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for the Naval Nuclear Propulsion Program without having to give away Government patent rights.
Patents are generally incidental to Government research and development work, not its primary purpose. The patents that arise under a Government R. & D. program are not at all indicative of the technology developed. When I place an R. & D. contract for a new design reactor, it is principally to work out the details of a design and to identify and resolve the problems of design, manufacture, and operation. If patentable inventions arise in the course of this work, they generally involve only small design features, not entirely new concepts.
The existence of a large number of Government-owned patents which apparently are not being used does not present an accurate representation of Government-owned patent utilization. It is almost impossible to tell the extent to which patented inventions are being used, particularly in the case of Government-owned patents. Government agencies do not have a reason to search for patent infringement. The Government, unlike private parties, generally has no desire to prevent others from using its inventions.
The proposed bill would place upon each Government agency an obligation to promote the use of patents the Government already owns as if they were predominantly good ideas. Such efforts would tend to divert attention and resources of the Government agencies away from their main functions. Under the proposed bill, Government agencies would be expected to actively promote patents currently held by the Government.
Most agencies have enough trouble doing the job they were established to do; they should not be required to spend their time and resources trying to promote patents, the majority of which are of dubious value. I believe that the decision to use or not use Government financed inventions is one best left for the private sector.
In many areas today, the Government is in the forefront of technological development. The public is actually financing development of entire new technologies. The U.S. Government intends to spend in fiscal year 1980 nearly $32 billion for research and development.
The majority of these Federal research and development dollars will go to large contractors. For example, in fiscal year 1978, 64 percent of the total dollar value of research and development contracts placed by the Department of Defense went to only 19 large contractors.
If the rights to publicly financed inventions are given to contractors, the Government itself will be promoting the concentration of economic power in the hands of a few large corporations, mainly conglomerates. As the corporations expand, the problem is exacerbated.
Currently, the President and many members of Congress are calling for the expenditure of unprecedented sums to develop new sources of energy and more efficient ways of using it. By far, the vast majority of these funds will be spent under contracts with large corporations.
Imagine the public furor that would ensue if, under the terms of this bill, a contractor, either large or small, developed at public expense a major breakthrough in energy technology. Is it proper for that company to be able to exercise monopoly rights over the distribution, use, and pricing of the results for 17 years? I think no. In my view, the rights to inventions developed at public expense should be vested in the Government and made available for use by any U.S. citizen.
Many large corporations patent minor improvements or design features simply to discourage competitors or potential competitors—particularly small firms—from trying to enter the market. To challenge the validity of any of these patents can take hundreds of thousands of dollars and years of litigation. Although a high percentage of patents contested in court are ruled invalid, not many firms can afford the lengthy litigation that is required to challenge a patent. Thus, if the Government were to give its contractors title to inventions developed at public expense, it would be discouraging competition and making it easier for large businesses to freeze out their smaller competitors.
In apparent anticipation of concerns that a contractor might obtain title to publicly financed inventions then not use it, the bill contains a march-in rights provision. Under this provision, the Government retains the right to force widespread licensing if it determines that the contractor who has title to the invention is not satisfactorily developing and promoting it.
This safeguard would be cumbersome, ineffective, and largely cosmetic. The Government has had march-in rights since 1963, but to my knowledge has never, or very, very rarely ever used them. To be in a position to exercise these rights the Government would have to stay involved in the plans and actions of patent holders and check up on them. If the Government ever decided to exercise its march-in rights and the patent holder contested the action, no doubt the dispute could be litigated for years.
This proposed bill is but one of many patent bill introduced in Congress in recent years aimed at giving contractors title or exclusive rights to inventions developed under their Government contracts. The rationale for such legislative proposals has varied over the years. In the past, the proponents have stressed the possibility that companies would not accept Government contracts unless they were guaranteed exclusive patent rights. The issue being promoted today is that innovation will decline unless the Government gives away patent rights to publicly financed inventions.
I have testified numerous times during the last 20 years in opposition to proposals that would give away the Government's patent rights. In recent years, I testified before the Senate Small Business Committee and before the Senate Judiciary Committee. With your permission, Mr. Chairman, I would like to include those statements as part of my testimony today. I would like to include, for the sake of the historical record and to show the part that you and I played, the original testimony to you when you were chairman.
Senator Long. We would be happy to have that in the record.
Admiral RICKOVER. In summary, I believe that inventions paid for by the Government should belong to the public, and all citizens should have an equal opportunity to use these inventions. Private firms, particularly large companies, should not be able to get a 17
1 The National Patent Policy hearing of June 2, 1961 has been placed in the committee files.
year monopoly on inventions they develop with tax dollars. In my opinion, the effects of Government patent policy are continually exaggerated and overemphasized by the patent lawyers and contractors who have a vested interest in the matter. Proposed changes regarding ownership and use of patents developed at Government expense are always presented under the banner of high sounding principles and purposes. Having observed this issue for many years, I am thoroughly convinced that almost all of such proposed changes are contrary to the best interests of the United States.
In my view, Congress should require the Government to retain title to all inventions developed at public expense and make these inventions freely available for use by the public. In this regard, the Commerce Department should be required to publicize for a period of 6 months the availability of each patent to which the Government has title and to grant nonexclusive licenses to those who express an interest in using the invention on this basis. If during this period no one requests a nonexclusive license, the patent rights would be thrown open to competitive bidding with an exclusive license granted to the highest bidder, but not for the entire 17year period for which a patent is valid. At the end of this period, the invention would fall in the public domain. To avoid circumvention of these procedures Government agencies should be prohibited from waiving Government patent rights.
The basic principle embodied in present laws is that the Government should have title to inventions developed with Government funds. The reasons the Government should take title to these inventions are primarily to preclude the establishment of a private monopoly for a publicly financed invention; to insure the public has equal access to these inventions; and to insure the Government is not subsequently barred from using the idea by someone else's patent. These are sound reasons that I fully support. The basic principle of title in Government should be modified, waived, or otherwise tampered with only for compelling reasons-and even then with great care and in the most limited way needed to accomplish the purpose.
That is the end of my statement.
Senator LONG. Admiral Rickover, I appreciate your appearance here today and may I say you have been a compelling witness from my point of view on this subject.
Now you made a point some years ago in testifying on this subject when I was chairman of the Small Business Subcommittee which until now I had forgotten. You said that most of these people who do this research are sophisticated enough to know that their ultimate employer is the U.S. Government. For example, here's some fellow who's working for some company, let's say Westinghouse for lack of a better name, and so the Government pays Westinghouse and Westinghouse hires a scientist. Now the scientist is the fellow who makes the breakthrough. Well, he has a contract with Westinghouse so he's not privileged to have a private monopoly on his brainchild. Westinghouse gets that because Westinghouse hired him. But the Government hired Westinghouse.
Admiral RICKOVER. You know what's wrong with your statement, Senator? You're just talking some ordinary commonsense that any citizen can understand. But apparently the patent lawyers can'tyou're not a lawyer, I hope, sir. Senator LONG. I am a lawyer by profession.
Senator SCHMITT. But I'm not, Admiral. The author of the bill before you is not. He's a geologist.
Admiral RICKOVER. I'm sorry to learn you're a lawyer, Senator. You are a rare breed-a lawyer who can also see the truth. I don't mind if you use that in your campaign if you wish, sir.
Many of the problems we have today are fomented by lawyers. If we didn't have so many lawyers, we wouldn't have these problems. Many of them create the problems and then make money by proposing solutions.
Of course, what you said makes sense, Senator Long. When the Westinghouse engineer develops something, he doesn't get anything for it. He's paid by Westinghouse and, as you say, Westinghouse is paid by the Government. Why isn't the Government treated exactly the same way? That's all there is to it. I could testify for months on this subject, but you have said it all very succinctly.
Senator LONG. Well, basically, isn't this about the same thing, as though the Government pays a highway contractor to build a highway; then after he builds a highway you say, "Now all right; you can keep the highway and you can either charge the public to use the highway if you want to or deny them the right to use it entirely,” even though the public paid the whole cost of it.
Admiral RICKOVER. Yes, sir. It is the equivalent of the man who built the highway saying, “Now that I have built the highway it belongs to me and I'm going to charge the Government to put vehicles on this road.”
Senator LONG. Wouldn't it be about the same principle as if we said for our new Senate building, “We'll pay for it. Go ahead and build the Senate office building,” and after he gets through building it he owns the building and we have to pay rent if we want to use it?
Admiral RICKOVER. The unfortunate thing is that you and I think alike, Senator Long. Perhaps I could run for the Senate on that basis. The patent system is that simple. I don't understand why Congress have these hearings every year to cover the same ground. The same points are brought up and yet the same legislation is introduced every year which will give these rights away.
Senator LONG. We hear the argument that if you're going to get somebody to use one of these patents that he's going to have to have a monopoly. Now basically, what you're talking about with a patent is somebody has an idea. It's a way of doing something. It works and he's the fellow who puts the idea to work. Now if it's in the public domain, can you explain to me why people wouldn't use it? It's just like saying if you can develop a better mousetrap and if people want to trap mice, why wouldn't they go ahead and make a better mousetrap?
Admiral RICKOVER. The reason is because most patents aren't worth much. Those that are worth something are used. One of the things I mentioned in my statement was that the Government could put out for competitive bidding the patent rights to those Government-owned patents which are not being used.
Senator LONG. It's also suggested that somebody might not be interested in doing research for the Government if he can't get a private patent.
Admiral RICKOVER. I have not found that to be the case in my experience with contractors. I hear that argument all the time. In my career, I have not found one single instance of a company refusing Government work because it could not receive patent rights.
Senator LONG. It seems to me one simple answer-I would have no objection to saying, all right, if we want some type research done let's open it up and let those who would like to participate make their proposition and some fellow says, “I'm the best man to do it but I'm only going to do it if I have a patent monopoly," and then let that fellow make the offer on that basis and see if we are so hard up for contractors in that case to consider his proposition.
Admiral RICKOVER. I thoroughly agree, sir.
Senator LONG. It occurs to me there might be some situation like that, but I think he ought to bear the burden of proof. If he's the only fellow who's qualified and he had all sorts of proprietary information he could start with so he is the best, and if he could make a case, I wouldn't object. But to take the kind of thing where you have plenty of competent contractors who would like to have the business and let the public fully have the benefit-
Admiral RICKOVER. And as I said, Senator, I have not found one single case where the issue of patents was the determining factor of whether a company accepted a Government contract, and I'm talking about thousands of different contractors over a period of many, many years. I haven't found this to be true.
Senator LONG. Is this bill providing a limitation on just how much the successful contractor can charge the public for what the public has already paid for?
Admiral RICKOVER. No, sir, it does not.
Senator Long. In other words, if some fellow found a much better light bulb that provided at one-quarter of the energy twice as much light, conceivably a patent and a monopoly to such an invention might be worth $500 million. Goodness knows what it might be worth. Is there any limitation in this proposal as to how much he could charge the public to have the benefit of what the public had already paid for when they paid for the research?
Admiral RICKOVER. I don't believe there is. I might say, in this connection that I have been in the atomic energy field now for many years and I have been able to get the large companies to work together on these things and to exchange information with no patents involved at all. The patents all belong to the people. I have never once given anybody the right to patents. In fact, I have developed some things myself. I turned the rights—which I could have patented and made money on, over to the Government.
Senator LONG. Suppose, Admiral Rickover, somebody working in atomic research could show up with a brilliant idea. Say, he actually found å way whereby instead of using this atomic power to heat water and then use the water to turn a turbine and the turbine to generate electricity, suppose he found a way where you could put that atomic power directly into that copper wire and just transmit it right on to the public and reduce the cost of delivering that