and proposed regulations as a sham to cover what was labelled as "... mere pious puffery to cloak what is frequently the Government's giveaway policy.' The Corporate Accountability Group also asserted that ERDA's proposed patent regulations give a clear indication of ERDA's move in a direction which will preserve and strengthen the monopoly powers of the large firms already sitting astride the entire energy field. Further, in the view of the Group, any administrative discretion to grant exclusive rights leads to abuses. A specific example of such abuse. was cited in this testimony. The incident involved an invention for handling solutions in kidney machines so that the solution could be reused. The company which did the research for DHEW applied for and received an exclusive license even though a second company was interested in obtaining a nonexclusive license, but was refused it by DHEW. In essence, it was alleged that DHEW had an opportunity to increase competition in the field, but refused to exercise it in preference to the creation or continuance of a monopoly. ERDA's Assistant General Counsel for Patents stated at the hearing that DHEW would be asked to submit the facts of the case for the record. This was done, and the facts, documented with exhibits of official correspondence, etc., were reported to ERDA by letter dated December 5, 1975, from DHEW's patent counsel, and have been incorporated in the transcript record.4/ The DHEW record presents a different view which does not, in 4/ The letter from DHEW points out that the Corporate Accountability Research Group previously cited this case in a Congressional hearing our opinion, provide a sound basis to support the contention advanced that the mere placement of discretionary powers with a Federal agency to grant exclusive rights is bound to lead to an abuse of discretion that would be contrary to the public interest. In their testimony the Group relied heavily on a 1961 discussion by Admiral H. G. Rickover on government patent policy. As the Admiral manaages a major program at ERDA he was requested to express his present views on the subject. In response, Admiral H. G. Rickover expressed concern as to the implementation of ERDA's legislative patent policy and recommended which preceded the passage of the Nonnuclear Energy Act, and that the 15-page DHEW document on the background of this case was made available to the Group prior to that hearing. The facts as expressed in the DHEW letter are that DHEW owned an invention involving dialysis of blood to remove excess urea which resulted from impaired renal function. The company which had made the invention under a DHEW contract, was not the leader in the field of blood treatment, volunteered to develop the invention for commercial utilization under an exclusive license. The second company, the recognized leader in the field of blood treatment, upon reading in the Federal Register of DHEW's intention to grant the exclusive license, objected to such grant and indicated its willingness to do so under a nonexclusive license. Based upon briefs and reply briefs, it became evident that only the prospective exclusive licensee was willing to invest large sums of money to produce the desired objective, but in the absence of an exclusive license would drop out of the picture altogether. By DHEW's granting the exclusive license, not only was the desired objective more likely to be attained and at a date much earlier (several years) than that promised by the petitioner for the nonexclusive license, but in doing so there would be established a genuine competitor in this field. See Appendix C.2. 5/ In a January 20, 1976 letter from Admiral H. G. Rickover to R. Tenney Johnson, ERDA General Counsel, Admiral Rickover stated: "Nothing I have observed in the past 15 years has changed my view [,before the Senate Judiciary Committee in 1961,] that patents developed at Government expense should belong to the Government." The full text of Admiral Rickover's letter is in Appendix C.2. ...the new ERDA patent regulations be revised so as to not en- The comments of the many individuals and of various organizations, which have been made of record in the hearings and by letters present other facets of the points discussed above and in some cases new points altogether. In a subject so far-reaching in its effects, so complex in its devolution, so involved with over thirty years of debate in forums in government, in industry, in universities, so amalgamated through the heat of various forms of social, economic and legal philosophies, it is scarcely surprising that there is less than complete unanimity on any particular phase of government patent policy. In contrast with the above, the participants at the hearing, with the exception of the public interest group, viewed the treatment of private patent rights with essential unanimity. They argued against the desirability of having mandatory licensing, in general, and in particular with regard to ERDA's patent policies. There also seems to have been 6/ Whereas Admiral Rickover recognizes some appropriate waiver situations, such as in certain cost sharing contracts or to gain contractor participation, the Corporate Accountability Group testimony recognized no instances of where waiver would be appropriate. Only exclusive licensing of Government owned patents under strict safeguards (as opposed to waiver of title) was mentioned as a possible avenue of granting exclusive rights by the Group. The uniformity (with one exception) in the concept that exclusivity is, in many situations, absolutely crucial to attainment of certain objectives. public interest Group testifying proposed some form of exclusivity only under more stringent safeguards than the present Section 9 of the Nonnuclear Energy Act. In order to induce desirable contractors to do R&D considered critical to the attainment of national goals, patent incentives unencumbered by restrictions such as compulsory licensing or enforced nonexclusive licensing were strongly advocated by industry representatives and trade associations. In summary, the basic conclusion of the majority of the testimony presented at the public hearing is that, wherever possible, if R&D in energy-related fields is to be encouraged and possibly stimulated as never before, a most liberal interpretation of the patent provisions of the Nonnuclear Energy Act should be applied. While this Act has some built in restrictions which would prevent the implementation of a patent policy expressed by many to be more generally in the public interest, the proposed ERDA-PR patent provisions may keep those restrictions to acceptable tolerances. ERDA will undoubtedly profit by the constructive criticisms of those who testified before its panel of officials and thanks them for their participation. It is only through such an interchange that the views of all interested parties can properly be gathered and evaluated for future action. Admiral Rickover's 1961 testimony and letter state, in essence, that in his experience no potential contractor has refused to do essential R&D for the Government solely because of a Government title patent policy. VI. COMPULSORY (OR "MANDATORY") LICENSING OF PATENTS A. The Required Report (Study) During the legislative process which led to the Nonnuclear Energy Act, compulsory licensing (referred to in the Act as "mandatory licensing") was proposed as part of the Act. Mr. Kauper, the Assistant Attorney General for Antitrust, advanced the rationale that with a statutory compulsory licensing provision a consistent general policy 1/ for compulsory licensing would be formulated by the administering agency.Dr. Ancker-Johnson, the Assistant Secretary for Science and Technology of the Department of Commerce, objected to compulsory licensing on the ground that it would diminish the incentives provided by the patent These positions were taken system to invent in the energy field.2/ with respect to a compulsory licensing provision which was contained (c) Whenever the Chairman determines that- (1)(A) in the implementation of the requirements of this Act a right under any United States patent, which is not otherwise reasonably available, is reasonably necessary to the development or demonstration of an energy system or technology pursuant to this Act, and (B) there are no reasonably equivalent methods to accomplish such purpose, and 1/ Hearings Before the Subcommittee on the Environment of the House Committee on Interior and Insular Affairs, 93d Cong., 2d Sess. (1974). 2/ Id. |