The patent rights involved in this case are plainly the kind of valuable assets which cannot be disposed of without a specific Congressional mandate. Both President Kennedy and President Nixon in their statements of patent policies referred to these patent rights as a "valuable national resource". Memorandum and Statement of Government Patent Policy, 28 Fed. Reg. 10943 (Oct. 12, 1963), Memorandum and Statement of Government Patent Policy, 36 Fed. Reg. 16887, 16889 (Aug. 26, 1971). Defendant refuses to focus on the question of the value of these rights as an element in interpreting article IV, but attempts to undercut plaintiffs' position by claiming that inventions only may "incidentally arise" from these R & D contracts (Def. Br. 60). However, his own brief contradicts that assertion since, as to the grants made in 1972 alone, 6500 invention disclosures were made, on which approximately 1725 patent applications were filed (Br. 10, note 10). But, regardless of the frequency of patent applications, there can be little doubt that the right to make the application is a valuable asset which is "property" for purposes of this case. Defendant's discussion of the cases on which plaintiffs rely wholly fails to recognize their importance in shedding light on the meaning of property under article IV, section 3, clause 2. Rather, he dismisses them briefly by claiming that they deal with "subject matter far removed from the unique character of intellectual creations" and that each involves "a tangible and identifiable interest" which existed at the time of disposal (Def. Br. 60). Once - 15 again defendant has simply stated his conclusion with no explanation in terms of the functions served by article IV, Defendant's fundamental error is his failure to analyze the question of whether the rights at issue here are "property" under article IV, section 3, clause 2, in terms of the purposes of that provision. He has argued the question as though the outcome was to be determined by a provision in Title 35, or by the constitutional source of the federal government's power to regulate intellectual creations, article I, section 8, clause 8. But as we have shown, and as the Brenner decision on which defendant relies fully supports, the question must be examined in light of article IV's purposes. When that is done, as we have shown in this brief and in our principal brief (pages 23-27), it is readily apparent that the rights at issue here are "valuable natural resources" and thus are "property" within article IV, section 3, clause 2 of the Constitution. III. THE REGULATIONS AUTHORIZE OFFICIALS OF THE EXECUTIVE BRANCH Having concluded that these valuable rights to future patents and inventions are "property" for purposes of article IV, section 3, clause 2, we must next determine whether they are rights "belonging 7Even defendant's rationale, that these cases deal with "tangible" interests, would not explain Ashwander v. TVA, supra, which defendant himself describes as a case involving "water and the potential for converting the existing power therefrom into electrical energy . . (Def. Br. 60, emphasis added). 16 to the United States" or are the property of private parties. In answering that question, the fact that the Regulations speak of the United States "acquiring" rights in certain situations is no more than an assertion by the draftsmen that in their opinion the contractor has all the rights save those which are given to the Government. Similarly, plaintiffs' contention that defendant is attempting to "grant" to private parties rights belonging to the United States assumes the conclusion that the United States owns such rights. The real question to be addressed is which party-the United States or the contractor--would have title to the inventions and patents in the absence of a contract or statute.8 Much of defendant's discussion of this issue is deficient because it is based on the laws relating to patents rather than on the Constitution. Furthermore, he erroneously seeks to equate this situation with the typical one involving only private parties who are not constrained as is the Executive by article IV. To the extent that defendant does analyze the basic ownership question, he does so with a primary focus on those situations in which the patent rights are only "incidental," but from which he attempts to 8 Defendant's assertion that "nothing in the common law prevents parties from entering into agreements which are determinative of invention rights in any manner satisfactory to them" (Br. 66), whil true in general, is irrelevant where the United States is one of the parties to the contract unless there is a statute permitting the official to enter a contract with the particular determinations as to rights of the United States. While "the United States, like any private party, possesses the right to determine on what conditions it will contract" (Def. Br. 78), it is Congress and not the Executive which makes that determination on behalf of the United States under our Constitution. - 17 draw conclusions about all instances covered by the Regulations. See, e.g., Def. Br. 49, 60, 71, and 72. In drawing those conclusions, he relies primarily on United States v. Dubilier Condenser Corp., 289 U.S. 178 (1933), in which the Government was adjudged to be entitled only to "shop rights"--a non-exclusive license to use the invention, royalty free--but not title to the patent since the employees who made the discovery were neither employed to make the invention nor even working in that specific area. Id. at 185. But that case, regardless of how broadly it is read, deals with only a portion of the situations covered by the Regulations, and defendant never attempts to assess the validity of the remaining portions in terms of the controlling legal principles. In our view the three distinct situations contemplated by the Regulations--Rights to the United States, Rights to be Determined at a Later Date, and Rights to the Contractor--must be examined separately, a task to which we now turn. 9 In those instances in which the United States is awarded the principal rights to future patents, the contractor is generally allowed a non-exclusive royalty-free license. The grant of a nonexclusive license is not a "disposition" under article IV, and 10 9We will not attempt to detail the conditions under which the choice of the three options is to be applied since the only relevant factor in this case is that there are three different options requiring separate analyses. 10See 34 Ops. Att'y Gen. 320 (1924). thus even if the United States owns the patent rights under the contract, there has been no violation of the Constitution. But even in the situation where the Government initially obtains the patent rights, the Regulations permit the contractor to make an application to acquire greater rights once the invention has been identified and certain other conditions are met. See $$ 1.107-3(a)(4) (ii); 1.107-4(a)(2); and 1.109-6. In such cases, however, there would be a disposition when the contractor later obtained any patent rights beyond that to which he was entitled under the contract. In that respect the situation becomes identical for all practical purposes to the second basic type of contract provision, the Deferred See $$ 1.107-3(c) and 1.107-5(c). Determination. Under the Deferred Determination, the question of patent rights is left open until the patents are identified and other specified conditions are met. See, e.g., § 1-9.107-3(c). The contractor has no rights whatsoever to the patent when the determination is made since the required contract clause provides that "the Government shall have the sole and exclusive power to determine the disposition of the domestic and foreign rights in any Subject Invention." § 1.107-5(c) (emphasis added). Thus, the situation at the time of the Deferred Determination--which is the relevant time for purposes of article IV, section 3, clause 2--is virtually identical to that in Public Citizen v. Sampson, No. 74-1619, also |