determination of rights shall be made by the agency after the invention has been identified, in a manner deemed most likely to serve the public interest as expressed in this policy statement, taking particularly into account the intentions of the contractor to bring the invention to the point of commercial application and the guidelines of Section 1(a) hereof, provided that the agency may prescribe by regulation special situations where the public interest in the availability of the inventions would best be served by permitting the contractor to acquire at the time of contracting greater rights than a nonexclusive license. In any case the government shall acquire at least a nonexclusive royalty-free license throughout the world for governmental purposes. (d) In the situations specified in Sections 1(b) and 1(c), when two or more potential contractors are judged to have presented proposals of equivalent merit, willingness to grant the government principal or exclusive rights in resulting inventions will be an additional factor in the evaluation of the proposals.

(e) Where the principal or exclusive (except as against the government) rights in an invention remain in the contractor, he should agree to provide written reports at reasonable intervals, when requested by the government, on the commercial use that is being made or is intended to be made of inventions made under government contracts.

(f) Where the principal or exclusive (except as against the government) rights in an invention remain in the contractor, unless the contractor, his licensee, or his assignee has taken effective steps within three years after a patent issues on the invention to bring the invention to the point of practical application or has made the invention available for licensing royalty free or on terms that are reasonable in the circumstances, or can show cause why he should retain the principal or exclusive rights for a further period of time, the government shall have the right to require the granting of a license to an applicant on a nonexclusive royalty-free basis.

(g) Where the principal or exclusive (except as against the government) rights to an invention are acquired by the contractor, the government shall have the right to require the granting of a license to an applicant royalty free or on terms that are reasonable in the circumstances to the extent that the invention is required for public use by governmental regulations or as may be necessary to fulfill health needs, or for other public purposes stipulated in the contract.

(h) Where the government may acquire the principal rights and does not elect to secure a patent in a foreign country, the contractor may file and retain the principal or exclusive foreign rights subject to retention by the government of at least a royalty-free license for governmental purposes and on behalf of any foreign government pursuant to any existing or future treaty or agreement with the United States.

Section 2. Government-owned patents shall be made available and the technological advances covered thereby brought into being in the shortest time possible through dedication or licensing and shall be listed in official government publications or otherwise.

Section 3. The Federal Council for Science and Technology in consultation with the Department of Justice shall prepare at least annually a report concerning the effectiveness of this policy, including recommendations for revision or modification as necessary in light of the practices and determinations of the agencies in the disposition of patent rights under their contracts. A patent advisory panel is to be established under the Federal Council for Science and Technology to

(a) develop by mutual consultation and coordination with the agencies common guidelines for the implementation of this policy, consistent with existing statutes, and to provide overall guidance as to disposition of inventions and patents in which the government has any right or interest; and (b) encourage the acquisition of data by government agencies on the disposition of patent rights to inventions resulting from federally financed research and development and on the use and practice of such inventions, to serve as basis for policy review and development; and

(c) make recommendations for advancing the use and exploitation of government-owned domestic and foreign patents.

Section 4. Definitions: As used in this policy statement, the stated terms in singular and plural are defined as follows for the purposes hereof:

(a) Government agency—includes any Executive department, independent commission, board, office, agency, administration, authority, or other government establishment of the Executive Branch of the Government of the United States of America.

(b) "Invention" or "Invention or discovery"-includes 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 of America or any foreign country. (c) Contractor-means any individual, partnership, public or private corporation, association, institution, or other entity which is a party to the

contract.

(d) Contract-means any actual or proposed contract, agreement, grant, or other arrangement, or subcontract entered into with or for the benefit of the government where a purpose of the contract is the conduct of experimental, developmental, or research work.

(e) "Made" when used in relation to any invention or discovery means the conception or first actual reduction to practice of such invention in the course of or under the contract.

(f) Governmental purpose-means the right of the Government of the United States (including any agency thereof, state, or domestic municipal government) to practice and have practiced (made or have made, used or have used, sold or have sold) throughout the world by or on behalf of the Government of the United States.

(g) "To the point of practical application"-means to manufacture in the case of a composition or product, to practice in the case of a process, or to operate in the case of a machine and under such conditions as to establish that the invention is being worked and that its benefits are reasonably accessible to the public.

Senator SALTONSTALL. Wait a moment, Mr. Chairman. May I have that repeated?

What are you going to put in the record?

Senator MAGNUSON. The policies enunciated on patents, when the subject matter has been a result of federally financed research.

Dr. HORNIG. The President has issued a policy statement which establishes the ground rules for all of the agencies.

Senator SALTONSTALL. Well, Mr. Chairman-I did want to understand that, because you have one policy in NASA, you have a slightly different policy in the Defense Department. You have got two or three bills pending before the Congress at the present time, before Senator McClellan of Arkansas. And when-now, how, under those circumstances, can you lay down general policy? Yet you have already done it, you say.

OTHER AGENCIES IN PATENT DISCUSSIONS

And then you have a report-I happen to know they are working on it-as to the effect of patents on small business, and there is a different point of view there.

Senator ALLOTT. And the Interior Department has been wrestling with the problem for the last 3 years and it cannot seem to make up its mind on it at all.

Senator MAGNUSON. We put in some bills on patent policy-some laws.

Senator SALTONSTALL. When NASA was set up, there was a very carefully worked out policy under the leadership of the present President of the United States, Mr. Johnson. I just happen to know that because I worked with him on it. You have got that. And then you have, as I say, the interpretation of Mr. McNamara and the Defense Department and their policies.

I was just curious as to how you could lay down a policy for the

President.

31-706-64-pt. 1-3

I

Dr. HORNIG. I am going to ask Mr. Beckler to speak on that. have been here just over 2 months. This was largely carried through before I arrived.

Mr. Beckler is my special assistant and has done most of the work on the patent policy. Perhaps he can speak on it.

GOVERNMENT VERSUS PRIVATE PATENT RIGHTS

Mr. BECKLER. Yes, sir. Recognizing there is legislation on the books, this policy attempts to define the rationale or the situations where the Government should take title to the inventions under contracts, and when it should leave the commercial rights to private firms. It starts from a neutral position, examines the situations such as in the field of public health, where the Government sponsors development work, situations where the object of the contract is public use rather than use for governmental purposes, and situations where the contractor is operating a Government-owned facility or laboratory. In these situations, for example, the policy says that normally the Government would acquire the rights.

On the other hand, it states that where the object of the contract is to provide something to the Government, and where the contractor has a nongovernmental commercial position, that the contractor would normally retain the commercial rights, such as has been done under the Defense Department contracts.

It provides for a novel procedure-where the contractor acquires the rights and does not exploit those rights or make efforts to utilize the inventions within 3 years, an applicant may come in and request. a license to work the invention.

GENERAL GUIDELINE ON PATENTS

So the policy sets down general guidelines. It does not attempt. to change any existing legislative authority. Where there is discretion authorized at the present time, the agencies may follow these policy guidelines.

Senator SALTONSTALL. That is a general guideline to the various agencies.

Mr. BECKLER. That is correct, sir.

Senator SALTONSTALL. And that guideline is set up by your Committee, Doctor?

Dr. HORNIG. It was set out by the President. We did the staff work on it.

Senator SALTONSTALL. Would you please repeat that?

Dr. HORNIG. I say the policy guideline was set out by the President. We did the staff work for him.

Senator SALTONSTALL. And is that policy set out by the present President, or President Kennedy?

Mr. BECKLER. Last October, by President Kennedy, sir.

Senator SALTONSTALL. And this is the policy lineup-you gentlemen are a group of scientists and technologists. Are there any lawyers in this group?

Mr. BECKLER. Yes, sir, I am a patent attorney, and an engineer. Senator SALTONSTALL. Because that is a subject of great difference of opinion, Mr. Chairman. As you said, it is a very touchy subject.

I was just curious as to why there should be any general commendation to the President in relation to it.

Mr. BECKLER. We worked with some 20 different agencies. They all concurred in the final statement of policy.

Senator SALTONSTALL. Thank you.

Senator ALLOTT. Was the Department of the Interior included? Mr. BECKLER. They were included; yes, sir.

EXAMINATION OF NATIONAL ENERGY RESOURCES

Senator MAGNUSON. Now, on page 3 you have a comprehensive examination of national energy resources, which is currently near completion.

You mean by that resources-that is gas, hydro, energy resourcesor what do you mean-natural resources or what?

Dr. HORNIG. What I mean is that there have been a number of studies

Senator MAGNUSON. Nuclear power, hydro, gas, coal, and so forth?

Dr. HORNIG. That's right. We are concerned with the research and development programs for their effective utilization.

Senator MAGNUSON. Why wouldn't the Federal Power Commission do that?

Of course I can understand they would not be in the nuclear field. But they would be in all other fields of energy-gas, oil, coal, and hydro.

Dr. HORNIG. But they are primarily a regulatory agency.
Senator MAGNUSON. This is what I want for the record.

DIFFERENCES IN FPC AND OST FUNCTIONS

Dr. HORNIG. They are primarily a regulatory agency. The primary function of this report is to look into the future for instance, if one wants to ask on what scale one should develop nuclear energy, the critical question is how fast and in what ways can oil shale or coal

Senator MAGNUSON. Now, is that done by a separate panel group? Dr. HORNIG. In this case, the staff work is being done by a group largely from Northwestern University, including scientists and economists.

Senator MAGNUSON. When they make their report, your functions, then, are to publish it, is that correct?

Dr. HORNIG. It is to make recommendations based on it. In this case, there is a steering committee chaired by myself and the Chairman of the Council of Economic Advisers, and composed of the agencies to whom the actual study will be reported. Additional information together with a copy of the memorandum iss uedby President Kennedy authorizing the study follows:

INTERDEPARTMENTAL ENERGY STUDY

President Kennedy's directive of February 15, 1963, established a steering committee consisting of the heads of nine Federal departments and agencies to conduct "a comprehensive study *** of the development and utilization of our total energy resources to aid in determining the most effective allocation of our research and development resources." The Director of the Office of Science and Technology was named chairman of the study, and the Chairman of the Council of Economic Advisers was named the study's vice chairman.

The staff work for this study was placed under the direction of Dr. A. B. Cambel, chairman of the department of mechanical engineering and astronautical sciences at Northwestern University. All told, nearly 100 technical papers were prepared for internal use of the energy study. These were reviewed by more than 150 qualified technical reviewers and by about 225 members of 22 special ad hoc committees. Drafting of the staff report based on this effort is nearly complete. The costs of this study, which is being carried forward mainly by Government personnel and by consultants, are being shared by the major participating agencies. OST's contribution consists largely of professional staff time and clerical support.

THE WHITE HOUSE, Washington, February 15, 1963.

Memorandum for:

The Secretary of the Interior.
The Secretary of Commerce.

Chairman, Atomic Energy Commission.
Chairman, Council of Economic Advisers.
Chairman, Federal Power Commission.

Director, Bureau of the Budget.

Director, National Science Foundation.
Director, Office of Science and Technology.
Director, Office of Emergency Planning.

Subject: "Interdepartmental Energy Study."

1. Following receipt of the Atomic Energy Commission report, dated November 20, 1962, on the subject of "Civilian Nuclear Power," I asked the Director of the Bureau of the Budget for his recommendations as to the most effective way to deal with the question, which the Commission considered inappropriate to cover in its report, of the possible effects of major research efforts on the economics of nonnuclear energy sources, or on improved transmission methods for either nuclear or nonnuclear produced energy. In addition, I requested recommendations for dealing with the broader economic questions which are implicit in the Commission's report, such as the size and characteristics of future demands for energy, possible price trends for fuels, and available alternative technical approaches to the problem of supplying the long-term energy requirements of the Nation.

2. The significance of energy resources to our society has again been underscored by recent studies of the National Academy of Sciences and the Federal Council on Science and Technology, and by the report of the National Fuels and Energy Study Group to the Senate Interior and Insular Affairs Committee. These studies also stress the need for balanced, comprehensive development of energy sources, improved generation and transmission facilities, and greater efficiency in the utilization of energy The report by the Atomic Energy Commission focused attention on the role of civilian nuclear power in our total supply of energy over the future decades. Each of these reports, in whole or in part, discusses the impact of research and development on the cost and availability of energy to the Nation. A study of electric power requirements has also been undertaken by the Federal Power Commission.

3. The amount and allocation of Federal research and development in the energy field will affect the efficiency of various components of our energy system, and, consequently, the rate and pattern of our national economic growth.

4. Acting upon the recommendations of the Director of the Bureau of the Budget, I direct that a comprehensive study be undertaken of the development and utilization of our total energy resources to aid in determining the most effective allocation of our research and development resources. I would expect the Department of the Interior and the Federal Power Commission to provide significant assistance in the conduct of the study.

5. The study is to be undertaken under the direction of a committee comprised of the above listed officers, with the Director of the Office of Science and Technology as Chairman and the Chairman of the Council of Economic Advisers as Vice Chairman. Where appropriate, departments and agencies not represented on the committee should participate in the development of the study and be consulted regarding it.

6. An interim report should be submitted by September 1, 1963.

s/ JOHN F. KENNEDY.