PIE IN THE PATENT SKY

...The Webb proposal was in no way as extreme as the Pentagon's nearly wholesale waiver of public patent rights...

...The argument for public ownership of the rights to such innovations is simple enough...

...NASA's research and development programs, which have grown from nothing to more than $4 billion in just a few years, are rapidly catching up to the volume of the Defense Department's programs...

...eficently waives public patent rights to its contractors in the interest of industrial harmony...

...Wouldn't it be absurd," Barber asked, "if the government were then to give the bridge back to the contractor and permit him to set up toll booths to charge motorists a fee for crossing . . . Would it be any less objectionable if the government's own vehicles were exempted, as long as all other motorists could still be taxed by the contractor...

...Article I of the Constitution gives Congress the power "to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive rights to their respective writings and discoveries...

...Not surprisingly, the prime production contracts usually wind up in the plants of the research and development contractors...

...In 1962, three corporations—General Dynamics, Lockheed, and Boeing—received a quarter of the Defense Department's $10.3 billion in research and development expenditures...

...To the contractor and his patent counsel, the prospect of monopoly is a spur to inventiveness...

...The disproportionate share of total industrial research and development in the largest firms may foreshadow a greater concentration of economic power in the future...

...The Oregon Democrat also censured Congress for "abdicating our legislative responsibilities to administrative tribunals...

...Such products as the aerosol bomb, frozen orange juice, blood plasma, and epoxy cements, have blossomed from government research contracts...

...it provides the very inspiration to create...

...These facts bear out the warning of Attorney General Herbert Brownell back in 1956 that the distribution of government expenditures for research and development appears to be reinforcing "the industrial trend toward concentration...

...The search for a sound Federal patent policy, particularly in the space and defense fields, cannot be considered apart from these underlying economic facts of increasing economic concentration in the military and civilian space fields: f A 1959 National Science Foundation study showed that ninety per cent of all Federal research and development dollars went into companies with 5,000 or more employes...

...By far the biggest spenders of these funds are the Defense Department and NASA...

...It is questionable whether Wiesner's proposal really clarifies the underlying issue in the patent debate...

...Scientist Wiesner, who had conducted a two year quest for a uniform, government-wide solution to the hopeless jumble of Federal patent policy, tried to strike a middle ground between NASA and the subcommittee...

...Senator Long's hearings in March, although ignored by most of the Washington press corps, provided one of the most significant explorations of an important national issue in the new Eighty-eighth Congress...

...He suggested that the government retain title to products used in the civilian economy, for medical research and drug discoveries, and projects in which the government is chief developer...

...At the same time he argued that a strong case could be made for granting exclusive rights to contractors with an established commercial position and extensive knowledge and experience in the field in which government seeks their services, particularly in the programs of the Defense Department and NASA...

...To support this grossly inefficient and oppressive system, the people are forced to pay twice: first, as taxpayers they must pay excessive monopoly prices to get the research done...

...It is also the patent philosophy that Congress wrote into the space act five years ago, although the administrator of NASA was given leeway to waive patent rights if in his judgment the act was in the public interest...

...We socialize the financing of research," Gray commented, "but permit monopolization of its output . . . The end product of this system is an institutional monstrosity—a bastard form of socialism crossbred with a bastard form of capitalism...

...The dramatic highlight of the committee's inquiry was an angry collision between space administrator Webb, who staunchly defended the revision in policy, and Senator Wayne Morse, Oregon Democrat, who accused the NASA official of seeking to give away "basic, substantive rights" that Congress had vested in the public...

...For example, NASA's biggest contractor, North American Aviation, has already committed more than sixty per cent of its production to the space agency's Apollo project and the manufacture of space systems...

...The industry's crusade to capture these fruits has been pressed with vigor in Congress, in the highest councils of the New Frontier and, with most persuasive effect, inside the agency charged with guiding the space effort, the National Aeronautics and Space Administration (NASA...

...Webb, the issue is joined and it is up to Congress to put you in check...

...Ten top contractors got fifty-six per cent of the total...

...The stakes in the NASA patent controversy are enormous, if not precisely measurable...

...The techniques that have gone into development of the space suit, for example, promise useful application in medicine...

...Nonetheless, the agency was seeking to reverse the basic direction of Congressional policy on NASA patents as written into the original act and reaffirmed during the two industry-sponsored attempts in Congress to rewrite the policy...

...Long, a leading Congressional gadfly on the patent issue, and his fellow anti-monopolist, Senator Estes Kefauver, Tennessee Democrat, censured NASA sharply for taking action designed to circumvent Congress...

...Such was the case when Horace M. Gray, professor of economics at the University of Illinois, attacked, in scholarly accents, the NASA proposal as another step toward "collectivization of research and privatization of results...

...PIE in the PATENT SKY by LAURENCE M. STERN One of the earthly prizes most coveted by America's mushrooming space industry is the bounteous patent harvest that is being nurtured by government-financed research and development...

...For a full week a procession of economists, agency heads, and White House advisers, including NASA space boss and Presidential science adviser Jerome B. Wiesner, appeared before Long in the huge, nearly empty Senate caucus room...

...Morse threatened to initiate a "historic debate" on the Senate floor if NASA persisted in its course...

...It is weighted heavily with invocations to the Founding Fathers and the Constitution, from which the patent system springs...

...This year the Federal government will pour some $15 billion into research and development, roughly three-quarters of the estimated round trip fare to the moon...

...The fruits of Federal research have had an enormous impact on civilian markets...

...North American's earnings per share, for example, rose by about sixty per cent from 1960 to 1962 as it plunged into the Apollo program...

...Because of this seemingly irreversible pattern, and because of the enormous potential influence of military and space research on the civilian economy, it is becoming increasingly urgent that the government not only makes sense out of the chaos that is now Federal patent policy, but that its action clearly and firmly upholds the public interest in developments resulting from taxpayers' investments...

...It has lots of appeal to the man in the street," a patent attorney once condescendingly informed me...

...Despite NASA's efforts to diversify subcontracts among small businesses, the trend toward concentration is growing...

...In these circumstances, it seems pointless to speak of North American's established "commercial position" as a yardstick for government waiver of its patent rights...

...When Webb opened the NASA hearings last December, while Congress was out of town, one witness hurried back to Washington...

...At times the cavernous legislative hall seemed transformed into a university lecture room...

...Only ten companies, he pointed out, receive nearly sixty per cent of the Defense Department's research awards...

...The public puts up billions of dollars to finance the research on a virtually no-risk basis, since most research and development contracts pay full costs plus a negotiated profit...

...Long lost no time in announcing a series of hearings of his Small Business Subcommittee on Monopoly, from which to stage the counterattack...

...At this rate of growth it is understandable that the space agency has become the tender concern of the contractors...

...The space contractors first tried Congress in their drive to acquire patents for tax-supported research and development work...

...The Pentagon, now the governmental front-runner in research spending with a current annual outlay of $7.5 billion, benLAURENCE M. STERN is a staff writer for The Washington Post who last year won a George Polk Memorial Award for distinguished reporting...

...It is no coincidence that the Defense Department's top six research and development contractors are also the top six prime production contractors—General Dynamics, Lockheed, Boeing, North American, General Electric, and Martin Marietta, according to a compilation for the Long subcommittee...

...Thus, once the particular assignment has been completed, it is reasoned, the government should take title to the new process or product it has paid for...

...second, as consumers they must pay monopoly prices for products created by use of the new knowledge...

...These developments are the prizes around which the patent debate has revolved...

...More than ninety-seven per cent of North American's sales during 1961 were to the Federal government...

...He was Senator Russell B. Long, Louisiana Democrat, who can argue with equal vehemence in favor of continuing the oil depletion allowance and in opposition to the communications satellite "giveaway...

...This is a proposition that has yet to be convincingly established, and in any case would not necessarily apply to the acquisition of patents on products developed by public funds...

...Barber submitted to the Long subcommittee a richly detailed argument to back up his charge that "most of the scientific knowledge being generated through the government's research effort is now being locked up in the hands of the few, benefiting almost exclusively the giant corporations that receive the bulk of the funds and the relatively limited geographic areas in which these firms have their principal facilities...

...These early campaigns failed...

...The argument favoring private acquisition of patent rights is the same as that which supports private retention of patents...

...The 1958 NASA Act barely had been signed when the lobbyists began beating the drums in their effort to seize for free enterprise what Congress had placed clearly in the public domain—the patent rights to new discoveries developed at public expense...

...Another witness, youthful assistant professor of law Richard J. Barber, of Southern Methodist University, compared the NASA proposal for the waiver of public rights to government-financed research and development discoveries to a bridge across a river for which the government has paid full costs, plus a profit, to the contractor...

...The reason for the move, as set forth by NASA Administrator James E. Webb, was that "the prompt workings of inventions will ordinarily be fostered by the private retention of exclusive rights...

...The latest outburst of controversy on NASA started last October when NASA decided, on its own initiative, to bring its policies into closer conformity with Pentagon practices...

...It contained restrictive guidelines to prevent the worst abuses of monopoly control, such as the use of patents by contractors to suppress commercial development of an invention...

...To the space industry's advocates of revision, this line of reasoning is boorishly simple-minded...

...Morse then icily lectured Webb: "As far as I am concerned, Mr...

...It was at this point that the astromoguls of the newborn space boom, and their ready allies, the patent lawyers, sought to amend NASA's charter so that they could assert commercial monopoly rights to the new inventions...

...Congress owes it to you to set limits within which you may exercise discretion...

...The biggest contractors in the space program developed their know-how and commercial positions through years of government work...

...materials developed for space capsule nose cones have produced com-merical cements of great strength...

...This is the policy pursued by many Federal agencies engaged in large-scale research—such as the Atomic Energy Commission...

...Their benefits have been distributed through the economy once they were injected into the competitive stream of commerce...

...Now, with the revolutionary technology of space only in its infancy, we seem to be standing on the threshold of an even more promising era of innovation in transportation, communications, and in consumer goods and services...