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COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
HOWARD W. CANNON, Nevada, Chairman WARREN G. MAGNUSON, Washington BOB PACKWOOD, Oregon RUSSELL B. LONG, Louisiana
BARRY GOLDWATER, Arizona ERNEST F. HOLLINGS, South Carolina HARRISON H. SCHMITT, New Mexico DANIEL K. INOUYE, Hawaii
JOHN C. DANFORTH, Missouri ADLAI E. STEVENSON, Illinois
NANCY LANDON KASSEBAUM, Kansas WENDELL H. FORD, Kentucky
LARRY PRESSLER, South Dakota
JOHN W. WARNER, Virginia
AUBREY L. SARVIS, Staff Director and Chief Counsel
STEPHEN MERRILL, Professional Staff Member
WILLIAM C. GIBB, Minority Staff Counsel
COMMITTEE ON THE JUDICIARY
EDWARD M. KENNEDY, Massachusetts, Chairman BIRCH BAYH, Indiana
STROM THURMOND, South Carolina ROBERT C. BYRD, West Virginia
CHARLES MCC. MATHIAS, JR., Maryland JOSEPH R. BIDEN, JR., Delaware
PAUL LAXALT, Nevada JOHN C. CULVER, Iowa
ORRIN G. HATCH, Utah HOWARD M. METZENBAUM, Ohio
ROBERT DOLE, Kansas DENNIS DECONCINI, Arizona
THAD COCHRAN, Mississippi
ALAN K. SIMPSON, Wyoming
STEPHEN BREYER, Chief Counsel
Baruch, Dr. Jordan J., Assistant Secretary for Science and Technology, Depart-
ment of Commerce; accompanied by Charles Herz, General Counsel, National
Prepared statement of Dr. Baruch with attachments
Prepared statement of Mr. Herz.
FRIDAY, JANUARY 25, 1980
Washington, D.C. The Committee on Commerce, Science, and Transportation, and the Committee on the Judiciary met jointly at 10:05 a.m. in room 235, Russell Senate Office Building, Hon. Adlai E. Stevenson presiding.
OPENING STATEMENT BY SENATOR STEVENSON Senator STEVENSON. The committees will come to order. This morning we continue-and I hope complete-hearings on Government patent policy.
In the last session, the Commerce Committee and the Senate Judiciary Committee held extensive hearings on legislation to set a uniform policy for allocating rights to exploit the results of Federal research development. Today, these committees examine the proposal of President Carter in his message to the Congress on industrial innovation.
We received the administration's bill only yesterday. It is a draft bill. But the bill conforms to the principles which were outlined by the President 3 months ago, and so we urge our witnesses to focus on this proposal.
If, after they have had more time to examine it, they find the details in the bill on which they wish to comment, we can receive those comments later.
With only one exception and minor qualifications, the testimony has supported the legislation before our committees. As a result, in part, of Dr. Baruch's efforts, the remaining objections within the executive branch have been removed. There is a growing recognition that we must encourage commercial use of publicly financed R. & D. in the face of the Nation's lagging productivity and competitiveness in world markets.
This subject has been on the agenda since the 1940's. We need to move on to the agenda of the eighties. It is time we acted, and I'm optimistic that we will do so soon.
I have a statement by Senator Cannon which will be entered into the record without objection. Senator STEVENSON. Senator Bayh?
STATEMENT OF HON. BIRCH BAYH, U.S. SENATOR FROM
INDIANA Senator BAYH. Mr. Chairman, I appreciate the opportunity to join with you this morning. I regret that I can only stay for a few moments because of a commitment to appear before the Budget Committee.
I would like to ask unanimous consent to put into the record a statement by Senator Gaylord Nelson, who is chairman of the Small Business Committee.
Senator STEVENSON. That will be entered in the record.
Senator BAYH. One of the greatest threats to our economic-and ultimately political-well-being is the recent alarming slump in American innovation and productivity. Certainly my colleagues who are here today and the representatives of the administration do not need to be reminded of the statistics that confirm what many of us have been privately fearing-American industry is simply not keeping up with its international competition in too many fields. While Government patent policy is by no means the only cause of the problem; it is certainly a contributing factor.
As the author along with Senator Bob Dole of S. 414, the University and Small Business Patent Procedures Act, I have become acutely aware of the heavy burden that the present patent policies have placed on the most innovative segment of our economy-the small businesses. Universities and nonprofit organizations which are now conducting by far the biggest percentage of basic research in this country are also not able to fully explore patentable inventions because of the restrictions and uncertainties arising from current Federal patent policies. The harrassment and discouragement of these proven innovators has hurt all of us through lost jobs, delayed or aborted new products, and a worsened inflation rate.
Government patent policy has also become a barrier to increased competition. While small businesses have made over one-half of the most important inventions since World War II and are the leading source of new jobs in this country, they receive less than 4 percent of our Federal research and development contracts. This is not because small companies cannot perform this work, but the denial of patent rights to important inventions resulting from Government-supported work can be a devastating threat to a struggling small company. The result is that these companies simply cannot afford to take the risk of getting involved with the Government. The recent White House Conference on Small Business adopted as its sixth recommendation out of 60 the enactment of new patent policies as contained in S. 419. We simply cannot afford to wait to address this critical problem.
With university and nonprofit organizations the present patent policies have had a detrimental effect in many areas, but none more serious than the denial or delay in delivering potentially important medical discoveries to suffering patients. Senator Dole documented many cases where important medical discoveries were delayed for months and even years before any decision could be made by the funding agencies on who should own the patent rights. The real losers in this situation are the American taxpayers who are investing billions of dollars in research, but are being denied