not feasible to have complete uniformity of practice throughout the Government in view of the differing missions and statutory responsibilities of the several departments and agencies engaged in research and development. Nevertheless, there is need for greater consistency in agency practices in order to further the governmental and public interests in promoting the utilization of federally financed inventions and to avoid difficulties caused by different approaches by the agencies when dealing with the same class of organizations in comparable patent situations.

From the extensive and fruitful national discussions of Government patent practices, significant common ground has come into view. First, a single presumption of ownership does not provide a satisfactory basis for Governmentwide policy on the allocation of rights to inventions. Another common ground of understanding is that the Government has a responsibility to foster the fullest exploitation of the inventions for the public benefit.

Attached for your guidance is a statement of Government patent policy, which I have approved, identifying common objectives and criteria and setting forth the minimum rights that Government agencies should acquire with regard to inventions made under their grants and contracts. This statement of policy seeks to protect the public interest by encouraging the Government to acquire the principal rights to inventions in situations where the nature of the work to be undertaken or the Government's past investment in the field of work favors full public access to resulting inventions. On the other hand, the policy recognizes that the public interest might also be served by according exclusive commercial rights to the contractor in situations where the contractor has an established nongovernmental commercial position and where there is greater likelihood that the invention would be worked and put into civilian use than would be the case if the invention were made more freely available.

Wherever the contractor retains more than a nonexclusive license, the policy would guard against failure to practice the invention by requiring that the contractor take effective steps within 3 years after the patent issues to bring the invention to the point of practical application or to make it available for licensing on reasonable terms. The Government would also have the right to insist on the granting of a license to others to the extent that the invention is required for public use by governmental regulations or to fulfill a health need, irrespective of the purpose of the contract.

The attached statement of policy will be reviewed after a reasonable period of trial in the light of the facts and experience accumulated. Accordingly, there should be continuing efforts to monitor, record, and evaluate the practices of the agencies pursuant to the policy guidelines.

(This memorandum and the statement of policy shall be published in the Federal Register.)

STATEMENT OF GOVERNMENT PATENT POLICY

BASIC CONSIDERATIONS

A. The Government expends large sums for the conduct of research and development which results in a considerable number of inventions and discoveries. B. The inventions in scientific and technological fields resulting from work performed under Government contracts constitute a valuable national resource. C. The use and practice of these inventions and discoveries should stimulate inventors, meet the needs of the Government, recognize the equities of the contractor, and serve the public interest.

D. The public interest in a dynamic and efficient economy requires that efforts be made to encourage the expeditious development and civilian use of these inventions. Both the need for incentives to draw forth private initiatives to this end, and the need to promote healthy competition in industry must be weighed in the disposition of patent rights under Government contracts. Where exclusive rights are acquired by the contractor, he remains subjects to the provisions of the antitrust laws.

E. The public interest is also served by sharing of benefits of Governmentfinanced research and development with foreign countries to a degree consistent with our international programs and with the objectives of U.S. foreign policy. F. There is growing importance attaching to the acquisition of foreign patent rights in furtherance of the interests of U.S. industry and the Government.

G. The prudent administration of Government research and development calls for a Government-wide policy on the disposition of inventions made under Gov

ernment contracts reflecting common principles and objectives, to the extent consistent with the missions of the respective agencies. The policy must recognize the need for flexibility to accommodate special situations.

POLICY

SECTION 1. The following basic policy is established for all Government agencies with respect to inventions or discoveries made in the course of or under any contract of any Government agency, subject to specific statutes governing the disposition of patent rights of certain Government agencies.

(a) Where

(1) a principal purpose of the contract is to create, develop or improve products, processes, or methods which are intended for commercial use (or which are otherwise intended to be made available for use) by the general public at home or abroad, or which will be required for such use by governmental regulations; or

(2) a principal purpose of the contract is for exploration into fields which directly concern the public health or public welfare; or

(3) the contract is in a field of science or technology in which there has been little significant experience outside of work funded by the Government, or where the Government has been the principal developer of the field, and the acquisition of exclusive rights at the time of contracting might confer on the contractor a preferred or dominant position; or

(4) the services of the contractor or—

(i) for the operation of a Government-owned research or production facility; or

(ii) for coordinating and directing the work of others, the Government shall normally acquire or reserve the right to acquire the principal or exclusive rights throughout the world in and to any inventions made in the course of or under the contract. In exceptional circumstances the contractor may acquire greater rights than a nonexclusive license at the time of contracting, where the head of the department or agency certifies that such action will best serve the public interest. Greater rights may also be acquired by the contractor after the invention has been identified, where the invention when made in the course of or under the contract is not a primary object of the contract, provided the acquisition of such greater rights is consistent with the intent of this section 1(a) and is a necessary incentive to call forth private risk capital and expense to bring the invention to the point of practical application.

(b) In other situations, where the purpose of the contract is to build upon existing knowledge or technology to develop information, products, processes, or methods for use by the Government, and the work called for by the contract is in a field of technology in which the contractor has acquired technical competence (demonstrated by factors such as know-how, experience, and patent position) directly related to an area in which the contractor has an established nongovernmental commercial position, the contractor shall normally acquire the principal or exclusive rights throughout the world in and to any resulting inventions, subject to the Government acquiring at least an irrevocable nonexclusive royalty free license throughout the world for governmental purposes.

(c) Where the commercial interests of the contractor are not sufficiently established to be covered by the criteria specified in section 1(b), above, the 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 3 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.

SEC. 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.

SEC. 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.

SEC. 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.

INTERPRETIVE STATEMENT ON THE PRESIDENT'S MEMORANDUM AND
STATEMENT OF GOVERNMENT PATENT POLICY

(Issued by the Patent Advisory Panel of the Federal Council for
Science and Technology, December 1964

On January 8, 1965, the Chairman of the Patent Advisory Panel forwarded the attached interpretive statement to the heads of the Federal departments and agencies which have research and development responsibilities. The coverning letter contained the following statement:

"The memorandum and statement of Government patent policy issued by the President on October 10, 1963, promulgated a Government-wide policy with respect to rights to inventions resulting from Government-contracted research and development, and set forth basic principles to be followed by all Federal departments and agencies, except where otherwise provided by statute.

"It recognized that the detailed administration and implementation of the policy statement are the responsibilities of the individual departments and agencies. However, the Patent Advisory Panel, established by the policy state-ment, was called upon 'to develop, by mutual consultation and coordination with the agencies, common guidelines for the implementation of this policy.'

"In order to achieve more uniform interpretation and consistent application of the criteria set forth, the agencies which have research and development responsibilities reached general agreement on common guidelines for use in interpreting the policy statement. The enclosed interpretive statement reflects this agreement, and is forwarded for the guidance and assistance of your agency in the administration of the President's policy statement."

INTRODUCTION

The President's memorandum and statement of Government patent policy issued on October 10, 1963 (28 Federal Register 10942-10946, Oct. 12, 1963), promulgated a Government-wide patent policy to be followed by all Federal departments and agencies, except where otherwise provided by statute. The policy statement provided for the establishment of the Patent Advisory Panel under the Federal Council for Science and Technology for the purpose of (a) developing by mutual consultation and coordination with the agencies common guidelines for implementing the policy and providing overall guidance as to the disposition of invention and patent rights, (b) encouraging the acquisition of data for use in policy review and development, and (c) making recommendations on the use and exploitation of Government-owned domestic and foreign patents.

The Patent Advisory Panel and the subcommittees formed thereunder have been studying the President's memorandum and statement of Government patent policy and its effect on the patent policies of the various Federal departments and agencies. As a result of the panel's activities, it has become apparent that the agencies are experiencing difficulties in interpreting various key phrases and words within the policy statement. Therefore, in order to achieve greater consistency, the Patent Advisory Panel has developed the following interpretations for the guidance of the various departments and agencies.

Various subcommittees of the Patent Advisory Panel are presently considering the application of the President's policy statement to special types of contracting situations. Therefore, additional interpretive statements may be issued in the future as necessary to further interpret or provide guidelines for implementation of the policy statement.

GENERAL APPLICATION OF POLICY STATEMENT

Section 1(a) of the policy statement sets forth contracting situations where the Government normally shoud acquire or reserve the right to acquire principal or exclusive rights to inventions in the public interest. For contracting situations which do not fall within the criteria of section 1(a), section 1(b) defines

the conditions under which the contractor normally retains principal or exclusive rights. Contracting situations which do not fall under section 1(a), and do not meet the conditions of section 1(b), are handled in accordance with the provisions of section 1(c). Sections 1(a) and 1(b) deal with the allocation of patent rights at the time of contracting, whereas section 1 (c) prescribes deferment of the patent rights allocation until after the invention has been identified.

PRINCIPAL OR EXCLUSIVE RIGHTS UNDER SECTION 1 (a)

"***the Government shall normally acquire or reserve the right to acquire principal or exclusive rights throughout the world in and to any inventions made in the course of or under the contract."

Acquiring "principal or exclusive rights" by the Government will mean taking title to the inventions in question in most cases, but, where it appears to be desirable in the public interest, the intent of this phrase can be fulfilled by taking those attributes of ownership to the inventions which will assure the full availability of the inventions to the Government and will assure that the Government can control the inventions, domestically and abroad, subject to the rights reserved to the contractor.

EXCEPTIONAL CIRCUMSTANCES UNDER SECTION 1(a)

66* ** In exceptional circumstances the contractor may acquire greater rights than a nonexclusive license at the time of contracting, where the head of the department or agency certifies that such action will best serve the public interest."

This part of the policy statement recognizes that exceptional circumstances may exist, even though the contracts are of the type defined by subsections 1-4 of section 1(a). Examples of exceptional circumstances of the type contemplated by section 1(a) might be where the objectives of the research would appear to be materially advanced by leaving principal or exclusive rights to the contractor and the public interest is otherwise protected, or where the public interest will be advanced by leaving principal or exclusive rights to a nonprofit educational institution that agrees to administer inventions in a manner deemed by the agency to be consistent with the public interest.

Exceptional circumstances could also be found in regard to inventions identified at the time of contract, for example, when the contractor has established substantial equities at his own expense in the development of the invention.

GREATER RIGHTS UNDER SECTION 1(a)

"***Greater rights may also be acquired by the contractor after the invention has been identified, where the invention when made in the course of or under the contract is not a primary object of the contract, provided the acquisition of such greater rights is consistent with the intent of this section 1(a) and is a necessary incentive to call forth private risk capital and expense to bring the invention to the point of practical application."

The policy statement also allows greater rights to be given to the contractor after the invention has been identified where (1) the invention is in a technical field which is not directly related to a primary object of the contract, (2) the invention is not of the type intended to be covered by section 1(a), and (3) such rights are a necessary incentive to call forth private risk capital and expense to bring the invention to the point of practical application. Even where the invention is in a technical field which is directly related to a primary object of the contract, but is also susceptible of uses outside of that contemplated by the contract, greater rights could be left with the contractor for such uses provided that, with respect to such uses, the acquisition of greater rights is consistent with the intent of section 1(a) and is a necessary incentive to call forth private risk capital and expense to bring the invention to the point of practical application.

SUBSECTION 1(a) (1)

66* * a principal purpose of the contract is to create, develop, or improve products, processes, or methods which are intended for commercial use (or which are otherwise intended to be made available for use) by the general public at home or abroad, or which will be required for such use by governmental regulations;"

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