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~~~~~~~~~~~~~~~~ ................ .. 
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REF ID:A10461B 

DEPARTMENT OF THE ARMY 

OFFICE OF THE .JUDGE ADVOCATE GENERAL 

WASHINGTON 25, D. C. 

JUL 21.1963 

SUBJECT: Part II of Final Report of Armed Services Patent 

Policy Review ~oard 

TO: National Security Agency 

Washington 25, D. C. 

ATTN: Mr. Henry B. Stauffer, NSA 3024 

Pursuant to your telephonic request of 20 July 1953 

there is inclosed a copy of Part II of the subject report. 

It is requested that the report be treated as' thoufl it 

cal'.r>ied a military classif'ication of "Confidential and 

not be disclosed to pel:'sons other than those of your 

agency concerned with patent and related mattel:'s. 

FOR THE JUDGE ADVOCATE GENERAL: J 

1 Incl: 

Cy of Pt II 

or subj rpt. 

-

/G;,~~ 

~---~~~ WESTERMAN 

Major, JAGO . Chief, Patent~ Divfsion 

. \ 

·-
\ 

REF ID:A10461B \ 

FINAL REPORT 

PART II 

ARMED SERVICES 

PATENT POLICY REVIEW BOARD ------ ------ __ ...,___ -----

4 September 1952 
REF ID:A10461B 

Froms Armed Services Patent Policy Review Board 

To: Secretary 0£ the Army 

Secretary 0£ the Navy 

Secretary of the Air Force 

1. There is transmitted herewith Part II of the Report of the 

Patent Policy Review Board. This Part covers, 

Patent policy relating to the division of 

patent rights as between the Armed Services 

and its employees. 

2. Part II completes the Report. 

~aaaaad9ZJ MAJOR GENERAL E.M. BRANNON 
REF ID:A10461B 

TABLE OF CONTENTS 

Page 

RICOMMENDATIONS ••••••••.•••••••••••••.•••••••••••••.•••••••••••••••• I 

PART II - DIVISION OF RIGHTS IN AND TO INVENTIONS MADE BY GO~ .ErJil>WmES ••••••••••••••••••••••••• • • • • • • • • • • • • • l 

SECTION I - JUDICIAL AND LEGISLATIVE HISTORY•••••••••••••••••••••• 1 

JUDICIAL HISTORY•••••••••••••••••••••••••••••••••••••• 1 

LEGISLATIVE HISTORY••••••••••••••••••••••••••••••••••• 7 

ACT OF 1883 ••••••••••••••••••••••••••••••••••••••••• 7 

ACT OF 1870 (35 USC 68) ••.•••••••••••••••••••••••••• 8 

TENNESSEE VALLEY AUTHORITY ACT (16 USC 831 d(i)).... 8 

NATIONAL SCIENCE FOUNDATION ACT OF 1950 

(42 USC 1871)........... 9 

ACT OF 1910 (28 USC 1498), AS AMENDED BY P. L. 582, 

82nd CONGRESS ••••••••••• 10 

SECTION II - ARMED SERVICES PATENT POLICY PRIOR TO EXECUTIVE 

ORDER 10096 ••••••••••••• 13 

SECTION III - PRESENT POLICY UNDER EXECUTIVE ORD~R 10096 •••••••••• 18 

HISTORY OF ORDER•••••••••••••••••••••••••••••••••••• 18 

EXECUTIVE ORDER 10096 ••••••••••••••••••••••••••••••• 26 

THE POLIC! IS VAGUE AND INDEFINITE •••••••••••••••• 27 

THE ORDER IS BROADER THAN INDUSTRIAL PRACTICES •••• 29 

THE ORDER DESTROY' S ''INCENTIVE" • • • • • • • • • • • • • • • • • • • • 30 

THE ORDER PREVEi'ITS RETENTION OR HIRING OF 

COMPETENT PERSONNEL ••••• 34 

INCREASED GOVERNMENT COSTS•••••••••••••••••••••••• 42 

THE GOVERNMENT PATENTS BOARD IS NOT A BOARD ••••••• 44 

SECTION IV - AWARDS SYSTEM •••••••••••••••••••••••••••••••••••••••• 47 

INDUSTRY PRACTICE•••••••••••••••••••••••••••••••••••• 47 

PROPOSED LEGISLATION (H.R. 7316) ••••••••••••••••••••• 50 

SECTION V - OPINION AND RECOMMENDATIONS ••••••••••••••••••••••••••• 53 

i 
APPENDIX 

G 

N 

REF ID:A10461B 

APPENDICES 

TITLE 

Executive Order 10096 

Government Patents Board Report of 

11A Proposed Government Incentive Awards 

and Rewards Program With Respect to 

Government Fmployees" 

ii 

55 

(not 

duplicated} 
REF ID:A10461B 

RECOMMENDATIONS OF THE ARMED SERVICES PATENT POLICY REVIEW BOARD 

See Report 

Page The Boa.rd recommends that: 

.$3 (1) THAT THI PRESIDENT BE REQUESTED TO EXEMPT THE ARMED 

SERVICES FROM THE POLICY PROVISIONS OF EXECUTIVE ORDER 

10096; 

.$3 ( 2) THAT THE FOLLOWING POLICY BE ESTABLISHED FOR THE 

ARMED SERVICES: 

THE FOLLOWING POLICY SHALL GOVERN THE DIVISION OF RIGHTS 

IN AND TO INVENTIONS MADE BY EMPLOYEES OF THE DEPARTMENT 

OF DEFENSE: 

(i) WHEN AN EMPLOYEE'S EMPLOYMENT IS IN RESEARCH AND 

DEVELOPMENT 

(a) TITLE TO ANY INVENTION MADE BY SUCH 

EMPLOYEE IN CONNECTION WITH PERFORMING 

HIS ASSIGNED ACTIVITY AND WHICH IS 

DIRECTLY RELATID TO THE SUBJECT MATTER 

THEREOF SHALL BE IN THE GOVERNMENT: 

(b) TITLE TO ANY INVENTION MADE BY SUCH' 

EMPLOYEE NOT WITHIN HIS ASSIGN.ED ACTIVITIES 

OR NOT DIRECTLY RELATED THERETO SHALL EE IN 

THE EMPLOYE}R~ SUBJECT TO GRANTING TO THE 

GOVERNMENT AN IRREVOCABLE, ROYALTY .FREE, 

WORLD-WIDE LICENSE IN AND TO SAID INVENTION 

"WHEN THE INVENTION IS MADE ON GOVERNMENT TIME 

OR WITH THE USE OF GOVERNMENT MONEY, FACILITIES, 

MATERIAL OR OTHER GOVERNMENT PERSONNEL. 

(ii) WHEN AN EMPLOYEE'S EMPLOYMENT IS NOT IN 

RESEARCH AND DEVELOPMENT 

(a) TITLE TO ANY INVENTION MADE BY 

SUCH EMPLOYEE SHALL REMAIN IN SUCH EMPLOYEE, 

SUBJECT TO THE GRANTING TO THE GOVERNMENT AN 

IRREVOCABLE, ROYALTY FREE, WORLD-WIDE LICENSE 

IN AND TO SAID INVENTION WHEN THE INVENTION IS 

MADE ON GOVERNMENT TIME OR WITH THE USE OF 

GOVERNMENT MONEY, FACILITIES, MATERIAL OR 

OTHER GOVERNMENT PKRSONNEL. 

I . 
See Report 

Page 

REF ID:A10461B 

(iii) EXCEPT AS PROVIDED ABOVE 

(a) TITLE TO AN INVENTION MADE BY ANY 

»IPLOYEE SHALL BE IN THE EMPLOYEE, SUBJECT TO NO RIGHTS IN THE GOVERNMENT. 

THE SECRETARY OF EACH DEPARTMENT OF THE ARMED SERVICES SHALL 

PROMULGATE R,ULES AND REGULATIONS FOR ADMINISTERING THE ABOVE 

POLICY. 

54 (3) THAT AWARDS LEGISLATION SIMILAR TO I!. R •. 7316 BE INCLUDED 

IN THE DEPARTMENT OF DEFENSE LEGISLATIV! PROGRAM. 

II 
? ;:!.! • 

REF ID:A10461B 

PART II 

!DIVISION OF RIGHTS IN AND TO 

INVENTIONS MADE BY GOVERNMENT EMPLOYEES 

SECTION I 

JUDICIAL AND LEGISLATIVE HISTORY 

The present policy for the division of rights in and to inventions of 

Government employees is set .forth in Executive Order 10096 (Appendix G) 

which was issued on 23 January 1950. Before considering it, a review of 

the Judicial and Legislative history o.f the policy will aid in an understanding of the problem. 

JUDICIAL HISTORY 

The question of the proper disposition of rights as between the Government and its employees to inventions of the latter is an old one. It has 

been repeatedly raised in the courts and before the Congress for almost a 

century. 

The rules governing the disposition of rights were clearly defined in 

1933 by the Supreme Court, in the case of the United States vs. Dubilier 

Condenser Corporation, (289 U. s. 178), herein referred to as the Dubilier 

' C~se. In any instance where the Congress considered a ~fferent set of /z/ ~es necessary it enacted legislation to that effect.1) 2) 

In the Dublier Case, the Supreme Court enunicated a guidi~g set or 

equitable principles, and there is no dispute between the AGR3J and the 

various Government departments as to what those principles are. The AGR 

states them on page 135, Vol. III, as follows: 

"The mere fact that an inventor was employed by the 

Federal Government at the time he conceived an invention 

or reduced it to practice does not give the United States 

any interest in the invention or in a patent issued thereon. 

But like the private employer, the Government may obtain 

certain rights in the invention of its employee because of 

the circumstances in which it was made. These rights may 

consist either of equitable ownership or of a shop right (a 

free license) to use the iIIVention. tr 

The above doctrine was not new in 1933. It was first suggested by 

the Supreme Court in 1870, clearly established by the Court in Solomons 

vs. u. s., (137 US 342, 346), in 1890 and merely restated in the Dubilier 

Case. 

- - - - - - - - - - - - - - - - - - - ~ - - - - - 1) TVA Act of 1933, (16 USC 83ld(i)) 

2) National Science Foundation Act of 1950, (42 USC 1861-1875) 

3) Attorney General's Report of 1947 

1 
REF ID:A10461B 

In Solomons vs. United States, (137 u. s. 342, 346), it was said: 

"The government has no more power to approp:riate a 

man1 s property invested in a patent than it has to take 

his property invested in real estate; nor does the mere 

.f'act that an inventor is at the time of his invention 

in the employ or the government transfer to it any title 

to, or interest in it. An employee, performing all the 

duties assigned to him in his department or service, may 

exercise his inventive faculties in any direction he 

chooses, with the assurance that whatever invention he 

mEey" thus conceive and perfect is his individual property. 

There is no difference between the govermnent and any 

other employer in this respect." 

The Government, when it brought its action against Dubilier, recognized the existing laws, for the Court pointed out: 

"When the United States filed its bills it recognized 

the law as heretofore declared; realized that it must 

like any other employer, if it desired an assignment of 

the respondent's rights, prove a contractual obligation 

on the part of Lowell and Dunmore to assign the patents 

to the Government." (Page 193) 

Arter emphasizing that the Government was requesting the Court to 

force an assignment, even though it was shown that the employees were 

not assigned to devise or invent, the Court said: 

"The Government's position in reality is, and must be, 

that a public policy, to be declared by a court, forbids 

one employed by the United States, for scientific research, 

to obtain a patent for what he invents, though neither the 

Constitution nor any statute so declares.n (Page 197) 

Thereafter the Court reviewed the repeated attempts to have legislation enacted to change the law• One :recommendation was to have the 

law make the express terms of employment into a contract whereby any 

patent application made or patent granted for an invention discovered 

or developed during the period of Government service and incident to 

the line of official duties should, upon demand of a special board, be 

assigned by the employee to an agent of the Government. The Court concluded that: 

"Congress has refrained .from imposing upon Government 

servants a contract obligation of the sort above described." 

(Page 208) 

2 
REF ID:A10461B 

Nevertheless)the AGR argued that the heads of departments have authority 

under (5 USC 22)1 to issue regulations compelling employees to assign 

their inventions to the Government ev·en under circumstances in which the 

Supreme Court has only recognized a shop right or license to exist. 

In the Dubilier Case the Court mentioned the attempts of Government 

departments to impose obligations upon its employees by means of regulations but as the case before the Court did not involve such a.regulation 

it saidr 

"It is unnecessary to consider whether the various departments have power to impose such a contract upon employees 

without authorization by act of Congress. The question is 

more difficult under our form of government than under that 

of Great Britain, where such departmental regulations seem 

to settle the matter.• (Page 208) 

But the Court further added: 

ftit is suggested that the election rests with the 

authoritative officers of the Government. Under what 

power, express or implied, may such officers, by administrative fiat,, determine the nature and extent of 

rights exercised Under a charter granted a patentee 

pursuant to constitutional and legislative provisions? 

Apart f'rom the fact that express authority is nowhere 

to be found, the question arises, who are the authoritative officers whose determination shall bind the 

United states and the patentee? The Government's position comes to this - that the courts may not reexamine 

the exercise of an authority by some officer, not named1 

purporting to deprive the patentee of the rights conferred upon him by law. Nothing woul.d be settled by such 

a holding, except that the determination of the reciprocal 

rights and obligations of the Government and its employee 

as respects inventions are to be adjudicated, without review, by an unspecified department head or bureau chief. 

Hitherto both the executive and the legislative branches 

of the Government have concurred in what we consider the 

correct view, - that any such declaration of policy must 

come .from Congress and that no power to declare it is 

vested in a:amiiiistrative officers." CPPo 208-209) (Emphasis 

ours) 

1) (5 USC 22) - Departmental regulations. The head of each department is 

authorized to prescribe regulations, not inconsistent with law, for the 

government of his department, the conduct of its officers and clerks, the 

distribution and performance of its business, and the custody, use, and 

preservation of the records, papers, and property appertaining to it. 

3 
REF ID:A10461B 

The only Government agencies which had established a set or rules 

different from.those promulgated by the Supreme Court were the Bureau or 

Standards and the Department of the Interioro The former doubted the 

legality of its practice o.t requiring employees to assign0 (AGR, Vol. II, 

p. 99) The latter admitted it had title to over one hundred patents or 

applications to which the Department•s 

•• * * * employees had been personally entitled under 

existing legislation and Court decisions·***" 

(AGR, Vol. II, Po 195) (Emphasis ours) 

Prior to 1933 the Executive Branch of the Government had always 

recognized that the establishment of patent policy so rar as the rights 

or Government employees were concerned was a matter for the Congress. 

The Court sums up this history (PPo 205-207) as follows: 

"The executive departments have advocated legislation 

regulating the taking of patents by government employees 

and the administration by government agencies of the 

patents so obtained. In 1919 and 1920 a bill sponsored 

by the Interior Department was introduced. It provided 

for the voluntary assigmnent or license by any government 

employee, to the Federal Trade Commission, of a patent 

applied £or by him, and the licensing of manufacturers by 

the Commission, the license fees to be paid into the Treasury and such part of them as the President might deem equitable to be turned over to the patentee. In the hearings and 

reports upon this measure stress was laid not only upon the 

fact that action by an employee thereunder would be voluntary, but that the inventor would be protected ~t least to 

some extent in his private right of exclusiono It was recognized ·th~t the Government could not compel an assignment, 

was incapable of ·talcing such assignment or administering the 

patent, and that it had shop-rights in a patent perfected by 

the use of government material and in govermnent working time. 

Nothing contained in the bill itself' or in the hearings or 

reports indicates any intent to change the existing and well 

understood rights of government employees who obtain patents 

f'or their inventions made while in the serviceo The measure 

failed of passage. 

"In 1923 the P~esident sent to the CongI"ess the report of 

an interdepartmental patents board created by executive order 

to study the question of pa~~μts within the government service 

and to recormnend regulations establishing a policy to be followed in respect thereof0 The'report adverted to the fact 

that in the absence of a contract providing otherwise a patent 

taken out by a government employee, and any invention developed 

by one in the public service, is the sole property of the 

inventoro The cOlllI!littee recommended strongly against publie 

dedication of such an invention, saying that this in effect 
- • 

REF ID:A10461B 

voids a patent, and, if this were not so, 1 there is little 

incentive for anyone to take up a patent and spend time, 

effort, and money : • • on its commercial development without 

at least some measure of protection against others free to take 

the patent as developed by him and compete in its use. In such 

a case one of the chief objects of the patent law would be 

defeated.• In full accord is the statement on behalf of the 

Department of the Interior in a memorandum furnished with 

respect to the bill introduced in 1919. 

"With respect to a policy of permitting the patentee to 

take a patent and control it in his own interest (subject, ~f 

course, to the Government's right or use, if any) the committee 

said: 

' * * * it must not be lost sight of that in 

general it is the constitutional right of every 

patentee to exploit his patent as he may desire, 

however expedient it may appear to endeavor to 

modify this right in the interest of the public 

when the patentee is in the Government service,' 

"Concerning a requirement that all patents obtained by 

government employees be assigned to the United States or its 

agent, the committee said: 

' * * * it would, on the one hand, render 

difficult securing the best sort of technical men 

for the' service and, on the other, would influence 

technical workers to resign in order to exploit 

inventions which they might evolve and suppress 

while still in the service. There has al.ways been 

more or less of a tendency for able men in the 

service to do this, particularly in view of the 

comparative meagerness of Government salaries; thus 

the Government has suffered loss among its most 

capable class of workers.' 

"The committee recommended legislation to create an Interdepartmental Patents Board; and further that the law make. it 

part of the express terms of emp!oyment, having the effect 

of a contract, that ·any patent application made or patent 

gra.flted f-0r an invention discovered or developed during the 

period of government service and incident to the line of 

official duties, which in the judgment ·of the board should, 

in the interest or the national defense, or otherwise in 

the public interest,be controlled by the Government, should 

upon demand by the board be assigned by the employee to 

an agent of the Government. The recommended measures were 

not adopted." (Emphasis ours 
REF ID:A10461B 

~cept for the statutes mentioned under Legislative History, the 

Congress hRR not changed ·the Law. As pointed out subsequently in the 

discussion of the 1910 Act, the last Congress again expressed its 

intent that the Dubilier Case is still controlling. 

The reluctance of. the Courts and Congress to change the Law may be 

best explained by one more quote from the Dubilier Case (pp. 188-190): 

"The reluctance of courts to imply or infer an 

agreement by the employee to assign his patent is 

due to a recognition of the peculiar nature of the 

act of invention, which consists neither in finding 

out the laws of nature, nor in fruitful research as 

to the operation of natural laws, but in discovering 

how those laws may be utilized or applied for some 

beneficial purpose, by a process, a device or a • . machine. It is the result of an inventive act, the 

birth of an idea and its reduction to practice; the 

product of original thought; a concept demonstrated 

to be true by practical application or embodiment in 

tangible form. Clark Thread Co. vs. Willimantic Linen 

Co., 140 u.s. 481, 489; Symington Co. vs. National 

Castings Co., 250 U.S. 383, 386; Pyrene Mfg. Co. vs. 

Boyce, 292 Fed. 480, 481. 

"Though the mental concept is embodied or realized 

in a mechanism or a physical or chemical aggregate, 

the embodiment is not the invention and is not the 

subject of a patent. This distinction between the 

idea and its application in practice is the basis of 

the rule that employ.m.ent merely to design or to construct or to devise methods of manufacture is not the 

same as employment to invent. Recognition of the 

nature of the act of invention also defines the limits 

of the so-called shop-right, which shortly stated, is 

that where a servant, during his hours of employment, 

working with his master's materials and appliances, 

conceives and perfects an invention for which he obtains 

a patent, he must accord his master a non-exclusive 

right to practice the invention. Mcclurg vs. Kingsland, l How. 202; Solomons vs. United States, 137 

u. s. 342; Lane & Bodley Co. vs. l-0cke, 150 u. s. 193. 

This is an application of equitable principles. Since 

the servant uses his mater's time, facilities and 

materials to attai~ a concrete result, the latter is 

in equity entitled to use that which embodies his own 

proper"Jty and to duplicate it as often as he may find 

occasion·to employ similar appliances in his business. 

But the employer in such a case has no equity to demand 

a conveyance of the invention, which .is the original 

conception of the employee alone, in which the employer 

had no part. This remains the property of him who conceived it, together with the right conferred by the 

6 

.·· 
REF ID:A10461B 

patent,, to exclude aJ.lothers than the· employer from 

the accruing benefit$. These principles are settled as 

respects private employment." 

LEGISLA.TIVE HISTORY 

Prior to the AGR the Executive Branch of the Government frequently 

ref erred the present problem to the Congress,, and the Congress repeatedly 

refused to pass any overall legislation on the subject. 

The legislative history has been so well reviewed in United States 

vs. Dubilier Condenser Corporation,, 289 u. So 178,, (referred to herein as 

the Dubilier Case),, beginning at page 205,, that it is not deemed necessary 

to restate it here,, except to discuss brietly the five statutes which 

Congress has seen fit to enact relating specifically to inventions ·of 

Government employees. These are: 

(a) The Act of 3 March 1883 as amended in 1928 

(35 USC 45) 

(b) The Act of 8 July 1870 (35 use 68) 

(c) The Tennessee Valley Authority Act of 1933, 

(16 use 83ld(i)) 

(d) National Science Foundation (42 USC 1861-75) 

(e) The Act of 25 June 1910 (28 USC 1498) as 

amended in 1952 by PoL. 582, 82nd Congress. 

ACT OF 1883 

The Act of 1883 provided that when a Government employee makes an 

invention he may file an application in the United States Patent Office 

without payment of the Patent Office fees, if the proper Government 

official certifies that the invent.ion might be useful to the Government. 

If the employee does file his application under this Act then he must 

agree to grant a license to the Government for governmental use. 

The Act is purely permissive as far as Government employees are concerned. It does not require employees to file under the statute. If any 

employee does not choose to take ad.V'antage of' the· Act he may file his application in the normal manner and pay the Patent Office fees. 

When the statute was originaJ.ly enacted it included the following 

provision: 

"Provided, That the applicant in his application 

shall state that the invention described therein, 

if patented,, may be used by the Government, or any 

of its officers or employees, in the prosecution 

of work for the Goverrnnent, or by any other person 

in the United States, without payment to him of 

any royalty thereon, which stipulation shall be included in the patenton (Emphasis ours) 

7 
REF ID:A10461B 

The underscored portion of the above provision was variousl.y interpreted by the different departments of the Government. Some, including 

the Armed Services, held that it acted as a dedication of the patent to 

the public. Others held to the contrary. 14':i.nally, in Squier vs. American Tel. fl.e Tel. Co., (21 F(2d) 7b7), the district court held that a patent 

issued under t4e 1883 Act as quoted above was open to free public use. 

Arter repeated attempts to have this provision removed, the Congress 

in 1928 amended the statute to avoid dedication. As amended, the pertinent 

portion now reads: (35 use 45) 

"Provided, That the applicant in his application 

shall state that the invention described therein, 

if patented, may be manufactured and used by or for 

the.Government for governmental purposes without 

the payment to him of any royalty thereon, which 

stipulation shall be included in the patent. •

1 

At the time that the amendment was before Congress, the Congress had 

full opportunity to establish a different policy. Instead of amending 

the statute to ·avoid dedication to the public, the Congress could have 

taken away all rights of employees to their inventions. The Congress did 

not choose to do so. 

In discussing the 1928 amendment, the Supreme Court, in a footnote 

to the Dubilier Case (Page 203), again reiterated that any changes in 

the law relating to the disposition or employees* rights in their inventions Is the province of the Congress. 

ACT OF 1870 (35 USC 68) 

The Act of 1870 is the only statute that Congress has enacted barring 

specified Government employees from obtaining patents. This excludes officers and employees of the Patent Of £ice from acquiring or taking, directly or indirectly, except by inheritance or bequest, any right or interest in a patent during the period-for which they hold their appointments. 

The statute is an equitable one. It is obviously aimed at the employees of the Patent Office, not because they were Government employees, 

but because their employment in the Patent OffiQe would give them an opportunity to use their knowledge and position in a manner which might be 

inequitable or unjust to other inventors or to the Government. 

TENNESSEE VALLEY AUTHORITY ACT (16 USC 83ld(i)").. 

The Tennessee Valley Authority Act of_l933 provided: 

"That any invention or discovery made by virtue of 

o r incidental to such service by an employee of the 

Government of the United States serving under this 

section, or by any employee of the Corporation, together with any patents which may be granted thereon, 

8 
REF ID:A10461B 

shall be the sole and exclusive property or the Corpora~ 

tion, which is hereby authorized to grant such licenses 

thereunder as shall be authorized by the Board; Provided 

further, That the Board may pay to such inventor such 

sum from the income from sale of licenses as it may deem 

proper." 

This is a most interesting statute for the following reasons: 

(1) It is the one time Congress has authorized a 

Government Agency to grant licenses under Government-owned patents; and 

(2) It authorizes the inventor to share in the 

profits. 

If, as claimed by the AGR, title to an invention by an employee 

may be taken by administrative action, then the inclusion of the above 

provision in the TV~ Act was unnecessary. 

NATIONAL SCIENCE FOUNDATION ACT OF 1950 (42 USC 1871) 

The Act provides (Section 12(b)): 

"No officer or employee of the Foundation 

shall acquire, retain, or transfer any rights, 

under the patent laws of the United States or 

otherwise, in any invention which he may make 

or produce in connection with performing his 

assigned activities and which is directly related to the subject matter tfiereo!': Provided, 

however, That this subsection shill not be construed to prevent any officer or employee or the 

Foundation from executing any application for 

patent on any such invention tor the purpose of 

assigning the same to the Government or its 

nominee in accordance With such rules and regulations as the Director may establish". (Emphasis ours) 

As pointed out in Part I of this Report, there was considerable 

discussion in both the ijouse and the Senate as to what patent provisions 

should be placed in the Act. Many contended that the proposed policies 

enunciated in the Attorney General's report should be adopted but these 

recommendations were rejected. The Congress again did nothing more than 

reiterate what had long been Government policy when it enacted 12(b), ~bove. In effect this section states that an employee shall assign his 

invention to the Government only when he makes an invention ••• • 

• 

9 
REF ID:A10461B 

"In connection with performing his assigned 

activity and which is directly related to the 

subject matter thereof". 

It should be noted that two conditions are required before an employee 

of the National Science Foundation must assign his invention. First, it 

must fall within his assigned activities and second, it must pe directly 

related to the subject matter thereof. This was the rule set dawn in the 

Dubilier Case. 

THE ACT OF 1910 ~28 USC 1498, AS AMENDED BY P. L. 582, 82nd CONGRESS) 

This is one of the most important statutes with relation to Government 

patent problems. Prior to 1910 a patent owner did not have a remedy against 

the Govermn.ent for inf'ringement of his patent. By this statute the Court 

of Claims was vested with jurisdiction to hear patent cases for unauthorized ~se by the Government. In considering the Bill the Congress had before it 

the question of whether Government employees should be permitted to bring 

suit against the Government and the House Committee made specific reference 

to the equitable doctrine governing the Q:i.sposition of employees' rights in 

and to their inventions and patents as defined by the Supreme Court in 

Solomons vs. u. s. 137 USC 342 and recognized these doctrines as being the 

law. The report stated as follows: 

"The United State~ in such a case hae an implied 

license to use the patent without compensation, for 

the reason that the· inventor used the time or the money 

or the material or the United States in perfecting his 

invention. The use by the United States of such a 

patented invention without any: authority from the 

owner thereof is a lawful use under existing law, and 

we have inserted the words 1 or lawful right to use the 

same' in order to make it plain that we do not intend 

to make any change in existing law in this respect, and 

do not intend to give the owner of such a patent any 

claim against the United States for its use,n (House 

Report 1288, 6lst Congress., 2nd Sess.) 

Following the enactment of the 1910 Act the Services always took 

the viewpoint that in proper cases they could still buy an employee's 

rights but the AGR argue~ otherwise. I! the AGR is right, an employee 

would be forever debarred from recovering from the Government for use 

of his invention, even though the law, as enunciated by the Supreme 

Court and pertinent statutes established that the Government had no 

rights in the invention. 

Except fo~·two amendments which are not pertinent here, the 1910 

Act remained unchanged until the 82nd Congress. The 82nd Congress, by 

P. L. 582, amended the statutes as follows; 

10 
REF ID:A10461B 

"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled That the'rourth paragraph of section 1498 of 

title 28, United States Code, is amended' by substituting the following therefor: 

1A Government employee shall have the right 

to bring suit against the Government under this 

section except where he was in a position to 

order, influence, or induce use of the invention 

by the Government. This section shall not confer 

a right of action on any patentee or any assignee 

of such patentee with respect to any invention 

discovered or invented by a person while in the 

employment or service of the United States, where 

the invention was related to the official functions 

of the employee, in cases in which such functions 

included research and development, or in the making 

of which Government time, materials or facilities 

were used. t 

Approved July 17, 1952 

The House Report, No. 1726 (Page 3) and Senate Report, No. 1992, 

(Page 2) , state as follows: 

"In the Dubilier case (289 U.S. 178) the Supreme Court 

established that if an inventor is hired to invent or assigned to invent, title is in the employer. If he is not 

so hired or assigned and he uses the time, facilities, information, or the like of the employer, then title remains 

in the employee, but the employer has a license. In any 

other instance, full right, title, and interest remains in 

th& employee. The right to sue, pursuant to this bill, in 

large part, follows title under the present law as estab-· 

lished by the Dubilier case ·and similar decisions. If title 

is in the employee and he is not in a position to influenc& 

or reduce the use of the invention by the Government, he is 

accorded the right to bring a suit against the Government in 

the Court of Claims. 

ffThe amendment passed by the subcommittee will permit a 

Gover.nm.ant employee who makes an invention be£ore entering 

the Government service to sue on the patent covering that 

invention the same as any other patentee, except where he 

is actually in a position to induce the use of his patented 

device by the Government. It will also permit a Government 

employee who makes an invention completely outside of his 

official function to maintain a suit against the Government 

without penalizing the Government unduly by inviting the 

filing of numerous suits by the Government employee-patentees 

where the invention is made in the general line of duty. 

11 
REF ID:A10461B 

"It is recognized that Government employees sometimes make 

inventions that are wholly unrelated to their official 

functions and in the making of which neither Government 

time nor materials are used. In these cases, equity 

demands that the empl.oyee-inventor be adequately rewarded 

if his invention is used by the Govermnent." 

Here again the Congress has expressed its intent that the rules 

established in the Dubilier.case be followed. This is not ancient 

histo:ry. The Law was approved on 17 July 1952. 

SUMMARY 

The j~dicial and legislative history on the problem of the proper 

division of rights in and to inventions of Govermnent employees establishes 

the following: 

(1) Tha! the Law applicable to Government employees 

·is no different. than the Law relating to a private 

employer and employee; 

(2) That the establishment or a policy different 

from the rules enunicated by the Supreme Court is 

vested only in the Congress; 

(3) That where the Congress has deemed it necessary 

to apply different rules it has done so by specific 

legislation; and 

(4) That where the Congress has not enacted specific 

legislation it is the intent of the Congress that the 

rules in the Dubilier case be followed. 

12 
REF ID:A10461B 

SECTION II 

ARMED SERVICES PATENT POLICY PRIOR 

TO 'EXICUTIVE ORDER 10096 

Thoroughly familiar with the decisions of the Supreme Court and 

legislation on the subject, the Armed Services had followed a policy which 

it considered to be consistent :nth the rules laid down by the Supreme 

Court. 

The complexities of the problem are clearly set f'orth in the following quote from United States vs. Dubilier Condenser Corporation, (289 u.s. 

178, pp. 197-199): 

1

'The Government• s position in reality is, and 

must be, that a public policy, to be declared by 

a court!\__forb~ds one employed by the United States, 

for s~:J/lltific research, to obtain a patent for 

what he· invents, though neither the Constitution 

nor any statute so declares. 

"Where shall the courts set the limits of the 

doctrine? For, confessedly, it must be limited. 

The field of research is as broad as that of science 

itself. If the petitioner is entitled to a cancellation of the patents in this case, would it be so entitled if the employees had done their work at home, 

in their own time and with their own appliances and 

materials? What is to be said of an invention evolved 

as the result or the solution or a problem in a realm 

apart from that to which the employee is assigned by 

his official superiors? We have seen that the Bureau 

has numerous divisions. It is entirely possible that 

an employee in one division may make an invention .falling within the work of. some other division. Indeed 

this case presents that exact situation, for the inventions in question had to do with radio reception, a 

matter assigned to a group of which Dunmore and Lowell 

were not members. Did the mere fact or their employement 

by the Bureau require these employees to cede to the 

public every device they might conceive? 

nrs the doctrine to be applied only where the employment is in a bureau devoted to sceinti£ic investigation 

pro bono publico? Unless it is to be so circumscribed, 

the statements 0£ this court in United States vs. Burns, 

suprai Solomons vs. United States, supra, and Gill vs. 

United States, supra, must be held for naught. 

"Again, what are to be defined as bureaus devoted entirely to scientific research? It is common knowledge 

that many in the Department of. Agriculture conduct re13 
REF ID:A10461B 

searches and inventigations; that divisions of the War 

and Navy Departments do the like; and doubtless there 

are many other bureaus and sections in various departments of government where employees are set the task of 

solving problems all of which involve more or less of 

science. Shall the field of the scientist be distinguished 

from the art of a skilled mechanic? Is it conceivable that 

one working on a formula for a drug or an ant15eptic in the 

Department of Agriculture stands 1.n a. different class from 

a machinist in an arsenal? Is th.I'.! distinction to be that 

where the government department is, 20 to speak, a business 

department operating a business activity of the government, 

the employee has the same rights as one in private employment, 

whereas if his work be for a bureau interested more particularly in"what may be termed scientific research he is upon 

notice that ·whatever he invents in the field of activity of 

the bureau, broadly definedJ belongs to the publi~ and is 

unpatentable? Illustrations of the difficulties which would 

attend an attempt to de.fine the policy for which the Govemment contends mightl::e multiplied inde.finitely. 

"The courts ought not to declare any such policy; 

its formUiation belongs solely £0\ffie Congress. wiii permission to an employee to eiijoy patent rights 

as against all others than the Government tend to the 

improvement of the public service by attracting a 

higher class of employees? Is there in fact greater 

benefit to the people in ~ dedication to the public 

or inventions conceived by officers of government, 

than in their exploitation under patents by private 

industry? Should certain classes of invention be 

treated in one way and other classes di£f erently? 

These are not legal questions, which courts are competent to answer. They are practical questions, and 

the decision as to what will accomplish the greatest 

good for the inventor, the Government and the public 

rests with the Congress. We should not read into the 

patent laws limitations and conditions which the legislature has not expressed." (Emphasis ours) 

With such knowledge before it the policy followed by the Services, 

prior to Executive Order 10096, with respect to employees' inventions and 

patents was: 

So far as affects rights pertaining to inventions 

and patents, the status of persons in the services 

is similar to that of persons in other occupations, 

and in connection with such rights the relation bet~reen 

the Services and each person in its service, whether 

officer, enlisted person, or civilian employee (all 

referred to hereinafter as employee) is the relation 

14 
REF ID:A10461B 

between employer and employee; and the Service recognizes 

the rights of the employee in and to inventions and patents 

as established by the law pertaining to employer and 

employee, with certain exceptions incident to Government 

service. 

Those rights in each case must be determined by the 

facts in the particular case. For the purpose of illustration, 

however, there are described below certain assumed situations 

based on facts and circumstances that frequently occur, in 

which the respective rights of the parties may be c1early 

defined. 

«(a) The title to the invention and to any patent 

secured on it by the employee vests in the employer when 

An employee is directed to make or improve 

a specific device, means, method, or process, and 

in the performance of such duty he makes an 

invention direct1y bearing upon that particular 

device, means, method, or process, or 

The comple~e control of the invention is 

necessary in order for the employer to realize 

all the benefits which he anticipated would flow 

to him by the employment of the employee. 

"(b) The title to the invention and to any patent 

secured on it by the employee, including all commercial 

and foreign rights, resides in the employee, but subject 

to a license to the employer when 

An employee not assigned to duty as in (a) 

makes an invention and uses the employer's time 

or facilities or other employees in the development 

of the invention. In such case the Govermn.ent 

requires a nonexclusive, irrevocable, and unlimited 

right to make and use, and have made for the Government's use, devices embodying the invention, and to 

sell such devices as provided for by law regarding 

the sale of public property • 

. '~ (.c} The title to the invention and to any patent 

secured on it by the employee is the property of the 

employee, subject to no right of the employer when 

An employee makes an invention not w.tthin the 

circumstances defined in (a) or (b) or concerning 

which he is not otherwise obligated to the employer. 11 

15 
REF ID:A10461B 

In the belief that the Executive Branch of the Government not only is 

controlled by the statutes, but also should be guided by the interpretation 

or the law as rendered by the Supreme Court of the United States, the policy 

was established following the decision of the United States Supreme Court 

in u. s. vs. Dubilier Condenser Corporation, (289 u. s. 178). 

An examination of the rules as established by the Dubilier, and many 

other cases, shows that the extent to which an employer is entitled to 

an employee's invention is based on (1) the terms of the employment, and 

(2) the use made by the employee of the employer's time, facilities, material, etc., in making the invention. 

If an employee is initially hired to inven"B, i.e., to exercise his 

creative and inventive powers, then all inventions made within the scope 

or the employee's duties belong to the employer, regardless of when or 

how made. On the other hand, if an employee is' not initially hired to 

invent, his invention, with one exception, belongs to him, subject only 

to any implied license or shop right which may have arisen from the 

employee's use of the employer's material, time, facilities, etc. The 

exception to the second rule occurs when an employee, not initially hired 

to invent, during the course of his general employment is designated to 

invent. Then during that period he is considered as employed to invent 

and shy inventions a.rising out of the designated employment belong to the 

employer. 

Thus, if an electronic engineer is initially employed to invent, 

then all inventions he may make while so employed belong to the employer. 

However, if the same electronic engineer were hired for general employment, but during the course of his employment he is assigned to devise 

an electronic tube having certain characteristics and producing a 

desired result, the task requiring originality of thought and use or 

his inventive faculties, then while he works on this project he is employed 

to invent and any resulting inventions belong to the employer. 

SUMMARY 

It is apparent from the foregoing discussion 

(1) That the policy of the Armed Services, previous to 

Executive Order 10096, clearly followed the rules enunciated 

by the Supreme Court for making a proper division of rights 

in and to inven;tions of Government employees; 

(2) That the previous policy clearly followed the 

intent of the Congress in requiring 

(a) Assignment when the employee made the 

invention while performing his assigned activities 

and the invention is directly related to the subject 

matter thereof; 

16 
REF ID:A10461B 

(b) That the inventor retain title but gives 

to the Government a royalty-free license when the 

invention does not fall within (a) but he utilized 

Government time, materials, money or facilities in 

the making of the inventions; or 

(c) In all other instances full right, title 

and interest in the invention remain with the 

employee. 

17 
REF ID:A10461B 

~ J""' SECTION III 

.. \ ~ PRESENT POLICY UNDER. EXECUTIVE ORDER 10096 

. fo-. Despite all o:f the Judicial and Legislative History to the contrary, f \ J'b~"! Executive Order 10096 issued on ~January 1950. Its history is illuminating. 

HISTORY OF ORDER 

The order was first proposed by the Attorney General in his letter or 

11 December 1947 addressed to the Director of the Bureau or the Budget. 

T~ let~er ~t~!-.~~ except for the Navy and War Departments, the other ~agencies-riivored the order. 

~-:J.~..J.. At a meeting held at the Bureau of the Budget ~here w.as_pppo~ition .:.,J2. ~l? from ~ a~encies. The Secretary of Defense wrote as follows on 

-1.,......... narc 194 : 

"In short, although I recognize the desi;-ability of 

establishing a uniform patent policy covering inventions 

made by Federal employees, I strongly disapprove of the 

proposed Executive Order. As an alternative, I should 

like to suggest the establishment of a committee composed of representatives of the governmental departments 

and agencies whose employees, in performance of their 

duties, produce a significant number of inventions. 

This committee could consider in detail the experience 

of the various departments and agencies concerned and 

formulate solllld and workable criteria for the assignment o:f employees' inventions to the government. After 

approval by the President, these criteria could be promulgated as the policy of the administration. Such a 

committee could also consider the important need for 

arrangements to replace potential patent rights as 

incentives to enter and remain in the service of the 

Federal Government. However, it should not be concerned 

with stimulation of the exploitation of government-owned 

inventions by government-financed develo:Pment or by 

direct publicity nor with patent policies other than 

those affecting government employees. 

"I should be glad to assist in the formulation and 

work of such a committee." 

Nothing further occurred until 23 October 1949 when a substitute 

order was submitted for consideration and ten days given for reply. 

As discussed in Part I of this Report the new order ran to procurement policies as well as employee policies. The Bureau of the Budget 

did not hold any joint hearing on this order but did have a conference 

with Defense representatives following the deletion of those portions 

of the order relating to procurement. 

18 
' : 

REF ID:A10461B 

The Bureau of the Budget suggested that Defense try to work out a compromise with Justice. Efforts along this line were made and it was thought that a 

compromise had been reached. A conference was held at the office of tpe Head 

of the Patent Section of the Department of Justice on 20 January 19$0, and an 

adva.IJ,ce copy of the proposed compromise policy was submitted. On 21 January a 

letter was prepared for the signature of the Secretary of Defense for officially 

transmitting the compromise policy. The 21st of ~anuary was a Friday. The 

letter reached the Secretary of Defense on Monday 23 January but the order 

was signed the same day. -

The prepared letter was forwarded to the Secretary of Defense by the 

following memorandum from the Assistant Secretary of Defense (L & LD). 

"Jan. 211 1950 

"Memo for the Secretary 

Recommend signature of the attached letter to John Steelman. This 

represents an ei'f ort to get Steelman to consider the very real interest 

of the Dept. of Defense in a proposed government-wide patent policy, 

about to be issued, Percentagewise, Defens~ Dept. employees have filed 

82% of the total government-wide employee patent applications - so we 

think our views are entitled to serious consideration, etc. Prepared 

by Felix Larkin, and concurred in by the three services and the Research 

and Development Board. Mar)C L0va11 

The letter forwarded by the above memorandum was.add1•(JG30d to Ul!. John 

Steelman and read aa follovrat 

"Dear John: 

"THE SECREI'ARY OF DEFENSE 

Washington 

"I understand that an Executive Order entitled 'Providing for a 

Uniform Patent Policy for the GOV"ernment with Respect to Inventions 

Made by Government &nployees and for the Administration of Such 

Policy's is being forwarded to the P~esident for approval and 

signature. The Departments of the Army, Navy and Air Force object 

to this Order in its present form and recommend that I speak to 

the President about it. Since I ara informed that it is in your 

hands I thought I would pass on their arguments to you. 

"This proposed Executive Order was con~idered. more than two years 

ago and this Department suggested that a group be formed of the 

Executive agencies principally conc~~ned with employee inventions to 

formulate a.t the working level more effective and acceptable provj.oions. 

When the Order was again proposed on October 12, 1949, I made a similar 

suggestion. Under date of 19 December 1949, following a conference 

between representatives of this office and of the Bureau of the Budget, 

certain proposals for revision of the draft Order were submitted to 

the Bureau of the Budget with a statement that the Department of Dcf0nse 

would be able to operate under an Order containing those modific:it.ionn .. I understand that those modifications were transmitted to the Department 

of Justice and resulted in some modification of the eariier proposed 

Executive Order. The modifications made by the Department of Justice, 

however, do not appear to us to meet the major objection~ tihich have 

been presented to the Bureau or the Budget on various occasions. 

After further stu,dy and discussion within the Department · 19 
REF ID:A10461B 

or Defense and with a representative of the Department or 

Justice, further revisions were informally submitted to 

the Bureau of the Budget on January 13, 1950, in an 

effort to resolve differences on the major remaining 

issue, namely section 1, which sets forth the criteria 

governing assignment to the Government of title in 

employees' inventions. Since then we have continued to 

consider this matter in informal discussions and have 

prepared a further revision to replace the present 

section 1. I am attaching a copy ot this revision in 

a sincere effort to reach a form of Order that will be 

acceptable to all concerned. You will note that the 

proposed modification submitted herewith goes substantially further towards the Department of Justice 

position than the proposals previously submitted. 

11The disposition of inventions made by employees 

o.f' the Department of Defense is a matter of great 

concern to us. Some idea of the volume or such 

inventions and its relation to that of other Executive departments and agencies is given by the attached 

memorandum. With respect to this memorandum, it is 

important to note that patent applications ~e filed 

by this Department only on those inventions which, 

after rigorous examination, are determined to be of 

the most substantial value to the Government and 

shortage of patent attorneys results in the abandonment of many valuable inventions. 

''As the subject of disposi 1;.ion or employees• 

inventions is an extremely complex one, it seems desirable, in order to provide perspective, to review brie~ the current practices of the Department or 

Defense and our objections to the proposed Order in 

its present form. 

HAt present the Armed Services in determining the 

division of rights in employees• inventions follow 

the equitable principles .enunciated by the Supreme 

Court in u.s. ve. Dubilier, 289 u. s. 178. Under the 

principles of this decision, the rights acquired by employ--

era (whether Government or private industry) depend upon 

the employees' work assignment at the time the invention 

is made. If an employer assigns an employee to a task 

which envisions the making of an invention, such invention becomes the property- of the employer. If, however, 

an employee makes an invention in the course of his general employment, using his employer's time, or facilities, 

or services 0£ other employees, the employer receives a 

license to use the invention and the employee retains all 

other rights. In all '>ther cases the~ employ-ee retains 

all rights to his invention. It should be noted that, 

even where the Government receives no rights in an employee 1 s invention, the employee is prevented by law 

.20 
REF ID:A10461B 

(28 u.s.c. 1498) from br~nging suit for its use by the 

Government. 

ffSome industrial. organizations have modified the rules 

enunciated in the Dubilier decision by enter~ng into eJ11ployment agreements with thei~ employees. A recent survey indicates that about half' a group of 700 firms contacted (varying in size from those doing a g.ross business of $,501 000.00 

a year to those doing a gross business of over $Jo,ooo,ooo.oo 

a year) have adopted such agreements. ~f those firms which 

have adopted such agreements and particuJ.arly the larger 

firms, the great majority have restricted the requirement 

for agreements to employees eng~ged in research and develQpment, and to executive employees. In many instances the 

agreements of industrial firms vdth the unions limit the 

rights of the employer in the employees' inventions to a 

shop right. 

"The proposed policy goes beyond the p:i;-actices of industry. It is the opinion of the Department of Defense that 

Government employees should not be forced to accept a 

policy which is mo~e drastic than that generally follo~red 

by industry. It is true that civilian employees wh,o are 

dis-satisfied with the pol!cy may resign but members 0£ 

the Armed Services who are bound by contracts of enlis~-

ment may not resign. 

"In addition to objecting to the policy, the Order in 

its present form is objected to for the following .~easons: 

"l• The Order ~s too broad in scope in that 

it subjects to possibly arbitrary det~rmination, 

subject only to vague and extremely broad limi- t~tion, the r~ghts to inventions o! employees 

lvhose duties have no relation to research and 

development. Thus, mechanics, electricians, 

chauffeurs, clerk, charwomen, soldiers, 

sailors and air.men arc subject to this Order, 

while in industry these and other employees in 

like 9ategories are subject only to the more 

limited rules of common law. 

f

12. The Order would destroy incentive on 

the part of Goverrunent employees who1 when they come 

upon an obstacle, use their ingenuity to overccme 

same by making ipventions. Under the present system, 

the employee who uses his ingenuity and initiative 

may look forward to the possibility of financial 

reward if his invention has any commercial. possibility. If, however, bulldozer operators, mechan~ 

ics, electricians and other types of employees, fr9m 

wb,om not even industry requires aesignment 0£ inventions, must assign to the Government, their incentive 

to ~nvent will be lost. .Employees in these categories • 

21 
REF ID:A10461B 

are a fruitful source of practical inventions that 

are a result of the solutions or problems encountered 

in their work. Moreover, by acquiring t].tle to 

inventions made by non-technical Government employees, 

the Government does not receive such benefits as would 

warrant the risk of de~troying their incentives inasmuch 

as the Government °trJ operation of law receiires a license 

under their inventions. 

"3. The Order will substantially increase the 

administrative load and expenses of the Pepartment of 

Defense in that it wili require the preparation and 

submission to the Chairman of the Government Patents 

Board of reports on a large number of inventions made 

by non-research and development employees ifi.th respect 

to which the Government will not and in equity should 

not take title. Moreover, the ~rder will add a new 

Goverrnnent agency for patent administration, including 

a new board. With respect to this new board it should 

be pointed out that although more than 80 percent of 

the employee inventions reported by Government agencies 

a.re made by ~rmed Services employees, the Army, Navy 

and Air Force are not represented on the Government 

Patents Board. There is but one member for t.he Department of Defense on a board of ten members. 

1

• A.s stated at the outset of this letter, we have consistently opposed the proposals thus far made for an Executive 

Order on Government employee patent policy. 'tve have not. done 

so in a spirit of obstructionism, but, rather, have repeatedly 

sought to obtain a workable solution to the problem which we 

believed could be arrived at by consideration or representatives 

of interested agencies. In the absence of such inter-agency 

discussions, the military departments have devoted considerable 

study to the problem involved in this Order. In this connection, 

I should like to rAfer you to a report on the Navy Patent 

Policy, dated 23 June 1948, which, I am informed, has received 

the concurrence of the Dep~tments of the Arnzy- and Air Force 

and .has been forwarded to the Bureau of the Budget. While 

the enclosed suggested revision of section 1 goes considerably 

further than the policies set forth in that report, it is 

acceptable to the militBJ;'y departments as a compromise and 

in my opinion it is a reasonable compromise under which 

the Department of Defense could operate. I hope that you 

will give it careful consideration. 

Inclosures 

The Honorable John R. Steel.man 

The Assistant to the President 

The White House 

Sincerely yours," 

cc: Honorable Frank Pace, Jr. 

~Di~ec~or! B~e~u ~f ~he-~ge~ 

22 

..... -
REF ID:A10461B 

The first enclosure to the above letter was the suggested 

compromise policy mentioned in the last paragraph of the 

Secretary of Defense letter and reads as followsi 

"Amendment to Section 1 of Proposed 

Executive Order Relating to Inventions of 

Government &nployees 

"l. The f'ollowing basic policy is established f'or all 

Goverrunent agencies with respect to inventions here~.fte+ made 

by any Government employees 

(a) The title to the invention and to any patent 

secured on it vests in the Government when an employee 

(1) is employed to invent and makes an invention within the scope of the defined employmentJ or 

(2) is assigned to a task having as its object 

the devising, the improving or the perfecting of 

methods or means for accomplishing a prescribed 

result and makes an invention or reduces one to practice within the scope of the assignment; or 

(3) is employed to supervise, direct, coordinate, 

review, or take off'icial action with reference to the 

work of those falling within the foregoing categories 

and makes an invention relating to such work. 

• (b) The title to the invention and to any patent 

secured on it resides in the employee but subject to 

a non-exclusive, irrevocable, royalty-free license to 

the Government for all governmental purposes the world 

over when an employee i·s not employed as in (a) but 

(1) makes an invention within the scope 

of his general employment; or 

(2) makes an invention outside the scope 

of his general employment but utilizing Government time, facilities, materials, or services 

during working hours of other Goverrunent employees. 

(c) The title to the invention and to any patent 

secured on it is the property of the employee subject 

to no right of the Government when an employee makes 

an invention not within the circumstances defined in 

(a) or (b). 

"2. (a,) It shall be presumed that all employees connected with research, engineering, design or development 

fall within l(a) subject to a showing by them that they fall 

23 
REF ID:A10461B 

within l(b) or l(c), and also subject to the approval of the 

Chairman of the Government Patents Board. 

(b) It shall be presumed that employees other than 

those defined in 2 (a) fall within l(b) subject to a showing 

by the Government that they fall within l(a) or a showing by 

them that they fall within 1( c). The Chairman may, upon his 

request, review any case falling within this category.ff 

Also included with the Secretary of Defense letter was 

a memorandum prepared by the Chief of the· Patents Division 

of the Artrry tabulating the number of patent applications 

that had been filed by Government employees. It is here 

reproduced in full. 

"17 January 1950 

"MEMORANDUM 

"SUBJECT: Government Employee Inventions subject to Government Interest as Recorded in Patent Office 

11 1. Executive Order 9424, 18 Feb 1944 (9 FR 1959) requires that all instruments evidencing Government interests 

in patents and patent applicatione be recorded in the Patent 

Of.fice. 

"2. A search of the Records in the Assignment Division 

of the Patent Office on 16 January 1950 discloses the following 

information with respect to inventions made by the employees o.f 

the different government departments and agencies. 

DEPARTMENT OF DEFENSE 

Patent 

ApplicaPatents tions 

Navy 2132 2441 

Army (includes Air Force 

until recently) 3552 1845 

Air Force 74 142 

ml> 4fi2ff 

ALL OTHER GOVERNMENT AGENCIES 

Agriculture 982 619 

Commerce 129 20 

TVA 113 22 

Justice 80 231 

Interior 80 46 

AEC 64 2 

Treasury 34 l 

Federal Security Agency 14 0 

Federal Works Administration 9 0 

24 
REF ID:A10461B 

Maritime Commission 

OSRD 

Bureau of the Budget 

Federal Communications Commission 

Capitol Architect 

6 

4 

3 

3 

3 

2 

2 

2 

2 

2 

l 

1 

1 

1 

0 

0 

l 

0 

3 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

l 

1 

0 

Bureau of Econ. 1larf are 

Central Statistics Bureau 

Govt. Printing Office 

ICC 

Post Office 

CCC 

Labor Dept. 

Natl. Housing Authority 

·war Produetion Bo!U'd 

State Dept. 

Genl. Svc. Agency 

Archives 

TOTAL 1539 947 

".3. The following summary of the above figures <;>n 

Government employee inventions contrasts the n1,1J11.ber made 

by employees of the Department of 'Oefense as compared by 

those of all other Departments and agencies combined: 

Patents 

Department or Defense 

All other Govt. Agencies 

TOTAL 

Patent Applications . . 

Department of Defense 

•11 other Govt. Agenc~es 

TOTAL 

Grand Total 

of 

Patents and Patent 

Applications · 

D~partment of Uefense 

All other Govt. Agencies 

5758 

1539 

II 7297 

4428 

9h7 

5315 

10186 

2486 

% of Total 

79.4 

20.6 

100. 

82.5 

17.5 

100. 

82.0 

18.o 

/s/ George W. Gardes 

GF.ORGE W. GARlll?.S 

Colonel, JAGC 

Chief, Patents Division" 
REF ID:A10461B 

The final memorandum returning the correspondence to file 

reads: 

11Attached letter was not sent because Executive Order 

10096 was signed by President Truman on January 23." 

by those 

Thus 

responsible 

the views of 

for 

the 

forwarding 

Defense Department 

the Ord~r 

were 

to the 

never 

Pres1aent .. ~ for -~ignature. - -·· · --- -· - ··---·-· 

EXECUTIVE ORDER 10096 (Signed January 23, 1950) I I 

The policy established by the Executive Order is found in 

Paragraphs l(a) to (d) thereof, here reproduced in fulls 

"l. The following basic policy is established fo~ all Government agencies with respect to inventions here~fter made by any Government enployee: 

(a) The Government shall obtain the entire 

right, title and interest in and to all inventions, made 

by any GoV'ernment employee (1) during working hours, or 

(2) with a contribution by the Government of facilities, 

equipment, materials, funds or information, or of time or 

services of other Government anployees on official duty, or 

(3) which bear a direct relation to or are made in consequence 

of the official duties of the inventor. 

(b) In any case where the contribution of the 

Government, as measured by any one or more of the criteria 

set forth in paragraph (a) last above, to the invention is 

insufficient equitably to justify, a reqμirement of assignment to the Government of the entire right, title and interest to such invention, or in any case where the Government 

has insufficient interest in an invention to obtain entire 

right, title and interest therein (although the Government 

26 

~\ 
REF ID:A10461B 

could obtain same under paragraph (a), above), the Government agency concernea, subject to the approval of the 

Chairman of the Government Patents Board (provided for in 

paragraph 3 or this order and hereinafter ref erred to as 

the Chairman), shall leave title to such invention in the 

employee, subject, however, to the reservation to the 

Government of a non-exclusive, irrevocable, royalty-tree 

license in the invention with power to grant licenses fqr 

all governmental purposes, such reservation, in the terms 

thereof, to appear, where practicable, in any patent, 

domestic or foreign, which may issue on such invention. 

( c) In applying the provisions of paragraphs 

(a) and (b), above, to the facts and circumstances relating to the making of any particular invention, it shall 

be presumed that an invention made by an employee who is 

employed or assigned (i) to invent or improve or perfect 

any art, machine, manufacture, or composition of matter, 

(ii) to conduct or perform research, development work, or 

both, (iii) to supervise, direct, coordinate, or review 

Government financed or conducted research, development 

work, or both, or (iv) to act in a liaison capacity 

among governmental or nongovernmental agencies or 

individuals engaged in such work, or made by an employee 

included within any other category of employees specified by regulations issued pursuant to section 4(b) 

hereof, falls within the provisions of paragraph (a), 

above, and it shall be presumed that Bir3' invention made 

by any other employee £alls w.i.thin the provisions 0£ 

paragraph (b), above. Either presumption may be rebutted 

by the facts or circumstances attendant upon the conditions under which any particular invention is made and, 

notwithstanding the foreoging, shall not preclude a 

determination that the invention falls within the provisions of paragraph ( d), next below. 

(d) In any case wherein the Government 

neither (1) pursuant to the provisions of paragraph (a) 

above, obtains entire right, title and interest in and to 

an invention nor (.2) pursuant to the provisions of paragraph (b) above, reserves a non-exclusive, irrevocable, 

royalty-free license in the invention with power to grant 

licenses for all governmental purposes, the Government 

shall leave the entire right, title and interest in and 

to the invention in the Government employee, subject to 

law." 

THE"POLICY IS VAGUE AND INDEFINITE 

Paragraph l(a) or the policy establishes three criteria for determining when the Government shall obtain the entire right, title 

27 
REF ID:A10461B 

and interest in and to the invention. The second criterion, however, 

breaks down into severaJ. additional criteria, but for purposes of 

discussion here they may be considered as one. 

Although paragraph l(a) is mandatory, as written, it is 

modified by l(b). This paragraph states that the Government shall 

obtain a license: 

flin any case where the contribution of the 

Government, as measured by any one or more of the 

criteria set forth in paragraph--ra)-i:'.'as-E"'""ibove, 

to the invention is insufficient equitably to 

justif'y a requirement of assignment of the invention. 

~I- * *" 

Analyzing this it establishes that if any one or more of the criteria 

is insufficient equitably, then title remains in the employee. 

Analyzing further the words "any one or more", it will be noted they 

are in the subjunctive, not the conjunctive. Therefore they must of 

necessity mean, or otherwise the paragraph is meaningless, that 

(a) If one of the criteria is insufficient equitably 

theii""issignment will not be required; or 

(b) If more than one of the criteria is insufficient 

equitably, then assignment will not be required. 

The Armed Services have contended that because of this language 

it must be initially found that all three of the criteria of paragraph l(a) are present before the case is one requiring assigmnent. 

If any one of the criteria is absent it follows that "one of the 

criteria is insufficient equitabl:y"', for how can a requirement which 

is absent ever be sufficient equitably? 

Carrying this one step further, when all three are present, then 

title should not be required if any one criterion is insufficient 

equd.:fiably or any combination, i.e., more than ~, is insufficient. 

However, this interpretation has not been accepted on the 

assumption that this was not the intent of the Order. It is 

asserted that the presence of any one of the criteria set forth 

in paragraph l(a) is sufficient to require assignment if that one 

criterion is equitably sufficient. ----

It becomes apparent that the Order is far more limiting on 

the rights of employees than either the rules of the Supreme Court 

or the rule establ!shed by the Congress and approved by the President in the National Science Foundation Act. The rule established 

in the NationaJ. Science Foundation Act became law subsequent to the 

issuance of the Order. 

28 
--- ,,,.__ ------- - -----.....--REF - ID:A10461B - ~ ~---

. r - "' ...... ... 

... -- ""'l ,.~ _ __. 

.!. ... -... - ~ __ .....,... c. __ fa_, - .,. ~ l' .... 

~- -.!J, ~ - .... ""' ~ - pc. -

~ ;;liT- I - r L I~:& ... ,.,: .:! ..... ..,_., "':? _"$..,,.. 

~ - ~:~ ~ ... _ r-:f.~-ta.99; P-P"- -~ .,. •.} .._ - "i.-- 7 ,..,>I _,._- .)-. I 

- ,.r-_..._.,.. ,.. ..... "Ya - - ... ... .., 

- llthough the question of the cost of administration is discussed 

later, the present interpretation of the Order results in a he1197 

adm1 n1 stration load. ~ It an agency-determines that 8.iV' rCine or the - -

criteria in paragraph l( a) is present and decides to leave title 

with the ~empl.a.ree, then the case must be referred to the Chairman 

ot the Government Patents Board tor his apprdf'al or disapproval.. 

It the agency determines to take title then the emp1a.ree mast 

petition the Chairman if' he believes title should remain with him. ~ - - .. .;r ,,,.- ,.,.-.. .... .r 

The resu1t is chaotic, so fa:r as employees are concerned. 

Thq do not have &JV' clea:r-cut indication of what their rights 

are, nor can azJiYOne ad.vise them. The final interpretation in each 

------case rests entire~ with the Chairman of the Government Patents Board.-----

One ~a,yee auccinctl.7 states it as follows• Ill -

•obvious]J', the cooperation of the inventor is essential 

to the operation ot the Executive Order and it is Jq 

view, that the expressed terms of the Executive Order 

be clarified to set .torth a clea:r basis tor the 

determination of' the respective right of the Goverm.ent 

and of the inventor in such full. and clear terms that 

the inventor ~ be apprized of hia rights in and to 

those inventions which he has made. 11 

THE ORDER IS BROADER THAN INDUSTRIAL PRACTICES 

In preparing Executive Order 10096 little consideration was given to 

the tact that the Armed Services have two distinct types of activities, 

the first,, its research activities, and the second, its production and 

ma:f.ntenance activities. Under no decision o:t the Supreme Court or of arqother Court has an employee ever been required to assign his invention 

to the eia.ployer, unl.ese he waa speci:f.'1.cally hired or assigned to make 

inventions,, yet the Executive Order makes no clear distinction in this 

regard,, it mere]J' presumes. 

Huch has been said about the Order following industrial practices, and 

it is alleged by mtmy" that most corporations require all employees to sign 

contract agreements giving the empla.rer control of their inventions. This 

is a fallacious belief. In preparing the Armed Services Procurement 

Regulation it was learned that substantial]J' ervery union contract provides 

that the employer may obtain only a shop right under an imrention made 

b;y a union employee, and at times an option to acquire title. It is ~ 

the contract employees who m~ be bound to give more than a shop right. 

B,y tar the best stu.c%r on the subject ot Industrial Practice is found 

in "Trends in Industrial Research and Patent Practices0 published b;y the 

Rational Association of Manufacturers. An analy'Si.s of replies received 

.trom 684 corporations with annual saJ.es running from JSo,,ooo to over 

t30,000,000 indicated that 136 ot the corporations required assigmnent of 

inventions ot employees when they ttresulted from his employment activity" 

and this was the most stringent requirement. 

29 

= 
\1 

REF ID:A10461B 

This is the limitation formerly followed by the Armed Services. 

They required assignment when flan. employee was directed to make or improve 

a specific device, means, method, or process, and in the performance 0£ 

such duty he makes an invention bearing upon that par·ticular device, 

means, method, or process.tr 

231 of the corporations required assignments only when the invention 

fell within their particular field of businessD Six had other types or 

assignments and 19 did not answer. 

Out 0£ the 684 who reported, only 77 required agreements from aJ.l 

personnel and only 173 required agreements from their research and ~ 

engineering sta££. In addition, 32 required agreements, not o~£rom 

their research and engineering staff but also from their executives and 

supervisory force. 68 further included all technical employees and 58 

also included sales and service personnelo 

It becomes evident that the practice in Industry, far from requiring 

agreements from aJ.l personnel.11 only requires agreements from a very limited 

number of personnel and only about 25% of the corporations require any 

agreement. 

The figures given above are rather startling when it is considered 

that Industry exploits inventions for a profit motive, whereas the Armed 

Services utilize inventions to inc~ease their efficiency and their ability 

to build a better Army.11 Navy and Air Forceo Industries, liberality is all 

the more startling when it is reali.zed that their salary scale does not 

stop p.t $10,000 except for the so-calle~~uper gradesJI 

: \.). S Tj r-.-i· 

THE ORDER DESTROYS "INCENTIVE" 

The Services were established to uphold our nationaJ. policies and 

interests, to support our commerce and 017-i international obligations, 

and to guard the United States including its overseas possessions and 

dependencies. To accomplish this purpose it is necessary to build and 

maintain the most powerf'ul Force in the world. However, no Service can 

p,/ 

long remain powerful without constantly improving its materiaJ. and techniques. 

It must actively participate in research and experimentation and must 

encourage new ideas and developments» by its employees as well as by 

industry. 

Among its employees the Services have found by experience that the 

method of leaving commercial rights with the inventors when the law 

permits, not only is the best Soll:~ most equitable way of encouraging new 

ideas by its employees, but also is best suited to attracting into its 

service scientists and technicians who have the training and background 

necessary for its research and experimentation programo 

- Whether or not the ideas originated by its employees are, or may result 

in, patentable inventions is or secondary importance. Of primary importance 

is the fact that the employees do originate new ideas 0 The question of 

patentability is considered onlY:-because the Government must be protected 

30 
REF ID:A10461B 

f'rom the possibility that inventions by its employees may subsequently be 

patented by others, thereby opening the doors to costly litigations against 

the Government. 

\.\ .. eJ J.hO Under the .Atto~ GeneraJ. Report polic;y: the requirement o! tald.ng 

~ _'.J , title to inventions Jr! e "*dur::i..ng working h~s·1 or related to the employee's ~' •. ~\, "of'f'icial f'Ull.ctions" would discriminate against inventors. It would ..Pe; ...;J Q lt 0 in ef'.f'ect, peJ18,lize inventive employees because their ideas were in theVf veey fields of science or the arts in which the Constitution and Congreas 

wished to encoUl'age new ideas. 

Maey ideas which are not patentable inventions still have commercial. 

val,.ue. Suppose an employee, during working hours, develops a new system 

of bookkeeping. The employee was not hired to originate new methods of 

doing bookkeeping but was merely employed to keep the books of' one of the 

bureaus. Systems of' doing business are generally not patentable inventions. Not only might the employee receive an award under P.L. 600, 79th 

Congress, 6o Stat. 809, but he coul.d retain title to his id.ea and might 

still get commercial. prof'it b.f selling it to business firms, or by writing 

a book on the method and obtaining profits from its sales. 

On the other hand, suppo~e a technician, hired to keep certain radio 

equipment in repair, while on duty originates a new radio circuit, and 

this circuit is a patentable invention. This technician was not hired 

to originate :radio circuits, therefore, under P.L. 600 he might also 

receive a reward. However, since his idea is an invention, the AGR policy 

could require him to assign all his rights to the Government, thereby 

denying him. &ny' Opportunity- to rPalize further gains .f'rom. his idea. 0.f' 

course, if the technician happered al.so to b' an enlisted man, then, not 

only would he loose title to his inven~ion, but he could not receive a 

reward under P.L. 600, since the Act exoludes military perso:nnel from its 

benefits. 

When questioned on what would happen if the AGR patent policy were 

ad.opted, one or the Serviees foremost inventors stated 

"Government inventors will not file patent applications 

without strong incentives. The preparation or patent disclosures, 

the legal red tape that goes with malo..ng patent applications, 

and the nature of the controversies involved in patent interferences 

are in them.selves distaste.f'ul. to the average engineer. In 

addition, they are particularly annoying when they take his 

time away from the technical. work in which he is pr:l.marilyinterested. In commercial companies the initiative is taken 

by legal engineers in seeking out patentable material in the 

laboratories and taking steps to protect the company's interest 

in such matters. Su.ch a process appears to be inf'easible at 

NRL because or the tremendously expanded legal department that 

would be required to perform this £unction. It the Government's 

interests, and therefore, the people's interests, are to be 

protected, some alternate provision is necessary to get the 

31 
REF ID:A10461B 

engineers to file patent applications. Present Navy policy in 

this regard provides in part the necessary incentive. Even 

with this policy it is still necessary to stimul~te by direct 

action the keeping of proper legal records and the filing of 

important patent applications. 

"Present policy is an important factor in attracting and 

holding a certain type of scientist. This writer testifies 

that were it not for the hope, through commercial rights on 

patents, of filling the gap between his Government salary and 

the average value of his many commercial offers, he would never 

bother to file patent applications for the Navy. The use of 

other pressures to force filing of patent applications would 

only serve to make commercial offers appear even more attractive.'' 

Another Scientist said: 

11 Incentivo systems which definitely offer promotions are not 

considered feasible under a civil service set-up. Of course, 

patents could be weighted in considering a promotion chiefly 

based on other considerations, but it is presumed that that 

is already the case. Lump-sum payments such as employeed in 

industry to a considerable degree, offer about the only alternative. 

However, such systems unless carefully administered will result 

in more 1 thumscrew1 patents than the present system and at 

greater expense to.the Government. Moreover, unless the sums 

are graduated up to large amounts the individual may decide that 

his personal advantage lies in concealing an important invention 

until a~er severing Federal employment. A valuable patentable 

device would also serve as a strong bargaining point in obtaining 

other employment." 

The above statements were made before the Order issued; the following 

were recently made by employees: 

"Under the present suggestion program, which is considered 

to be a very good program, there is more profit to government 

employees in proposing minor and many times insignificant changes 

such as strategically locating drinking fountains and spittoons 

than in getting an invention adopted. 11 

"Industry recognizes that incentive must be provided to 

stimulate invention and has provided incentives through the 

medium of higher salaries, bonuses, or profit sharing. (The 

frequency of use of the incentive system by 233 large companies 

has been summarized in 28 JPOS 110). While the Government is 

on a par with industry in providing promotion for the apprentice 

scientist the difficulty arises among those men having unusual 

32 
REF ID:A10461B 

inventive talent who are usually at the GS-12 to GS-11 Civil 

Service Grade. In the higher grades promotions become of 

importance to the organizational structure of the unit. The 

result is that valuable inventions can be rewarded only to a 

limited extent. Therefore, present policy is detrimental to 

the incentive to invent of the most valuable type of talent." 

"On the basis o:f limited statistical in:formation received 

a decrease in the number of invention disclosures submitted 

to patent personnel has already occurred and can be expected 

to decrease further. 

11The Army Ordnance Detroit Arsenal reports the following 

statistics on the number of invention disclosures received: 

"Period 

Jan-1948--Jan-1950 

Jan-1950--Jan-1952 

Total 

Disclosures 

Received 

73 

125 

Percentage of Inventions 

by Government Employees 

Only 

49 • .3 

5.6 

Inasmuch as the period Jan-1950--Jan-19.52 was a period of 

increased research activity as compared with the period 

Jan-1948--Jan-19.50, the statistics show a marked decrease 

in the number of inventions submitted by Government employees." 

11 It is an accepted fact that 1;1alaries in Government 

scientific work are less than corresponding salaries in 

industry by a factor of 3/4 to 1/20 The other circumstances 

surrounding Government employment, such as prestige, leave 

privileges, retirement, etc. are at the present time only 

slightly more advantageous than those offered in industry and 

are steadily becoming less attractive as Congress whittles 

away privileges o:f Government workers and as industry adopts 

more liberal policies. Consequently, a liberal patent policy 

might be a deciding factor in recruiting new employees and 

retaining old employees, particularly with respect to employees 

with inventive talent." 

"If an employee conceives a new item having very 

valuable non-military use, he regards these as his own and 

may resign his position rather than lose all rights in the 

non-military exploitation of the invention. ti 

"The Government needs no mor~ than the assurance o.f' 

'Freedom of Use' with respect to patents and such use 

may be secured by a license. The Government should not 

be interested in excluding others from using inventions 

33 
REF ID:A10461B 

because it is not incommercial competition. Therefore, it 

appears that the Government by present policy is taking title 

to employee inventions for no valid reason." 

"Under the former policy, the Government not only 

enjoyed all the rights necessary for its operations but in 

addition, provided a means of rewarding inventors for their 

contributions at no additional cost. Furthermore, the 

inventor would be rewarded purely on the worth of his 

invention as judged by buniness men.fl 

"Keeping adequate records for patent purposes, preparing 

disclosure records and aiding patent personnel in the 

prosecution of applications is a chore for scientists which 

requires a certain amount of extra effort. Without any 

individual stimulus, employees have relaxed their efforts 

to record inventions. Issuance of a patent in his name in 

the remote future does not counterbalance human inertia 

and certainly does not generate an aggressive attitude 

toward reporting inventions. While in some fields patent 

personnel may be able to recognize potential invention by 

inspection of records, logs, and the like, such solution is 

generally not practical because of the enormous output and 

swi.rt development in research activities. The cooperation 

of the inventor is essential." 

Of the foregoing comments the last is particularly significant in 

pointing up a serious problem, and explains one of the reasons why 

invention disclosures received from Government employees are falling 

off. Although research personnel normally maintain notebooks, the 

Government does not have and never has had enough patent personnel to 

carefully scrutinize the notebooks to determine whether there is 

something in them which discloses an invention. It is necessary to 

depend upon the individual employee to make the disclosure. Employees do 

not object to making disclosures and heretofore did most of it on their 

own time, tm"l.i without aey incentive they obviously are not going to 

utilize their own time for this purpose. If, on the other hand, they 

must fill out numerous reports and forms, during working hours, the 

primary purpose for which they were employeed is being defeated and 

the Government is paying extra for that which it does not use. 

THE ORDER PREVENTS RETENTION OR HIRING OF COMPETENT PERSONNEL 

One needs but to consider the difficulties heretofore encountered in 

retaining competent personnel to appreciate the value of the incentive 

of' leaving ;i:-ights with employees. 

The difficulty of retaining scientists within the Government is 

apparent from the report of Mr. John R. Steelman on "Manpower for Research", 

11October1947. This report states (p. 17): 

34 
REF ID:A10461B 

"Government competition is strong for scientists in 

the earlier stages of their careers. Due to the general 

$101 000 ceiling on salaries, however, the Federal scientific 

program has difficulty in holding those or longer experience 

or of outstanding ability. Thus both Government and the 

universities and colleges a~e at a sharp disadvantage in 

salary competition with industry.fl 

The Steelman Report further shows the distribution of ~cientists in 

1937 as follows: 

1

120% in Government 

30% in Industry 50% in Colleges and Universities 

Ten years later the Government had succeeded in increasing its 

number by 2%, whereas the number in industry had risen 12%, 

the total loss being in colleges and universities." 

Thus, in the competition for scientists, between Government and 

industry, the Government is a poor second. About the only incentive 

that the Government can off er is the right to retain patent rights for 

commercial exploitation. Lacking this incentive, the scientists will 

either transfer to industry, where they will receive better salaries, 

or go back to the colleges and universities where they will have freedom 

from many of the restrictions they face as Government employees, and 

where, in many universities, they will be permitted to act as consultants to industry for remuneration. 

In the lower Court decision in United States vs. Dubilier Condenser 

Corp., (49 F. 2d. 306), p. 312, Judge Nields stated as follows: 

"The Bureau of Standards has upon its staff a large 

number of employees engaged in specific fields of activity 

and to a certain extent engaged in research work. To hold 

that every invention made by one of these research workers 

under the facts disclosed in this case automatically became 

the property of the United States would, I think, be not 

only contrary to the law as laid down by ·the Supreme Court, ;· 

but have a strong tendency to destroy the moro/ of the ~/ 

Bureau and take away a just incentive on the part of its 

employees to make inventions; that is, a personal reward for 

their efforts, bearing always in mind that the Government is 

entitled to the full use of all such inventions. 

nin commenting upon the retirement of Dr. Samuel w. 

Stratton, formerly Director of the Bureau.of Standards, 

President Hoover, then Secretary of Commerce, said: 

'While the Massachusetts Institute of 

Technology is to be congratulated on securing 

Dr. Stratton, one cannot overlook the fact that 

the desperately poor pay which our Government gives 

35 
REF ID:A10461B 

to great experts makes it impossible for us to retain 

men capable of performing the great responsibility 

which is placed upon them. The Institute of Technology, 

an educational institution, finds no difficulty in paying 

a man of Dr. Stratton' s caliber three times the salary the 

Government is able to pay him. 

'Dr. Stratton has repeatedly refused large offers 

before, but the inability of the scientific men in the 

Government to properly support themselves and their 

families under the living conditions in lfashington 

and to make any provision for old age makes it impossible 

for any responsible department head to secure such men 

for public service at Government salarieso• 

"Under such conditions, should the normal reward of inventors 

be withheld from research workers in the Bureau or Standards? 

I think not. To do so would measurably crush the inventive . genius, enthusiasm, and spirit of the employees. It would 

drive unusual men out of the public service and correspondingly 

lower the efficiency of the Bureau. If the rules of law heretofore prevailing are to be extended to bring about this result, 

resort should be had to the Congress and not to the courta.tt 

The Bureau of Fisheries (now the Fish and Wildlife Service) has also 

found "That its top-rank men were being 'lured away• by the higher salaries 

paid outside the Goverrun.ent." (AGR, Volo II, p. 195). 

The AGR has proposed a system or awards to replace the incentive of 

leaving commercial rights to inventions with the employeeso Major General 

Phillip B. Fleming, Administrator of the Federal Yorks Agency, in 194.5 

stated his opinion that 

''while a general system of awards may encourage 

valuable suggestions, it is not believed to be a 

sufficient incentive to invent * * *" 

and recommended that connnercial rights to inventions remain with the 

employees (AGR, Vol. II, Po 163). 

The attitude of the Govermn.ent employee is not particularly different 

from that or other human beingSJ they are seeking a fair return for what 

they give. The standards or Civil Service 'employment are very high but 

the returns are seldom commensurate. Career Government employees may 

look forward to the possibility of getting to the Grade 15 level but 

seldom beyond this. One employee, a doctor of philosophy sums it up as 

f'ollowst 

"Several factors made the return to Government Service 

in 1949 seem attractive, none of which was salary. A liberal 

patent policy, a liberal annual and sick leave policy, good 

working conditions, and a freedom of thought and time. 

36 
REF ID:A10461B 

Unfortunately, all of these factors have been taken away from 

the individual in the past two years. 

ffA recent article in McCalls magazine compared the salaries 

of Government and Industrial employees at various levels or 

responsibilities. Except for secretarial level of employment, 

Govermnent salaries are about 50 per cent or less of those in 

industry at comparable levels or responsibility. A liberal 

patent policy could cOI11pensate, in part, for this discrepancy. 

"Man is, by nature, selfish. Being selfish he is not prone 

to give away his ideas or •gadgets' that took years of time and 

effort to develop, unless of course, that was the condition under 

which he accepted employment. Many Government employees did not 

accept employment under the regulations that now exist, nor were 

they given any opportunity, until nowi to voice their opiriion on 

policy matters that a±'f ect their 1ivi ihood. In industry an 

indiViduil With Vision and ability is compensated by increased 

salary or bonus or even a percentage or royalties. In Government, 

as of now, an individual receives no added remuneration for a 

patentable idea or process. It is recognized that the Government 

should be entitled to a royalty-free license on patents developed 

by Government employees but the employees should have an option 

to develop the commercial aspects of the invention without 

prejudice to his position0 " 

Another employee states: 

11My educational background includes the degrees, Electrical 

Engineer and Doctor of Science and approximately 10 years of 

research experience, eight of which have been at supervisory 

level. For six years immediately previous to my coming to NRL, 

I was a member of the staff of the Applied Science Research 

Laboratory of the University of Cincinnati. During this period 

I engaged in several researches, two of which brought me to the 

attention of the Armed Services. I did the basic metallurgical 

research leading to the successful manufacture of hollow steel aircra~ propeller blades for the Air Force, and I invented and 

developed the electromagnetic underwater log (ship speed indicating 

device) which will soon undergo acceptance trials for the Navy. 

"I was approached. by several organizations with offers of 

what then appeared to be fabulous salaries, but what interested 

me most was NRL which offered no net increase in salary, but 

rather the opportunity to procure commercial rights to rrry 

inventions and the opportunity to do basic work in the field 

of magnetic amplifications. I joined NRL as a Unit Head at the 

P-4 level in September 1949. 

"In the two years since joining NRL, I have led first a 

unit, and then a Section which has consisted for most of the 

time of only two men besides myself 0 My work has resulted to 

37 
REF ID:A10461B 

date in eight patent disclosures on new and improved circuitry 

and a new theoretical approach to solutions of magnetic amplifier 

problems. There have been four formal publications one in the 

AIEE and numerous publications and references to this work in 

Navy and commercial periodicals. I and two of my men have 

delivered technical papers and served as speakers for meetings 

or technical societies literally from coast to coast. Visitors 

from industry and Government bureaus are continually using our 

laboratory for a source of consultation and information. 

"When Executive Order 10096 was announced I :immediately 

sought opinions f'rom legalJ:y trained friends both inside and 

outside the Government. Their net opinions indicated that the 

results would be detrimental to the National interest and that 

this arbitrary breach of contract was somewhat illegal. They 

believed the order would soon be rescinded or declared unconstitutional. It is the latter which has held me to my post, but 

I have now concluded that this is a false hope, since arbitrary 

actions on the part of our government are becoming more and 

more prevalent. 

"This has called tor a re-evaluation of my position here. 

I have found that it is no longer to my advantage to remain at 

NRL and I am now examining some positions in private industry 

which prove more remunerative for my special talents. I can 

say, quite frankly, that the offers I am receiving from well 

established and stable organizations make my present salary 

look quite small. Since comparisons can now be made only on 

the basis of salary I seem to have.no choice." 

Another employee states: 

11As an example close to home, I am working on an 

accelerometer, alone, at home. My job is not to invent 

an accelerometer nor to improve an existing instrument. If 

the old Navy policy were in effect I would bring the Navy my 

ideas, and if they looked good the Navy might desire that I 

utilize some Navy facilities to produce a still better 

instrument and a patent owned jointly might eventually be 

obtained. 

••However, with the patent policy in a state of turmoil, 

I am in no mood to have my title to such an invention clouded 

by asking professional advice of anyone in the Navy Department." 

A former employee who left Government employment with the issuance of 

the Executive Ord.er states: 

"This important development has established me as the 

leader in this field and this leadership has not been 

challenged to date. The Signal Corps and the Air Force have 

offered me contracts, and discussions have been held with the 

38 
REF ID:A10461B 

Bureau of Aeronautics of the Navy for the purpose of determining 

whether a contract could be arranged. I have consistently 

declined to accept any contract which would be subject to the 

provisions of Order 10096. I decline to put myself into any 

position which will deprive me of a just and reasonable participation in the fruits of my labor through ownership of commercial 

rights under my patents. Inasmuch as I do not possess a private 

laboratory so that I could accept one of these proffered contracts 

as an outside contractor and thereby circumvent order 10096, 

my further participation in this important field has been stopped 

completely. I would have no objection to accepting a contract 

wherein the Government would obtain a royalty-free non-exclusive 

license under any and all patents which might flow from such a 

contract provided I could retain commercial rights." 

The· Chief of Transportation of the United States Army submitted the 

following: 

"Informal discussion with TC employees who had submitted 

inventive disclosures prior to EO 10096 disclosed that such 

employees had lost all interest in processing inventive disclosures 

through the Government or in striving for invention in the course 

of their general employment. They were also opposed to submitting 

inventions made on their own time and at their own expense in 

view of the complicated procedures set out in EO 10096 and 

regulations thereunder and the ever present possibility that some 

one may insist upon the Govermnent ta.king title to a patent covering such an invention. For your information most of the inventions 

submitted by TC employees for patent applications were made by 

employees on their own time and at their own expense. 

"In view of the above stated comments and the fact that 

present policy on employee patents is set out in an Executive 

Order signed by the President, it is not surprising to this 

office that Armed Services Patent Policy Review Board has not 

received as many comments as desired on the joint circular above 

mentioned., 11 

Another employee states: 

11To operate effectively, our laboratory absolutely must be 

able to compete with private industry, for competent physicists 

• and engineers, particularly at the top levels. It is a sober 

fact that industry is offering $2,000 more per year than the 

Government for men w:ith a Master's degree in servomechanisms 

and no experience. For experienced men the differential is. 

greater. In two years of searching our section has not succeeded 

in hiring a single man of either category. In that period, 

iridustry has siphoned orr key personnel throughout the 

laboratory. There was a time when skilled, aggressive people 

39 
I 

REF ID:A10461B 

could be attracted because they were willing to gamble on an 

immediate salary loss, confidently expecting commercial patent 

rights for their outstanding contributions. Executive Order 10096 

leaves us totally unable to compete for personnel in fields which 

parallel the needs of industry. Still worse, we are threatened 

with the loss of key personnel who feel the order was a breach of 

contract." (Emphasis added) 

The matter of incentive is so important that the Naval Inspector General 

has recommended that the "Office of Naval Research make strong representations 

to the Armed Services Patent Policy Review Board, and other Agencies concerned, 

to alleviate the personnel problems of research employees resulting from the 

President's Executive Order :)..0096." 

The recommendations followed a visit by the Naval Inspector General to 

the Naval Research Laboratory, in which it was made clear to him that 

extreme difficulties were being encountered in recruiting and retaining 

technical employees by reason of the l:iJnitations impos.ed by the Executive 

Order. 

The difficulties are so clearly set forth in a letter from the Director 

of the Laboratory, that the body of the letter is quoted in full: 

"The conduct of research within the Department of Defense 

on the framework of Civil Service employment regulations is an 

essential function, but one attended with the most serious 

obstacles from personnel recruitment through to the final product 

of the Laboratory's efforts. In the present state of technical 

personnel supply and management problems, few of these obstacles 

a.re unrelated to the human equation. lt is felt that a realistic 

and positive patent policy could offer most material assistance 

to the function of the Laboratory through the latter channel. 

11At one time it was possible to select technical personnel 

of research caliber for research problems; the present manpower 

situation demands the use of available personnel rather than 

selected men in the former sense. In consequence our research 

staff now encompasses not only the dedicated scientists, but in.· / substantial degree individuals ranged ~l toward the opposite JV/ 

extreme. This broader basis of the research effort necessarily , exists throughout the research establishments of the Department 

of Defense. ~It renders more opportune than ever the formulation 

of a patent policy geared to research productivity because of 

the intensified management problem and the increased susceptibility 

or our personnel to such stimulus. 

"A critical encumbrance of Governmental research-personnel 

administration lies in the massive award and promotion machinery 

available for the recognition or research productivity. Such 

facilities should be easily available to management; their 

absence is acutely embarrassing due to their competitive use 
REF ID:A10461B 

by private research organizations with the fullest freedom. 

Additionally, industrial award and bonus programs in recognition 

or inventions are being expanded0 

"It is exactly at this juncture that present patent policy 

fails of any assurance to the productive research employee. 

When our research personnel pool is most receptive to economic 

stimulus and their inventive productivity is most critical to 

the national security, we are faced 1d.th the asymtotic case by 

case resolution of a policy which bodes a confusion enduring 

through the present emergency. The necessity for reviewing the 

effects of the present policy was never more pressing, and the 

prospective results of an affirmative support of individual 

initiative never more promising. 

"Other factors than inventive initiative contribute to the 

urgency of this review. The essential need for a Department of 

Defense patent program is freedom of procurement without royalties 

on Governmental research products. In recent years disclosure 

of Governmental inventions to representatives of industry has 

moved far beyond the requirement of procurement, from the final 

product~9 the early stages of research programming. The latter 

takes ~~e, for instance, in consideration of the Laboratory's 

program and research problems by R0D0 B. panels which include - members from industry. 'While it is not believed that this type 

of disclosure should be limited for the purposes of patent protection any more than is the necessary disclosure for military 

procurement, manifestly the need for prompt filing of Government 

patent applications has increased0 

"Without any individual stimulus, employees generally relax 

their efforts to maintain necessary legal records, and the 

inventive employee frequently hesitates to submit his development 

to the patent activity for consideration. Issue of a patent in 

his name in the remote future often does not counterbalance the 

human inertia, and despite his knowledge that a Govermn.ent asset 

is unprotected, he fails to prepare the patent disclosure and 

undertake its necessary discussion and analysis for patent purposes. 

While in some fields patent personnel may be able to recognize 

potential invention by inspection of reports and research logs, 

such solution is not practical at the Laboratory because of the 

enormous output by the technical staff and the swift developments 

in the fields in which they work. If the patent personnel 

attempted to keep abrest of the general advance in all technic&J. 

fields of Laboratory research, little if any time would be 

available for their primary operations. Recognition of probable 

imrention, as a practical matter, must depend essentially on 

the research staff. Maintenance or adequate notebook records to 

establish dates of invention can only be secured by the cotpe=ration 

or the research employees. Reliance on administrative directives 

apart from personal interest is an unsure procedure in the 

protection or essential Government rights 0 
REF ID:A10461B 

''At the Labo.ra"t-ory, the impact of Executive Order 10096 has 

begun its developm.ento In the two years since its issue,, the 

Research Depar·tm.ent staff."has expanded 23%,, while invention 

disclosures for calendar year 19.51 fell .5% under the figure for 

1949. A comparison based on past. experience is probably indicative 

of what may be expectedo The Bureau of Standards has long 

operated on the basis of complete acquisition of rights in 

inventions, and is somewhat comparable in size and fields of 

activity to the Laboratory. The Attorney General's Investigation 

of Government Patent Practices (Report,, Vol. II,, PP 98-99) shows 

that between 1930 an.d 1943, .59 patents were obtained by the 

Bureau,, and new inventions were being made at the rate of about 

one a month in late 1944. At the Laboratory,, during the 12 years 

referred to,, 314 patents were issued, and new inventions were 

being reported at the rate of W.i. a month through the last half 

of 19W.i.o 

"From the viewpoint of research personnel administrative and 

Governmental protection in freedom of procurement, present patent 

policies appear inadequate :f'rom the experience of this Laboratory. 

The Laboratory therefore recommends: 

1. That the present confusion on the 

ownership of patent rights be 

clarif'iedo 

2. That Depart,men·t. of Defense patent 

policy be framed as an instrumental 

stimul.ation to individual initiative 

in invention. 

3. That Department of Defense patent 

policy compensate in part the 

diff'icul·ties inherent in alternate 

channels of employee recognition0 

4. That Department of Defense patent 

policy encourage the maintenance 

of individual research records and 

disclosure of inventions within the 

Department for purposes of patent 

protection. 

"From the viewpoints of administrative simplicity and 

economy of Governmental expenditure, the aims of the last 

paragraph can best be accomplished by leaving the title 

with the inventor subject to a Governmental license 0 tt 

INCREASED GOVERNMENT COSTS 

As previously pointed out.11 invention disclosures are falling off and 

if as a result thereof another obtains a patent on a device being used by 

42 
REF ID:A10461B 

the Government, the Government. will at least be open to a suit and its 

principal defense would be to prove pri.or invention.. Such a defense 

could not oe raised if the matter has been classified, for classified 

information is not 11 public.'' Moreover, if only paper records are 

available these cannot be used for Gov·er11I11ent files are not public 

and the Congress has repeatedly refused to make them public or to 

establish a defense for the Government on the basis of "information 

in its files.,u It is impossible to even estimate the potential 

damage that may occuro 

It is much easier ~o establish the actual increase in dollar 

expenditure that has resulted from the issuance of ·the Executive Order .. Paragraph 3(c) of the Order providesa 

nconsonant with law, the agencies referred to in 

paragraph 3(a) hereof shall as may be necessary for 

the purpose of effectuating this order furnish assistance to the Board in accordance with section 214 of 

the Independent Offices Appropriation Act, 1946, 59 

Stato 134, 31 USC 691. The Department of Commerce 

shall provide necessary office accommodations and 

facilities for the use of the Board and the Chairman0 tt 

The provision of the law reads as follows: 

11Appropria·tions of ·the executive departments and independent establishments of the Government shall be 

available for the expenses of committees, boards, or 

other interagen~y groups engaged in authorized activities of common interest to such departments and establishments and ca.~posed in whole or in part of representatives thereof who rec~ve no additional compensation by 

virtue of such membership~ PROVIDED, That employees of 

such departments and es·t.ablishrnents rendering service 

for such comrnH.teesj) boards, or other groups, other 

than as representat.ives9 shall receive no additional compens~tion·by vir-tue or such serviceo May 3, 1945, 

Co 106, Title II, S 214.9 59 Stato 1340" 

The intent of this Act was to provide administrative support for 

Interdepartmental. Boards or Committees but not ·to support a permanent 

organization0 A't.. present ·t.he office of t.he Chairman of· the Board, including the salary of ·t.he Chairman, is being paid from appropriations 

of other !D~partment.s.. The following contributions have been made by 

the' Department of Defense: 

1951 - $35,ooo 

1952 - 50,000 

In 1953 875,ooo was requested but the Chairman of the Board has been 

informed that in view of cutbacks the Department of Defense may only 

contribute $50,000 .. 

43 
REF ID:A10461B 

Cash outlay isn't allJ based on a survey made by the Department of 

the Army, it is presently tald..ng 400 man hours a month for that Department 

to administer the Order. Multiplying this by three, which is.a fair estimate, inasmuch as the Department of the Navy has a heavier workload and 

the Department of the Air Force a lighter workload., it amounts to 1200 

man hours per month for the three Services. This is a total of 14.400 man 

ho'llrs a year and at the conservative rate or $2.50 per hour it represents 

136,ooo. 

The above does not take into consideration the meetings of the 

Government Patents Board, of which there have been at least 221 averaging 

2 hours each, or a total of 440 man hours of top Government personnel. 

In addition, there have been numerous subcommittees drawn from various 

agencies working out procedures, reports and gathering other miscellaneous 

information. 

It thus appears that it is costing the Department of Defense over 

$100,000 a year, not counting what it is costing other agencies. 

THE GOVERNMENT PATENTS BOARD IS NOT A BOARD 

A further objection is the fact that the Board is not a Board. At 

present the so-called Board includes the members from • 

Department of Agriculture 

Department of Commerce 

Department of the Interior 

Department of Justice 

Department of State 

Department of Defense 

Civil Service Commission 

Federal Security Agency 

National Advisory Committee for Aeronautics 

General. Serv:t-ces A9ministration 

The members serve only .in an advisory capacity. The Chairman is the 

only one who may make recollln\end.ations to the President with respect to 

policy. He m~ accept or reject any recommendation made by the Board or 

by any other committee he establishes. The Board (Par J(b)) -

"shall advise and confer with the Chairman concerning the operation of those aspects of the 

Government's patent policy which are affected 

by the provisions of this order or of Executive 

Order No. 9865, and suggest moqifications or 

improvements where necessary. 11 

But the Chairman is auiμlorized and directed: 

"To consult and advise with Government agencies concerning the .application and operation of the policies 

outlined herein; 

44 
• 

REF ID:A10461B 

Arter consultation with the Government Patents Board, 

to formulate and submit to the President for approval 

such proposed rules and regulations as may be necessary 

or desirable to implement and effectuate the aforesaid 

policies, together with the recommendations of the 

Government Patents Boa.rd thereon; 

To submit annually a report to the President concerning 

the aperation of such policies, and from time to time 

such rec~endations for modification thereof as may 

be deemed desirable; 

To determine with finality any controversies or disputes between any Government agency and its employees, 

to the extent submitted by any- party to the dispute, 

concerning the ownership of inventions made by such 

employees or rights therein; and 

To perform such other or further functions or duties 

as may from time to time be prescribed by the President 

or by the statute. 

It is clear that the administration of a problem which relates to 

the morale of every Government employee is completely removed from the 

Secretaries of the Departments and placed in the hands of the Chairman 

of the Government Patents Board. Departments of the Army, Navy and Air 

Force are represented only through the one member from the Department 

of Defense. An 80% interest with a 10% repreaentationt The percentage 

is based on Government employee applications pending in the Patent 

Office. Of the remaining 20% interest almost 60% represents applications 

of Department of Agriculture employees •. The remainder are scattered 

through other agencies. 

SUMMARY 

It may be said from the foregoing discussions that: 

(l) The policy outlined in Executive Order 10096 is vague 

and indefinite and neither follows the Law, as established 

by the Suprem~ Cour~ o/ the Rules established by the Congress J 

(2) The Order is broader than the practices followed in 

Industry; 

(3) The Order has resulted in a reduction or invention 

disclosureSJ 

(4) It has destroyed the incentive of employees to make 

invention disclosuresJ 

45 
REF ID:A10461B 

(5) It has made recruiting difficult and present employees 

are co~sidering leaving Government employ; 

(6) The Order is costing the Department of Defense at 

least $100,000 a year; and 

(7) The Boa.rd established under the Order is not in fact 

a Board. Prerogatives of the Secretaries in administering 

their own Departments has been given to the Chairman of the 

Government Patents Board. 

46 
REF ID:A10461B 

SECTION IV 

AWARDS SYSTEM 

It has been repeatedly proposed that an Awards System should be 

established for compensating inventors. There are some Government 

employees who believe that such an Awards System would off set the ill 

effects of Executive Order 10096 and some of their reasons for such a 

system are as follows: 

"The reward which an inventor may receive .from the 

commercial exploitation of his invention is not 

necessarily proportional to the value of the invention 

to the Government. 

11The commercial exploitation of ·an invention is a 

difficult matter and one in which the employees_, in 

most cases, are not skilled. An inventor may therefore 

not be properly rewarded even though his invention is 

of a value to the Government. 

"The exploitation of an invention would absorb a 

great deal of the employee's time and effort and may 

thereby impair his value to the Government. 

"Under former policy, secrecy between scientists 

resulted in some cases from a fear of 'idea piracy•, 

which is fatal to the f~ee flow of inf'ormation, a 

necessary prerequisite of all research." 

Other employees feel that.an Awards System is adequate for military 

inventions but on non-military inventions the commercial rights shou1d 

be left with the employee. The opinion appears to be unanimous that 

incentive is desirable and that an Awards System should be established. 

The important question is the selection of a proper Awards System.. 

INDUSTRY· PRACTICE 

Again it would do well to look toward Industrial practice and the 

following is quoted !rom Trends in Industrial Research and Patent ~aotices: 

11Q. 6. Is any compensation other than salary stipulated in 

the contract paid for meritorious inventions? 

"The majority of those ·reporting state that no extra compensation for a meritorious invention is provided in the employees' 

contract, only 35% replying that they had such a provision. 

There is a wide variation as to how compensation, other than 

salary is to be paid, as appears from the answers to the next 

following questions. 

47 
.... 

REF ID:A10461B 

"Q. 7. I! so, is it by: 

a. Promotion and salary increases? 

b. Bonus? Is bonus fixed? Does it vary with importance 

of invention? 

c. Fixed fee for each invention? Amount? 

d. Royal ties? 

e. Other? 

"a. Thirty per cent of the 193 companies reporti~~ that they pay o//' ,/ 

such extra compensation stated that it is made by means of promo- \); 

tion and salary increases. 

11 b. Twenty-seven per cent pey- a bonus which often varies with the 

importance of the invention,, and many o:r those giving extra 

compensations (a and b) reward employees by both methods. 

flc. A fixed fee for each meritorious invention mady by an employee 

is given by 8% of the companies which pay extra compensations. The 

amount of the fee varies considerably as between companies, as is 

illustrated in t~e following examples. One company reports that 

$50 is paid when the patent application is made and $100 upon 

the issuance of the patent. Still another pays $50 upon execution by the employee of the assignment, $50 upon the grant of 

the patent and 20% of the amount in royalties received by the 

company. Another concern states that it pays $2$ upon the filing 

of each application and $100 upon the issuance of each patent. 

Several companies do not have a fixed fee, but give varying 

amounts according to the merit of the invention. One concern 

reports that it pays from $250 to $500, and another that it 

pays from $5 to $5,ooo for an invention which is assigned to 

it by an employee. · 

. 11 d. A few manufacturers reported that a percentage of the anount 

received by them from rofyaJ.ties is paid to employees for 

meritorious inventions. 

11 e. One manufacturer reports that he gives 1% of his sales 

resulting from the invention for the first· five years. None 

of the other companies reported any method of compensating 

employees other than those set forth above. 

"Q. B. If no additional compensation is paid for the meritorious invention, what is the reason, and how is the matter 

handled? 

t•Many companies feel in the case of inventions made by employees 

whose job it is to develop new ideas, especially those in the 

research department, that the salary paid is sufficiept compensation. Most concerns who do not have any stipulation 

in the employee's assignment contract, however, believe that 

the best policy is to reward inventive ability for~promotion 

and salary increases. Sometimes a special bonus is given for 

exceptional invention and one company states that if definite 

48 
REF ID:A10461B 

net profits have resulted from a specific invention by an 

employee, a bonus of approximately 5% of the resulting profits 

will be paid to such employee. 

"A few concerns state that it is difficult to determine the 

amount which should be paid for a meritorious invention. 

One manufacturer states. •Experience has shown that placing 

of emphasis, especially from a monetary standpoint, has 

curtailed the free interchange of information within the 

laboratory and thereby reduced over-all efficiency. Assurance 

of patent protection for the company is con~idered to be an 

element of the job, and this is considered w.i.th other elements 

in promotion or salary increases•. 

"Q. 9. If non-technical employees are exempt from assignment 

agreements do you have a suggestion system covering ideas from 

these employees? 

a. If patentable suggestion results, is assignment 

taken when award is made? 

b. If no assigrunent, what rights does the employer 

retain when an award is made? 

"More than one-half of.the companies replying report that they 

have a suggestion system for rewarding non-technical employees 

who are exempt from the assignment agreement. 

"a. Sixty per cent of those having a suggestion system state 

that if a patentable suggestion is made an assiinment is taken 

when the award is made. Many, however, require that an assignment be made when the patent application is filed, and some, 

having no formal system, believe that a patentable idea should 

be assigned and compensation given according to the value of 

the invention to the company. 

"Some companies encourage the development of new ideas by their 

employees through a patent award system. One concern stimulates 

and rewards original thinking on the part of the employee by giving 

rewards based on the evaluation of the disclosures, for original 

or spontaneous ideas, and for the working out of an assigned 

project ingeniously. Awards in varying amounts are made, first, 

when the patent application is filed, second, upon the issu~ce 

of the patent, and a final award of one-third of the net profits 

occasioned by the first year's use of the idea. One company 

reports that if it licenses someone else under the invention 20% 

of the net revenue received is paid to the employee. 

"b. If no assignment is taken of a patentable invention, the 

employers in general retain only r shop rights' under the invention, though some claim exclusive rights thereunder. 

49 
REF ID:A10461B 

"Q. 10. I.r employer sells or licenses employee's patent, does 

the inventor share .financiaJ.ly? In what way? 

ttTwenty-six per cent of those replying to this question stated that 

the employee would share financially where the company sells the 

patent or issues licenses thereunder. The procedure employed 

showed a wide variation, some giving a share in the royalties 

received, usually 50%, a .few a percentage of the annual profits 

resulting from the invention, and others reward the employee 

by means of promotion, salary increases, or a bonus." 

A survey of the above shows that industry by and large has some form 

of incentive for its inventors. 

In establishing an awards system for Government employees, one of 

the most important factors is to do it at the least possible cost to the 

Government. Inasmuch as the Government does not exploit any inventions 

nor receive any remuneration from them it is obvious that if the invention 

fills a governmental need then any other rights are merely so much surplusage 

so far as the Government is concerned0 

In view of this the inexpensive way for the Government to give incentive 

is to leave commercial rights with the employees when the law so permits. 

As heretofore pointed out this was the policy of the Armed Services. 

This policy should be resumed as the least expensive form of incentive. In 

those cases where the Government is constrained by law from leaving 

/

!) commercial rights with inventors or where the invention has only military 

application, then an awards system should be established. It must be 

recognized that an awards system only has ~plication when an invention 

actually goes into use 0 Many inventions made by Government employees 

are never used by the Government. There are many reasons why they do 

not go into use. The most importantJ so far as this discussion is 

concerned is that the Armed Services have no immediate need for them. 

However, in the carrying out of research such inventions will arise. 

It is equally true that when commercial rights are le.rt with 

inventors many of the inventions will never go into use but there is a 

far better possibility that they willJ for outside interests will be 

willing to gamble capital in return for the rights. 

PROPOSED LEGISLATION (HR7.316) 

There was introduced in the last Congress, H. R. 7316, which proposed 

the establishment of an Awards System for inventions which were communicated to the Government and were used in the National Defense. This Bill 

was broad enough to include Government· employees when the inventions were 

useful in the National Defense. 

The Department of Defense supported this legislation but in the 

closing days of the Congress it bogged down just as other legislation 

had bogged down. 

50 
REF ID:A10461B 

The Chairman of the Government Patents Board testified and supported 

this legislation in principle but recommended that the Board be placed 

under the President, rather than under the Secretary of Defense. He 

also submitted a copy of the Report of "A Proposed Government Incentives, 

Awards and Rewards Program with Respect to Government Employees". Appendix 

N. 

In referring to this Report it must he recognized that it does not 

necessarily r~present the opinion of the Chairman as it is a Report submitted to the Chairman. 

The Committee preparing this Report apparently failed to recognize 

that Executive Order 10096 relates only to patentable inventions. A 

patentable invention is something quite distinct from a beneficial. 

suggestion. The dra~ers of our Constitution considered inventions 

BO important that they included a provision in the Constitution to award 

inventors. This same provision permits awards to authors. These awards 

are in the nature of a patent or copyright and it is~the only place in 

the Constitution which permits the establishment of 11 class legialationtt. 

A patentable invention is something new, it must not heretofore have 

existed and can only be obtained within the prescribed limits set down 

by the Congress. The award in the nature of a patent gives to the inventor the right to exclude others from its use for a period of seventeen 

years. In other words, the patent establishes the patent rights, a patent 

cannot exist independently of the invention but the invention exists 

independent 0£ the patent. The rights granted by the patent are, of 

course, lost to the Government employee if the Government takes title 

and then makes the invention available to everyone. 

On the other hand a beneficial suggestion need not be new, it need 

not be original., it need only be something which is brought to the attention of a governmental. agency and used to increase its efficiency. The 

awards for beneficial suggestions are based on "savings", whereas many 

inventions cannot be measured on this basis 0 The atomic bomb is indicative, its cost has been astronomical, and this is true in many 

instances of other inventions. 

The Proposed Government Incentive Awards and Rewards Program lumps 

inventions in with all other types of suggestions 0 It is an excellent ,,,. ::--... 

statement of the problem but ~1 completely on one reconnnendation. 

Under Recommendations for new legislation, on page 25, paragraph l(b} 

reads as follows: 

ffJWployees most likely to produce inventions by reason 

of the nature or their employment or assigned duties 

should not necessartly be excluded by reason of such 

employment. However, for such anployees to qualify 

for an award, their inventions definitely would have 

to be outstandingly beyond the normal requirements 

of their work." (Underscodng added) 

51 
REF ID:A10461B 

This is the reason most inventors cannot now get an award under the 

beneficial suggestion program. If it is their duty to invent, how can 

they invent beyond their duty? If a man is assigned to invent the 

hydrogen bomb and invents it, then he has done only what is expected 

of him. The proposed criteria rule out inventors except possibly 

the so-called 11 one-shot inventor", such as the janitor who comes up 

with a new radio. 

I

.('.. The measure of awards should be its usefulness to the National 

Defense and its application ~ould only be necessary in those cases 

where the Government is cor.strained by law to take title to the 

invention. 

Again it is emphasized that the problem should not be confused by 

lumping inventions with everything else. 

SUMMA.RY 

From the foregoing it may be said 

(1) That an awards system is desirable for Armed Forces 

employee inventors when required to assign their inventions; 

(2) The most inexpensive type of incentive system is to 

return to the policy of leaving commercial rights with 

the inventors except when constrained by law from doing 

so; and 

(3) An awards system similar to H. R. 7316, should be 

adopted by the Armed Services as it is broad enough to 

include Government employees 1vho otherwise would not be 

awarded for use of their inventions~ 

52 
REF ID:A10461B 

SECTION V 

OPINION AND RF~OMMENDATIONS 

OPINION 

It is the opinion of the Board (1) that the policy presently 

enunciated by Executive Order 10096 is detrimental to the National 

Defense and has caused a demoralizing effect among Government employees; 

(2) that administration or this vital problem should remain in the 

hands of the Secretaries or the Departments where it can be administered 

without additional costs to the Defense Departments; (3) that any policy 

adopted by the Armed Services should be in conformity with existing law 

and follow the intent of the Congress; (4) that the policy be sufficiently 

clear to enable Government employees to antic~pate their rights in and 

taking of title to an invention the employee inventor should be made 

eligible for an award if Government use is made of the invention. 

to inventions made by them; (5) that when the policy requires the 11 

RECOMMENDATION 

It is recarmnended: 

(1) THAT THE PRESIDENT BE REQUESTED TO EXEMPT THE ARMED 

SERVICES FROM THE POLICY PROVISIONS OF EXECUTIVE ORDER 

10096; 

(2) THAT THE FOLLOWING POLICY BE ESTABLISHED FOR THE 

ARMED SERVICES: 

THE FOLLOWING POLICY SHALL GOVERN THE DIVISION OF RIGHTS 

IN AND TO INVENTIONS MADE BY· 'EMPLOYEES OF THE DEPARTMENT 

OF DEFi!tNSE: 

(i) WHEN AN EMPLOYEE'S EMPLOYMENT IS IN RESEARCH AND 

DEVELOPMENT 

(a) TITLE TO ANY INVENTION MADE BY SUCH 

EMPLOYEE IN CONNECTION WITH PERFORMING 

HIS ASSIGNED ACTIVITY AND WHICH IS 

DIRECTLY RELATED TO THE SUBJECT MATTER 

THEREOF SHALL BE IN THE GOVERNMENT; 

( b) TITLE TO ANY INVENTION MADE BY SUCH 

EMPLOYEE NOT WITHIN HIS ASSIGNED ACTIVITIES 

OR NOT DIRECTLY RELATED THERETO SHALL BE IN 

THE .EMPLOYEE, SUBJECT TO GRANTING TO THE 

GOVERNMENT AN IRREVOCAET.E, ROYALTY FREE, 

WORLD-WIDE LICENSE IN AND TO SAID INVENTION 

'WHEN THE INVENTION IS MADE ON GOVERNMENT TIME 

OR WITH THE USE OF GOVERNMENT MONEY, FACILITIES, 

MATERIAL OR OTHER GOVERNMENT PERSONNEL. 

53 
REF ID:A10461B 

(ii) WHEN AN EMPLOYEE'S EMPLOYMENT IS NOT IN 

RESEARCH AND DEVELOPMENT 

(a) TITLE TO ANY INVENTION MADE BY 

SUCH EMPLOYEE SHALL REMAIN IN SUCH EMPLOYEE, 

SUBJECT TO THE GRANTING TO THE GOVERNMENT AN 

IRREVOCABLE, ROYALTY FREE, WORLD-WIDE LICENSE 

IN AND TO SAID INVENTION WHEN THE INVENTION IS 

MADE ON GO~RNMENT TIME OR WITH THE USE OF 

GOVERNMENT MONEY, FACILITIES, MATERIAL OR 

OTHER GOVERNMENT PERSONNEL. 

(iii) EXCiCPT AS PROVIDED ABOVE 

(a) TITLE TO AN INVENTION MADE BY ANY 

EMPLOYEE SHALL BE IN THE ~LOYEE, SUBJJIJT TO NO RIGHTS IN THE GOVERNMENT. 

THE SECRETARY OF EACH DEPARTMENT OF THE ARMED SERVICES SHALL 

PROMULGATE RULES AND REGULATIONS FOR ADMINISTERING THE ABOVE 

POLICY. 

(.3) THAT AWARDS LEGISLATION SIMILAR TO H. R. 7.316 BE INCLUDED 

IN THE !DEPARTMENT OF DEFENSE LEGISLATIVE PROGRAM. 

54 
REF ID:A10461B 

APPENDIX G 

EXECUTIVE ORDER 10096 

January 2J, 1950 

PROVIDING FOR A UNIFORM ?ATENT POLICY FOR THE GOVERNMENT 

WITH RESPECT TO INVENTIONS MADE BY GOVERNMF.NT EMPLOYEES 

AND FOR THE ADMINISTRATION OF SUCH POLICY 

~JHEREA.S inventive advances in scientific an~ technological fields 

frequently result from governmental activities carried on by Government 

employees; an~ 

WHEREAS the Government of the United States is expending large sums 

of money annually for the conduct of these activi~ies; and 

WHEREAS these advances constitute a vast n~tional resource; and 

WHEREAS it is fitting and proper that the inventive product of functions 

of the Government, carried out by Government employees, should be available 

to the Government; and 

WHEREAS the rights of Government employees in their inventions should 

be recognized in appropriate instances; and 

. WHEREAS the carrying out of the policy of this order requires appropriate 

administrative arrangements: 

NOW, THEREFORE, by virtue of the authority vested in me by the 

Constitution and statutes, and as President of the United States and 

Commander in Chief of the armed forces of the United States, in the 

interest of the establishment and operation of a uniform patent policy 

for the Government with respect to inventions made by Government employees, 

it is hereby ordered as follows: 

1. The following basic policy is established for all Government agencies 

with respect to inventions herea~er made by any Government employee: 

(a) The Government shall obtain the entire right, title and interest in 

and to all inventions made by any Government employee (1) during working hours, 

or (2) with a contribution by the Government of facilities, equipment, 

materials, funds, or information, or of time or services of other Government 

employees on official duty, or (3) which bear a direct relation to or are 

made in consequence of the official duties of the inventor. 

(b) In any case where the contribution of the Government, as measured by 

any one or more of the criteria set forth in paragraph (a) last above, to the 

invention is insufficient equitably to justify a requirement of assignment to 

the Government of the entire right, title and interest to such invention, or 

in any case where the Government has insufficient interest in an invention to 

,, 

. ,.
REF ID:A10461B 

obtain entire right, title and interest therein (although the Government 

could obtain same under paragraph (a), above), the. Govermnent agency concerned, 

subject to the approval o.f the Chairman of the Government Patents Board 

(provided for in paragraph 3 of this order and hereina~er referred to as 

the Chairman), shall leave title to such invention in the employee, subject, 

however, to the reservation to the Government of a· non ... e:{clusive, irrevocable, 

royalty-free license in the invention with power to grant licenses for all 

govermnental purposes, such reservation, in the terms ther€of, to appear, 

where practicable, in any patent, domestic or foreign, which may issue on 

such invention. 

(c) In applying the provisions or paragraphs (a) and (b), above, to 

the facts and circumstances relating to the making of any particular invention, .. it shall bo presumed that an invention made by an employee who is employed or 

'·· assigned (i) to invent or improve or perfect any art, machine, manufacture, or 

composition of matter, (ii) to conduct or perform research, development work, 

or both, (iii) to supervise, direct, coordinate or review Government 

financed or conducted research, development wor~, or both, or (iv) to act 

in a liaison capacity among governmental or non-governmental agencies or 

individuals engaged in such work, or made by an employee included within a:rr:r 

other category of employees specified by regulations issued pursuant to 

section 4 (b) hereof, falls ld.thin the provisions of paragraph (a), above, 

and it shall be presumed that a.zzy- invention made by any other employee falls 

within the provisions of paragraph (b), above. Either prearmption may be 

rebutted by the facts or circumstances attendant upon the conditions under 

which any particular invention is made and• notwithstanding the foregoing, 

shall not preclude a netermination that the invention falls within the 

provisions of paragraph (d) next below. 

(d) In any case wherein the Government. neither (1) pursuant to the 

provision of paragraph (a) above, obtains entire right, title and interest 

in and to an invention nor (2) pursuant to the provisions of paragraph (b) 

above, reserves a nonexclusive, irrevocable, royalty~free license in the 

invention with power to grant licenses for aJ.l governmental purposes, the 

Government shall leave the entire right, title and interest in and to the 

invention in the Government employee, subject to law. 

(e) Actions taken, and rights acquired, under the foregoing provisions 

of this section, shall be reported to the Chairman in accordance with 

precedures established by hill'l. 

2. Subject to considerations of· national security, or public health, 

safety or welfare, the following basic policy is established for the 

collection, and dissemination to the public, of information concerning 

inventions resulting from Government research aad development activities: 

(a) 'When an invention is made under circumstances defined in paragraph 

l(a) of this order giving the United States the right to title thereto, 

the Government agency concerned shall either prepare and file an application 

for patent therefor in the United States Patent Office or make a full 

disclosure of the invention promptly to the Chairman, who may, i.f he 

56 
determines the Government interest so requires, cause application for patent 

to be f'iled or cause the invention to be ful:ly" disclosed by publication 

thereof: Provided, however, That, consistent with present practice of the 

Department of AgricUlture, no application for patent shall, without the 

approvaJ. of the Secretary of Agriculture, be filed. in respect of any variety 

of plant invented by any employee of that Department. 

(b) Under arrangements made and policies adopted by the Chairman, all 

inventions or rights therein, including licenses, owned or controlled by the 

United States or any Government agency shall be indexed, and copies, 

summaries, analyses and abstracts thereof shall be maintained and made 

available to all Government agencies and to public libraries, universities, 

trade associations, scientists and scientific groups, industrial and 

cormnercial or~anizations, and all other interested groups of persons. 

3, (a) A Government Patents Board is established consisting of a 

Chairman of the Government Patents Board, who sh~l be appointed by the 

President, and of one representative from each of the following: 

Department of Agriculture 

Department of Commerce 

Department of the Interior 

Department or Justice 

Department of State 

Department ot Defense 

Civil Service Commission 

Federal Security Agency 

National Advisory Committee for 

Aeronautics 

General Services Admiltj.stration 

Each such representative, together with an alternate, shall be designated 

by the head of the agency concerned. 

(b) The Government Patents Board shall advise and confer with the 

Chairman concerning the operation of those aspects of the Govermnent's 

patent policy which are affected by the provisions of this order or of 

Executive Order No. 9865, and suggest modifications or improvements where 

necessary. 

(c) Consonant lrith law, the agencies referred to in paragraph 3(a) 

hereof shall as may be necessary for the purpose of effectuating this order 

furnish assistance to the Board in accordance with section 214 of the 

Independent Offices Appropriation Act, 1946, 59, Stat. 134, 31 u.s.c. 691. 

The Department of Commerce shall provide necessary office accommodations 

and facilities for the use of the Board and the Chainnan. 

(d) The Chairman shall establish such committees and other working 

groups as may be required to advise or assist him in the·performance of any 

of his functions. 

( e) The Chairman of the Government Patents Board and the Chairman of the 

Interdepartmental Conmrlttee on Scientific Research and Development (provided 

for by Executive Order No. 9912 of December 24, 1947) shall establish and 

maintain such mutual consultation as will effect the proper coordination of 

affairs of common concern. 

51 
REF ID:A10461B 

4. With a view to obtaining uniform application of the policies set 

out in this order and uniform.operations thereunder, the Chairman is authorized 

and directed: 

'· 

(a) To consult and advise with Government agencies concerning the 

application and operation of the policies outlined herein; 

.(b) After consultation with the Government Patents Board, to formulate 

and submit to the President for approval such proposed rules and regulations 

as may be nece~sa.ry or desirable to implement and effectuate the a.f'oresaid 

policies, together with the recommendations of the Government Patents Board 

thereon,; 

(c) To submit annually a report to the President concerning the 

operation of such policies, and from time to time sueh recommendations for 

modification thereof as may be deemed desira.bleJ 

(d) To determine with finality any controve7sies or ~isputes between 

any Government agency and its employees, to the extent subnitted by any 

party to the dispute, concerning the ownersh1p of μiventions made by such 

employees or rights therein; and 

(e) To perform such other or further !unctions or duties as may from 

time to time be prescribed by the President or. by statute. 

5. The functions and duties ot the Secr~tary of Commerce and the 

Department of Commerce under the provisions of Executive Order No. 9865 

of June 14, 1947 are hereby transferred to the Chairman and the whole or 

a.n:y part of such functions and duties may be delegated by him to any 

Government agency or officer: Provided, That said Executive Order No. 9865 

shall not be deemed to be amended or affected by' any provision of this 

Executive Order other than this paragraph 5. " 

6. Each Government agency shall take all steps appropriate to 

effectuate this order, including the promulgation of necessary regulations 

which shall not be inconsistent in.th this order or ~th regulations 

issued pursuant to paragraph 4 (b) here~£. 

1. As used in this Executive Order, the next stated terms, in singular 

and plural, are defined as follows for the purposes hereof: 

(a) "Government agency" includes any executive department and any independent commission, board, office, agency, authority, or other 

establishment of the Executive Branch of the Government of the United 

States (including any such independent regulatory commission or board, 

any such wholly-owned corporation, and the Smithsonian Institution), 

but excludes the Atomic Energy Commission. . . 

(b) "Government employee" inclup.es any officer or employee, civilian 

or military, of any Government agency, except s~h part-time 

consultants or employees as may be excluded by r~~ations promulgated 

pursuant to paragraph 4 (b) hereof. 

58 
REF ID:A10461B 

(o) "Invention" includes any art, machine, manufacture, design, or composition of matter, or any new and useful improvement thereof, or any 

variety of plant, which is or may be.patentable under the patent laws 

of the United States. 

HARRY.S. TRUMAN 

THE WHITE HOUSE 

January 23, 1950