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Conclusion

In this paper I have tried to show that the question of compensation for the employed inventor is a broad one, that it encompasses the twin needs of enhancing the rate of innovation and rewarding employed inventors, that great differences between individuals exist about how best to effect such compensation, that present methods for accomplishing this purpose are widely diversified and are frequently perceived by employed inventors to be inadequate, and that alternative methods to legislation can be conceived to provide some resolution of the present and anticipated problems.

To return to the title of this paper, in light of the views expressed here, I should like to add three two-letter words and a question mark. The title would then be "Legislation Is Necessary and Coming, or Is It?" Whether legislation comes, it seems to me, is up to both employers and employed inventors. But, if it does come, the lack of adequate reward procedures for employed inventors will be the primary cause. To obviate legislation it will be necessary for employers to assume the responsibility and burden for developing compensation plans acceptable to employed inventors. Until this is done widely the threat of legislation will remain.

Compensation for employed inventors

Our patent system is designed to "promote the progress of... the useful arts" (1) by encouraging disclosure of inventions to the public. As an incentive to disclosure, a right "to exclude" is given to the owner of the invention by the grant of a patent. Whether the patent system has been fulfilling the purpose of facilitating disclosure to increase the common fund of knowledge instead of fostering the withholding knowledge in the form of trade secrets is a matter of wide current interest. But this aspect of the system is outside the scope of this communication. Instead it concerns an important concomitant to the system: reward to inventors in order to encourage intellectual creation (2). Growing interest in whether this function is being satisfied is reflected in activities of scientific societies, and of Congress (3).

Many opinions have been expressed about whether the system should be modified, but such expressions for the most part were grounded on personal experiences and not from direct evaluation of inventor motivation. Why inventors invent is an interesting question but it is not covered here. Here the inquiry is whether inventors feel the system is fulfilling in the reward function, which is an important purpose of the patent system.

This paper reports results of a study done by the California Coordinating Committee of the American Chemical Society that represents more than 10,000 members of the eight sections of ACS in California. This study focused on experiences and attitudes of recent California inventors. By-mail questionnaire, it surveyed all inventors of chemical patents who lived in California and who were issued patents in the last quarter of 1973.

dissatisfied with the system of compensating employed inventors. Of those who responded, 43% expressed a lack of satisfaction with the compensation system relating to isSuance of patents, even though the patent system has, as one of its purposes, rewarding inventors to encourage intellectual creation. Only 18% were "very satisfied" at the time a patent issued and the reward function would be expected to be at its maximum. One reason for the widespread dissatisfaction is that 54% of the respondents got one dollar or less in direct compensation for their inventions.

Substantially all of the employed inventors assigned the patent to the employer. (All but 2% had signed written employment agreements requiring such assignment). Selfemployed and partner inventors tended to be more satisfied than employees of corporations, probably because they have an equity interest in the ownership rights. Employees of larger corporations tended to be more satisfied than employees of smaller ones, possibly because larger corporations had more formal awards programs. Those employees who received an kind of direct recognitione.g., money-peer recogni. on, commemorative notationtended to be more satisfied with the system than those who did not. The older and the higher paid inventors also appear to have greater satisfaction from the system of employment compensation under which they work.

Because of the difficulty in finding complete addresses for inventors listed in the Official Gazette of the U.S. Patent Office, many of the 402 inventors were not sent questionnaires. A total of 248 questionnaires were mailed and 162 (66%) were returned within 6 weeks. Others came later, but were not tabulated. Since over 10% of the questionnaires mailed were undelivered, the 66% of all those mailed that were returned show a strong interest in the subject matter. A copy of the questionnaire that shows the percent response in each category is in Figure 1. Questionnaires were sent to inventor's home to avoid interfering with his work and/or any inhibition he may feel in adJohn P. Sutton, a member of the Joint dressing such questions while he is receiving compensation

The results indicate that California inventors are relatively well paid, highly educated, and knowledgeable about patents and compensation practices from receiving many previous patents in addition to those which form the basis of this survey. Yet even these inventors are largely

[graphic]

Board Council Committee on Patent

Matters and Related Legislation of
the American Chemical Society,
practices law in San Francisco. As
Secretary of the Coordinating
Committee of California Sections of
ACS, he was instrumental in
conducting the survey here described.
Ohio born, Sutton received his BA
from the University of Virginia and
the JD from George Washington. He
was admitted to the Virginia Bar in
1964, and the California Bar in 1965
and entered private practice.
Previously he was an examiner in the
U.S. Patent Office and Technical
Advisor to the US Court of Customs
and Patent Appeals.

while not engaging in creative effort.

The Inventors

Of the inventors, 90% were in the age group between 30 to 60, and 43% were between 40 and 50. One third were over 50, discrediting the belief in some quarters that older workers do not invent. All inventors had post high school education with 93% having earned at least one college degree; more than half had the doctorate.

Only 9% of this group had no other patents; while 36% had more than 10 other patents. The inventors in this sample have thus repeatedly demonstrated their creative abilities.

These inventors appeared to receive relatively high salaries. Only 16% received an annual income below $18,000. Two thirds (65%) had an income between $18,000 and

Reprinted from CHEMICAL TECHNOLOGY, Vol. 5. February 1975. pp. 86-89
Copyright 1975 by the American Chemical Society and reprinted by permission of the copyright owner

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$29,999, and 17% received more than $30,000. While a direct comparison with all chemists salaries in published surveys is not possible, it would appear that the respondents are above average in income.

The employers

The inventors in this survey appeared to be employed, for the most part, by large corporations: 57% had sales over $100 million. Although the questionnaire failed to provide for government employees as such, 6% indicated employment by the government.

Compensation practices

Most inventors received a dollar or less in extra compensation for these patents. Only 3% of the inventors received between $500 and $5000 for the invention, and none received over $5000 for the invention just patented. On the other hand, 37% of these inventors placed values of $100,000 or more on their inventions (cf. question 10, Figure 1).

When asked if one would fairly trace a promotion, a raise, or a desirable change in job situation to the issuance of the patent, the great majority said "No." It is frequently argued that extra monetary compensation is not necessary because inventors get the raises and promotions. This study does not confirm that argument since only 19% of the respondents perceived such a relationship. Possibly the raises and promotions will come in the future and possibly the employees simply do not know that their job situations or raise is partly because of the patent. In any event, there is no strong feeling of reward for the patent issuance evident from these responses.

Inquiry was also made of nonmonetary compensation, such as newspaper publicity; intracompany publicity or recognition before peers; commemorative notations or gifts. Over half of the respondents received no form of nonmonetary recognition.

Satisfaction with the system

Question 9 asked, "Based on your experience with the value of patents, how satisfied are you with the compensation system under which you worked in making this invention?" Of respondents, 18% were "very satisfied"; 36% "somewhat satisfied"; 28% "not at all satisfied" and 14% "very dissatisfied."

Some people contend that inventors are never satisfied with the status quo, which is why they invent. But to have 42% negative reaction at the time when the reward function, and presumably the satisfaction, should be at its greatest is disheartening. Perhaps it is not surprising, since 54% of the inventors received $1.00 or less in direct compensation for their inventions.

Expressions of dissatisfaction carried beyond the response to one specific question. Respondents were encouraged to make comments and relate anecdotal experiences as well. Most comments fell into two categories: (1) those who believe only a few inventions sustain all research expenditures and that salary for all research workers is adequate without extra compensation and, (2) those who expressed bitterness at the inequity of the system. When asked about extra compensation for inventions, one respondent said: "The cheapskates might give me a dinner!" Another said: "[employer] doesn't even say thank you!" Some comments were shocking. One said:

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they terminate a person, they give him his check and tell him to be off the premises by the end of the day." Another said, "One of my patents has already made over $10,000,000 for my company and I even spent my own money in the initial development to prove that the invention was feasible. If I had been able to file under my own name and retain full ownership for one

product patent, I could have already sold the licensees fees for over $1,000,000 in one year. I do disagree with most company policies on patent contracts and the initiative to keep on giving your brains to the big corporations for the privilege of having a 'good job' keeps many profit-making items hid under a bushel."

Placing a monetary value on an invention at the time of issuance of the patent is difficult at best. Moreover, the inventor is usually not in a position to best evaluate the worth of an invention, since it is an economic question, not a technical one that involves such factors as capital and risk for implementing the invention. Nevertheless, when inventors were asked to estimate the value of the invention just patented, they valued their brain children highly, with 19% placing a value on them of more than a million dollars. Only 5% valued their inventions at less than $1000. These responses are interesting not for the accuracy of valuations, but as a reflection of the seat of widespread dissatisfaction with the compensation system for employed inventors. Few inventors got "a piece of the action," and any savings, profits, or royalties are windfall for the employer to the extent they exceed salary.

Cross correlations

In cross-tabulating the responses to different questions, some interesting correlations appear. Of those who believed they received fair market value for their inventions in salary and other recognition, 91% were also satisfied with the compensation system for employed inventors.

Conversely, 71% of those who believed the invention was worth more than they received were also dissatisfied with the compensation system. Also, those who indicated that they had received the fair market value for the rights in their creation valued their inventions lower than those who felt their salaries and compensation were not equal to the fair market value.

A correlation shows up between valuation and satisfaction. The higher the value of the invention, the greater the dissatisfaction. Of those who marked "very dissatisfied," 82% valued their recently patented inventions at more than $100,000, while only 30% of the "very satisfied" respondents placed such a high value on their inventions.

Clearly employed inventors respond to either monetary or nonmonetary recognition. All of those who received more than $500 for their inventions marked one of the two "satisfied" blocks, while only 3% of the "very dissatisfied" received extra compensation as high as $50. One might thus conclude that a program of extra compensation for patented inventions in the range of $50-500 goes far to reduce the number of “very dissatisfied" employed inven

tors.

Even nonmonetary recognition seems to make respondents feel more satisfied with the system. Two thirds of those who received such recognition, such as newspaper or intracompany publicity, commemorative notation, or a gift, indicated satisfaction (either "very satisfied" or "somewhat satisfied"). On the other hand, 56% of those who received no nonmonetary recognition expressed dissatisfaction (either "not at all satisfied" or "very dissatisfied").

As might be expected, there was a correlation between satisfaction and age and income. Those who were over 50

were much more satisfied than those under 40. (None of the three under thirty respondents marked either of the "satisfied" blocks.) As to income, the higher the income, the greater the satisfaction. Only 4% of those receiving over $30,000 annually were "very dissatisfied," while two thirds in the $12,000-$18,000 category were either "not at all satisfied" or "very dissatisfied."

Those who indicated they were self-employed or partners were much more satisfied than employed inventors, presumably because they would receive equity participation in whatever fruits the invention bore.

Conclusions

This survey suggests there is widespread dissatisfaction with the system of compensating employed inventors. Inventors are a national resource whose encouragement is a Constitutionally expressed goal. The goal cannot fairly be said to have been reached if satisfaction is any reflection of encouragement of inventors. The Constitution makes no mention of employers, but only speaks of securing exclusive rights to inventors. In today's society, employers take title to the inventions of employees and yet, in many cases, give nothing in return. This imbalance can and should be corrected by institution of awards programs or extra compensation policies for employed inventors. References

(1) The Constitution, Article 1, Section 8, Clause 8.

(2) Goldstein v. California, 412 US. 546; (1973). Patents, whether federal or state, reflect "appreciation of intellectual achievements." Kewanee Oil Co. v. Bicron Corp..US (No. 73-187), May 13, 1974. (3) Moss Bill HR 2370.

Author's address: Limbach, Limbach & Sutton, 3000 Ferry Building, San Francisco, Calif. 94111.

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