IIA

103D CONGRESS

1ST SESSION H. R. 1313

IN THE SENATE OF THE UNITED STATES

MAY 19 (legislative day, APRIL 19), 1993

Received; read twice and referred to the Committee on the Judiciary

AN ACT

To amend the National Cooperative Research Act of 1984

with respect to joint ventures entered into for the purpose of producing a product, process, or service.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘National Cooperative

5 Production Amendments of 1993’’.
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1 SEC. 2. FINDINGS AND PURPOSE.

2 (a) FINDINGS.—The Congress finds that—

3 (1) technological innovation and its profitable

4 commercialization are critical components of the

5 ability of the United States to raise the living stand6 ards of Americans and to compete in world markets;

7 (2) cooperative arrangements among

8 nonaffiliated businesses in the private sector are

9 often essential for successful technological innova10 tion; and

11 (3) the antitrust laws may have been mistak12 enly perceived to inhibit procompetitive cooperative

13 innovation arrangements, and so clarification serves

14 a useful purpose in helping to promote such ar15 rangements.

16 (b) PURPOSE.—It is the purpose of this Act to pro17 mote innovation, facilitate trade, and strengthen the com18 petitiveness of the United States in world markets by

19 clarifying the applicability of the rule of reason standard

20 and establishing a procedure under which businesses may

21 notify the Department of Justice and Federal Trade Com22 mission of their cooperative ventures and thereby qualify

23 for a single-damages limitation on civil antitrust liability.

24 SEC. 3. AMENDMENTS.

25 (a) SHORT TITLE.—Section 1 of the National Coop26 erative Research Act of 1984 (15 U.S.C. 4301 note) is
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1 amended by striking ‘‘National Cooperative Research Act

2 of 1984’’ and inserting ‘‘National Cooperative Research

3 and Production Act of 1993’’.

4 (b) DEFINITION.—Section 2(a)(6) of the National

5 Cooperative Research Act of 1984 (15 U.S.C. 4301(a)(6))

6 is amended—

7 (1) in the matter preceding subparagraph (A)

8 by striking ‘‘research and development’’;

9 (2) in subparagraph (D) by inserting ‘‘or pro10 duction’’ after ‘‘research’’;

11 (3) in subparagraph (E) by striking ‘‘and (D)’’

12 and inserting ‘‘(D), (E), and (F)’’;

13 (4) by redesignating subparagraphs (D) and

14 (E) as subparagraphs (F) and (G), respectively;

15 (5) by inserting after subparagraph (C) the

16 following:

17 ‘‘(D) the production of a product, process,

18 or service,

19 ‘‘(E) the testing in connection with the

20 production of a product, process, or service by

21 such venture,’’; and

22 (6) by striking ‘‘research’’ the last place it ap23 pears and inserting ‘‘such venture’’.
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1 (c) EXCLUSIONS.—Section 2(b) of the National Co2 operative Research Act of 1984 (15 U.S.C. 4301(b)) is

3 amended—

4 (1) in the matter preceding paragraph (1) by

5 striking ‘‘research and development’’;

6 (2) in paragraph (1) by striking ‘‘that is not

7 reasonably required to conduct the research and de8 velopment that is’’ and inserting ‘‘if such informa9 tion is not reasonably required to carry out’’;

10 (3) by amending paragraph (2) to read as

11 follows:

12 ‘‘(2) entering into any agreement or engaging

13 in any other conduct restricting, requiring, or other14 wise involving the marketing, distribution, or provi15 sion by any person who is a party to such venture

16 of any product, process, or service, other than—

17 ‘‘(A) the distribution among the parties to

18 such venture, in accordance with such venture,

19 of a product, process, or service produced by

20 such venture,

21 ‘‘(B) the marketing of proprietary informa22 tion, such as patents and trade secrets, devel23 oped through such venture formed under a

24 written agreement entered into before the date
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1 of the enactment of the National Cooperative

2 Production Amendments of 1993, or

3 ‘‘(C) the licensing, conveying, or transfer4 ring of intellectual property, such as patents

5 and trade secrets, developed through such ven6 ture formed under a written agreement entered

7 into on or after the date of the enactment of

8 the National Cooperative Production Amend9 ments of 1993,’’;

10 (4) in paragraph (3)—

11 (A) in subparagraph (A) by striking ‘‘or

12 developments not developed through’’ and in13 serting ‘‘, developments, products, processes, or

14 services not developed through, or produced

15 by,’’;

16 (B) in subparagraph (B) by striking ‘‘such

17 party’’ and inserting ‘‘any person who is a

18 party to such venture’’; and

19 (C) by striking the period at the end and

20 inserting a comma; and

21 (5) by adding at the end the following:

22 ‘‘(4) entering into any agreement or engaging

23 in any other conduct allocating a market with a

24 competitor,
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1 ‘‘(5) exchanging information among competitors

2 relating to production (other than production by

3 such venture) of a product, process, or service if

4 such information is not reasonably required to carry

5 out the purpose of such venture,

6 ‘‘(6) entering into any agreement or engaging

7 in any other conduct restricting, requiring, or other8 wise involving the production (other than the pro9 duction by such venture) of a product, process, or

10 service,

11 ‘‘(7) using existing facilities for the production

12 of a product, process, or service by such venture un13 less such use involves the production of a new prod14 uct or technology, and

15 ‘‘(8) except as provided in paragraphs (2), (3),

16 and (6), entering into any agreement or engaging in

17 any other conduct to restrict or require participation

18 by any person who is a party to such venture, in any

19 unilateral or joint activity that is not reasonably re20 quired to carry out the purpose of such venture.’’.

21 (d) RULE OF REASON STANDARD.—Section 3 of the

22 National Cooperative Research Act of 1984 (15 U.S.C.

23 4302) is amended—

24 (1) by striking ‘‘research and development’’ the

25 first place it appears;
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1 (2) by striking ‘‘and development’’ the last

2 place it appears and inserting ‘‘, development, prod3 uct, process, and service’’; and

4 (3) by adding at the end the following:

5 ‘‘For the purpose of determining a properly defined, rel6 evant market, worldwide capacity shall be considered to

7 the extent that it may be appropriate in the cir8 cumstances.’’.

9 (e) TECHNICAL AND CONFORMING AMENDMENTS.—

10 The National Cooperative Research Act of 1984 (15

11 U.S.C. 4301 et seq.) is amended—

12 (1) in section 4—

13 (A) in subsections (a)(1), (b)(1), (c)(1),

14 and (e) by striking ‘‘research and development’’

15 each place it appears;

16 (B) in subsections (a), (b), and (c) by in17 serting ‘‘of this section’’ after ‘‘subsection (d)’’

18 each place it appears; and

19 (C) in subsection (e) by striking ‘‘the effec20 tive date of this Act’’ and inserting ‘‘October

21 11, 1984,’’; and

22 (2) in section 5(a) in the matter preceding

23 paragraph (1) by striking ‘‘research and develop24 ment’’.
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1 (f) DISCLOSURE.—Section 6 of the National Cooper2 ative Research Act of 1984 (15 U.S.C. 4305) is amend3 ed—

4 (1) in the heading by striking ‘‘RESEARCH AND

5 DEVELOPMENT’’;

6 (2) in subsection (a)—

7 (A) by striking ‘‘the date of the enactment

8 of this Act’’ and inserting ‘‘October 11, 1984’’;

9 (B) in paragraph (1) by striking ‘‘and’’ at

10 the end;

11 (C) in paragraph (2) by striking the period

12 at the end and inserting ‘‘, and’’; and

13 (D) by inserting the following after para14 graph (2):

15 ‘‘(3) if a purpose of such venture is the produc16 tion of a product, process, or service, as referred to

17 in section 2(a)(6)(D), the identity and nationality of

18 any person who is a party to such venture, or who

19 controls any party to such venture whether sepa20 rately or with one or more other persons acting as

21 a group for the purpose of controlling such party.’’;

22 and

23 (3) in subsections (a), (d)(2), and (e) by strik24 ing ‘‘research and development’’ each place it ap25 pears.
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1 (g) LIMITATION.—The National Cooperative Re2 search Act of 1984 (15 U.S.C. 4301 et seq.) is amended

3 by adding at the end the following:

4 ‘‘APPLICATION OF SECTION 4 PROTECTIONS TO

5 PRODUCTION OF PRODUCTS, PROCESSES, AND SERVICES

6 ‘‘SEC. 7. Notwithstanding sections 4 and 6, the pro7 tections of section 4 shall not apply with respect to a joint

8 venture’s production of a product, process, or service, as

9 referred to in section 2(a)(6)(D), unless—

10 ‘‘(1) the principal facilities for such production

11 are located in the United States or its territories,

12 and

13 ‘‘(2) each person who controls any party to

14 such venture (including such party itself) is a United

15 States person, or a foreign person from a country

16 whose law accords antitrust treatment no less favor17 able to United States persons than to such country’s

18 domestic persons with respect to participation in

19 joint ventures for production.’’.

20 SEC. 4. REPORTS ON JOINT VENTURES AND UNITED

21 STATES COMPETITIVENESS.

22 (a) PURPOSE.—The purpose of the reports required

23 by this section is to inform Congress and the American

24 people of the effect of the National Cooperative Research

25 and Production Act of 1993 on the competitiveness of the
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1 United States in key technological areas of research, devel2 opment, and production.

3 (b) ANNUAL REPORT BY THE ATTORNEY GEN4 ERAL.—In the 30-day period beginning at each 1-year in5 terval in the 6-year period beginning on the date of the

6 enactment of this Act, the Attorney General shall submit

7 to the Committee on the Judiciary of the House of Rep8 resentatives and the Committee on the Judiciary of the

9 Senate—

10 (1) a list of joint ventures for which notice was

11 filed under section 6(a) of the National Cooperative

12 Research and Production Act of 1993 during the 12-

13 month period for which such report is made, includ14 ing—

15 (A) the purpose of each joint venture;

16 (B) the identity of each party described in

17 section 6(a)(1) of such Act; and

18 (C) the identity and nationality of each

19 person described in section 6(a)(3) of such Act;

20 and

21 (2) a list of cases and proceedings, if any,

22 brought during such period under the antitrust laws

23 by the Department of Justice, and by the Federal

24 Trade Commission, with respect to joint ventures for
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1 which notice was filed under such section at any

2 time.

3 (c) TRIENNIAL REPORT BY THE ATTORNEY GEN4 ERAL.—In the 30-day period beginning at each 3-year in5 terval in the 6-year period beginning on the date of the

6 enactment of this Act, the Attorney General, after con7 sultation with such other agencies as the Attorney General

8 considers to be appropriate, shall submit to the Committee

9 on the Judiciary of the House of Representatives and the

10 Committee on the Judiciary of the Senate a description

11 of the technological areas most commonly pursued by joint

12 ventures for production for which notice was filed under

13 section 6(a) of the National Cooperative Research and

14 Production Act of 1993 during the 3-year period for which

15 such report is made, and an analysis of the trends in the

16 competitiveness of United States industry in such areas.

17 (d) REVIEW OF ANTITRUST TREATMENT UNDER

18 FOREIGN LAWS.—In the three 30-day periods beginning

19 1 year, 3 years, and 6 years after the date of the enact20 ment of this Act, the Attorney General, after consultation

21 with such other agencies as the Attorney General consid22 ers to be appropriate, shall submit to the Committee on

23 the Judiciary of the House of Representatives and the

24 Committee on the Judiciary of the Senate a report on the

25 antitrust treatment of United States businesses with re-
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1 spect to participation in joint ventures for production,

2 under the law of each foreign nation any of whose domes3 tic businesses disclosed its nationality under section

4 6(a)(3) of the National Cooperative Research and Produc5 tion Act of 1993 at any time.

Passed the House of Representatives May 18, 1993.

Attest: DONNALD K. ANDERSON,

Clerk.