The granting of a waiver by an executive department or agency shall be accompanied by findings of fact made by the head of such executive department or agency, which desrcibe fully the basis under which the waiver was granted. (f) Whenever the provisions of subsection (a) of this section require the head of an executive department or agency to take a proprietary interest in an invention greater than that specified in subsection (b) of this section, he shall take such greater interest unless he determines, after examination of the facts of the particular case, that special circumstances indicate that the contractor should receive all right, title, and interest in and to the invention, subject to the proprietary interest reserved to the United States in subsection (b) of this section, and that the public health, safety or security would not be affected adversely as a result of the contractor receiving said right, title and interest. The criteria for making this determination shall be (1) that the interest of the particular executive department or agency will not be adversely affected; (2) that the interests of other executive departments or agencies of the Government will not be adversely affected; (3) that there is a present commercial value and potential public use for the invention; and (4) that the developer of the invention can reasonably satisfy public demand for and use of the invention. Prior to making this determination, the head of the executive department or agency shall make findings of fact thereof. These findings of fact shall be communicated to the heads of other executive departments or agencies whose interests may be affected by the determination. The responses of such other executive departments or agencies shall be considered by the head of the executive department or agency concerned when its determination is made. FURNISHING OF INFORMATION SEC. 4. (a) Any party entering into a contract under section 3 hereof shall furnish to the appropriate executive department or agency a written report which shall detail full and complete technical information concerning any invention, discovery, or improvement made in performance of such contract, in accordance with such rules and regulations as the executive department or agency may prescribe. (b) Any patent which issues to a contractor on an invention developed in the performance of a contract shall become the property of the United States and the patent be dedicated to the public, if upon a finding made pursuant to subsection (c) of section 6, and in the event an appeal therefrom is taken, such finding is affirmed by a proceeding brought under section 7 hereof, that the contractor knowingly and willfully withheld reporting of the invention required by an applicable contract. LICENSING OF PATENTS SEC. 5. Whenever the Government takes a proprietary interest in an invention greater than that specified in subsection (b) of section 3 and makes available to the public use thereof, the Government shall grant to the contractor which produced the invention an irrevocable exclusive, royalty-free license for practice of said invention if within three years of the taking of such interest by the Government, no actual use is made of said invention by another party. Such license shall be granted upon application by the contractor to the pertinent executive department or agency. ADMINISTRATIVE PROCEDURE FOR DETERMINATIONS SEC. 6. (a) Whenever the head of an executive department or agency shall determine that an invention, made in the performance of an obligation arising from a contract where the United States has taken rights no greater than those specified in subsection (b) of section 3, has given rise to new, unusual, and compelling factors related directly to the public health, safety, or security which did not exist at the time the contract was negotiated, but which require reconsideration of the rights established under said contract, he shall within sixty days after receipt of the information on which that belief is based (1) make a determination supported by findings of fact that he shall take on behalf of the United States a proprietary interest greater than that speci fied in subsection (b) of section 3 pursuant to the provisions of subsection (a) of section 3, or that he shall take no greater rights than are required by subsection (b) of section 3 because the invention does not come within any of the categories enumerated in subsection (a) of section 3. Such determination shall be based upon that criteria enumerated in section 3 (a) and (e) hereof; and (2) if the executive department or agency head determines to take on behalf of the United States a proprietary interest greater than that provided in subsection (b) of section 3, he shall transmit to the contractor written notice of his intention, which notice shall (A) specify the nature of the proprietary interest in that invention which the executive department or agency head claims on behalf of the United States; (B) state with particularity the basis for belief that the United States is entitled under this Act to take such interest in that invention; and (C) accord to the contractor, or his duly authorized representative, an opportunity for a hearing, conducted pursuant to the provisions of subsection (c) of this section upon the question whether the United States is entitled under this Act to take such proprietary interest in that invention. (b) If no application for a hearing is made by the contractor, or any other interested party, within sixty days after receipt of notice by the contractor, or if the executive department or agency head determines upon the record of any such hearing that the United States is entitled under this Act to take a proprietary interest greater than that provided in subsection (b) of section 3, the executive department or agency head shall issue with respect to that invention a written declaration of taking on behalf of the United States which shall (1) identify with particularity the invention to which it relates; and (2) specify the nature of the proprietary interest therein so taken on behalf of the United States. Such declaration shall be served upon the contractor or upon his duly authorized representative, and a copy thereof shall be transmitted to the Commissioner of Patents. The executive department or agency head shall advise the Commissioner of Patents promptly concerning the pendency and result of any judicial review of such declaration. (c) Whenever any section of this Act provides for a hearing to be conducted by an executive department or agency into the question of the proprietary of any determination made thereunder, there shall be issued to the parties involved a notice of intention to hold a hearing not less than sixty days after the mailing of such notice. Any hearing held under this subsection shall be conducted in conformity with the provisions of the Administrative Procedure Act. There shall be a right of judicial review under section 7 of this Act to any decision by an executive department or agency under this subsection. JUDICIAL REVIEW SEO. 7. Any person aggrieved by any declaration under sections 4, 5, and 6 may, under the Federal Rules of Civil Procedure, title 28, United States Code, obtain a review of such determination 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 party resides by filing an application for such review within sixty days after notice of such declaration or determnation. Findings of fact made in the administrative proceeding, if supported by substantial evidence, shall be conclusive. 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. RIGHTS BY IMPLICATION SEC. 8. No rights granted under any invention or patent pursuant to section 3 or section 5 hereof shall be deemed to grant any rights by implication under any other invention or patent. GOVERNMENT PATENT PROTECTION AND USE SEC. 9. (a) Whenever proprietary rights specified under subsection (a) of section 3 are taken to an invention by and in behalf of the United States through a declaration of taking, the head of the executive department or agency involved in the taking of said rights may make application to the Commissioner of Patents for the issuance of a patent therefor to such executive department or agency head on behalf of the United States. If it is determined by the Commissioner of Patents that such invention is patentable, a patent shall issue to such executive department or agency head on behalf of the United States. (b) Each executive department or agency head may grant a royalty-free, nonexclusive license for the practice of any invention for which a patent is held under this Act on behalf of the United States if such license is granted in furtherance of a purpose set forth in subsection (f) of section 3. If such nonexclusive license fails to result in the practice of an invention, such executive department or agency may thereafter grant an exclusive license subject to section 5 of this Act, provided a finding of fact is made by the head of such executive department or agency that an exclusive license is necessary to insure practice of the invention. Any party aggrieved by such finding of fact may bring proceedings under subsection (c) of section 6 of this Act. Any license under this subsection may be granted for the effective period of the patent or for a more limited period of time. REPORTS TO THE CONGRESS SEC. 10. The head of each executive department or agency which awards any contracts of the class described in section 3 shall submit semiannual reports to the Congress which contain (1) the number of inventions disclosed pursuant to such contracts; (2) the number and general nature of such inventions with respect to which the executive department or agency acquired no greater right than those specified in subsection (b) of section 3, and a summary of the findings of fact upon which such determinations were made; (3) the number and general nature of inventions coming under the categories described in subsection (e) of section 3 with respect to which no rights greater than those specified under subsection (b) of section 3 have been taken, and a summary of the findings of fact upon which such determinations were made; and (4) the number and general nature of such inventions in which the executive department or agency has acquired a proprietary interest greater than a royalty-free license. RULES AND REGULATIONS SEC. 11. The Secretary of Commerce shall promulgate rules and regulations for the administration of this Act. Each executive department and agency of the Government may issue supplemental rules and regulations required for its internal administration and consistent with the rules and regulations promulgated by the Secretary of Commerce. SEVERABILITY CLAUSE SEC. 12. If any provision of this Act, or the application of such provision to any person or circumstance, is held invalid, the remainder of this Act or the application of such provisions to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby. TECHNICAL AMENDMENTS SEC. 13. (a) The Atomic Energy Act of 1954 is amended by striking out section 152 thereof (42 U.S.C. 2182). (b) The National Aeronautics and Space Act of 1958 is amended by striking out sections 305 and 306 thereof (42 U.S.C. 2457, 2458). (c) The National Science Foundation Act of 1950 is amended by striking out section 12 thereof (42 U.S.C. 1871). (d) 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 United States Code 4271 (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." (e) The Saline Water Conversion Act of 1961 (75 Stat. 628) is amended by striking out section 4(b). (f) The Coal Research and Development Act of 1960 (74 Stat. 336) is amended by striking out section 6. (g) Section 4 of the Helium Act, as amended by the Helium Act Amendments of 1960 (74 Stat. 918) is amended by striking out the following language: "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 it to be necessary in the interest of national defense) be available to the general public. (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. 14. This Act shall take effect on the first day of the fourth month beginning after the date of enactment of this Act. Senator JOHN L. MCCLELLAN, UNIVERSITY OF DENVER, Chairman, Subcommittee on Patents, Trademarks, and Copyrights, Judiciary Committee, U.S. Senate, Washington, D.C. DEAR SENATOR MCCLELLAN: I should like to submit for the record a brief statement of my personal views on S. 1809 and S. 1899 concerning Federal patent policy on which your subcommittee held hearings last week. In summary, I favor, with a few exceptions, the terms of the chairman's bill, S. 1809, and oppose the terms of Senator Long's bill, S. 1899. For 10 years, my applied economic and management research work has required frequent and intimate contacts with industry. During the last 5 years, the bulk of these contacts have been with technically oriented firms nationwide. The problems of Federal patent policy have entered into many aspects of this research work (which has been sponsored both by Federal and private funds). This experience, plus study of the extensive hearings and publications on the subject of patent rights arising from federally sponsored contract research, have led me to conclude that with a few exceptions, patent rights should rest with private industry or should be made available on a limited-exclusive basis to private industry. Hence, my views are largely in agreement with S. 1809. Proponents of the opposite viewpoint make very appealing arguments about the merits of a Government title policy such as advocated in S. 1899. Almost none of these arguments stands the test of scrutiny, in my opinion. For example, the argument is made that the Federal Government should take title to all patents arising out of research supported by the taxpayers to protect the public interest from "giveaways." But, rather than protecting the public interest, I believe a Government title policy harms the public interest by discouraging the commercial application of the fruits of the public's R. & D. tax dollars thus tending to deny the public new, better, or less expensive products. I have been convinced of the validity of industry's argument in this regard. Since industry usually has to invest 10 or more times the R. & D. cost of an invention in designing, producing, and marketing it, there is a greatly reduced incentive to invest large sums to develop inventions on which the patent rights are nonexclusive. Returning to the chairman's bill, S. 1809, I feel certain that my few objections to this bill were covered in detail in testimony made to your subcommittee last week. I only wish to state my belief in the generality that the more remote the Federal Government can place itself in such administrative matters as selecting licensees and protecting licenses from infringement, the better. Such activities would appear to present the Federal Government with many distasteful and difficult decisions which would be better left to the private sector if appropriate mechanisms can be developed. Sincerely, JOHN G. WELLES, Head, Industrial Economics Division. STANFORD UNIVERSITY, DEPARTMENT OF CHEMISTRY, Stanford, Calif., August 30, 1965. Hon. JOHN L. MCCLELLAN, Senate Subcommittee on Patents, MY DEAR SENATOR MCCLELLAN: I hope that it is not yet too late to send you some comments on your proposed bill, S. 1809. Unfortunately, the complete text of this bill reached me only recently. I am sure that you have received numerous communications on the subject and I would like to limit myself to only three points which have some bearing on my professional competence. As a university professor, I have published several books and well over 500 scientific articles in the field of organic chemistry, largely on health-related subjects, and over half of this work has been supported partly or completely by grants from two Government agencies (National Institutes of Health and the National Science Foundation). I have also had, and still have, intimate connections with the pharmaceutical industry-having been a research chemist or director in two such companies prior to my academic career, and currently serving on the board of directors of one of these (Syntex Corp.). However, none of my university research is currently being performed in collaboration with any pharmaceutical company. On the whole, I am very favorably impressed with your bill and am largely in agreement with what you are trying to accomplish. There are three points, however, where I believe that modifications will strengthen the bill and be of ultimate advantage to the public. 1. You draw no distinction between contracts and research grants. In universities, and especially in health-related areas, virtually all of the Government support is obtained in the form of grants rather than contracts. In section 3 (b) (1), your bill requires "the prompt and full disclosure by the contractor to that agency of any invention made in the course of or under the contract." The NIH has already been operating theoretically under this assumption under their revised patent policy. In connection with its publication in the Federal Register, I wrote to the Surgeon General on July 24, 1963, indicating that such a requirement is totally unrealistic since it cannot be complied with and cannot be enforced. Many of the comments in that letter (especially pp. 2-4), of which I am enclosing a copy, also apply to section 3(b)(1) of your bill (every university scientist working under partial Government support is a "contractor") and I believe that an appropriate modification in the wording should be considered. Other than acknowledging receipt of that letter, I never did receive any reply from the Surgeon General. Senator Wayne Morse, with whom I once had some personal discussion during a plane trip on the general subject of Government support of academic research, had this letter and some related material republished in the Congressional Record (August 6, 1963, pp. 13434-13440, and especially pp. 13439-13440). 2. In section 4(a) (2), your bill reserves principal or exclusive rights to the Government in any invention made in the field of public health. While I sympathize with the motive, the result of this clause-if permitted to remain-will have precisely the opposite effect in that it will be to the disadvantage of the taxpaying public. I am making his rather blunt statement for the following reasons. To my knowledge, during the past 10 years probably not a single important drug has been developed in an American Government or university laboratory and brought to approved human use through the FDA by such an agency or university. Under present FDA regulations (with which I agree), the possibility of such an event happening becomes virtually zero. I would estimate that, in the case of a new drug, it would cost an absolute minimum of half a million dollars, and frequently several millions, to satisfy all the FDA requirements for human use and for manufacture. No university has such money avail |