L. Fettig -8 July 18, 1978 resulting fro: research and development work it sponsors, In his prepared statement for that House Appropriations subcommittee on Harch 10, Dr. Baruch said: Government laboratories and Government licensing. Fewer than 1,700 of these patents resource. A decade ago, according to NTIS, Government inventions generally were not evaluated for commercial potential and were not actively promoted. The condition of the Government's patent portfolio is not of itself a reason to suppose that universities could do better. 2. When it began a study of the department's patent policy last August, the HEW Office of General Counsel stopped processing requests from non-IPA holders for retention of patent rights, and there is a backlog of between 25 and 30 cases (1). No similar restriction has been placed on IPA holders, which appears to place non-IPA universities at a distinct disadvantage. Releasing the GSA patent regulation at this time would underscore that inequity. Again, I appreciate your participation in our hearings, your cooperation and your willingness to receive these recommendations. Thank you. GH/gsy Sincerely, GAYLORD NELSON Chairman Honorable Joel W. Solomon Administrator General Services Administration Washington, D.C. 20405 Dear Jay: JUL 17 1978 On March 22, 1978, I requested that you take the necessary action to stay for 120 days the final rule amending the Federal Procurement Regulation on Institutional Patent Agreements. This rule was contained in the February 2, 1973, Rederal Register. I understand that under its terms the stay will automatically be lifted at the end of the 120-day period on July 18, 1978. I concur that the stay should be lifted at this time but request that this action be noted in the Federal Register and that the notification include a statement that the Institutional Patent Agreement regulations are subject to change when there is an executive branch resolution of Federal patent policy. Tom Williamson of my Office has discussed this matter with Phil Read. [1505-01] GENERAL SERVICES ADMINISTRATION Federal Supply Service INSTITUTIONAL PATENT AGREEMENTS Observence of New Effective Date NOTE.-This document was inadvertently omitted from the notices section of the issue of Tuesday, July 25, 1978. The use of Institutional Patent Agreements was prescribed in Federal Procurement Regulation (FPR) Amendment 187, April 11, 1977 (43 FR 4424, Feb. 2, 1978). At the request of the Office of Federal Procurement Policy the effective date of the amendment was changed from March 20, 1978, to July 18, 1978 (43 FR 16979, Apr. 21, 1978). The change permitted further consideration of the amendment by Members of Congress and others. FPR Amendment 187 is effective on July 18, 1977, as previously announced. However, the referenced review will be continued in conjunction with the examination of Government patent policy which is in progress. JAY H. BOLTON, Acting Commissioner. [FR Doc. 78-20740 Filed 7-24-78; 11:28 am] [From the Congressional Record, May 19, 1978, pp. $7881-S7883] PATENTABLE MATERIAL AND THE FREEDOM OF INFORMATION ACT Mr. NELSON. Mr. President, Government patent policy generates a substantial flow of information in connection with its outlays for research and development. For example, as a result of its expenditures of about $100 billion for research and development from fiscal year 1970 through 1975, the Government received 52.996 invention disclosures. Patent right clauses in the Armed Services Procurement Regulations and Federal Procurement Regulations require a Government contractor to submit a complete technical disclosure of each invention conceived or first actually reduced to practice under the contract. The definition covers any invention or discovery "which is or may be patentable under the laws of the United States of American or any foreign country." In its study of Government patent policy, the Monopoly and Anticompetitive Activities Subcommittee of the Select Committee on Small Business has noted the substantial flow of preinvention information to the Department of Health, Education, and Welfare which is, nonetheless, claimed to involve patentable material. From 1969 through 1974, roughly 100,000 grant applications and contract proposals were submitted to HEW. During that period, the Department estimates, universities filed patent applications on 329 inventions which were either generated or corroborated by HEW-funded grants and contracts. The Freedom of Information Act was in effect throughout that period. On January 5, 1973, the Federal Advisory Committee Act went into effect, requiring that meetings of Federal advisory committees be open to the public but allowing certain meetings to be closed on the same grounds that the FOIA allows certain documents to be exempt from mandatory public disclosures. Typically, the advisory committees of the National Institute of Health that review grant applications and contract proposals for scientific and technical merits -commonly known as "peer review" committees-would close their meetings on grounds that the FOIA exemptions for trade secrets and invasion of personal privacy applied to the matters to be discussed. As of early March 1977, NIH notices in the Federal Register announcing that a peer review panel meeting would be closed in accordance with the Federal Advisory Committee Act and exemptions 4 (trade secrets) and 6 (personal privacy) of the Freedom of Information Act customarily asserted: "The (grant) applications contain information of a proprietary or confidential nature, including detailed research protocols, designs, and other technical information; financial data, such as salaries; and personal information concerning individuals associated with the applications." However, on or about March 11, 1977, the eve of the effective date of the Government in the Sunshine Act, the wording of NIH notices changed. Here is an example from page 13603 of the Federal Register of March 11, 1977, which was meant to apply to meetings dealing with contract proposals and/or grant applications: "These proposals and applications and the discussions could reveal confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the proposals and applications." Mr. President, I asked the Congressional Research Service to determine whether use of the phrase "patentable material" could be instified either by statutory law or by judicial interpretations of exemption 4. The CRS reply says in part : "Patentable material is not automatically exempt; it must satisiy the criteria of Exemption Four and its judicial gloss." However, it also acknowledges a frankly commercial aspect urged by commentator James T. O'Reilly. The reply was: "A threshold consideration in determining the applicability of Exemption Four to research grant applications and proposals is the motivation of the researcher or organization. In the words of one commentator, “in the research area, the motive of the researcher to make his findings profitable in the commercial sense is considered a prerequisite to b(4) protection for the research." I find that view somewhat bizarre. It raises the prospect of grant applications being judged by the commercial gleam in the applicant's eye, instead of their scientific and technical merit. Would the peer review system go cash-and-carry? Also, it raises doubts about the use of institutional patent agreementsgiving universities first option to own the rights to inventions resulting from Government-sponsored research and development-as an implement of Government patent policy. Could the 72 institutions having such agreements with HEW cite that fact on their grant applications as official recognition of the commercial potential of the proposed research. Finally, there is the basic question of what is patentable. NIH sometimes receives different opinions from its advisers as to what is patentable, as do universities and researchers. It is by no means obvious, perhaps because inventions must be "unobvious" to qualify for patenting. Mr. President, I ask that the analysis by CRS, consisting of two memorandums, be printed in the Record. [The material follows:] THE LIBRARY OF CONGRESS, CONGRESSIONAL RESEARCH SERVICE, Washington, D.C., May 8, 1978. To: Senate Subcommittee on Monopoly and Anticompetitive Act. From: American Law Division. Subject: The Applicability of Exemption Four of the Government-In-the-Sunshine Act and the Freedom of Information Act to NIH Peer Review Meetings and Invention Disclosures Pursuant to Institutional Patent Agreements. This memorandum will analyze the propriety of language used in meetings notices of the National Institutes of Health in light of the Government-in-the Sunshine Act and the applicability of the Freedom of Information Act to invention and disclosures required by the provisions of the proposed Institutional Patent Agreement. Meetings of the National Institutes of Health dealing with contract proposals and/or grant applications have been closed to the public on the basis of Exemption 4 of the Government-in-the Sunshine Act, 5 U.S.C. 552b (c) (4) (1976). The Federal Register Notices of such closures have stated: "These proposals and applications and the discussions could reveal confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the proposals and applications." The question is the propriety of use of the phrase "patentable material" in the agency's justification for closing a meeting to the public. The starting point for analysis is the statutory language-which is identical to Exemption Four of the Freedom of Information Act, 5 U.S.C. 552 (b) (4),—and judicial interpretations of that language, which was intended by Congress to be imported into the Government-in-the Sunshine Act provision. See, H. Rept. 94-880, 94th Cong., 2d sess. at 10 (1976). Exemption Four of both Acts excepts from mandatory disclosure or openness "trade secrets and commercial or financial information obtained from a person and privileged or confidential." Thus, three basic categories of information are exempt from disclosure: 1) trade secrets; 2) commercial information obtained from a person which is privileged or confidential; or, 3) financial information obtained from a person which is privileged or confidential. See Getman v. NLRB, 450 F. 2d 670 (D.C. Cir. 1971). The first category, trade secrets, has not occasioned much litigation as it was the intent of Congress to adopt the traditional interpretations of the legal term of art. See, O'Reilly, Federal Information Disclosure. 14.06 (1977). A common definition is that of the 2938 Restatement of Torts, § 757: "A trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business and which gives him opportunity to obtain an advantage over competitiors who do not know or use it.” See, Kewanee Oil Company v. Bieron Corporation, 416 U.S. 470, 474 (1974). A similar and frequently relied on definition is that given in United States ex rel. Norwegian Nitrogen Prods. Co. v. United States Tariff Comm., 6 F 2d. 491 (D.C. Cir. 1925) rev'd on other grounds, 274 U.S. 106 (1927) : "An unpatented, secret, formula, or process, which is used for the making, preparing, compounding, treating, or processing of articles or materials which are trade commodities." The other categories of information exempt from disclosure are commercial or financial information which is privileged or confidential. Commercial or financial information relates to the business affairs of a person. The interest in nondisclosure must be a commercial or trade interest. Thus, in Washington Research Proj., Inc. v. Department of H.E.W., 504 F. 2d (DC. Cir. 1974) cert. denied, 421 U.S. 963 (1975), the court held that research grant applications submitted by |