of overall Government policy in which the atomic energy provisions would be incorporated or reflected so that all departments and all agencies of the Government would have the same general base from which to work.

Mr. DADDARIO. Do you envisage then the formation of some committee, such as that which you have touched upon, that the various agencies of Government could in proper combination work out the kind of patent policy with the necessary flexibility so that it could accomplish these end objectives? So that the agencies of Government could come to quicker and better understandings one with the other? So that we could take title when necessary and not take title when it was deemed best not to? Where we could also, perhaps, accomplish the development of the property rights which do remain presently in the hands of the Government, which some witnesses have said are extremely valuable and ought to be developed? Perhaps also to come to some kind of understanding as to how the Government should grant exclusive licenses and take back royalties?

In fact all of this put together compels us, does it not, to come to some conclusion now so that we may take advantage of a resource which is in the hands of Government-which is not being properly utilized and which ought to be?

Mr. ANDERSON. Yes, sir.

Mr. DADDARIO. On your first page, Mr. Anderson, your second paragraph, you have the clause "sponsors and pays." As the years have gone by have you found that the Government sponsors less often than it formerly did and pays a lesser percentage of the overall development than it did when the Atomic Energy Commission first went into existence?

Mr. ANDERSON. In certain fields of development we certainly are conducting less research than we did years ago. For example, in the field of raw materials we had an extensive program for the processing and production of raw materials. We no longer have any program or if we do it is a very minor program to promote the development and research in the field of raw materials. This is because we have processes today that are commercially feasible and look economic and we have these in operation. So there is, therefore, no need for the Government to do it. We know that industrial concerns that are processing raw materials are still conducting their own research programs to improve these processes that they have. In some of our contracts we have an incentive program whereby if they save on costs of production the Government and the contractor shares in the savings. This is sort of an inducement to have them improve the proc

esses.

I think this is an area where we are spending less on research and development. In other areas the Commission has promoted the civilian power demonstration program under which the Commission is sharing part of the research and development costs and industry may be sharing part of the costs.

It is hard to say whether or not we are spending more in one area and less in another and overall whether it is going down. I think the rapidity with which the research and development fields advance and the new developments that are made in this field are so rapid that what was new in 1954 is now old. I believe, for example, there

has been certain testimony in which it has been shown that savings that have come about in the last several years in various fields are due to the extensive research we have had. I think this will continue to be the case. It is hard to predict as to whether or not we are spending more overall or spending less.

Mr. DADDARIO. Our overall capacity, however, as a nation, and our industrial capacity in the field of atomic energy has grown so considerably, has it not, so that when you are dealing with companies you know pretty well what their proven capacity is at the moment you begin negotiating with them

Mr. ANDERSON. Yes, indeed.

Mr. DADDARIO. And then following the definitions set forth by Mr. Yeager as originally promulgated by General Groves, these circumstances become more difficult to define as to just what categories they fall into-isn't that correct?

Mr. ANDERSON. As time goes on.

Mr. DADDARIO. This would seem to me to give more impetus to the importance of your particular statement here today, of the flexibility needed to adjust to this growing fund of knowledge which we have available to us.

Mr. ANDERSON. I believe this is correct.

Mr. DADDARIO. We are getting to the end of this session. There are many more questions I have in mind. We will determine whether to call Mr. Anderson back or see if perhaps we can set these questions down on paper so that you can answer them.

Off the record for a moment. (Discussion off the record.)

Mr. DADDARIO. On the record.

We will determine whether Mr. Anderson will be back or not as I have already said. We will list a series of questions if he does not come back and will include in it this proposition involving the ideas of the exchange of information and the importance of that in this whole philosophical discussion as to the title in patents resting in the Government or not.

Mr. YEAGER. May I ask one short question?

Mr DADDARIO. Certainly.

Mr. YEAGER. Would part of the problem be overcome with modernization and speedup in Patent Office procedures? Why should it take 3 years or better to get a patent from the date of filing, if that is the case?

Mr. ANDERSON. This is true under our present patent system. The processing and prosecution takes on the average 36 to 42 months. This could be speeded up by some change in the statutory act or in the rules or regulations requiring earlier action.

Mr. DADDARIO. It would seem to me this goes to the heart of the new look of the overall patent picture that you present.

Mr. ANDERSON. Yes, it is part of that picture.

Mr. DADDARIO. The meeting will adjourn, subject to the call of the Chair.

(Whereupon, at 12:05 the committee adjourned, subject to the call of the Chair.)

PATENT POLICIES RELATING TO AERONAUTICAL AND

SPACE RESEARCH

THURSDAY, JUNE 22, 1961

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SCIENCE AND ASTRONAUTICS,

SPECIAL SUBCOMMITTEE ON PATENTS

AND SCIENTIFIC INVENTIONS,

Washington, D.C.

The subcommittee met, pursuant to call, 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.

I want to welcome to the committee as a witness this morning Mr. Charles Ruttenberg, of the National Science Foundation, Deputy Counsel. It is my recollection you were here when Dr. Waterman testified before this committee on this subject.

Mr. RUTTENBERG. That is correct, back in 1959.

Mr. DADDARIO. We are pleased to have you and would like to have you proceed.

STATEMENT BY CHARLES B. RUTTENBERG, DEPUTY GENERAL COUNSEL, NATIONAL SCIENCE FOUNDATION, ACCOMPANIED BY JOSEPH R. SCHURMAN, ATTORNEY, NATIONAL SCIENCE FOUNDATION

Mr. RUTTENBERG. I have with me Mr. Schurman, of the Foundation who has been handling some of our patent matters.

Mr. DADDARIO. We are glad to have you, Mr. Schurman.

Mr. RUTTENBERG. Mr. Chairman and members of the subcommittee, I appreciate the opportunity to appear before you today to discuss the policy of the National Science Foundation with respect to patents developed through the course of Foundation-supported scientific activities.

The statutory basis for the establishment of the Foundation's patent policies is contained in section 12 of the National Science Foundation Act of 1950. Subsection (b) of section 12 relates to the production of inventions by officers or employees of the Foundation in connection with the performance of their assigned duties. Since we do not conduct any research ourselves, there has not been occasion for an officer or employee of the Foundation to acquire any patent rights to inventions produced in connection with his Foundation responsibilities. I therefore believe it would be appropriate to eliminate subsection (b) from further discussion.

Subsection (a) of section 12 states:

Each contract or other arrangement executed pursuant to this Act which relates to scientific research shall contain provisions governing the disposition of inventions produced thereunder in a manner calculated to protect the public interest and the equities of the individual or organization with which the contract or other arrangement is executed: Provided, however, That nothing in this Act shall be construed to authorize the Foundation to enter into any contractual or other arrangement inconsistent with any provision of law affecting the issuance or use of patents.

As you can see, this gives the Foundation wide discretion with respect to the establishment of its patent policies.

There was considerable discussion of this provision before it was enacted. Dr. Vannevar Bush, whose report, "Science, the Endless Frontier," substantially led to the creation of the National Science Foundation, said, in testifying on the patent provisions of the proposed legislation:

The extent of the patent rights to which the Government is entitled depends on all the facts of a specific case. In particular, the patent rights which the Government should acquire depend on the relative degree of the Government's contribution to the particular research project as compared with the contribution of the private organization undertaking that project. Government-supported research is a collaborative proposition. The funds furnished by the Government are not the sole ingredient of successful research. The facilities,

the funds, the personnel, and the skill furnished by the research organization are indispensable. The terms on which the research is done, must, therefore, be fair to all participants. No person, organization, or government can insist on an all-or-nothing policy for itself and expect to persuade others to collaborate with it effectively.

Dr. Bush recommended:

In most cases, as a policy for the Foundation, the usual provisions of Government research contracts under which the contractor grants a royalty-free license in favor of the Government would seem adequate. Such license should be granted under all patents covering discoveries or inventions made in the course of research financed by the Foundation.

In addition, it is to be expected that, as a matter of policy, the Foundation would require assignment to the Government of the full patent rights to inventions in the fields of particular importance. Thus, for example, most medical research should be done under arrangements which yield to the Government the full patent rights. Of course, too, it is understood that the information resulting from research financed by the Government would be fully disseminated to the public for its use.

The Foundation has thought a great deal about the matter of patents on inventions arising out of research or fellowship activities receiving support from the National Science Foundation. On the one hand the public interest must be protected. On the other hand, when an organization or individual has spent a number of years working in a particular field of research, it may not be appropriate that, because of what may be a relatively small grant of funds from the Foundation to assist in further research in that field, the Foundation should insist that the Government receive all the fruits of those years of effort.

The vast majority of the Foundation's research support is provided through grants to nonprofit institutions, primarily those of an educational nature. The Foundation rarely supports research by profitmaking organizations and if it does, it does so by contract rather than through the grant mechanism.

In the vast majority of cases, the amount of money provided by the Foundation is substantially less than the funds actually needed to

carry out the research. The institution brings to the research its facilities, the know-how of its scientific staff, and its wide experience with research administration.

As Dr. Waterman, Director of the National Science Foundation, has pointed out on numerous occasions, the Foundation's mission is the support of basic scientific research, not scientific development. Basic research, as you know, is aimed at wider knowledge of the subject being studied without the particular goal of practical application. It results in the publication in recognized mathematical or scientific journals of an article describing the work and conclusions drawn from it. It is the recognition by the scientific community of the importance of the work that motivates the basic research worker and not its practical use.

His primary aim, therefore, is a full discussion of the research information developed. Furthermore, basic research is concerned primarily with the study of natural phenomena and the ascertainment of natural laws and principles. The prospects of patents arising from such research which have commercial value, therefore, are very limited. This is borne out by our experience to date. Since its inception up to the present time the National Science Foundation has made over 18,000 grants for support of scientific activities. The estimated total dollar amount of grants through fiscal year 1961 is approximately $597 million. In addition, the Foundation has awarded approximately 18,000 fellowships to individuals for scientific study or work.

During that time we have been informed that only four patents have been obtained on inventions developed in connection with scientific activities supported by the Foundation. We, of course, have received royalty-free licenses to use these inventions for governmental purposes. Three of these patents have been assigned to the Research Corp., a nonprofit organization which distributes its net income to colleges and universities as grants-in-aid of fundamental research.

Under its arrangements with educational institutions, the Research Corp. acquires from the institution inventions which may have commercial prospects. The Research Corp. bears all costs incidental to patent processing and licensing of such inventions. Income from patent royalties is divided among the institution, the inventor and the Research Corp.

The institution's share is, of course, devoted to research and educational purposes. The corporation's share, after deduction of expenses, is applied to sponsoring further basic scientific research."

In 1960, the Research Corp. awarded colleges and universities about $1.2 million as grants-in-aid of fundamental research. The fourth patent, which we have been advised has no practical applications, was developed by a National Science Foundation fellow. Since the Foundation was established we have been notified, in addition, of 29 other applications for patents. Seven of these applications have since been abandoned.

It has seemed to the Foundation that flexibilty with respect to disposition of Government patent rights is highly important and that no rigid rule should be required. Factors such as whether or not the public health, safety or welfare are involved or whether the Government has been the sole or prime developer of the field of technology involved, or whether there are other equities affecting the situation