TABLE 16 TIME LAG FROM PATENT APPLICATION TO FIRST COMMERCIAL UTILIZATION *Years between filing and first expected commercial utilization. This column is not included in the row totals. Senator SCHMITT. Can you suggest reasons why the commercial utilization rate of NASA-generated inventions is so much higher for contractor-owned patents than NASA-owned patents? Mr. MOSSINGHOFF. I think Mr. Johnson indicated some of the reasons in his testimony. Hopefully we have selected the best contractor to do the job for NASA. He is in the business, he has the ability to evaluate inventions to discern which ones have greater commercial potential. He has the production, marketing, and engineering capability to develop the invention from an idea of the inventor to an item actually produced and sold in the marketplace. I think Tenney Johnson gave a good summary of that reason. Another element that should not be overlooked is that it has been my experience that the person most impressed with an invention is the inventor himself or herself. It is their baby and they want to see it used. They want to leave their footprint. It seems to me that it is important, unless there is an overriding public policy to the contrary, to leave the commercial rights where that inventor is, so you have the single greatest champion of the invention working the problem. I think those are the two principal reasons. Senator SCHMITT. That is an interesting point. I think all of us in one way or another in science and technology would be impressed with that if we just thought about it-how protective we are of an idea that we may have had and how rapidly we try to advance that idea, whether it is an intangible idea or some piece of hardware. That is an excellent point. Are you satisfied that the march-in rights, those which NASA retains under its present policy and those which would be required under S. 1215, are adequate to protect the public interest, and if so, why? Mr. MOSSINGHOFF. It is difficult to imagine a situation where those march-in rights wouldn't be adequate to protect the public interest. I think when President Kennedy's statement was issued that was the heart of the policy concept, adopting a flexible policy vis-a-vis the Government and the contractor to retain rights. But if the contractor retained rights, it wasn't against the world. He had to act responsibly with those rights. As Tenney referred to, he couldn't just suppress the invention and it must be made available for public health, safety, and welfare reasons. So the answer to your question is yes. I think that those rights are adequate. Senator SCHMITT. So you are saying that the fact that march-in rights have not been exercised extensively is the best sign that they are working? Mr. MOSSINGHOFF. Yes; I believe that. That experience brings into a realm of reality what until now has been a hypothetical issue of whether the cure for cancer is going to be suppressed or whether the carburetor that will get 100 miles to the gallon will be suppressed by some commercial operation. While NASA has never exercised march-in rights as such, we do require periodic reporting from our waiverees of the steps they are taking to commercialize the invention. And where they are not taking such steps, or have no plans to commercialize the invention, we void the waiver. We have done that in more than 25 percent of the cases for a total of 266-with respect to a total of 266 inventions, we have voided the waivers and taken the patent back into NASA's portfolio and made it available for licensing. Senator SCHMITT. How does that contrast with the march-in rights? Mr. MOSSINGHOFF. It is a part of the march-in rights, but it was done voluntarily between NASA and the waiveree. We require periodic reports Senator SCHMITT. They have voluntarily agreed to release the waiver? Mr. MOSSINGHOFF. In response to the fact that they have not brought the invention to the point of practical application within 3 years. When we find that out, they are put on notice that we are going to require the issuance of licenses if someone requests. And as a voluntary agreement with NASA, they agree to have NASA void the waiver and return title back to the Government. Senator SCHMITT. In all of those cases you have been able to negotiate a march-in rather than actually having to impose one? Mr. MOSSINGHOFF. Yes, sir. Senator SCHMITT. In your view, which patent policy would be more cost effective, NASA's present policy or the one generally outlined in S. 1215? Mr. MOSSINGHOFF. I am not convinced that our policy is cost effective, Senator. I think there is a lot of Government effort that goes into evaluating inventions, doing patent searches on the inventions, acquiring the patents, and then putting it in the license portfolio. Those of us that participated in this recent analysis-that led to the conclusion that we are getting a commercialization rate of about 1 percent with respect to contractor inventions that we own patents on-we are disappointed by that. I know the general counsel of NASA wants to go further in that analysis to determine whether or not what we are doing makes sense. It seems to me that, again for reasons that Mr. Denny indicated, if you leave that invention with the contractor, he has the ability to evaluate it and decide whether he is going to file and whether the patent is going to become part of his portfolio, it will probably be cost effective for the Government. Senator SCHMITT. S. 1215 specifically provides that the act shall not be construed to deprive an owner of a background patent. What is NASA's position on acquiring background rights to inventions, and do you think something more explicit ought to be included in this measure? Mr. MOSSINGHOFF. As a general policy, NASA does not acquire background rights to inventions developed by the contractor using its own independent resources. I think the number of times we have done that is probably between 6 and 12 times in the history of NASA. Senator SCHMITT. Is there any general criteria that seems to have been met when you exercised background rights? Mr. MOSSINGHOFF. Some of them, Senator, were when decisions had not been made in the communications satellite area and NASA was very reluctant not to get some assurances-and that is about all it amounted to-assurances that the contractor would not |