2 Government Patent Policy—Where Is It Headed on the Administrative Front? JESSE E. LASKEN Downloaded by NATL UNIV OF SINGAPORE on May 5, 2018 | https://pubs.acs.org Publication Date: June 1, 1978 | doi: 10.1021/bk-1978-0081.ch002
Office of the General Counsel, National Science Foundation, Washington, D C 20550
In the previous paper in this symposium, Mr. James E . Denny has described the history and evolution of Government patent p o l icy, highlighting the various issues that have been debated through the years. He has also detailed the major provisions of the patent policy governing the Energy Research and Development Administration (ERDA), now Department of Energy, research and development a c t i v i t i e s . Mr. Norman Latker w i l l speak in the f o l lowing paper about the rationale behind Representative Thornton's currently pending bill which would establish a comprehensive legi s l a t i v e policy with a presumption in favor of contractors and grantees retaining title to inventions. And Professor John C. Stedman w i l l t e l l you why he believes a policy with the opposite presumption should be established. Therefore, though I am sorely tempted to discuss why the Thornton approach i s j u s t i f i e d , I have decided to cover another subject rather than repeat what others may say. In particular, I w i l l try to bring you up to date on recent administrative developments i n the area of patent policy and make some conjectures as to the way things are l i k e l y to progress assuming H.R. 8596 (the Thornton B i l l ) or other comprehensive legislation f a l l s short of passage. Let me emphasize a point, however, that should not be forgotten when one discusses patent policy. Typically discussions center around who should get t i t l e — the Government or the contractor. However, a l l the Government people that I know who favor leaving t i t l e in the contractor or grantee do not take this position out of some love for contractors or grantees. They do so because they see this as the most practicable way to help ensure
Disclaimer:
The views expressed i n t h i s paper are those o f the author and do not n e c e s s a r i l y r e f l e c t the views o f the N a t i o n a l Science Foundation.
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This chapter not subject to U.S. copyright. Published 1978 American Chemical Society Marcy; Patent Policy ACS Symposium Series; American Chemical Society: Washington, DC, 1978.
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t h a t r i g h t s i n i n v e n t i o n s made under Government sponsorship are d i s t r i b u t e d i n a way t h a t w i l l maximize economic growth and jobs, i n n o v a t i o n , competition, the U.S. p o s i t i o n i n world markets, and minimize a d m i n i s t r a t i v e and c o n t r a c t c o s t s . Patent p o l i c y , o f course, i s not the predominant f a c t o r t h a t a f f e c t s any o f these objectives. I t i s but one f a c t o r o f many. But these a r e the o b j e c t i v e s t h a t must be considered and i t i s unfortunate when the d i s c u s s i o n breaks down i n t o slogans such as "giveaway" o r "the p u b l i c should own what i t pays f o r " o r , sometimes on the other s i d e s u p e r f i c i a l arguments about "overregulation" or " c o n s t i t u t i o n a l rights of inventors". A l l of these beg the r e a l i s s u e s . My own o p i n i o n i s t h a t f o r a substant i a l number o f i n v e n t i o n s reported t o the Government, i n terms o f the o b j e c t i v e s I mentioned e a r l i e r , i t r e a l l y doesn't make much d i f f e r e n c e who gets the t i t l e . However, there i s a s i g n i f i c a n t p r o p o r t i o n o f cases i n which I know i t does make a d i f f e r e n c e and t h a t p o s i t i v e r e s u l t s w i l l occur i f the c o n t r a c t o r gets t i t l e o r negative e f f e c t s w i l l occur i f t i t l e remains with the Government. But s i n c e n e i t h e r I nor anyone e l s e t h a t I have met who i s i n volved i n t h i s business r e a l l y has any means o f i d e n t i f y i n g except by h i n d s i g h t (and even then i t i s questionable) f o r which i n v e n t i o n s i t w i l l make a d i f f e r e n c e i f the Government takes t i t l e , I consider i t a mistake t o take t i t l e i n any but the r a r e and obvious case. Moreover, i t seems t o me t h a t most o f the hyp o t h e t i c a l harm t o competition t h a t i t i s a l l e g e d might occur i f c o n t r a c t o r s keep t i t l e can be adequately d e a l t w i t h through "march-in" p r o v i s i o n s and/or the a n t i t r u s t laws. I would note, a l s o , t h a t d e s p i t e the thousands o f cases i n which c o n t r a c t o r s have r e t a i n e d t i t l e t o i n v e n t i o n s made under Government grants and c o n t r a c t s , I have y e t t o see a title-in-the-Government advocate p o i n t t o an a c t u a l case where harm was done, l e t alone harm t h a t could be a t t r i b u t e d t o the c o n t r a c t o r being allowed t o r e tain t i t l e . As a f u r t h e r backdrop t o my d i s c u s s i o n o f a d m i n i s t r a t i v e developments, no one should be m i s l e d i n t o b e l i e v i n g t h a t administ r a t i v e changes t o Government patent p o l i c y can, i n the c u r r e n t c l i m a t e , e l i m i n a t e the need f o r a comprehensive s t a t u t o r y p o l i c y t h a t i s supportive o f the a d m i n i s t r a t i v e p o l i c i e s t h a t the agenc i e s might wish t o pursue i f given a f r e e hand. To put t h i s another way, i f you l i s t e n e d c a r e f u l l y t o what Mr. Denny s a i d , i t might have occurred t o you t h a t the primary f e a t u r e o f Government patent p o l i c y over the l a s t twenty years has been the cons i s t e n t enactment o f piecemeal l e g i s l a t i o n with a t i t l e - i n - t h e Government o r i e n t a t i o n . Slowly but s u r e l y , the number o f agenc i e s and types o f r e s e a r c h subject t o such l e g i s l a t i o n has grown. F o r the most p a r t the e f f o r t s o f the Committee on Government Patent P o l i c y which i n 1976 recommended a d r a f t b i l l subs t a n t i a l l y s i m i l a r t o HR. 8596 was a r e a c t i o n t o the ERDA patent legislation. Many persons are concerned over the p r o b a b i l i t y o f f u r t h e r piecemeal l e g i s l a t i o n unless a comprehensive Congression-
Marcy; Patent Policy ACS Symposium Series; American Chemical Society: Washington, DC, 1978.
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a l l y mandated p o l i c y can be enacted. These f e a r s , i n my o p i n i o n , are w e l l based. I t might be noted, f o r i n s t a n c e , t h a t the ERDA language was o n l y a few months l a t e r i n c o r p o r a t e d by r e f e r e n c e i n l e g i s l a t i o n amending the S o l i d Waste D i s p o s a l A c t , i n t h a t case r e p l a c i n g s t a t u t o r y language t h a t d i r e c t e d the EPA t o f o l l o w the P r e s i d e n t ' s Memorandum and Statement o f Government Patent P o l i c y . I t h i n k we can a l l expect t h a t each time a new p i e c e o f R&D l e g i s l a t i o n comes up an attempt w i l l be made t o i n s e r t ERDA-type language i n the b i l l . For v a r i o u s reasons such piecemeal e f f o r t s are much more s u c c e s s f u l than would be any attempt by t i t l e - i n the-Government advocates t o secure the passage o f a comprehensive Government-wide p o l i c y . Such an e f f o r t would meet with the u n i t e d o p p o s i t i o n o f many agencies and i n t e r e s t groups, but the same i s not t r u e o f piecemeal e f f o r t s . However, i t i s now anyone's guess whether the A d m i n i s t r a t i o n w i l l o r w i l l not support the Thornton B i l l (H.R. 8596). I t i s my p e r s o n a l o p i n i o n t h a t , i f i t does not support H.R. 8596, i n 15 years o r so the only agencies t h a t w i l l not be subject t o ERDA type l e g i s l a t i o n w i l l be the Defense Department and p o s s i b l y the N a t i o n a l Science Foundation (NSF), i f t h a t agency has not i n the meantime been merged i n t o some super Science Department. I f and when a super Science Department i s formed, you can be assured t h a t unless H.R. 8596 i s enacted i n the meantime such an agency w i l l be made s u b j e c t t o ERDA-type l e g i s l a t i o n . However, as we await the doomsday t h a t I foresee i n Government patent p o l i c y i f comprehensive l e g i s l a t i o n i s not passed, there are a few t h i n g s happening on the a d m i n i s t r a t i v e f r o n t t h a t can g i v e one h e a r t . T h i s i s e s p e c i a l l y true w i t h r e s p e c t t o r e cent developments i n the area o f Government patent p o l i c y v i s - a v i s u n i v e r s i t y r e s e a r c h , and these w i l l occupy most o f the remainder o f my d i s c u s s i o n . In 1975 the Interagency Committee on Government Patent P o l i c y approved a r e p o r t by i t s Ad Hoc Subcommittee on U n i v e r s i t y Patent P o l i c y which recommended t h a t the agencies adopt the Ins t i t u t i o n a l Patent Agreement (IPA) approach followed by NSF and The Department o f Health, Education, and Welfare (DHEW) w i t h r e spect t o u n i v e r s i t y and n o n p r o f i t o r g a n i z a t i o n r e s e a r c h . The essence o f t h i s approach i s t h a t those u n i v e r s i t i e s t h a t are determined t o have e f f e c t i v e i n v e n t i o n i d e n t i f i c a t i o n and l i c e n s i n g programs may be given a standing agreement t o e l e c t r i g h t s i n any i n v e n t i o n s which they make under the sponsorship o f the agency w i t h whom they have the agreement. As recommended i n the r e p o r t and as now followed i n p r a c t i c e by DHEW and NSF, c e r t a i n l i m i t a t i o n s are p l a c e d on the e x e r c i s e o f a u n i v e r s i t y ' s r i g h t s under an IPA. I n c i d e n t a l l y these same r e s t r i c t i o n s are normally i n s e r t e d i n NSF and DHEW case-by-case waivers. These i n c l u d e : 1. A bar on assignment o f i n v e n t i o n s t o other than patent management o r g a n i z a t i o n s , except with the approval o f the agency.
Marcy; Patent Policy ACS Symposium Series; American Chemical Society: Washington, DC, 1978.
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L i m i t a t i o n s on the p e r i o d o f any e x c l u s i v e l i c e n s e s under U.S. p a t e n t s , now normally the e a r l i e r o f three years from f i r s t commercial s a l e o r e i g h t years from the date o f l i c e n s e , whichever comes f i r s t . 3. A l i c e n s e t o the Government and the u s u a l s o - c a l l e d "march-in r i g h t s " . Related t o t h i s both NSF and DHEW a l s o r e q u i r e t h a t any l i c e n s i n g agreements i n c l u d e a requirement t h a t the l i c e n s e e undertake reasonable e f f o r t s t o commercialize the i n v e n t i o n . As a r e s u l t o f the r e p o r t r e f e r r e d t o e a r l i e r j u s t l a s t month amendments were proposed t o the F e d e r a l Procurement Regul a t i o n s (FPR) which would a u t h o r i z e agencies t o enter i n t o I n s t i t u t i o n a l Patent Agreements with n o n p r o f i t o r g a n i z a t i o n s . ( E d i t o r ' s Note: The e f f e c t i v e date o f these amendments was l a t e r postponed pending f u r t h e r study by Congress.) The amendments i n clude a model i n s t i t u t i o n a l patent agreement. P o s s i b l y the most s i g n i f i c a n t change i n the model agreement from c u r r e n t NSF and DHEW IPAs i s the change from the three and e i g h t year p e r i o d f o r e x c l u s i v e l i c e n s e s t o a f i v e and e i g h t year p e r i o d . Moreover, the e i g h t year p e r i o d w i l l be a u t o m a t i c a l l y t o l l e d d u r i n g any r e q u i r e d premarket clearance proceedings. T h i s would apply t o drugs r e q u i r i n g FDA approval, and now, medical d e v i c e s . I t i s d i f f i c u l t t o p r e d i c t how many agencies w i l l adopt the IPA approach i f and when i t has been o f f i c i a l l y a u t h o r i z e d i n the F e d e r a l Procurement Regulations. I t s use i s o p t i o n a l and not mandatory. I would venture a guess t h a t probably o n l y the Department o f Commerce among the c i v i l i a n agencies w i l l i s s u e IPAs. E a r l i e r Department o f Defense (DOD) o f f i c i a l s i n d i c a t e d t h a t they would adopt the approach once i t was p u b l i s h e d i n the FPR. That remains t o be seen. I t might be noted t h a t u n t i l t h i s i s done, DOD's p o l i c i e s towards u n i v e r s i t i e s a c t u a l l y have taken a t u r n for the worse i n the l a s t few y e a r s . That i s , up u n t i l a few years ago DOD had a l i s t o f u n i v e r s i t i e s w i t h approved patent policies. U n i v e r s i t i e s on t h a t l i s t a u t o m a t i c a l l y were given a t i t l e - i n - t h e - c o n t r a c t o r type clause i f the c o n t r a c t f e l l under what i s s e c t i o n 1(b) o r (c) o f the P r e s i d e n t ' s Patent P o l i c y and a l l but a small percentage o f DOD c o n t r a c t s do. For reasons never very c l e a r , when the ASPR was amended a few years back t o conform t o the new FPR s e c t i o n on patents the l i s t was a b o l i s h e d . However, there i s another s e c t i o n o f the r e c e n t FPR amendment t h a t i s s i g n i f i c a n t . The r e g u l a t i o n contemplates the establishment o f an interagency mechanism t o i d e n t i f y u n i v e r s i t i e s with e f f e c t i v e technology t r a n s f e r programs. T h i s l i s t may be used by the agencies having IPA programs i n l i e u o f i n d i v i d u a l agency reviews. Secondly, i t might be used by agencies such as N a t i o n a l Aeronautics and Space Agency (NASA) o r DOE as a b a s i s f o r g r a n t i n g d e f e r r e d determination waivers on a more automatic b a s i s t o i n s t i t u t i o n s , on t h a t l i s t . For example, the Department o f Energy i n a Report t o the P r e s i d e n t and the Congress o f the United S t a t e s mandated under
Marcy; Patent Policy ACS Symposium Series; American Chemical Society: Washington, DC, 1978.
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subsection 9(n) of the F e d e r a l Nonnuclear Energy Research and Development A c t of 1974 concluded t h a t i t d i d not have a u t h o r i t y t o enter i n t o I n s t i t u t i o n a l Patent Agreements under t h a t A c t . Instead, they seem to have i n t e r p r e t e d the Act i n a way t h a t only allows them to grant a waiver to a U n i v e r s i t y e i t h e r at the time of c o n t r a c t i n g or a f t e r an i n v e n t i o n i s i d e n t i f i e d when i n the words o f subsection (d) (11) of S e c t i o n 9 the " i n s t i t u t i o n has a technology t r a n s f e r c a p a b i l i t y and program, approved by the Adm i n i s t r a t o r as being c o n s i s t e n t with the a p p l i c a b l e p o l i c i e s o f this section". The a c t a l s o r e q u i r e s the A d m i n i s t r a t o r to consider i n conn e c t i o n w i t h any d e f e r r e d determination waiver "(1) the extent to which such waiver i s a reasonable and necessary i n c e n t i v e to c a l l f o r t h p r i v a t e r i s k c a p i t a l for the development and commercialization of the invent i o n , and (2) the extent to which the p l a n s , i n t e n t i o n s , and a b i l i t y o f the c o n t r a c t o r or i n v e n t o r w i l l o b t a i n e x p e d i t i o u s commercialization of such i n v e n t i o n " . The r e p o r t by ERDA i n d i c a t e s t h a t the second c o n d i t i o n may be considered as having been met i f the (d) (11) c o n s i d e r a t i o n i s met. tod DOE has i n d i c a t e d t h a t the l i s t developed under the FPR amendment might be used by i t f o r the purpose o f s a t i s f y i n g the (d) (11) c o n s i d e r a t i o n . NASA's i n t e n t i o n s i n t h i s area are l e s s c l e a r . I t seems to me, a t l e a s t , t h a t NASA has s u f f i c i e n t a u t h o r i t y to i s s u e c l a s s waivers under the Space Act so t h a t i t could adopt the IPA approach. On the other hand, they may, perhaps, use any l i s t developed under the new FPR procedure as a b a s i s f o r some s o r t of expedited procedure f o r waiver of i d e n t i f i e d i n v e n t i o n s t o u n i v e r s i t i e s on the l i s t . A l l t h i s , however, i s pure s p e c u l a t i o n on my p a r t and I do not b e l i e v e NASA has a c t u a l l y committed i t s e l f t o anything i n t h i s area e i t h e r f o r m a l l y or i n f o r m a l l y . There i s , I t h i n k , one other item o f major i n t e r e s t concerning a d m i n i s t r a t i v e patent p o l i c i e s . The O f f i c e of Management and Budget (OMB) and v a r i o u s persons w i t h i n the executive o f f i c e of the P r e s i d e n t are now engaged i n d r a f t i n g a s o - c a l l e d " d e c i s i o n paper" on patent p o l i c y to be sent to the P r e s i d e n t . In a t a l k b e f o r e the Government Patent Lawyers A s s o c i a t i o n a r e p r e s e n t a t i v e from the O f f i c e of F e d e r a l Procurement P o l i c y (OFPP) i n d i c a t e d t h a t i t would consider o r g a n i z i n g an e f f o r t t o r e v i s e the c u r r e n t r e g u l a t i o n s depending on what d e c i s i o n the P r e s i d e n t makes. For example, i f the P r e s i d e n t i n d i c a t e s support f o r the Thornton B i l l then pending a c t u a l passage of the b i l l , OFPP might seek l i b e r a l i z a t i o n o f the c u r r e n t r e g u l a t i o n s . Conversely, i f the P r e s i d e n t opts f o r title-in-the-Government, t h i n g s might have to be r e w r i t t e n i n the opposite d i r e c t i o n . I p e r s o n a l l y hope t h a t any paper t h a t goes t o the P r e s i d e n t makes i t c l e a r t h a t such an approach i s t o t a l l y u n s u i t a b l e as a Government-wide p o l i c y . I f the P r e s i d e n t decides to l e t things l i e and s t i c k w i t h the s t a t u s quo,
Marcy; Patent Policy ACS Symposium Series; American Chemical Society: Washington, DC, 1978.
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presumably the FPRs w i l l stay as they are, although i t i s possible that the FPRs could be simplified and made more responsive to the needs of universities and small business without doing any violence to the current Presidential Statement of Government Patent Policy. In summary, we are at a c r i t i c a l point in the development of Government Patent Policy, The President w i l l presumably be making c r i t i c a l decisions i n the upcoming months that may have important consequences on the future direction of Government patent policy whether he moves the Government in either of the two basic directions or whether he chooses to stay with the "status quo" and avoid the immediate controversy. Abstract We are at a c r i t i c a l point i n the development of Government Patent Policy. There i s a continuing real need for a comprehensive statutory government patent policy that is supportive of overall Government p o l i c i e s . This need cannot be f u l f i l l e d adequately by promulgating simple administrative regulations or piecemeal legislation. For the foreseeable future, in absence of comprehensive legislation, either the Institutional Patent Agreement approach with title-in-the-grantee orientation, or the approach taken i n recent legislation of providing title -in-the-government with waiver-to-the-contractor privileges w i l l p r e v a i l . The former arrangement is used at present by the Department of Health, Education and Welfare and the National Science Foundation. The latter policy is embodied i n legislation which governs the Department of Energy. Biographic Notes As Assistant to the General Counsel, National Science Foundation for the past six years, Jesse E . Lasken, has p a r t i c ipated i n many conferences on federal grants and patent p o l i c i e s , and has served i n various capacities on the Federal Council for Science and Technology Committee on Government Patent Policy. Mr. Lasken is a member of the D i s t r i c t of Columbia Bar and the Federal Bar Association. His baccalaureate in the arts was awarded by the University of Michigan and he has received degrees i n law from both the University of Michigan and George Washington University. RECEIVED June 20,
1978.
Marcy; Patent Policy ACS Symposium Series; American Chemical Society: Washington, DC, 1978.
