Senator MCCLELLAN. Now, as I understand it, industry, private industry, not the Government, expended a total of $4.1 billion of its own money in research during that same fiscal year, is that correct? Mrs. ARNOW. During roughly the same year.

You realize that the fiscal and business years

Senator MCCLELLAN. All of this is in round numbers, and it is not to the exact penny.

And private industry spent a total of $4,100 million during that same fiscal year?

Mrs. ARNOW. Yes.

Senator MCCLELLAN. But only $100 million of that spent in private industry was given to nonprofit organizations to assist it in this research.

Is that correct?

Mrs. ARNOW. Yes.

Senator MCCLELLAN. Then we have another chart. This is the third chart or rather a third bar. We have another bar on the chart. Now, what does that bar represent? Its identification is "all other Federal funds used by."

Mrs. ARNOW. This bar represents the remaining agencies of the Federal Government.

If you took the first bar representing the Department of Defense, and added it to this third bar, you would have the Federal Government as a whole, the entire Federal Government.

Senator MCCLELLAN. First bar and the third bar cover all Government funds that were expended in the field of research?

Mrs. ARNOW. Right.

Senator MCCLELLAN. The first bar representing

Mrs. ARNOW. The Department of Defense.

Senator MCCLELLAN. Those expended by the Defense Department; and the third bar on the chart representing all other funds expended by all other agencies of the Government.

Mrs. ARNOW. Yes.

Senator MCCLELLAN. That shows how much was the total expended by all other agencies of the Government or all other agencies expended $1.9 billion, or $1,900 million of which they retained for use in their own laboratories or in laboratories of other agencies, $500 million. That is the black on the bar?

Mrs. ARNOW. Right. The black indicates intramural use of the

money.

Senator MCCLELLAN. Yes.

Mrs. ARNOW. Grants are important in this bar because it includes the grant programs of the NIH and the NSF, and similar organizations; $700 million were spent by these other agencies in their grant programs and contracts with nonprofit organizations such as universities. Industry also received from these other Government agencies $700 million for research and development.

Senator MCCLELLAN. All right.

Now, adding the third bar, the total of the third bar, together and the total of the first bar together we have what?

Mrs. ARNOW. $8 billion.

Senator MCCLELLAN. $8 billion, that the Government expended in round numbers, the last fiscal year of which we have a complete record?

Mrs. ARNOW. Right.

Senator MCCLELLAN. That is correct, is it not?

Now, the real issue before us here or one of the issues here, as I understand it, is that raised by the Defense Department's expenditures of $4.4 billion through private industry, under research and development contracts by which the contractor gets the exclusive commercial rights to all inventions and patents resulting from the expenditure of this money. Is that your understanding or you do not know about it?

Mrs. ARNOW. No.

Senator MCCLELLAN. Well, I am making the statement then for the record.

Then the third bar here shows that other agencies of Government, pursuing possibly a different policy, expended $1.9 billion of Federal funds in the research field, and they may and sometimes do require as to inventions growing out of or resulting from expenditures of this money in private industry, that the patent rights become the property of the Federal Government, and thus there is a different policy in Government today or a different practice, may I say, between the other agencies of the government, as related to the patent provisions in their contracts. and those of the Defense Department.

Now, that is the problem that we are here trying to study with the hope that we might find some way to resolve it.

Now, I find on the chart a fourth bar. What does that represent? It says "nonprofit organizations funds used by."

Mrs. ARNOW. The fourth bar represents the nonprofit organizations as sources of funds for research and development; and the interesting aspect of this bar is the fact that as sources these organizations are also consumers.

Senator MCCLELLAN. They are what?

Mrs. ARNOW. As sources of funds for research and development, the nonprofit organizations use all they provide. They do not contract out to anyone else outside their sector. The universities and other nonprofit organizations do not give any money for anyone else to do research. They use what they have for research intramurally, so that amount is $300 million.

Senator MCCLELLAN. None of that is Government money?

Mrs. ARNOW. All this money originates in the nonprofit group. Senator MCCLELLAN. That is money left to foundations and others

Mrs. ARNOW. It includes income from endowments.

Senator MCCLELLAN (continuing). That they spend themselves in their own laboratories doing research.

Mrs. ARNOW. Right; and they give none outside their own group. They give no money to outside industry.

Senator MCCLELLAN. So then we have the total of bars 1, 2, 3, and 4, we get the total amount of expenditures, money expended from all sources, Federal Government, private enterprise, and nonprofit organizations that was expended during that fiscal year in the field or research and development?

Mrs. ARNOW. Yes. That amounts to $12.4 billion.

Senator MCCLELLAN. $12.4 billion is the amount shown on the chart?

Mrs. ARNOW. Right.

Senator MCCLELLAN. All right.

Is there any other comment you wish to make regarding the chart at this time?

Mrs. ARNOW. No.

Senator MCCLELLAN. Thank you very much.

Are there any further comments or any further statements you wish to make?

Mrs. ARNOW. No, sir.

Senator MCCLELLAN. Chief Counsel, Mr. Wright, do you have any further comments to explain this and to get it in its proper perspective?

Mr. WRIGHT. With your permission, Senator, I would like to ask the witness some questions which would let us define in more percise terms these areas where different policies apply with respect to the disposition of right to inventions.

I call your attention to that third bar there, which accounts for all of the Federal agencies other than the Defense Department, and ask you if you can tell us, for example, how much of that $1.9 billion came from the Atomic Energy Commission?

Mrs. ARNOW. I think that it is $790 million, but I would rather answer that type of question by giving you a later submission.

Mr. WRIGHT. Yes. I just wanted to get it in rough terms if we could.

Mrs. ARNOW. Right.

Mr. WRIGHT. So that we could understand preliminarily whereMrs. ARNOW. It is $790 million; that is almost $0.8 billion of $1.9 billion.

Senator MCCLELLAN. Any information that you do not have that you are inquired about can be supplied by letter or memorandum for

the record.

Mrs. ARNOW. Surely.

Mr. WRIGHT. I believe, Mr. Chairman, you wanted at this point to indicate briefly the character of the provisions that controls the disposition of patent rights in the Atomic Energy inventions.

Senator MCCLELLAN. Well now, to get this record in chronological arrangement as it should be, are we through with this witness?

Mr. WRIGHT. There are some other breakdowns that I would like to get from her.

Senator MCCLELLAN. I would like to have the chief counsel place in the record at this point the difference in the provisions, the contract provisions, of the Defense Department, that they generally use in the expenditure of that $4.4 billion or more, and what the other agencies of the Government use in this, with the contractors in this field of research and development.

If you can make a brief statement with respect to those different provisions, I would like to have them in the record here at this point so we can again realize what the issues are as we read this record. Mr. WRIGHT. That is what I was going to do, Senator, with respect to

Senator MCCLELLAN. Then, follow that, if you will, by inserting-you can insert that later-but insert in the record immediately following these different contract provisions, excerpts of the per

tinent statutes that now exist with respect to these other agencies. There are some statutes governing their contracts, whereas there is no statute or law governing the contracts of the Defense Department; am I correct?

Mr. WRIGHT. That is right.

Senator MCCLELLAN. Then state or put in the record at this point the different contract provisions, and then follow that-you may do that later-follow that with the different provisions of the statutes, the statute provisions, that are applicable to the other agencies of Government.

All right, proceed.

(The information referred to follows:)

As to the first bar, the money spent by the Defense Department, there is no statutory control over the disposition of patent rights except as to the amount spent in the Atomic Energy field. Defense Department employee inventions (black segment) are controlled by Executive Order 10096 and the Government gets title. Defense contractors, however, have received during the past 6 years title, except where the research is in the atomic energy field or the research contract has been made on behalf of the National Aeronautics and Space Adminstration.

Section 2182 of the Atomic Energy Act, says, in substance, that the Government shall have title in the first instance to all inventions which are "useful in the production or utilization of special nuclear material or atomic energy

Section 305 of the NASA Act of 1958 gives the Space Administrator the right to determine who shall have title to inventions made in the performance of any work under any R. & D. contract with his Administration.

The disposition of rights in inventions resulting from Department of Agriculture research is controlled by legislation which says that the Secretary is required to make the results "available to the public through dedication, assignment to the Government, or such means as the Secretary of Agriculture shall determine." (7 U.S.C. 427 (i), 1624 (a).)

In the case of research contracted by the Department of Health, Education, and Welfare, there is no statutory provision which tells the Surgeon General how to dispose of patent rights in inventions arising out of public health research, but the Surgeon General has, by regulations, provided that the head of the particular HEW organization responsible for the R. & D. contract. should determine the disposition of all inventions arising out of the contract. Under all of the statutory policies which I have just enumerated, there are waiver procedures under which the contractor may acquire, and has acquired, title to inventions produced by these contracts. However, in general, this has occurred only as a result of a decision by the agency itself to make an exception to its general policy dictated by exceptional circumstances.

The foregoing description of relevant statutory provisions is intended only to indicate generally some of the principal areas in which conflicts in Government patent policy may occur.

Mr. WRIGHT. Can you tell how much of that $1.9 billion bar that represents all other agencies than Defense, is represented by expenditures of the National Aeronautics and Space Administration? Mrs. ARNOW. $425 million.

Mr. WRIGHT. I will interpolate at that point that that money also is spent under provisions which say that the Government shall, in the first instance, have title to inventions arising out of contracts for research and development which are made by the Space Administration. Then, in addition to those agencies, can you tell me roughly, how much of that $1.9 billion is spent by the Department of Agriculture? Mrs. ARNOW. $144 million.

Mr. WRIGHT. And that, too, is subject to a statutory provision which provides that the research results be made generally available, al

though you do not have there, I gather, the breakdown of the agricultural expenditures between contract research and what they do themselves?

Mrs. ARNOW. Of the $144 million, roughly $90 million is performed in the Department's own laboratories.

Mr. WRIGHT. And the rest-that part you just referred to would appear in the black segment of this third bar, is that correct? Mrs. ARNOW. Right.

Mr. WRIGHT. And the rest of it, how much was that?

Mrs. ARNOW. Of the rest, $31 million, is performed by educational institutions.

Mr. WRIGHT. That would appear in the gray segment of that third bar, is that correct?

Mrs. ARNOW. Yes.

Mr. WRIGHT. And under those contracts with educational institutions that Agriculture makes those, they would, in general, provide for title in the Government?

Mrs. ARNOW. I imagine that is largely under the agricultural experiment station program.

Mr. WRIGHT. Yes.

Mrs. ARNOW. I am not familiar with the patent arrangements.

Mr. WRIGHT. Now, can you tell us how much of those funds in that $1.9 billion bar are spent by HEW, the Department of Health, Education, and Welfare?

Mrs. ARNOW. $322 million

Mr. WRIGHT. And then

Mrs. ARNOW (continuing). Of which $88 million is used internally in the Department's own facilities, research facilities.

Mr. WRIGHT. That would be part of the black?

Mrs. ARNOW. Part of the black section of the bar.

Mr. WRIGHT. Now, do you know how the rest was spent?

Mrs. ARNOW. Yes. What we call profit organizations, industrial organizations, received approximately $12 million; $156 million went to educational institutions; and the remaining $66 million to other types of organizations, such as research institutes and state governments.

Mr. WRIGHT. Do you have figures there which indicate, how much of the $12 million was spent for the cancer chemotherapy research program?

Mrs. ARNOW. You mean the $12 million that went to industry, Mr. Wright?

Mr. WRIGHT. Yes.

Mrs. ARNOW. No. This is not broken down by subject of research. Mr. WRIGHT. I might say by way of explanation that the Health, Education, and Welfare policy, with the exception of the cancer chemotherapy program, is to vest title in the government or to dedicate the invention to the public. But an exception was made with respect to that one program where the contractors retain title subject to certain administrative provisions for compulsory licensing to make the research results available generally on reasonable terms. There was one thing I asked you if you could tell me how much of that first bar was represented by expenditures in the atomic energy field. The Defense Department does spend some money in atomic energy research, does it not?