained at public expense are being given away with little regard for the economic and social consequences. His recommendation was that all patents developed at public expense should be put in the public domain. What he failed to appreciate, of course, was that if this were done there would then be no way of getting for the inventors a share of the profits or other proceeds which he was advocating they should have. In other words, he was suggesting that we should kill the goose that lays the very golden eggs which he wanted to have shared. Or was he in favor of cutting up the child because he was unhappy with the manner in which its "mother" was being determined? Shades of King Solomon, or should I say Senator McClellan?

Mr. FORMAN. I believe that the prepared statement which I submitted prior to June 1 and the talk I just referred to amply set forth my general views on Federal patent policy and my specific views on the bills you are considering here today.

I would like now to dwell only on the main reasons why I believe legislation of the kind embodied in S. 1809 comes closer to being in the public interest than any of the others, and why S. 1899 is the furthest of the three bills from being in the public interest.

The proponents of legislation represented by S. 1899 make these three principal claims:

1. The public should not have to pay a second time through royalties or higher prices for inventions which arose out of research and development which was at least in part paid for out of Government funds.

2. Numerous Government-originated unpatented technological advancements have been used by industry. Hence, the argument that a patent is a necessary inducement to development of inventions for commerce by industry is invalid.

3. Leaving patents in the hands of Government contractors only tends to increase the size and wealth of large corporations making them more monopolistic, more and more culpable of antitrust violations, and more likely to adversely affect small business.

My answer to these claims follows:

I believe that if the public could be given the whole story, without the headline hunting labels such as "Billion-dollar giveaways," the would agree with me.

average person

With respect to the first point-in the long run this country and all of its people stand to benefit far more if more and more inventions are utilized that is, made available for use by everyone than if they are allowed to lie fallow because no one wanted to take the risks of investing in their development.

I, for one, would gladly pay an extra premium in royalties or higher prices in order to get the benefit of a new laborsaving device or possibly a lifesaving invention, or something which increased my standard of living. I would much rather get those benefits even if my taxes did help pay for the inventions than to run the risk of not having them at all.

Gentlemen, would you object to such so-called double payments if they resulted in the development of a cure for cancer or even if it just doubled the mileage you could get on a gallon of gasoline in your automobile, especially when you realize that under our patent system, after a stated number of years the invention will be in the public domain.

I know I would certainly not object at all.

I would like to point out an illustration I have repeated many times before many groups to show what I think is the real issue here, or at least one of the major issues.

Our technological inventive ability in this country is necessarily limited. There are only so many inventions that can be made in a given year. For simplicity's sake, I like to consider this in simple round numbers.

We can make, let's say, a maximum of 1,000 patentable inventions in a year, 70 percent

Senator MCCLELLAN. What do you mean make a thousand inventions? Who knows how many inventions may come this year and how many next?

Mr. FORMAN. We do not know, Senator, of course. This is merely a simplified hypothetical illustration to explain a point.

Senator MCCLELLAN. All right.

Mr. FORMAN. Let us say that in any given year only 1,000 inventions are made in this country. They constitute the total productivity of the inventive genius of the entire Nation. These inventions are national assests. What we do with them may determine the country's future. They certainly will determine the progress of the country, and maybe even determine the existence of the country itself.

Now, if 70 percent of all the money spent in the United States for research and development goes into Government contracts-and if we roughly correlate this in terms of numbers of inventions—this could mean that the future benefits to our Nation from 70 percent or 700 out of the thousand inventions are going to be resolved when you settle this question of Government patent policy.

Now, how many of those 700 inventions can we afford to let go down the drain because no one wishes to undertake their development? We never know but that one of those inventions might be the cure for cancer; or it might be the means for the causing establishment of a new industry; or it might be the answer to some national defense requirement. Because we never know it is important that we do whatever we can to develop every one of those inventions that we can possibly utilize and not just be satisfied with a "paper" invention.

With regard to point two, of course, patents are not necessary inducements for the development of all inventions. Industry constantly brings to the marketplace relatively simple, unpatentable inventions for which there is much demand. When there is very little investment required, there is no great worry about competitive risks and no concern over the likelihood of imitators coming out with cheap imitations after an expensive investment has been made in research and development by someone else.

Now, if the Government wishes to finance all the risk taking research and development work in its own laboratories, as when the Department of Agriculture makes a new plasticizer out of an epoxidized oil, or develops a new dialdhyde starch, it is a simple problem to find manufacturers for those kind of products. Such situations only prove how important it is for the manufacturer who has to invest his own money to develop an invention to have it protected by patents.

There are always people who are ready to imitate after the developmental risks are no longer a factor.

The real difficulty is in finding manufacturers who will undertake to develop an invention when the research and development is expensive and the risks of success are extremely great.

Now, I would like to cite an actual case history which I not only know about--I was actually involved in the negotiations which I shall

54-400-65-pt. 2

describe. I filed the full case history with the chief counsel for this subcommittee.

This involved an invention which concerns the saving of life. It had to do with extending the shelf life of blood bank blood. This is the blood that the Red Cross and other agencies gather and then put on a shelf. It goes bad in 21 days under normal circumstances. You normally cannot prolong its useful life as whole blood.

In the case of open heart surgery, in the case of situations where you are trying to get blood to the far corners of the world, 21 days often is not enough. It is important if you can extend the life of that blood by another week, another month, or longer, because blood is a commodity you just cannot get any time you want it.

Now, the Jefferson Medical College of Philadelphia had some surgeons who were interested in trying to develop a way of extending that blood life, they received some grants from NIH, and they tried to do this job. They found themselves at an impasse. They could not solve the problem. They had come up to a point and they found out that they were not getting over the hump.

They went looking for somebody outside, an expert who could help them. They found such a man, an experienced ion exchange chemist known the world over. He happened to be there in Philadelphia working for the company where I happen to be employed. He was asked if he would help. His services were volunteered gratuitously and many thousands of dollars of his time and materials were given to the institution. Eventually, the problem was solved, an invention happened to be made, and the invention has proved to be patentable. The question is-Will this invention get out into the public? Will this invention be developed for use by people all over the country? It has worked in the laboratory, and the technical people have reached the point where they think and know it will be useful for saving human lives. But there are considerable risks in the development. Nobody can guarantee that this invention, when tried out in mass production, is going to work successfully.

The Jefferson Medical College and our company, both of which have had no background, incidentally, in developing this type of invention, went looking for somebody who had the experience and the interest. We found only five laboratories in the country, five commercial companies, that had the required background of experience. They all decided it was too great a risk to get into. Only one of them decided to take the chance and that was Baxter Laboratories, of Morton Grove, Ill.

Senator MCCLELLAN. Well, now, they have the exclusive right to it? Mr. FORMAN. No, sir-I have not come to that. If I may, I will bring it out in just a moment.

Senator MCCLELLAN. All right. I will be patient.

Mr. FORMAN. Baxter said they were interested, but they made some computations and figured it would take a million and a half dollars to bring it from the point where it was at Jefferson Laboratories to the point where they could put it in the hands of physicians and surgeons throughout the country.

They asked what the patent situation was. We went down to NIH to try to straighten this question out, because under the grant Jeffer

son could keep the rights, provided they had a patent policy of their own whereby they would exploit the patented inventions. This is the general policy in connection with such grants.

But when it was pointed out that our company, because of its employee, had also been a participant, a joint inventor here, the question was raised, Would we yield our rights, or how else should the situation be handled? They did not know because they apparently had never dealt with that kind of situation, and there was no provision in the Department of Health, Education, and Welfare regulations which covered it.

We had some discussions with the Surgeon General and finally it was pointed out that, under the October 10, 1963, memo and statement of the President on Government patent policy-which stresses the desirability of utilizing all inventions in the public interest at every possible opportunity-it was for the good of all, in the public interest, to get this invention out of the laboratory and do everything that could be done to make it available to the public. They agreedthey said all right, finally-"We will agree to permit Jefferson to grant a 5-year exclusive period to develop this invention-5 years from the time that the Food and Drug Administration and the Division of Biological Standards approve this invention for public use." This much time, it had been estimated by Baxter, would give them a chance to recoup about 30 percent of that million-and-a-half-dollar investment. They figured that they would take their chances on recouping the rest of the investment and making a profit on it in the nonexclusive period after the exclusive period expired, relying on their "leadtime" to put them in a competitive position.

Incidentally, I ought to point out that the grant was for about $15,000 and our company invested about an equal amount, $10,000 or $15,000 at that point-or a total of about $30,000. As Dr. Price pointed out earlier this morning, relatively small sums generally are needed to make a given invention. But, as in this case, a million and a half dollars would be required to reduce that invention to the point where it could be used by the public.

Baxter agreed to accept the license with the 5-year exclusive period. Then the Department of Health, Education, and Welfare decided that this was not sufficient. They said-it is all right to give a 5-year exclusive and then say it will be opened up nonexclusively to any other manufacturer who wants to make this later-"But suppose, Baxter, you use some of your background inventions that you had before you start work on this development, or suppose you use some new ideas that you make in the course of investing your $12 million-these inventions might be desirable or necessary to the production of the end product of your development that is acceptable for the commercial market. Without these added ideas, what good will a nonexclusive license be to a potential second or third producer after your exclusive period ends? We would like you to yield those rights to the public, too."

Well, this was asking Baxter to give up its commercial birthright. It may have spent many millions before on some of the ideas that they had in their own research department. Besides the $12 million they were planning to spend to reduce the invention to a practical embodi