On October 10, 1963, President Kennedy issued the first government

wide patent policy Memorandum for the heads of Executive Departments and 52/

Agencies.

The Memorandum included a Statement of Government Patent

Policy. The purpose of the Memorandum was to obtain a greater consistency in agency patent policy for those government agencies whose policies were not controlled by statute.

This first attempt to resolve this long debated policy issue on a government-wide basis had two main objectives: (1) a consistent, government-wide patent policy, subject to statutory requirements, which would take into account the missions of the respective agencies; and (2) common guidelines and principles for the allocation of invention rights in a manner that would best serve the public interest, and more specifically in a manner that would:

(a) achieve expeditious development and commercial
utilization of inventions developed under Government
sponsorship;

(b) obtain the cooperation of industry in assisting

the Government in its research and development efforts;

and

52/

Memorandum and Statement of Government Patent Policy, 28 Fed. Reg. 10943 (1963). See Appendix A.3.

(c) not contribute to the concentration of economic

power or substantially interfere with free competition in

commercial markets.

The satisfaction of the public interest, however, is a difficult goal to achieve, primarily because the public consists of different groups whose interests are in some instances conflicting. Further, the objectives of achieving expeditious commercial utilization, obtaining the cooperation of private industry, and maintaining competition may be in conflict in any given situation because the greatest cooperation of industry would probably be achieved by permitting contractors to retain title to resulting inventions, but this course of action may not best support competition. In addition, such action may or may not best achieve widespread commercial utilization of these inventions. Accordingly, the acquisition of principal or exclusive patent rights by the Government, or a title policy, and the dedication or licensing of these inventions by the Government to the public might best serve the public interest insofar as such a policy will promote widespread use of the inventions. On the other hand, a title policy may not support the public interest insofar as it might discourage the use of inventions which need further development, or would tend to discourage participation of those prospective contractors which have the greatest privately developed background and know-how in the area of interest to the Government.

The President's statement attempted to resolve these conflicts by recognizing that the arguments both for and against the title and license policies were correct in certain situations, and incorrect in others. It was based on the premise that no single policy could accommodate the differing missions of the Federal agencies, the diversity of government contractors ranging from educational institutions to manufacturing organizations, or to the resulting inventions that will range from nuclear reactors to fertilizers.

identifying

Accordingly, the Statement took a flexible approach: contracting situations where the public interest would best be served by the Government acquiring or reserving the right to acquire principal or exclusive rights to resulting inventions; and identifying other situations where such rights would best be left with the contractor. In addition, recognizing that the policy was based on a number of assumptions and limited factual information, the Statement underlined the need for flexibility and safeguards by specifying exceptions to the general rule and by reserving certain rights in the Government.

The 1963 Statement in Section 1(a) first identified four situations where the public interest would normally best be served through the Government's acquisition of principal or exclusive rights at the time of contracting. The first is where:

a principal purpose of the contract is to create, develop, or improve products, processes, or methods which are intended for commercial use (or which are otherwise

intended to be made available for use) by the general
public at home or abroad, or which will be required for
such use by governmental regulations. .
(Section 1(a)
(1))

Thus, this Statement recognized that many times agencies conduct R&D in response to the needs of a particular segment of the public and contract for development of products or processes to satisfy these needs. In these cases, the presumption was made that it would be in the best interest of the public to reserve to the government the principal rights to any inventions which might cover or control the utilization of products or processes resulting from the contract.

The second situation is where:

a principal purpose of the contract is for exploration into the fields which directly concern the public health or public welfare. .

(Section 1(a)(2))

This is a generalized form of the first situation, the principal difference being that it is not who utilizes the end product of the research that is important, but rather whether the field being explored under the contract is concerned with the public health or welfare. Here again, the presumption was that in research conducted in an area of primary public concern and where a market presumably exists for the research results, the Government should control, at least initially, the rights to resulting inventions.

The third situation for principal rights in the Government is where:

the contract is in a field of science or

technology in which there has been little significant
experience outside of work funded by the Government,
or where the Government has been the principal developer
of the field, and the acquisition of exclusive rights at
the time of contracting might confer on the contractor a
preferred or dominant position. .
(Section 1(a)(3))

This provision was to cover contracts in fields where the Government would contribute to, or actually create, a private monopolistic situation under government funding if its contractor retained principal or exclusive rights. A good example of this situation was atomic energy. This field was virtually unexplored before the Government undertook to fund the major portion of the R&D in this field of technology. Also, this R&D effort was concentrated in a relatively few contractors for reasons of security and because of the large scale development costs involved. Το have allowed this small group of contractors, or any one of them individually, to obtain a dominant commercial position in this new field, based on their government contracts, would have been grossly inequitable. Atomic energy was about the only example which fitted this situation. It is questionable, however, whether this presumption would apply to all phases of atomic energy today because of the substantial amount of private funds presently being invested in this field for R&D by private parties. The fourth and last situation is defined where:

(ii) coordinating and directing the work of others.

This contracting situation was based primarily on equitable considerations. It was primarily intended to cover the government-owned, contractoroperated (GOCO) facilities and the situation where the contractor is primarily involved in coordinating and managing the research and development work of other contractors. In either of these situations, the contractor contributes little towards the conception or development of

the particular inventions involved.