« PreviousContinue »
The second person needed in a licensing situation is a champion for the invention within the company which is being licensed. In the absence of such a champion, one who really espouses the invention as a product line for the company, or espouses use of the invention by the company in another way, the invention will generally go nowhere.
We speak from and have had considerable experience along those lines and conclude that two people, the inventor and the invention champion are necessary for its successful transfer to the public.
Senator SCHMITT. Is this different from a Dr. Jeckyl-Mr. Hyde personality split within the inventor himself or herself that could be embodied in two people or one person?
Mr. BREMER. Speaking for the universities in general on that point is rather difficult, since there are various kinds of arrangements that are available. In some schools, for example, there is an employment agreement with the professors conducting the research. They then have a direct obligation to the universi itself. Other places, as at the University of Wisconsin, they do not. At Wisconsin, absent an obligation to the Government because of Federal funding, the inventor is free to do with his inventions whatever he wishes. In that situation, he can go directly to the industry, participate in the invention development, and also receive some stipend back from any successful transfer of that technology; or he may even sell the invention outright. In other universities he cannot do that.
Also where he is essentially a free agent he is very often employed by the licensed company as a consultant. That is, however, on his own volition and a voluntary act.
Senator SCHMITT. Do you favor that kind of an arrangement?
Mr. BREMER. It has been very successful, in our view, at the University of Wisconsin, and I must state that my experience has been primarily limited to that approach. That arrangement has generally been credited as part of the reason that that university has been so successful in technology transfer efforts.
Senator SCHMITT. Section 201(a) of S. 1215 creates a central review authority with power to determine with administrative finality any dispute between a Federal agency and a contractor as to the allocation of rights for an invention made under a Federal contract. Do you believe, Mr. Bremer, that this review authority could meaningfully address the concerns that you raised in this regard?
Mr. BREMER. I think it certainly can. In any situation you have an equity proposition that attaches, and we have found very often, that the old saw about what the Government pays for it should get is not, in equity, applicable. The university often provides physical space, the proper environment, and the principal investigator, who is generally salaried by the State, as well as other ancillary contributions. We have very often found that the equity position of the university vis-a-vis the Government is about 50-50.
As a consequence, a review authority could consider all of those factors in addressing a problem such as this.
Senator SCHMITT. In your statement-and Dr. Marcy may want to comment on this, also—you say the present Government patent policy has, in a way, insured that technology generated with Federal funding is available without charge or restriction to foreign competitors, and they have more successfully utilized such technology than we have. Do you think that S. 1215 would treat that problem?
Mr. BREMER. In my view, if we can give the contractor first option to title-he will make a selection to the best of his ability as to the invention disclosures which appear to have the best commercial potential and file patent application on them. We, for example, at the University of Wisconsin, may get 60 disclosures a year. We may file patent applications on about one-third of those. The remaining technology may not lend itself to patentability or is so narrow in scope that it doesn't lend itself to a patent licensing arising at a university however, it a generally disclosed through publication. It must be kept in mind that for a university or a nonprofit, a patent is the fundamental basis upon which a transfer of technology occurs.
The NTIS, of course, publishes—they even have an outlet in Japan, I understand, so they can transfer the technology more quickly to the Japanese, who can't seem to get it fast enough. I think S. 1215, with its basic thrust, would be favorable toward controlling at least some of that free dissemination of technology.
Senator SCHMITT. Dr. Marcy?
Dr. MARCY. Well, I think one has to realize that the major funding of scientific research at universities comes from the HEW and from NSF. Therefore, generally speaking, the inventions that come out of this type of research are biological, chemical, pharmaceutical, biomedical devices, diagnostic testing procedures and so on rather than the so-called high
technology inventions in electronics.
Now, the situation regarding that type of invention is quite different from the situation in the electronics and mechanical device area. Chemically-oriented inventions are much stronger and much more important to the industrial company that finally manufactures and sells these things.
Our practice at Research Corp., for the past 10 years at least, has been to try to develop patent packages overseas on this type of invention in foreign countries, and to license these things in foreign countries, certainly on terms no more favorable than in the United States, and in many cases even less favorable to the terms in the United States.
So that, in our view, the situation overseas for this type of invention, contrary to the way people say it has been, is that technology does not necessarily get used overseas freely, since we have seen to it that it doesn't get used freely overseas first. Sometimes our licensees overseas get on the market there first before the U.S. companies do here, and then these products finally end up in the States. The point I am trying to make is that, with the university type inventions, using our services, and I think with WARF's services, too, this does not happen in this manner.
Now, in the electronics and the mechanical devices area, where massive support for this type of investigation in the institutional area is centered in just a few institutions, like MIT, Princeton, Brookhaven and so forth, that is a different story. This type of research doesn't make very good patentable inventions. Frequently the technology gets published and the information gets transferred overseas in a normal way, and science just diffuses around the world. In those cases, what is said is true about the foreign countries getting this technology and bringing it back later to the United States.
I think you have to take that into consideration and keep in mind the type of technology we are talking about.
Senator SCHMITT. Gentlemen, I am sorry to say we've run out of time.
Again, thank you very much for your testimony.
Our next hearing is Friday at 9:30 in this room. We will continue our examination of S. 1215 and related issues. I hope that in the not too distant future we can take into account ail of the good suggestions we have had and ignore the bad.
Thank you very much.
(By Peter F. Drucker 1) Science and industry in the United States used to enjoy a relationship of mutual respect based on an unspoken conviction that they depended on one another. That relationship, while distant, was uniquely productive for both science and industry
The first change in the traditional American relationship occurred after World War II. Research became fashionable in industry and government alike. These were the years when the stock market valued a company according to the amount of money it spent on research, and which lavish campuslike research center was considered proof of a management's competence. Similarly in those years-culminating in the space program of the 1960's-science and research increasingly came to be seen as the mark of the effective well-planned and properly progressive government program.
During the years after the war, the ability of America to convert science into industrial application was considered the outstanding strength of both American science and American industry. Treatise after treatise pointed out that the British, for instance, were America's equals in science. But the British failed to convert their own scientific achievements-in electronics, in polymer chemistry, in the computer, in radar, or in aviation-into technology, products, and economics advancement, whereas America did.
Equally, especially during the Truman and the Kennedy years, the willingness, indeed eagerness, of the American politician and government executive to apply science-“hard” as well as "soft"-to both the study of social and political problems and to the design of social and political programs was seen both inside this country and outside as a distinct and great American achievement. The innovating ability of American society was widely explained throughout the world, including the Communist countries, as the result of the sensitivity of the American scientist to political and social needs and opportunities, and to the values and dynamics of the political process.
In quantitative terms, the relationship seems to be as close as ever-and perhaps even closer in computer sciences, solid-state and nuclear physics, the earth sciences, and biochemistry. It might be argued that nothing has really changed despite all the talk of irrelevance of science or of the wickedness of “American Imperialism" by the vocal critics on the New Left, despite Vietnam, despite inflation, and so on. One might indeed assert that the highly publicized and highly visible developments and media events—the headline- and demonstration-makers-are little more than whitecaps on the surface of the ocean.
The author is Clarke, professor of Social Science and Management at the Claremont Graduate School, Claremont Colleges, Claremont, California 91711. This article is adapted from the text of a letter delivered at the meeting of the AAAS in Houston, Texas, 7 January 1979.
I know of no comparative study of different models of integration of science and society. The few Marxists analysts, such as George Lukacs or Lancelot Hogben, wore nationalistic blinkers; Lukacs, for instance, assumed the German model to be universal.
Yet there has been a major change, not in the measurable realities of the relationship between science and the decision-makers in industry and government, but in the moods, the values, and the meaning of the relationship. There is today distrust, disenchantment, mutual dislike even, and worse, lack of interest in each other on both sides. American scientists today, in large number, tend to suspect the traditional relationship as being tainted or impure. Industry still professes to honor the relationship and to respect research. But industry's actions no longer fully live up to industry's professions. As to government, there is now a strong tendency to judge science by what is politically expedient or politically fashionable; that is, to attempt to subordinate science, whether pure or applied, to value-judgments that are the reverse of, and largely incompatible with, any criteria one could possibly call scientific.
In both industry and government, there is even increasing doubt whether science and research do indeed lead to results. It is often argued that this reflects lengthening lead times resulting from the increasing complexity and specialization of today's advanced scientific research. But there is no evidence that the lead times have lengthened; the time span between new theoretical knowledge and the first application is the same 30 to 40 years that it has been all along (for example, between Maxwell's theory and Westinghouse, between x-ray diffraction and Carruther's de velopment of nylon and polymerization, or between quantum mechanics and semiconductors). What is changing are not facts but faith. On both sides the mood is becoming one of alienation and perhaps even of recrimination. It is a dangerous mood, above all for American science and American scientists. Both sides stand to lose, but science stands to lose far more. Ways of industry
The mind-set values of industry-but equally of the government decision-maker concerned with effective policy-are in danger of becoming hostile to the needs, the values, the goals, and the perception of science. One reason for this is the increasing pressure, especially in an inflationary period, to produce results fast. An inflationary period, by definition, is one that erodes and destroys both industrial and political capital. In an inflationary period the existing value of future results is subject to the exceedingly high discount rate of inflation which, in effect, means that no results more than a year or two ahead have any present value whatever, whether value is defined in economic or in political terms. It is, therefore, not a period in which either industry or the policy-maker can take risks.
Thus both industry and the governmental policy-maker in an inflationary period concentrate on small, but sure and immediate, payoffs; that is, on what can be calculated with high probability. The application of true scientific knowledge is by definition a big gamble in which payoffs are far in the future and thus exceedingly uncertain although very great in the event of success. In an inflationary period, the industrialist or the policy-maker is almost forced into the small but quick payoff of a lot of small and, by themselves, unimportant projects that require very little science altogether and can only be damaged if exposed to too much science. Tax effects and investments
More important perhaps—or at least more insidiously deleterious over a longer period of time—is taxation. The tax system adopted by the United States in the last 20 years or so penalizes basic research and the adaptation of basic research to technology. Worse, through the combined working of corporation income tax and capital gains tax, the system greatly favors short-term, immediate gains and makes long-term investments in an uncertain future unattractive and unrewarding.
Equally inimical to investment in research and innovation is the increasing burden of regulation. It is not primarily that regulation adds cost, but that it creates uncertainty. Whether in respect to the environment, to safety, or to new drugs, regulation makes investment in research irrational, not only increasing the odds against research producing usable results but also making research into a
Tax laws and regulations also push industry away from technology focus and toward financial conglomeration. Under the tax laws of the United States—laws which in this form do not exist in many countries—the proceeds of liquidating yesterday are considered profit and are taxed as such both to the company and to the investor. Hence, businesses, instead of liquidating the obsolete, have to find new investments in new businesses for whatever cash is being released by the shrinkage of an old technology, an old product line, or an old market. And this, in effect, imposes conglomeration on them. This policy makes it increasingly difficult to shift resources from low and diminishing areas of productivity to areas of high and increasing productivity and this impedes innovation. It also shifts businesses from a
technological to a financial focus. It makes management increasingly a matter of finding the right financial investment.
This constant pressure of the tax laws, which results in a swerve from the scientific and technological toward the financial and from the long term toward the short term, is then aggravated by the antitrust laws, which probably are responsible more than any single factor for turning American industry away from building on a technological, science-oriented base and toward the financially based conglomerate.
In the world economy, even businesses that are very large on the national scene are becoming marginal, if not too small. The "big business” of 1938 or even 1958 is a small, if not a marginal, business in the 1979 world economy. Yet our antitrust laws frown on the scalingup of businesses except through the formation of conglomerates, which, however, lack the fundamental core of technological unity. This conglomerate is focused on financial rather than on technological results. Hence, investment in long-range research and in the application of scientific knowledge to economic production becomes difficult in the conglomerate. People who are good at building and running conglomerates are financially oriented people. Yesterday's business, with its unified technology, organized around a process, such as making glass, was basically technologically oriented and therefore looked to science for its future. The conglomerate, which comprises everything from tin cans and electronics to fast-food restaurants and dress shops, from airlines to banks and toys, is, of necessity, financially oriented. Research becomes a cost center rather than a producer of tomorrow's wealth.
Similar forces operate in government in respect to the interest and the investment in science. Even the most short-sighted businessman still has to focus on both the short term and long term. But a governmental budget is always myopic. It knows no time span other than the fiscal year. It has to justify allocation of resources on the basis of short-term and mostly political expediencies. This was one reason why some older and wiser heads in American science warned against dependence on government 25 years ago. Their fears proved well founded. As soon as science ceases to be an article of the faith and popular, and becomes one application of governmental funds rather than the application of governmental funds, the pressures of the budget process make science a low-priority choice for politician and bureaucrat alike.
There is also disenchantment with the results. Whether science oversold itself or whether industry and government expected miracles, is beside the point; the results that business and government anticipated when they rushed into lavish expenditures on scientific research have rarely been attained. Surely, the relation between scientific work and results, whether in terms of goods, services, or such benefits as better schools or better health care, is far more difficult and complex than either scientist or policy-maker thought.
As a result of these pressures and developments, industry and government are drifting toward what might be called a scholasticism of the budget in which the budget is a closed system, with its own absolute logic.
Both the business executive and the governmental executive proclaim their faith in research, but neither can practice it today. The mind-set of executives, whether in business or in government, and their values thus inexorably shift from what Thorstein Veblen, about 60 years ago, called “the instinct of workmanship to what he called “the spirit of business”--the right term today would be “the spirit of the budget.” It is a shift from a concern with the creation of wealth-producing resources toward immediately payoffs. It is a shift in cost-effectiveness from emphasis on cost. And this trend is perhaps a good deal more pronounced in government today than it is in business. Estrangement
Let us now look at what has happened to change the mood, the mind-set, the value of American science. Those changes, or at least their underlying causes, go back to an earlier period during which the relation between science and its nonscientific patrons and customers both in industry and in government seemed to be closest, most harmonious, and most productive.
American science first began to feel uncomfortable in the traditional relationship of mutually advantageous coexistence. Or perhaps science was uncomfortable all along, but did not see any alternative until after World War II, when government emerged as its rich and more generous patron. Whereas industry had at best spent hundreds of thousands and hired a dozen scientists, the government spent billions and seemed to have an insatiable appetite for well-paid science professionals in an ever increasing number of government agencies.
Even more appealing: Government increasingly offered scientists, including_a great many junior ones still at the beginning of their scientific careers, the bp