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PRELIMINARY REPORT AS TO THE PATENT PRACTICES OF THE VETERANS' ADMINISTRATION

I. LEGAL AUTHORITY AS TO PATENTS

The Veterans' Administration received specific authority to enter into contracts for research purposes from which inventions might result with the enactment of Public Law 346, 78th Congress, June 22, 1944, and Public Law 729, 80th Congress, June 19, 1948. These laws were first codified as title 38 United States Code, sections 253, 254, and 697(a).

Section 253 stated:

There is authorized to be appropriated annually to the Veterans' Administration and to remain available until expended the sum of $1,000,000 to be expended, in accordance with laws now or hereafter applicable to the Veterans' Administration, for prosthetic research, including all forms of prosthetic and orthopedic appliances and sensory devices. Section 254 stated:

In carrying out the research program authorized by section 253 of this title the Administrator of Veterans' Affairs is authorized to make available the results of his investigations to private or public institutions or agencies and to individuals in order that the unique investigative materials and research data in the possession of the Government may result in improved prosthetic appliances for all disabled persons.

Public Law 85-857, 85th Congress, 2d session, H.R. 9700, September 2, 1958, which became effective January 1, 1959, recodified sections 253 and 254, as section 216, which states:

The Administrator shall conduct research in the field of prosthesis, prosthetic appliances, orthopedic appliances, and sensory devices.

In order that the unique investigative materials and research data in the possession of the Government may result in improved prosthetic appliances for all disabled persons, the Administrator may make available to any person the results of his research.

The VA states that "there is no change of substance" as a result of the recodification because the purpose was merely to simplify the language of old sections 253 and 254. It, therefore, seems clear that the VA is obligated to make the results of its prosthetic research available to all disabled persons as well as to veterans.

Letter of Oct. 10, 1958, to Hon. Joseph C. O'Mahoney, chairman, Subcommittee on Patents, Trademarks and Copyrights, Committee on the Judiciary of the U.S. Senate from Guy H. Birdsall, General Counsel, Veterans' Administration, hereinafter cited as letter of Oct. 10, 1958.

Section 697 (a) granted general authority to engage in and control medical research. This section has been recodified as section 213

with no change in meaning.

Public Law 85-934, 85th Congress, 2d session, S. 4039, September 6, 1958, granted the VA and other Government agencies specific authority to issue research grants to nonprofit organizations.

1. Personnel

II. PRESENT PRACTICE

A. ADMINISTRATION

The Veterans' Administration is presently spending annually about $15 million for medical research (including $1 million for prosthetic research) which is producing a substantial number of inventions.

The VA has no staff setup to deal exclusively or primarily with patent matters but the General Counsel is authorized to act for the Administrator of Veterans' Affairs in patent and invention matters. The contracting officer and the scientific officer also act on patent and invention matters as part of the duties of their office. Records relating to patents developed under research contracts in the field of prosthetic and orthopedic appliances and sensory devices are maintained by a GS-6 employee who devotes less than 10 percent of his time thereto.

Prior to September 4, 1953, if it appeared that an employee invention was a matter of public interest, the matter was referred to the Civil Division of the Department of Justice. Since that time the Department of the Army has processed such employees' patent applications pursuant to the provisions of 31 U.S.C. 686.2

2. Performance statistics

The Veterans' Administration has caused the Government to take title to two patents developed by employees, one of which covers a blood oxygenator.3

Patent applications have been filed at Government expense in cases in which the inventions were made by VA employees or arose out of VA programs. The Government obtained a royalty-free license for use and manufacture for governmental purposes in all of these cases except the two noted above.

This provision provides that departments or agencies of the Government may perform services for each other. U.S. Patent No. 2833279.

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B. POLICY AS TO RETENTION OF TITLE

The Veterans' Administration, after initiating its prosthetic research program, concluded that "publication of results would not protect the interests of disabled persons as effectively as patents would, if the patents are properly controlled." The VA believes that with mere publication outsiders could still obtain patents on these inventions, but that their chances would be much less if patent applications were filed in the first instance by either the VA or the contractor. Under present VA policy, the results of all research are published and where an invention is made which is the product of VA expenditure a patent application is filed. However, as noted above, VA itself has taken title to the patent in only two instances. 1. Employees

The determination of invention rights as between the Government and the employee is made by the General Counsel of the VA. The VA has left title to the invention in the employee in all instances but two, retaining for the Government a nonexclusive, irrevocable, royalty-free license in the invention for all governmental purposes. These decisions have been subject to the approval of the Chairman of the Government Patents Board."

An employee may file simultaneously for an incentive award for his invention under the Federal departments and agencies incentive award program authorized by title 5 United States Code, sections 2121-2123. This action by the employee does not affect his right to a patent, nor does the filing of a patent application affect his filing for an incentive award.

2. Contractors and Grantees

The Veterans' Administration treats the rights to patents as a matter for negotiation between the parties to a research grant or contract. Usually these contracts provide that inventions and patents are the property of the contractor or grantee subject to a nonexclusive, irrevocable, royalty-free license to the Government for the use and

'Letter of Oct. 10, 1958, supra.

See Executive Order 10096, dated Jan. 23, 1950.

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manufacture of the invention for governmental purposes.

The VA, in addition, usually acquire the right to reproduce and disclose technical information, designs, drawings, reports, and data pertaining to the invention.

The Veterans' Administration originally drafted a "short form" and later a "long form" patent clause to be used in its research contracts. Under the "short form" clause the Government retains all foreign and domestic rights to inventions and the VA's contracting officer determines whether patents should be applied for. The VA at present has 10 contracts still in effect containing the "short form" or the "modified short form" clauses. Six contracts containing the "short form," "modified short form A" and the "Modified short form B" 10 clauses have terminated. The "modified short form A" and "modified short form B" clauses are essentially identical to the "short form" clause except that both of these "modified" forms state that the contractor is relieved from any obligation of prior art searches, the preparation, filing, and prosecution of patent applications, determination of questions of novelty, patentability, and inventorship. The "modified short form A" also states that the contractors are not responsible to the Government for any default caused by an employee directly engaged in the contract work who breaches an agreement with the contractor to execute all documents and other required duties necessary to fulfill the contract. The "modified short form" patent contract clause states that whenever any patentable invention is made by the contractor or its employees in the course of the contract, the VA contracting officer has the sole power to determine whether or not a patent application shall be filed, and to determine the disposition of the title to and the rights under any application or patent that may result. Although contracts containing the "short form" and the various "modified short forms" patent clauses have been in use since World War II, the Veterans' Administration has yet to file any patent applications for inventions resulting from these research contracts.

The "short form" patent clause in contracts for the development of prosthetic devices was originally prepared by the Judge Advocate General's Office of the Department of the Army at the request of the then Secretary, Robert Patterson, in order to aid civilian employees injured in war plants as well as injured servicemen. For this purpose it was deemed necessary that the Government retain title to the invention and whatever other rights that would be the result of the contract. However, the VA has never insisted that the "short form" be inserted in its contracts.

Under the terms of the "long form" patent clause, if the contractor chooses to apply for a patent, the Government only retains for its own use a nonexclusive, irrevocable, royalty-free license to the invention in the United States and the right to file for foreign patents. If the contractor does not wish to apply for a patent then the Government may. Although the contractor obtains title to the invention under this clause he may not grant licenses without the permission of the Veterans' Administration and is obligated to grant royalty-free licenses to whosoever is designated by the Veterans' Administration.

See app. A.

7 See app. B. See app. C. See app. D. 10 See app. E.

At present the Veterans' Administration has seven contracts still in effect and seven terminated contracts containing the "long form" patent clause.

The so-called "modified long form" " patent clause provides that the invention shall be the property of the Government but that the contracting officer may designate the form in which title shall be held. At the present time the VA has only one contract outstanding containing this clause. It also had one contract with a patent clause that the Veterans' Administration has designated as a "special form", 12 where the Government had no right to title.

The VA also contracts to pay the contractor the costs that are required to file for and prosecute an application for a patent even though the contractor will have title and the Government merely license rights. The Veterans' Administration reviewed 22 patents which were obtained from 1946 through 1952 as a result of the VA's contracting program and found the approximate average cost for each patent was $402.

C. FOREIGN FILING

Regulation 652 (b) 13 of the Veterans' Administration recites that part of Executive Order 9865 which states: "All Government departments and agencies shall, whenever practicable, acquire the right to file foreign patent applications on inventions resulting from research conducted or financed by the Government * * *.' The VA has informed the subcommittee in a letter dated January 13, 1958, that under the provisions of Presidential Executive Order 9865 "applications for foreign patents did not appear to be practicable under the circumstances." No funds have been appropriated for this purpose. The Veterans' Administration has therefore never made application for patents in foreign countries.

1. Employees

Veterans' Administration has no information as to foreign applications on patents owned by employees. It regards as impracticable the reservation of power to grant licenses for governmental purposes under employee's foreign patents provided for in regulation 652(b). 2. Contractors and grantees

The Veterans' Administration has no information as to whether any of its contractors have filed for foreign patents on inventions developed under VA research contracts.

D. USE BY PARTIES RETAINING TITLE

1. Employees and contractors

The Veterans' Administration has no complete records indicating usage by veterans or by the general public of the inventions produced by its research. These include prosthetic and orthopedic appliances, and sensory devices, as well as newly discovered or improved fitting principles, which are of public importance but no effort is made to maintain complete records of specific applications of these devices. The Veterans' Administration, therefore, believes that its information

"See app. D.

"See app. E.

"Veterans' Administration Regulations 650-663, 38 C.F.R. 1.650-1.663.

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