Mr. KINZEL. Yes. But the word "title" is used somewhat differently in the AEC type C clause.

Senator MCCLELLAN. So I did not think there was any room for negotiation, nothing to negotiate in between a license and the ownership; there is no middle ground between them to negotiate over?

Mr. KINZEL. Sir, I would maintain that there is room for negotiating as to which of No. 1 or No. 2 is involved in any given case. Senator MCCLELLAN. As to which is the proper

Mr. KINZEL. Which is in the best public interest and equitable. Senator MCCLELLAN. Which is equitable or to the best interest of the Government?

Mr. KINZEL. That is right.

Senator MCCLELLAN. As between the two you negotiate?

Mr. KINZEL. Yes.

Senator MCCLELLAN. But I did not understand that there was a middle ground between the two.

Mr. KINZEL. No, you are quite right; you cannot give part rights in that sense.

Senator MCCLELLAN. All right. I think I understand now.
Maybe the record will reflect it so others will understand too.
Proceed.

Mr. KINZEL. Obviously the intent of such negotiation should be to best serve the public interest and to deal fairly with the contractor. In the vast majority of cases, both the public interest and the equities are best served when the Government obtains a royalty-free, nonexclusive license to use the inventions for Government purposes, and the inventor or contractor retains the remaining rights, that is, the commercial rights and title. If in any specific case it would be more equitable for the Government to obtain either greater or lesser rights, this refers to what we were just discussing the Government department or agency concerned with that case should have discretionary authority to so contact, always in the best public interest.

Senator MCCLELLAN. At that point, may I say, do you feel that it is impractical, at least it is not impossible, for the Government by law to fix a rigid policy?

Mr. KINZEL. I think it is unwise, and certainly it would not serve the purpose to best advantage.

Senator MCCLELLAN. All right, proceed.

Mr. KINZEL. I would point out that long experience of the Department of Defense has resulted in contracts with patent clauses substantially in accord with the above views, and that after a certain amount of experience with mandatory rules and regulations the Atomic Energy Commission provided and still provides a type of patent clause, known at AEC's type C patent clause, which approaches the same practical result in a slightly different way.

As a matter of fact, the AEC introduced this type C patent clause after considerable experience and examination of the equities and the best public interest. It achieves essentially the same result as the DOD patent clause, although, I might add that the way it operates is that the actual title in the strict patent sense of the word "title" resides in the AEC, not in the contractor. But the result is the same as with the DOD clauses.

In the system of free enterprise in which all of us operate in this country, incentive is probably the most important factor. We in the scientific and engineering world, as well as in the industrial world, are vitally interested in maintaining a free society and its prime component, free enterprise. And for this, incentive must be emphasized; profit incentive, obiously. But both as a part of this and as an independent element of progress, the patent incentive must be fostered.

This incentive is provided by our Constitution. It has contributed in no small measure to the success of our free enterprise society. When, by mandatory contract, all patent rights are to become the sole property of the Government, the incentive to invent and patent is very seriously reduced, and we no longer have the full benefit of free enterprise incentives. Thus, it is not in the public interest to require, on an automatic basis, that Governmnt departments obtain all patent rights.

As to the equities, what is fair to the contractor in most cases? The prime reason for Government to enter into a research contract with industry is that the potential contractors have experience in the subject, or a staff competent to deal with the subject, or the special facilities necessary to the research, or any combination of these. Generally, it is because the potential contractors have all of them. Moreover, in general, such facilities and experience were acquired by the contractor's effort, with correlative spending of both his time and his money. So the Government saves all the effort, all this time, and all this money, by starting its project, not at the beginning, but at the advanced position already reached by the contractor. Futhermore, when the position is futher advanced by the contractor with Government money, any invention is the result, not of just the most recent effort, but of the sum total of all of the effort in the broad area. This would include research done by the contractor's organization long before anyone even knew that the Government had an interest or contemplated a contract.

In general, invention in the complex areas of today's science requires a long mental soaking in details of the pertinent disciplines. The total term of most Government research contracts is such that only the precontract soaking time provides the necessary condition. Thus, in most cases, the equities demand that the contractors obtain all those patent rights other than those necessary to the Government for its operations.

I would add that in any case the Government could obtain such rights in the public interest by eminent domain.

One final point. The law requires that a patent be granted to "the inventor," an individual, or several individuals. Why?

Because it wishes to provide incentive to individuals. Experience has shown that patents mean more to individuals than to companies, and mean more to small companies than to large companies.

In conclusion, it is our belief that the views of the Manufacturing Chemists' Association are supported by examination of the public interest, by examination of the equities, and by examination of the intent of the Constitution and the patent laws enacted pursuant to the Constitution.

I appreciate the opportunity of being permitted to make this short statement to you. And thank you.

Senator MCCLELLAN. Doctor, you have presented a very concise statement, very brief and very strong for your position. I personally, as chairman, appreciate the brevity of your statement, together with the force and effect of it. From your point of view I think it is an excellent statement.

Thank you, sir.

There may be some disagreement as to the conclusions you reach. But it is a very fine thing to have statements like that come before the committee, just state your case, one, two, three, and not make a long record here.

Mr. KINZEL. I intend to be helpful, sir.

Senator MCCLELLAN. Very good.

Mr. WRIGHT. Just one question I had suggested by the last sentence at the bottom of page 4, a paragraph where you say you refer to the necessity of providing individual patent incentives.

How would you feel about a statutory provision which said that the title in these cases should be reserved or given not to the contractor, but to the individual or the particular inventors who made the invention?

Mr. KINZEL. That would in itself have no great purpose, in that practically every researcher who was employed by a company or anyone else, by virtue of the fact that he is employed to invent, agrees to assign those rights which he gets to the corporation or the company.

For example, I have a great many patents. These patents are all in my personal name. I am the inventor of these patents. But because I work for Union Carbide and have for some years, and having signed an agreement with them whereby the rights to my inventions shall be theirs by virtue of the fact that I am employed to make such inventions, I at once assign my patent to the company, even though the patent is issued to me, as it must be by law.

So I think that this kind of an approach to ownership of patents would really have no purpose.

Mr. WRIGHT. You would object, I take it, to any provision which requires that title of the inventions go to the inventor rather than the inventor's employer?

Mr. KINZEL. You would have to specify that the inventor has no right to assign his patent rights.

Mr. WRIGHT. I am referring to that being done by statute, you would regard it as undesirable for any statute to provide that the title to the inventions resulting from a research and development contract should go to the inventors rather than their contractor employers?

Mr. KINZEL. By title do you mean the rights to the patent? Mr. WRIGHT. Correct.

Mr. KINZEL. Yes, I think that it would be unenforceable without a great deal of other legal specifying to go with it. And once you did this, any company or individual would have the problem of hiring and paying people to invent, but not being able to get any return for it themselves.

Mr. WRIGHT. But if you were thinking in terms primarily of preserving patent incentives, that would be the best way to preserve them, would it not?

Mr. KINZEL. To preserve the rights?

Mr. WRIGHT. The incentive to invent in the statute here.

Mr. KINZEL. It would give the incentive to the inventor himself, but it would remove the incentive from the people that were financing him and supporting him.

Mr. WRIGHT. And when you say "financing and supporting him," of course what we are talking about here is the situation where the financial support comes from the Government rather than the employer?

Mr. KINZEL. When the financial aid comes wholly from the Government—and by "wholly" I mean throughout the entire history of a project-yes. But as I have said in one of the paragraphs I just read, generally you do not start from zero, you start with a heavy background of scientific, hard labor and detail, a mental soaking in the whole process provided by the contractor. For example, if at Carbide or at some other organization, they have put in 6 or 7 years in a broad area, and have finally pinpointed it to several aspects, and then the Government comes along and says, "We would like you to work on this particular aspect of this project in order to achieve this result," and they do, and then they make an invention.

That invention has not been even largely paid for by this last increment of financing. That is only a small part of the total. But the Government certainly has a right to this invention for their own use, in our estimation. Because it is only a small part, the contractor also has a right.

Mr. WRIGHT. Getting back to the question of incentive, do you believe that when Congress enacted the patent laws that it intended to give the patent reward to inventors who were financed with public money rather than by private money?

Mr. KINZEL. To answer categorically, "No, I do not." And I think it is perfectly proper that when inventions are made in Government laboratories, when the total expense and experience has been built up there the rights to the invention should belong to the Government and not to the inventor. But as far as a company is concerned, I think you again have to take the cost of a project as a whole, and you cannot chop off this last little piece and treat it as a whole.

Senator MCCLELLAN. Dr. Kinzel, this one question.

You said in your own experience, in your own affairs, you own the title to the invention.

Mr. KINZEL. I am the inventor as written on the patent; yes, sir. Senator MCCLELLAN. And you assign them to your company? Mr. KINZEL. Yes, sir.

Senator MCCLELLAN. Does that carry with it-I am just curious about this, I do not know whether it is altogether pertinent-does that carry with it the right to your company, then, to sell and dispose of it to others for their own profit?

Mr. KINZEL. Completely, yes.

Senator MCCLELLAN. They can sell?

Mr. KINZEL. Anything they want, it is theirs.

Senator MCCLELLAN. You have nothing except title in name? Mr. KINZEL. I have nothing but a citation on the patent to the effect that I am the inventor.

Senator MCCLELLAN. I did not quite understand. I did not know but what maybe you assigned it to your company for the benefit of

your company so long as your company used it for its own benefit in its own plant.

Mr. KINZEL. No, a complete assignment.

Senator MCCLELLAN. I see.

Again, I wish to thank you. You have been very helpful to us. I am going to direct that this testimony be placed at another point in the record other than here. I think that all of this testimony should come in following the testimony of those who appear here for Government agencies in our initial presentation.

Thank you very much, Doctor.

Mr. KINZEL. Thank you, sir.

Senator MCCLELLAN. Now, I am going to depart again from our regular schedule in the hope I am accommodating some folks. And I do not think they will be very long.

When I ask about length of time, about whether you are going to be long or not, it is not with any purpose to deny anyone the right to be fully heard. We do have a job here, there are so many to hear, and when you can be brief and concise and help us, get your point across, we appreciate it.

Mr. Meyer, Mr. Harold Meyer, will you come around, please.

Be seated, Mr. Meyer, and state your name in full, and whom you represent, and what your present business or occupation is. STATEMENT OF HAROLD S. MEYER, REPRESENTING THE NATIONAL ASSOCIATION OF MANUFACTURERS; ACCOMPANIED BY RAY BENNETT, NATIONAL DEFENSE AND PATENT COMMITTEE, NATIONAL ASSOCIATION OF MANUFACTURERS

Mr. MEYER. I am Harold S. Meyer, patent counsel for the B. F. Goodrich Co. of Akron, Ohio. I am representing NAM, the National Association of American Manufacturers.

Senator MCCLELLAN. And you have someone with you.

Mr. BENNETT. I am Ray Bennett. I am an executive of the National Defense and Patent Committee of the National Association of American Manufacturers.

Senator MCCLELLAN. Very good.

All right, Mr. Meyer, you have a prepared statement?

Mr. MEYER. The prepared statement has been filed, and I would like to request that it be made a part of the record. But I will not read from it, except to the extent of reading two short paragraphs containing the policy statement, sir.

Senator MCCLELLAN. Very well.

The prepared statement of Mr. Meyer will be inserted in the record in full at this point.

(The prepared statement of Mr. Meyer follows:)

STATEMENT OF HAROLD S. MEYER IN BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS

This statement is submitted on behalf of the National Association of Manufacturers, a voluntary association composed of approximately 19,000 member companies, of whom over 80 percent employ fewer than 500 employees and nearly half employ less than 100. Therefore, these views represent those of small, medium, and large producers as well as a cross section of all types of business enterprises.