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were made which, as I said, decompromised it and restores it right back into the controversial field to which I think there is a great deal of objection, and I do not think the National Association of Manufacturers is the only one that has objections to it.
My impression is that the scientists and the educators in this country feel the same way about this matter.
Now then, let us look and see in what way that original compromise bill was changed. As I said, section 5 was stricken out and that caused a renumbering of the sections after that, so that the original section 6 of 2385 now becomes section 5, and it is this section that I want to call special attention to.
This section 5 of the group 2 bills departs from the compromise features, that the President should appoint the Director "after receiving recommendations from the Foundation."
Now, in lieu of that phrase the group 2 bills in S. 247 merely provides for the appointment of a Director after the members of the Foundation have been appointed and qualified."
Even the compromise bill might have been objected to, because it still left, as it probably should, the President with a free hand to appoint whom he pleases; but at least it would have a salutary effect of having the recommendations from the Foundation, which was to carry out the operation of the act, of the Foundation.
So we see here is quite an important change. It makes little difference, it seems, whether the Director is appointed before or after the Foundation is established, unless the President, or unless it is expected the President, will consult with the Foundation with regard to a suitable Director who will be acceptable to that Foundation.
That is the first point.
Now, there are other very significant omissions from this compromise bill. I read that paragraph (b) of section 6 of the group 1 bills, which reads as follows and which is omitted from the groups 2 bills as well as S. 247:
The Director shall, in accordance with such directives as the Executive Committee shall from time to time prescribe, exercise the powers set forth in this Act within the policies developed by the Foundation : Provided, That the authority granted to the Foundation by paragraph (c) of section 11 shall be exercised by the Director with the approval of the Executive Committee.
That proviso clause is something that I am going to deal with separately.
But you will note the express direction that the Director shall act in accordance with the directives of the Executive Committee, or we might say with the Foundation, are left out.
That is an important omission, because on the face of it it seems to give a free hand to the Director, and what we are afraid of is, in effect, the Foundation will become a one-man Foundation.
You will note that whereas in striking out section 5, they struck out the Executive Committee being mandatory and made it merely permissive. Since there might not be an Executive Committee at all, throughout the bills where the expression “Executive Committee” was used, the bill substitutes "Foundation."
Now, it is significant that this paragraph that is stricken out does not provide any control over the Director. If it said the Director shall, in accordance with such directives as the Foundation shall from time to time prescribe, there would be no objection to the change.
Now, it is further significant that in the group 3 bills, section 11 thereof comes out frankly and practically makes the Director sole arbiter as to what he should do and puts the Foundation merely in an advisory capacity.
That is one of the principal reasons why we object to the group 3 bills.
There is another section that is very controversial. I understand you have received a number of letters objecting to paragraph (e) of section 11 of the group 1 bills, which corresponds exactly to paragraph (e) of section 10 of the group 2 bills, and this same paragraph is found in the group 3 bills.
I think that the intentions were good, but the language is not satisfactory. I have tried to suggest a revision of section 11 that I think. and hope, will meet the views of everyone concerned with this legislation.
In that section 11 of the group 1 bills and (section 10 of the group 2 bills, identical in this respect) it is provided that, The Foundation is empowered to do all things necessary to carry out the provisions of this Act, and without being limited thereby. The Foundation is specifically authorizedand then we go to paragraph (e) of that authorization which reads as follows: to acquire by purchase, lease, loan, or gift, and to hold and dispose of by sale, lease, or loan, real and personal property of all kinds necessary for, or resulting from, scientific research. That seems to cover everything. It does not say, necessary to carry out the duties and objects of the Foundation. It is much broader than that. It includes anything resulting from scientific research, and is not even limited to basic scientific research. It might be any research. It is broad enough to include everything.
And, as I said, the bill aparently leaves it to the Director to exercise those duties without any check-up on the part of the Foundation, because the section (b) of paragraph 6 was eliminated, where the Director could act only with the approval of the Executive Committee.
Now, one of the objections to paragraph (e) is that “real and personal property of all kinds” would, of course, include patents, because it has been well determined that patents are species of property.
But, it goes further than that. It is too broad even if it specifically left patents out.
In the first place we do not need any provision by which the Government shall acquire patents, because the act of 1910 as amended in 1918 expressly provides where there is manufactured for or by the Government, without the license of the patent owner, that the patent owner has his redress in the Court of Claims. In other words provision is made by which the Government exercises its right of eminent domain and by which the patent owner can acquire his just compensation.
So, the Government does not need any further provision with respect to the acquisition of patents. Besides, all the Government could possibly need is nonexclusive licenses, because certainly they do not want to exclude their own citizens from utilizing these inventions. Besides, the danger of a suit against the Government for the use in the basic research field is so remote that it is negligible.
So, I think there is quite a little reason for concern over the fact that this would in language, at least authorize the Foundation or the Director to arbitrarily acquire such property rights as he might deem necessary, without limitation. They expressly so state without limitation.
I have tried to draft a substitute for this paragraph (e) which I hope will be satisfactory. I would suggest that paragraph (e) be rewritten as follows—this is one way–no doubt some other way is equally as good—to read:
(e) to acquire by purchase, lease, loan, or gift, and to hold and dispose of by sale, lease, or loan, real and personal property of all kinds necessary for carrying out the provisions of this Act.
Now, is not that all they want, the power to do what is necessary to carry out the provisions of the act? I think that will overcome all of the objections that have been urged against it. It will overcome objections of the National Association of Manufacturers, the objections which they have made to this paragraph (e) of the bill.
I do not want to take up your time further, but on June 1, 1948, when hearings were held we went into the group 3 bills very fully, I do not believe it is necessary to refer to them at the present.
Mr. Priest. We thank you, Mr. Folk. Are there any questions?
Mr. O'HARA. I am just wondering if the last part of your language, your suggested amendment to section (e), does leave pretty much the same concern to me that you expressed as to the original language?
Mr. Folk. No; the original says "necessary or resulting from," and as I said it would cut out the patent provisions of it, because it is not necessary at all.
Mr. O'HARA. Should that power be in the Director or be in the Foundation ?
Mr. FOLK. We said we favored group 1 bills, which leaves it in the Foundation. The
group 2 bills leaves it more or less up in the air. And, I think it was intended to leave it to the Director.
Group 3 bills specifically state that the Director shall exercise that power. Those are the three different variations.
Mr. O'HARA. I take it you are generally familiar with the viewpoint of the patent lawyers with reference to this bill?
Mr. Folk. Well, since I was one of the first ones objecting to that patent ground, I think I am familiar with it. I also have received a number of communications and no doubt you have received them from those objecting to that section of the bill. I think I am thoroughly familiar with it.
Mr. O'HARA. Does your suggested amendment
Mr. FOLK (interposing). My suggested amendment, I hope, takes care of that—those objections. It certainly does, so far as the NAM is concerned. Does that answer your question?
Mr. O'HARA. In other words, the results of the work of this Foundation would be for the benefit of the Government; is that correct?
Mr. FOLK. It would not be necessary for the Government to take any action on patents at all in view of the act of 1910 and the act of 1918. They already have all that is necessary to carry out the functions of this Foundation, and that is the reason why the word “necessary” would be satisfactory to me.
Mr. O'HARA. Well, what I have been concerned about is that we encourage the genius in science and the genius of the inventor, rather than in any way discourage them.
Now, my question in this regard goes to whether existing law or the effect of this bill on inventive genius—is good or bad. What have you to comment as to that?
Mr. FOLK. This bill has a section dealing particularly with patents. Mr. O'HARA. I realize that.
Mr. Folk. It has been a controversial section, but it in effect, says, when inventions are made, sponsored by the Foundation, the patent rights shall be divided equitably both to the public and to the inventor, so that the special section on patents takes care of that.
I have only introduced this discussion of (e), because it apparently does something more than affect the patent section.
Mr. O'HARA. Now, you have probably made it clear, but it is not clear to me. Is it your recommendation that the Director should be selected by the Foundation, or the appointment made by the President?
Mr. FOLK. That was the original idea and it was the one worked out by the
House committee of 1947, and the bill was passed by both Houses. That is, that the Director should be appointed by the Foundation.
I think that that would be more desirable from the Foundation's standpoint, because they certainly want a Director acceptable to them, since the Foundation itself only meets possibly once a year and he Executive Committee would not be in continuous session, and it is desirable to have a Director in whom they have the utmost confidence, as well as desirable to have a Director in whom the President has confidence. For that reason we do not disapprove the original S. 2385, or the first group of bills, which provided that the President shall appoint the Director, after receiving recommendations from the Foundation.
I will say with reference to that I am glad that you mentioned it because in the appointment of the Foundation itself there is a provision with reference to how they shall be appointed—it seems to me, if it is all right there, it might be all right in the appointment of the Director.
Mr. O'HARA. Which bill are you reading from now?
Mr. Folk. I am reading from section 3 of the group-1 and group-2 bills, with reference to the appointment of the Foundation itself, not the Director.
In making the appointment it states in section 3, about lines 10 and 11 of the bill:
The President is requested, in making of nominations of persons for appointment as members, to give due consideration to any recommendations for nomination which may be submitted to him by the National Academy of Sciences, Association of Land-Grant Colleges and Universities, the National Association of State Universities, Association of American Colleges, or by other scientific or educational organizations.
That certainly would have a salutary effect.
Now, if there is reason for doing that with reference to the appointment of the Foundation members, is it not equally true that that should be carried out in the appointment of the Director? In other words, we wish to emphasize the fact that it is absolutely essential that there be no discord between the Foundation and the Director who is to carry out the provisions of this bill.
Mr. O'HARA. I think that is perfectly sound.
Mr. FOLK. I hope I have made myself clear. It is quite a complicated situation. That is all I have.
Mr. WILSON. Mr. Chairman.
Mr. WILSON. I would like to ask you again about the reasons for your objection to 11 (e) under H. R. 12? That is worded “or resulting from scientific research."
Mr. FOLK. Well, "resulting from” certainly makes it extremely broad, because practically everything in the world results from research work. It does not say basic research even. It would give them authority to take over any developments that any corporation might make or any individual might make as a result of research work which is far beyond the scope of this bill, and I think it should be limited, so far as necessary to carry out the provisions of this act, and that the powers of the Foundation and the director both should be limited, as the bill elsewhere expressly limits them.
Mr. Wilson. You say in your prepared statement that the association is in favor of such Foundation as long as the lines set out in the pamphlet entitled, "Science: the Endless Frontier" are followed ?
Mr. FOLK. Yes; that is true. That has been our consistent position from the very first.
Mr. Wilson. And the patent provisions set out on page 31 of that pamphlet?
Mr. FOLK. That is all right; the patent section is perfectly all right.
Mr. Wilson. That is the way you feel about it, the way it is set out in that pamphlet?
Mr. FOLK. I do not like the patent section of the group-3 bills.
Mr. PRIEST. I want to ask Mr. Folk specifically if he approves the section 12 in the group-1 bills, which deals with the patent question?
Mr. Folk. Of the group-1 bills?
Mr. FOLK. Absolutely, yes; we have no objection to that. I would say that a number of changes have been made in S. 247 from the original 2385, different from the others. We have not objected to these other provisions. I covered that here, but skipped it to save time.
Mr. Priest. Are there any further questions, Mr. Wilson?
Mr. Wilson. That was the question that I was driving at as to section 12 in H. R. 12 on patent rights.
Mr. FOLK. Yes.
Mr. FOLK. Our position is that the group-1 bills are all right; the group-2 bills have the same provision. That is the compromise that was acceptable to us.
Mr. BENNETT. Mr. Chairman?
Mr. BENNETT. Mr. Folk, under section 12, no employee can obtain any rights under a patent on the basis of information he gets while he is an employee, as I read the section.