Page images
PDF
EPUB

Thermo Electron, in conducting Research and Development under government funding looks forward either to commercialization by Thermo Electron or by licensing third parties under technology and patents. It hopes the incentive will be there when the time for commercialization comes. As said before, our experience has shown that potential licensees are interested only if some degree of exclusivity is available.

The patent system has been in operation for a long time. I see no reason to believe that the public would fare any differently from a contractor operating under patents which were obtained through government sponsored research than from a business operating under patent obtained through privately sponsored research. The present bill does not propose a move from a presently known condition to an unknown condition, but proposes a move from a presently known condition toward another known condition. There is a potential for public benefit and I do not see a corresponding potential for public harm.

I would like to comment on several other issues which have been raised in connection with this bill.

Question 1. What have been the effects of federal agency patent policies and practices on the development and commercialization of government sponsored invention?

Answer. In implementation, if not by design, the federal agency patent policies appear to provide to the contractor the minimum right under the federally owned patent which would be sufficient to enable him to enter the market. The contractor appears too often viewed as one whose actions are likely to be contrary to the public interest rather than being viewed as one through whom economic benefits can flow to the public. The present policy does not stand as a bar to commercialization but it does not encourage commercialization and I believe it tends to discourage or impede commercialization.

Question 2. Is there justification for maintaining a title-in-Government policy with respect to research and development for civilian purposes and a policy which provides substantial rights to the contractor for military and other Government research and development?

Answer. I see no reason for a distinction. Commercialization of Government sponsored inventions and commercialization of products which are spin-offs from government sponsored research can be facilitated by granting to both categories of contractors rights under patents which permit the incentive of the patent system to be available to the contractor.

Question 3. Should the government try to recoup some of its research and development funding from a contractor who commercializes a product using a government sponsored invention?

Answer. No. If introduction of new technology to the marketplace is a primary objective we should not be concerned with recoupment of government research and development funding. This requirement will blunt profitability and therefore blunt incentive and will detract from the primary objective. The public benefits through increased employment and increased tax revenue.

Question 4. Would you favor a self-enforcing licensing requirement whereby the contractors exclusive rights to an invention would expire after a reasonable time, unless the contractor demonstrated a need for an extension?

Answer. No. The shorter the time available to the contractor, the smaller will be the incentive.

Question 5. When should the government retain title to government-sponsored inventions?

Answer. When the primary benefit to be obtained from the research is not intended to be achieved through commercial application of the resulting technology. For example, if a product resulting from the research is to be purchased principally or exclusively by the government, ordinary market incentives are not needed to get the product into practical application. The government could retain title in these cases and still achieve its ultimate objective, if these contractors will agree to these terms. Even if the contractors were agreeable, I would expect title in the government to inhibit commercial spin-offs from such government-sponsored research. The spinoffs from this research accounted for significant technical advances.

Question 6. Are field of use restrictions appropriate?

Answer. As long as the field provided to the contractor is that in which he wants and needs to operate, the field of use restriction would probably have less effect on any commercial activity than any other of those mentioned. The difficulty might be in determining how broad or how narrow the field of use restrictions should be. I expect that the contractor and the contracting officer for the agency would frequently find this a most important question on which agreement was difficult.

52-476 O - 80 - 25

Additionally, I doubt that a substantial public benefit would result from the rights retained by from government. I believe a private contractor is inherently better equipped and more likely to find a commercial market than is a government agency. At present the government agencies are not equipped to perform this marketing function. I do not believe that public funds would be well spent if they were directed to staffing agencies or an agency to perform such a marketing function.

COMMENTS ON SPECIFIC SECTIONS OF S. 1215

S. 1215 strikes a reasonable balance between incentive to bring scientific and technological developments to practical application on the one hand and legitimate government concerns on the other hand. We can support this Bill in its present form. However we offer the following for your consideration:

Section 201(b)4

A central review entity is essential if the Act is to have uniform application across agency lines. This would hopefully provide a single body from which appeals to the judiciary could be taken.

Section 301

The agency determination should be at or before the time of entering into the contract. Otherwise, the contractor continues to operate under a cloud of Federal rights competing with his own. The determination statement required by Subsection B should also be filed with the contractor.

Section 302(b)

The non-exclusive royalty-free license retained by the contractor when the government obtains title to an invention should be applicable to those inventions to which the government obtained title pursuant to Subsection 302(A) as well as those to which it obtained title under Section 301. Additionally, as long as the contractor is actively promoting practical application of an invention under circumstances which are expected to be effective within a reasonable time, the non-exclusive license retained by the Contractor under Subsection 302(B) should not be revoked to the extent that such a license is important to the commercialization of an invention to which title has been retained by the contractor.

Section 304(a)

It should be expressly clear that reasonable terms include payment of a reasonable royalty. It should generally be clear that if the contractor has mounted an effort to achieve practical application of the invention it can't be compelled to relinguish its right except upon reasonable terms.

Section 305(a)(3)

It should be made clear that the Federal Agencies may agree at the time of entering into the contract that they will withhold from public disclosure information for a reasonable time in order to permit patent applications to be filed. During this period the information should not be obtainable under the Freedom of Information Act. If the determination to withhold from public disclosure is made during work under the contract on a case-by-case basis, it increases the administrative burden and could put the contractor in the position of having to jeopardize its patent rights to comply with its contractual obligation to submit information to the funding agency promptly. If the information is submitted without assurances of confidentiality and exemption from FOIA, it might be construed as publicly available and therefor subject to statutory bars under the patent law as of the time of its submission.

Section 307

Under the authority of Section 307, the government should not revoke a nonexclusive license already granted to the contractor where that non-exclusive license is relevant to achieving practical application of an invention to which the contractor has retained title. The non-exclusive license left to the contractor could be limited in scope to that which is necessary for the practice of inventions to which the contractor has title.

Senator STEVENSON. Thank you, sir.

Senator SCHMITT. Our next witness and our final witness this morning is Admiral Rickover, the Deputy Commander for Nuclear Propulsion, Naval Sea Systems Command. Thank you, Admiral, for

joining us. Your name has been mentioned. I don't know if you have had a chance to hear all of the testimony, but most of it has not been very suportive of your views.

Admiral RICKOVER. Well, my first view is that you have a very lovely hearing room and one in which you cannot hear in the back. Outside of that, it's a very fine hearing room.

Senator STEVENSON. Well, I'm sorry about that, but maybe it's just as well.

STATEMENT OF ADM. H. G. RICKOVER, DEPUTY COMMANDER FOR NUCLEAR PROPULSION, NAVAL SEA SYSTEMS COMMAND, DEPARTMENT OF THE NAVY

Admiral RICKOVER. I think you're probably right because I believe that this whole patent situation has gotten way out of hand. Before I start my statement, if you care to, I will tell you my feeling about the patent system in general.

Back in the Age of Mercantilism, monopolies, called letters patent, were granted by the king. Finally, Parliament passed a law abolishing all monopolies with one exception, and that was if an individual got an idea he could patent it. That was the one exception they made.

Now the whole patent situation has gotten out of hand because of patent lawyers. If we did away with the patent lawyers, we would simplify the system.

Senator STEVENSON. Are you confining it to patent lawyers?

Admiral RICKOVER. That's right, sir. Patent lawyers are responsible for the fouled up mess we have in patents. If you go back to the origin of the patent system, it was intended to protect the individual, who with his own money and his own time, developed a new idea. That was the one exception made by Parliament.

Senator STEVENSON. We heard this morning-Admiral, I'm sorry you didn't hear it-that all nations with the exception of the People's Republic of China have patent laws and presumably they have patent fraternities, and not in England but this system originated in Venice in the 17th century, and apparently since then it has moved to all countries, including all Communist countries with the exception of that one. Are they all wrong?

Admiral RICKOVER. I'm going back to the English laws. In England, as I said, they had a mercantile system and they had monopolies. But in 1624 Parliament abolished the system with one exception. The exception was monopoly rights granted to inventors. Parliament made that one exception. That is the origin of our patent system. This system has now grown into a vast complex issue. The issue before us today is a simple one-if a man invents something on his own time and with his own money, he should get a patent. However, the issue becomes complicated when corporations enter the scene and introduce with all kinds of nuances on this patent issue which takes up the time of many people. I believe if you go back to the original principle, it will simplify the problem before you.

Senator STEVENSON. The original principle being?

Admiral RICKOVER. The original principle being that, if a man has an idea and on his own time and with his own money develops something, he should get certain rights. They made exceptions

even to that for medical purposes. It was felt until very recently in all European countries that if a man developed something that had connotations of public health it was not patentable. One of the reasons for the exception was that the Chamberlen family, who invented obstetric forceps, did not release information about their discovery for 100 years. Therefor, over a 100-year period, many children died unnecessarily during childbirth and it was very difficult for mothers. And all that time the Chamberlens knew this and kept the forceps to themselves. When it became known, it aroused a great deal of public opinion which forced people who had ideas to make them known. That's another reason for the patent system. The basic idea was for the public welfare and not for the welfare of corporations. Now patents primarily benefit big business, like almost everything else in this country. That is not in my written statement. But I think you should know my feelings, since this issue comes up annually. I believe it's a big waste of time over a simple thing. I believe this committee could accomplish something by taking a definite stand and making up some simple rules.

If I tried to do my technical work the way patents are handled in this country, we would never have any nuclear ships. We would constantly be arguing about things that have no real moment. How's that for a statement, sir?

Senator STEVENSON. I don't think so far the witnesses would disagree with you entirely.

Admiral RICKOVER. Well, that's wonderful. I'm glad to see that somebody is finally in agreement with me on the patent situation. I applaud that very much. I was thinking of another example I could give about patents. Let's take the case of Arizona-I believe that's the State that Senator Schmitt comes from

Senator SCHMITT. New Mexico.

Admiral RICKOVER. OK. They're both about the same. They happened to come into the union at about the same time.

Senator SCHMITT. We both have very fine battleships. Unfortunately, our sister State's battleship disappeared in Pearl Harbor. Admiral RICKOVER. I served on the New Mexico, so I know something about that ship, sir.

Suppose you own a plot of land, let's say 1,000 acres. Because you think there might be minerals on that land you hire a group of prospectors to go out and dig holes in the ground. They come back and report to you they found gold or uranium. Who owns that gold or uranium? The guy who did the prospecting or the owner of the land? You're the owner. Who owns the rights to that, sir?

Senator SCHMITT. I own the mineral rights. I own whatever is under it, but I probably would have gone out and found it myself. Admiral RICKOVER. Well, you could, because you are a geologist. But supposing you hired someone else to do it. Who would own the minerals? You paid the man for digging holes and he reported to you that there's gold in that ground. Who owns that gold? Senator SCHMITT. I would own it.

Admiral RICKOVER. Let's say adjacent to your land is another 1,000 acre, plot that belongs to the Government. The Government hires the very same prospectors who search the land and come up with the same results. Who should own the gold? The man who did

the prospecting or the Government, the 220 million people who own the land? Who should own the rights?

Senator SCHMITT. It depends on whether it's to the advantage of the Government to let the people who found it market it.

Admiral RICKOVER. But that is up to the owner, sir. You could also do that in your case. It belongs to the Government to dispose of it as it wishes.

Senator SCHMITT. The issue before us today is just how is the Government going to dispose of the valuable products developed under its auspices.

Admiral RICKOVER. That's right, sir. But the Government has the right to decide, not the man who did the prospecting. The prospector does not have any rights except as the Government gives him. That's the point, sir.

Senator SCHMITT. Well, the purpose of S. 1215 is for the government to make that decision. We are part of the government.

Admiral RICKOVER. Fine. We'll leave it up to the Government. But the way it is now, as I see it, the people who do the prospecting say they have a right. That's what I'm getting at, sir.

Senator SCHMITT. They only have title if we give it to them, Admiral.

Admiral RICKOVER. That's right.

Senator SCHMITT. The purpose is to try to determine those areas where giving away of title will accelerate the introduction of a technology into the private sector for commercialization.

Admiral RICKOVER. That should be a decision the Government makes without any threats or lobbying or anything else by the guy who did the digging. It should be entirely up to the Government. I thoroughly agree with that, sir.

Senator SCHMITT. That's consistent with what we're trying to do with S. 1215.

Admiral RICKOVER. In that case, I applaud this committee. Now, with your permission, I'd like to read my statement.

Thank you for inviting me to testify on S. 1215, the, "Science and Technology Research and Development Policy Act." My comments on this bill are based on my dealings with various segments of American industry both as head of the Naval Nuclear Propulsion Program for the past 30 years and as head of the Bureau of Ships Electrical Branch during World War II. That was for a period of about 6 years.

The basic principle in most current laws concerning government patents is that the government should retain title to patents developed at public expense. The proposed bill would reverse this principle so that, except in unusual cases, government contractors would be able to take title to any inventions arising under their contracts with the Government. Government agencies could retain title to inventions only in the limited circumstances prescribed by the bill and only if retention could be justified to the satisfaction of the Secretary of Commerce.

I would like to repeat what I've said a number of times about the Department of Commerce in the issue of patents and others. The Department of Commerce, in my opinion, is about as useful to the government as a lighthouse without a light.

« PreviousContinue »