prospective inventions, the very same research and development organization as the NASA contracts. Yet just because the Congress appropriates money for this particular contract to NASA, and it comes out of NASA's pocket, the contractor faces an entirely different patent situation for an invention produced under the NASA contract from what it does with respect to an invention produced under a Department of Defense contract. We think this is not good government. It is indefensible for a government to conduct itself in that fashion. It is inequitable for a contractor to have his rights, whether one believes they are justifiable or not, to be determined on such a quixotic basis. We think we ought, in that particular case, to deal more along the lines that the Department of Defense is dealing than we can at the present time. On the other hand, we also have the AEC which has its own peculiar patent provisions and laws which have been described this afternoon. We would like also, when we are engaged in that kind of business, to be able to adapt our policies to those of the Atomic Energy Commission. Senator LONG. It seems to me that when you bring your law in here we can get you fellows to get a consistent policy by getting the DOD and you to go to the Atomic Energy Commission policy rather than putting you over the other side. Now, the effort was made up here a short time ago to pass a bill which the administration recommended, to give those corporations title on things which were developed by Government research in the field of atomic energy. This was the subject of a very heated fight in the U.S. Senate, and I think the Senate decided that issue correctly. It was a very bitter fight, but it was decided in favor of maintaining AEC policy. We have not had a debate on this Department of Defense policy, but I see no reason why Congress should not debate it, so that the problem is fully understood. I see no reason why Congress will not reach the same conclusion about the Department of Defense that it reached about the AEC. Now, this thing you are talking about here, your policy and this latitude you have, I imagine you got that out of conference, did you not? Did you get that in the House of Representatives? The latitude that you can give these fellows to waive these patent rights, did you get that out of the House of Representatives? Mr. JOHNSTON. Mr. Chairman, it came out of conference. I am not prepared this afternoon to-I would have to get the earlier version to tell exactly what changes were made. This did come out of conference, and it was a new provision so far as I can recollect. Senator LONG. Didn't you tell me that the House passed the bill that had a provision similar to the Atomic Energy policy? Mr. JOHNSON. No, sir. I did not say similar to the Atomic Energy policy. I said it had a provision somewhat similar to the one that finally came out in our act. Of course, this is more like the AEC provision than anything else. Senator LONG. This one here? Mr. JOHNSON. Yes, sir; and then the Senate knocked it out entirely in passing the bill, and then this particular version was agreed upon in conference. Senator LONG. Does this give you more latitude or less latitude than the House bill gave you? Mr. JOHNSON. Mr. Chairman, I would have to go back and reexamine the earlier versions to be able to give you an answer. Would you like to have me supply this for the record? Senator LONG. Yes. Would you provide me with the House bill as introduced, as reported by the committee, and also a copy of the House report so we can see just how this got this way.29 Did the Senate liberalize it, that is, as a result, did it strike it out, and did you get a more liberal clause or did it mean, as a result of striking it out and going to conference, that you had less discretion about the matter? I would be curious to know. Mr. JOHNSON. Yes, sir. I can certainly provide the earlier versions of the bill. My recollection is that there was no committee report at all on this. This is one of those very remarkable pieces of legislation that has practically no legislative history in the record. Senator LONG. Seeing a thing of this sort, I will be frank to tell you, my reaction is that if you people are paying 100 percent of Government funds to have something developed, and then you are letting this fellow have a private patent on it, which gives him certain monopolistic rights, my question would be, How did we come to do this? My second reaction is that this is the kind of thing you would get out of conference somewhere. You do not see it going in. Then we get it back, and we rush it through on a conference report which is how we probably did it. That would be my reaction to the practice of paying 100 percent to have something developed and then letting a private firm secure all rights to it and enabling the firm to charge the taxpayers again for it. Suppose you give me the memorandum 30 and see what the House thought about it when they passed the bill initially. Mr. JOHNSON. Surely. May I complete my statement concerning this proposed legislation? Senator LONG. Yes, sir. Mr. JOHNSON. We have, in recommending this legislation, sought to avoid making any ultimate judgments concerning the wisdom of taking title rather than taking a license to inventions produced under Government contracts. This is a subject that has been debated both in the executive and legislative branch of the Government for years, as the chairman knows, without any uniform policy having been adopted, either by the executive or the legislative branch of the Government. We have a variety of legislation, so far as the legislature is concerned. We have a variety of practices so far as the executive branch is concerned. H.R. 12575, H.R. 11881 (H. Rept. 1770), S. 3609 (S. Rept. 1701), conference report (H. Rept. 2166), 85th Cong., 2d sess. H.R. 12575 became Public Law 85-568, approved July 9, 1958. 30 See exhibit XII(B), p. 271, for history of the patent provisions of the National Aeronautics and Space Act of 1958, subsequently furnished by Mr. Johnson. We feel that it is a very difficult question even to determine whether a uniform policy is desirable. I heard Mr. Anderson's testimony, and I recall that he felt therewere grave questions as to whether a uniform patent policy was a desirable thing, given the great variation in missions of the different agencies of the Government. But we know, in any event, that this is a question which has been debated for mai y years. So far as I am concerned, I cannot be certain that it ever will be resolved, nor do I know how soon it will beresolved, if ever. In the meantime, we have some more proximate problems to face.. We have the problem of daily negotiating contracts with contractors,. and we have the problem of a responsible Government trying to deal with some equity with those contractors. So far as I am concerned, the very first principle of equity is equality, and I think that a legal regime which subjects the inventions of contractor X working for the Defense Department to one result, while subjecting the inventions of contractor Y working for NASA on substantially indistinguishable type of work to a different result, is inequitable. I think Congress could well deal with that as a proximate problem before coming up with a final solution to the question of title versus license. Senator LONG. Thank you very much, Mr. Johnson. Do you have any further questions you want to ask? Mr. GORDON. Just one. Has your particular policy retarded the placing of important R. & D. contracts? Mr. JOHNSON. I think Mr. O'Brien who has been engaged in some of these negotiations would like to answer this. Mr. O'BRIEN. I would say it has definitely retarded the placing of important R. & D. contracts. Our present patent policy has retarded the placing of important R. & D. Senator LONG. Can you give us a list of some of the contracts you have had difficulty in placing? Mr. O'BRIEN. Yes, sir. But I would like to amplify my statement in this respect, I think that in a greater majority of the cases where we have had negotiating difficulties we have resolved these difficulties during the negotiation process. We have been faced with the responsibility, with the problem of explaining the provisions of our act as we now interpret them. The problem of explaining the provisions of our regulations which have only recently been published, has caused delays. They have not been insurmountable in the majority of instances. 1 There are some instances where we probably will not be successful in placing contracts. Mr. GORDON. But the contractors are beginning to learn to live with this NASA provision, are they not? Mr. O'BRIEN. Unquestionably, yes. Mr. JOHNSON. I think I should say, too, that we have not based our request for new legislation essentially on this consideration. Senator LONG. Let me just suggest to you if you are hoping to get this legislation through, don't hold your breath until it goes through. Mr. JOHNSON. Mr. Chairman, we are busily engaged in administering the law as it now stands, and we will continue to do that. Senator LONG. Thank you very much. (The following information was subsequently supplied by the National Aeronautics and Space Administration :) EXHIBIT XII(A). NASA'S PATENT POLICY-LIST OF CONTRACTS Statements requested during hearings before the Subcommittee on Monopoly of the Select Committee on Small Business, U.S. Senate, December 9, 1959 Mr. Gordon asked whether NASA's1 patent policy has retarded the placing of important research and development contracts and Mr. Johnson asked Mr. O'Brien to reply to Mr. Gordon's question. Mr. O'Brien stated that the NASA patent policy, in his opinion, definitely has retarded the placing of important research and development contracts. Senator Long then asked for a list of some of the contracts that we have had difficulty in placing. The list follows with a discussion of the difficulties: Case No. 1.-The Westinghouse Electric Corp. believes that it has made some very basic and fundamental discoveries in the technique of maintaining and regulating an arc discharge in a gaseous medium. The discoveries which Westinghouse Electric has made in connection with arc discharge resulted from its studies over the years of the phenomena of arc discharge. It appeared to technical representatives of Westinghouse Electric that these recent discoveries could well have application to the development of high-velocity wind tunnels capable of producing velocity of the order of mach 15. Westinghouse Electric informally inquired of NASA whether or not a contract for research and development with NASA to apply its discoveries in the field or arc discharge to the development of a high Mach number wind tunnel would permit it to retain commercial rights in inventions made in the performance of such a contract. Westinghouse Electric appeared to believe that there would be further demand for such wind tunnels not only by the Government but by industry, and the retention of commercial rights in such inventions would enhance its competitive position in constructing wind tunnels, utilizing its techniques. Westinghouse Electric was advised that the only way in which it could accomplish this objective would be to receive a waiver under subsection 305 (f) of the NASA Act, as implemented by NASA regulations. Since subsection 305 (f) provides for the granting of waiver by the Administrator of NASA upon recommendation of the NASA Inventions and Contributions Board, no assurance could be given in advance that a waiver would be granted in a specific instance. NASA'S patent waiver regulations provide that waiver may be granted if it shown that the invention has only incidental utility in the conduct of activities with which the Administration is particularly concerned, and has substantial promise of commercial utility. It would appear that any invention in the field of wind tunnel design would not be said to have only incidental utility in the conduct of activities with which NASA is concerned. Accordingly, this provision for waiver offered little promise that a waiver of the Government's rights in these inventions could be obtained. Another provision in the regulations for waiver is where it is shown that the invention is directed specifically to a line of business of the contractor with respect to which contractor's expenditure of funds in the field of technology to which the invention pertains has been large in comparison to the amount of funds for research and development work in the same field of technology expended under the contract of the Administration in which the invention was conceived or first actually reduced to practice. Whether or not inventions would qualify for waiver under this provision would depend upon facts not ascertainable in advance of a contract. None of the other provisions in NASA's regulations for waiver appeared to offer Westinghouse Electric better hope of obtaining commercial rights in new inventions. In view of these factors, Westinghouse Electric is still considering whether to submit a contract proposal to NASA. It should be added that Westinghouse Electric has contracts with NASA in fields of technology where it does not regard its commercial position as being so critical. Case No. 2.-The Motorola Co. has made certain discoveries in photographic processes and techniques which appear to have substantial promise of commercial utility. These discoveries in photographic processes and techniques were 1 National Aeronautics and Space Administration, Washington, D.C. made independently of any Government sponsorship and are presently the exclusive property of the Motorola Co. It appears, however, that these photographic processes and techniques may have application in the solution of problems of photography in space exploration. Officals of the Motorola Co. approached NASA to suggest a research and development contract to apply these techniques to problems in outer space photography but desired to ascertain whether such a NASA contract would result in the Government acquiring rights to any inventions involved in the foregoing discoveries. Moreover, the Motorola Co. desires to continue its own research and development program in the commercial applications of these new photographic techniques and processes, and, therefore, desires to retain commercial rights to all new inventions. It is the policy of NASA not to acquire, except by direct purchase, rights in inventions that have been actually reduced to practice prior to the placing of a contract with NASA. Because the investigations undertaken by Motorola are still in an experimental stage, some questions remain as to whether or not their present state of development would, in each case, be considered as an "actual reduction to practice." If any of the inventions were to be first actually reduced to practice in the performance of the NASA contract, subsection 305 (f) of the act would require that the Government retain, as a minimum, a license under such inventions even though the Administrator were to waive title to the contractor, as provided by the NASA patent waiver regulations. Whether or not the commercial rights to any new inventions conceived in the performance of the contract could or would be waived to Motorola would depend upon whether the invention qualified under the waiver regulations and upon the judgment of the Administrator acting upon the advice of the NASA Inventions and Contributions Board. In view of these considerations, the officials of Motorola are in doubt as to the desirability of making a contract proposal to NASA to support the investigation. Case No. 3.-The General Electric Co., under contract with an agency of the Department of Defense, had successfully completed the basic research and study to indicate the applicability to missile guidance of certain phenomena previously discovered by the General Electric Company relating to superconductivity. NASA desired to join with the Department of Defense in entering into a new contract with the General Electric Co. to apply these discoveries in superconductivity to space vehicle guidance. Such joint sponsorship would necessitate incorporation in the contract of the NASA patent provisions which are less favorable to the contractor than those of the Department of Defense. The contractor refused to take the contract under such joint sponsorship, and presumably this investigation, if undertaken, will have to be supported solely by the Department of Defense. It should be added that the General Electric Co. is participating under research and development contracts with NASA in many other areas of research and development. Its reluctance to accept NASA's support in this specific case evidently was attributable to its unwillingness to grant to the Government rights under inventions previously conceived but which might be first actually reduced to practice in the performance of such a contract, as it would be required to do by section 305 of the act. Case No. 4.-Narmco Industries, Inc., of San Diego, Calif. was requested by NASA to undertake some research investigations bearing upon the development of new structural materials for outer space application which would involve the impregnation into plastic or metal structures of fibers or disklike flakes of ceramic or glass materials. Narmco would be responsible for the development of the end material but would be required to seek from the glass or ceramic industries the improved fibers and disklike materials which were to be incorporated into the plastic or metal matrix. On investigation, Narmco found that the glass and ceramic industries were reluctant to participate in this program if their participation would subject them to the patent provisions of the NASA Act. Because of these difficulities, this proposed investigation did not materialize. However, it is understood that Narmco has accepted contracts from the military services for such work. Case No. 5.-The Associated Piping Engineering Co. of Compton, Calif., has apparently developed, independently of any Government sponsorship, a novel process for welding tungsten containing alloys. The company claims to have a well-established proprietary position in this field. It appears that the process developed by Associated Piping could be applied to tungsten or molybdenum to acheive a NASA objective which is important to the space program. The |