There is one other contract patent provision which the Commission employs that may be of general interest, namely the patent indemnity provision in favor of the Government. Where the Commission purchases standard or commercial items or where the contract is for services to be performed in a manner normally utilized by the contractor, the Commission incorporates in such contracts or purchase orders, a provision under which the contractor indemnifies the Government in respect of patent infringements that result from the furnishing of such a standard or commercial components or items, or result from the performance of such standard services.

This, in brief, is the Commission's contract patent picture.

THE COMMISSION'S AUTHORITY TO LICENSE PRIVATE PATENTS

The Atomic Energy Act of 1954 has a unique provision that may be of interest to this committee, namely section 153 that provides for compulsory licensing of privately owned patents in the atomic energy field under unusual circumstances. The section was recently extended by section 114 of the AEC Authorization Act, Public Law 50, 86th Congress, so that provision, as extended, is in force as to any patent, the application for which is filed on or before September 1, 1964. The Commission has had no occasion to invoke the authority to date. The Commission considers it a reserve power which, if the occasion arises where, in the public interest, the Commission deems that (1) the invention is of primary importance in the production or utilízation of special nuclear material or atomic energy and (2) the licensing is of primary importance to effectuate the policies and purposes of the act, the same could be invoked.

The very existence of the authority may have a salutary effect and prevent abusive and unhealthy situations. The restrictive conditions and procedures surrounding the exercise of the authority are such that it could only be used in comparatively rare and compelling cases where the patent owner refused to license a Commission authorized private activity.

One of the situations that could arise for employing said section 153 involves the private atomic power industry. A private company operating a power reactor generating electricity for some local community could find itself subject to a patent infringement charge on a fuel element covered by a patent which was issued subsequent to the construction and startup of the reactor. In such an instance, if the owner refused to license the company, the authority of the Commission under subsection 153a could be involved or the company could initiate proceedings under subsection 153c. If the company initiated a proceeding and the Commission found that the company's activities met the tests of "primary importance" under subsection 153e, the Commission could grant a license and if the patent owner and the company could not agree on a reasonable royalty the Commission could, after hearing, fix the reasonable royalties. The only benefit of the normal patent system that the owner of such a patent is denied by section 153 is the injunctive relief. Where the activities are of "primary importance" to the furtherance of the Atomic Energy Act it can be seriously questioned whether the public inconvenience and interest is not such as to warrant denial of injunctive relief.

THE LICENSING OF COMMISSION OWNED PATENTS

The Commission is authorized to hold patents and to license and otherwise treat with patents by sections 156 and 161 (g) of the Atomic Energy Act of 1954.

Section 156 provides for the establishment of standard specifications for the granting of licenses and the specifications have been promulgated and are set forth in 10 C.F.R. 81. The Commission has a portfolio of some 2,225 U.S. patents, several hundred foreign patents, and several thousand U.S. and foreign patent applications. In addition thereto several hundred domestic and foreign patent applications have been filed by contractors on inventions in which the Commission has rights. The domestic and foreign applications filed by the Commission and its contractors over the past 5 years are set forth in my exhibit (B). (See exhibit X(B), p. 238.)

The Commission has, to date, granted over 780 royalty-free licenses and in addition contractors have retained licenses in some 425 patents. The Commission's policy is to grant, upon request, royalty free, nonexclusive licenses on Commission-owned U.S. patents to all, and to grant the same type of nonexclusive license to U.S. industry on Commission foreign-owned patents.

The Commission's research and development contract articles include a provision that all technical data developed in the course of contract work become the property of the Commission, to be used by the Commission as it sees fit, so that the Commission may be in a position to fulfill its statutory responsibilities for dissemination of technical and scientific information under sections 3 and 141b of the Atomic Energy Act of 1954.

THE COMMISSION'S PUBLICATION POLICY

The Commission has a vigorous program for the dissemination and publication of such technological atomic energy information. In the past 3 years over 46,800 documents have been declassified and made available aside from the many thousand unclassified reports and documents released and disseminated either directly or through contractors.

It is hoped that the foregoing information as to the Atomic Energy Commission's patent policies will be found useful in the studies of your committee.

f

(The documents referred to follow :)

EXHIBIT X(A)

Research and development prime and subcontracts reported to the Office of the Assistant General Counsel for Patents between the years 1954 and 1958, inclusive, in which was incorporated a patent provision in accordance with the Commission's policy

NOTE.-Those indicated as type A are contracts in which the Commission has the right to acquire all of the rights. Type B are those in which the contractor, by contract, retains at least a nonexclusive license. Type C are those in which the contractor, by contract, retains the exclusive rights (except as against the Government or its account) for purposes other than use in the production or utilization of special nuclear material or atomic energy.

EXHIBIT X(B)

Domestic and foreign patent applications filed by the Commission or its contractors between Jan. 1, 1955, and Nov. 15, 1959

NOTE.-In most of the applications filed by contractors the Commission has retained exclusive infield rights subject to a nonexclusive license in the contractor. In some of the applications filed by contractors the subject matter is deemed not of sufficient primary interest to the Commission's activities so that the Commission has only retained a nonexclusive license.

Senator LONG. Could you tell me how much classified material you are holding as compared to the amount of unclassified?

Mr. ANDERSON. I think today it is fair to say it is only that information which pertains to the military aspects of our program which is classified, and I would venture a guess that there is a very, very small percentage, somewhere less than probably 5 or 6 percent; and this is only a guess on my personal part, but I would say it was a very small part.

I think it is fair to say that all technological information in the field of atomic energy, except weapons information and production data is unclassified or declassifiable, as we call it.

Senator LONG. Do you believe the policy you are following in the Atomic Energy Commission is the best way to get ahead with this job by staying out in front of the Soviets and our competitors?

Mr. ANDERSON. I think in atomic energy we have a unique situation. We had a development that occurred during an emergency period of the Government.

The Government paid for the entire basic program and has carried on largely the research and development program in this area.

I think, therefore, it may be said that up until the present time, at least, we feel our policy has been correct in that it has permitted everyone to use this information for which the public is the largest single contributor.

Senator LONG. What type of incentive awards do you give to your employees, or others who find patentable information?

Mr. ANDERSON. The Commission has established an incentive award system for valuable contributions as to which its employees may be granted an award, and one of the things taken into account is inventions that may have been made by that employee.

He can get his award without ever having made an invention. We do not give an award merely because of invention insofar as our employees are concerned.

With respect to our contractors, if the contractor has a policy— Senator LONG. What type of award would it be?

Mr. ANDERSON. In the nature of value?

Senator LONG. Can you give me a typical instance of the type of award that you are talking about, and handing out?

Mr. ANDERSON. Yes, sir.

One of our employees made a contribution in the form of a new detecting system which was very valuable insofar as protecting our various installations are concerned.

This employee submitted to the Commission his invention.

We filed an application on it and the patent has recently issued. We have accorded a number of commercial licenses on that patent. He, in addition to his regular salary, was given an award, I believe, of $500, and one of his coworkers was given a smaller award very recently by the Commission under the Commission's award system. Senator LONG. $500?

Mr. ANDERSON. $500.

Now, the Commission has established under section 157 an award system under which the principal award is the Fermi Award, which is given as an annual award to an outstanding scientist or contributor to the atomic energy field.

This award consists of a medal, a citation, and a $50,000 check.

It might be of interest to this committee to know that the award was made only a week ago for the year 1959 to Dr. Glenn T. Seaborg the codiscoverer of plutonium, and a very active scientist in the early days on the Commission's program who, with his coworkers, developed the present separation methods that the Commission is employing in its large plants.

This award has been given to Dr. Fermi, who was the first recipient, Dr. von Neumann, who was the second, Dr. E. O. Lawrence was the third; and Dr. Wigner was the fourth recipient.

In addition, the Commission has recently established what is known as the E. O. Lawrence Award, which will consist of a medal and a citation, as well as a monetary award.

It can go, I believe, from $5,000 to $25,000, and is to be given to junior scientists for their valuable contribution in the program. Senator LONG. Don't you have it within your power to give as much as $100,000?

Mr. ANDERSON. We have no limitation as respects the awards that may be given.

The Commission, pursuant to the general statutory authority, set $50,000 as the upper limit for this award, which is an award given for recognition and not as a matter of right.

We have an awards system in the Commission which is, one might say, similar to a court of Claims action, whereby a private inventor who makes a contribution in the atomic energy field and complies with certain requirements may come and make an application for an award before our Patent Compensation Board.

There is no limit as to the amount of the award that Board can make.

Senator LONG. How do you think your award system compares as far as incentive is concerned with most of the private concerns, large corporations?

Mr. ANDERSON. I think our internal system compares to private concerns and in that respect let me say when it comes to what the private concerns do for their employees, the fact that the invention is made under a Commission contract, does not exclude the employee from getting an award under the awards system that the contractor has, and we reimburse him for the amount of award that the contractor pays to the employee.

For example, if the company has a system of awards whereby upon the filing of a patent application the employee is entitled to $50, he gets that even though title goes to the Commission, and if the patent goes to issue and the company pays an additional $50 for the issuance of a patent to an employee, that money is paid to him and we reimburse the contractor under the contract.

Senator LONG. I notice in section 306 of the NASA Act, they have the power to go up to $100,000, and they can go beyond that, providing they get the approval of Congress on it.

I do not recall whether they have ever asked Congress for such approval. If it happened, I do not know about it.

In view of that $100,000 figure, it would seem to me you might very appropriately set your top award at $100,000.

Mr. ANDERSON. That could be.

Senator LONG. Right now it is $50,000?

Mr. ANDERSON. Right now at the present time it is $50,000.

Senator LONG. Do you find that this incentive and award program does play a considerable part in getting better work from your scientists and engineers?

Mr. ANDERSON. I think it is difficult to evaluate that. I think that certainly so far as we have been able to ascertain from our contractors, we find that the employees are very desirous of reporting inventions and getting a patent application filed in order to even get that little honorarium of $50, $100 or $150 or in some instances it might go up as high as $500 because it is just a little more in their pockets in addition to their salary.

I think we should recognize it is not only these monetary awards these gentlemen might receive by virtue of making an invention, they get credit in their company. They may move along faster in the company; they may be recognized as being of a creative mind, and thereby their salaries are increased.