incentive and initiative at a high level, the Committee of Conference adopted entirely new patent provisions.[6]

The report then continues with a very brief explanation of Subsection 305(a), indicating that inventions are to become the property of the United States "according to a specified standard." (Emphasis in report). This standard is set forth in subparagraphs (1) and (2) of subsection 305(a), and is based on a relationship of inventions made to both the duties of the contractor employee performing under the contract and contract requirements.[7]

During floor discussion prior to final passage of the Space Act, Rep. McCormack stated in his opening address: "The patent provisions of the House bill is the only part of the bill extensively revised by the conferees. The senate version carried a patent provision closely similar to the provision of the House bill. This was dropped by floor amendment just before passage in the Senate to allow this section to go to conference. The review and redrafting were wise. The select committee created a special subcommittee to study the matter, and after talking with many experts in and out of Government arrived at an new version, drawing upon Senate and House suggestions. The original patent provision was too closely patterned after the stringent requirements of the Atomic Energy Act which are not fully applicable to the space field. The substitute provision agreed to by the conferees protects both the interests of the Government and affords enough flexibility to the Space Administrator to let him meet needs for preserving inventions of the individuals and companies whose efforts it is public policy to encourage."[8]

Representative Keating also commented rather extensively on the patent provisions. Included in his summary of section 305 was the statement:

"The conferees recognized that research and development in aeronautical and space sciences will not be comparable, in most respects, to that in the field of atomic energy, and hence that there is no necessity for a Government monopoly of rights or interests in all inventions and/or discoveries relating to space exploration.

"And the patent provisions in this conference report do not automatically, as I understand the Atomic Energy Act does, give all property rights in inventions to the Government."[9]

The above-noted comments from the conference report and statements made during floor debate, viewed in light of drafting changes that culminated in the final version of section 305, clearly suggest that there was a legislative intent not to follow the restrictive and stringent approach taken in the field of atomic energy, which approach automatically created a "Government-monopoly" on inventions in the entire field based on some rather broad and generalized contractual relationships.[10] To the contrary, the Congresssional intent behind the redrafts that became section 305 was to loosen the grip of government ownership of technology resulting from the space program. This was accomplished by incorporating the "standard" of subparagraphs (1) and (2) into subsection 305(a) wherein the Government acquires rights to inventions only in specified situations in which contractors and employees thereof are required to perform work of an inventive nature for the Administration.

Thus, even though the legislative history lacks a detailed analysis of the various provisions of section 305 and their interplay, two key points are evident from the conference report and the floor statements, quoted above. First, there was an underlying legislative purpose to maintain private incentive and initiative; and second, there was a legislative intent that the restrictive provisions of the Atomic Energy Act, which essentially preempt private ownership of patent rights in an entire field of endeavor, were not to be carried over to space activities. Accordingly, NASA has from the onset adopted a liberal adminsitration of section 305 and has made this known to Congress.[11] This is illustrated by the numerous examples discussed below.

3. NASA Interpretation and Application of Section 305

Consistent with the pronouncement to liberally administer section 305, and in harmony with the aforementioned legislative purpose and intent, NASA has over the years taken a more restricted interpretation as to the type of contracts that are subject to the title-taking constraints of subsection 305(a) than is literally suggested by the broadly worded definition of subsection 305(j)(2).[12] Accordingly, it has been the long standing official interpretation and administrative practice of NASA to limit the application of subsection 305(a) to activities performed for NASA that have the potential for making inventions.[13] This is reflected in NASA's regulations and practices over the past two decades, as the following review illustrates. This review covers a number of arrangements that NASA determined were not covered by subsection 305(a), a joint endeavor being one such arrangement. In each instance

the determination made by NASA, and relied on by the other party, has had a direct effect on the vesting of property rights to inventions made by that party.[14]

a. Proposals Submitted to NASA

A literal interpretation of subsections 305(a) and 305(j)(2), taken together, would require the Government to take title to any privately funded inventions made in the course of preparing a proposal (i.e., a "proposed contract") for submittal to NASA. Such interpretation, however, is manifestly at odds with the legislative purpose of section 305(a) to protect private interests and to maintain private incentive and initiative. Thus, NASA took a restrictive interpretation of the phrase "any . . proposed contract" appearing in subsection 305(j)(2), and limited it to work performed upon an understanding that a contract would be awarded, such as when a written authorization is given to proceed with the work pending formalization and execution of a contract.[15]

b. Contracts for Supplies, Construction and Utility Services

In developing NASA's procurement_regulations, interpretations of section 305 were made to determine the types of contracts that were subject to subsection 305(a), and therefore required the inclusion of a provision as specified in subsection 305(b). NASA concluded that the legislative intent was to apply section 305 only to those types of contracts requiring the performance of inventive type work for NASA, and so advised Congress.[16] This interpretation is reflected in the NASA Procurement Regulations, which limit the use of a patent rights clause that would invoke section 305 to specified types of contracts having a prospect of inventive work being performed.[17]

c. Launch Service Agreements

NASA has provided launch services to non-NASA entities during most of its history. Many of the launches have been provided on a reimbursable basis for private domestic concerns, wherein the launched spacecraft has been developed and owned by the concern for whom NASA provided such services. In addition, there have been numerous reimbursable launches for other U.S. Government agencies, foreign countries and international organizations.

(i) The AT&T Launch Agreement.-The first launch service agreement was with American Telephone and Telegraph (AT&T) (July, 1961) to launch the experimental Telstar communication satellites. This agreement differed considerably from the typical research and development contract entered into by NASA since the satellites were to be designed, built, funded and owned by AT&T, and AT&T was also to reimburse NASA for its "out of pocket launch costs." Thus, the roles of the parties were reversed from the normal contractual situation in that NASA was being paid to perform work for AT&T.

The agreement was made subject to section 305, and NASA took, and then waived back, title to all inventions made by AT&T in the design and development of the Telstar satellite, but retained a worldwide, royalty free license for governmental purposes. In addition, NASA acquired the right to grant licenses to others for the practice of such inventions throughout the world for any purposes whatsoever upon such terms and conditions as the Administrator may prescribe. This right to license others was unrestricted as to both the parties to be licensed and the purposes for which the inventions may be practiced.

The rationale for acquiring these rights under the AT&T agreement was the existence of exceptional circumstances; that is, the desire to keep options open in an uncertain area until such time as the Congress and the President acted on an approach to be taken in establishing a communication satellite system.[18]

(ii) Subsequent Launch Agreements.-The next launch service agreement where the applicability of section 305 was raised was in 1964, when NASA negotiated an agreement with the Communications Satellite Corporation (Comsat) to launch on a reimbursable basis, Comsat's funded and owned satellites. In formulating a patent policy for this agreement note was made, and consideration given, to the position previously taken by NASA with respect to NASA/AT&T Telstar launch agreement. It was concluded, however, the reasons that gave rise to the particular NASA/ AT&T patent policy no longer existed. [19] It was observed that while the NASA/ Comsat launch agreement was a "contract for the performance of work" and hence could be construed to be covered by section 305, under the specific terms of the agreement NASA was to perform the work for Comsat, as contrasted with the typical situation where the contractor performs work for NASA.[20] In other words the conventional roles were reversed under this type of agreement.

NASA made the interpretation that the launch service agreement with Comsat was not subject to section 305 because no work was to be performed for NASA, and

52-476 O - 80 - 13

thus there was to be no transfer of NASA funds to Comsat. However, to insure against a later amendment of the agreement calling for the performance of work by the corporation for NASA it was decided to include a section 305 patent clause in the agreement as a precautionary measure. To this end, the clause began with the language "If and to the extent that any work is performed for NASA under this agreement. *[21] Thus, NASA made the further interpretation that, in addition, inventive type work had to be performed for NASA in order for section 305 to apply.[22]

*

The interpretation that a launch service agreement does not constitute a contract for the performance of work for NASA, and hence not a contract subject to subsection 305(a), has been consistently followed since 1964.[23] In fact, experience has shown over the years that the standard launch service agreements have never required any work to be performed for NASA, and the above-mentioned precautionary section 305 patent rights clause is no longer used.

4. Joint Endeavors

The above review illustrates a number of instances where NASA has made an official interpretation and adopted administrative practices to support the position that not all contracts are subject to subsection 305(a). Joint endeavors represent yet another instance where NASA has made an interpretation that an agreement or arrangement which literally meets the definition of contract under subsection 305(j)(2) is not a contract in the context of subsection 305(a).

With the development of advance facilities, such as wind tunnels, sensing and communications satellites and a space transportation system, and the creation of high technology, such as supercritical wing and ADP systems, NASA found it to be in its interest, both national and international, to enter into arrangements whereunder NASA would contribute the use of its facilities or technology to other parties in return for the other parties agreeing to furnish their products or services to carry out a program or project of mutual interest. The parties then share the results and benefits of the project. Often these activities are carried out as a joint endeavor, as previously defined.

Joint endeavors may vary as to the number of parties involved, the type and amount of contributions made by the parties, as well as the technical nature of the endeavor undertaken. In general these activities and arrangements differ considerably from a formal NASA contract and somewhat from those activities previously discussed in that they are usually informal in nature, are sometimes bottomed on a best efforts basis, do not involve the reimbursement or exchange of funds between the parties, and are not deemed as requiring employment of one party's employees or contractors by the other party in making the contribution of facilities, equipment or services to the joint activity.

NASA's first interpretation as to whether section 305 applied to a joint endeavor occurred in April, 1959, in response to an inquiry by a private company regarding an arrangement whereby NASA would contribute one of its facilities for the testing of privately developed equipment, and NASA and the owner of the equipment would share the resulting test data. [24] The position was taken that, while such an arrangement had the appearance of a contract with NASA, the fact that the company contributed equipment to the joint endeavor would not mean the company assumed any obligations to perform any work for NASA in the sense of subsection 305(a). Hence the interpretation was made that subsection 305(a) would not be applicable to any inventions made by the company or its employees during the testing of the company's equipment or any activities incident thereto. The interpretation was also made that should any of the company's employees participate in the testing, and should they as a result make an invention, the invention would not be covered by subsection 305(a) because it would not have resulted from the performance of any work for NASA.[25]

Subsequent to this intital interpretation, NASA has had many occasions to determine whether an arrangement or agreement structured as a joint endeavor was to be considered a contract subject to subsection 305(a). The interpretation has been consistent that, under joint endeavors neither party is assuming any obligations to perform inventive type work for the other, and accordingly each party retains rights to any inventions that may be made in the course of carrying out its activities that are contributed to the effort. [26] This interpretation and the resulting practices are illustrated by the examples set forth below.

(a) Use of NASA Facilities.

Where NASA's contribution is the use of a ground-based facility, and the other party furnishes equipment or services, NASA does not apply section 305, but ac

quires license rights to any inventions resulting from such use through negotiated provisions in the agreement. [27]

NASA has a similar policy where the contribution is the use of its orbiter to carry the other party's payload for testing, demonstration, or performing other operations or analysis in space.[28]

(b) Use of Satellite Data and High Technology

Other joint endeavors in which NASA has not applied section 305, involve activities wherein NASA's contribution is its satellite data[29] or its high technology such as supercritical wing technology in exchange for results of the analysis thereof. When the resulting activities are not of the inventive nature, no patent provisions are included; when it is anticipated that inventions may be made, a patent provision may be included by negotiation.[30]

(c) Contributions of Technical Interface and Technical Monitoring Assistance NASA also entered into a joint endeavor with the McDonnell Douglas Corporation (and a similar one with the Boeing Company) whereunder McDonnell Douglas developed at its expense a spin stabilized payload assist module (SUSS/PAM) for launching payloads from the orbiter, and NASA provided technical interface and monitoring assistance and services. [31] Subsection 305(a) was not deemed applicable to this joint endeavor, but under negotiated provisions NASA would acquire rights to inventions made by McDonnell Douglas in developing the SUSS/PAM in event of termination for default.[32]

(d) Cooperative Launch Activities

In addition, NASA has entered into arrangements whereby NASA launches, at no cost to the other party, spacecraft and/or experiments provided at no cost to NASA by the other party, with the understanding that NASA and the other party are to share in the results, usually by exchange and/or publication of the information and data derived from the resulting activity. Again, section 305 has not been deemed applicable to these arrangements, but a provision may be included, by negotiation, to acquire license rights for governmental purposes if it is determined that the resulting activity is of a inventive nature. Other than such license rights, invention rights reside with the respective parties (or their employees or contractors) of the joint endeavor.[33]

(e) Contribution of Major Hardware

Other NASA joint endeavors have involved activities where the various parties have made significant hardware contributions to a common program. As in the previously discussed joint endeavors, subsection 305(a) has not been deemed applicable, and any invention rights involved reside with the party (or its employees or contractors) who contributed the hardware. License rights, for governmental purposes, are acquired if it is determined that the resulting activity is of an inventive nature.[34]

5. Summary and conclusions

It is clear from the foregoing that during its nearly two decade history NASA has entered into numerous actual or proposed contracts, agreements, understandings or other arrangements, all within the literal definition of "contract" of subsection 305(j)(2), that were not deemed subject to subsection 305(a). In some instances they were for the procurement of goods and services (supply contracts using appropriate funds); in other instances they were for launch services or the use of NASA facilities on either a reimbursable or joint basis; and in still other instances they involved contributions of hardware on a joint basis. They issue does not turn on whether the arrangement between the parties falls within the literal definition of contract as defined in subsection 305(j)(2). Rather, the common basis for the decision not to consider these types of "contracts" under subsection 305(a) was a determination, consistent with the ligislative history, purpose and intent, that they did not involve the performance of work of an inventive type for the Administration in the context of subsection 305(a).

This determination is equally valid with respect to joint endeavors, wherein each party performs, or has performed, work on its own behalf in order to make contributions to the common project. To the extent that any inventive activity is performed by a party's employees or contractors, it is performed by or for that party for the purpose of enabling that party to make contributions to the joint endeavor. That is, one party is not performing, or not having performed, work for the other party, but rather, for itself. Neither party is empowered to direct, assign or require work of an inventive nature to be performed by the employees or the contractor employees of the other party. Thus, a joint endeavor is no different than the numerous other

arrangements NASA has determined not to be subject to subsection 305(a) in that it does not require the performance of work of an inventive type for NASA.

In addition, there is nothing in the legislative history of section 305, nor of NASA's long-standing interpretation and administrative practices relating thereto, to suggest the determination should be any different because the technology involved may find commercial application, as may be the case for joint endeavors under the Materials Processing in Space Program. If it is determined that the activity does not involve the performance of work of an inventive type for NASA, subsection 305(a) is not applicable notwithstanding the nature of the technology involved or its commerical potential.

Because joint endeavors are not contracts under subsection 305(a), any rights to inventions made in the course of a joint endeavor undertaken in the Materials Processing in Space Program must be acquired by negotiation. It is recommended that at a minimum NASA continue the established practice of acquiring a royaltyfree license to practice, for governmental purposes, all inventions made in the course of the resulting activities of a joint endeavor undertaken in the Materials Processing in Space Program. Consideration may be given to acquiring license rights of the same scope to practice any inventions specifically made in the course of any preparatory or background activities, to the extent necessary to practice inventions made in the course of the resulting activities. Beyond this, it will be necessary to consider each proposed joint endeavor case-by-case. However, it is recommended that, consistant with the policy set forth in NMI 8610.8 dealing with reimbursable launches, [35] NASA obtain assurances, by way of directed licensing rights, that the results of any joint endeavor activity which may have a significant impact on the public health, safety or welfare be made available to the public on terms and conditions reasonable under the circumstances.

It is therefore concluded that:

(a) NASA does enter into many types of arrangements falling within the literal definition of contract under subsection 305(j)(2) that are not contracts in the context of subsection 305(a);

(b) a joint endeavor is an example of one type of arrangement that is not a contract in the context of subsection 305(a);

(c) a joint endeavor under the Materials Processing in Space Program is no different regarding the intepretation and application of subsection 305(a) than any other joint endeavor, and therefore is not a contract in the context of subsection 305(a); and

(d) the allocation of property rights in inventions under any joint endeavor is a matter of agreement between the parties that must be specifically set forth in the joint endeavor.

NOTES

ROBERT F. KEMPF.

1. 72 Stat. 426; 42 U.S.C. § 2451 et seq.; particularly 42 U.S.C. § 2457.

PROPERTY RIGHTS IN INVENTIONS

SEC. 305(a) Whenever any invention is made in the performance of any work under any contract of the Administration, and the Administrator determines that

(1) the person who made the invention was employed or assigned to perform research, development, or exploration work and the invention is related to the work he was employed or assigned to perform, or that it was within the scope of his employment duties, whether or not it was made during working hours, or with a contribution by the Government of the use of Government facilities, equipment, material, allocated funds, information proprietary to the Government, or services of Government employees during working hours; or

(2) the person who made the invention was not employed or assigned to perform research, development, or exploration work, but the invention is nevertheless related to the contract, or to the work or duties he was employed or assigned to perform, and was made during working hours, or with a contribution from the Government of the sort referred to in clause (1),

such invention shall be the exclusive property of the United States, an if such invention is patentable a patent therefor shall be issed to the United States upon application made by the Administrator, unless the Adminstrator waives all or any part of the rights of the United States to such invention in conformity with the provisions of subsection (f) of this section.

(b) Each contract entered into by the Adminstrator with any party for the performance of any work shall contain effective provisions under which such party