PATENT POLICIES RELATING TO AERONAUTICAL AND

SPACE RESEARCH

TUESDAY, JUNE 20, 1961

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SCIENCE AND ASTRONAUTICS,

SUBCOMMITTEE ON PATENTS AND SCIENTIFIC INVENTIONS,

Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 214-B, New House Office Building, Hon. Emilio Q. Daddario (chairman of the subcommittee) presiding.

Mr. DADDARIO. The committee will come to order.

Our witness today is Mr. Roland A. Anderson, who is Assistant General Counsel for Patents of the U.S. Atomic Energy Commission. It is my recollection that you have been before this committee before. Mr. ANDERSON. Yes, sir; I have had that pleasure.

We will be

Mr. DADDARIO. When Congressman Irwin Mitchell was chairman. We are, of course, pleased to have you appear before us. pleased if you would proceed with your testimony.

STATEMENT BY ROLAND A. ANDERSON, ASSISTANT GENERAL COUNSEL FOR PATENTS OF THE U.S. ATOMIC ENERGY COMMISSION

Mr. ANDERSON. It is indeed a pleasure to meet with this Subcommittee on Patents and Scientific Inventions of the House Committee on Science and Astronautics and present a statement as to the patent policy and practices of the U.S. Atomic Energy Commission.

The Commission has pursued a policy in its funded research and development and operating contracts of employing patent provisions under which the Commission is in position to acquire all rights in inventions and discoveries in the atomic energy field. It is the Commission's view that where the Commission sponsors and pays for research and development in the field of atomic energy, the resultant inventions and discoveries should be the property of the Government for the benefit of the general public. One of the present effects of the AEC policy is that all unclassified and declassified technological and scientific information prepared and developed by the Commission and its contractors is available to every company presently engaged in atomic energy work.

This policy, originally adopted during the early days of the Manhattan Engineering District project, has been implemented by the statutory provisions of the Atomic Energy Act of 1954. The 1954 act has three sections, namely, sections 152, 159, and 161g, dealing

specifically with the rights of the Commission in inventions and discoveries resulting from or arising out of Commission contracts.

The specific patent article used by the Commission in research, development, or operating contracts reserves to the Commission the right to determine the disposition of title to the rights in and to any inventions or discoveries made or conceived in the course of, in connection with, or under the terms of the contract. Thus, the contract provision parallels the present statutory phraseology of section 152. In instances where the contractor has an established industrial and patent position in the nonnuclear field and the research is conducted in other than a Commission laboratory, or Commission owned or operated facility, the article employed provides for the contractor's retention of at least a nonexclusive license. If, in addition thereto, the research and development work relates only incidentally to basic research of the Commission and results from more or less routine development work, the contract provision used provides for the retention of a sole license (except as against the Government) in the contractor for purposes other than for use in the production or utilization of special nuclear material or atomic energy, generally referred to as the outfield.

It is to be noted that the provisions accord the Commission the right to determine and are not themselves automatically dispositive of the rights in inventions arising under the contract. To the extent that the Commission accords the contractor exclusive rights in the nonatomic energy field, subject to a Government license, the AEC recognizes the equities of the contractor's industrial and patent position in his particular established field of work. This takes into account that the Government may not be justified in always taking all rights under all circumstances in research and development work sponsored by the Government any more than it is only justified in taking an automatic license in all circumstances.

It might be noted that in the atomic energy field the Commission has made arrangements with the various departments and agencies negotiating contracts pertaining to atomic energy for a provision according the Commission the right to determine the disposition of inventions made under such contracts in the atomic energy field. Such working arrangements have been made with the Department of Defense, National Aeronautics and Space Administration, the Maritime Commission, the Bureau of Mines, and so forth, either by having the specific contract provisions of the AEC incorporated in the specific contract on an individually negotiated basis, or as has been developed with the Department of Defense the inclusion of a provision in the ASPR regulations. The Department of Defense regulation provides that in all research and development contracts relating to atomic energy an AEC provision shall be inserted in the contract (set forth in current ASPR-9-107.4).

The Commission has to date acquired the title and rights in inventions covered by some 2,550 patents, and in addition thereto the AEC has licensing rights of one nature or another in some 300 additional patents. Contractors have retained license rights in some 500 patents in which the Commission has the title and the Commission has granted over 825 nonexclusive, royalty-free licenses to individuals and corporations. The regulations of the Commission as to the granting of royalty-free, nonexclusive licenses is set forth in 10 CFR 81.

On January 11, 1961, the Commission announced a policy of permitting contractors, who perform the contract work at privately owned and operated facilities, as distinguished from Commission owned and operated facilities, to secure the rights in foreign patents (but not in U.S. domestic patents) where the contractor secures the foreign patent, subject to certain conditions. Among the conditions

are:

(a) The U.S. Government is accorded a license for U.S. governmental purposes with the right of the U.S. Government to grant licenses to foreign governments for use pursuant to a treaty or agreement with the United States;

(b) An obligation to grant to other U.S. concerns royalty-free licenses; and

(c) An obligation that if the invention is not developed to practical application within 5 years of the issuance of the particular foreign patent, the contractor, at Commission request, shall grant licenses to others for reasonable royalties.

The Commission on January 11, 1961, also announced that AEC would charge royalties on Commission-owned foreign patents to foreign corporations and foreign nationals in those countries where the foreign government charges royalties to the U.S. Government or U.S. citizens. The Commission will continue to grant royalty-free licenses to U.S. citizens and U.S. corporations on Commission-owned foreign patents, as well as continue to grant royalty-free licenses on Commission-owned U.S. patents.

Pursuant to this latter policy announcement the Commission on May 25, 1961, and June 6, 1961, published listings of some 126 AECowned Belgian patents, 94 AEC-owned British patents, and 78 AECowned Canadian patents on which licenses will be granted by AEC either on a nonexclusive or exclusive basis for a period of from 3 to 5 years (subject to free license grants to U.S. nationals). The Commission has received a number of inquiries concerning the licensing of said foreign patents that are at present under advisement.

In addition to the foregoing general information as to the policies and practices, inquiry was solicited as to section 152 of the Atomic Energy Act of 1954. While certain facets of the procedure might be further developed to avoid delays, it has, with the cooperation of the U.S. Patent Office, been a workable procedure. The Government has acquired rights in a number of cases not otherwise reported. The provision may also have had a salutary side effect in other instances by contractors diligently reporting inventions and examining records more closely to assure compliance with the provisions of the contract as to reporting inventions.

Under section 152 the Commission is granted authority to waive rights in inventions under appropriate circumstances. The Commission has exercised its waiver power as to various arrangements and relationships, including those arising from AEC services and material that are generally available to the public on a nonpreferential basis, such as to (1) inventions resulting from the sale or distribution of stable or radioactive materials, or from irradiation and other services publicly available (10 CFR 83), (2) inventions resulting from the use of the gamma irradiation facility at the National Reactor

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Testing Station (10 CFR 83) and (3) inventions resulting from access permits (10 CFR 25.23b), except in one special classified field.

The Commission has, in at least three special circumstances, waived rights, except as against the Government, in atomic energy inventions under contracts: (1) As to inventions made under certain research grants to educational institutions and training programs; (2) as to inventions in the apparatus or process for the production of fuel elements and fuel and core cartridge assemblies in development contracts for fuel elements and fuel and core cartridge assemblies; and (3) after January 11, 1961, the Commission has waived rights in the field of atomic energy in foreign patents (not United States) as respects invention arising out of Commission research and development contracts where the work is performed at privately owned and operated facilities as distinguished from Government-owned or operated facilities, subject to certain terms and conditions as noted herein before. Where the Commission supports research in a field where the contractor has already done some research, which we generally describe as a "background position," the Commission may acquire a nonexclusive license for governmental purposes or some other limited purpose in such background contributions, the scope of the background provision being dependent upon the facts of the situation and the particular purposes of the research and development work.

There is one other patent provision which the Commission employs that may be of general interest, namely, a patent indemnity provision in favor of the Government. Where the Commission purchases standard or commercial items or where the contract is for services to be performed in a manner normally utilized by the contractor, the Commission incorporates in such contract or purchase order a provision under which the contractor indemnifies the Government in respect of patent infringements that result from the furnishing of such standard or commercial components or items, or result from the performance of such standard services.

It is hoped that this statement as to the Atomic Energy Commission's patent policies and practices will be found useful in your studies of the treatment of inventions and discoveries on Government-sponsored work of the National Aeronautics and Space Administration.

Mr. DADDARIO. Mr. Anderson, that was an excellent statement. I am pleased that you went into some detail, especially in those regulations pertaining to foreign patents, because that has been a subject which has arisen during the last year or so and since the last meetings of this committee terminated. It is a very lucid explanation. I will for the moment, for background questions, turn the questioning over to Mr. Yeager, our counsel.

Mr. YEAGER. In regard to the new provisions in the foreign patent field that you have described here, what prompted you to make these changes? Tell us in a practical vein.

Mr. ANDERSON. I suppose there has been some question as to whether or not we were promoting the foreign aspects of the program as vigorously as we should. In addition thereto, I think one of the primary motives that we were concerned with was that foreign governments have been diligently filing applications in the United States. Therefore, in order to preserve what might be said a quid pro quo position, we felt it was necessary to undertake the filings of foreign applications to preserve our position in the foreign field.