search paid for by the Commission shall be promptly reported to the Commission, and the Commission reserves the right to determine the disposition of all rights in such invention after it has been disclosed to the Commission. The determination of the Commission is exclusive and final, and not subject to judicial review. The Commission believes that there is a prima facie public interest in its retention of the right to determine the disposition of ownership in any invention or patent resulting from research paid for by it.

As indicated by their titles, S. 789 and S. 1809 seek to establish a national policy among the agencies and departments of Government in the disposition of property rights in inventions made as the result of the expenditure of public funds under Government contracts. The policy established by S. 789 and S. 1809 is that, in every Government contract involving scientific or technological research, the Government shall reserve not less than an irrevocable, nonexclusive, nontransferable, royalty-free license for the practice of such invention throughout the world, by or on behalf of the United States or by a foreign government pursuant to any treaty or other agreement with the Government of the United States. This policy is consistent with the late President Kennedy's Memorandum on Government Patent Policy of October 10, 1963, whereby the principal or exclusive rights to any invention resulting from Governmentfinanced research and development may be acquired by the Government under certain circumstances, or may be left with the contractor when it is determined that the public interest will be served thereby. On the other hand, under section 3 of S. 1899, the Government would be required to acquire exclusive right and title to all such inventions and could waive such proprietary interests only under very limited circumstances.

From the standpoint of this agency, we have some reservations concerning certain aspects of S. 789 and S. 1809, and a substantive provision of S. 1899.

Section 4 (c) of S. 1809 provides that, unless an invention resulting from a Government contract comes within one of the four clauses specified in section 4(a), the agency shall take no greater rights than the royalty-free license unless there are special circumstances which indicate that the public interest would suffer as a result of the contractor's receiving said "right, title, and interest" in the invention. There is no specification what such "special circumstances" might be; however, a determination as to the existence of such circumstances requires the same kind of administrative hearing and involves the same judicial review as a determination regarding four specified categories of circumstances. Furthermore, section 5 provides that such determination must be made within a brief period of time after disclosure of the invention (i.e., 60 days). The Commission has two points of concern: (1) It appears to be desirable to provide a longer period of time than 60 days, since it may be impossible for the agency to know or learn all of the relevant facts within such a short period of time; and (2) it certainly appears to be more appropriate for the burden to be put upon the contractor to secure a waiver of presumed Government rights to title by establishing that the invention does not fall within one of the categories specified by section 4(a) of the bill.

Section 3(a) of S. 789 requires that the Government acquire not more than an irrevocable, nonexclusive, nontransferable, royalty-free license, unless the contract is in five limited areas. It appears that it would be more difficult for the Government to establish its right to take title under the provisions of S. 789 than under the provisions of S. 1809. Accordingly, we would suggest that it would be more appropriate to place upon the contractor seeking title under the provision of S. 789 the burden of establishing that the invention does not fall within one of the five categories in sections 3(a) (1) to (5) of S. 789.

None of the bills would amend the Communications Act of 1934 (47 U.S.C. 151 et seq.); however, section 14(n), "Technical Amendments," of S. 1899 proposes to amend section 301 of the Communications Satellite Act of 1962 (72 Stat. 419; 47 U.S.C. 731) by inserting, immediately after the second sentence, the following new sentence: "All purchases and contracts of the corporation for or upon which any payment is made or to be made from any funds appropriated by the Congress or furnished directly or indirectly by any department, agency, or instrumentality of the United States shall be subject to the provisions of the Federal Inventions Act."

Under this proposed amendment to the Satellite Act, it appears that the United States would have exclusive right and title to any invention arising directly or indirectly from any contract or purchase by the Communications Satellite Corp. which is paid for, in whole or in part, out of funds appropriated by Con

gress or furnished directly or indirectly by any department, agency, or instrumentality of the United States. Further, section 8 of S. 1899 sets forth certain restrictions and conditions on the disposal of any of the proprietary rights of the United States in inventions. We are concerned that these proposed provisions of law may prevent or interfere with the discharge of the patent obligations of the Communications Satellite Corp. to its 43 foreign partners in the global commercial satellite communications system. For, under article 10(f) of the Special Agreement Establishing Interim Arrangements for Global Commercial Communications Satellite System (TIAS 5646), all of the signatories of the special agreement, and all persons in the countries of the signatories, have certain rights to use, without payment of royalities, all inventions arising directly from contracts relating to equipment for the space segment of the satellite system. The Communications Satellite Corp., a private corporation, was designated by this Government as the U.S. communications entity to sign the special agreement with other foreign communications entities or governments. Moreover, the corporation is the manager of the system on behalf of all of the partners. and contracts and purchases for the system will normally be made in the name of the corporation. In order to avoid any possible conflict between the proposed legislation and the obligations imposed by the special agreement, we suggest that any proposed amendment to the Satellite Act make clear that it does not override any rights or obligations under the special agreement.

Finally, we note that the provisions of section 3 of S. 1899, governing the disposition of proprietary rights to any inventions made by Federal employees, do not materially differ from existing Commission policy in this area. A copy of the regulations governing the disposition of rights in inventions made by em ployees of the Federal Communications Commission, issued on July 11, 1951, pursuant to Executive Order 10096, is attached.

In summary, the Commission believes that the policy now followed by the Commission, and embodied in the attachment hereto, has worked satisfactorily for this agency. We urge, therefore, that if Congress should prescribe a uniform Government policy, consideration to be given to the Commission's present policy (and to the other procedural recommendations we have made). The Commission recognizes the desirability of establishing a uniform national policy concerning the disposition of proprietary rights in inventions made through the expenditure of public funds, and can revise its procedures to comply with whatever patent policy may be prescribed by Congress. However, we hope that under any such policy we would, in any event, be permitted to retain sufficient authority to insure that any invention, made pursuant to a Commission-sponsored research and development contract or program, which could have significant impact on the public interest in the communications field, would be made available for wide public use.

[Attachment 1]

PATENT PRACTICES OF THE FEDERAL COMMUNICATIONS COMMISSION

REGULATIONS GOVERNING THE DISPOSITION OF RIGHTS IN INVENTIONS MADE BY EMPLOYEES OF THE FEDERAL COMMUNICATIONS COMMISSION, ADOPTED JULY 11, 1951, PURSUANT TO EXECUTIVE ORDER 10096 AND THE GOVERNMENT PATENTS BOARD ADMINISTRATIVE NO. 5

1. The Government may require assignment of title to inventions made by employees of the Government, and to any patents that may be issued on such inventions if any of the following conditions are present:

(a) If the invention was made during working hours; or

(b) If the invention was made with a contribution by the Government of facilities, equipment, materials, funds or information, or of time or services of other Government employees on official duty or

(c) If the invention bears a direct relation to or was made in consequence of the official duties of the inventor.

2. In determining whether a condition set forth above was present in the mak ing of the invention, the following definitions shall apply:

(a) Working hours for civilian employees shall mean time spent during either the usual working hours, or overtime, or both, and for military personnel time spent during the hours actually engaged in officially assigned duties:

(b) A contribution of facilities shall mean that the facilities were used in the making of the invention, and while so used were made available for other purposes;

(c) A contribution of equipment shall mean that the equipment was used in the making of the invention, and was thus made unavailable for other purposes;

(d) A contribution of material shall mean that the materials were specifically obtained and used for the purpose of making the invention, and were thus rendered unavailable for other use;

(e) A contribution of funds shall mean that Government funds were actually expended for the purpose of making the invention;

(f) A contribution of information shall mean that the information used in the making of the invention was available only by reason of the inventor's official duties, and was obtained from sources not otherwise available;

(g) A contribution of time or services of other Government employees on official duty shall mean that their time or services was utilized during working hours as defined in (a) above;

(h) Bearing a direct relation to or made in consequence of the official duties of the inventor means that the duties to which the inventor had been assigned were such that the invention could reasonably be expected to arise therefrom.

3. When any of the conditions set forth in paragraph (1), as defined in paragraph (2), are present, the domestic rights and, in the discretion of the Commission, foreign rights in and to the invention shall belong to the Government if

(a) The conditions are equitably sufficient to justify assignment thereof by the employee to the Government; and

(b) The Government has sufficient interest in the invention to require assignment thereof by the employee.

If it should be found that assignment is not required under (a) and (b) of this paragraph, the employee nevertheless shall be required to grant to the Government a nonexclusive, irrevocable, royalty-free license in the invention and under any patents, domestic or foreign, which may issue thereon.

4. It is presumed that the conditions of paragraph (1), as defined in paragraph (2), are present, when the employee is employed or assigned

(a) To invent or improve or perfect any art, machine, manufacture, design, or composition of matter;

(b) To conduct or perform research or development work or both;

(c) To supervise, direct, coordinate, or review Government-financed or conducted research or development work, or both;

(d) To act in a liaison capacity among governmental or nongovernmental agencies or individuals engaged in such research or development work, or both.

5. Employees within the classes defined in paragraph (4) may submit evidence that will enable the Commission to establish the absence of any one or more of the conditions of paragraph (1), as defined by paragraph (2), or that the conditions which are present are insufficient equitably to justify a requirement that assignments be made to the Government of the invention and any patent which may issue thereon.

6. For employees not within the classes defined in paragraph (4), the Government must establish that the conditions of paragraph (1), as defined by paragraph (2), are sufficient equitably to require an assignment to the Government of the invention and any patent which may issue thereon.

7. Whenever an invention is made under any of the conditions set forth in paragraph (1), the employee must report the invention to the Chief Engineer of the Commission.

8. Definitions of terms as used in these regulations:

(a) The term "Government employee" means any officer or employee, civilian or military, of the Commission, including any part-time consultant or part-time employee except when special circumstances in a specific case require a departure herefrom to meet the needs of the Commission. Such circumstances shall be reported to the Chairman of the Government Patents Board.

(b) The term "invention" means any art, machine, manufacture, design or composition of matter, or any new and useful improvement thereof, or any variety of plant, which is or may be patentable under the patent laws of the United States.

[Attachment 2]

FEDERAL COMMUNICATIONS COMMISSION PATENT RIGHTS CLAUSE

(a) Whenever any invention, improvement, or discovery (whether or not patentable) is made or conceived or for the first time actually or constructively reduced to practice by the Contractor or its employees, in the course of, in connection with, or under the terms of this contract, the Contractor shall immediately give the Contracting Officer written notice thereof, and shall promptly thereafter furnish the Contracting Officer with complete information thereon; and the Commission shall have the sole and exclusive power to determine whether or not and where a patent application shall be filed, and to determine the disposition of all rights in such invention, improvement, or discovery; including title to and rights under any patent application or patent that may issue thereon. The determination of the Commission on all these matters shall be accepted as final and the provisions of the clause of this contract entitled "Disputes" shall not apply and the Contractor agrees that it will, and warrants that all of its employees who may be the inventors will, execute all documents and do all things necessary or proper to the effectuation of such determination.

(b) Except as otherwise authorized in writing by the Contracting Officer, the Contractor shall obtain patent agreements to effectuate the provisions of this clause from all persons who perform any part of the work under this contract. except such clerical and manual labor personnel as will have no access to technical data.

(c) Except as otherwise authorized in writing by the Contracting Officer, the Contractor will insert in each subcontract, having experimental, developmental, or research work, as one of its purposes, provisions making this clause applicable to the subcontractor and its employees.

Hon. JAMES O. EASTLAND,

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

GENERAL SERVICES ADMINISTRATION,
Washington, D.C., August 9, 1965.

DEAR MR. CHAIRMAN: This refers to your letters of May 6, 1965, which requested comments on three bills, S. 1899, S. 789, and S. 1809, pertaining to property rights in inventions made in the course of federally financed research and development.

It is our opinion that the current magnitude of Government contracting for research and development and the volume of patent rights flowing from these contracts makes the establishment of a national policy for the disposition of rights in inventions made in the course of federally financed research and development a most desirable and appropriate objective.

Although the current dollar volume of the General Services Administration contracting for goods and services is substantial, GSA is not itself directly involved in contracting for research and development to any great extent. Consequently, the impact of these bills on GSA operating programs would be small. However, the General Services Administration has a significant interest in this subject matter by virtue of its statutory function of prescribing Government-wide procurement policy (sec. 201 of the Federal Property and Administrative Services Act of 1949, 40 U.S.C. 481). In this connection, GSA has long participated in the patent policy deliberations of the interested agencies, looking toward coordinated regulations. As drafted, S. 789 and S. 1899 would authorize the issuance of rules and regulations by an agency in the executive branch for the guidance of all executive agencies, while S. 1809 would leave the responsibility for supplementing its provisions to each of the agencies affected, without provision for any central coordinating mechanism.

Based on our experience gained through extensive past participation in procurement policy deliberations in this area, it is our opinion that the multiple program needs of the several agencies engaged in research and development make it unlikely that any single policy can be developed which will be appropriate for all agencies concerned. On the other hand, if each agency is left to develop its own regulations independently of other agencies and in accordance with their individual views and interpretations, the achievement of coordinated national

policies concerning property rights in inventions would seem to be unlikely. Accordingly, we suggest that any legislation on this subject permit multiple policies, and contain provisions for necessary implementing regulations to be prescribed by the President, with the assistance of the agencies concerned. In this regard, section 205 (a) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 486) specifically provides this mechanism for the very purpose of assuring, among other things, procurement policy coordination in the executive branch. Thus, present authority exists to carry out this coordinating function. Such regulations could be prescribed by the President or the Administrator of General Services and published as a part of the Federal Procurement Regulations.

With respect to the other aspects of these bills, we believe meritorious the proposal in S. 1899 to establish an agency having responsibility for the stimulation of invention, the protection, administration, and promotion of the Government's proprietary interests in inventions, the collection and dissemination of scientific information and related matters. However, in view of the wide variation of program requirements of the agencies that are involved in research and development contracting, we question whether the exclusive right and title policy proposed by the bill would be in the best interest of the Government. Accordingly, we do not favor the enactment of S. 1899.

With respect to S. 789, although not identical to the President's October 10, 1963, statement of Government patent policy with which we are in accord, the approach employed by the bill is similar regarding the retention of exclusive rights or nonexclusive licenses by the United States and contractors. In addition, the bill includes provisions which appear desirable regarding the recovery of exclusive rights by the United States, issuance of licenses by contractors, judicial review of agency determinations, and disposition by agency heads of infringement claims.

With respect to S. 1809, it is our view that the provisions of the bill strike an appropriate balance between the interests of the Government and those performing Government contracts with respect to the property rights in the inventions flowing from such contracts. Subject to our comments on the need for a Central Government coordinating mechanism, we would favor the enactment of S. 1809. The Bureau of the Budget has advised that, from the standpoint of the administration's program, there is no objection to the submission of this report to your committee.

Sincerely yours,

LAWSON B. KNOTT, Jr., Administrator.

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE,

July 6, 1965.

Hon. JAMES O. EASTLAND,

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

DEAR MR. CHAIRMAN: This is in response to your recent request for a report on S. 789, entitled "National Inventions Act," S. 1809, entitled "Federal Inventions Act," and on S. 1899, entitled "Federal Inventions Act."

All of these bills propose to deal comprehensively with the disposition of inventions arising out of research financed (in whole or in part) by the Government. Our comments on these bills will be addressed primarily to those provisions applicable to the activities of this Department.

The major portion of our research is in the health and medical fields and is carried out through the grant mechanism rather than through contract. Also. a very considerable amount of medical research is carried out intramurally in such facilities as the National Institutes of Health, our Communicable Disease Centers at Savannah and Atlanta, Ga., and the Taft Sanitary Engineering Center at Cincinnati, Ohio. Increasing amounts of research are also being supported by the Department in other fields. The total research budget of the Department for the fiscal year 1965 totaled $735 million.

Consistent with its statutory responsibility for the advancement of science and knowledge in the areas of health, education, and welfare, and for making available to the public the results of research, it is the policy of the Department that the results of Department-financed research be made widely, promptly, and freely available to other research workers and the public by publication and by