license in inventions which may be made under the contract, and since it only acquires that, it gives the contractor the assurance, at the time the contract is entered into, that it will retain title to the inventions that may arise in the course of performance.

As you know, largely on the basis of the report which this committee rendered a year ago, the Department of Defense has modified its practices to some extent and has required that in certain instances the contracting officer shall make determinations, in advance of the signing of a contract, that the likely course of invention may fall in certain areas where the Government should acquire title, thus, reflecting the statement of intent which this subcommittee put in its report. But those are certainly the atypical cases in the Department of Defense.

Now that is the difference insofar as the contracting end of the business is concerned. Of course, in the Department of Defense, there is also the matter of policing the contract, getting reports of inventions to be sure that the Government knows what inventions it has a royaltyfree license to but that is pretty largely it.

So far as NASA is concerned, if the invention is reported, the presumption is not contested, and the determination is therefore made, the contractor may then submit his petition to the Inventions and Contributions Board which is referred to in sections 305 and 306 of our act, for waiver of rights to the invention.

We have some special procedures whereby he may obtain an advisory opinion concerning waiver in advance of committing himself to the factual conditions under which the invention was made.

In other words, having reported the invention, it is possible that he may wish to contest the presumption. There may be some question as to whether the invention was or was not made under the conditions specified in 305 (a).

On the other hand, he may wish to get an advisory opinion as to whether waiver would be granted, even if the invention was made under the statutory conditions. He may feel that he would rather base his case upon the equities of the situation in terms of waiver than to get involved in a factual dispute about the conditions under which the invention was made. So we permit him in that case-reserving his rights to contest the presumption-to request an advisory opinion on the merits of his waiver petition.

We have tried to achieve maximum procedural flexibility this way, so that a contractor can reserve his rights on one hand while pursuing them on the other.

But, assuming he has not requested an advisory opinion, and assuming that the determination has been made, he may submit a petition for waiver and he can file briefs before the Inventions and Contributions Board. There may be a hearing before the Inventions and Contributions Board. Finally, the Board, which receives advice from the Office of General Counsel on the technical aspects of the case, will make a recommendation to the Administrator that waiver either be or not be granted.

That is the situation and I should mention, too, that the regulations do spell out, as my statement mentioned, a number of criteria for guidance of the contractors—those areas which we have termed prima facie bases for waiver. So that he has very great assurance that if he is

able to make out a case which falls within these relatively broad criteria, the petition will be favorably looked upon.

Mr. DADDARIO. When and how did this advisory opinion become a part of this procedure?

Mr. O'BRIEN. After the disclosure of the invention is made or contemporaneously with the making of the disclosure the contractor may submit a request for waiver and this request for waiver would then be submitted to the Inventions and Contributions Board. The Board would then advise the petitioner whether or not this invention would be waived. It doesn't go to the Administrator at this time; it is just the advisory opinion of the Board.

If the contractor is satisfied with what he could get from the Board, he may say, "All right, I will concede this presumption. I am satisfied with the presumption. Now, give me my waiver," and he would take the waiver.

If he is not satisfied with the type of waiver which he would receive on the recommendation of the Board, then he could say, "I contest the presumption. I am now submitting facts upon which I request the Administrator to make an actual determination as to whether this invention was made under the circumstances of 305 (a) paragraph (1) or (2)."

Then we would have the obligation of making a determination on the basis of the facts which he submits. Thus the advisory opinion preserves the contractor's right to have a determination made on facts, if he is not satisfied with the waiver he would get.

Mr. DADDARIO. When did you find it necessary to bring in this question of an advisory opinion? How long ago?

Mr. O'BRIEN. This was a part of our original draft of the patent clause for use in our contract. We have used this, although we find now that the title "Advisory Opinion" is not frequently used because if the contractor submits his disclosure of an invention and at the same time making a petition for waiver, it is in fact an advisory opinion because the presumption does not attach.

Mr. DADDARIO. Then the point is that all of these procedures you have explained come about because of the problems that exist in the minds of people who deal with you as to the title to the invention. These are the complications which have arisen as a result of section 305 in the Space Act, and this is the administrative difficulty which has affected the discretion of the Administrator and which has made it difficult for you people to deal with this particular problem, and it exists today as it existed when you came before the committee in 1959. Mr. JOHNSON. Yes, Mr. Chairman.

I think I can reply specifically to your question about time. The procedure for an advisory opinion was contained in the patent clause published in the Federal Register May 5, 1959, so it has been in effect for over 2 years. The answer to your last question is certainly "yes," except that we have, I think, gained a little wider acceptance of the NASA practices, and contractors have become better acquainted, I think, with the way we are doing business than they were a while ago. Mr. BELL. Mr. Chairman, I would like to ask Mr. Johnson a question.

What is the statutory position of the Inventions and Contributions Board? I am new at this.

Mr. JOHNSON. The Inventions and Contributions Board is established by section 306 (a) of the National Aeronautics and Space Act of 1958. I am sorry; I should say section 305. There are provisions concerning the Board in section 306 but the actual establishment of the Board is in section 305 (f). The provision is this:

Each proposal for any waiver under this subsection shall be referred to an Inventions and Contributions Board which shall be established by the Administrator within the Administration. Such Board shall accord to each interested party an opportunity for hearing and shall transmit to the Administrator its findings of fact with respect to such proposal and its recommendations for action to be taken with respect thereto.

And then there is a great deal more said about the Board over in section 306 in connection with the matter of awards for inventive contributions.

Mr. BELL. It is somewhat under the jurisdiction then of the Administrator of NASA?

Mr. JOHNSON. Entirely, sir. It is appointed by the Administrator under 305 (f) and is purely answerable to him. It is purely an advisory body. It does not take final action in its own name. It is a hearing board and one which makes recommendations for decision by the Administrator.

Mr. FULTON. This does not refer to the Patents and Inventions Board in the Patent Office, does it?

Mr. JOHNSON. No, sir.

Mr. FULTON. Would you explain that to us?

Mr. JOHNSON. There are three subsections of the act that relate to procedures in the Patent Office. Those are subsections (c), (d), and (e) of section 305 and the Board to which you are referring, I believe, Mr. Fulton, is the Board of Patent Interferences, which is in the Patent Office. The Inventions and Contributions Board, on the other hand, is a purely internal NASA Board responsible to the Administrator and is purely advisory to him.

Mr. FULTON. I thought you were referring to the other one originally.

Mr. YEAGER. Since you mentioned section 305 (c), (d), and (e), would you tell us how effective these provisions have been?

As I read it, it looks as though it would require a great deal of work and activity, both on the part of the Patent Office and yourselves to determine whether or not any invention, where an application is made for patent, has "significant utility" for the space program. Mr. JOHNSON. They are extremely burdensome, Mr. Yeager. Extremely burdensome.

Mr. YEAGER. Subsections (c), (d), and (e)?

Mr. JOHNSON. Yes. I would say that up to the present time we and the Patent Office have put a lot of effort under these sections with very little practical result, but we have to do it.

Mr. O'Brien has statistics on this if you would like to have them submitted for the record.

Mr. DADDARIO. If you would, please.

Mr. O'BRIEN. The requirement that the Commissioner submit statements has been fulfilled in 1,034 cases. There are 1,034 cases where applications have been filed in the Patent Office and have been referred, or transmitted to NASA. So this is the number that have been subject to an interpretation under section 305 (c).

75208-61-pt. 1--3

We have taken some shortcuts which are not specifically provided by the law, but we have viewed some of these applications at the Patent Office in preferencee to having them reproduced and transmitted over to our office. We have gone over there and reviewed them together with the statements at the Patent Office just to eliminate a lot of the paperwork, the 341 applications have been reviewed in the Patent Office. The number actually transmitted is 693.

Mr. YEAGER. In your judgment, then, this is an administratively difficult section and not too effective?

Mr. O'BRIEN. Not too effective and of little value to us.

Mr. YEAGER. I believe it was testified in 1959 that the Commissioner had to ask you whether the invention had any utility.

Mr. O'BRIEN. We have provided the Patent Office with a list of the areas in which we are interested.

Mr. YEAGER. Doesn't that have to be kept up to date?

Mr. O'BRIEN. It does indeed.

Mr. YEAGER. Is this unique as far as NASA is concerned or does Atomic Energy have a similar requirement?

Mr. O'BRIEN. They have a similar requirement.

Mr. YEAGER. Does DOD?

Mr. O'BRIEN. No, sir.

Mr. DADDARIO. If this section of the act were to be eliminated and if you were able to deal with it in the same manner as DOD, you wouldn't have to go through this burdensome procedure?

Mr. O'BRIEN. No, sir.

Mr. DADDARIO. Getting back again to dealings with the contractor, Mr. Johnson, when a waiver has been granted, what does the contractor then in fact have?

Mr. JOHNSON. The contractor has all of the property rights in the invention which he would have if he were dealing with the Department of Defense-that is, he has title, less a royalty-free license in the U.S. Government for the Government's use as required by the law-with one additional qualification, and this is something to which I referred in some detail in my statement, and that is that we do require that after a period of years, which is either 5 years from the date the patent is issued on the invention, or 8 years from the date the waiver is granted, whichever comes sooner, that he demonstrate to NASA that the invention is actually being exploited in a practical way. Either that the contractor itself is utilizing it, developing it, giving it practical application, or that it is available on a reasonable royalty basis to others for such exploitation.

If it appears at that point that this is not being done, that this is an invention which is lying idle and that the exclusive rights of the contractor are not benefiting anybody, at that point his title is voidable. A hearing is offered if the contractor wishes to contest it, but the Administrator may reacquire the title to the invention and then make it available for licensing to others. We think this is an improvement. I testified earlier before this committee that we felt that this was at least a minimum interest which the Government ought to retain in inventions which have come out of research and development it has financed, and this is something which we would continue to do, I am quite certain, even if we had all the freedom of the Department of Defense.

But, except for that possibility of the title being voided if the contractor makes no practical use of it-and in that case he should really have no complaint about it he has all the rights that any patent owner has, subject only to the Government's license.

Mr. DADDARIO. What he gets back is not really complete ownership in the patent.

Mr. JOHNSON. It is complete ownership except for the license in the Government and this possibility of the title being voided. But all he has to do to get rid of that condition is just make use of the patent.

Mr. DADDARIO. It is a tremendously big "except," isn't it?

Mr. JOHNSON. It is an "except" but it is not an "except" that a contractor that is interested in utilizing an invention need be concerned about. He has a right to a hearing on this. If the time comes and it appears that he has simply been delayed in the practical development, this period can be extended, and he is accorded a hearing for that purpose.

After all, the reason contractors want these rights, the legitimate purpose, is to go ahead and exploit the invention, utilize it, or license it to others, and if the contractor gives the invention practical application during this period-5 to 8 years is quite an extensive period or licenses it to others, there is no loss by the contractor. Mr. DADDARIO. There is a cloud that hangs over his title, however, at all times?

Mr. JOHNSON. Yes, sir, and this is not required by our statute; this is something which we have developed administratively as being in the public interest.

We want to be sure in these cases where we have waived-after all, we are talking about an invention where, under the law, the Administrator could acquire everything for the Government—we want to make sure these inventions are not simply put on the shelf for the purpose of developing or enhancing a monopolistic position or for the purpose of preventing the bringing about of a line of activity, but rather that the public really gets the benefits out of it that the patent system is supposed to foster.

Mr. DADDARIO. Before we get into a discussion on this last statement, the thing I am trying to get straight in my mind is that when a person or a company deals with you they in fact give you the title to the invention. Then you give it back to them when and if you agree on their request for waiver.

Mr. JOHNSON. That is correct.

Mr. DADDARIO. That there is, therefore, ownership really retained in the Government so that they can take this back unless these conditions are met. Isn't that the procedures through which they must go? Mr. JOHNSON. I don't think I can say that, after there has been waiver, ownership is retained, but we do require that the title be voidable, so it adds up to a possibility of reverter. There is a possibility that the title will come back to the Government under certain conditions.

Mr. DADDARIO. These conditions not having been met, it can set in and assume their original position?

Mr. JOHNSON. It can, after the period specified in our regulations should expire. At a minimum it is 5 years after the patent issues or