Dan Jacobson DANJ at jhuhyg.bitnet
Sun Jul 21 17:00:12 EST 1991

Jack Kramer writes:

>In article <1700 at> jckelley at (John Kelley)
>>Being involved with a group doing molecular biology work that may
>>be patentable, we are very interested in maintaining valid

>I'll put my asbestos underware on again and...

>I am totally flabbergasted and appalled!

>Is this really a request for information on obtaining "patents" from
>a United States government (NIH) organization?

>Is the federal government using tax dollars to directly compete with private
>individuals and businesses.

>If it really is does it mean that as a contributing shareholder (form 1040)
>that I am intitled to dividends? Where can I get an Annual Report?

In my experience with the national lab system I found that people were not only
allowed to apply for patents but in fact were encouraged to do so.  Similarly I
have heard that people in the NIH system get brownie points for producing paten
ts.  As I understand it this is done in order to HELP industry.  We've all hear
d how the US is getting trounced on the economic side of things and needs to be
come more competitive on the world market etc....  It's also been widely public
ized that Japanese industry gets a substantial amount of government support
and thus it's never a fare fight etc....  Thus the idea of TECHNOLOGY TRANSFER
has become a big issue with people in Congress.  For a long time few of the
inventions made in US government labs ever found there way to the market place
precisely because they were not patented.  If a company is going to develop and
market a  particular product it will invest a large amount of time and money
doing so, especially if they start right after the invention stage of R&D.  Now
a company which does all this development and then markets a product without a
patent for it will be wiped out by competitors who can market the same product
(with none of the overhead involved in developing it) for less.  So in order to
get more economic bang out of the taxpayer's buck the government wants to
patent the inventions that it pays for and then give (license?) the patent to a
company willing to develop it into a product which helps the economy which
makes  the incumbents happy, whew.  I'm not a lawyer but this is the general

The other side of the coin is the creation of spin off companies where the inve
stigator comes up with an idea which he/she would like to personally make money
on.  This becomes much more of a grey area as public funding for personal enric
hment is somewhat frowned upon by the average taxpayer (note the Senate gave it
self a raise at midnight after most taxpayers had gone to bed).  There are ways
around rules regulating such occurences though.  The inventor may form a compan
y to receive the patent that he/she obtained in the lab, the inventor may clai
m that the idea occurred to them in their free time....  Lots of wishy-washy
areas are bound to come up any time the law is involved.  I beleive that the
NIH has a rule forbiding an investigator from owning a company but again loop
holes abound - spouses may become a major shareholder and/or chair
of the board for spin-off companies etc...  At any rate I'm sure we're all fami
liar with the many spin-off companies which sorround our universities where the
investigator was most likely receiving public funds for their research when the
y came up with the *idea*.  Furthermore the government (NIH or NSF ?) itself
gives out "small business grants" to help high-tech companies get on their feet
(and these can go over a million dollars).

So in answer to some of Jack's questions -

The government appears to be trying to help rather than compete against busines

I think a Senator would tell you that your dividends are the lower taxes that y
ou will pay because it is helping to build a high-tech industry which will brin
g in lots of tax dollars (yawn) blah, blah, blah. (Let's just hope that when th
ese companies get big enough that they don't move overseas in search of cheaper
labor...) (I might tell you that your dividends just went into that Senators
$25,000 raise).

Likewise a Senator would tell you that your annual report is called the GNP.

Dan Jacobson
danj at

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