gles; and Oscar Hammerstein, a cigar making machine.

FUNCTION OF GOVERNMENTAL PATENT

ORGANIZATION

The primary function of any Government patent organization (excluding the Patent Office) is to insure that a bare minimum of appropriated moneys-usually for procurement-are expended for settlement of patent matters. The Government enjoys no preferred position insofar as liability for patent infringement (unauthorized use of private patents) is concerned, hence acquisition and preservation of the Government's rights in inventions of employees of the Government and of Government contractors, as well as avoidance of unlicensed governmental use of the patents of others, is essential.

An extremely difficult but nevertheless equally important responsibility of any Government patent organization is to advise and persuade research personnel to make use of the extremely valuable and extensive library of technical information readily available in the Patent Office files of issued patents. The weekly issues of the U.S. Patent Office Official Gazette, which contain brief information of newly issued patents, and the Department of Commerce Patent Abstract Series, containing information relative to new patents obtained by the U.S. Government, are also excellent sources of information. Experience of the Navy Patent Organization with the anticipation of Navysponsored inventions by prior art points to a duplication of research and development effort.

NAVY PATENT ORGANIZATION-HISTORY

The Office of the Judge Advocate General of the Navy had direct cognizance of all patent matters for the entire Naval Establishment prior to World War II, including patent soliciting and administrative adjudication of claims for patent infringement, although a few small departmental and field patent offices were established and manned as somewhat autonomous organizational units under the management, fiscal and administrative control of several of the material bureaus. The patent personnel of these departmental offices prepared some patent applications (which were filed through the Office of the Judge Advocate General), assisted personnel of the Office of the Judge Advocate General in the investigation of infringement claims and advised bureau contracting officers on procurement patent matters (pri

7. 36 Stat. 851 (1910).

marily contractual patent clauses). The field offices (such as Naval Ordnance Laboratory and Naval Research Laboratory) confined their efforts to obtaining invention disclosures, searching prior art and preparation of applications.

The accelerated procurement program occasioned by the United States' entry into World War II resulted in the establishment of the Procurement Legal Division of the Office of the Under Secretary of the Navy. All matters relating to procurement such as preparation of contract patent clauses, investigation of patent infringement claims, and formulation of patent license agreements were accordingly transferred from the Office of the Judge Advocate General to this Division in 1942. Technical control of Navy patent matters was thus split between the Office of the Judge Advocate General and the Procurement Legal Division.

The Secretary of the Navy in 1944, recognizing the increasing magnitude and importance of patent matters in the Naval Establishment as well as the disadvantages of divided responsibility therefor, requested Mr. R. J. Dearborn, a prominent patent attorney, to undertake a management survey of Navy patent operations for the purpose of determining, inter alia, an optimum Navy Patent Organization. The report of this survey, dated 10 March 1944, included a recommendation that one organization under a Coordinator of Research should handle all patent matters in order to provide for unified supervision, administration and control and coordination thereof with naval research activities. The approval of this recommendation on 26 September 1944 by the Secretary of the Navy, as well as by those then charged with responsibility for naval research, development, legal and patent services resulted in the establishment on 19 October 1944 of a single Office of Patents and Inventions in the Office of the Secretary of the Navy.

9

The Navy, in order to provide statutory authority for this office, as well as for budget and other purposes requested, and legislation was enacted, in the fall of 1946 establishing and authorizing funding for an Office of Naval Research in the Office of the Secretary of the Navy with prescribed research functions and "super-i vision, administration and control of activities within or on behalf of the Department of the Navy relating to patents . . ." A SecNav Instruction 10 implementing this Law include a

8. The name of this office was changed to Office of Research and Inventions on 19 May 1945.

9.60 Stat. 779, 780; 70A Stat. 290, 291, 10 USCA §§ 5150-5152. 10. Currently SECNAV INST. 5430.20A of 1 March 1960.

provision for establishment of such subordinate offices within the Navy as necessary to effectuate the provisions of that Law. The small patent offices of the material bureaus established prior to World War II, as well as several new ones, were by mutual agreement between the Chief of Naval Research and the chiefs of such bureaus, kept physically within these bureaus to facilitate their operations and to maintain essential close rapport with research personnel. The Office of Naval Research assumed full management, fiscal, technical and ceiling control of personnel assigned thereto, but the bureaus provide them space, services and equipment. The Office of Naval Research exercises its control through the bureau and field patent counsel who are on the staffs of the chief of the bureau and the field commanding officer, thereby insuring transmittal of directions through the normal military chain of command.

NAVY PATENT ORGANIZATION-STRUCTURE

The current Navy Patent Organization, which was established upon the basic concept of locating qualified patent personnel 11 where patent matters originate, has remained substantially unchanged since 1952. There are twenty branch offices located generally at major U.S. naval research activities throughout the United States, whose supervisors are accountable to one of three Division Directors 12 in Washington, D.C., and a regional office in London, England, whose program director is answerable-as are the aforementioned Division Directors and an administrative staff-to the Deputy Patent Counsel for the Navy in the Office of Naval Research. The Deputy Patent Counsel, who directs daily operations, and whose duties embrace the broad areas of program planning as well as management and program execution, is responsible, as is a small professional staff that is available for legal research in such areas as legislation, patent prosecution, patent litigation, procurement, use of proprietary items, domestic and international agreements, royalties and the like, to the Patent Counsel for the Navy in the Office of Naval Research. The Patent Counsel for the Navy reports to the Assistant Chief of Naval Research for Patents, a Navy Captain detailed from the Office of the Judge Advocate General to the Office of Naval Research,13 and 11. These personnel must be educated and experienced in engineering and legal matters as well as qualified to prosecute patent matters before the Patent Office.

12. Bureau of Naval Weapons, Bureau of Ships or General Patent Services-servicing, as a practical matter, all remaining Bureaus and Offices of the Naval Establishment.

13. This is the only military billet in the Navy Patent Organization.

together they devote their efforts primarily to broad patent policy formulation and coordination of Navy patent policy on an interdepartmental and international basis. The Assistant Chief of Naval Research for Patents heads the Navy Patent Organization and is responsible to the Chief of Naval Research for operation of the entire Navy patent program.

NAVY PATENT ORGANIZATION-OPERATIONS

The professional work of the operating Divisions is divided generally into three areas, namely, procurement counseling, administrative adjudication of infringement claims against the Government and coordination of field operations (primarily soliciting). The major effort of the field branches is directed toward obtaining disclosures of probable inventions developed under Navy sponsorship (contractor and "inhouse") and protection-under United States patent statutes of those which have technological significance or which may be involved in Navy procurement.

The Navy Patent Organization each year processes in excess of 1,800 invention disclosures, prepares about 700 patent applications, secures the issuance of approximately 600 patents, investigates approximately 35 infringement claims and assists in defending the Government in approximately 40 suits in the Court of Claims.14

It is not possible to place a dollar value on Navy Patent Organization defensive operations any more than on the neighborhood fire station; however, an indication of the amounts involved in such operations is apparent from the following examples:

(1) Five claimants recovered $2,439,388 in the Court of Claims against the Department of Defense in 1960 (the largest settlement of a claim against the Navy by the Court of Claims being that of English Electric Magnetrons in the amount of $1,750,000).

(2) A claim for $11,500,000 against the United States in September 1957 by the International Telephone and Telegraph Company for infringement of some of its 3,000 patents and patent applications relating to radar (Plan Position Indicator, Moving Target Indicator), TACAN and some inventions in LORAN (prior to 1961), was administratively settled in mid1962 for $1,000,000 and a negotiated royalty rate for future use was considerably less than other licensees of the International Telephone and Telegraph Company.

14. There are presently pending 63 infringement claims and 33 suits in the Court of Claims.

(3) A Navy lieutenant built and tested a shielded ignition system for internal combustion engines to prevent radio interference sometime in 1925 without filing a patent application. A Professor Crook, who filed an application on a similar system in 1926 that resulted in issuance of a patent in 1927 (which expired in 1944), offered to license the Government's use thereof in the early stages of World War II, because many military planes were equipped with such systems, but the offer was refused on the grounds that the Services were using a grounded or different system. Professor Crook was initially successful in 1943 in an infringement suit against the Government in the Court of Claims in the amount of $5,000,000, since no documentary evidence was presented to support the lieutenant's testimony contesting the validity of the professor's patent. Evidence was finally obtained from a 1921 technical publication of Marconi's Wireless and Telegraph Company in England, through a costly worldwide search,

whereby the Court, upon presentation of this evidence on appeal, found the professor's patent invalid. The expenditure of a relatively small amount of money and effort in 1925 to file a patent application would have avoided a Government expenditure of an estimated $50,000 for trial costs, and considerably more if the search for documentary evidence had been unsuccessful.

(4) A patent application was prepared by the Government in the early stages of World War II on the complex invention of five Navy engineers of an automatic mechanism for the six-inch 47-caliber dual-purpose gun, which was extensively used by U.S. troops in World War II. An interference was declared between this application and one filed by a British inventor, resulting in limitation of the latter claims to the electrical system disclosed. It is conservatively estimated that, because of the extensive procurement, $1,500,000 in royalty payments was thus averted.

desires of a testator and that a saving on taxes may be less important than other considerations. This is especially true in relatively small estates. The overall expense resulting from trusts and attorneys' fees in the probate or administration of estates complicated by tax gimmicks may be more than if a simple will had been used without attempting avoidance. Also, there are many instances of elaborate tax saving schemes that were expensive to set-up and deprived the owner or donor of some or all of the income and control and then ended up being taxed anyway because of a change in the law closing a "loophole", a change in a Revenue ruling or a court decision.

The examples outlined in this article illustrate why expert advice should be obtained before embarking on an estate planning program. There are many sad cases where death, gift and income taxes have been avoided, but the donor, his dependents or donees ended up with less money for their needs than if the tax considerations had been ignored. To cite one last unfortunate example, suppose a serviceman is living on his service pay or is without outside income; that he has not accumulated an estate of any size; that he has a large mortgage or deed of trust on the house he is buying and on

which he is paying 6% or more interest; and that he gets ahead so that he has $3,000 in his savings account or other investments. He hears about the avoidance of income taxes by making gifts to children, so to avoid about $30 in annual taxes on the interest income, he makes a gift of the $3,000 by buying savings and loan stock registered in his name as custodian for his child. Perhaps the stock pays 412%, or less than the 6% the donor is paying out on his loan secured by the house mortgage. The savings and loan corporation turns out to be unsound and goes into the hands of receivers ending up with an almost total loss of the $3,000. The loss is the child's, not the father's. The child has no other income so the loss can not be deducted for any income tax benefits, and the mortgage on the father's property is $3,000 more than if the money had been used to cut that down.

The moral, if any, is that gifts to your children for their future are wonderful, but taxwise or overall, there is little advantage to them until you are out of debt yourself; and if you make a gift that is bona fide or sufficient to exempt you from tax on the income and to take it out of your estate for death tax purposes, it is gone. You can not take it back or use it for your benefit later on.

RETIRED PAY; UNIFORMED SERVICES PAY ACT OF 1963; Computation of Retired Pay for Members retired 1 April 1963

The Comptroller General in decision B-152631 of 29 October 1963 considered the question whether the retired pay to which certain members were entitled on 30 September 1963 may be recomputed effective 1 October 1963 under the new rates of monthly basic pay prescribed by section 2 of the Uniformed Services Pay Act of 1963, approved 2 October 1963, Public Law 88-132, 76 Stat. 456. All of the examples considered involved the cases of members retired as of 1 April 1963, under various provisions of law and under varying circumstances.

In the first example a member was transferred to the Temporary Disability Retired List, effective 1 April 1963 under 10 USC 1202. His transfer had been approved by direction of the Secretary of the Navy on 19 March 1963. It was held that such member was not entitled to recompute his retired pay under the higher rates provided in the new pay bill.

In the second case a chief warrant officer completed 24 years of active service for retirement purposes on 22 March 1963. On 16 January 1963 he requested that he be retired on 1 April 1963. He was transferred to the retired list effective 1 April 1963 under 10 USC 1293 and was advanced on the retired list on the same date to pay grade 0–2 under 10 USC 6151. His transfer to the retired list had been approved on 8 March 1963. It was held that he is entitled to have his retired pay recomputed under the higher rates of the 1963 pay law.

A commissioned officer completed the requisite 20 years of active service for retirement purposes on 18 January 1963. On 31 January 1963 he requested transfer to the retired list on 1 April 1963 and was transferred to the list on that date under 10 USC 6323. His transfer was approved on 6 March 1963. The conclusion was reached that he was entitled to have his retired pay computed on the basis of the new rates.

The final two examples involved Reserve members who qualified for retired pay under chapter 67 of Title 10, U.S. Code after having completed at least 20 years of satisfactory service (active and inactive) and having attained age 60. One Reserve member completed 20 years of satisfactory service on 22 March 1963. His date of birth was 21 October 1902. On 29 April and 21 May 1963 he applied for retired pay effective 1 April 1963, under 10 USC 1331. His application was approved on 31 May 1963, effective as of 1 April 1963, and he was placed on the retired list effective 1 April 1963, by orders issued 5 June 1963. The second Reserve member completed 20 years of satisfactory service on 5 March 1963. His date of birth was 24 August 1901. On 16 and 23 October 1962 he applied for retired pay effective 1 April 1963, under 10 USC 1331. His application was approved 19 December 1962, effective 1 April 1963, and he was placed on the retired list as of 1 April 1963, by orders issued on 1 April 1963.

In the cases of both of these Reserve members it was held that there is no entitlement to have retired pay computed under the 1963 rates.

Section 5(a) of the 1963 Pay Act, effective 1 October 1963, provides generally that members who become entitled to retired pay after 31 March 1963 but before 1 October 1963 are entitled to have their retired pay recomputed under the rates of the new law but that members who become entitled to retired pay on 1 April 1963, by virtue of 5 USC 47a (Uniform Retirement Date Act) shall be considered to have become entitled to retired pay before 1 April 1963. The rationale of the Comptroller's decision appears to be that members who met the eligibility requirements for retirement prior to 1 March 1963 and were in fact retired as of 1 April 1963 qualified under the general provision to have their retired pay recomputed while those who did not become eligible to retire until some date in March, 1963, are deemed to have a retirement date as of 1 April 1963 fixed by the Uniform Retirement Date Act and thus to have been retired prior to 1 April 1963 and therefore not to be eligible for recomputation. (Comp. Gen. Decision B-152631 of 29 October 1963)

BOARD FOR CORRECTION OF NAVAL RECORDS; Pecuniary Results from Board's Action; Dual Employment Act

● A recent decision by the Comptroller General emphasizes not only the scope of possible corrective action by the Board for Correction of Naval Records but also the far-reaching and unanticipated results which may flow from the Board's action.

An officer of the Regular Navy was honorably discharged on 30 June 1958, pursuant to 10 USC 6384, after having completed more than 17 years of service, and was thereupon paid severance pay in the amount of $17,280. During the period from 1 July 1958 through 29 March 1963 he was employed by various agencies of the Federal Government for which he received $44,312.48 as salary.

On 28 March 1963 the Board for Correction of Naval Records, proceeding under chapter 79 of Title 10, U.S. Code (10 USC 1551 et seq), corrected the officer's record to show that he was not discharged with severance pay on 30 June 1958; that he continued on active duty until 30 June 1960; and that he was retired as of 1 July 1960 in accordance with the mandatory provisions of Public Law 87-155 (73 Stat. 333), without benefit of the lumpsum indemnity payment.

The officer's pay accounts accordingly became subject to adjustment to reflect the Correction Board's action. Pursuant to the corrected records, he was credited with

active duty pay as an officer of the Regular Navy from

1 July 1958 to 30 June 1960 and with retired pay from 1 July 1960. Since the records now show that he was not discharged on 30 June 1958, his account was debited the amount of severance pay previously paid. The Comptroller General further concluded that since the officer is now deemed to have been on active duty for the period 1 July 1958 through 30 June 1960, and in a retired pay status thereafter, during which time pay accrued to him at a rate in excess of $2,500 per year, his civilian employment with the Federal Government for the period 1 July 1958 through 29 March 1963 was illegal under the Dual Employment Act of 1894 (5 USC 62) (an act prohibiting the concurrent holding of two offices to which compensation is attached if the compensation attached to either office equals or exceeds $2,500 per annum).

As a result it was determined that the officer was not entitled to retain any part of the compensation received by him from Federal civilian employment during the period in question. Two-thirds of his current retired pay is being withheld and applied to reduce his indebtedness pursuant to 5 USC 46d. (It might be observed that as a retired officer of the Regular Navy the officer mentioned is now generally prohibited by the Dual Employment Act from accepting Federal civilian employment and is subject to the Dual Compensation Act (5 USC 59a) in any of the few Federal positions from which he is not barred by the Dual Employment Act.) (Comp. Gen. Decision B-152215 of 9 September 1963)

INJURY SUFFERED BY RESERVIST IN CONNECTION WITH INACTIVE DUTY TRAINING; "While So Employed" or "Under Military Control"; Meister case

The U.S. Court of Claims in Meister v. United States, Ct. Cls. No. 54-62, decided 12 July 1963 considered the case of a Naval Reservist who on the night of a scheduled inactive duty training drill fell and suffered injury after he had entered the training center compound and while proceeding toward the drill hall, but prior to being mustered for drill. The Court held, in effect, that the member was "employed" on inactive duty training at the time of his injury and accordingly was entitled to receive disability benefits under the provisions of 10 USC 6148 (the codification of "Public Law 108").

Advice was requested from the Comptroller General of the United States as to whether the decision of the Court of Claims might be applied in other cases similar to the Meister case and also as to the scope of the coverage of 10 USC 6148 in the cases of certain other Reservists injured in connection with the performance of inactive duty training.

The Comptroller General, in decision B-148324 dated 25 October 1963, expressed disagreement with the conclusion reached in the Meister case, and reiterated his view that by 10 USC 6148 (a) Congress intended to

provide coverage for injuries suffered by inactive duty trainees only while actually performing inactive duty training. The language of the decision makes it clear that the Comptroller intends to limit future application of Meister as strictly as possible, and requires that all claims which might come within the purview of that decision be forwarded directly to his office for settlement. "In view of the fact that the court refrained from formulating a rule for general application in the Meister case, it should not be used as a precedent for favorable administrative action in any similar case."

Included for determination were two Navy cases expected to fall under the scope of this decision, one involving a Reservist who sprained his ankle while playing basketball during a lunch hour break in the scheduled weekend drill session, and another who fractured his thumb at handball during a lull in duties launching helicopters at a similar weekend training period. Addressing himself to these situations, the Comptroller ruled that although a Reservist is not to be considered to be in an inactive duty training status for the entire day on which a drill is performed, he is so employed from the time he first musters in for that duty until dismissal, and is entitled to disability benefits for injuries sustained during that period even though they result from some independent activity not a part of the training duties. cannot be said that during a scheduled lunch break or a time when no actual duty is being performed during a drill the man reverts to his normal civilian status so as to be outside the protection of 10 USC 6148 (a) during those times. In neither of the cases described had the men been released from military control at the time the injuries were sustained." Thus it may be that this new test of "military control" may supplant the "while so employed at training" test employed earlier.

"It

The Comptroller observed, however, that travel, no matter whether it is accomplished by private or Government conveyance, is not a part of inactive duty training and is beyond the contemplated coverage of 10 USC 6148. Tours of inactive duty training are for scheduled periods of time, and the Joint Travel Regulations do not authorize transportation allowances to such training at the headquarters of the reserve component. Therefore, it was held that injuries are not compensable under 10 USC 6148 when sustained during travel to or from the training center, even if the member is a permissive passenger on Government transportation, or traveling during the period of time assigned for drill. (Comp. Gen. Decision B-148324 of 25 October 1963.)

U.S. GOVERNMENT PRINTING OFFICE: 1964