Ch. 12 — Patenting Living Organisms • 251 
federally funded in\ entions and to make them 
generally a\ailahle through none.\clusi\e 
licenses. 
Until recently, there had been tio comprehen- 
si\ e, gox ernmentvvide policy regarding owner- 
ship of patents on federally funded in\ entions. 
Some agencies, such as the Department of 
Healtli and Human Ser\ices (DHHS), [)ermitted 
noii[)i'ofit institutional grantees to own [Kitents 
on inventions (subject to conditions deemed 
necessary to protect the public interest) if they 
had formal ()i'ocedures for administering them. 
However, most agencies generally retained title 
to such patents, making them available to any- 
one in the [)rivate sector for development and 
possible commercialization through none.x- 
clusiv e licenses. 
The rationale behind the policy was simply 
that inventions developed hv public money 
should he av ailahle to all— including priv ate in- 
dustry— on a tione.vclusive basis. This arrange- 
ment had been criticized as not providing suf- 
ficient incentiv e for industry to take the risks to 
dev elop the inv entions. Of the more than 28,000 
patents owned by the Government, less than 4 
percent have been successfully licensed; on the 
other hand, universities, which do grant ex- 
clusive licenses on patents that they own, have 
been able to license 33 percent of their 
patents.-® 
On December 12, 1980, President Carter 
signed the Government Patent Policy Act of 
1980. The .Act sets forth congressional policy 
that the patent system be used to promote the 
utilization of inv entions developed under fed- 
erally supported R&.D projects by nonprofit 
organizations and small businesses. To this end, 
the organization or firm may elect to retain title 
to those inventions, subject to various condi- 
tions designed to protect the public interest. 
Such conditions include retention by the fund- 
ing agency of a nonexclusiv e, irrev ocable, paid- 
up license to use the invention, and the right of 
the Government to act where efforts are not 
being made to commercialize the invention, in 
cases of health or safety needs, or when the 
use of the inv^ention is required by Federal reg- 
ulations. 
2*S. Rept. i\o. 96-480, 96th Cong. 1st sess, 1979. p. 2. 
rhere is still the question of whether patents 
on molecular techniques or genetically en- 
gineered micro-organisms are sufficiently dif- 
ferent to merit exception from any general pat- 
ent policy decided on by Congress. For some, 
the molecular genetic techniques are unique be- 
cause they are powerful scientific tools that can 
manipulate the life processes as never before. 
However, in a November 1977 report, NIH took 
the following position with regard to patents on 
rDNA inventions developed under DHHS-NIH 
support:^^* 
There are no compelling economic, social, or 
moral reasons to distinguish these inventions 
from others involving biological substances or 
processes that have been patented, even when 
partially or wholly developed with public funds. 
The report was prompted by the Stanford- 
L'CSF patent application. Even though the appli- 
cation was in accord with the funding agree- 
ments between the institutions and NIH, the 
universities requested a formal NIH opinion on 
the issue in view of the intense public interest in 
rDNA research. NIH solicited comments from a 
group of approximately 67 individuals, ranging 
from academic and industrial scientists to 
students, lawyers, and philosophers.^® The 
review' and analysis of the responses were 
referred to the Federal Interagency Committee 
on rDNA Research, the Public Health Service, 
and the Office of the General Counsel of the De- 
partment of Health, Education, and Welfare 
(now DHHS). A fairly uniform consensus on the 
above-quoted finding developed in this process; 
the one significant dissenter, the Department of 
Justice, contended that the Government should 
retain ownership of any invention resulting 
from federally funded rDNA research because 
of the great public interest in that research. 
^’’The Patenting of Recombinant DNA Research Inventions De- 
veloped under DHEW Support: An Analysis by the Director, National 
Institutes of Health, November 1977, p. 16. 
•The report further concluded that no change was necessary in 
the basic NIH policy permitting nonprofit organizations to own 
patents on inventions developed under contracts or grants from 
the Department of Health, Education, and Welfare (now DHHS), 
subject to several conditions to protect the public interest. The 
only recommended change was that the formal agreements be- 
tween NIH and the institutions be amended to require that any 
licensees of institutional patent holders comply with the contain- 
ment standards of the NIH Guidelines in any production or use of 
rDNA molecules under the license agreement. 
“Ibid., app. I, pp. 5-8. 
