MR. DERMER: It is our position that handling it by the regulations would be satisfactory. If you would like to have the Act amended, that would be fine, too.

MR. DENNY: One of the problems, when you solve one problem you get into another, Our six months was created as the result of all government agencies trying to help contractors by having the same set of regulations and time limits. This six months you will find in the FPRs. It is one of the things we thought was a problem to the contractors. There was an attempt to get it uniform throughout the government.

But you are saying we have a uniform problem now.

MR. DERMER: The problem is the same.

MR. DENNY: Thank you very much, Mr. Dermer. We

appreciate it.

Is Mr. Sperber here?

MR. SPERBER: Yes, I am.

Good afternoon, gentlemen.

My name is

Philip Sperber. I am counsel and an officer of the Cavtron Corporation, and I am an officer and director of the Ultrasonic Industry Association.

However, the views that I am going to express today are personal, based upon my experience as a lawyer and businessman in industry.

A couple of weeks ago I submitted a 20-or so page statement on whether mandatory licensing is desirable in the nonnuclear energy field, and subsequently, I received a call and was invited to come down to perhaps summarize that statement and subject myself to questions.

It is a very complex area, and I feel that since you do have this lengthy statement from me, that we can better make use of our time by allowing me to apply the concepts of my statement on mandatory licensing to the specific proposed policies of ERDA on patents, data and copyrights. So, with your indulgence, I would like to do this. Then you can question me on either issue, either mandatory licensing or my views on ERDA's patent and data policies.

(The complete statement follows.)

1290 AVENUE OF THE AMERICAS NEW YORK, NEW YORK

Honorable Sir:

In response to your Notice of Hearing on whether legislation requiring mandatory licensing of energy-related patents is needed to carry out the purposes of the FNERDA of 1974, I enclose an economic and legal analysis and conclusion on this subject.

I personally feel that the subject and issues involved are too complex to summarize in any meaningful manner with an oral presentation. However, if the interagency task force would like to question me on the attached statement or would like to have me make an oral presentation, I would be happy to attend the Hearing.

By way of information, I am. Counsel and Officer of Cavitron Corporation, New York City. I am also a Vice President and Director of the Ultrasonic Industry Association, Inc., an organization representing the interests of hundreds of high technology R&D firms vitally dependent upon the patent system for progress in the fields of medicine, national defense and industry, including energy R&D.

I am the author of Intellectual Property Management: Law - Business - Strategy, a 700 page treatise published by Clark Boardman, Ltd., in which I have made a study of the relationship between the patent incentive and venture capitalism needed for the financing of new product ventures.

I have also served as committee, subcommittee and group chairman cn licensing, antitrust and patent legislation in the American Patent Law Association, the Licensing Executives Society, the New York State Bar Association, the New Jersey State Bar Association and the New York Patent Law Association.

Honorable Robt. Scamans, Jr.
November 7, 1975

page twe

My testimony does not represent the official position of any organization of which I am a member. These are my personal views only, based upon my previous research, experience and responsibilities in industry and the patent profession.

Respectfully submitted,

Philips Spacer

Philip Sperber
Manager

Legal Department

PS: MWC enc.

THE QUICKEST WAY TO ENERGY INDEPENDENCE

The end product desired by Congress is readily available low-priced solutions to our energy problems. This end result is attainable only after commercializatio of the most promising of many different technological approaches and innovations in the energy field. The means by which this end result can be achieved in the fastest possible manner is none other than good old-fashioned research and development competition among firms within the energy industry. If hundreds of small businesses and dozens of major corporations are all enthusiastically trying to develop their own technological solutions to our energy goals, with each of said firms improving upon the innovations and efforts of others and hoping to be the first to present the public or ERDA with a commercially feasible breakthrough, then this is the ideal atmosphere for expediting energy independence What is the ideal combination of incentives to motivate R&D competition within the energy industry? The basic motivations for budgeting R&D for ventures in any industry are well established; the prime incentive being a satisfactory ROI.

1

If the potential rate of return on investment is high enough, the entrepreneur will take a reasonable gamble with his or his backer's capital. The key to decision-making here is what is a reasonable gamble. The risk that ROI objectives may not be reached is dependent on three fundamental factors, the most important, in the mind of the venture capitalist, being the degree of carpetition."

2

Now we get into the venture capitalists' mentality. Protection against competition serves as the insurance that the venturer and his capital sources will recoup the investment together with a reasonable profit should the research and development prove fruitful. Without some form of protection, competitors would immediately copy the innovation after technical feasibility and initial marketing success has been shown by the entrepreneur. This would put the venturer at a financial disadvantage since the competitors would be able to underprice the innovator, who must charge enough to recoup his substantial pioneering investment in both the laboratory and the marketplace, in addition to his fixed manufacturing cost.