ment was their own money. Why should they share rights to inventions which may be made through research done entirely at their own expense?

Well, after 2 years of arguing up and back, Baxter finally said they could not afford to take the risk under the supplemental conditions imposed by the Department of Health, Education, and Welfare and they withdrew.

I might point out that this example well illustrates how important it is to give developers of inventions the inducement of protection against cutthroat competition for at least a limited period of time in order to get people to take on the development of inventions which involve great risks as to the chances of success.

Senator MCCLELLAN. Now, if I understand you, in that instancewhat was the name of the company?

Mr. FORMAN. Baxter Laboratories.

Senator MCCLELLAN. They finally agreed that they would undertake it for a 5-year exclusive right?

Mr. FORMAN. Yes, sir.

Senator MCCLELLAN. But then the question arose if there were any, I would call them, byproduct inventions, fallout inventions or discoveries, who would get those? And the Public Health Service wanted the Surgeon General-wanted Baxter to agree that the Government should have those.

Mr. FORMAN. No, sir. They wanted the equivalent of that, but technically it worked out a little differently. They merely wanted Baxter to agree that it would provide nonexclusive licenses to anyone who decided later to make the final development, the final invention. Senator MCCLELLAN. And they were never able to get an agreement? Mr. FORMAN. That is right.

Senator MCCLELLAN. Now, what has happened? Is the product being used now?

Mr. FORMAN. Not yet.

Senator MCCLELLAN. Oh, is it still not on the market?

Mr. FORMAN. It is not on the market, but we expect that it will be, and for this reason.

Our own company, having gone as far as it had with its gratuitous contributions to the making of the invention, and fortuitously having acquired a small pharmaceutical manufacturing company-just prior to Baxter's withdrawal-decided that it would try to carry on the work for a while rather than let it die, and this work has actually been going on there ever since.

But we went back to the Surgeon General to explain the situation, and he very cooperatively reconsidered the problem. We pointed out that, like Baxter, we could not afford to invest that kind of money since this is a very perilous type of invention, and there can be no guarantee it is going to work or that it will be accepted by the medical profession when it is placed on the market, and they withdrew the supplemental requirements that they had imposed the year before. Senator MCCLELLAN. On Baxter?

Mr. FORMAN. Yes, sir. And the way it now stands, it is merely on the basis that the invention will be maintained exclusively jointly by the company and Jefferson for 5 years. After that it is open to the public: anybody who wants to can use it.

Senator MCCLELLAN. How much is it going to cost you to develop it? Mr. FORMAN. It won't cost less than $12 million the way it looks, because from the investment already made, and what is predicted, it will easily run that amount, probably more.

it?

Senator MCCLELLAN. How many years is it going to take to perfect

Mr. FORMAN. I cannot predict that. Our scientists are unable to tell us yet. We hope within the next year or two, but we cannot say. Senator MCCLELLAN. You don't know how soon you can get the product perfected?

Mr. FORMAN. No, sir; I do not know that, sir.

Senator MCCLELLAN. Well, in the meantime, are lives being lost, by reason of that invention not being available?

Mr. FORMAN. Well, it is hard to predict whether lives or how many lives are being lost. But you have to think of it in these terms. Each open heart surgery may use 10 or a dozen pints of blood. It is not easy to get live donors for a particular operation when needed by the surgeon. It would be a great boon if he could have blood on the shelf for several months. The same thing would happen, for example, if we were going to ship blood to Vietnam. It would quite possibly go bad before they could use it on the battlefield.

Senator MCCLELLAN. In other words, it is very beneficial, or will be very beneficial, in the health field if this process can be developed to where blood can be preserved for a much longer period of time than it can be now; is that correct?

Mr. FORMAN. Yes, sir.

Senator MCCLELLAN. This is a current illustration in this field.

Mr. FORMAN. This is so current, this is happening today. The agreement was completed last December.

Senator MCCLELLAN. Now, if I understand you correctly, you did offer this to all companies in that field, all the laboratories.

Mr. FORMAN. Jefferson did. They tried and found only five that said that they could do it, but only one actually volunteered to try. Senator MCCLELLAN. Well, of course, I would regard this as a kind of an extreme case, would you not? This is not just an ordinary situation.

Mr. FORMAN. It is hard to answer that question, Senator. I do not know what you mean by extreme.

Senator MCCLELLAN. Well, maybe that is not the proper word. You would not encounter the same problem ordinarily in the processing of a new drug or a new technique in medicine, would you? Or would you? I don't know.

Mr. FORMAN. As long as there is a great risk, and the probability of failure is great, you are going to find fewer and few companies wishing to invest money, time, and personnel in developments of that type.

Senator MCCLELLAN. All right. Proceed with your statement.

Mr. FORMAN. With regard to that third point I made, about the position taken by the proponents of S. 1899, this is my answer.

If there is a legitimate danger to our society in concentrating too much wealth and too many opportunities to get wealthier in the hands of a limited number of corporations, the answer may lie in the Government's finding ways and means to give out its contracts to

as many other parties as possible. But once the contractors are selected, preventing companies from obtaining patent rights out of Government contracts may not solve anything. Such a policy may only deprive the Government of worthwhile contractors or may result in contractors devoting their second best personnel to work on Government projects while reserving their best people to work on their own commercial projects so that they could keep title to inventions arising out of them and thereby get some protection for their investment.

Now, I understand from being here previously that the subcommittee would like to have examples of contractors who have refused to take contracts because of this principle. I know how difficult it is to produce examples like this, although we privately hear about them all the time by people representing one company or

another.

I did, however, go back into the records of the Mitchell subcommittee, which in August to December 1959 had hearings with regard to proposed amendments to the patent provisions of the Space Act. At that time one of the Congressmen who was sitting on the committee asked specifically for documentation to prove that particular point. The man he asked, who happened to represent the American Patent Law Association, did come back some time later with letters submitted by five companies, and these can be found referred to in the printed report to those hearings for Public Law 85-568, page 412. The five companies were the Electric Storage Battery Co. of Philadelphia, the National Research Corp. of Cambridge, Mass., Corning Glassworks of Corning, N.Y., AMP, Inc., of Harrisburg, and Bowmar Instruments Co. of Fort Wayne, Ind. All five said that because of the title-taking clauses they would not accept NASA contracts-I think most of them had to do with the then new Project Mercury.

If we want to know why it is so difficult to get companies to stand up and be counted as they did, perhaps the reason is that the same Congressman, upon receiving these letters, wrote back to the presidents of those companies and said, "This is your position as it has been represented to us, but surely there must be some mistake-this would make it appear to us as if you are not interested in cooperating with the Government of the United States on this important project." Each of these companies wrote back and reaffirmed their position in no uncertain terms. But, nevertheless, this news did get around the country like wildfire, and I think because of it, as much as anything else, Senator, many companies that might otherwise come forward have refrained from doing this because they fear such intimidation. and possibly reprisals in the form of being blacklisted from working on future contracts with the Government.

Now, gentlemen, it appears to me that this last point is the crux of the entire platform upon which Senator Long stood when he introduced S. 1899. All the other points are merely subsidiary or corollary to his concern over the possibility that retention of patent right by Government contractors will permit them to get a stranglehold on our economy.

As Senator Long said on May 4, 1965, in introducing S. 1899-and here I quote two brief paragraphs from page 9027 of the Congressional Record for that day--he said:

Mr. President, this is not merely an economic problem. This concerns our liberty and freedom to the extent that, through the granting of monopolies, areas of our economic life are barred to many of our citizens to that extent is our freedom abridged.

Scientific and technological research conducted or financed by the U.S. Government represents a vast national resource, which could equal or surpass in actual or potential value the public domain open to settlement in the last century. Because the control of patent rights and inventions resulting from such activities means the control of the fruits of this resource, it is the function of the Government to make the results of research available for use by the entire American public which has made this research possible.

I agree 100 percent with this last portion of the statement by Senator Long. It is the function of the Government to make the fruits of any research, which has been subsidized even only partially by Government funds, to the public at large. The real issue is how is this to be done so as to do the most good for the most people.

Should it be done under the time-tested operation of the American patent system, with its inducements for private investment of capital and labor? Should it be done by the Government itself through its own building and operation of plants, followed by market distribution, and so forth? Or should it be done by the Government's free dissemination to everyone of the rights to practice the inventions?

If there is any doubt in Senator Long's ultimate objective, regardless of anything in S. 1899 which may appear to the contrary, this doubt is eliminated by his embracing the philosophy spelled out by his assistant, Mr. Benjamin Gordon, in the article which was reprinted in the Congressional Record following the printing of S. 1899 at pages 9031 to 9033.

In his final paragraph concluding the article, which was devoted to a comparison of "Government Patent Policy and the New Mercantilism," in which Mr. Gordon sees in the policy of leaving title with Government contractors a strong similarity to the mercantilism of the Middle Ages, he says:

If this comparison elicits the reply that the national interest requires monopoly grants as a necessary stimulation of enterprise, the question arises whether the price we are paying is far too heavy, even if the means could secure the end, for involved is the sacrifice of the citizen's economic freedom.

Now, this philosophy of Mr. Gordon, which Senator Long has apparently endorsed, indicates a belief that the operation of our economy under our patent system is not in the public interest. Senator BURDICK. Is that an article by Mr. Gordon?

Mr. FORMAN. That is the concluding paragraph of the article by Mr. Gordon: yes, sir.

Senator BURDICK. It appears in the Congressional Record?

Mr. FORMAN. Yes, sir.

Senator BURDICK. What is the date of that?

Mr. FORMAN. May 4.

Now, gentlemen, with 70 percent of all the R. & D. funds now being financed by the Government, such a belief by the proponents of S. 1899 would seem to be an important first step in the elimination of our patent system altogether.

This, gentlemen, I submit is the behind-the-scenes real threat of that bill. It would be the beginning of the end of a system designed to induce people to invest labor and money to make risky inventions worth while.

As the Senate Subcommittee on Patents, I think this threat should be kept in your minds when you review the merit of all the bills under consideration.

It does not matter to me what manner or means are employed to conserve and promote the utilization of our inventive productivity. That productivity is limited. It is one of our greatest national assets. What matters is that every worthwhile invention should be given every possible chance of being developed for use by the people, all the people.

In conclusion, let me point out that I speak not for the patent system, not for the patent profession, not for industry, not for any segment of these. I speak only as a citizen who has for almost 20 years studied and critically observed the developments in the field of Government patent policy, and who is seriously concerned over the possibility that a good deal of our limited inventive productivity will become wasted if not developed under the inducements offered to all the people under the patent system.

This is what will happen under a law like S. 1899 which will tend to take title to most of the inventions made in the United States and put them in the public domain where interest in developing them will lag if not fade into insignificance.

It will not happen under S. 1809 because that bill will tend to leave title with the contractor in a maximum number of situations-that is, I might say, a maximum number consistent with today's political opposition caused by the "patent giveaway" theorists.

S. 1809 tends to assure maximum utilization of the invention by means of compulsory working and/or compulsory licensing requirements. This is good. In exercising those prerogatives, the Government will exercise its true and proper functions. As a contributor to the development of the inventions, the Government is in partnership with the contractor. As a partner, it has certain rights. In this case, it is not to share in cash profits, but in seeing that the other partner puts the inventions to the widest possible use so that the public will benefit thereby. That is the Government's right and obligation. That compulsion is as far as the Government ought to go in promoting utilization of the inventions in most cases.

S. 1809 is not perfect, it needs amendments. I have proposed some in my formal written statement. Others have been suggested by those who have testified before me. Nevertheless, I see in S. 1809 the basis for legislation which comes closest to being the most sensible, workable compromise that has a reasonable chance today of being acceptable to the Congress and also to all who are critical of the general philosophy, as well as the specific provisions of S. 1899. Gentlemen, S. 1809 is in the true public interest. S. 1899 is not. Thank you very much for this opportunity today to speak. Senator Mo Thank you, sir.

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