Your letter of 5 August 1976 regarding the above patent provisions and the Institutional Patent Agreement with educational and other nonprofit institutions has been received.

We are pleased to note the general trend toward a more reasonable and realistic approach in bringing inventions to the public sector quickly by means of such agreements.

However, some concern exists in the language which appears to speak of individual agreements negotiated with each of the various agencies. See for example proposed Subsection (6) to 1-9.107-4(a) line 9 referring to ".. "...an..." agreement and also proposed subsection (c) to 1-9.107-6 line 2 "...an..." agency, and line 3 "...an..." duplicated. This would appear to mean that it is intended that no single agency-wide agreement is contemplated, which we believe to be a mistake resulting in costly and needless duplication of work. It would seem more reasonable to expect that the information required to satisfy one agency in this regard should generally suffice for all others.

Finally, we are in agreement with the deletion of a proscribed award scheme and the resulting proposed Section (F) p.3 providing for incentive awards and utilization for educational and research purposes. The agency imposition by means of a previously determined royalty amount to be awarded to an inventor appears to be an unwarranted intrusion into the relationship between the grantee institution and its employees.

We are pleased to have had this opportunity to offer the above comments.

RUTGERS

THE STATE UNIVERSITY
OF NEW JERSEY

RESEARCH AND SPONSORED PROGRAMS 116 COLLEGE AVENUE NEW BRUNSWICK NEW JERSEY 08903201/932-7118

August 10, 1976

Mr. Philip G. Read

Director of Federal Procurement Regulations

General Services Administration

Federal Supply Service

Washington, D. C. 20406

Dear Mr. Read:

This is to acknowledge receipt of your memo concerning the amendment on patents proposed for the Federal Procurement Regulations. I have no questions to pose or views to express that are contrary to the content of the document in its present form.

Re: Federal Procurement Regulations - Proposed
Institutional Patent Agreement

We appreciate having the opportunity to comment upon the proposed Institutional Patent Agreement with educational and non-profit institutions which accompanied your letter of August 5, 1976. We are pleased to see that consideration to this approach to the transfer of technology from such organizations has progressed to this point. Our comments on the terms and provisions of the proposed Institutional Patent Agreement follow:

The comments here can also be readily tied to and should be considered along with the comments to Article IV (b) (B).

We do not understand the need for any exclusion of certain
contracts from the Institutional Patent Agreement. To our
knowledge there has been no history of abuses leading
to the need for such exclusion. More importantly, no criteris
have been established upon which the decision to exclude is
to be based. Hence, the decision at the outset to exclude a
contract from the scope of the Institutional Patent Agreement
can be completely arbitrary in nature. The inclusion of such
a provision also seems redundant in view of the march-in
rights reserved to the Government in Article IV (b) (B).

In addition, for every exclusion from the Institutional Patent Agreement, the only alternative presented to the Institution is to abandon administration of an invention arising under the

:

excluded contract or to again go back to a case-by-case
determination. Experience with this latter approach has
established that it is unsatisfactory. I can introduce
what can be critical time delays in the transfer of the
technology to the private sector with the result that the
public may in reality be deprived of that technology. It
will certainly serve to significantly increase the burden
of administering the invention.

Further in relation to Article I of the proposed Institutional
Patent Agreement, we do not understand why the Institutional
Patent Agreement should not apply to subject Inventions
where the Institution is a contractor under a prime contract
of the Agency. By parity of reasoning if the Institutional
Patent Agreement is available to an Institution where it is the
prime contractor it should also apply when the Institution is
a subcontractor.

IV (b) Minimum Rights Acquired by the Government

The general emphasis in the application of Section (b)
appears to be the reverse of that in existing like provisions
of the Institutional Patent Agreements with both the Department
of Health, Education, and Welfare and the National Science
Foundation. The format in which this Section has been couched
would appear at the outset to shift the burden of proof in the
administration of an invention. In other words, it would
appear that under the literal language of the proposed provision
the Government can request the Institution to grant a license
to a third party at any time before the running of the 3-year
period after the patent issues. The burden of proof then appears
to shift to the Institution to show that effective steps have been
taken to bring the invention to the point of practical application,
or that the invention has been licensed on reasonable terms
or that principle or exclusive rights should be retained - the 3-
year "incubation" period being available to the Institution by
implication.

It would seem more appropriate that the 3-year "incubation"
time should be more specifically set out so that there is no
misunderstanding of the intent of the whole of paragraph (b).
We believe the language of Article XII (a) of the Institutional
Patent Agreement with the Department of Health, Education,
and Welfare would be more appropriate.

V.

With regard to paragraph (b) (B) of Article IV the decision
(see comments under Scope of Agreement above) can be
an arbitrary one. No guidelines or criteria are established
upon which such a decision can be based. Moreover, the
decision to license others can be made under this provision
without even giving the Institution an opportunity to be heard.
That opportunity, at the very least, should be included in the
provision. The format of the corresponding provisions from
the Institutional Patent Agreement with the Department of
Health, Education, and Welfare, Section XII (b), which is
reproduced below for your convenience, would be more
appropriate and equitable:

"The Grantor reserves the right to license or to
require the licensing of other persons under any
U. S. patent or U. S. patent application filed by the
Grantee on a subject invention on a royalty-free basis
or on terms that are reasonable in the circumstances,
upon a determination by the Assistant Secretary
(Health and Scientific Affairs) that the invention is
required for public use by governmental regulations,
that the public health, safety, or welfare requires
the issuance of such license(s), or that the public
interest would otherwise suffer unless such license(s)
were granted. The Grantee and its licensees shall
be given written notice of any proposed determination
pursuant to this subparagraph not less than thirty (30)
days prior to the effective date of such determination,
and that if requested, shall be granted a hearing before
the determination is issued and otherwise made effective. '

It is submitted that the Institution should at least have the right
to be heard and adoption of the above language from the
Department of Health, Education, and Welfare Institutional
Patent Agreement is urged in place of Article IV (b) (B).

Invention Identification, Disclosures and Reports

The implication of Section (d) is that where no patent application is filed the Institution can bar or prohibit publication without limitation.