Donald S. Fredrickson, M.D. 
- 2 - 
governmental agencies and authority to waive such rights if a 
waiver is found to be in the best interest of the United States 
and the public. Such authority is needed to continue to encourage 
wide industry participation in NIH projects and to give NIH 
flexibility to deal effectively with situations which cannot 
be anticipated. A rigid policy requiring NIH to take title to 
all patents resulting from cooperative research or otherwise 
denying a private party a reasonable award for its background 
rights or its efforts to discover improved technologies 
seriously discourages industry's participation 
The U.S. patent system offers inven ors and industry 
a reasonable incentive to spend the time and money necessary for 
the discovery of new and better processes and products. The 
incentive is the exclusive right which a patent grants to practice 
an invention for 17 years in return for a full disclosure of 
the invention to the public. The exclusive right to practice 
an invention for 17 years is a valuable incentive for research 
and development because it provides a sheltered period during 
which research and development expenditures can be recouped. 
The disclosure is of benefit since it is available to the public 
when the patent issues and thereby acts as a springboard for 
further advances by others. Moreover, upon termination of the 
patent, the invention can be freely practiced by everybody. 
In contrast, without a viable patent system, it would be necessary 
to keep inventions secret in order to prevent piracy, and the 
advance of technical knowledge would be greatly Impeded. 
We believe strongly that mandatory licensing of patents 
covering recombinant DNA-related inventions would effectively 
deny the benefits of the present patent system to inventors of 
such subject matter and eliminate much of the incentive of 
industry to participate in such work. Accordingly, we feel that 
mandatory licensing of such patents would be counterproductive 
to the achievement of NIH's objectives. 
Inasmuch as you were kind enough to solicit our views 
as to your reply to Stanford on how they might administer 
appropriately any patent that they secure on their new genetic 
engineering technique we would not cast our vote for any of 
your options numbered 1-5- Ownership should remain with the 
university but the university might be urged to license such a 
patent on a basis which would provide sufficient incentive 
for commercialization and encourage responsible companies to pursue 
work in the recombinant DNA area and generate subsidiary inven- 
tions. We feel, as do your patent people, that your departmental 
policy of rapid dissemination of research will not be burdened 
by the processing of patent applications. 
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