Mr. DADDARIO. Just following that for a moment, since this really is what the argument boils itself down to. How do we control that? Let's say that there will be a new administration which will appoint a new Director of NASA, who believes that the congressional intent was to take title, and to grant waiver only in certain instances, and he has a strict interpretation and takes title in most instances?

Could you not then be creating a problem, since part of your answer indicated the need of great flexibility?

Mr. LOEVINGER. I think any statutory policy, if badly administered, could create a problem. I have little doubt that congressional committees such as this will work over any administrator who is thought to be using his powers unwisely.

It would be suggested to him he should change his policy.

The difficulty with the proposed legislation or one of the principal difficulties of the present legislation is that it effectively deprives the Administrator of discretion in terms it appears to give him discretion, but the discretion must be exercised at a time when it is literally impossible for him to have the information on which such discretion could be intelligently exercised.

Mr. DADDARIO. Well, I think we will explore that at a later date. You make an assumption—and you make it strongly, but I think it is a false one-and that is, at the time the contract is being negotiated that the Government knows nothing whatsoever about what might develop. The fact is that in most instances the Government has had prior experience with this company, they have bid proposals and other negotiations which have preceded it.

They have a pretty good idea of the competence of this company to perform a certain effort which they are interested in, and if they had not had proven competence they would not have gone to them in the first instance. So they do not start from scratch; they start from somewhere down along the line. At that stage of the game, all of the people being quite expert in this field, there is a pretty good idea as to what is going to happen and what will develop.

Taking all of those facts into consideration, it would not seem to me that they have no knowledge of what might happen.

Mr. LOEVINGER. Well, sir, if I understand the theory of the patent law correctly, if a patent is in fact predictable in this fashion, then it is not if an individual-I'm sorry; I misspoke myself.

If an invention is predictable on the basis of contracting, and assigned research, then it is not patentable. An invention must represent such a departure from the prior art as to constitute genuine discovery, and it seems to me by definition a patentable invention is one which cannot be thus predicted.

Mr. DADDARIO. I think that is correct, and yet again we are not putting into balance all of the other elements that come into it and the other elements involved, the inception of thought leading up to the invention, which eventually results in a patent.

I find it difficult to divorce from my mind the requirements on a company to develop the competence, so that the Government will go to them in the first instance, and how we divorce from that all of the ideas and all of the skills and talents born, built, and developed within a certain time which is built by a certain company which it then makes available to the Government. Through all of this, per

haps an invention may result. If it does result, does it come-where was the spark initiated, at the time the contract was made or sometime prior thereto? How can you determine that? You can't look ahead, neither at that time can you really look back, except you can say they either have a strong competence in this field or not.

It seems to me that your theory would be a very good one if we started completely from scratch, a Government and a contractor who had no competence whatsoever, and would begin developing its research team from that point on. It seems to me that would be a necessary part of this problem for your assumptions to hold true.

Mr. LOEVINGER. Well, I don't believe that is true, sir.

I believe that in fact the Patent Office does precisely this: It does look back, and looks at the development of an invention to determine whether or not it has patentable novelty. I think that at the time you are looking at an invention you can also examine the past competence of this company, the relative contribution of its own research team, of its own funds, the field that it is in, what it relates to, and at this time you can make a rational determination.

However, when you talk about simply turning it all over to the company, at the time the contract is signed, you are talking about companies that have gotten 99 percent of all of their research funds. from the Government. It seems to me to be pretty hard to say that they have gotten a fund of established competence from private capital that entitles them to all of the inventions that are going to result from future Government investment, which is essentially what this legislation would say.

Mr. DADDARIO. Well, this falls again into a pattern where the discretion of the director becomes important.

There are companies which receive less from the Government.
Mr. LOEVINGER. Yes.

Mr. DADDARIO. There are companies where the ratio of risk capital is much greater than that of the Government.

There are instances where companies, companies which work strongly with the Government in one area, will have a research team working on a particular problem completely separate and apart, using only its own funds.

So there must be a great deal of flexibility. I think that one of the problems in this discussion is those who assume the one position assume their strongest position, and those who assume the other, assume their strongest position. Whereas in fact there is an area in between toward which I think this committee has worked in the past and is working at the moment. I think it is a very healthy one.

At any rate, I think we have gone far beyond where we should this morning, and if you can come back next Wednesday morning, there is still a great deal which has to be explored.

Mr. FULTON. Could I just get one point on the record here, what they are not for, just one small point?

Mr. DADDARIO. Yes, until a quarter after.

Mr. FULTON. All right.

You definitely oppose complete Government ownership of patents, inventions, licenses, discoveries, and improvements, or Government research and development contracts where the Government puts up the money.

You are against that complete Government ownership recommended by Senator Long; aren't you?

Mr. LOEVINGER. I haven't read Senator Long's bill, sir, recently, and I again feel it imperative as an attorney to read legislation before commenting on it.

Mr. FULTON. All right, then, leave Senator Long out of it, and say you oppose a position which is for straight Government ownership of patents that are on inventions, discoveries, or improvements, under Government-financed research and development contracts?

Mr. LOEVINGER. I would prefer to say, Congressman, that I believe that any policy must have elements of flexibility.

Mr. FULTON. But you are against the straight rule that the Government should own all the patents, licenses, and everything; aren't you?

I think we should get a yes or no on it, because it disagrees with your present position.

Mr. DADDARIO. Mr. Fulton, may I say this: We will have an opportunity to discuss this at further hearing. Judge Loevinger is coming back.

Mr. FULTON. Just a yes or no answer.

Mr. RYAN. Mr. Chairman, if we are going to extend this, I have many questions along this line. I think it is unfair.

Mr. DADDARIO. Mr. Ryan, I think we will explore this later. He may have the answer on a yes or no basis at a later time.

Mr. FULTON. I don't want just that, but I would like to know whether he is against straight-out Government ownership right now. Mr. DADDARIO. Can you answer that question yes or not?

Mr. FULTON. If there is any hesitation, I think that is a point that should be noted in the record.

Mr. LOEVINGER. Let the record show I have hesitated, sir.

Mr. DADDARIO. All right.

This committee will adjourn until tomorrow morning at 10 o'clock. (Whereupon, at 12:16 p.m., the subcommitttee adjourned, to reconvene at 10 a.m. Friday, February 2, 1962.)

PATENT POLICIES RELATING TO AERONAUTICAL AND

SPACE RESEARCH

FRIDAY, FEBRUARY 2, 1962

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SCIENCES AND ASTRONAUTICS,

SUBCOMMITTEE ON PATENTS AND SCIENTIFIC INVENTIONS,

Washington, D.C. The subcommittee met at 10:10 a.m., Hon. Emilio Q. Daddario presiding.

Mr. DADDARIO. The meeting will come to order.

I am pleased to have as the first witness before the committee this morning, the U.S. Commissioner of Patents, David L. Ladd, a man with whom I have had discussions in the past on the administration of the Patent Office.

I have never had an opportunity to hear him on this particular subject, and we are extremely pleased to schedule him as a witness. We will listen very carefully to what he has to say.

If you will proceed, Commissioner.

STATEMENT OF DAVID L. LADD, U.S. COMMISSIONER OF PATENTS; ACCOMPANIED BY EDWIN REYNOLDS, FIRST ASSISTANT COMMISSIONER OF PATENTS, AND R. L. CAMPBELL, ACTING PATENT OFFICE SECURITY OFFICER

Mr. LADD. Thank you, Congressman.

I think copies of my statement have been provided to the committee. If the committee has had a chance to look over the statement, the committee will have seen the statement deals largely with the operation of the Patent Office in relation to the provisions of the present

act.

However, since the committee may want to ask some questions beyond the statement itself, I have brought with me and would like to present to the committee, Mr. Edwin Reynolds, the First Assistant Commissioner of Patents.

Mr. DADDARIO. Mr. Reynolds, we are pleased to have you sir.

Mr. LADD. And Mr. R. L. Campbell, who is an acting primary examiner in one of our security divisions, and who is acting presently as the Patent Office security officer.

Mr. DADDARIO. We are pleased to have you, too, sir.

Mr. LADD. As I say, I have been asked to appear before this committee to testify on that part of the Space Act which requires some action by the Patent Office in connection with applications for patents on space-related inventions, particularly subsections (c), (d), and (e) of section 305 of the act.

The bill before the committee, H.R. 1934, deals with the basic problem of the disposition of rights with respect to inventions made in connection with research and development contracts entered into by the Space Administration.

My testimony will not touch upon the broad policy questions presented by this bill. The Patent Office itself has not entered into research and development contracts with private contractors, and does not do so now. The Patent Office performs no function in such activities of other Government agencies; and the problem involves questions of business and economics with which the Patent Office does not deal.

Consequently, I am not here to testify on the bill, but only to give information on the operation of the present act, insofar as the Patent Office is connected with these operations. Mr. Giles, the General Counsel of the Department of Commerce, will present the views of the Department on the policy issues.

Subsection (a) of section 305 of the Space Act provides that inventions made in the performance of work under a contract with the Space Administration, as specified, shall be the exclusive property of the United States, with authority in the Administrator to waive all or part of the rights as provided in subsection (f).

Subsections (c) and (d) relate to the procedure by which the Administrator may assert the right of ownership and require patents to be issued to him on behalf of the United States. It is this procedure in which the Patent Office plays a part. Basically, it follows that set forth in section 152 of the Atomic Energy Act of 1954 with a few differences.

The procedure as specified in subsections (c) and (d) can be analyzed in the following sequence of steps.

1. The applicant for a patent for an invention which "appears * * * to have significant utility in the conduct of aeronautical and space activities" must file a special written statement under oath. This sworn statement or affidavit must set forth the circumstances under which the invention was made and state the relationship, if any, of the invention to the performance of any work under any contract of the Administration. The statement must be filed "with the application or within thirty days after request therefor by the Commissioner." If the required statement is not filed, no patent can be issued, except in the case of an application already owned by the United States.

2. When the statement is filed, the Commissioner is to forward copies of it and of the application to which it relates to the Administrator.

3. The Administrator has 90 days after the receipt of the copies mentioned, within which he may request the Commissioner to issue the patent to him. In other words, the Administrator at this time may assert ownership of the invention. If the Administrator fails to file the request within the 90 days, the Commissioner may issue the patent to the applicant in the usual manner.

4. If the Administrator files the request referred to, the applicant is to be notified. He then has 30 days within which to request a hearing on the question of whether the Administrator is entitled to receive the patent. This hearing is before the Board of Patent Interferences in the Patent Office, with an appeal to the Court of Customs and Patents.