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.C697.
1979
pt. 1

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

HOWARD W. CANNON, Nevada, Chairman

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Prepared statement of Mr. Lonsdale

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Lemelson, Jerome H., president, Licensing Management Corp..

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Manbeck, H. F., Jr., general patent counsel, General Electric Co

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Prepared statement

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Attachment

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Armstrong, Marshall J., assistant general manager, energy and instruments
group, Thermo Electron Corp.; accompanied by James Neal, corporate
counsel.

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Prepared statement

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Rabinow, Jacob

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Kempf, Robert F., Assistant General Counsel for Patent Matters, NASA, letter
of June 19, 1979

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Koogle, Herbert G., chairman, National Society of Professional Engineers,
letter of July 31, 1979...

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Lemelson, Jerome H., Licensing Management Corp., letter of August 14,
1979

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Monopoly Subcommittee of the Senate Small Business Committee, Decem-
ber 19, 1977

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Subcommittee on the Constitution of the Senate Committee on the Judici-
ary, June 6, 1979..

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Science and Industry, Challenges of Antagonistic interdependence, article by
Peter Drucker..

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Staats, Elmer B., Comptroller General of the United States, letter of July 17,
1979

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PATENT POLICY

MONDAY, JULY 23, 1979

U.S. SENATE,

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION,
SUBCOMMITTEE ON SCIENCE, TECHNOLOGY, and Space,

Washington, D.C.

The subcommittee met at 9:30 a.m., in room 235, Russell Senate Office Building, Hon. Adlai E. Stevenson (chairman of the subcommittee) presiding.

OPENING STATEMENT BY SENATOR STEVENSON

Senator STEVENSON. America's leadership in technology has often resulted from the Government's role as a supporter of research and development and consumer of its results. As distasteful as the notion may be to believers in the omnipotence of free enterprise and the irrelevance of Government, our most innovation and competitive industries are those which have benefited most from Government involvement-aerospace, electronics, telecommunications, and agriculture.

Now with productivity stagnating, inflation accelerating, our competitive position in world markets eroding, and the need for energy development pressing, the Government is uncertain about new technological initiatives and continues to impose barriers to Government-industry collaboration.

In May I introduced with Senator Cannon and Senator Schmitt the National Technology Innovation Act. The subcommittee held hearings in June. Today we begin hearings on the Science and Technology Research and Development Utilization Policy Act, a bill introduced by Senator Schmitt to establish a uniform policy for determining the rights of the Government, its contractors and employees to exploit publicly financed inventions.

The Federal research budget of $29 billion represents half of the Nation's total investment in R. & D. and generates more than 10,000 invention disclosures a year. The Government acquires title to the vast majority of inventions whose ownership and usage rights are determined, but less than 10 percent of the Government's portfolio has been licensed to private producers. Less than 5 percent of Government-owned inventions are used commercially. For energy development, health care and transportation improvement, civilian applications of military and space R. & D., and a variety of other domestic purposes, the Government depends largely on private markets to commercialize the technology it develops. Government financing of the R. & D. does not eliminate the risks to private investors in turning these inventions into marketa

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ble products. The risks are especially high if competitors can legally copy an invention because the Government refuses to allow a producer exclusive rights for the period necessary to recoup his investment in development and marketing. The principle of granting temporary exclusivity in return for public disclosure is the foundation of the patent system. It should be recognized in most Government R. & D. grants and contracts.

By introducing this bill, we intend no giveaway of public property to private monopolists but rather a prudent use of private interests for the public good. The balance we are seeking will not be helped by the rhetoric that for 30 years has prevented achievement of the uniform Government patent policy that numerous commissions, studies, and Members of Congress have recommended. But with the good will of business, labor, public interest groups, and academia, we can make an important contribution, not to innovation for innovation's sake, but to a revival of America's growth, productivity, and competitiveness. Senator Schmitt?

OPENING STATEMENT BY SENATOR SCHMITT

Senator SCHMITT. Thank you, Mr. Chairman.

I am pleased to join with you in this opportunity to hold hearings on U.S. patent policy and the patent system in general and its effect on innovation and other aspects of our economy and position in the world.

For the past 2 years, the Commerce Committee has conducted an extensive review of the state of American technology and the role of the Federal Government in promoting technology and its utilization. Mr. Chairman, I think it is important to note that in the last Congress you and I also were able to do this under the auspices of the Banking Committee, because the two issues were closely interrelated; that is, the economy and technology.

The witnesses before those two major committees have repeatedly underscored the need to stimulate the development, application, and diffusion of new products and processes to the marketplace if we are to reverse the alarming downward trend in our economic growth and productivity.

Admittedly, the problems are varied and complex-overburdensome and costly regulations, lack of a strategic capacity for trade policy, counterproductive tax policies, and inadequate funding of basic research-both public and private, to name just a few. Yet the solution seems not so much a need for new policies or expensive programs as it is a need to reexamine and adjust existing policies which have been ineffective and oftentimes counterproductive. The one exception may well be the need to completely rethink how this country conducts its overall trade policy.

Today's hearing is intended to focus on the Federal Government's policy for handling the billions of dollars of national expenditures on science and technology, and on research and development.

For more than a decade, Federal agencies have funded nearly two-thirds of this Nation's expenditures on research and development and related activities. During this past fiscal year alone, the

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