I

103D CONGRESS

1ST SESSION H. R. 1313

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.

IN THE HOUSE OF REPRESENTATIVES

MARCH 11, 1993

Mr. BROOKS (for himself, Mr. FISH, Mr. EDWARDS of California, and Mr.

BOUCHER) introduced the following bill; which was referred to the Committee on the Judiciary

A BILL

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’’.

6 SEC. 2. FINDINGS AND PURPOSE.

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

8 (1) technological innovation and its profitable

9 commercialization are critical components of the
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1 ability of the United States to raise the living stand2 ards of Americans and to compete in world markets;

3 (2) cooperative arrangements among

4 nonaffiliated businesses in the private sector are

5 often essential for successful technological innova6 tion; and

7 (3) the antitrust laws may have been mistak8 enly perceived to inhibit procompetitive cooperative

9 innovation arrangements, and so clarification serves

10 a useful purpose in helping to promote such ar11 rangements.

12 (b) PURPOSE.—It is the purpose of this Act to pro13 mote innovation, facilitate trade, and strengthen the com14 petitiveness of the United States in world markets by

15 clarifying the applicability of the rule of reason standard

16 and establishing a procedure under which businesses may

17 notify the Department of Justice and Federal Trade Com18 mission of their cooperative ventures and thereby qualify

19 for a single-damage limitation on civil antitrust liability.

20 SEC. 3. AMENDMENTS.

21 (a) SHORT TITLE.—Section 1 of the National Coop22 erative Research Act of 1984 (15 U.S.C. 4301 note) is

23 amended by striking ‘‘National Cooperative Research Act

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

25 and Production Act of 1993’’.
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1 (b) DEFINITION.—Section 2(a)(6) of the National

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

3 is amended—

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

5 by striking ‘‘research and development’’;

6 (2) in subparagraph (D) by inserting ‘‘or pro7 duction’’ after ‘‘research’’;

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

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

10 (4) by redesignating subparagraphs (D) and

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

12 (5) by inserting after subparagraph (C) the fol13 lowing:

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

15 or service,

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

17 production of a product, process, or service by

18 such venture,’’; and

19 (6) by striking ‘‘research’’ the last place it ap20 pears and inserting ‘‘such venture’’.

21 (c) EXCLUSIONS.—Section 2(b) of the National Co22 operative Research Act of 1984 (15 U.S.C. 4301(b)) is

23 amended—

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

25 striking ‘‘research and development’’;
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1 (2) in paragraph (1) by striking ‘‘that is not

2 reasonably required to conduct the research and de3 velopment that is’’ and inserting ‘‘if such informa4 tion is not reasonably required to carry out’’;

5 (3) by amending paragraph (2) to read as fol6 lows:

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

8 in any other conduct restricting, requiring, or other9 wise involving the marketing, distribution, or provi10 sion by any person who is a party to such venture

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

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

13 such venture, in accordance with such venture,

14 of a product, process, or service produced by

15 such venture,

16 ‘‘(B) the marketing of proprietary informa17 tion, such as patents and trade secrets, devel18 oped through such venture formed under a

19 written agreement entered into before the date

20 of the enactment of the National Cooperative

21 Production Amendments of 1993, or

22 ‘‘(C) the licensing, conveying, or transfer23 ring of intellectual property, such as patents

24 and trade secrets, developed through such ven25 ture formed under a written agreement entered
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1 into on or after the date of the enactment of

2 the National Cooperative Production Amend3 ments of 1993,’’;

4 (4) in paragraph (3)—

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

6 developments not developed through’’ and in7 serting ‘‘, developments, products, processes, or

8 services not developed through, or produced

9 by,’’;

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

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

12 party to such venture’’; and

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

14 inserting a comma, and

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

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

17 in any other conduct allocating a market with a

18 competitor,

19 ‘‘(5) exchanging information among competitors

20 relating to production (other than production by

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

22 such information is not reasonably required to carry

23 out the purpose of such venture,

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

25 in any other conduct restricting, requiring, or other-
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1 wise involving the production (other than the pro2 duction by such venture) of a product, process, or

3 service,

4 ‘‘(7) using existing facilities in connection with

5 the production of a product, process, or service by

6 such venture unless such use is for the production

7 of a new product or technology, and

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

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

10 any other conduct to restrict or require participation

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

12 unilateral or joint activity that is not reasonably re13 quired to carry out the purpose of such venture.’’.

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

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

16 4302) is amended—

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

18 first place it appears;

19 (2) by striking ‘‘and development’’ the last

20 place it appears and inserting ‘‘, development, prod21 uct, process, and service’’; and

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

23 ‘‘For the purpose of determining a properly defined, rel24 evant market, worldwide capacity shall be considered to
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1 the extent that it may be appropriate in the cir2 cumstances.’’.

3 (e) TECHNICAL AND CONFORMING AMENDMENTS.—

4 The National Cooperative Research Act of 1984 (15

5 U.S.C. 4301 et seq.) is amended—

6 (1) in section 4—

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

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

9 each place it appears; and

10 (B) in subsection (b) by inserting ‘‘of this

11 section’’ after ‘‘subsection (d)’’; and

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

13 paragraph (1) by striking ‘‘research and develop14 ment’’.

15 (f) DISCLOSURE.—Section 6 of the National Cooper16 ative Research Act of 1984 (15 U.S.C. 4305) is amend17 ed—

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

19 DEVELOPMENT’’;

20 (2) in subsection (a)—

21 (A) in paragraph (1) by striking ‘‘and’’ at

22 the end,

23 (B) in paragraph (2) by striking the period

24 at the end and inserting ‘‘, and’’, and
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1 (C) by inserting the following after para2 graph (2):

3 ‘‘(3) if a purpose of such venture is the produc4 tion of a product, process, or service, as referred to

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

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

7 controls any party to such venture whether sepa8 rately or with one or more other persons acting as

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

10 and

11 (3) in subsections (a), (d)(2), and (e) by strik12 ing ‘‘research and development’’ each place it ap13 pears.

14 (g) LIMITATION.—The National Cooperative Re15 search Act of 1984 (15 U.S.C. 4301 et seq.) is amended

16 by adding at the end the following:

17 ‘‘APPLICATION OF SECTION 4 PROTECTIONS TO

18 PRODUCTION OF PRODUCTS, PROCESSES, AND SERVICES

19 ‘‘SEC. 7. Notwithstanding sections 4 and 6, the pro20 tections of section 4 shall not apply with respect to a joint

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

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

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

24 are located in the United States or its territories,

25 and
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1 ‘‘(2) each person who controls any party to

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

3 States person, or a foreign person from a country

4 whose law accords antitrust treatment no less favor5 able to United States persons than to such country’s

6 domestic persons with respect to participation in

7 joint ventures for production.’’.

8 SEC. 4. REPORTS ON JOINT VENTURES AND UNITED

9 STATES COMPETITIVENESS.

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

11 by this section is to inform Congress and the American

12 people of the effect of the National Cooperative Research

13 and Production Act of 1993 on the competitiveness of the

14 United States in key technological areas of research, devel15 opment, and production.

16 (b) ANNUAL REPORT BY THE ATTORNEY GEN17 ERAL.—In the 30-day period beginning at each 1-year in18 terval after the date of the enactment of this Act, the At19 torney General shall submit to the Committee on the Judi20 ciary of the House of Representatives and the Committee

21 on the Judiciary of the Senate—

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

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

24 Research and Production Act of 1993 during the 12-

25 month period for which such report is made, includ-
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1 ing the purpose of each joint venture and the iden2 tity and nationality of each party to such joint ven3 ture as described in such section; and

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

5 brought during such period under the antitrust laws

6 by the Department of Justice, and by the Federal

7 Trade Commission, with respect to joint ventures for

8 which notice was filed under such section at any

9 time.

10 (c) TRIENNIAL REPORT BY THE ATTORNEY GEN11 ERAL.—In the 30-day period beginning at each 3-year in12 terval after the date of the enactment of this Act, the At13 torney General, after consultation with such other agen14 cies as may be appropriate, shall submit to the Committee

15 on the Judiciary of the House of Representatives and the

16 Committee on the Judiciary of the Senate—

17 (1) a description of the technological areas of

18 research, development, and production most com19 monly pursued by joint ventures for which notice

20 was filed under section 6(a) of the National Cooper21 ative Research and Production Act of 1993 during

22 the 3-year period for which such report is made, and

23 an analysis of the trends in the competitiveness of

24 United States industry in such areas; and
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1 (2) an update of the report submitted by the

2 Attorney General under subsection (d) to reflect

3 changes in foreign law’s antitrust treatment of joint

4 ventures.

5 (d) REVIEW OF ANTITRUST TREATMENT UNDER

6 FOREIGN LAWS.—Not later than 1 year after the date of

7 enactment of this Act, the Attorney General, after con8 sultation with such other agencies as may be appropriate,

9 shall submit to the Committee on the Judiciary of the

10 House of Representatives and the Committee on the Judi11 ciary of the Senate a report on the antitrust treatment

12 of United States businesses that are parties to joint ven13 tures under the law of each foreign nation whose domestic

14 businesses filed notice under section 6(a) of the National

15 Cooperative Research and Production Act of 1993 at any

16 time.

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