1. By employees 2 B. POLICY AS TO RETENTION OF TITLE FCC makes employee patent determinations in accordance with provisions of Executive Order 10096, which was approved on January 23, 1950. In addition it promulgated its own regulations on July 11, 1951, implementing Executive Order 10096 and spelling out in detail the relationship between the Commission and its employees regarding patent matters.3 2. By contractors and grantees FCC has made no grants and has only recently begun a research and development program, by contracts, pursuant to Public Law 86-626 of July 12, 1960, in which the Commission is authorized to spend up to $2 million for a special ultrahigh frequency television study during fiscal years 1961 and 1962. A research and development contract with Airborne Instruments Laboratory, a division of CutlerHammer, Inc., was awarded on May 16, 1960, in connection with this ultrahigh frequency television study. Further contracts which might have patent implications have been entered into with Melpar, Inc., awarded on November 1, 1960; Smith Electronics, Inc., awarded on December 5, 1960; Smith Electronics, Inc., awarded on February 1, 1961; Melpar, Inc., awarded on April 10, 1961. Contracts which do not appear to have any patent implication have also been awarded to Melpar, Inc., on June 6, 1961; RCA Sales Corp., on June 14, 1961; the city of New York, on July 14, 1961; Jerrold Electronics Corp., on July 19, 1961. Similarly, a lease with the Radio Corp. of America awarded on February 24, 1961, involves equipment which has been previously developed so that the only invention possibilities would seem to be those which might arise from the construction and use of the installation. Although it is impossible to foretell what inventions or patents may come from the research and development contracts involved in this study, the patent policy of FCC has already been determined as one which will give the Commission complete control of the disposition of all inventions and patents which may arise.* 1. Employee patents C. FOREIGN FILING The FCC has no information as to the foreign filing of patents by its employees. 2. Contractors and grantees patents The Commission has made no grants and entered into no research contracts prior to May 16, 1960. There has, therefore, not been any occasion for any contractor or grantee to apply for patents in foreign countries. For complete text of Executive Order 10096 promulgated Jan. 23, 1950, 15 F.R. 389, see app. A on p. 17, of the "Patent Practices of the Government Patents Board," report of the Subcommittee on Patents, Trademarks, and Copyrights of the Committee on the Judiciary, U.S. Senate, 86th Cong., 1st sess. See also, Executive Order No. 10930 of Mar. 24, 1961, "Abolishing the Government Patents Board and Providing for the Performance of its Functions by the Department of Commerce," which appears as app. E, p. 28, of the "Patent Practices of the Department of Commerce," report of the Subcommittee on Patents, Trademarks, and Copyrights of the Committee on the Judiciary, Ú.S. Senate, 87th Cong., 1st sess. App. A, p. 9. For copy of patent rights provisions, see app. B, p. 11. 88372-62 D. USE OF PATENTS BY PARTIES RETAINING TITLE 1. Employees The FCC has no information indicating any use by its employees of the inventions made by them on which patents were obtained. 2. Contractors and grantees The Commission has made no grants and no patents have yet been obtained by its research contractors. 3. Government The Commission has made no use of either of the two patents to which it took title or of one of the patents which it licensed from the employee-inventor. The Commission has made a very limited use of the patent which it licensed from the employee-inventor, No. 2,500,935, which was granted on a chart analyzer. The analyzer was used for a few months and then discontinued. E. PATENT POLICY OF THE COMMISSION WITH RESPECT TO PROMULGATION OF TECHNICAL STANDARDS In promulgating technical standards for broadcasting and other radio communication services, the Commission establishes certain technical requirements which its licensees must meet. Such requirements may frequently be met only by the use of patented equipment. While these technical standards are specified in terms of performance, rather than a specific design, certain specified performance characteristics may be obtainable by the use of equipment which is available for communications use only on terms established pursuant to privately owned patent rights. Therefore, in promulgating these technical standards and regulations, the Commission necessarily gives considertion to the effect of patent rights upon the availability of equipment that will meet the specified performance standards. The Commission has stated *** that patent monopolies or patent misuses are impor- However, the Commission has declined to require the regular reporting of information as to the impact of patent rights upon technical standards in general, upon the ground that it has no staff adequate "*** to cull out the particular items warranting consideration by us in the discharge of our statutory functions," and that "* * * overall surveillance of this field must properly be left to other Government departments having important and more direct responsibilities to correct patent abuses * (report and order in docket Nos. 10090 and 11228, adopted Apr. 24, 1957, p. 3). Patent information which is pertinent to those functions, the Commission believes may be obtained by specific requests made in the course of rulemaking proceedings on an ad hoc basis. Statement of Apr. 20, 1960. For full text of this report and order, including two dissenting opinions, see app. C, p. 11. As an illustration of how the Commission has applied this policy, in the recent rulemaking proceedings for establishing standards to permit FM broadcast stations to transmit stereophonic programs on a multiplex basis, the Commission requested the proponents of various systems to supply it with information as to their patents. Thus, in the report and order in this proceeding (docket No. 13506), adopted on April 19, 1961, the Commission stated: 34. The proponents of Systems 1, 4, and 4A have, as requested in the Notice of Proposed Rule Making, submitted statements which indicate in substance that each is prepared to grant nonexclusive licenses under any one or more of its patent applications and the patents issuing thereon to any responsible party at reasonable royalties for the manufacture, use and sale of the apparatus covered thereby. We find these representations consistent with the patent policies of the Commission which are designed to obviate any restraint of trade or monopolistic practices in matters coming within its cognizance. The policy of the Commission in judging the effect of patent rights upon its technical standards was the subject of hearings held by the Legislative Oversight Subcommittee of the Committee on Interstate and Foreign Commerce of the House of Representatives, during the 85th Congress. As a result of its investigation the subcommittee recommended that the Commission should require annual reports by companies owning or controlling patents relating to transmitting and receiving equipment, and should review its technical standards for the purpose of promulgating rules and regulations that would insure that standards" *** effectively serve the public interest and are not tied in with a patent or other monopoly enjoyed by one or more manufacturers or licensees." 7 In response to Senator O'Mahoney's inquiry as to the views of the Commission with respect to these recommendations, the Commission stated that: *** The Commission has already required that certain companies provide patent information to the Commission on a semiannual basis. These companies are American Telephone & Telegraph Co., Radio Corp. of America, and Western Union. In most cases the Commission does not require patent information and only in those cases where patents have a bearing on the Commission's decision will the Commission require patent information. While the Commission is not presently considering increasing the number of companies from which it will require patent information, the Commission does recognize a responsibility to require this information from others should it appear that other manufacturing companies are acquiring dominant patent positions which may affect the ability of the Commission to carry out its regulatory functions in the public interest. In responding to this subcommittee's inquiry as to the Commission's views as to the recommendation of the House subcommittee with respect to prevention of adverse effects resulting from the impact of 1 H. Rept. No. 2711, 85th Cong., 2d sess., p. 15. Statement of Apr. 20, 1960. patent and other monopolies on Commission technical standards, the Commission has reiterated its position that it "would not knowingly adopt standards which would give an unfair competitive advantage to any one manufacturer." It also insists that it is 9 careful not to promulgate technical standards which would prohibit useful patented inventions, but attempts to promulgate technical standards which will be broad enough to include the greatest number of patented inventions.10 There has, however, been no change in the Commission's previously announced position that it does not require the regular filing of infor mation as to patent rights, and therefore does not employ the technica staff necessary to process and accurately appraise the impact of such information. As noted above, the Commission believes that jusgments as to whether particular patent rights have sufficiently injurious effects on competition in the manufacture of communications equipment to jeopardize an adequate public communications system may be more appropriately left to other departments, presumably having staffs better able to make this kind of judgment. The only other department specifically referred to by the Commission as possessing such s staff is the Department of Justice. The Commission's view is that primary responsibility for the correction of restraints of competition in the communications field which may in part result from Commission action rests upon the Antitrust Division of the Department of Justice, rather than upon the Commission. The Commission points out that it has consistently referred to the Department "any patent informstion coming to its attention that may be violative of the antitrust laws," and that the Department has obtained certain consent decrees entered against A.T. & T. and RCA, respectively. These decrees are two of those examined in this subcommittee's report on "Compulsory Patent Licensing Under Antitrust Judgments" (86th Cong., 2d sess.). It was noted in that report that those decrees both contained reciprocal patent licensing provisions which raise serious doubt as to whether either one would effectively restore the competition in the communication fields that they were intended to restore. Not being a party to these or any other antitrust decrees, the Commission bears no responsibility for their success or failure as regulatory devices. The result of the existing policy of reliance upon the Department of Justice to correct unreasonable competitive restraints in the communications field, is that the regulations thought necessary to correct such restraints have been established by antitrust litigation instead of by the Commission. If, on the other hand, the Commission assumed primary responsibility for such regulations, the regulations would be subjected to the conventional safeguards provided by administrative consideration of the views of all interested parties, followed by appropriate judicial review of the action taken. The view of the Commission, however, is that if any change is to be made in the present policy of delegating to the Department of Justice the function of appraising the adverse impact of patent rights upon communication standards that Congress must change the policy by • Ibid. 10 Ibid. appropriate legislation. The Commission "is of the opinion that its present policies have proven to be in the public interest." "1 III. AGENCY VIEWPOINT A. JUDGMENT AS TO EFFECTIVENESS OF PRESENT POLICY The Commission feels that its present policy is satisfactory and is in accordance with its statutory powers and duties. 12 As indicated in the rulemaking proceeding discussed above a majority of the Commission believed that the patent policy then established was in the public interest. However, in light of current developments the Commission has determined to reexamine these matters. B. RECOMMENDATIONS AS TO FUTURE POLICY No recommendations were offered. To this end, the Commission. proposes to institute appropriate rulemaking proceedings in the near future. 11 These statements accurately reflect the views and policies of the Commission as of Dec. 31, 1960. However, a majority of the Commission as now composed believes that there is some question as to whether previous patent policies fully protected the public interest. Its entire procedure relating to patent policies is now being carefully reexamined. 12 Ibid. |