Page images

Several years ago, the Office and the defense agencies began developing a more informative and understandable secrecy order. We were successful and the new secrecy order will be utilized soon. Among its improvements, it will identify the agency requesting the secrecy order.

Sixth, your sixth question asks about the compensation of applicants whose applications are subject to secrecy orders. It goes on to ask whether the statutory right to compensation is illusory or real and whether practical benefits have in fact been obtained.

Rights under 35 U.S.C. 183 for securing "just compensation" for Government use or damages resulting from a secrecy order are provided in the same section. The applicant on receiving a notice of allowability may administratively claim compensation for money damages caused by the order.

Claims for compensation are directed to the head of the agency responsible for the secrecy order. If full settlement is not effected, the applicant may sue the United States in the Court of Claims or an appropriate district court. Alternatively, the applicant, on issue of the patent, may sue the United States in the Court of Claims for damages the order caused.

I regret that I cannot answer from firsthand knowledge your question about the effectiveness of these remedies. Nevertheless, I understand that 29 administrative claims for compensation have been filed since 1945 with the Defense Department. Of these, 5 are the subjects of pending litigation, 3 were settled by the Defense Department before litigation, 5 were settled during litigation, 1 was the subject of a private relief bill, 10 were terminated by denial, and the remainder are pending in the Defense Department.

Seventh, your question asks about the placing of classification markings on applications, the procedures applicable to these classified applications, and the restraining effect of security classifications on applicants.

As I have mentioned before, the great majority of patent applications under secrecy order are filed by the Government of Government contractors. In most of these cases the security classification is put on the patent application by the owner when it is filed. Government agencies and their contractors ordinarily know exactly what technology is classified and act accordingly.

Security classification markings for any document, including patent applications, are imposed by virtue of Executive Order 12065 or earlier Executive orders or the Atomic Energy Act. Under Executive Order 12065 security classification markings can only be placed on documents in which the Government has a proprietary interest. The Executive order is qualified, however, by the Atomic Energy Act. Under that act a security classificcation marking may be placed on a document involving nuclear technology, even through the Government does not have a proprietary interest. Applications containing security classification markings when filed are reviewed to determine whether such markings are authorized. This authorization is usually found in documents accompanying the application. If the authority appears proper the application is subjected to the secrecy order process.

Nevertheless, the time for issuing the secrecy order may vary depending upon agency practice. Some agencies request secrecy

orders at the time of filing. Other agencies do not request a secrecy order until later notified that the application has actually been filed. In substantially all applications, however, a secrecy order is issued before the application is examined.

If the authority to apply a security classification marking is not apparent the Office asks the appropriate party if it has such authority. If no authority exists the Office requires the party to delete the markings and the application, of course, is not subjected to the secrecy order process.

Applications bearing valid security classification marking but not yet subjected to a secrecy order are nevertheless safeguarded in the same manner as those already subjected. As I mentioned, an application may bear a valid security classification markings before being subjected to a secrecy order. Before a secrecy order is imposed the classification markings still restrain the applicant from disclosing his invention. The extent of his restraint, as well as any penalty for disregarding such restraint, is provided under the security classification system by which the application was marked in the first place.

The penalties for unauthorized disclosure of an invention subject to a secrecy order may differ from those provided under the security classification system. Until such secrecy order has been placed on the application, however, its specific provisions for restraint and penalties cannot be invoked against the applicant.

Attached to my written statement are various exhibits that should help the subcommittee understand and evaluate the Office's part in protecting national security. These are a compilation of forms used for security cases, including a soon-to-be-utilized secrecy order, the more important parts of the legislative history of the patent law's security provisions, and a functions-and-information chart of our processing procedures for security-related applications. This, Mr. Chairman, concludes my oral testimony. Mr. Quarforth and I would be happy to answer any additional questions you many have.

Mr. PREYER. Thank you, Mr. Tegtmeyer.

Without objection, those supplemental documents with your prepared statement will be make a part of the record at this point. [Mr. Tegtmeyer's prepared statement, with attachments, follows:]




Mr. Chairman, I am pleased to appear before your Subcommittee today, to testify on the Patent and Trademark Office's implementation of the Invention Secrecy Act of 1951. Accompanying me is C. D. Quarforth, the Director of our Special Laws Administration Group charged with the processing and examination of securityrelated patent applications.

The statutory authority for processing and examining securityrelated applications is found in patent law sections 181-188, which comprise chapter 17 of this law. But broad statutory authority is not detailed enough for the day-to-day procedures that security precautions inherently demand. Accordingly, the procedures utilized by the Office are prescribed in detail in Title 37, parts 5 and 7 of the Code of Federal Regulations. CFR provisions also implement Executive Order 9424, establishing a Register for recording Governmental interests in patents.


In administering these security provisions, the Office has, of course, developed and put into use various forms, secrecy orders, permits, licenses, notices and so on. I will discuss the most important of these, but the written testimony includes a complete set and an explanation of each.


Security Review Procedures

Let me begin by explaining the Patent and Trademark Office's

screening process for identifying security-related information in patent applications.

The Licensing and Review Branch in our Special Laws Administration Group screens all patent applications filed in the Office to determine whether any application contains material involving national security (35 U.S.C. 181, 42 U.S.C. 2181), the production or utilization of nuclear material or atomic energy (42 U.S.C. 2182) or has significant utility for space or aeronautical activities (42 U.S.C. 2457). The vast majority of patent applications filed in the Office do not contain security-related technology.

Applications affecting national security are placed under a secrecy order at the request of a defense agency. This order prohibits any disclosure of the technical contents of the patent application. Sections 182 and 186 prescribe legal and criminal penalties for violating a secrecy order.

During fiscal year 1979, the Office received 107,409 patent Of these, 4,829 were thought to contain securityrelated information and were, therefore, made available to defense



agencies. Only 243 secrecy orders were issued, however, of

which 200 applications contained security classification markings when filed.

The Office, as I mentioned, has established an extensive screening system to assure the identification of all patent applications actually or possibly bearing on our nation's security. Each patent application filed in the Office is processed through the Licensing and Review Branch. Here, patent applications are separated on the basis of their contents into three broad technological categories--chemical, electrical or mechanical inventions. Examiners with appropriate security clearances and technological backgrounds inspect each of these applications to determine if they contain national security information. Of course, most security-related applications have already been classified by the Government agency or government contractor prior to filing the application in the Office.

To assist the Office in determining the existence of classified technology that must be kept from the public, the defense agencies have provided us with category or "field of interest" lists of such technology.

Examiners screen each patent application with

these lists in mind. When a patent application involving such a field is found, the Licensing and Review Branch puts the application

aside and calls it to the attention of each interested government defense agency.

« PreviousContinue »