NBSIR 76-1006

Report of the Ad Hoc

Committee on NBS Inventions

and Patent Programs

Ad Hoc Committee on NBS Patent Programs, F. Karl Willenbrock, Chairman

Institute for Applied Technology

National Bureau of Standards

Washington, D. C. 20234

March 1976

Final

*1

U S DEPARTMENT OF COMMERCE

NATIONAL BUREAU OF STANDARDS

\

NBSIR 76-1006

REPORT OF THE Ad Hoc

COMMITTEE ON NBS INVENTIONS

AND PATENT PROGRAMS

Ad Hoc Committee on NBS Patent Programs, F. Karl Willenbrock, Chairman

Institute for Applied Technology

National Bureau of Standards

Washington, D. C. 20234

March 1976

Final

U.S. DEPARTMENT OF COMMERCE, Elliot L. Richardson. Secretary

James A. Baker, III, Under Secretary

Dr. Betsy Ancker-Johnson. Assistant Secretary for Science and Technology

NATIONAL BUREAU OF STANDARDS. Ernest Ambler. Acting Director

Table of Contents

Report and Discussion of the Findings and Recommendations of the Ad Hoc

NBS Committee on Patent Programs

February 26, 1975

I. Investigations of the Ad Hoc Committee 1

A. Patent and Non-Patent Methods for Disclosure of Government

Inventions 1

B. Invention Protection Objectives 2

1. Royalty Payment Protection 2

2. Economic Benefits 3

C. Government-Wide Patent Policy 4

1. Presidential Policy Statement of 1971 4

2. Legal Complications 4

D. Survey of Patent Practices in Government Agencies 5

1. Incentive Awards for Government Inventors 6

2. Government Agency Licensing Practices C 7

3. Data on Patent Activity for Employee Inventions of Selected

Government Agencies 9

Table I: Data on Patent Activity for Employee Inventions

of Selected Government Agencies 10

E. NBS Patent Practices 12

1. The NBS Committee on Patents 12

2. NBS Inventions Summary 15

3 . NBS Contractor Inventions 16

4. Commercial Use of NBS Inventions 18

II. Findings 21

A. Strengths and Weaknesses in the NBS's Patent Practices 21

1. Strengths 21
2. Weaknesses 22

III. Recommendations 24

A. The Basic Premise 24

IV. Estimated Workload Increases and Implementation Costs 28

A. Estimated Workload Increases 28

B. Estimated Implementation Costs 30

1. Current Costs 30

2. Additional Direct Costs 30
THE FINAL REPORT OF THE AD HOC COMMITTEE ON NBS PATENT PROGRAMS

An Ad Hoc Committee on NBS Patent Programs consisting of A. McCoubrey,

M. Greenspan, R. Barra, C. Gravatt, D. Robbins, A. Farrar, and

F. K. Willenbrock, Chairman, was established on June 23, 1974, to investigate the reasons for the small number of patent applications filed by

NBS each year. The Committee was assisted by Peter Urbach, Deputy

Director of NTIS, and Lawrence Eicher, IAT. The purpose of the

investigation was to determine what was needed to create a climate among the

NBS professional staff which encourages innovative and inventive activity,

and the disclosure of inventions.

In the course of their investigation, the Ad Hoc Committee found:

1. That a comparison of patent activities at NBS and eight other

Federal agencies*, from 1963 to 1972 showed that NBS averaged

3.7 invention disclosures per 100 scientist/engineer employees

compared to a low of 2.1 in the Department of Interior and a high

of 8.5 in the Department of Defense. The eight agency average

was 4.2. Patent and invention disclosure activity at NBS is

similar to that of other agencies not having inventor award

programs and below those which do have award programs;

2. That the number of NBS patented inventions is not a complete

measure of the inventive and innovative activities at NBS.

Although patenting can be an important mechanism for transferring

technology and helps promote commercial utilization of NBS research

results, NBS scientists and engineers often help develop

innovative technical solutions to technical problems and disclose

them through papers, lectures, and demonstrations without

determining whether or not the technical solution qualifies as

a patentable invention;

3. That NBS has no operative program for granting awards to inventors

for invention disclosures or patent applications, and that there

has been no systematic effort to recognize NBS inventors whose

inventions have been used in industry;

4. That NBS inventions which have been developed to a point of practical

application at the time of patenting or publication (for example,

the NBS contra-angle dental handpiece) are available immediately

for public use. However, many NBS inventions require further

development by either NBS or the private sector. In some cases

where private investment is needed to develop NBS inventions, the

absence of statutory authority for certain Government agencies

to grant limited exclusive licenses on patents discourages such

investment; and

*The Department of Health, Education and Welfare; Department of Argiculture;

Department of Transportation; Department of Interior; Tennessee Valley

Authority; Energy Research and Development Administration; National

Aeronautics and Space Administration and the Department of Defense.
2

5. That important potential benefits to the public may result from

foreign licensing, and in certain cases from limited exclusive

domestic licensing.

As a result of their investigation, the Ad Hoc Committee recommends:

1. That NBS should, under existing authority, aggressively support an

inventor award program to improve the climate for invention

disclosure at NBS. Cash awards of $100 should be given to NBS

inventors for each invention disclosure that is assignable to NBS

and is recommended for publication or patent application by the NBS

Committee on Patents. It is further recommended that NBS should

establish a special award of up to $25,000, as authorized by Civil

Service Regulations, that can be granted to an NBS employee for an

invention that constitutes an outstanding contribution to society;

2. That in cases where the NBS Committee on Patents determines that an

invention made by an NBS employee is directly related to an NBS mission

and that the invention requires further development to demonstrate

its practical application, the Committee should report these

conclusions to the appropriate NBS Institute Director so that

further development is encouraged;

3. That NBS actively support the Department of Commerce in its efforts

to obtain statutory authority to grant limited exclusive licenses

on NBS patents when it is in the public interest to do so;

4. That the criteria presently used by the NBS Committee on Patents

to determine whether NBS inventions should be published or patented

(Attachment A: Section E, Item 1) should be considered for

revision as a separate undertaking, taking into account the relative

merits of patenting and publication as means for protecting NBS

inventions, and for helping to promote their commercial use.

Consideration should be given to: the economic potential of the

invention; the amount of further development needed to bring the

invention to the point of practical application; and to the possibility that limited exclusive licensing may become available and

whether or not such licensing will be a necessary incentive for

the investment of private risk capital to bring the invention to

the market place; and

5. That NBS should strengthen its program to disseminate information

about NBS inventions to potential users. Such a program should

include

(a) Continuing public announcement of all NBS patents and patent

applications in cooperation with the National Technical

Information Service (NTIS) and publication of brief

descriptions of NBS inventions in NBS Technical Notes.
3

(b) Additional promotional activities for NBS inventions selected

to receive special emphasis. Such activities might include

invitational conferences, the preparation of special displays

for trade conventions or offers of (technical assistance and

could be undertaken in cooperation with NTIS when appropriate.

The Ad Hoc Committee estimated that the implementation of the first four

recommendations would cost approximately $15,000 per year and could be

expected to improve the climate for inventive activity and invention disclosure

at NBS, and significantly increase the number of NBS patents.

A complete and full discussion of the findings and recommendations of the

Ad Hoc Committee on Patent Programs is included as Attachment A.

Attachment

ATTACHMENT A

Report and Discussion of the Findings and Recommendations of the Ad Hoc

NBS Committee on Patent Programs

February 26, 1975

Members: Arthur McCoubrey, Martin Greenspan, Ralph Barra, Claude Gravatt,

David Robbins, Allen Farrar, Peter Urbach (NTIS) , Lawrence Eicher,

and F. Karl Willenbrock (Chairman)

I. Investigations of the Ad Hoc Committee

The investigations of the Committee have focused primarily on Government

employee inventions because most NBS inventions fall into this category.

With the exception of section I-E-3, which describes NBS's limited

experience with contractor inventions, the findings and recommendations

of this report are strictly applicable to NBS employee inventions only.

A. Patent and Non-Patent Methods for Disclosure of Government

Inventions

Inventions resulting from the work of Government employees

may be made available for use in the following ways:

0 Public use of the invention.

0 Describing the invention in a publication or at a public meeting.

° Applying for a patent.

Although public use or publication does not result in the grant of

a patent to the Government, these ways for making an invention

available for use tend to prevent others from obtaining a patent
2

on the same invention. That is, if a second inventor applies for

a patent on the invention, the Patent and Trademark Office may

reject his application on the grounds that is is not patentable

in view of previous public use or publication.

When a patent is not obtained on a Government invention, its

development and use is not restricted. When a Government agency

chooses to patent an invention, the development and use of the

invention by non- Government parties is subject to the patent

licensing policies of that agency.

B. Invention Protection Objectives

1. Royalty Payment Protection ; Patenting employee inventions

protects the Government from paying royalties to a second

inventor for use of an invention that was first made by a

Government employee. The Government obtains less protection

if such inventions are placed in the public domain by public

use or publication. In those rare cases where priority of an

invention is claimed by the Government and another party, the

Government is in a stronger legal position to prove priority

if the invention has been covered in a patent application

rather than disclosed by publication or public use.
It is difficult to estimate the amount of money saved by

the Government and the general public by avoidance of royalty

payments to a second inventor because:

(a) there has been no careful audit of commercial utilization

of Government patented inventions, and

(b) it is impossible to determine what would have happened

if the Government had not had patent protection in a

particular case.

Economic Benfits : Normally, the Government does not charge

royalties under licenses granted to1 U.S. citizens or U.S.

corportations on Government inventions. However, inventions

in scientific and technological fields resulting from work

performed by Government employees or contractors constitute

a potentially valuable national resource. The public interest

in a dynamic and efficient economy requires that efforts be

made to encourage timely development and use of these inventions.

NTIS's experience with its newly established program for promoting

the use of Government inventions suggests that an effective

program to encourage the development and use of Government

inventions could result in increased tax revenues that would

more than pay for the program's operation.
4

C. Government-Wide Patent Policy

1. Presidential Policy Statement of 1971 ; On August 23, 1971,

the President issued a revised memorandum and statement of

Government Patent Policy addressed to the Heads of

Executive departments and agencies. Revisions contained in

the 1971 Presidential Policy Statement were based on the

results of studies and experience gained under the 1963

Presidential Policy Statement. A major revision of the

President's 1971 Statement on Government Patent Policy provides

that Government-owned patents shall be made available, and the

technological advances covered thereby brought into being in

the shortest possible time, through dedication of exclusive

or non-exclusive licenses under regulations prescribed by the

Administrator of General Services.

2. Legal Complications ; The 1971 Presidential Policy provisions

were subsequently implemented as part of GSA's Federal

Property Management Regulations concerning Government-owned

patents. A major premise of these regulations is that to

obtain commercial utilization of an invention covered in a

Government-owned patent, it may be necessary to grant an

exclusive license for a limited period of time as an incentive

for the investment of risk capital to achieve the practical

application of the invention. Shortly after the GSA regulations
were announced on February 5, 1973, a group called Public

Citizens, Inc., along with 11 Congressmen successfully

challenged (in the U.S. District Court for the District of

Columbia) the GSA exclusive licensing regulations as unconstitutional on the basis that the Executive may not dispose of government

property without Legislative approval. The court's decision

has been appealed but a decision by the Court of Appeals has

not yet been rendered.

It should be noted that NASA, NSF, and ERDA, the successor agency

to AEC, have statutory authority to grant exclusive licenses on

their patents. This authority, which was written into their

organic legislation, is not being contested in the courts.

Survey of Patent Practices in Government Agencies

Review of the patent activities of the various Government agencies

shows significant differences in encouraging employee and

contractor invention disclosure, and in promoting the development

and use of agency inventions. These differences are due in part

to differences in the R&D missions of the agencies, but also

reflect management decision within the agencies involved as to

the importance of seeking patents.
6

1. Incentive Awards for Government Inventors : Chapter 45,

Title 5 of the U.S. Code is the basic law governing the

granting of awards for Government employee inventors. Under

this law departments and agencies may grant cash incentive

awards for inventive achievement ranging from $25 to $25,000.

Awards in excess of $5,000 may be granted only with prior

approval of the Civil Service Commission.

a. Passive Inventor Awards Programs : DoC including NBS , HEW,

NSF and USDA are examples of agencies that do not normally

give awards for invention disclosure or patents. These

agencies do operate incentive awards programs in which

outstanding achievement awards may be and sometimes are

given to inventors. Jacob Rabinow was given an NBS Exceptional

Service Award and the DoC Gold Medal for his magnetic

particle clutch invention in 1947.

b. Active Inventor Award Program : The Air Force, the Department

of Transportation, and the Department of Interior give small

automatic cash awards (usually $50) for each invention

disclosure. If the invention is patented, some agencies

give the inventor an additional award of $100. The Army and

Navy also give small cash awards for invention disclosures on

the recommendation of special review boards. ERDA does not

grant awards to its own employees for inventions . However

,

most ERDA inventions are made by contract employees, and the
major ERDA contractors (e.g. , Union Carbide at Oak Ridge) do

operate patent award systems.

c. An Agressive Inventor Award Program : NASA, which operates

its inventor award program under statutory authority that

is separate from Title 5 of the U.S. Code, gives cash awards

for patents as determined by its Inventions and Contributions

Board. In FY 1974, NASA gave 224 individual awards ranging

from $100 to $25,000 with ten of the awards in excess of

$1,000. The NASA inventor award system also covers NASA

contractors in other Government agencies. For example, an

NBS employee at Boulder (Daniel H. Weitzel) received a NASA

patent award in 1971 for a flowmeter invention.

Government Agency Licensing Practices ; The degree to which the

Government can encourage the expeditious development and civilian

use of its inventions depends to some extent on the patent

licensing options available to Government agencies. The patent

laws establish a 17-year monopoly (limited period of exclusivity)

as a reward for invention and the disclosure of the invention to

the general public. The monopoly may act as an incentive for

private risk capital to develop the invention and make its

benefits available to the public. This investment protection

could be extented to Government patented invention development
8

through limited exclusive license arrangements with responsible

applicants in the private sector. As noted in Section C, item

2 above, GSA's revised patent licensing regulations were

intended to make the exclusive licensing options available to

all departments and agencies. However, a final adjudication

of the constitutionality of these regulations has not yet been

rendered by the court.

a. Non-Exclusive Licensing Disincentives ; Without the

exclusive licensing option, most Government agencies will

undoubtedly continue to grant non-exclusive, royalty-free

licenses on their patents. In the period from 1963

through 1971, 99.9% of the licenses issued on Governmentheld patents were non-exclusive. This type of licensing

can create disincentives for private investment in the

development of Government patented inventions. An illustration of this kind of disincentive is given for a

specific NBS invention in Section E.

b. Exclusive Licensing : NASA, ERDA, and NSF are the only

Government agencies that have statutory authority to grant

exclusive licenses on their patents.

In cases where patent rights are assigned to NASA or ERDA

provisions for limited exclusive licensing to responsibile

applicants are made when such licensing is deemed

in the public interest. Determining when exclusive
licensing is appropriate and selecting appropriate licensees

is a difficult procedure, requiring both legal and technical

review. NASA has granted 14 exclusive licenses since

1967. Each exclusive license application is reviewed by

the NASA Inventions and Contributions Board which in turn

recommends action to the NASA Administrator. ERDA has

established procedures for granting exclusive licenses and

has reviewed several applications, but has never granted

an exclusive license on an ERDA patent.

NSF has not granted any exclusive licenses although it does

have the statutory authority to do so.

HEW has granted several exclusive licenses based on internal

(non-statutory) regulations which were issued before the

GSA regulations, and is continuing to accept exclusive

license applications recognizing that their actions may be

subject to legal challenge on the same grounds used against

the GSA regulations.

Data on Patent Activity for Employee Inventions of Selected

Government Agencies ; Table I on the following page presents

data compiled from the "Annual Report on Government Patent

Policy: 1971-72" of the Federal Council for Science and

Technology; the 1971 edition of NSF's "Reivews of Data on

Scientific Resources - Federal Scientific and Health Personnel;"

and NBS records.
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These data may be regarded as indicators of patent activity in

the various Government departments and agencies. Because of

the time-lag involved in invention evaluation and' patenting

procedures, one area of data may appear to be inconsistent with

another. For example, Table I shows that DoC obtained 104

patents in the FY 1963-1972 period, but filed only 66 patent

applications in the same period. This apparent inconsistency

is due to the large number of NBS patent applications which

were filed in the U.S. Patent and Trademark Office prior to

1962, but were not examined and issued as patents until 1962

and later.

a. Patent Activity Ratios ; The ratio of R&D funds obligated,

to the number of inventions patented varies widely among

the agencies. The variation may be attributable to several

factors. For example, the relative proportion of R&D funds

used for basic research, applied research, and systems

development (including hardware purchases) varies widely

among agencies.

The ratio of employee invention disclosures to the number

of scientists and engineers in intramural R&D programs, may

be a more sensitive indicator of employee inventive

activity in the various agencies.
12

NBS Patent Practices

1. The NBS Committee on Patents : The NBS Committee on Patents

(Lawrence Wood, Jacob Rabinow, Martin Greenspan, David Robbins,

i and G. Franklin Montgomery) is the standing committee which

determines which NBS inventions should be protected by

patenting or publication.

a. The criteria, used by the NBS Committee on Patents for

determining when NBS inventions should be protected by

patenting or publication, are based primarily on the need

to protect the Government and the general public from

paying royalties to a second inventor on inventions that

are first made by Government employees. Occasionally,

the Committee will recommend that a patent application be

filed on an invention because it is directly related to

a primary NBS mission and represents a significant advance

in the art related to that mission, even though the market

for the invention is not significant. The primary criteria

used by the Committee may be summarized as follows:
13

(1) When an invention is assignable to the Government, a

domestic patent application should be filed on the

invention when it is judged to have high potential

for commercial success in this country, as judged by

estimated sales to the Government and the general

public (e.g., sales greater than $1 million over a

17-year period)

.

(2) When an invention is assignable to the Government,

it should be protected by publication when it is judged

to have moderate potential for domestic commercial

success, as judged by estimated sales to the Government

and general public (e.g., sales greater than $75,000

and less than $1 million over a 17-year period)

.

(3) When all rights in an invention remain with the

employee inventor, subject to a royalty-free license

to the Government, and the employee requests NBS to

file an application on the invention, the application

should be filed using the criteria of (1) above, except

that only use by the Government is considered.

b. In applying the criteria, the Committee takes into

consideration the following primary factors:
14

(1) An invention is most likely to find commercial success

when it fulfills a need in Government or private

industry and is fully developed.

(2) An invention that is basic in nature, even though

not fully developed, should be patented because of

the broad claims that may be obtained in the patent

which would protect further development of improvements that are likely to find wide commercial application.

(3) A patent should be obtained on an invention for

recognition purposes when it is directly related to

a primary mission of NBS and represents a significant

advance in the field of that mission.

c. Other factors which influence the decisions made by the

NBS Committee on Patents include the following:

(1) As long as NBS patents are not available for exclusive

licensing, both patenting and publication make an NBS

invention available for unrestricted use.

(2) Patenting an invention is more expensive than

publishing it—the added legal expenses amount to

about $1,500 per patent.
15

(3) NBS employees do not receive any special kind of

recognition for patent contributions. Patents and

publications are considered "roughly equal" when used

for purposes of performance evaluation.

2. NBS Inventions Summary ; The following table shows a breakdown

of the disposition of NBS employee invention disclosures for

FY-72, 73, and 74.

NBS Invention Summary

Invention Disclosures FY-72 FY- 7 3 FY-74

Assignable to the Government (funded by NBS) 11 9 21

Patent application filed 3 2 12

Published 5 4 5

No protection 3 3 4

All rights retained by inventor (license to

the Government, shop rights) 2 1 1

All rights retained by inventor (invention

is not job related) 29 8 14

Assignable to the Government (funded by

and forwarded to another agency) 8 16 8

NBS contractor disclosures 0 6 3

Unpatentable or incomplete 10_ _9 12

Total disclosures received 60 49 59
16

a. During this three-year period a total of 168 invention

disclosures were received. Of these:

(1) 50 (30%) were inventions in which NBS employees

retained all rights, and 4 (2%) were inventions

in which NBS employees retained all rights with a

license to the Government.

(2) 32 (19%) were inventions made by NBS employees who were

working on projects sponsored by another agency, and

the invention disclosure was forwarded to that agency.

(3) 9 (6%) were submitted by NBS contractors.

(4) 31 (18%) were incomplete or unpatentable.

(5) Only 41 (24%) were funded by NBS and assignable to

the Government. Patent applications were filed on

17 of these Government-owned invention.

3. NBS Contractor Inventions : On August 23, 1974, the President

issued a Statement of Government Patent Policy for inventions

made in the course of any contract with a Government agency.
17

The Statement established three categories of contracting

situations. In the first, the Government normally acquires

title to the invention; in the second, the contractor normally

acquires title; and in the third, the rights in the invention

are determined after the invention has been identified.

In the second category, when the contractor declines to file a

patent application for the invention, the Government may acquire

title to the invention. In the first and third categories,

the contractor may request greater rights in the invention

than a non-exclusive license, e.g., a limited exclusive license

or title to the invention subject to a license to the

Government. Such requests involving DoC contracts are

forwarded to the Assistant Secretary for Science and

Technology in accordance with Departmental procedures, who

applies the criteria set out in the Presidential Statement

in determining whether greater rights should be retained by

the Contractor.

During the last three fiscal years, NBS received nine invention

disclosures from its contractors. Six of the inventions submitted

by a single contractor fell in the first category, but the

contractor did not request greater rights in the inventions than

a non-exclusive license. Three of the inventions fell in the

second category and the contractors could have acquired title to
18

the invention but declined to do so. After evaluation, the NBS

Committee on Patents decided that no protection was required of

any of the inventions and all the disclosures were inactivated.

Commercial Use of NBS Inventions ; While it is not possible

to determine the overall commercial use of past NBS inventions,

it is instructive to consider cases which illustrate the

factors that appear to influence the commercial use of NBS

inventions. These factors are:

a. The potential market for the invention.

b. The amount of development needed to bring the invention

to the point of practical application.

c. The way in which the invention is made available to the

private sector (patented or published) ; if patented,

the type of licensing available.

Considering the last two factors above (presumably these

factors could be controlled to some extent by NBS) the following

three NBS inventions have been chosen to illustrate different

categories of incentives for commercial use.
19

i

(1) The Magnetic Clutch ; This invention, which was disclosed

in 1947 by Jack Rabinow, was subsequently patented by NBS

and made available in the U.S. for non-exclusive licensing .

The invention was thought to require a considerable amount

of additional development to be brought to the point of

practical application . The invention was licensed in

the U.S. , but used only in those applications where no

other device was practicable.

DoC elected to assign foreign patent rights to the

inventor, who with private financial backing filed for

patents in several foreign countries, thus making the

magnetic clutch invention available on an exclusive

licensing basis outside the United States . By the late

1950' s, Renault, Hilman, and Peugeot had purchased licenses

under the patents, and subsequently developed and used the

magnetic clutch in several models of their automobiles .

It was also used for many industrial applications.

(2) The Hydraulic Turbine Dental Drill ; In 1953 Carl Pelander

(Senior NBS instrument maker) , John Kumpula (NBS laboratory

mechanic) and Robert Nelsen (NBS Research Associate from

the American Dental Association) published a detailed

description of a contra-angle handpiece containing a small
20

turbine propelled by a high speed stream of fluid in a

closed system. This instrument had been developed to the

point of practical application at the time of publication .

Although the use of fluids as motive power for dental

rotary cutting instruments had been described in U.S.

patents going back as far as 1875, the NBS instrument

was regarded as a very significant advance in the art.

By 1958 several patent applications had been filed on

modifications of the NBS instrument, and by the mid-1960'

s

the use of hydraulic turbine contra-angle handpieces had

become wide-spread .

The Electrode-less Deposition of Nickel ; In 1950

Abner Brenner and Grace Riddell disclosed an invention

which accomplished the deposition of nickel from solution

without the use of conventional electrodes. This process

was patented by NBS and made available for non-exclusive

licensing . The process required little additional

development and could be used without major modification

of existing nickel plating equipment. Since this patent

was granted, 170 non-exclusive licenses have been issued

on the process, and the invention is being widely used.
21

( These three examples have been chosen to illustrate some of

the positive and negative results of NBS's current patent

practices. In each case the invention was eventually used.

It is difficult to estimate how many, if any, NBS inventions

have not been used because of NBS's patent practices.

CI. Findings

A. Strengths and Weaknesses in the NBS's Patent Practices

Starting from the basic assumptions that NBS should encourage

inventive activity in its laboratories, and that efforts should be

made to encourage the timely development and use of NBS inventions,

the strengths and weaknesses of current NBS invention and patent

practices are summarized as follows:

1. Strengths ; The investigations of the Committee support the

contention that inventive activity within NBS compares well

with that of other technical organizations in the Government.

a. While invention disclosure and patenting can be important

mechanisms for transferring technology and obtaining

commercial utilization of innovative NBS research results,

there are other important mechanisms which are being used

effectively for the same purpose.
22

b. NBS scientists and engineers, in the course of their work,

often help develop innovative technical solutions for

technical problems which are then promoted through papers

and talks and by demonstrations to 'visitors—often without

an apparent need to determine whether or not the technical

solution qualifies as a patentable invention. This

situation may result in fewer NBS invention disclosures

that might be made if all NBS technical outputs were

carefully screened for possible inventive concepts.

c. The fact that non-exclusive licenses have been issued

on a fair number (33) of NBS's patents may indicate

that a manufacturer can be encouraged to market an

item embodying an NBS invention because he is assured

that the Government, and not someone else, holds the

patent on the invention.

2. Weaknesses : The weaknesses of the current patent program

at NBS appear to be due in part to problems inherent to the

awkward position of Government agencies in the U.S. patent

system, and in part to the relatively non-aggressive posture

NBS has taken toward encouraging inventive activity and

invention disclosure on the part of its employees, and toward

encouraging the timely development and use of NBS inventions

in the private sector.
23

No employee awards are given for invention disclosures or

patent applications, and there has been no systematic

effort to recognize NBS inventors whose inventions have

been used in industry.

In cases where significant private investment is needed

to bring NBS inventions to the point of practical

application, NBS has no effective way to encourage such

investment. The current practice of licensing NBS patents

on a non-exclusive basis discourages private investment in

these cases. In the absence of private sector incentives

to undertake such developmental work the question of whether

to publish or patent an NBS invention becomes a question

of how best to protect the Government and the general

public from paying royalties to someone who is not the

first inventor. If this defensive strategy is the primary

NBS strategy, NBS's patent practices are not consistent

with the general NBS goal to promote the transfer of

inventive technology from the public to the private

sector.

The method currently used to determine whether NBS inventions

should be patented or published requires that the NBS

Committee on Patents make judgements concerning the

potential commercial success of an invention. Such

judgements are very difficult to make within the NBS '
24

environment because the Committee lacks detailed knowledge

of the state of the industrial art in which the invention

might be used.

III. Recommendations

A. The Basic Premise

The public interest in a dynamic and efficient economy requires

that efforts be made to encourage inventive and innovative activity

among NBS scientists and engineers, and to encourage the timely

development and use of NBS inventions.

Recommendation 1 . Under the provision of Chapter 45 of Title 5

of the U.S. Code, and Section 2.04.b of the DoC Administrative

Order 202-451, concerning "Incentive Awards Programs," NBS

should establish an Inventor Award Program to improve the

climate for inventive activity and encourage invention disclosure

by its employees. It is recommended that cash awards of $100

be given to NBS inventors for each invention disclosure that

is assignable to NBS and is recommended for publication or

patent application by the NBS Committee on Patents; this award

should be given to the inventor when a patent application is

filed or when the publication appears. Further, it is recommended

that NBS establish a special award of up to $25,000 that may be

granted to an NBS employee when it is determined that his

invention has made an outstanding contribution to society.
Recommendation 1 seeks to change the relatively passive position

now taken by NBS management toward employee inventiveness, to an

active and aggressive position reflecting a commitment to

encourage inventive activity and invention disclosure. The

recommended awards for invention disclosure via patent applications

or publication are similar to those given by NASA. The proposed

award to recognize inventors whose inventions have made outstanding

contributions to society is similar to an award now being considered

by NBS management (Attachment 1: Draft memorandum from the Director

to John Will proposing an NBS Award to Recognize Superior

Achievement in the Functional Application of Technology, particularly with regard to inventions and patents). However, this

report recommends a higher limit for the cash award.

Recommendation 2 . In cases where the NBS Committee on

Patents determines that an NBS employee invention is directly

related to an NBS mission, and that the invention requires

further development to demonstrate its practical application,

the Committee should report these conclusions to the appropriate

NBS Institute Director so that further development is encouraged.
26

Recommendation 3 . NBS management should continue its efforts

to assist the Department of Commerce in its efforts to obtain

authority to grant exclusive licenses on NBS patents in cases

where it is deemed in the public interest to create added

incentive for private investment to facilitate further

development and marketing of such inventions.

Pending court actions may eliminate the need for NBS action on

Recommendation 3 if the Government is successful in its appeal

to the District Court's ruling against GSA's implementation of

the Presidential Policy Statement granting exclusive licensing

authority to Heads of departments and agencies. If the Government

looses its appeal, NBS should encourage and assist DoC in its

efforts to obtain statutory authority to grant exclusive licenses

on department patents. Exclusive licensing should not be regarded

as a cure-all for the NBS patent program, but rather as an added

option to be used when necessary to promote the use of NBS

inventions .

Recommendation 4 . The criteria presently used by the NBS

Committee on Patents to determine whether NBS inventions

should be published or patented (Section E, Item 1) should

be considered for revision as a seperate undertaking, taking
into account the relative merits of patenting and publication

as means for protecting NBS inventions, and for helping to

promote their commercial use. Consideration should be given

to: the economic potential of the invention; the amount of

further development needed to bring the invention to the point

of practical application; and to the possibility that limited

exclusive licensing may become available and whether or not

such licensing will be a necessary incentive for the investment

of private risk capital to bring the invention to the market

place.

Recommendations 2, 3, and 4 reflect the view that both patenting

and publication are adequate disclosure modes for those NBS

inventions that can be easily used in the private sector. The

problem comes when an NBS invention requires further development

that investors in the private sector are reluctant to undertake

without the protection of exclusive license. The proposed solutions

reduce this problem either by providing an opportunity for the

development of such inventions by NBS, or by providing incentives

for the private sector to undertake such development via limited

exclusive licensing.

Recommendation 5 . NBS should strengthen its program to

disseminate information about NBS inventions to potential

users. Such a program should include:
28

1. Continued public announcement of all NBS patents and

patent applications in cooperation with the National

Technical Information Service (NTIS) of the Department

of Commerce; and, publication of brief descriptions of

NBS inventions in NBS Technical Notes.

2. Additional promotional activities for NBS inventions

selected to receive special emphasis. Such activities

might include invitational conferences, the preparation

of special displays for trade conventions, or offer of

technical assistance, and could be undertaken in

cooperation with NTIS when appropriate.

IV. Estimated Workload Increases and Implementation Costs:

A. Estimated Workload Increases

Implementation of the recommendations of this report would be

expected to result in an increase in total workload spread over

several existing NBS organizational units. Added functions would

include
29

i

i

Office of the Legal Adviser

(1) Monitor and provide legal advice concerning pending court

actions regarding exclusive licensing of government-owned

patents

.

(2) Eventual processing of exclusive license applications , (if

exclusive licensing becomes available) probably in

accordance with GSA regulations.

i

NBS Committee on Patents

(1) Participate in the review and revision of the criteria

used for determining when NBS inventions should be

published or patented.

(2) Review and recommend action on nominations for special

invention awards.

(3) Recommend further NBS development of selected NBS

employee inventions to the Director.

Incentive Awards Program

(1) Administer automatic Inventor Awards Program.

(2) Administer Special Inventor Awards Program.

Office of Information Programs

(1) Administer NBS invention information activities.
30

An effective award program could be expected to increase the number

of NBS invention disclosures. Estimating that the number of

disclosures per 100 scientists and engineers would increase from

approximately 3.7 to 5.0 (this estimate is based on the data in

Table 1 showing other agency experience with employee invention

disclosures) , the number of NBS invention disclosures might be

expected to increase from an average of 60 per year to approximately 80 per year.

Estimated Implementation Costs

1. Current Costs ; The current annual direct cost of NBS's

invention and patent program, including the staff of the Office

of the Legal Adviser (Patent Adviser, GS-15; Patent Agent,

GS-13; and Secretary, GS-4) and its contracted legal services,

is approximately $75K. Indirect costs associated with the

operation of the NBS Committee on Patents are on the order

of four professional man-months per year (estimated at $12K)

giving an estimated total of $87K.

2. Additional Direct Costs:

a. Patent Processing : Assuming that the practice of

contracting for the preparation of applications will

continue, and that the number of NBS patent applications
31

will increase in direct proportion to the estimated

increase for invention disclosures (about 30%) , the

added direct cost at $1,500 per patent for 5 additional

patents per year is $7,500.

b. Invention Awards ; At the present time about 24 invention

disclosures assignable to the Government are received

each year. (See the chart in paragraph I.E. 2. above.)

Assuming that there will be an increase of 30% in

disclosures, about 30 inventions will be received. If

80% of these are protected by patenting or publication

and are therefore eligible for the $100 award, the

automatic award program would cost about $2,400. Adding

$5K per year for special inventor awards, gives a total

of $7,400.

Thus, the estimated toal direct cost increase is estimated

at $14,900 per year.

USC0MM-NBS-DC

ATTACHMENT 1

DRAFT

To : John Will

Director of Personnel

Through: Betsy Ancker-Johnson , Ph.D.

Assistant Secretary for S & T

From: Richard W. Roberts

Director

Subject

Proposed NBS Award to Recognize Superior Achievement in the

Functional Application of Technology, particularly with

regard to invention and patents

This is to recommend that the Director of the National Bureau of Standards

be authorized to establish, approve, and present an "Applied Technology

Award" to recognize superior achievement in the functional application of

technology. The award, which may be granted once each year to NBS

employee (s), will include a plaque and a honorarium up to $1500.

The purpose of the award is to afford tangible recognition for superior

achievement in the functional application of technology by employees of the

National Bureau of Standards, and thereby to encourage the creative,

practical application of existing technology through invention, innovation

and patents.

Furthermore, the award will complement the NBS Incentive Awards Program

since awards are presently established to recognize research contributions

(The Stratton Award) , the development of meaningful and significant

M. standards of practice in the measurement field (The Rosa Award), and

achievements by non-professional supporting services personnel (The

Crittenden Award)
2

The "Applied Technology Award" will provide recognition for a

significant contribution to science, engineering, or some area within

the sphere of activity of the National Bureau of Standards as determined

by the impact or potential impact of the contribution on society.

Nominations may be made by Associate Directors, Division Chiefs, and

other senior staff members. Nominations will be called for by the

Personnel Division in the usual way. To assist in reviewing nominations,

the Director may call upon specialists at the Bureau oj: consultants from

outside the Bureau. Final selection of recipients will be made by the

Director

As indicated in the enclosed letter from Dr. Harris, funding for the

award will initially be provided through a $5,000 gift, However, it is

anticipated that the award will be a part of the continuing Incentive

Awards Program and future funding will be provided by the National Bureau

of Standards from its own funds. It is intended also that the award

will be given no more often than yearly, and that no award will be made

if the submissions do not warrant it.

Enclosure

x " CONCUR:

Betsy Ancker -Johnson, Ph,D. Date
NBS-114A (REV. 7-73)

U.S. DEPT. OF COMM.

BIBLIOGRAPHIC DATA

SHEET

1. PUBLICATION OR REPORT NO.

NBSIR 76-1006

2. Gov't Accession

No.

3. Recipient's Accession No.

4. TITLE AND SUBTITLE

Report of the Ad Hoc Committee on NBS Inventions and Patent

Programs

5. Publication Date

March 1976

6. Performing Organization Code

7. author(S) F. K. Willenbrock,

Ad Hoc Committee on NBS Patent Proarams. Chairman

8. Performing Organ. Report No. NBSIR 76-1006

9. PERFORMING ORGANIZATION NAME AND ApDRESS

NATIONAL BUREAU OF STANDARDS

DEPARTMENT OF COMMERCE

WASHINGTON. D.C. 20234

10. Project/Task/Work Unit No.

1 1. Contract/Grant No.

12. Sponsoring Organization Name and Complete Address (Street, City, State, ZIP)

National Bureau of Standards

Department of Commerce

Washington, D.C. 20234

13. Type of Report & Period

Covered

Final

14. Sponsoring Agency ('ode

15. SUPPLEMENTARY NOTES

16. ABSTRACT (A 200-word or less (actual summary of most significant information. If document includes a significant

bibliography or literature survey, mention it here.)

An ad hoc Committee was established in June of 1974 to study NBS inventions and

patents, and to determine what was needed to create a climate among NBS

professional staff which would encourage innovative activity, and the disclosure

of inventions. The Committee consisted of Arthur McCoubrey, Martin Greenspan,

Ralph Barra, Claude Gravatt, David Robbins, Alan Farrar, and Karl Willenbrock,

Chairman. The Committee was assisted by Peter Urbach, Deputy Director of NTIS;

and Lawrence Eicher. This report contains the findings and recommendations of

the ad hoc Committee.

17. KEY WORDS (six to twelve entries; alphabetical order; capitalize only the first letter of the first key word unless a proper name; separated by semicolons)

Government patent policy; Government-owned inventions; Inventions; National

Bureau of Standards; Patents

18. AVAILABILITY p""1 Unlimited

[TFor Official Distribution. Do Not Release to NTIS

I

1 Order From Sup. of Doc, U.S. Government Printing Office

Washington, D.C. 20402, SD Cat. No. CH

I ! Order From National Technical Information Service (NTIS)

Springfield, Virginia 22151

19. SECURITY CLASS

(THIS REPORT)

UNCLASSIFIED

20. SECURITY CLASS

(THIS PAGE)

UNCLASSIFIED

21. NO. OF PAGES

22. Price

USCOMM-DC 29042-P74