STUDY OBJECTIVES I. II. III. TEST THE EFFECTS OF ALTERNATIVE PATENT POLICIES. ACQUIRE AND REPORT DATA NEEDED TO EVALUATE THE REPORT INFORMATION USEFUL TO EXECUTIVE AGENCIES STUDY QUESTIONS 1. WHAT EFFECT DOES PATENT POLICY HAVE ON INDUSTRY PARTICIPATION IN GOVERNMENT R&D PROGRAMS? II. III. WHAT EFFECT DOES PATENT POLICY HAVE ON COMMERCIAL WHAT EFFECT DOES PATENT POLICY HAVE ON BUSINESS STUDY APPROACH I. Phase One: Review Existing Data. II. III. Literature search. Promotional programs of government agencies. Known cases of hesitation or refusal to deal with government. Phase Two: Conduct Utilization Survey of Government-Sponsored Phase Three: Perform Case Studies of Selected Contractors and Study 21 high and low utilizers to determine reasons for their performance. Study all sample inventions of TVA, Agriculture and Interior to determine effect of agency mission on invention utilization. Study 16 educational and nonprofit institutions to determine their role in promoting utilization of government-sponsored inventions. Study all survey inventions involved in infringement suits for effects on business competition. Study the NIH medicinal chemistry program and drug industry response to determine effect of patent policy on industry participation in, and utilization of the results of the program. Summary and Analysis of Findings A. Study Objectives and Approach The primary purpose of the Harbridge House study has been to provide government policy makers with data to evaluate the effectiveness of government patent policy in achieving policy objectives. The study sought answers to three basic questions which underlie the government's objectives concerning patents arising out of government contracts: (i) (ii) How does patent policy affect commercial utilization How does patent policy affect business competition in (iii) How does patent policy affect participation of contractors A three-phase study effort was undertaken to answer these questions: In phase The first phase involved four separate tasks. A literature search was conducted to determine what existing data were available on the study questions. In addition, three research tasks were conducted within government activities to (i) determine the promotional programs of eight government agencies; (ii) review reported instances of industry hesitation or refusal to participate in programs of the Department of Interior and the National Institutes of Health (NIH) for reasons relating to patents; and (iii) examine 100 contractor NASA waiver requests to determine the basis for waivers of patent title granted by NASA. These tasks, useful in themselves, also provided background information in conducting phases two and three of the study. 2 In the second phase of the study, commercial utilization of all governmentsponsored inventions patented in 1957 and 1962 were surveyed through questionnaires to gather data on utilization and licensing of a large and statistically significant group of patents. A two-year sample was selected to en sure against bias in patents issued in a given year, and the years 1957 and 1962 were chosen to allow enough time for sample inventions to be applied commercially. Although the sample predates the current 1 For government agencies other than DOD, AEC and NASA all patents issued from 1956 to 1966 were included because of the small number of patents issued on inventions of those agencies in 1957 and 1962. Copies of the questionnaires are included in an appendix to this report. policy established by the Kennedy Memorandum of 1963, patent fights in sample inventions were allocated in different ways under various programs making it possible to project the results of the study in terms of current policy. Questionnaires on each invention were sent to organizations which developed them regardless whether the contractor or the government retained title. Similar questionnaires were also sent to firms which requested licenses to government-owned inventions, whether developed under contracts on in government laboratories, to compare conditions under which inventions might be used with and without exclusive rights. Both included questions on the size and business orientation of the responder; the nature of the invention; the role it played in its commercial use; the speed with which it was applied; the type and amount of private funds invested in applying it; the sales attributable to the invention; the extent to which it was available for and resulted in licenses by patentee; and the reasons for nonutilization where it was not used commercially. Questionnaire responses were received on about 60 percent of the sample inventions and were analyzed to determine the patterns of utilization, and the effect of patent rights and other factors on commercial use, licensing and business competition. The data were also used to select areas for case research in phase three of this study. The case research in phase three gathered more detailed data on selected government contractors and inventions to understand better the factors which control decisions to utilize government-sponsored inventions, the utilization process, the effect of utilized inventions on business competition and the factors affecting willingness of contractors to participate in government-sponsored R&D programs. Five groups of case studies were conducted: (i) (ii) (iii) Twenty-one high and low utilizers of sample inventions performance. All sample inventions of TVA, and the Department of Sixteen educational and nonprofit institutions representing a (iv) All sample inventions involved in infringement suits were (v) An industry study involving the medicinal chemistry B. Effect of Government Patent Policy on Commercial Utilization The study sought answers to several key questions concerning commercial utilization of government-sponsored inventions. Among these were: (i) (ii) (iii) (iv) (v) Under what circumstances have government inventions How important have exclusive patent rights been in Under what conditions has utilization been optimized by Has substantial private investment been required to develop government-sponsored inventions for commercial use? Has such investment been made when everyone has been Several factors were found to have an important bearing on the answers to these questions. The intended uses of the sample inventions were found to have a primary effect on their commercial potential. Their intended uses, in turn, were determined by the R&D missions of the sponsoring government agencies. Once the invention was developed, several factors were found to affect their actual use in commercial markets--the extent of market demand for products employing them, the degree of promotion by government agencies which sponsored them, the size of private investment required to apply them, the prior experience and attitude toward innovation of organizations that developed them, and the type of patent rights available to protect the user's investment in bringing the inventions to market. inventions: These factors have had the following net effect on utilization of sample Of 2,024 contractor inventions in the two sample years for which information was available, 251 were used commercially. 52-476 - 80 - 11 |