With Respect to Government Employees 

OFFICE OF THi CHAlaMAM 

GOVERNMEMT PATIMTS BOARD 

WASHINGTOM, D. C. 
- - REF ID :A4161585 

A PROPOSED 

Government 

Incentives, Awards 

and Rewards 

Program 

WITH RESPECT TO GOVERNMENT 

EMPLOYEES 

Report of lnteragency Working Committee 

on Incentives, Awards, and Rewards Submitted 

to the Chairman, Government Patents Board 

MARCH 10, 1952 

OFFICE OF THE CHAIRMAN 

GOVERNMENT PA TENTS BOARD 

WASHINGTON 25, D. C. 

For sale by the Superintendent of Documents, U. S. Government Printing Office 

Washington 25, D. C. - Price 1 5 cents . 

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CONTENTS 

Page 

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

A. Employees Covered in This Study. . . . . . . . . . . . . . . . . . . . . . . 2 

B. Importance of the Problem. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 

II. EXISTING LAWS AND CURRENT PRACTICES............ 4 

A. Existing Laws Applicable to More Than One Agency. . . . . . 4 

B. Special Statutory Provisions for Certain Departments...... 8 

C. Practices of Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 

D. Practices of Other Governments. . . . . . . . . . . . . . . . . . . . . . . . . 14 

III. DISCUSSION AND ANALYSIS............................. 17 

A. Pros and Cons Regarding a Separate Awards System for the 

Inventive Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 

B. Types of Awards.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 

C. Deficiencies and Limitations in Present Laws Covering 

Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 

D. Deficiencies of System Which Permits Awards Under Special 

Departmental Statutory Authority..................... 23 

IV. FINDINGS AND CONCLUSIONS ......................... . 

A. Recommendations for New Legislation for a Comprehensive 

Incentives and Awards Program for All Government Employees lnc:luding Inventors .......................... . 

B. Recommendations Which May Be Effectuated Immediately 

Without New Legislation ............................ . 

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FOREWORD 

Because of general interest in the. subject and because of the desirability of 

giving appropriate recognition to Government employees who make meritorious 

creative contributions useful in the performance of governmental functions and 

operations, this report on a proposed comprehensive Government incentives, 

ayvards, and rewards program is being made available as a publication of this 

Office. 

· The report has been submitted to me by an interagency working committee, 

appointed to make a study of the subject and to submit their findings and 

recommendations, with particular reference to the Government employeeinventor and the relation .of such a program to the achievement of the objectives 

of the recently adopted uniform patent policy of the Government. 

The report is based upon an intensive study made by the committee, under 

the able chairmanship of Henry A. Sawchuk of the United States Civil Service 

Commission. In it the committee discusses and analyzes the problems involved, 

existing statutory provisions and experiences thereunder, and the practices and 

experiences of American industry and of foreign governments. The committee 

also had the benefit of the long experience of the Royal Commission on Awards 

to Inventors in Great Britain and of the reactions to their conclusions and recommendations from sources both within and outside Government. 

The recommendations of the committee cover two phases of action: ( 1) the 

enactment of new legislation having as its objective a comprehensive program 

. for rewarding Government employees making all types of meritorious contributions, including inventions and discoveries of basic scientific principles, which 

are useful in the performance of any governmental function or operation, and 

(2) steps that may be taken immediately, pending the enactment of new legislation, to realize the most effective application of existing statutory provisions 

governing awards to Government employees. 

As Chairman of the Government Patents Board, an independent agency responsible to the President for the formulation and administration of the uniform 

patent policy of the Government, I have brought the report to the attention of ~--·---·~ the heads of all departments and agencies in the Executive branch of the Goveffi'~en't; and"h~-;eque"Sted that~ - - - . - . ,...._--:-.......___ ... _ _...,:. ·- - - --- ·- - ( 1) The necessary steps be taken within each agency to see that, in the administration of existing awards programs that are now authorized by law, those 

programs are made applicable to meritorious inventive contributions as provided in those laws; 

( 2) Existing agency incentives· and awards programs be reviewed to assure 

that the fullest possible advantage is taken of current laws as they apply to the 

employee inventor; and 

(3) For the purpose of stimulating productivity of their employees generally, 

including inventive productivity, the agencies publicize, through appropriate 

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media, the fact that employees making inventive contributions of merit may be 

rewarded under current awards programs. 

As the committee expressed in its conclusions, the advantage to the Government 

of rewarding inventor; in the ways proposed are such that, if the public is to 

.reap the _rich potential harvest from their efforts and creative genius, positive 

measures to reward inventive achievement are eminently desirable. As a firm 

believer in the American patent system and in its continuing contribution to the 

economic and social development of our country, I am convinced that such an 

ex gratia awards program as the committee has proposed is entirely consistent 

with and a desirable supplement to the patent system. 

Reactions to the program recommended by the committee will be welcomed 

from those who read this document and will be given consideration in the further 

development of such a program and of the necessary leg!slation. 

w ASHINGTON, D. c. 

June 4, 1952 

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ARCHIE M. PALMER, 

Chairman, Government Patents Board 

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I. INTRODUCTION 

On January 30, 1951, Dr. Archie M. Palmer, the Chairnian of the Government 

Patents Board, established an interagency working committee to make a study 

of the Government program of incentives, awards, and rewards in its relation 

to the achievement of the objectives of Executive Order roo96. The committee 

consisted of the following persons: 

Mr. Henry A. Sawchuk, Civil Service Commission, Chairman 

Dr. Henry L. Buckardt, Department of Defense 

Dr. K. S. Gibson, National Bureau of Standards 

Mr. Hubert H. Margolies, Department of Justice 

Mr. Henry C. Rubin, Department of the Interior 

Mr. Jack Simons, Federal Security Agency . 

Mr. Frank H. Spencer, Department of Ag~iculture 

Dr. 0. Glenn Stahl, Federal Personnel Council 

In addition, Dr. Palmer furnished valuable guidance and assistance during 

the course of the committee's work, as did Mr. Charles F. Parker, Jr., of the 

Bureau of the Budget, Dean Willis R. Woolrich of the University of Texas 

(Consultant, Government Patents Board), Miss Gudrun L. Scheldrup of the 

Civil Service Commission, and Mr. John M. Hager of the Government Patents 

Board. Mrs. Mary S. Turner and Mr. Paul F. Johnson of the Government 

Patents Board functioned as recorder and secretary, respectively, for the 

committee. 

Basic data underlying this study was obtained by a review of existing laws, 

reports and other pertinent literature. The principal Federal agencies affected 

were requested to furnish information on specific points, including their experiences, views, and recommendations. The committee met periodically and, 

as the scope and pattern 0£ the inquiry developed, specifi~ phases of the study 

were assigned to individual participants for further investigation and report._ 

In the course of the study, progress reports were made to the Chairman of the 

Government Patents Board, the Board itself at its monthly meetings, and the 

various Federal agencies. 

The documentary materials upon which this study is based were taken from 

the files of the Government, or were furnished by the industrial organization or 

foreign country concerned. These materials are available in the ·files of the 

Government Patents Board or other agencies concerned. The discussions at the 

meetings of the committee on incentives, awards, and rewards are summarized 

in memoranda now in the files of the Government Patents Board. In addition, 

considerable information was taken from books, articles, reports, and other 

printed or published material. 

Under Executive Order roo96 of January 23, 1950,. 15 F. R. 389, which provides for a uniform patent policy for the Government with respect to inventions 
REF ID:A4161585 

made by Government employees and for the administration of such policy, a 

Government Patents Board was established consisting of a Chairman, appointed 

by the President, and~a representative and alternate from the Departments of 

Agriculture, Commerce, Defense, Interior, Justice and State and from the Civil 

Service Commission, the Federal Security Agency, the National Advisory Committee for Aeronautics, and the General Services Administration. 

By this order, a basic policy was established for all Governm1mt agencies with 

respect to inventions thereafter made by Government employees. This policy 

includes the determination of the right, title, and interest in and to inventions 

made by Government ·employees. 

A. EMPLOYEES COVERED .IN .THIS STUDY 

For the purpose of this report, consideration is given only to employees of 

the Government who may produce inventions, inclu.ding military as. well as 

civilian personnel of the various agencies affected by Executive Order 10096. 

B. IMPORTANCE OF ·THE PROBLEM 

Estimates place the number of American people whose livelihood is dependeht 

upon patents in force at well over 12 million people or approximately one-fifth 

of the total employed ·population of the United States. 

In the present international emergency, the United States is vitally interested 

in a high rate of productivity in advanced scientific and technological invention 

to compensate for our comparative deficiency in manpower. 

For long-range national planning, an equally important objective of stimulating 

national inventive productivity is to conserve our material resources. This is 

especially significant in our role of international supplier of materials and machinery to allied or friendly nations. 

It appears obvious that the heart of the whole program of stimulating and 

developing inventions is the problem of the inventor and the incentives to' 

invention. 

The present general awards systems in effect in the Government service, which 

provide for salary increases for superior accomplishment, salary increases and 

cash awards for economy and efficiency, cash awards for suggestions, and horior 

awards for efficient and constructive public service, have some inerit. · Their 

principal weaknesses are in their complexity, inadequacy, and inequality. They 

do not specifically provide for contributions of an inventive nature, and in this 

respect they are discriminatory and in many departments fail to give adequate 

incentive and encouragement. 

There is consensus within the committee on incentives, awards, and. rewards 

that it would be considerably more advantageous to the Government to have 

new legislation to simplify, liberalize, and integrate the entire incentives, awards, 

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and rewards programs for Government employees and incorporate in such 

legislation a'uniform policy to apply to inventors in all Government agenciescivil and military. 

Any incentives and awards system having as an objective the stimulation of 

inventive thinking must be developed and operated so that research and other 

essential programs of the Government are ·not impaire4. On the contrary, a 

suitable system should not only strive to increase inventive productiveness, but 

should also im·prove the effectiveness of research and ot.her programs by enhancing 

the urge to investigate fundamental principles and phenomena and to develop 

inventions to productiveness. 

The National Inventors Council, which serves as a medium whereby the public 

may submit 'inventions of value in the defense and welfare of the Nation for 

consideration by the Department of Defense and other Federal agencies, has been· 

considering the possibility of requesting the Congress to authorize a program 

in which suitable cash awards may be given to any person producing inventions 

of value to the armed services and other Government agencies. 

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11. EXISTING LAWS AND CURRENT PRACTICES 

A. EXISTING LAWS APPLICABLE TO MORE THAN ONE AGENCY 

GOVERNING AWARDS TO ALL FEDE,RAL EMPLOYEES 

INCLUDING INVENTORS 

Incentive awards to employees in the Federal Service are granted as official 

recognition: of their contributions toward efficiency and economy of operation 

throughout the Federal Government. The various awards include step increases 

for superior accomplishment and salary increases or cash awards for efficiency, 

cash awards for suggestions, and honor awards. 

1. The Laws 

Awards programs are carried out under specific statutory authorities as follows: 

Step increases for superior accomplishment under Title VII of the Classification Act of 1949 (Public Law 429, 81st Cong., approved October 28, 1949); 

Efficiency awards under Title X of the Classification Act of 1949 (Public Law 

429, 8rst Cong., approved October 28, 1949); 

Cash awards for suggestions under Section 14 of Public Law 600, 79th Congress, and under Executive Order 9817, issued pursuant thereto on December 

31, 1946; and 

Honor awards under Section 14 of Public Law 600, 79th Congress (the Administrative Expenses Act) and Section 5 of Executive Order 9817, December 31, 

1946. 

a. Step increases authorized for salaried employees under Title VII of the 

Classification Act of 1949 

Employees of the Government compensated on a per annum basis, and occupying positions subject to the Classification Act of 1949, may under Title VII 

of the Act be given: 

( 1) Periodic step increases based primarily upon service and a performance 

rating of "Satisfactory" or better during a waiting period of 52 calendar weeks 

for employees in grades with step increases of less than $200, and 78 calendar 

weeks for employees in grades with step increases of $200 or more; 

( 2) Additional increases, granted only within the limit of available appropriations, as rewards for superior accomplishment, viz, outstanding sustained 

work performance; initiation of an idea, method, or device; or a special act or 

service in the public interest; and 

(3) Longevity step increases based on long and faithful service. 

Since periodic and longevity step increases are granted automatically upon 

satisfactory completion of a prescribed amount of service they will not be discussed in this report. 

4. 

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With respect to awards for superior accomplishment, each department is 

authorized to grant additional step increases, within the limit of appropriations, 

but no employee may receive more than one step increase for superior accomplishment within the time period prescribed for periodic salary advancements, 

i. e., 52 .or 78 calendar weeks, depending on the grade of the position which the· 

employee occupies. 

The Civil Service Commission is required by law to issue standards upon which 

superior accomplishment awards shall be based. Each department is required 

to report to the Commission all actions approving such awards, and the Commission, in turn, is required to submit an annual report to Congress covering the 

numbers and types of awards granted. A summary of awards for the fiscal 

years 1947 to 1950 is shown in the following table: 

Reasons for rewards for superior accomplishments 

A B c 

AwardJ for the Ji.cal year mding- Totalnum- Initiation of an Special act or her SuJtained wcrk 

performance idea, method, service in the 

or device public interest 

1947 .. ' ........................ 1, 249 984 166 99 

1948 ........................... 686 4S3 4S 188 

1949. . ························· 972 608 73 291 

19SO . . ························· 1,037 736 SS 246 

Grand total .............. 3,944 2, 781 339 824 

It is significant from a perusal of the table above, that approximately 8.6 

percent of rewards for superior accomplishments have been granted for 

"initiation of an idea, method, or device." Of this 8.6 percent, probably a very 

small percentage represents inventive accomplishments. The table above covers 

only the salaried employees of the Federal Government subject to the Classification 

Act of 1949, which encompasses, among others, professional, technical, and 

scientific workers engaged in research·, design, development, and similar technical 

functions. 

b. Efficiency awards under Title X of the Classification Act of 1949 

Employees of the Government compensated on a per annum basis, and occupying positions subject to the Classification Act of 1949, may, under Title X of 

the Act, be given cash awards or increases in rates of basic compensation for 

accomplishments contributing to outstanding efficiency and economy. 

A cash award for efficiency shall not exceed 25 percent of the estimated savings 

in the first year of operation, nor an amount equal to three times the step increase 

of an employee's grade. If the limitations on the amount of cash awards would 

result in inadequate reward, a salary increase equal to one, two, or three steps 

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for his grade may be granted to an employee for a suggestion or other contribution to efficiency or economy. 

The Bureau of the Budget is required by law to maintain control of awards 

programs under TitlerX of the Act. 

c. Cash awards for suggestions 

Under Section 14 of Public Law 600 and Executive Order 9817, a cash award 

may be granted to any civilian officer or employee for an adopted suggestion 

outside the normal requirements of the duties of his position. Except in the 

Department of Defense, the total of all awards given by an agency during one 

fiscal year may not exceed $15,000. If such an award is based on estimated 

savings resulting from adoption of the suggestion, the amount of the award shall 

be based on the estimated saving in the first year of operation in accordance 

with the following table, unless for a special reason the head of the department 

determines that a different amount is justified: 

$1-$1 ,ooo. . . $1 o for each $200 of savings with a minimum of $10 for any 

adopted suggestion. · . 

$1,000-$10,000.. $50 for the first $1,000 of savings, and $25 for each additional 

$1,000 of savings. 

$10,000-$100,000 .... $275 for the first $10,000 of savings, and $50 for each additional 

$10,000 of savings. 

$100,000 or more. $725 for the first $100,000 of savings, and $100 for each additional $100,000 of savings; provided that (except in the De· 

partment of Defense) the maximum award for any one suggestion shall be $1,000. 

If an award is based on improvements not identifiable as savings, the department determines the amount of the reward commensurate with the benefits 

anticipated. 

At the end of each fiscal year, each department must report to the Director 

of the Bureau of the Budget the number of employee suggestions submitted, 

the number of employee suggestions adopted, the total amount of cash awards, 

and the total amount of estimated annual savings. 

Section 9 of Executive Order 9817 provides that any cash awards to employees 

shall be in addition to their regular basic compensation. The acceptance of a 

cash award by any employee precludes him, his heirs, or assigns, from making 

any claim of any nature upon the United States for the use of the suggestion 

upon which the cash award is based. 

A summary of cash awards granted for suggestions for the fiscal years 1947 

to 1950 is shown in the following table: 

Awards for the fiscal year ending1947 .................................... . 

1948 .................................... . 

·1949 ...............................•..... 

1950 .................•..•...........•.... 

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N11mber of cash Average amount Average ann11a! 

awai"ds made of cash award saving per award 

11,444 

13, 861 

20,037 

19,973 

$37.41 

32.44 

28.74 

28. 73 

$1,463 

1, 139 

919 

1, 034 

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The tabulation above includes all employees of the Government eligible for 

cash awards· under Public Law 600 (the Administrative Expenses Act )-those 

employees paid on a per diem basis which includes the trades and crafts, as well 

as salaried employees subject to the Classification Act of .1949. Information is 

not available as ·to the number of cash awards granted for adopted suggestions 

of an inventive nature. 

d. Honor qwards 

Under Public Law 600, 79th Congress, departments are authorized to incur 

necessary expenses for the honorary recognition of employees or organizational 

units for e"xceptional contributions toward efficient and constructive public service. Any officer or employee of a department or agency is eligible to receive an 

honor award. 

Some departments or agencies have established honor award programs having 

only three such awards, while others have as many as four major types of 

awards. These are known as Distinguished Service Award, Superior Service 

Award, Length of Service Award, and Commendable Service Award. The 

titles of the awards may vary slightly among the various agencies but the principles on which recognition is granted are basically the same. The award may 

consist of a medal, lapel emblem, or an appropriate certificate, or a combination 

of these. 

2. Publicity and Other Types of Recognition 

It is generally recognized that publicity of awards is required and the progra~ 

must be made known to employees generally if any substantial incentive value 

is to result and the program is to operate successfully. Ceremonies are usually 

held in connection with the presentation of awards to employees, with articles 

announcing such awards appearing in agency or departmental publications. 

Employee recognition includes not only salary increases, cash awards, and 

honor awards, but other forms of recognition, such as promotional opportunities, 

letters of commendation to be inserted in personnel folders, and other expressions. 

of approbation. ·While cash awards and salary increases are one important 

feature of the incentive awards program, they are considered· as incidental to 

the broader objective of obtaining management improvement through genuine 

participation by employees in deciding on questions which affect them and the 

way in which their work will be done. 

3. Machinery for Administration of Awards Programs 

The diversified legal authorities existing at present, the divided control responsibilities at .the executive level, and the close but complex relationship of 

the various types of awards have made it imperative that departments coordinate 

the administration of the awards program. Bureau of the Budget Circular A::-8, 

Supplement I, dated February 28, 1950, issued jointly with the Civil Service 

Commission, requires each department to establish an over-all efficiency awards 

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committee to coordinate and administer its awards program. This is necessary 

in view of the fact that, for a particular contribution, an employee .may now be 

eligible under the existing laws for awards under more than one program. 

Subordinate awards committees may be established in each agency to assist in 

administering the incentive awards programs. Members of any awards committee are selected from among the key operating and staff officers of the agency 

or the organizational unit which the committee serves. In organizations where 

the work is predominantly technical or scientific in nature, at least one committee member should have a technical or scientific background. Authority 

to grant awards may be delegated to the subordinate committees except where 

the legal authority for making the award does not permit such action. Each 

department issues instructions for the conduct of the awards program throughout 

that department. 

B. SPECIAL STATUTORY PROVISIONS FOR CERTAIN DEPARTMENTS 

GOVERNING REWARDS TO INVENTORS 

A patents and design board, composed of Assistant Secretaries of War, Navy, 

and Commerce, was created by the Act of July 2, 1926 (IOU. S. C., 1946 ed., sec. 

3 IO) to determine the amount, not to exceed $75,000, which any individual, firm, 

or corporation may be paid for a design, whether patented or unpatented, for aircraft, aircraft parts, or aeronaut.ical accessories. Any design submitted to the 

board for such consideration is referred to the National Advisory Committee for 

Aeronautics for its recommendation. Thus far only one award, in the amount 

of $1,000, has been made under this statute, and that award was made to a 

Government employee. 

Certain of the executive departments have been permitted, under special statutory provisions, to reward employee-inventors in their departments for meritorious suggestions and inventions. These provision~ are as follows: 

1. Department of the Interior 

The Department of the Interior is authorized, by Public Law 357, Seventyeighth Congress, seco:nd session (5 U. S. C., 1946 ed., sec. 500), to reward 

employees, in an amount not exceeding $1,000 (nor to exceed $20,000 in the 

aggregate during any one fiscal year), for any "suggestions or inventions" which 

would result in improvements in "technological or scientific processes or 

methods." Under this statute, the Department also may rec9mmend to the 

Congress that special appropriation be made for an award to an employeeinventor in an exceptionally meritorious case. 

As these provisions have been held by the Comptroller General, on March 20, 

1947, to be not in conflict with the provisions of Section 14, Public Law 600, 

Seventy-ninth Congress (5 U. S. C., 1946 ed., sec. u6a), they remain available 

to the Department of the Interior. 

Since the enactment of Public Law 600, the Department of the Interior has 

made only two awards to inventors, in the total amount of $430, under its 

special statutory authority. 

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2. Post Office Department 

The Post ,Office Department is authorized, under the provisions of the Act of 

December 3, 1945 (39 U. S. C., 1946 ed., sec. 813), to pay a cash award for any 

invention or suggestion which will clearly effect a material economy or increase 

efficiency in the administration or operation of the Post Office Department or the 

postal service. The amount of any one award may not exceed $1,000, nor may 

the aggregate amount of awards in any one year exceed· $15,000. 

The Post Office Department has not, since the enactment of Public Law 600, 

used the special statutory authority contained in the Act of December 3, 1945, 

for the purpose of making awards for inventions. 

3. Department of the Army 

The Department of the Army is authorized, under the Act of July 17, 1912 

(.50 U.S. C., 1946 ed., sec. 58), to make cash awards to employees of the Ordnance 

Department for an improvement or economy in manufacturing processes or 

plant. The aggregate amount of awards may not exceed $1,000 in any one 

month. 

Beginning with the 1943 appropriation act, and in subsequent appropriation 

acts, through 1946, the Department was authorized to pay awards to civilian 

employees for suggestions resulting in improvements or economy in manufacturing processes or plant, or military material. Substantial amounts were paid 

to employees under this authorization prior to 1947· 

The Department of the Army has, since 1943, operated its awards programs 

on a department-wide basis. It has not, since the enactment of Public Law 600 

in 1946, used the two previous authorizations mentioned above. 

4. ,Department of the Navy 

The Department of the Navy is authorized, by the Act of July l, 1918 (5 

U. S. C., 1946 ed., secs. 416a, 416b ), to pay cash awards to civilian employees 

for suggestions resulting in an improvement or economy in manufacturing 

processes or plant or naval material. 

From the date of the enactment of this legislation until 1945, the Navy Department paid out approximately $750,000 as awards for suggestions. In practice, the awards were made, in general, to those in unskilled positions and in 

the lower civilian personnel grades. Special legislation was enacted in two cases 

authorizing the awards to_ officers of $15,000 and $1,500, respectively, for assignments of their inventions. 

5. Tennessee Valley Authority 

The Tennessee Valley Authority Act of 1933 (16 U.S. C., 1946 ed., sec. 831) 

authorizes the payment to employee-inventors of such sums as the TV A Board 

may deem proper "from the income of sale or licenses." However, while patent 

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licenses are issued by TV A subject to such terms and conditions as are appropriate to each particular case, licenses so issued are in general nonexclusive and 

royalty-free. 

Since August 2, 1945, the TV A has filed an average of six patent applications 

per year. In addition, during the same period, an average of 75 technical suggestions per year were received from employees and formally considered under 

the TVA procedure of review. Of the total number of technical suggestions 

received since 1945, an average of approximately 20 per year have been of some 

use to TVA. 

The TV A presently is of the op1mon t_hat it also has authority under the 

broad provisions of section 3 of its act to establish a system or program of 

incentives independently of any sharing of license income. While TV A has 

sponsored for a number of years an active suggestion plan through a series of 

cooperative committees, it does not, as a result of an employee-management 

agreement, grant cash awards for suggestions. 

C. PRACTICES OF INDUSTRY 

1. Sources of Information 

_ To ascertain the policies of industry with regard to employees' inventions, 

existing reports and publications on this subject were studied. In a few cases 

information was obtained directly from certain companies. An exhaustive 

inquiry into current industrial practices was not undertaken because of lack of 

time and resources, and because the data already available in the various publications are sufficiently indicative for purposes of this report. 

2. Assignment of Invention 

The majority of industrial firms require their employees to execute agreements 

to assign title to their inventions. The firms which do not require written agreements generally have oral understandings to the same effect. There is no 

uniformity as to the employees covered-some firms require assignments from 

all employees, and other firms limit such agreements to those employees engaged 

in research and technical work. With respect to the scope of the assigrimeni:, 

it is the general practice to provide for assignment of any invention within the 

field of the company's business. There are two points of view as to the effect 

of assignments upon inventive productivity: 

a. Experience in the past has demonstrated that employees, particularly_ those 

most likey to produce inventions, do not object to assignment provided their work 

is recognized and they are treated fairly. In the case of technicians and researchers, assignment is expected if the invention is made in the line of the man's 

employment. Also, assignments tend to reduce secrecy and to provide better 

teamwork and freedom in working with others on similar tasks. 

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b. The assignment of inventions in advance tends to dampen the incentive 

to invent. Many employees are antagonized when required to execute an 

agreement ~hich may be interpreted as containing onerous terms for employment. It has been said: "Many of these employees feel that they are mortgaging 

their brains, ingenuity and ability for a stated salary because such contracts 

usually make no provision for a fair recompense in case an important invention 

is made." 

Judging by the experience and practices of industrial firms, it appears that 

the requirement of an assignment does not appreciably affect inventive productivity on the part of technical and scientific employees. Although many firms 

require assignments from all employees, most companies limit the written 

requirement to their technical staffs. 

3. ,Extent to Which Companies Stimulate Inventions 

There is wide diversity of practice with respect to the degree to which inventions are encouraged. A few companies take no positive measures to stimulate 

inventions. While this group is in the minority, this attitude seems to be characteristic of the well-established industries where the processes and equipment 

are standardized. The theory here is that dreamers of new inventions make 

poor producers. The result of this attitude is -that the industrial United States 

is replete with successful industries developed by men of inventive capacity who 

withdrew from their previous employment in dissatisfaction with the terms of 

invention assignments imposed upon them. Quite generally these men were 

individualists with a daring pioneer spirit who had courage to break away and 

slart out on their own. Alert industrialists today recognize that these are the 

very men most valuable for the expansion of their businesses, thus the change in 

attitude toward these productive inventors. 

Most companies encourage inventions on the part of all employees, ~ut many 

of these companies concentrate on their engineering and research staffs since they 

have found through experience that almost invariably the important inventions 

are made by those who are employed for such a purpose. 

The extent to which efforts are made to stimulate inventions among employees 

seems to vary with the nature of the work of the firm and the attitude of the 

company's management. 

4. Rewards for Inventions 

The practice with respect to the -nature of awards and the amounts of cash 

awards given to inventors in industry is as diverse as industry itself. Some firms, 

large and small, do not give special cash awards to any employees, feeling that 

any inventive contribution should be considered as an element in determining 

whether promotion should be made, usually with an appropriate increase in 

salary or regular compensation. Some companies allow special cash bonuses for 

inventions made only by nontechnical or nonresearch personnel, taking the position that their professional employees are paid to invent and special awards for 

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inventors tend to retard their research ai-id developmental programs. Most firms, 

however, allow special cash awards,. in varying amounts, for inventions made 

by all e~ployees. In some cases, special reward plans for inventions are applicable only to the techhical and research personnel, in the belief that an invention 

represents sornething more than a suggestion, and consequently a special system, 

designed to stimulate and elicit patentable ideas from among those most likely 

to make such contributions, is justified. 

In those cases where extra compensation, other than salary, is given for meritorious inventions, some companies make a fixed payment for each invention; 

other companies provide a sliding scale depending on the value of the invention. 

Those companies which make fixed payments may make such awards at different 

times and in different amounts. These payments may be made at the time of disclosure, at the time the patent application is filed, and at the time the patent is 

granted. 

Many companies have plans for payments which go beyond the fixed award 

scheme. These systems usually provide for fixed awards and, in addition, 

subsequent variable cash awards or bonuses which may be based upon a percentage of royalties collected under licenses granted, value of the invention as measured by savings, and value of the invention as measured by profits realized. 

In a few cases plans have been.adopted wherein the entire group working in 

the field of the invention is rewarded instead of rewarding just the particular 

inventor. Such plans usually provide that a fixed percentage of the profits or 

savings resulting from inventions should go into a fund to be apportioned annually to all of the employees concerned. Such apportionment is usually dependent on the salary earned by the individual employee and his years of service. 

5. Conclusion 

As might be expected, there is no uniform pattern with respect to the encouragement and rewarding.of inventors in industry. Even in the more homogeneous 

segments of industry there is a considerable diversity of practice due to the 

different attitudes and policies of the management of each organization. Many 

of the larger industrial firms have established policies of not giving their technical 

and research workers special rewards for their inventions. These firms usually 

consider inventions as an important factor in determining when the employee 

should be promoted or given a salary increase. 

The following reasons are usually given for not having. a special awards 

system for inventors: 

a. Arguments Against Special Awards System for Inventors 

( 1) Those employees engaged in technical research and development are paid 

with the expectation that they may produce inventions. 

( 2) Other employees who dev.ote too much time to inventive possibilities 

do so at a sacrifice in their regular productive output. 

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(3) Since many inventions stem from group effort, there is a practical difficulty in identifying the inventor, or inventors, to be rewarded and the extent 

of each person's contribution. 

(4) Special rewards tend to reduce teamwork because some workers may 

become secretive about their work in hope of greater personal gain. 

(5) Rewards for inventions are discriminatory against research workers and 

others who may make valuable discoveries that are not patentable. 

( 6) A special awards system for inventors encourages employees to submit 

large numbers of ill-considered ideas, and creates ill will against the compariy's 

patent department when decision is made nqt to seek protection. 

On the other hatj'ci, a significant number 0£ industrial firms, includ.ing some 

engaged in research>'.work, have found it profitable and advantageous to develop 

a patent consciousness and to provide for suitable monetary rewards for all employees, including those engaged in research work. Proponents of this approach 

feel that special awards should be given to all inventors, whether under a separate system or as a part of an over-all company suggestion and awards system, 

because: 

b. Arguments for Special Awards System for Inventors 

(I) When an engineer, scientist, or other employee makes an important invention it is only proper that he receive a suitable recompense-he should not be 

denied a suitable special reward because he is performing research work, because 

he has technical education and training, or because he has greater imagination 

than his fellow workers. 

(2) Rewarding of inventors by salary increase or promotion is not always 

practicable or fair-a salary increase for a particular inventive contribution may 

be inadequate if the employee should work at the increased salary for only a 

short time, whereas it may be disproportionately high if the employee continues 

to work. indefinitely at the higher salary and should make no more meritorious 

inventions; also, with respect to promotions, not all inventors desire or are capable of assuming successfully positions of higher responsibility and importance. 

(3) The absence of a positive awards plan for inventors has in part led to 

the use of the term "captive inventors" with reference particularly to salaried 

researchers. 

(4) The absence of an awards system which definitely provides for inventors 

is not conducive to the encouragement of inventions. 

(5) The following benefits may accrue from having a tangible system for 

rewarding all inventors: 

(a) Useful. inventions are promoted and a steady flow of ideas encouraged. 

( b) Prompt reporting of inventions is encouraged. 

( c) The work of a patent department is facilitated by increased cooperation 

from the inventors. 

( d) Patent consciousness on the part of management is promoted. 

( e) Good industrial relations are promoted by a well-administered plan. 

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D. PRACTICES OF OTHER GOVERNMENTS 

An analysis of available information with respect to the practices of othe1 

Governments reveale,d relatively little of value to the purposes of this report. 

Great Britain, Canada, France, and the Scandinavian countries, especially Sweden, 

did offer some suggestions. 

1 .. Great Britain 

Within the British Government, the inventions of the public servants 1 historically have been considered property of the Crown unless it could be demonstrated that the idea and the work of developing the invention had been done 

independent of all association with G<;ivernment time and/or facilities. 

Until the end of the nineteenth century, monetary awards were rarely accorded 

civil servants for inventions of special merit in Great Britain, but they were recognized by distinctive state honors, the decoration conforming to the salary level. 2 

of the servant. . 

A central committee on awards was set up by the Treasury on recommendation 

of the Civil Service Committee and the Civil Service National Whitley Council 

in 1930. 

Under this· awards system, departmental awards committees may recommend 

to the department or ministry head monetary awards to inventors up to one thousand pounds sterling. Also, they are authorized to recommend the distribution 

of the commercial rights between the inventor and the Government. 

The central committee on awards is an agency of the Treasury and is appointed by the Treasury. The Treasury also supplies one member of each departmental awards committee. The committe~. may make awards up to ten 

thousand pounds sterling and may recommend tb the Treasury the granting of 

even greater awards. It further serves as an award reviewing and coordinating 

board. . 

Cash awards to civil servants of Great Britain are not limited by the salary. 

level of the inventor as has been the policy on decorations. In fact, departmental 

committees have been reported to be more liberal in making high cash awards 

to low rather than high salaried civil servants on the basis that ~ore should be 

expected of a high salaried worker. In theory, cash awards for inventors in 

Britain are made inversely proportional to the proximity of the invention to 

the assigned duties of the civil servant concerned. However, in practice the· 

committee decisions have been very objective and liberal in order to encourage 

those who are employed to invent to join freely in the competition with all other 

civil servants. 

1 Public servants of Great Britain are any employees of the Government except those who 

are clecced to office or who receive salaries by hereditary process. 2 Low-salaried servants can receive a decoration as M. B. E. (Member of the llritish Empire). 

For the next level, the 0. B. E. (Order of the British Empire) might be given, chen upward 

at the next levels to C. B. E. (Commander of the British Empire) and K. B. E. (Knight of 

the Bricish Empire). 

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There is no regulation prohibiting both a cash award and an honors award 

for the sam<; discovery or invention. In fact, Sir Frank Whittle was decorated 

as a Knight of the British Empire some time before he was given the £ rno,ooo 

sterling tax-free cash award for the development of the jet engine. In determining the amount of this award, both the central committee on awards and the 

Royal Commission on Awards ~o Inventors participated. 

There is some confusion on the part of both the British laymen and others 

on the functions of the Royal Commission on Awards to Inventors and its relationship to the central committee on awards. The forerunner of the present 

Royal Commission dates back to 1919 when a Royal Commission on Awards 

to Inventors was created immediately after World War I. While the scope of 

the Royal Commission's activity has varied from time to time, primarily it acts 

as an appeals tribunal for inventors. A large portion of its work has to do with 

men outside of Government, but it is available to civil servants when they desire 

to use it. When the Government makes use of a British patent, the Royal 

Commission on Awards to Inventors is the tribunal that can receive an appeal 

to determine the inventor's equity. The present Commission's authority dates 

back to its reorganization in 1946. 

The Royal Commission was invited to participate in the discussions leading 

up to the Whittle a~ard by the Treasury because of its experience in appraising 

inventions and also because of the high regard in which the members of the 

present Commission were held. The procedure of the central committee and 

the Treasury in using the services of the Royal Commission on Awards to Inventors as principal advisor in their more important investigations has now become 

established. 

2." Canada 

The employee-inventor of the Canadian Government in the ordinary services 

is granted at least one-half of the domestic proceeds from the exploitation of his 

invention and all of the foreign rights but is given considerable Government 

supervision in the licensing and assigning of his patents. This freedom for the 

employee to exploit his own patents was intended to encourage higher productivity of invention. 

The National Research Council of Canada regulations of 1927 are more restrictive with its employee-inventors. "The regulation requires that: 

"All inventions made by members of the technical scaff shall be vested in the Council and 

shall be made available to the public under such condicions and upon the paymem of such 

fees as the Council may determine. This includes foreign as well as domestic rights." 

The Council, with the approval of the Governor of the Council, is authorized 

to pay the inventors such royalties and tees as it believes warranted. 

No statistical information is available on the merits of the two systems. The 

freedom of the employee to exploit his own patents does not seem to have inspired 

greater productivity in the ordinary Government departments. The National Research Council, in a period of about one-quarter of a century, does not show 

any significant income from Government-owned patents. 

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3. France 

The Government departments of France use a flexible system of awards to 

inventors. If monetary awards are used, it is 'quite custom.ary to make higher 

cash awards to the lo\ver rather than the higher paid employees on the basis that 

more should be expected of the higher paid. 

Honor awards are progressive. It is of inter.est that the title of the lowest 

state honor award .takes o.n the same designation as one of the highest in Great 

Britain. The sequence is Knight, Officer, Commander, and Grand Cross in 

the different professional orders. It is quite customary for outstanding men 

to rise progressively from their first honor of Knight to the succeeding honors 

in their own turn. A French inventor usually would be more appreciative of 

the Grand Cross than of a cash award of several thousand tax-free gold francs. 

He will work with great zeal and enthusiasm and strive to reach this goal through 

the several sequential steps within his professional order. 

4. Sweden· 

For the Scandinavian countries, Sweden is taken as the typical example. In 

the military service, inventors especially in the field of military weapons are 

from time to time given special gratuities. This is predicated on the idea that 

the inventor is unable to deal in a bus.iness way .with such ideas or inventions. 

16 

Ill. DISCUSSION AND ANALYSIS 

As a fundamental mechanism for stimulating thinking and eliciting beneficial 

ideas, the employee-participation program, involving a suggestion system. with 

appropriate awards, is not a new thing in the American industrial scene. Nor 

is it new within the administration of the Federal Government. 

Certainly the roots of the incentive systems run deep into the profound psychology of human relations and are firmly grounded in man's desire for improvement 

in the conditions under which he lives, for progress and advancement, and for a 

better way of life. 

The idea of employee-participation in developing improvements in work and 

performance has demonstrated its worth. Specific methods of doing this, by 

specific kinds of suggestion systems, have been the subject of much debate. 

The. underlying principle of awards for suggestions and valuable ideas is to 

provide tangible evidence of public recognition of the value of services rendered. 

Under this basic principle, the objective of any good suggestion system which 

provides for awards is, in brief, to secure constructive suggestions from as many 

employees as possible and thus improve employer-employee relations. This principle appears to be sound, whether the award consists of cash, a promotion, a 

certificate of merit, a medal of honor, or any of the many other kinds of awards 

m common use. 

Benefits of a suggestion system accrue both to the employer and to the worker. 

In the opinion of a majority of close students of incentives and awards systems, 

the actual saving represents the least of its value to the company. Undoubtedly 

a bigger value than the actual cash saving is the material help given by the 

suggestion system in keeping everybody in the organization on his toes and 

mentally alert. The improvement of industrial relations provides another large 

though intangible advantage to the organization. 

The workman who contributes good ideas toward improving his job very 

soon begins to feel a proprietary interest in it. He feels that "This is my job," 

and soon that "This is my company." 

An employee who turns in an idea which saves the co~pany a lot of money 

may be dissatisfied if he does not receive what he considers a fair share of the 

savings in cash. Just the same, it is almost universal experience that the expectation of receiving a cash award is not the only incentive that originally inspires an 

employee to turn in a suggestion. 

An employee .develops ideas and turns them into suggestions because they 

furnish the needed outlet, the psychological mechanism for the expression of 

concepts identified with his deepest mental and spiritual being. He experiences 

pleasure at seeing his own ideas at work in concrete form; and, in the great 

majority of cases, he is genuinely interested in helping the organization for which 

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he is working. He honestly and actively dislikes wa_ste and inefficiency and 

wants to do his part in improving company operations. 

It is the belief of the committee on incentives, awards, and rewards that the 

fundamental princip!-es governing the objective and application of suggestion 

and awards systems in general are applicable to inventors, as well as to those 

employees who might make meritorious contribi.1tions of a noninventive nature. 

Also, it is believed that whatever the formalized administrative machinery set 

up for incentive purposes, optimum results can be attained only by operating 

in a proper psychological environment in which management shows human 

understanding, fairness, and progressiveness in developing employee satisfaction 

by improving working conditions and according suitable recognition. As one 

writer puts it: "Personal tact, sympathetic and understanding handling, and a 

proper psychological approach -to the employee may sometimes be of greater 

value than an actual cash reward in encouraging the loyalty, confidence, cooperation, interest, and good will of the employee." 

A. PROS AND CONS REGARDING A SEPARATE AWARDS SYSTEM FOR 

THE INVENTIVE EMPLOYEE 

, So far as the committee has been able to ascertain, there is essentially unani~ous opinion among Government departments that it would be unwise at this 

time to establish any system of rewards for inventions or patents that would not· 

offer equal awards for other (nonpatentable) types of scientific or technological 

contributions or achievements. This was summarized in the committee's progress report under date of March 12, 1951, as follows: 

It is highly significant that all agencies seem to concur that a separate awards system for the 

inventive employee is undesirable because undue emphasis on the• inventive contribution may 

result in other classes of employees seeking special consideration, and it may seriously reduce 

the effectiveness of organizations engaged in research and development work. Special financial 

rc:wards to inventors may: 

lead to secrecy and lack of cooperativeness on- the part of research and technical ~mployees; 

involve administrative ·difficulties in determining the person to be rewarded whenever the 

invention is the result of group endeavor; and 

c~eate dissatisfaction among unrewarded members of a research group, as well as among 

personnel assigned to functions not likely to produce an invention. 

An improved general sy~tem of awards for all meritorious contributions, whethe~ or not of 

an inventive nature, would be free of these objections. 

In 1943 Dr. Lyman H. Briggs, former Director of the National Bureau of 

Standards, clearly stated the principal arguments against a special system of 

awards to inventors. 

It is not believed wise to provide special awards to employees for specific inventions or 

discoveries. At first thought such rewards might seem advisable, but it is believed they have 

been found in the long run unprofit;ble in private research organizations. In a large orga.nization, like the Bureau of Standards, covering a large variety of work, one of the principal 

advantages is the availability of advice from experts in many lines of work. Cooperation 

18 

and freedom of exchange of ideas among the workers in diverse fields arc highly valuable 

assets and these wouid be immediately and seriously endangered if each individual employee 

thought that his welfare depended upon individual inventions or discoveries. The experience 

of industrial laboratories has been that effective teamwork is made difficult or impossible when 

emphasis is placed upon credit to the individual. Furthermore, inventions or discoveries seldom 

spring entirely from the mind of one individual. Interchange of ideas and discussion of problems stimulate the conception of productive ideas, and in many cases it is difficult to say precisely 

which individual in a group conceived a new idea. 

If rewards are to be given at all they should be granted for disc~veries of broad principles 

and also for the engineering studies necessary to reduce an inYention to practice, as well as for 

the conception of the original idea which constitutes the basis of a patent. ·Consequently, it 

appears better to recognize the value of the inventor as one element in an organization rather 

than to emphasize his particular service on some one or more specific inventions. 

While there is thus general agreement that separate awards systems for the 

inventor would be unwise, there is considerable opinion that the present systems 

do not adequately reward the inventor or other employee making the truly great 

invention or contribution, whether in line of duty or not. However, great care 

must be used if inventions resulting from line-of-duty work are to be given cash 

awards. To give such awards for inventions and not for nonpatentable contributions of equal importance would be unwise discrimination, as already noted. To 

give them for all important contributions would, it is felt, create a very bad 

situation. However, if cash awards for line-of-duty contributions are limited 

strictly to the truly great inventions, discovery, or other achievement, and aregranted by some over-all board or committee with broad authority as to the 

amount of the awards, it is felt that inventors, as well as other employees, would 

be adequately covered. 

The fact that some industrial firms and the British Government have specific 

systems for rewarding inventors which operate independently of general incentive and suggestion systems applicable to all employees, has been carefully considered. The conditions and circumstances prevailing in these cases are basically 

different from those existing with respect to the management of employees of 

the United States Government; consequently, it is the belief of the committee 

that a separate awards system for Federal employee-inventors would not att~in 

the objectives sought as effectively as a broad integrated program including_ all 

classes of employees. 

B. TYPES OF A WARDS 

The nature and type of awards to inventors might include: 

1. Retention of commercial rights by the inventor, 

2. Cash awar.ds and bonuses, 

3. Pay increases, 

4. Promotions, 

5. Public recognition and honors. 

Retention of commercial rights by the inventor 1s sometimes regarded as a 

form of reward to the patentee. The uniform patent policy for the Government 

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provides that, under certain circumstances, the commercial rights are left to the 

inventor subject to a license to the Government for governmental purposes. 

The cash award with subsequent bonuses dependent upon the proven continued usefulness and~value of the invention is a most workable form of award 

for outstanding contributions that are distinctly beyond the normal anticipated 

productivity of the employee-inventor. 

Commercial organizations in their exploitation of patents have recognized 

that the new invention to survive must usually pass progressively through the 

patent, the development, the market introductory (termed by Dr. Kettering 

"shirt losing") and the profit making stages. A minimum of 3 years for the 

complete launching of a new invention to the profitable stage is typical of American practice. This indicates that many inventions will not demonstrate their 

true worth for some years after the patent is allowed. This would indicate that 

the awarding agency should be authorized to make an adequate cash award for 

early recognition of a patent with authority to make further subsequent cash 

awards over several years, if development or accrued benefit should justify such 

actiori. 

Assured pay increases might serve as an incentive to invention but in presenting 

this type of award the Government assumes the permanent value of the invento.r's 

general services has been increased by an increment equal to the award increase 

and this for all future Government employment of the individual. 

There are many inventors, who, although they work diligently at the task, 

present only one meritorious invention in their lifetimes. Further, if the invention proves to be one of increasing value with its years of use, it would be most 

difficult to determine equitably subsequent awards in terms of additional pay 

mcreases. As an award method, a pay increase for outstanding inventions is 

not as equitable and workable as the cash and subsequent bonus reward. 

In many cases, a very important effect of an outstanding investigation or research enterprise of the employee-im;entor will be that his more active general 

performance as an employee instead of his special contribution as an inventor 

should be recognized. The demonstration of unusual inventive ability may be 

a manifestation of the employee's ability to tackle successfully problems of increasing difficulty and complexity, thus justifiably meriting promotion to a higher 

grade of position. 

In public recognition and honors to outstanding inventors the Government 

·of the United States has an opportunity of making a great contribution to her 

scientific and technological advancement. To many individuals, suitable honors 

awards are much more meaningful than monetary rewards. Consequently, the 

value and importance of this type of award must be recognized and programs 

for honors awards should be strengthened. 

Specifically, a graduated system of honors and recognition to discoverers and 

inventors would inspire real competitive research and development. Within 

the Government departments and divisions, it might be organized most "intensively and operated with a high degree of effectiveness. Those in Government who have made the most outstanding contributions to research and dis20 

. covery should be advanced to a high level of recognition and this top level honor 

should be in competition with the Nation's best. 

C. DEFICIENCIES AND LIMITATIONS IN PRESENT LAWS COVERING 

AWARDS 

The provisions of existing laws for granting cash awards have already been 

discussed under section II. The many basic inequities, overlapping of eligibility 

re_quirements, and other problems inherent in these laws are worthy of detailed 

exploration. · 

Under Public Law 600 (79th Cong.), the Administrative Expenses Act of 

1946, all civilian officers arid employees are eligible for awards. However, more 

than one-half the total civilian officers and employees in the Federal Government 

are ineligible for awards under either Title VII or Title X of the Classification 

Act of 1949· An employee-inventor may therefore be eligible under one law 

and ineligible under another law, or he may be eligible under several laws. The 

principal exclusions under the Classification Act of 1949 relate to wage board 

and certain postal employees. 

Under Public Law 600 (79th Cong.), cash awards for suggestions are limited 

to not inore than 5 percent of the estimated first year's net savings. In the case 

of suggestions resulting in savings of more than $1,000, the award is based on an 

even smaller percentage of the savings. Under Title X of the Classification Act 

of 1949, cash awards, whether based upon a suggestion or other personal accomplishment, are limited to not in excess of 25 percent of the estimated first 

year's net savings or an amount equal to three times the step in~rease of the 

employee's grade. Thus, for a suggestion which results in a net savings of $1 ,ooo 

for the first year, an employee can receive up to $so under the provisions of one 

law and up to $250 under another law. 

Furthermore, the amount of an award under Title X of the Classification Act 

of 1949 is geared to the employee's grade as much as to the intrinsic worth of the 

contribution. The higher the grade of the employee, the greater is his return. 

This occurs because the maximum cash award payable for an employee in grade 

GS-3 is $240; for an employee in grade GS-5, $375; for an employee in grade 

GS-n, $600; for an employee in grade GS-15, $750, even though each would 

make the same contribution to the efficiency or economy of the organization. 

There are similar inconsistencies in applying the respective laws to individual 

cases. For example, an employee in grade GS-2 who receives a salary increase 

for superior accomplishment under Title VII of the Classification Act of 1949 

and remains in that grade for 6 years, would in that period receive the amount 

of $480. If given a two-step increase or a three-step increase under Title X of 

the Classification Act of 1949, he would realize $960 or $1,440, respectively, in 

a 6-year period. For an employee in GS-15, a three-step increase would, over a 

period of 6 years, amount to a total increase in income of $4,500. 

Other factors, such as whether a suggestion is "in line of duty" or "outside the 

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normal requirements of the duties of (the employee's) position" are brought into 

play in determining kinds and amounts of awards. In some cases, an award for 

a contribution "in line of duty" may be in excess of an award for a contribution 

which is determined tto be "outside the normal requirements of the duties of 

(the employee's) position." 

On a Government-wide basis, other disparities exist. Under Public Law 6oo 

(79i:h Cong.), a total of $25,000 in awards may be made in one fiscal year by any 

department or agency, regardless of the size of the department or agency. Also, 

a maximum of $1,000 may be paid for a suggestion. These provisions do not 

apply to the Department of Defense. It seems illogical to presume that only in 

the Department of Defense can the employee, including the employee-inventor, 

make the kind of contribution that may result in an award in excess of $1,900. 

The restriction that a department, other than the Department of Defe~se, may 

not make cash awards aggregating more than $25,000 in any one fiscal. year in 

one instance forced a large Federal agency to. repress its suggestion program because the $25,000 limitation had been reached before the end of the fiscal year. 

In limiting the amount of cash awards or pay increases to a percentage of the 

first year's net savings, an inadequate reward results to the employee-il)ventor 

who may make the infrequent truly outstanding contribution. In the inventi.on 

field, particularly, maximum savings are generally achieved subsequent ·to the 

first year in which the idea was developed. 

Final grants of efficiency awards under Title X of the Clas.sification Act of 

1949 may be made only by the over-all agency efficiency awards committee subject to the approval of the head of the agency. However, authority to grant 

within grade pay increases as awards for superior accomplishment under Title 

VII of the Classification Act of 1949 may be delegated by the head of the agency 

to the heads of constituent bureaus or other officials. Authority to grant awards 

for suggestions under Public Law 600 may also be delegated. 

No provision is made in any existing law for awarding the employee-inventor 

for contributions of value to other agencies or d.epartments of the Federal Government. In the final analysis, each agency is an integral part of the total Unite<l 

States Government. An employee in any department or agency is subject to 

broad general laws and regulations applying throughout the Federal Government. The undesirability of thinking of an employee only with respect to his 

own particular agency or department was indicated by the Hoover Commission 

in its· report on Personnel Management when it stated "the executive branch· 

recognizes, but is not dealing adequately with, the problem of transferring 

competent personnel ... from one agency to another." Rewarding employees 

for contributions of benefit to the whole Government service would be a step 

forward in the concept of an integrated Federal personnel program. 

·The Bureau of the Budget is investigating the problems of agencies in admin. 

istering the diverse incentives and awards programs, currently authorized by the 

various laws, with a view toward obtaining a single statute to provide for a 

uniform comprehensive incentives and awards program for all Federal employees. 

22 

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D. DEFICIENCIES OF SYSTEM WHICH PERMITS AWARDS UNDER 

SPECIAL DEPARTMENTAL STATUTORY AUTHORITY 

It will be noted, from the foregoing discussion under section II that, prior to 

August 2, 1946, only five Government agencies were specifically authorized to 

reward civilian employees with cash payments for suggestions or inventions. 

This evidently discriminatory treatment of the employees· of those agencies not 

having special statutory authority to make awards for suggestions or inventions· 

w.as obviated, at least in part, by the enactment of Public Law 600 (79th Cong.) 

on August 2, 1946. , , 

Two agencies-th~- Department of the Interior and the Tennessee Valley 

Authority-seem to have retained to some extent their special statutory authorities 

with respect to rewarding inventors. They have indicated that, in practice, they 

have made no more than a slight application of these special authorities since the 

enactment of Public Law 600. 

Moreover, prior to 1943, the special statutory authority of the Department of 

the Army was limited to awards in the field of ordnance. The special statutory. 

authority of the Patents and Design Board was, prior to 1946, and still is, confined 

to the field o.f aircraft design. 

It will b~ observed, in the discussion under section II, that the several special 

statutory a,uthorities pertain to special groups and special subject matters; 

there are. variations both with respect to the amounts which may be awarded, 

e~the'r monthly or annually; and there are variations in the sources of the· funds, 

i. e.,. appropriations and income fr011) licensing. 

None of the fiv~ agencies reported any difficulty with respect to administration 

under such ;tatutory auth~rity~ On the contrary, the Department of the Interior 

and the Tenn~ssee Valley Authority have indicated that they wish to preserve 

their special statutory authorities and discretion in administering their awar<ls 

programs. 

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IV. FINDINGS AND CONCLUSIONS 

The desirability and· the advantages to the Government of rewarding inventors 

~re su~h that ':'e canno~ afford to fail to take positive measures to reward present 

inventive achievement if we are to hope to reap the rich potential harvest. 

There have been occasional doctrinaire attempts to categorize and to postulate 

uniform ~haract~ristics for inventors. However, the extent to which they are 

money-minded, like the extent to which they appreciate or will be stimulated and 

satisfie.d ~y professional r~c~gnit.ion, varies considerably. To appeal to as many 

potential ~ventors and elicit as many inventions as possible, it is only the better 

part of wisdom to suggest that several types of awards be made available. 

It has been noted elsewhere in this report, particularly in section IV, that 

~resent ge~eral a_wards systems, and specific provisions of law for rewarding 

inven_tors m. part~cular_ ?epartments, are inconsistent and over-lapping. They 

permit possible ineqmties and make proper administration of the systems 

difficult. 

To avoid charges and imputations of partiality and favoritism and to provide 

a well-roun?ed ~rogram for s~imulating creative contributions, a separate system 

for re\:ard'.ng inventors should be rejected. Instead, adequate provision for 

rewarding inventors should be made in a broad integrated progra·m relating to 

all types of contributions. 

Pending adoption of the well-rounded program which the committee recomm~n~s, more advanta~es might be derived from the present systems. Although 

existing laws are obv10usly deficient in many respects in their impact on the 

employee-inventor, in order to obtain the maximum advantage to the Government and the public within the framework of existing laws, the specific benefits 

and rewards possible to the employee-inventor might be ascertained and dissemina~ed.. The ulti~ate objective, however, would be to atta.in more adequate 

and satisfying recogmt10n and reward for inventors through new basic legislation 

for all Federal employees. Appropriate provisions for inventors should be included in any such legislation. 

In considering the broad problem, the following principles should be guideposts: 

1. Any program developed should be forward-looking, i. e., it should recognize 

that the goal is the encouragement of inventions and contributions. 

2. In encouraging and promoting greater inventiveness, the rewards system 

sh~uld afford some flexibility and a liberal scale of awards for the purpose of 

smtably rewarding outstanding inventions. . 

3· To minimize._the..j'eopardy or prejudice to research programs which. might 

result if all employees become invention conscious, we recommend that the 

work of employees be considered carefully for.the purpose of assurance that all 

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extraordinary contributions-whether of an inventive nature or not-are suitably 

recognized. , 

4. Not all inventors should be automatically rewarded. Awards should be 

made only for useful inventions beyond the call of normal duty. The specific 

inventive contribution made by an employee should be one which his co-workers 

recognize as meriting an award; otherwise, the result might be to damage morale 

and consequently to lower the work output of other employees. 

5. Positive measures should be taken to assur~ adequate dissemination of information on new discoveries. Full utilization of new ideas tends to inspire 

the inventor and lead him to greater contributions. 

A. RECOMMENDATIONS FOR NEW LEGISLATION FOR A ~OMPREHENSIVE INCENTIVES AND AWARDS PROGRAM FOR 

GOVERNMENT EMPLOYEES INCLUDING INVENTORS 

Based on the findings and conclusions of the committee, the Chairman of the 

Government Patents Board should endorse new legislation having as its objective the integration, simplification, and liberalization of all awards programs. 

Such legislation should permit rewarding of employees making all types of 

meritorious contributions, including discoveries of basic scientific principles, as 

well as inventors. 

1. Application of Proposed. Law to Inventors 

The committee recommends that the requirements and application of a proposed new law provide that the following principles be observed in the treatment 

of the employee-inventor: 

a. All civilian employees of the Government should be eligible. Although 

this recommendation affirmatively includes only civilian employees, the committee sees no reason why the recommendation should not cover military 

personnel as well. 

b. Employees most likely to produce inventions by reason of the nature of 

their employment or assigned duties should not necessarily be excluded by reason 

of such employment. However, for such employees to qualify for an award, 

their ·inventions definitely would have t() be outstandingly beyond the normal 

requirements of their work. 

c. Two basic types of atvards should be recognized for employee-inventors. 

The first would be cash atvards, with provision for a sufficiently large monetary 

award for the infrequent invention of truly outstanding value, and the authority 

. for additional cash awards over an extended period of several years if subsequent 

developments or accrued benefits should warrant it: , The second would be 

honor atvards. Honor awards are particularly significa~t id some bureaus and 

in some fields of scientific specialization. The honor ~wards program should 

be strengthened and promoted. An award of either type should not necessarily 

preclude the granting of both types of awards, under appropriate circumstances. 

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REF ID:A4161585 

d. The award should be dependent on the value of the contribution. Authority 

~hould be conferred for determining the extent of the cash award for an invenc 

tion not only on the basis of savings to the immediate organization within the 

first year or other period but in a proper case on its value to the Government as 

a whole, especially if the value of the contribution cannot be determined in terms 

of dollars. Consideration should also be giveri to its value to the public in 

determining the award. 

In connection with these recommendations the committee believes that: ( r) 

the fa<:t of invention is pertinent to the performance and rating of the employeeinventor and should continue to be considered in accordance with exist~ng practices in connection with promotions or other recognition, and ( 2) the granting 

of an award should not be dependent upon whether the employee-inventor retains 

the comrpercial rights under the existing uniform patent policy of i:he Government. 

The retention by the inventor of commercial rights in an invention, while a factor 

to be considered,. should not preclude the granting of a cash award. 

2. Limita.tions on Total Funds Agencies May Expend for Awards 

The committee recommends against establishment of an over-all ceiling figure 

for each agency limiting the total funds to be spent each year on its atvards program. These c~iling figures are essentially arbitrary and productive of inequities. The developments ~f a particular year may -be unpredictable and 

deviate widely from the pattern, resulting in an injustice, inadequacy of awards, 

and impaired morale. These limitations, in effi;ct, gainsay the mutual benefits 

to be derived from the awards program. 

3. Awards Involving More Than One Agency 

To cover the case when the invention is of special value to a department other 

than the one in which the inventor is employed or when the inventor has transferred to another agency before his former agency has rewarded him for his 

invention, transfer of funds or other arrangements for awards purposes should 

be authorized. 

4. ,Rewards for Group Effort 

For those situations in which credit for the invention is not clearly due an 

individual, there should be authorization to reward the research scientists and 

collateral personnel directly concerned for inventions stemming from group 

effort. This is an increa.singly common situation. 

S. Rescission of Previous Awards Legislation 

In view of the comprehensiveness of the suggested program, the desirability 

of uniformity, and the danger of conflicting provisions if the program is superimposed on the present patchwork quilt, the committee recommends the rescission of all previous ge;zeral awards legislation and, to the extent practicable, the 

rescission of all previous special provisions of law governing rewards for inventors 

in individual agencies. 

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B. RECOMMENDATIONS WHICH MAY BE EFFECTUATED IMMEDIATELY 

WITHOUT NEW LEGISLATION 

Despite the many inconsistencies in the existing laws governing awards to 

employees, including the employee-inventor, there are several steps that can be 

taken by Federal agencies and departments to administer more effectively current 

awards programs, pending remedial legislation. It is urged that the Chairman 

of the Government Patents Board bring the following recommendations to the 

· attention of the heads of Federal agencies, and that necessary steps be taken to 

see that they are carried out: 

1. Application of Existing Programs to Inventors 

Existing awards programs authorized by law are, in many cases, applicable to 

-employees in the Government service who make meritorious inventive contributions, and should be so construed and applied. 

2 .. Agency Review of Existing Programs 

All Federal agencies should review their existing incentives and awards programs to assure that fullest possible advantage is taken of current laws as they 

apply to the employee-inventor. 

3. Publicity 

For the purpose of stimulating inventive productivity of employees, agencies 

~hould publicize, through appropriate media, the fact that employees making 

inventive contributions of merit may be rewarded under current awards 

programs. 

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U.S. GOVERNMENT PRINTING OFFICE: IHZ