GSA also disposes of any materials which are determined by the Office of Civil and Defense Mobilization to be no longer needed for the national stockpile or for the purposes of the Defense Production Act.

Within GSA, functions under the Strategic and Critical Materials Stock Piling Act and the Defense Production Act are performed principally by the Defense Materials Service.

Under Public Law 934 of the 85th Congress, approved September 6, 1958, GSA, together with other Government agencies, has authority to issue research grants to nonprofit organizations.

Thus, GSA in carrying out its functions, contracts for projects which may produce inventions, and purchases, sells, or disposes of patents and patent rights. GSA employees, as a result of their duties, also have the opportunity to invent or innovate.

1. Personnel

II. PRESENT PRACTICE

A. ADMINISTRATION

The contracting officers of the General Services Administration are authorized to seek patent advice from the Office of General Counsel, which employs a patent expert as a consultant on a when-actuallyemployed basis. The special assistant to the Administrator (Nicaro project), responsible for the Government-owned nickel production facilities at Nicaro, Cuba, is also advised by a full-time patent specialist.

Furthermore, in 1956 General Services Administration made informal arrangements with the Department of Defense, Department of the Interior, and Atomic Energy Commission to obtain advice from representatives of these agencies with respect to patent questions which might arise in connection with specific contract negotiations concerning defense materials.

2. Performance statistics

The General Services Administration does not yet own any patents. However, during 1958 two pending patent applications were assigned to General Services Administration by Cramet, Inc., in connection with the termination of a contract between Cramet, Inc., and GSA for the production of titanium. In addition, eight patents have been applied for by GSA covering inventions developed in connection with the operation of the Government-owned nickel project at Nicaro, Cuba. A statistical breakdown of patent applications filed and patents obtained by General Services Administration employees follows:

From June 30, 1949, until September 1953, applications for patents covering inventions made by employees of GSA were pre

1949. 1950.

1951.

1952.

1953.

pared and prosecuted by the Patent Section, Civil Division, of the Department of Justice. Since September 1953 such applications have been filed through the Office of the General Counsel, General Services Administration. All of the patent applications by Government employees were filed under title 35, United States Code, section 266, which provides for the issuance of patents without fees to Government employees. This section states:

The Commissioner may grant, subject to the provisions of this title, to any officer, enlisted man, or employee of the Government, except officers and employees of the Patent Office, a patent without the payment of fees, when the head of a department or agency certifies the invention is used or likely to be used in the public interest and the applicant in his application states that the invention described therein, if patented, may be manufactured and used by or for the Government for governmental purposes without the payment to him. of any royalty thereon, which stipulation shall be included in the patent.

The titles of the inventions filed by GSA employees under this free fee statute are: "Reference Service Chart," "Dual Type Nesting Pallet"; "Collapsible Pallets" (two applications); "Deactivating Lamp Disposal Devices" (two applications); "Ink Reservoir for Lettering Pens"; "Armour Shield for Projectile Type Fastenings"; "Adjustable Offset Ladder"; "Door Latch"; "Trip Movement for Watchmen's Patrol Boxes"; and "Demountable Beam Compass."

1. Employees

B. TITLE POLICY

General Services Administration states that in determining the rights of its employees it follows Executive Order 10096 dated January 23, 1950, and the implementing regulations of the Government Patents Board. In practice, GSA has allowed title to vest in the inventor, GSA retaining only a nonexclusive, irrevocable, royalty-free license in the invention with power to grant licenses for all governmental purposes.

2. Contractors and grantees

In negotiating ordinary procurement contracts under the Defense Production Act of 1950, General Services Administration reserves no proprietary rights to inventions, technical information, know-how, or specialized processes. These contracts do, however, include a patent indemnity provision. In some of the procurement contracts for metals derived from low-grade ore bodies, the Government pays premium prices to make possible the working of these ore bodies. If a new process were to be developed which would lower the cost of metal, the Government would not pay a lower price nor would the Government obtain the use for governmental purposes of any developed inventions.

In the usual negotiated research and development contract, General Services Administration uses the contract clause set forth in section IX of the Armed Services Procurement Regulations whereby the Government receives a royalty-free, nonexclusive license to use or

45719-59--2

permit to be used for its benefit any inventions conceived or first actually reduced to practice in the course of performing the work required by the contract. An example of such a patent contract clause is attached as appendix A. In these instances, the contractor retains title to the invention and the right to file in foreign countries. If the contractor decides not to file here or abroad, then the Government may obtain this right.

The matter of acquiring technical information resulting from research and development contracts and procurement contracts with research and development aspects negotiated by General Services Administration under the Defense Production Act is handled on a caseby-case basis. This means that the Government obtains such technical information and specialized know-how as is specifically called for by the contract. However, under the contract by which the Government-owned nickel project at Nicaro, Cuba, is operated by Nickel Processing Corp. (a subsidiary of National Lead Co.), General Services Administration obtained from the operator a license to reproduce, translate, publish, use and dispose of technical information, know-how, specialized processes and proprietary rights developed under research and development contracts relating to the operation of the project and GSA acquired full title to the patent rights, both foreign and domestic, on all inventions arising out of these contracts. The reason for this exception is that the Government found this protection necessary in order to be able to grant clear title to the Nicaro plant and the processes and equipment used in it. In this case the agency has recognized that a barrier to the sale of the plant to anyone other than the operator would be created if the operator were permitted to exercise patent control over processes essential to the successful operation of the plant.

General Services Administration has not so far used the authority to make grants to nonprofit institutions for basic research purposes. 3. Surplus property disposal

General Services Administration has not yet disposed of any patented inventions as surplus propery. Prior to the creation of the General Services Administration, a proposed surplus disposal of patents, processes, techniques, and inventions was fully described in the first supplementary report of the War Assets Administration submitted to the Congress as of June 27, 1946. This concerned the disposal of the Government's limited interest in 71 automotive patents for which the Government had paid $250,000 to the Automotive Engineering Corp. The records in the possession of GSA indicate that the United States received from these patents in cash royalties, and in royalties saved, an amount in excess of $3 million.1

2

The War Assets Administration widely publicized the proposed sale and received only two bids. The high bid was $25,000 by the Timkin Detroit Axle Co. which held a license under the patents. The second bid was $5,100 submitted by a World War II veteran. The War Assets Administration rejected the two bids as inadequate and

1 Letter of Mar. 5, 1959, to Hon. Joseph C. O'Mahoney, chairman, Subcommittee on Patents, Trademarks, and Copyrights, Committee on the Judiciary, U.S. Senate, from Franklin G. Floete, Administrator, General Services Administration (hereinafter referred to as letter of Mar. 5, 1959).

2 See app. B.

proposed disposal was never consummated. As a result the Government received for the remaining terms of the unexpired patents substantial royalties which exceeded the amount of the rejected bids. Another attempted commercial disposal concerned 18 patents and 11 patent applications relating to the metallurgy of magnesium, which had developed from research done under contract by the operator at the Government-owned Basic Magnesium Corp. plant at Las Vegas, Henderson, and Gabbs, Nev. These patents were declared surplus by the Reconstruction Finance Corporation but after circulation of this notice to other Government agencies, by the RFC, the patents and the patent applications were claimed by and assigned to the Office of Naval Research, Department of the Navy. Four of the claimed eleven patent applications matured into patents. The Department of the Navy has issued royalty-free, nonexclusive licenses under several of these patents, which deal with the flotation of magnesite ores and reduction of magnesium, to Basic Refractories, Inc., Cleveland, Ohio, and Southern Minerals, Inc., Haymarket, Va. However, neither the Navy Department nor GSA possesses any information which would indicate the present commercial use, if any, of these patents.

These magnesium process patent rights were apparently disposed of separately from the plants in which they were developed because the plants were not regarded as economical for private operation for the production of magnesium.

Some of the contracts negotiated for World War II operation of Government-owned plants with large chemical companies contained restrictive clauses as to the use of secret information, know-how, and patents. Where the operators of the Government-owned plants became the owners of the developed inventions they sometimes granted the Government only a royalty-free license for the duration of the war. This was true with respect to some aluminum plants and some ordnance plants. Recently, GSA has been hampered in its attempt to dispose of an ordnance plant by restrictions in a contract made during World War II as to secret information, know-how, and patents and their use. The Government is not able to transfer to the purchaser of the plant the use of the patented processes incorporated in the plant, essential information, or the know-how to operate it economically. In the contracts negotiated by the Government in connection with the oil-cracking plants built by Defense Plants Corporation during World War II under patented processes, provision was made for licensing the processes to subsequent purchasers of the plants. Under these agreements the Government has paid royalties for wartime operation and the purchasers have paid royalties thereafter to the patent owners.

4. Defense Production Act authority

Although GSA feels it has authority to purchase or sell necessary patents or patent rights to carry out the purposes of this act, it has never exercised this authority.

* Letter of Mar. 5, 1959.

The patents still in force which the Navy Department obtained from RFC are: U.S. Patent Nos. 2.436.520; 2.437,778; 2,436,509; 2,408,466; 2,399,634; 2.408.467; 2,488,993; 1.901.407; 1,923,955; 1,926,545; 2,398,250; 2,398,251; 2,474,538; 2,514,283; 2,514,275; 2.466,187.

The Reconstruction Finance Corporation previously purchased patent rights. One such case involved the purchase for $189,000 on November 14, 1942, from the National Wire Die Co. of patent rights relating to mechanical processes and machines useful for the manufacture of diamond dies. The inventions protected by these patents later became obsolete as a result of certain advanced inventions developed by the Bureau of Standards which were made available to industry. The RFC did collect a limited amount of royalties on these patents and licenses which were available under them for defense production.

1. Employees

C. FOREIGN FILING

GSA has no information as to the foreign filing of patent applications by employees.

2. Contractors and grantees

Under contracts made by General Services Administration the contractor retains the right to file in foreign countries, subject to an option of the U.S. Government to file if the contractor does not proceed. Generally, GSA has no information as to foreign filing by contractors. However, with respect to two contracts such information has been received. In one instance the contract imposed an obligation upon the contractor to notify GSA of the filing of patent applications in foreign countries. This contract covered the development of a process for producing nickel and cobalt from Cuban lateritic ores and the contractor has notified GSA of the filing in 12 foreign countries of patent applications covering 2 inventions. The second case involved the termination of a contract providing for the production of titanium sponge. In accordance with the requirements of the termination agreement, the contractor has notified GSA of its intention to discontinue the prosecution of eight patent applications covering two inventions. The applications in the case of each invention had been filed in four foreign countries. GSA has decided not to continue with these applications.

3. General Services Administration

GSA has not yet applied for any patents in foreign countries. However, it does not have any policy that would preclude any such application and it intends to protect in Cuba those patentable inventions which either are in use or are likely to be used at the Governmentowned nickel project at Nicaro, Cuba.

1. Employees

D. USE BY PARTIES RETAINING TITLE

No records are available to GSA which would show the extent of the commercial use of inventions made by employees of General Services Administration."

Secretary's Memorandum No. 3370, "Re: Diamond dies-Patent rights program, Collite Tungsten Corp. license agreements 109-M-2 and 109-M-3," Office of Defense Supplies, Reconstruction Finance Corporation, Apr. 13, 1948.

Letter of Nov. 25, 1958, from Franklin G. Floete, Administrator, GSA, to Hon. Joseph C. O'Mahoney, chairman, Subcommittee on Patents, Trademarks, and Copyrights, Committee on the Judiciary, U.S. Senate.

7 Ibid.