56 
information and for trade secrets are both issues on which industry 
has expressed concern with regard to the NIH guidelines on DNA 
Tecombinant research. On the other hand, opponents of such research 
have indicated that secrecy would conceal the very risks with which 
they are concerned. 
Mr. Lather 
Norman Latker, Patent Counsel for the Department of Health, 
Education, and Welfare, also reviewed the issue of patent applications 
as they would apply to DNA research. At the outset, and in reference 
to some public suggestions that the Patent Office might be able to 
enforce the NIH DNA guidelines on commerce by withholding patents 
for failure to follow these guidelines, Mr. Latker testified that he 
believed that this would be a less than effective control system. He 
preferred the continuation of the policy of permitting universities to 
own their inventions and then to collaborate with the industrial 
sector for commercialization of such inventions. However, he does 
not believe that licensing control is an appropriate method for con- 
trolling commercial compliance with the DNA guidelines. Mr. Latker 
was concerned that there appears to be insufficient recognition of the 
difficulty of commercializing new developments and that any further 
complication of the patent process or forced premature general 
public access to patentable information might further delay com- 
mercial development of valuable ideas. Mr. Latker made reference 
to data available which tend to indicate that patented developments 
owned by the Government fail to move into the commercial market 
because of the difficulty in obtaining risk capital in ventures where 
there is no assurance that patent protection will be maintained to 
protect the investments 
Mr. Anderson 
Rudolph J. Anderson, Jr., Associate General Counsel and Director 
of Patents, Merck and Company, addressed the same problem of the 
need for protection of risk capital in order to stimulate investment in 
the development of new ideas. He emphasized that Government 
regulations and laws have a direct influence on private research in- 
vestment. He believes that a basic factor in the U.S. industrial system 
is the protection of freedom of competition and that the patent system 
serves to protect this freedom. The reward for effective competition 
is the profitable sale of a new product. The patent system assures 
that society does not have to pay for industrial development, stimu- 
lates other manufacturers to search for other routes to solve problems 
(often less expensively and more effectively) and makes it unnecessary 
for society to select research projects to be funded. The patent system 
also produces pressure on a manufacturer to commercialize a valuable 
development as soon as possible. Although Mr. Anderson believes 
the HEW position on patents obtained through Federal funding 
within universities has been useful in stimulating commercial develop- 
ment of federally funded inventions, he has some concern about pat- 
ients obtained through Federal funding of research in private compa- 
nies. Proposals to control patents through mandatory licensing of 
rights under federally developed research, he views as inimical to rapid 
commercial development. Mr. Anderson pointed out that the British 
have now recognized the deficiencies in compulsory patent licensing 
and are eliminating this practice with regard to drug patents. 
[Appendix B — 105] 
