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We don't question that, but we do think that in actual application you've got some real problems of administration.

You could come up with an invention, for example, a single patented invention, which in a given product, actually put on the market, might be just one of four or five or more patented inventions going into that product. What apportionment would you make there in terms of royalty I am not saying it is insuperable, but there would be some administrative problems, and that should be handled very carefully, because the Government agency might get bogged down and spend a lot more on administration than this would get back. This is the point that the chairman made previously about administrative costs.

Mr. YEAGER. Yes, sir, I understand that.

There is no suggestion we try to write into the law something, some fixed policy that the administrator would have to handle. You do feel he should have the flexibility to carry out, make his own. regulations, in a situation such as royalty sharing that we spoke ofwithout being tied down to a particular line of activity. If you had, in your statute, something broad along the lines that you have in section 2, this would encompass that particular idea?

Mr. GILES. I think so, yes.

Mr. YEAGER. In the first paragraph there, where you say:

When the contractor is to have title to any resulting patent, the head of the agency shall determine at the time of contract negotiation * * *.

Our witness yesterday took exception to this type of thing in H.R. 1934, arguing that at the time of contract negotiation the Government was not in a position to know whether extraordinary conditions of national security or general welfare might be involved, whether inventions might come out of it that might be crucial.

I was wondering how you would answer that type of argument? Mr. GILES. First, and I may be incorrect in my recollection of the present NASA statute, but it is my impression, though, under the present language of that statute the Administrator could waive the right to title at the time of the contract. I don't know how they actually administer it, I am talking about the legal authority. At least the language in the statute seems to be broad enough to permit the Administrator to waive title rights at the time he enters into the contract.

So as beween that language in your present law and the language in H.R. 1934, in granting legal authority, I don't see any real difference.

Now, in actual application, it seems to us that an administrator would be able to determine at the time he enters into the contract negotiation the rights that he would want to have, or that he would need to have, to protect the Government's interest.

It is difficult for me to conceive an actual situation or an actual product developed which you would patent which couldn't be reasonably anticipated for purposes of a research contract. Even what some people have described as patentable fallout, something purely incidental that just happened to come off, could still be anticipated in

a contract.

Then, too, under the language as suggested here, there is considerable flexibility for the Administrator. He could still reserve certain licensing rights, and then later on, if he didn't need them, he could waive them and turn them back. You have a similar provision in H.R. 1934, as I interpret it, that the Administrator may later, after he has already made an initial determination, waive rights which he finds out that he doesn't need.

Mr. YEAGER. That is all I have.

Mr. DADDARIO. The only comment I have on that, then, is that you think it would be an unusual case where the Administrator would have no knowledge of what might result from a Government contract? Mr. GILES. I would think so, sir, and the point I'm making again is, we are talking about the grant of legal authority, not how it may be applied in given cases.

Now, as you have in this bill here, you grant a wide flexibility. In actual application it seems to me that the Administrator could resolve any doubt in favor of the Government, and then later on make a change if the facts so warranted.

Mr. DADDARIO. Could resolve it and should resolve it.

Mr. GILES. That is right. He could and should resolve it in favor of the Government. But we are talking again, it seems to me, primarily of what authority do you give to the Administrator of the agency, not what you compel him to do.

Mr. DADDARIO. I think that is very well put.
Mr. YEAGER. I have just one other question.

Time is very important, I think, in regard to the space program, and whether or not this title provision should be changed.

In view of that, can you give us any information about how soon we might expect some administration position on this? You mentioned work is being done in this field and various agencies are considering it. The schedule, if it can be called that, is interesting to us.

Mr. GILES. I am sorry, I cannot. All I can say is that a great deal of attention is being given to it, and I am sure every effort will be made to come to a conclusion.

Now, when that will be, I just can't say at the moment. I just don't know.

Mr. YEAGER. Thank you.

Mr. DADDARIO. Mr. Giles, again I want to thank you and the other gentlemen who have accompanied you.

This has been a very helpful session.

Mr. GILES. Thank you, sir.

Mr. DADDARIO. The committee will adjourn until the call of the Chair.

(Whereupon, at 12:32 p.m., the subcommittee adjourned until the call of the Chair.)

PATENT POLICIES RELATING TO AERONAUTICAL AND

SPACE RESEARCH

THURSDAY, FEBRUARY 8, 1962

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SCIENCE AND ASTRONAUTICS,

SUBCOMMITTEE ON PATENTS AND SCIENTIFIC INVENTIONS,

Washington, D.C.

The subcommittee met at 10:15 a.m., in room B-214, New House Office Building, Hon. Emilio Q. Daddario (chairman of the subcomittee) presiding.

Mr. DADDARIO. The meeting will come to order.

We are pleased to have Judge Loevinger here again, and our committee will begin by turning the questioning over to counsel, Mr. Yeager.

Mr. YEAGER. Judge Loevinger, when you were here last week, I think you testified that you would prefer to have a title approach to this problem that we are dealing with, one which would incorporate waiver processes in it to permit a certain amount of flexibility.

Data which have been provided to this subcommittee indicate that the waiver process itself is not without some difficulties. One, for example, being the interpretation of the act, and how liberal the waiver policy should become. Another one being that in some cases, perhaps in many cases, according to what we have been told, waiver is not asked for for a number of reasons, including expense and time involved as well as the possibility that waiver might be rescinded at some later date.

If we assume without arguing these particular points, if we assume there are serious difficulties with the waiver process, and therefore with the title process, and if we also assume the approach to the bill which we have is not the best-could you give us any alternative suggestion, which might be useful to this committee, and which would met most of your objections?

FURTHER TESTIMONY OF LEE LOEVINGER, ASSISTANT ATTORNEY GENERAL, ANTITRUST DIVISION, DEPARTMENT OF JUSTICE

Mr. LOEVINGER. I have attempted to ponder that question, Mr. Yeager, although not under the best circumstances.

I think all I can tell you is that if I were dratfing a bill, I think I would draft a bill very much like the present statute.

I have read the testimony regarding this, and frankly I am not, myself, much impressed with the alleged difficulties of the waiver

process.

The testimony given, at least in the last hearing, was that NASA had the burden of examining something like a 1,034, if I remember the figure correctly, descriptions of patents that might or might not be relevant to its field of activity.

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I don't see how you can expect to spend a billion or several billion dollars of Government money without having that much administrative burden. I don't think that you are going to get over the problem, at one and the same time, of safeguarding the public interest in spending billions of dollars of public money and also avoiding some administrative burden. I think those two are inseparably related.

Mr. YEAGER. I think that figure you spoke of is the figure which has been certified to them by the Patent Office. I was speaking here of cases involving NASA's own contracts. If we don't follow a title approach with the waiver system built in, is there something else we might do that would meet your objections to the bill?

I was going to come to this question next on the merits of the socalled flushing provision, which requires the Commissioner of Patents to certify any applications for patents which he finds could have "significant utility" for the space program to the NASA Administrator, and for the purpose of determining if they have been made with any Government assistance.

This is a little apart from what I had in mind in my initial question. I was trying to figure out the waiver system which NASA now employs, when it enters into a research contract itself with a company, whether or not, if we assume that there are difficulties with that waiver system-whether you had any ideas on some other system which you thought might work equally as well, or perhaps preferable to what we have in the bill and still not be the title approach.

Mr. LOEVINGER. I think I understand the question, Mr. Yeager, and I don't mean to be flippant about it.

I can't conceive of spending billions of dollars, as NASA is doing, safeguarding the public interest, and not having problems. It seems to me that if you look at these things carefully enough, no matter which place you put them, that there are difficulties. Indeed, if I recollect the testimony correctly, the testimony was that these provisions, these subprovisions of section 2457 were put in order to avoid greater burdens upon contractors and upon NASA that might result from a different policy.

If, for example, you started out with the assumption that contractors were to have title, but that NASA could reclaim title, or divest title from the contractors with respect to those inventions as to which particular criteria were met, whatever they may be, then it seems to me that you would have a much greater burden upon your contractors.

I see no way that such a system could be administered fairly and with due regard to the public interest and the expenditure of its funds. without requiring that the contractors make a very detailed disclosure of every invention and of every patent application. As it is, there is some disclosure, but since NASA can waive fairly readily, it can be, I think, a less disclosure without any danger to the public interest than would be required if NASA were required to make an affirmative determination to reclaim title. I don't see how you can escape from this dilemma.

Either you are going to make a determination as to each invention, or not. If you are, you've got to have some basis for the determination. This means a disclosure and a description. Perhaps there are mechanical ways of handling it that would be more easy, more expeditious. As to this I am not enough of an expert in the procedure

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