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What I am suggesting is that the philosophy of Government input to the innovation process be rather drastically changed. At present this philosophy is, generally, a defensive one leading to a proliferation of rules, regulations, and controls which, in toto, defeat innovative minds and greatly hinder, if not prevent, development of new ideas.
In the present circumstances there are simply too many people advocating and enforcing too many control methods. This results in great confusion at the working level. Instead of spending time, effort and enthusiasm on innovating, innovators must try to find the right person in Government to approach, prepare proposals in depth with ironclad justification for funding-based on speculation, I might add—and then stand in line just to obtain funds for doing research and development.
They must then perform the research and report back frequently in tedious and unnecessary detail what they have accomplished, justifying each expenditure in order to satisfy rigid Government auditing regulations. And finally, they must go through extensive report writing and prepare quasi-legal arguments with contracting agency officials to be allowed to proceed to develop, manufacture and market new products or processes resulting from the research.
Even when authorization is finally obtained, all sorts of restrictions are placed on how developing and marketing is to be handled, with a constant threat of the Government standing ready to take over at the first sign of difficulty. It is small wonder that innovation based on Government support has declined. The barriers are formidable.
In contrast, if all Government departments were united in the desire to help the innovator, to reduce barriers to his success, and to provide a positive atmosphere to his undertakings, innovative activity would greatly increase, the time between conception of an idea and its public use would be reduced and many more new ideas would surface.
What I propose, then, is that a highly positive approach be taken at the topmost levels of the Federal Government and that this attitude be actively promoted down through all the lower governmental levels.
In my view, a start in this new direction must be made in Congress through legislation. However, as noted previously, encouragement of innovation is a many-faceted and extremely complex endeavor. For this reason, I believe several pieces of legislation, each addressing one issue at a time, is preferable to a single omnibus bill which tries to resolve the whole problem in general terms.
Ideally, the several legislative proposals should dovetail and complement each other. When one issue at a time is addressed, later changes or modifications can be made more easily and promptly without disturbing companion legislation.
Consequently, it is heartening to me to see introduced into this session of Congress S. 414, which addresses the Government patent policy issue; S. 1215, which addresses the issue of the most suitable policy to follow in encouraging private industry to participate in developing federally funded innovative concepts; and S. 1250, which addresses the issue of developing and fostering a climate conducive to the enhancement and improvement of the innovative process.
These three bills complement each other and seek to improve the Government attitude toward innovation. If passed, they will be steps in the right direction, but will not provide the final answer. Additional bills along similar lines and addressing additional issues will need to be introduced and passed in the future to further improve the climate for innovation before measurable overall improvement can be perceived.
It is also gratifying to note that the constructive and forwardlooking institutional patent agreement approach, formulated and first used by Department of Health, Education, and Welfare patent staff personnel, and adopted later by the National Science Foundation, has served as a basis for some of the provisions in both S. 414 and S. 1215.
While the IPA is a small step, it is in the direction I advocate, that is, the removal of unnecessary recordkeeping, a major disincentive, and, through loosened, but not thoroughly relaxed, controls, the provision of a very real incentive to private organizations to undertake further development of innovative concepts stemming from federally funded research and development.
The provision in S. 1215 of a central authority to provide various services, such as evaluation, patenting and licensing, to the Federal contracting agencies is also gratifying. However, I would suggest setting up such an organization on a rather different basis than is proposed in the bill. I would not center it in an existing administrative agency, such as the Department of Commerce, but would recommend an entirely new quasi-governmental and semiautonomous organization independent of existing agencies along organizational lines similar to the National Research Development Corp. in England.
My reasoning is that many problems are bound to develop which could lead into serious conflict of interest situations, the solution of which would exceed the authority and administrative scope of an existing agency. This new organization should not only provide administrative oversight but would be responsible for the active development of innovative concepts all the way to the marketplace.
Such an organization should function with as small an internal staff as possible and contract with private organizations outside of the Federal Government to undertake the bulk of the work to be done, including the licensing of patents to industrial concerns. This type of arrangement would benefit the Government, private industry and the public by bringing to bear more knowledgeable managerial, financial, manufacturing and marketing expertise than is available from solely governmental sources.
I believe that a better job could be done at less overall expense to the taxpayer with this type of operation. A successful model for such an organization already exists on a modest scale within the Federal Government. It is the Office of Energy Related Inventions, established by Congress in the Nonnuclear Energy Research and Development Act of 1974, and administratively attached to the National Bureau of Standards.
I have other comments to make on S. 1215 and on the general issue of providing incentives to encourage private industry participation in federally funded research and development, but these will be included in a longer written statement for publication in the hearing record. Some of these comments may well be discussed, and have been this morning during the question and answer period following the opening statements.
I would like to interpolate a few comments about an article that I have in front of me that bears on this issue which I think is very important and which we haven't heard mentioned so far this morning.
Senator SCHMITT. Dr. Marcy, I will allow you to do that, certainly. I would say that your additional comments would be appreciated, even if they might be a little bit duplicative, and they will be included in our record.
It is always good to have the same thing said by different people.
Dr. MARCY. Thank you. I will only spend a couple of minutes on this.
This is an article that appeared in the magazine Science in the issue dated May 25, 1979, by Peter F. Drucker, who is a well-known economist and student of social issues and a management expert. This is a talk that he gave before the American Association for the Advancement of Science in Houston, Tex., on January 7, 1979. The title of the article is, “Science and Industry: Challenges of Antagonistic Interdependence":
Science and industry in the United States used to enjoy a relationship of mutual respect based on an unspoken conviction that they depended on each other. That relationship, while distant, was uniquely productive for both science and industry.
That is his opening paragraph. He goes on to say:
There has been a major change in this, not in the measurable realities of the relationship as between science and decisionmakers in industry and Government, but in the moods, the values and meaning of the relationship. There is today distress, disenchantment, mutual dislike, even, at worst, lack of interest in each other on both sides.
And he goes on to speak about the relationship between Government and scientists:
As to Government, there is now a strong tendency to judge science by what is politically expedient or fashionable, that is, to attempt to subordinate science, either pure or applied, to the value judgments that are incompatible with any criteria one could possibly call scientific. The values of industry, but equally of the Government decisionmaker concerned with effective policy, are in danger of becoming hostile to the needs, the values, views and perceptions of science.
One reason for this is the increased pressure, especially in inflationary periods, to produce results fast.
He goes on to say, in his view, that this is a period in which either industry or policymakers do not feel that they can take risks. He thinks this should be changed. He goes on to say-in referring to the effects of Government actions—that taxation is one of the more, as he puts it, "insidiously deleterious over a long period of time to the use of scientific results."
He also says, regarding regulations, that they not only add costs but they create uncertainties. And then he says this:
Regulation makes investment in research irrational, not only increasing the odds against research of producing useable results, but also making research into a crooked game.
He is very strong.
togethecientific pointe artic)
He says, then, further:
The atmosphere is aggravated by the antitrust laws, which probably are responsible, more than any single factor, for turning American industry away from building on a technological science-oriented basis and toward the financially-based conglomerate.
I won't go on. The article goes on and talks further about this from different points of view. And he feels that industry and science, scientific research and Government people should try to get together to change this atmosphere of hostility that has been arising. His final paragraph says:
The traditional relationship between science and its customers in the economic and governmental systems is based on mutual respect and understanding and a keen awareness of interdependence. American science must effect a return to these values, however old-fashioned they now appear to be.
I feel that this article in a way reflects what I said in my statement. And I have to confess that I wrote my statement before I read the article.
That, Senator Schmitt, concludes my formal statement. I would be glad to answer any questions you might have.
Senator SCHMITT. Thank you, Dr. Marcy. We will include that article by Drucker in the record. I would add, as a comment, that I appreciate the references that both of you have made to S. 414, the so-called Bayh-Dole bill. I am co-sponsor of that bill and it is, we believe, consistent with the direction we are trying to take in a somewhat broader sense in S. 1215.
Are you gentlemen familiar with the patent policies of other countries, particularly the major industrial countries, and if so, could you comment on how they compare with our patent policy or lack of same?
Mr. BREMER. As far as policies are concerned, we have all heard of Japan, Inc. I think that is an attitudinal approach in the sense that in Japan the Government tends to cooperate with certain companies to corner a share of the world market. This is certainly in contrast to the antitrust approach in the United States.
Where the foreign government is cooperating to take technology from outside, although the country itself has almost no resources, and to develop that technology and import it into our own market provides a formidable competitor.
I don't know that in the various other countries the governments support the R. & D. function to the extent that they do here, looking toward the cooperation under a free enterprise system between the private sector and the Government sector to transfer the technology to the public. As you are well aware, in Russia it is quite a different situation. In England-Dr. Marcy's reference to NRDC—it's an effort to pull together any inventions made at various universities, particularly where Government funding has been effected, and to use that agency, NRDC, to license those inventions and to ultimately earn money on them.
Senator SCHMITT. Have you any other comments about the NRDC, Mr. Bremer? Are you supportive of that concept?
Mr. BREMER. No; I do not support the NRDC concept. I support Mr. Tenney Johnson's view that there should be someone other than another Government agency or an already established agency that oversees these things, perhaps a panel that is free from any agency intervention or control.
It is my understanding that currently the NRDC is under attack in Britain from various sources and is considered not to have been as successful as it may appear.
Senator SCHMITT. Dr. Marcy?
Dr. MARCY. Senator, I have to disagree with Mr. Bremer. The NRDC has been under attack, not only once, but about three times, and each time it has weathered the attack and has come back stronger than ever. At present, it was being supported very vigorously by the former British Government. I have not heard anything about the new Government that has come in, as to what they are planning to do.
Senator SCHMITT. Is there a summary or analysis of the NRDC, its history?
Dr. MARCY. Yes; there are many summaries and there are also Government reports that came out of these investigations that are available. I do not have them with me. They are easily available. I would be pleased to get them for you:
Senator SCHMITT. The staff may get in touch with you to ask for those.
Dr. MARCY. Very good. Not only in England and Japan, but also in many of the other European countries and in Canada, some South American countries, Australia and New Zealand also, also India and some of the Third World countries, there are government policies relating to patents and relating to science and research and development.
In this country we have no such overall policy and we are anomalous in that regard. The countries that have these science and technology policies most highly developed, are, of course, the industrialized countries. West Germany does not have such a general Government policy. They function more or less like we do, but with a great deal of Government money input to the R. & D. area, and also into the area of transferring of technology.
The countries that have the NRDC concept, in Mr. Bremer's testimony, he says they deal only with the universities. This is not true. They deal primarily with Government agencies. The agencies of the French Government and the British Government are constrained by law to send any inventions that they might come up with as a result of research supported by them to the NRDC, and in France it is the ANVAR organization. And these two organizations are then charged with trying to get these particular inventions into the marketplace.
The reason I feel it is important to have a centralized organization like that to do this kind of thing is that, as has been mentioned before this morning on several occasions, the Federal Government is just not capable of doing this on a piecemeal basis. One thing that was mentioned, for example, is that the Government does not defend its patents, and it would be kind of a horrendous thing to do this. But this is very important. There is no point in getting a patent if you are not going to defend it. It would be better to publish the results and let them be free for everybody and save the expense of patenting.
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