(page 1) (logo of the Chemical Manufacturers Association) CHEMICAL MANUFACTURERS ASSOCIATION WILLIAM M. STOVER Vice President Government Relations July 10, 1986 (the following text is handwritten in black pen) File C. Fed. Tech Transfer Act (end of handwritten text) The Honorable Robert Dole United States Senate Washington, D.C. 20510 Dear Senator Dole: I am writing on behalf of the Chemical Manufacturers Association to express our views on H.R. 3773, the Federal Transfer Technology Act of 1986. The Chemical Manufacturers Association (CMA) is a nonprofit organization whose member companies represent over ninety percent of the productive capacity of basic industrial chemicals in the United States. The Chemical Manufacturers Association strongly endorses the concept of facilitating the utilization of technology developed in Federal laboratories by establishing greater statutory flexibility in the granting of rights to such technology. To the extent that any legislation effectuates this goal, CMA believes that it is deserving of support. However, CMA has serious reservations about Section 6 of H.R. 3773 as reported by the Senate Committee on Commerce, Science and Transportation. CMA is particularly concerned about Section 6 because it would require that Federal employee-inventors of a licensed invention receive 15 percent of the royalties received. There are four major reasons why this is not desirable. (1) This provision would encourage an attitude of secrecy among research personnel; it would discourage the free sharing, discussing, reviewing and critiquing of new ideas for fear that other individuals would become co-inventors of an invention leading to a sharing of the royalties. It would further discourage the cooperation and teamwork that are vital to the success of any research project. (2) The royalty provision is fundamentally inequitable. It recognizes only a small fraction of the total effort necessary in the invention process. The supplementary efforts of other technical support personnel, other than the actual "inventors" may be equally as important. CMA supports a system that places the responsibility for proper compensation with the appropriate managers and laboratory directors. We believe the current bonus system can be adequately used to compensate exceptional performances. Formerly Manufacturing Chemists Association—Serving the Chemical Industry Since 1872. 2501 M Street, NW · Washington, DC 20037 · Telephone 202/887-1122 · Telex 89617 (CMA WSH) (end of page 1) (page 2) The Honorable Robert Dole July 10, 1986 Page Two (3) The provision presents a significant conflict of interest for the individual, who will likely be motivated to spend additional Governmental monies to defend and promote his/her invention based on the potential personal financial reward rather than on the basic value of the technology to society. (4) The direction of the fundamental research project should be the responsibility of the laboratory directors. This proposed legislative provision tends to motivate scientists to invent where the immediate, greatest, personal financial impact could be realized, which will tend to be short-term oriented. We are concerned that this will lead to bifurcated direction of the programs and an ultimate breakdown of the management system. CMA is also concerned about the impact of Section 6 on the utilization of the recently enacted Statutory Invention Registration. Granting an employee a right to his/her invention unless the Government intends to file for a patent application, as this section does, would work against utilization of this provision of the U.S. Patent laws. It seems that an "S.I.R." would be filed only if the inventor had no interest in owning the invention. If there are questions with respect to our views, or if additional information is required, please contact Rose Marie Sanders (202/887-1123), the CMA Legislative Representative for Patents. Sincerely, (signature of William M. Stover) William M. Stover Vice President Government Relations (end of page 2)