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Senator MCCLELLAN. Very well. I have heard so much of this already, I can almost anticipate it.

Mr. MUNNS. You know it by heart.

Senator MCCLELLAN. I do not really mean to get ahead of you, but these thoughts arise. All right, proceed. Just go on with your state

ment.

Mr. MUNNS. Very well.

The situation I have just described will increasingly be a problem in the future as more and more Federal money is contributed through grants to hospitals, universities, medical schools, and medical centers. Can drug firms collaborate with these institutions if industry is denied a reasonable equity in resulting discoveries? My own opinion is that drug firms will have to shy away from such collaborative research under existing Government patent policy, as indeed they are already doing.

Senator MCCLELLAN. Now, there you conclude that sentence by saying, "as indeed they are already doing." Do you have concrete evidence of that work?

Mr. MUNNS. I think that could be developed, sir. The witness before me laid stress on that, where other drug companies were hesitant

Senator MCCLELLAN. Do you have any personal knowledge of such an instance?

Mr. MUNNS. It is a consideration that we have to think about when we have our own drugs, and we want

Senator MCCLELLAN. In other words, your own case is an instance. Mr. MUNNS. Yes.

Senator MCCLELLAN. The one you have just cited.

Mr. MUNNS. Yes; because if we went to a university or asked a scientist to collaborate with us, one who was under a Government grant, and in that process he found a variable use or a different use for this same substance, under those circumstances that new use patent would revert to the Government.

We in turn, working in our own shop, let us say, might easily have discovered the same thing. We would or we would not, but at least that possibility is always a distinct one, so that it would make us hesitant.

Senator MCCLELLAN. All right.

Mr. MUNNS. I therefore urge the subcommittee, in considering legislation, to aim at providing the maximum-not the minimum-incentives for medical discovery to university scientists and to the drug industry. I urge this because I sincerely believe that such a policy is in the national interest, and that it will bring the greatest good to the American people.

A very clear principle is involved. Our patent system stimulates the discovery of new and useful products and processes, and its incentive should not be reduced or denied in the field of health.

I would like to suggest the following principles which, in my opinion, should be considered in determining the form of any new patent legislation involving inventions with Federal support:

1. Where a scientist working in a nonprofit institution and supported by Government funds discovers a new compound that may have medicinal use, the patent rights should belong to his institution, subject to certain Government-retained controls.

2. The nonprofit institution should have the right to negotiate with industry to carry out screening, testing, and development work, and may further negotiate a royalty-bearing license with industry upon such terms as they may agree upon, subject again to Governmentretained controls. The license agreement may also define the respective rights of the nonprofit institution and the industrial concern as to new uses and related development and improvements which may result from collaborative work between them.

3. In view of the substantial expenses which must be borne by the industrial concern to develop and test the compound, and considering that the royalties will accrue to the institution and be available for further research, with such award to the individual inventor as the institution deems appropriate, the license to the concern must be attractive enough to invite its participation in this research and development. We have given considerable thought to specific amendments to S. 1809 and plan to submit them to the subcommitee at the earliest possible date.

That concludes my comments, Mr. Chairman. Thank you for your courtesy.

Senator MCCLELLAN. Thank you. Are you prepared to submit the amendments today, or do you wish to submit them later? Mr. MUNNS. I would like to submit them later, if I may. Senator MCCLELLAN. Very well.

Mr. MUNNS. They have not been-we haven't completely finalized them.

Senator MCCLELLAN. I personally appreciate it when those of you who have an interest in this, if you find some way that the bill can be improved, make your suggestion and then prepare the amendments that will carry out your recommendation so that we can better understand exactly what you wanted and what you mean and what the effect of your recommendation would be if adopted.

Mr. MUNNS. Well, you can appreciate that this is a very important piece of legislation that you are considering.

Senator MCCLELLAN. That is right.

Mr. MUNNS. And we are working, just as diligently as we can, to send to this committee our proposed or suggested amendments to your bill.

Senator MCCLELLAN. Thank you. I was just trying to emphasize that we will welcome such assistance from interested people.

Mr. MUNNS. We will try to get them to you just as quickly as we can, sir.

Senator MCCLELLAN. Very well. Thank you very much.

All right, Dr. Zucker, will you come around, please. We are ready to hear you.

STATEMENT OF WILLIAM ZUCKER, PRESIDENT, SOUTHEASTERN PENNSYLVANIA ECONOMIC DEVELOPMENT CORP.

Senator MCCLELLAN. Very well, Doctor. You may proceed. You have a prepared statement.

Mr. ZUCKER. I have, sir.

Mr. Chairman, I am William Zucker, president of the Southeastern Pennsylvania Economic Development Corp., a nonprofit organization created last year with the support of the business and financial community in the 5-county industrial area of which Philadelphia is the center, and which is composed of the counties of Bucks, Chester, Montgomery, and Philadelphia.

I have this prepared statement, which I would like so much to read if I may, and then be available for questions.

One of the concepts on which Spedco-which is what we call our organization—is based is that of encouraging economic development and industrial growth by creating an environment where new ideas in research and development of individual inventors who lack financial resources of their own can be translated into actual industrial production.

The patent incentive is an essential element of this process, and with Federal research and development programs expanding as they are, the potential impact-good or bad-of Federal agency patent policy on science-based, non-Government sectors of the economy cannot be overemphasized.

This is why the organization directed me to make known to your subcommitee, Mr. Chairman, our views on these important issues.

Let me briefly outline for you one key portion of our program which, by the way, is the first of its kind ever undertaken in this country, and which is jointly supported by our own business, financial, and academic communities and by the Federal Government itself through a technical assistance contract with the Commerce Department's Area Redevelopment Administration.

We have set up a new regional development laboratory, where inventors and researchers can obtain space in which to work up and test out their ideas, using our laboratory's specialized equipment and facilities, and having available to them a wide range of technical consulting services.

We designed this laboratory to provide the inventor or researcher with the best possible conditions in which to develop marketable, job-producing, economy-building products and services in the shortest possible time.

We believe it is important to take the individual inventor out of the basement, kitchen, or garage and give him the advantages enjoyed by his counterparts in well-supported industrial and academic laboratories.

Spedco's development laboratory will provide space for 12 "research associates," as we call them, who will pay service fees ranging from

$500 to $2,000 a year, depending on the extent of the R. & D. support that they require. All other costs are underwritten by the sponsoring organizations-ARA during this first year; Spedco and the West Philadelphia Corp.

The latter, parenthetically, is a second nonprofit corporation founded by the University of Pennsylvania, Drexel Institute of Technology, Philadelphia College of Pharmacy and Science and Philadelphia's Presbyterian Hospital to coordinate and stimulate the construction of University City, a 2,000-acre area being developed by private and public capital into a new urban community in West Philadelphia, distinguished by 16 educational and medical institutions. Our development laboratory is in the University City science center complex.

The length of time a Speco research associate will be permitted to occupy space in the laboratory varies with the product or service he is trying to develop and the progress he is making. When an idea has reached the prototype or model stage, the inventor will move out so that others may have access to the laboratory's facilities and opportunities for cross fertilization of ideas.

We already have 4 of the 12 research associates that our laboratory is equipped to house, and discussions are going forward with others. One is working on electronic devices for fire detection and for burglary detection.

A second is developing a low-temperature (cyrogenic) surgery probe and an instantaneous blood-flow reading device.

Polymer chemistry is the third associate's field, and the fourth is medical information retrieval.

Just before I came down last night, we signed up our fifth one, who is developing an electronic scanning device for the golf swing, so that if it is successful

Senator McCLELLAN. For what?

Mr. ZUCKER. For golf swing, sir. So that if it is successful, there will no longer be golf duffers in America. [Laughter.]

Senator MCCLELLAN. Say that again.

Mr. ZUCKER. This man has invented a scanning device hooked up by electronic devices with an IBM program device which examines the person's golf swing, his stance, the weight of the club, the way in which the golfer approaches the ball; and, hopefully, he will develop through this testing device a new way of approaching the ball and swinging the club. It will be sold to golf pros.

Senator MCCLELLAN. Is there any stock for sale in that? [Laughter.]

Mr. ZUCKER. I would like to point out, if I may just proceed, Mr. Chairman, that all of these are new and novel ideas that we are trying to develop.

Now, the Area Development Administration of the Department of Commerce is providing us with $120,000

Senator MCCLELLAN. On this particular thing?

Mr. ZUCKER. On the entire laboratory, not on this device. No, sir. We then provide some $45,000 in additional funds. But the patent device and the patent rights belong to the research associate. They

do not belong to the Federal Government, nor do they belong to Spedco, nor do we have any financial rights in the product at all. But this is one of the first times in which a Government contract was written in which the research associate's patent rights belong to him and do not revert to the Federal Government.

We pioneered in this R. & D. facility because it represents a single approach, a first approach which we hope will be duplicated throughout the country.

We have emphasized the fact that our area, our five-county area, has indeed quite a complex of R. & D. going on, and we have issued just recently this brochure (indicating), which I would like to leave with the chairman, not to put it in the record.

Senator MCCLELLAN. It may be received as an exhibit for reference, appropriately numbered. We have already had a number of exhibits for reference, and this will be appropriately numbered for reference. (The brochure referred to will be found in the files of the committee.)

Mr. ZUCKER. Thank you, sir.

In it, we have listed a directory of research and development, and we have found that there are more than 425 laboratories employing about 15,000 scientists and engineers and spending more than $500 million a year in R. & D. R. & D. programs span the entire range of science and technology, with the greatest concentration in aerospace, chemicals, electronics, instruments, machinery, materials, development. medicine, and physics.

When it is completed, the $50 million University City Science Center in West Phildelphia and its already functioning Science Institute will be able to make available to government and industry alike—provided equitable Federal patent policies are developed by Congress and enacted the research talents of a dozen or more universities, technological institutes, and medical centers.

The interdependence of science and technology, the frequent intermingling of research activities, and the participation of the Federal Government to industrial and academic research cannot be better demonstrated than in southeastern Pennsylvania.

As I mentioned, we had prepared this detailed directory of R. & D. organizations, facilities, and capabilities in southeastern Pennsylvania and, where possible, the sources of support for the work conducted in each.

We found that activities in the area's 425 research centers and laboratories included (1) research supported entirely by industrial concerns; (2) programs supported entirely by the U.S. Government under contracts or grants, and (3) also it had programs in which Government projects are going forward side by side, with research being conducted with a company's or university's own funds and with other, nongovernment contract or grant-supported work.

Monitor Systems, at Fort Washington, for example, is a small company with $2.5 million research volume in communications. All its work, at the time of our survey, was for the Government.

General Electric's Missile and Space Division employs 5,500 research personnel in a broad range of disciplines, with 95 percent Government support and 5 percent funded by GE itself.

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