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As you are aware, S. 1215 is one of many bills currently addressing government patent policy problems. S. 414, the “University and Small Business Patent Procedures Act,” addresses itself to this issue by creating a consistent policy and procedure concerning patentability of inventions made with federal assistance. The Society views S. 414 as a desirable first step in solving some of the problems in this area, and firmly believes that enactment of this legislation will result in increased productivity, and aid in the reassertion of the technological leadership of the United States. A copy of our statement on this matter is attached.
However, S. 414, of and by itself, will not be sufficient to reverse the alarming downward trend in the rate of technological innovation and economic growth in this country. Technological innovation itself is an exceedingly complex endeavor. It requires careful nurturing, a favorable climate and as deep an understanding as possible of the real world factors influencing its conduct; to increase the rate of technological innovation requires a conscious and continuing effort to promote it. At the same time undue and unnecessary control of the innovative process must be avoided in order to prevent its hindrance or, when carried too far, its suppression.
What is needed is a change in climate at all levels of government-from excessively defensive to helpfully encouraging-involving an integrated approach at the administrative, legislative, and judicial levels. Since the innovation process is extremely complex, a single omnibus law also would be exceedingly complex, difficult to administer, and in the end, might have very little real effect. Several pieces of legislation, each addressing a separate issue, would be preferable, as modifications and changes could be made more easily as the results of their influences on the innovative process become apparent. Extreme care must be taken to assure there is cooperation between sponsors of all such legislation so that it will be uniform in its approach and tenor.
A start in this direction already is provided by the introduction of S. 414, addressing government patent policy; S. 1215, providing a consistent policy for the encouragement of the participation of private industry in the further development of federally-assisted research and development results; and, S. 1250 which attempts to foster the development of a favorable climate for the enhancement and improvement of the innovative process. These three bills are companion bills which together set a positive pattern for the future. However, they must be supplemented by other bills which will address additional issues important for influencing the rate of innovation before overall improvement can be perceived.
To acquaint you with the American Chemical Society, we are including here some background information on the Society. The American Chemical Society is an individual membership organization made up of approximately 116,000 chemists and chemical engineers, reflecting a broad spectrum of academic, governmental, and industrial professional pursuits. Approximately 60 percent of the membership is employed by industry, 25 percent by academic institutions, and 15 percent by governmental and nonprofit institutions.
The Society was founded in 1876 and chartered as a nonprofit, scientific and educational organization by an Act of Congress signed into law on August 25, 1937. Under its National Charter, the Society is charged with the responsibility to encourage in the broadest and most liberal manner the advancement of chemistry and the promotion of research in chemical science and industry "thereby fostering the public welfare and education, aiding the development of our country's industries, and adding to the material prosperity and happiness of our people.”
The Charter imposes an obligation on the Society to provide assistance to the government in matters of national concern related to its areas of competence. Since one of the objectives of our Federal Charter is the promotion of research, we have welcomed this opportunity to comment on S. 1215.
We hope your Subcommittee will give serious consideration to the thoughts and recommendations of the American Chemical Society during deliberations on this legislation. If we can be of further assistance, we would be happy to cooperate with you. Sincerely yours,
GARDNER W. Stacy.
MACHINERY & ALLIED PRODUCTS INSTITUTE,
Washington, D.C., August 23, 1979. Hon. ADLAI E. STEVENSON, Chairman, Subcommittee on Science, Technology, and Space, Committee on Com
merce, Science, and Transportation, U.S. Senate, Washington, D.C.
THE PROPOSED “SCIENCE AND TECHNOLOGY RESEARCH AND DEVELOPMENT UTILIZATION
POLCY ACT" DEAR MR. CHAIRMAN: In connection with the current consideration by the Subcommittee on Science, Technology and Space of S. 1215, the proposed “Science and Technology Research and Development Utilization Policy Act,” we are writing to present our comments and recommendations. As you know, the Machinery and Allied Products Institute represents the capital goods and allied product industries of the United States. These companies, of course, rely heavily upon continuing technological development and excellence for the maintenance of their competitive positions. Hence, they are vitally concerned with the policies of the federal government with respect to patents and technical data in connection with the performance of government contracts, even though these companies, for the most part, are predominantly commercial rather than government oriented in terms of their total sales. This concern with patent and data problems in government contracts has been reflected by the Institute in a number of studies and in testimony before congressional committees and government departments and agencies.
S. 1215, which Senator Schmitt introduced, for himself, you, and Senator Cannon on March 22, would establish a uniform policy throughout the government as to the disposition of patents and other rights to inventions occurring during the performance of research and development (R&D) contracts whith the federal government. With the exception of a few specified situations in which the government would generally be required to take title to contractor inventions, contractors under the bill would have the option to take patents on such inventions, subject to the reservation to the government of a nonexclusive, royalty-free license (the so-called "license" policy). The contractor right would also be subject to the excercise of “march in" rights under which the government might compel licensing of other parties if the invention is not brought to practical application within a reasonable period of time or if other specific considerations relating to the public interest are determined to exist.
MAPI supports S. 1215. We have long believed, and have so stated on many occasions in the past in public hearings before congressional committees and elsewhere, that there should be a general presumption in favor of the license policy rather than the "title" policy under which the government would normally insist on full rights in inventions under research and development contracts. Although certain technical revisions in the bill might be desirable-such as the deletion of the provision requiring the government to take title in the case of classified work being done under contract-we think that the proposed legislation, with what amounts to a general presumption in favor of the license policy, merits our support and we urge its prompt adoption.
THE TITLE POLICY AND RESULTING PROBLEMS At the present time, specific statutes governing the performance of R&D contracts for such federal agencies as the Department of Energy, the Department of Transportation, the Department of Health, Education and Welfare, NASA, and others require the use of the title policy which has caused a number of problems. In many instances, although waviers of the government's title are possible in some cases, there have been inordinate delays in finally acting on such contractor waiver applications. The substantial disincentive aspects of this situation, of course, have made it increasingly difficult for agencies to secure firms which have substantial commercial market alternatives to do R&D work for the government. In addition, there has been very substantial lack of progress in securing commercial application and development of the rapidly growing portfolio of government-owned patents, a problem which seems to be getting worse as time goes on.
THE HISTORICAL BACKGROUND In the post-World War II period, with the increase in the government's R&D budget, there was growing concern about what should be the government's policy concerning rights to inventions occurring in the performance of R&D work. The Department of Justice urged a title policy, largely on antitrust grounds, while the Department of Defense continued with its traditional license policy. Then, by statute, the Atomic Energy Commission in 1954 and the National Aeronautics and Space Administration in 1958 were required to follow what amounts to a title policy, and, as indicated previously, soon thereafter, beginning in the early 1960's, a number of other statutes were enacted requiring a title policy in connection with new R&D programs and agencies. this situation led to growing concern that frequently whether the contractor had to cope with the title or the license policy depended upon the agency with which he contracted. To bring about some semblance of uniformity in treatment, President Kennedy in October 1963 issued a memorandum and Statement of Government Patent Policy (slightly revised and improved by President Nixon in 1971) which established a uniform policy to be followed by all government departments and agencies in similar contracting situations, expect to the extent that those departments and agencies were subject to contrary direction by specific statutory provisions. Subsequently, the late Senator McClellan, who then chaired the Senate Judiciary Subcommittee on Patents, Trademarks and Copyrights, proposed to establish a statutory policy on this subject. However, there was considerable opposition to such legislation from those in Congress and elsewhere who claimed that anything other than a title policy represented a "giveaway" of the public's rights to inventions.
CURRENT STATUS In real sense, the matter has now come to a head as the result of what has happened following the recommendations of the commission on Government procurement (COGP) in December 1972. In brief, with respect to patent policy, the Commission recommended that the Presidential Memorandum and Statement on Government Patent Policy be implemented promptly and uniformly and that, if further experience with the memorandum so indicated, consideration in the alternative be given to a statue establishing a general presumption in favor of the license policy but subject to strong “march in" rights to protect the public interest. A government Interagency Committee on Patent Policy, after evaluating further experience under the Memorandum, accepted the alternative approach and developed a draft legislative proposal embodying that approach in September 1975. There the matter has stood—now for nearly four years-with the Executive branch, apparently because of strong Department of Justice opposition to the legislative proposal, unable to arrive at a position on the matter. Clearly, if anything is going to be done in this area, Congress will have to take the initiative because the Administration seems either unwilling or unable to act. Moreover, the need for a resolution of the problem along the lines suggested now has assumed a greater urgency with the growing concern, particularly in recent months, about the decline of both productivity and technological development in the country and the obvious need for the government to do whatever it can in terms of policy to reverse this trend.
Summing up, we support S. 1215 and its resolution of the present controversy concerning government patent policy under R&D contracts. In essence, the bill would help to get the right companies involved in the performance of federal R&D work and it would also provide the proper incentives for the commercial application of resulting inventions. Finally, the public interest would be adequately protected by both the specific government title-taking criteria and by the very strong “march in" rights also reserved to the government.
This completes our comments in connection with the proposed "Science and Technology Research and Development Utilization Policy Act." If we can be of further assistance, please let us know. Cordially,
CHARLES W. STEWART,
PHARMACEUTICAL MANUFACTURERS ASSOCIATION,
Washington, D.C., September 12, 1979. Hon. ADLAI E. STEVENSON, Chairman, Subcommittee on Science, Technology, and Space, Committee on Com
merce, Science, and Technology, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: We appreciate the opportunity to present the Pharmaceutical Manufacturers Association's views on S. 1215, the Science and Technol
Research and Development Utilization Policy Act. The Pharmaceutical Manufacturers Association is a non-profit national association representating 140 manufacturers of prescription and ethically promoted pharmaceuticals, drugs and medical devices. PMA member compaines regularly seek to develop new techologies arising out of federally funded research. We strongly believe that the incentives of the United States patent system must be reasonably available to private industry so that discoveries made with public money can be developed and commercialized.
PMA supports a uniform system of government patent policy under which first rights to inventions resulting from federally supported research are made available to the private sector. Therefore, we endorse the basic approach stated in S. 1215. Further PMA supports the patent policy of the Department of Health, Education, and Welfare under which institutions receiving federal grants may qualify to obtain principal rights to inventions resulting from such research. Qualifying institutions then have the opportunity to enter into license arrangements with private concerns for the development and commercialization of such inventions. S. 1215 would appropriately allow non-profit organizations to retain patent rights to inventions that have been made under federally funded research programs if these institutions have demonstrated the capability to develop and market these inventions.
We appreciate the opportunity to present our views on this important legislation and ask that our comments be included in the hearing record. Sincerely,
BRUCE J. BRENNAN.