1982 INTELLECTUAL PROPERTY RIGHTS IN SPACE VENTURES 135 resulting activities are not of the inventive nature, no patent provisions are included; when it is anticipated that inventions may be made, a patent provision may be included by negotiation. 30 (c) Contributions of Technical Interface and Technical Monitoring Assistance NASA also entered into a joint endeavor with the McDonnell Douglas Corporation (and a similar one with the Boeing Company) whereunder McDonnell Douglas developed at its expense a spin stabilized payload assist module (SUSS/PAM) for launching payloads from the orbiter, and NASA provided technical interface and monitoring assistance and services."1 Subsection 305(a) was not deemed applicable to this joint endeavor, but under negotiated provisions NASA would acquire rights to inventions made by McDonnell Douglas in developing the SUSS/PAM in event of termination for default. 32 (d) Cooperative Launch Activities In addition, NASA has entered into arrangements whereby NASA launches, at no cost to the other party, spacecraft and/or experiments provided at no cost to NASA by the other party, with the understanding that NASA and the other party are to share in the results, usually by exchange and/or publication of the information and data derived from the resulting activity. Again, section 305 has not been deemed applicable to these arrangements, but a provision may be included, by negotiation, to acquire license rights for governmental purposes if it is determined that the resulting activity is of an inventive Thus for example, in a model ''Cooperative Endeavor Agreement" under which NASA made certain of its scientific and technical data available under specified conditions and the recipient provided NASA with reports of the result of applying such data to commercial aircraft, the following patent provision was included: 5. Patents (a) NASA, acting on behalf of the U.S. Government, has filed application for Letters Patent in the United States and certain foreign countries on an invention made by Richard T. Whitcomb and entitled. Airfoil Shape for Flight at Subsonic Speeds. The supercritical aerodynamic technology furnished by NASA to Lear Avia under this Agreement is based, in large part, upon the novel concepts, theories, formulae, and technology encompassed by this invention. In recognition of these contributions offered by the Government, Lear Avia agrees that should its application of such technology to commercial aircraft, as contemplated under this Agreement, result in patentable modifications or improvements to the supercritical aerodynamic technology, Lear Avia will provide NASA with the disclosure of such inventions and grant to the U.S. Government a nonexclusive, irrevocable, royalty-free license to practice such inventions throughout the world for government purposes. Such agreements have been entered into with Lear Avia, Cessna, Beech, and Gates Lear Jet. "Agreement of November 24, 1976, between McDonnell Douglas Corporation and NASA concerning the design, manufacture, test and delivery of a spin stabilized payload assist module for launching spacecraft. Supra note 31, ARTICLE IX - Termination for Default. nature. Other than such license rights, invention rights reside with the respective parties (or their employees or contractors) of the joint endeavor.33 (e) Contribution of Major Hardware Other NASA joint endeavors have involved activities where the various parties have made significant hardware contributions to a common program. As in the previously discussed joint endeavors, subsection 305(a) has not been deemed applicable, and any invention rights involved reside with the party (or its employees or contractors) who contributed the hardware. License rights, for governmental purposes, are acquired if it is determined that the resulting activity is of an inventive nature. "Examples of arrangements of this type are: (a) "Memorandum of Understanding Between The Federal Minister for Scientific Research of The Federal Republic of Germany and The United States National Aeronautics and Space Administration" for Project HELIOS, having the general objective to provide new understanding of fundamental solar processes and solar terrestrial relationships by the study of phenomena such as solar wind, magnetic and electric fields, cosmic rays, and cosmic dust. (b) "Memorandum of Understanding Between The United States National Aeronautics and Space Administration and The Netherlands Agency for Aerospace Programs" for the Infrared Astronomical Satellite to perform an all-sky survey of extraplanetary, galactic and extragalactic infrared sources. (c) "Memorandum of Understanding Between The United States National Aeronautics and Space Administration and The European Space Agency for The International Solar Polar/Out-Of-Ecliptic Mission" to conduct coordinated observations of the interplanetary medium and the Sun simultaneously in the northern and southern hemispheres of the solar system. (d) Letter agreement between NASA and The Centre National d'Etudes Spartrales, France, selecting a proposal entitled "Multipurpose French Cooperative Environment Tests to be Conducted on NASA LDEF,'' for participation in the NASA Long Duration Exposure Facility (LDEF) Mission. The proposal was submitted in response to the NASA Announcement of Opportunity AO-OAST-76-1, and has as a scientific objective the investigation of the effect of long term space exposure on thin metal film and evaporated cathodes, optical coatings, holographic gratings, thermal coatings, structural materials, and fiber optics. (e) Letter agreement between NASA and the University of Sydney, Australia, selecting a proposal entitled "Aggregation of Human Red Blood Cells," in response to NASA Announcement of Opportunity AO-OA-77-3 (see note 28). The scientific objective of the proposed experiment is to observe the aggregation of human red blood cells under conditions approaching zero gravity. No patent provisions were included in examples (a) (c), but examples (d) and (e) included the following: It is further understood that should any inventions and patents result from this Representative examples of joint endeavors involving contributions of major hardware are: (a) **Memorandum of Understanding Between The National Aeronautics and Space Administration and The European Space Research Organization for a Cooperative Programme Concerning Development, Procurement and Use of a Space Laboratory In Conjunction With the Space Shuttle," wherein ESA and its members developed the Spacelab (some of the subcontract research and development work performed by U.S. companies) to be utilized with the NASA developed orbiter; 1982 INTELLECTUAL PROPERTY RIGHTS IN SPACE VENTURES 5. Summary and Conclusions 137 It is clear from the foregoing that during its nearly two decade history NASA has entered into numerous actual or proposed contracts, agreements, understandings or other arrangements, all within the literal definition of "contract" of subsection 305 (j) (2), that were not deemed subject to subsection 305(a). In some instances they were for the procurement of goods and services (supply contracts using appropriate funds); in other instances they were for launch services or the use of NASA facilities on either a reimbursable or joint basis; and in still other instances they involved contributions of hardware on a joint basis. The issue does not turn on whether the arrangement between the parties falls within the literal definition of contract as defined in subsection 305 (j) (2). Rather, the common basis for the decision not to consider these types of "contracts"' under subsection 305(a) was a determination, consistent with the legislative history, purpose and intent, that they did not involve the performance of work of an inventive type for the Administration in the context of subsection 305(a). This determination is equally valid with respect to joint endeavors, wherein each party performs, or has performed, work on its own behalf in order to make contributions to the common project. To the extent that any inventive activity is performed by a party's employees or contractors, it is performed by or for that party for the purpose of enabling that party to make contributions to the joint endeavor. That is, one party is not performing, or not having performed, work for the other party, but rather, for itself. Neither party is empowered to direct, assign or require work of an inventive nature to be performed by the employees or the contractor employees of the other party. Thus, a joint endeavor is not different than the numerous other arrangements NASA has determined not to be subject to subsection 305(a) in that it does not require the performance of work of an inventive type for NASA. In addition, there is nothing in the legislative history of section 305, nor of NASA's long-standing interpretation and administrative practices relating thereto, to suggest the determination should be any different because the technology involved may find commercial application, as may be the case for joint endeavors under the Materials Processing in Space Program. If it is determined that the activity does not involve the performance of work of an inventive type for NASA, subsection 305(a) is not applicable notwithstanding the nature of the technology involved or its commercial potential. (b) "Memorandum of Understanding Between The National Aeronautics and Space Administration and The National Research Council of Canada For a Cooperative Program Concerning the Development and Procurement of a Space Shuttle Attached Remote Manipulator System (RMS),'' wherein Canada developed the RMS to be employed on the NASA developed orbiter; (c) "Memorandum of Understanding Between The European Space Agency and The United States National Aeronautics and Space Administration," under which ESA is to develop major hardware to be incorporated into the NASA developed telescope; and (d) "Memorandum of Understanding Between The Department of Communications of Canada and The Centre National D'Etudes Spartrales of France and The National Aeronautics and Space Administration of The United States of America," wherein Canada is to develop significant hardware (some to be produced in the U.S. under subcontract) to be used in and with a U.S. developed satellite. No patent provisions were included in examples (a) - (d), above. 138 JOURNAL OF SPACE LAW Vol. 10, No. 2 Because joint endeavors are not contracts under subsection 305(a), any rights to inventions made in the course of a joint endeavor undertaken in the Materials Processing in Space Program must be acquired by negotiation. It is recommended that at a minimum NASA continue the established practice of acquiring a royalty-free license to practice, for governmental purposes, all inventions made in the course of the resulting activities of a joint endeavor undertaken in the Materials Processing in Space Program. Consideration may be given to acquiring license rights of the same scope to practice any inventions specifically made in the course of any preparatory or background activities, to the extent necessary to practice inventions made in the course of the resulting activities. Beyond this, it will be necessary to consider each proposed joint endeavor case-by-case. However, it is recommended that, consistent with the policy set forth in NMI 8610.8 dealing with reimbursable launches," NASA obtain assurances, by way of directed licensing rights, that the results of any joint endeavor activity which may have a significant impact on the public health, safety or welfare be made available to the public on terms and conditions reasonable under the circumstances. It is therefore concluded that: (a) NASA does enter into many types of arrangements falling within (b) a joint endeavor is an example of one type of arrangement that is (c) a joint endeavor under the Materials Processing in Space Program (d) the allocation of property rights in inventions under any joint BUSINESS REPORT Space-Age Speculators Plan Orbiting As government sweeteners lure space manufacturing ventures, members of the old-boy space network may gain a foothold in the high frontier. times offers special sweeteners to lure the first tenants. To encourage companies to invest in extraterrestrial boondocks, the U.S. space agency is trying the same ploy. A handful of upward-looking companies, banking on a bright future for commercial space operations, is beginning to take advantage of the space agency's inducements: Their plans may fall flat, but if they succeed they could hold a preferential position in space over late-rising competitors. It may be only fitting that the pioneers in commercial space ventures get some cooperation from the government, because these entrepreneurs, in keeping with the Reagan Administration's policy of encouraging private space investments, are risking their own money rather than federal contract funds on untried technologies and on a much larger scale than in previous commercial space ventures. (See NJ. 1/26/85. p. 211) Still, granting these special deals may create a privileged class of governmentprotected operators if and when space becomes a new manufacturing site. And as the National Aeronautics and Space Administration (NASA) fashions such agreements on a case-by-case basis. there seems to be a lively possibility that the old-boy network of the space program will play a part in the proceedings, as officials leave the agency for the private sector and then negotiate agreements with their ex-colleagues. Take the case of Space Industries Inc.. a new Houston-based firm that proposes to put privately financed mini-factories in space NASA has just announced an agreement with Space Industries to help the firm do just that. 1986 NATIONAL JOURNAL 9 85 NASA administrator James M. Beggs. in a statement announcing the agreement, said his agency hopes the Space Industries modules "will be the first of many such platforms to be funded and built by private industry that will complement the permanently manned Space Station and lead eventually to an industrial park in space." Under the terms of the agreement, Space Industries would be better fixed than other space speculators if such a "If the private sector can do these kinds of things, how much should NASA be doing?" asks Chamber of Commerce space adviser Alan E. Pisarski. park ever materializes. The agreement provides that: • NASA will let Space Industries hitch its first three trips on the space shuttle on, a deferred-payment plan. but, at least until 1993, will charge the going rate for shuttle services to other firms that want to launch similar facilities; • NASA will not enter into any contracts to build and operate its own space factory modules, also until 1993, unless the manufacturing platforms are part of the space station project itself. Thus, the agreement gives Space Industries at least a seven-year edge over any private competitors on shuttle launch pricing and assures the company that NASA will not become a direct competi tor Space Industries says it hopes to launch its first rent-a-factory in 1989. several years before the space station is scheduled to be put together. The deferred-payment provision is an important feature because NASA, under its latest shuttle pricing policy, charges $74 million plus an inflation increase based on 1982 dollars to carry a full cargo bay payload into orbit. Space Industries, for its first three shuttle flights, will be allowed to pay at a yearly rate of 12 per cent of its annual revenues until the bill is settled. SPACE ENTREPRENEURS The founder, president and chief executive officer of Space Industries is Maxime A. Faget, 63, whose career in government space programs spanned 30plus years. Faget, before retiring in 1981, was director of engineering and development at NASA's Johnson Manned Space Center in Houston and was a lead designer of, among other projects. the Apollo program and the space shuttle. Also on the Space Industries team, as executive vice president, is Joseph P. Allen IV, 48, a former astronaut and space shuttle crew member who served as NASA's assistant administrator for congressional affairs. Faget estimated that it would cost $250 million-$500 million to convert his vision of floating factories to reality. Faget told a press conference at NASA headquarters that he has not lined up commercial customers yet but will start looking for some now that he has the NASA agreement in hand. He declined to explain how he plans to finance the venture. The most expensive part of the operation, he said, will be putting the modules aloft, in a low orbit about 230 miles above earth, using the shuttle to ransport them The modules, des gned for such activities as producing new medicines, alloys and semiconductor crystals in the near-zero |