Union Calendar No. 49

103D CONGRESS

1ST SESSION H. R. 1313

[Report No. 103–94]

A BILL

To amend the National Cooperative Research Act

process, or service.into for the purpose of producing a product,of 1984 with respect to joint ventures entered

MAY 18, 1993

Reported with an amendment, committed to the Commitordered to be printed tee of the Whole House on the State of the Union, and
IB

Union Calendar No. 49

103D CONGRESS

1ST SESSION H. R. 1313

[Report No. 103–94]

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

MAY 18, 1993

Additional sponsors: Mr. MOORHEAD, Mr. MAZZOLI, Mr. BERMAN, Mr. MANN,

Mr. SCOTT, Mr. GLICKMAN, Mr. FRANK of Massachusetts, Mr. REED,

Mr. NADLER, and Mr. SENSENBRENNER

MAY 18, 1993

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in italic]

[For text of introduced bill, see copy of bill as introduced on March 11, 1993]

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.
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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 abil10 ity of the United States to raise the living standards

11 of Americans and to compete in world markets;

12 (2) cooperative arrangements among

13 nonaffiliated businesses in the private sector are often

14 essential for successful technological innovation; and

15 (3) the antitrust laws may have been mistakenly

16 perceived to inhibit procompetitive cooperative inno17 vation arrangements, and so clarification serves a

18 useful purpose in helping to promote such arrange19 ments.

20 (b) PURPOSE.—It is the purpose of this Act to promote

21 innovation, facilitate trade, and strengthen the competitive22 ness of the United States in world markets by clarifying

23 the applicability of the rule of reason standard and estab24 lishing a procedure under which businesses may notify the

25 Department of Justice and Federal Trade Commission of
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1 their cooperative ventures and thereby qualify for a single2 damage limitation on civil antitrust liability.

3 SEC. 3. AMENDMENTS.

4 (a) SHORT TITLE.—Section 1 of the National Coopera5 tive Research Act of 1984 (15 U.S.C. 4301 note) is amended

6 by striking ‘‘National Cooperative Research Act of 1984’’

7 and inserting ‘‘National Cooperative Research and Produc8 tion Act of 1993’’.

9 (b) DEFINITION.—Section 2(a)(6) of the National Co10 operative Research Act of 1984 (15 U.S.C. 4301(a)(6)) is

11 amended—

12 (1) in the matter preceding subparagraph (A) by

13 striking ‘‘research and development’’;

14 (2) in subparagraph (D) by inserting ‘‘or pro15 duction’’ after ‘‘research’’;

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

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

18 (4) by redesignating subparagraphs (D) and (E)

19 as subparagraphs (F) and (G), respectively;

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

21 following:

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

23 or service,
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1 ‘‘(E) the testing in connection with the pro2 duction of a product, process, or service by such

3 venture,’’; and

4 (6) by striking ‘‘research’’ the last place it ap5 pears and inserting ‘‘such venture’’.

6 (c) EXCLUSIONS.—Section 2(b) of the National Coop7 erative Research Act of 1984 (15 U.S.C. 4301(b)) is amend8 ed—

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

10 striking ‘‘research and development’’;

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

12 reasonably required to conduct the research and devel13 opment that is’’ and inserting ‘‘if such information is

14 not reasonably required to carry out’’;

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

16 follows:

17 ‘‘(2) entering into any agreement or engaging in

18 any other conduct restricting, requiring, or otherwise

19 involving the marketing, distribution, or provision by

20 any person who is a party to such venture of any

21 product, process, or service, other than—

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

23 such venture, in accordance with such venture, of

24 a product, process, or service produced by such

25 venture,
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1 ‘‘(B) the marketing of proprietary informa2 tion, such as patents and trade secrets, developed

3 through such venture formed under a written

4 agreement entered into before the date of the en5 actment of the National Cooperative Production

6 Amendments of 1993, or

7 ‘‘(C) the licensing, conveying, or transfer8 ring of intellectual property, such as patents and

9 trade secrets, developed through such venture

10 formed under a written agreement entered into

11 on or after the date of the enactment of the Na12 tional Cooperative Production Amendments of

13 1993,’’;

14 (4) in paragraph (3)—

15 (A) in subparagraph (A) by striking ‘‘or de16 velopments not developed through’’ and inserting

17 ‘‘, developments, products, processes, or services

18 not developed through, or produced by,’’;

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

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

21 party to such venture’’; and

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

23 inserting a comma, and

24 (5) by adding at the end the following:
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1 ‘‘(4) entering into any agreement or engaging in

2 any other conduct allocating a market with a com3 petitor,

4 ‘‘(5) exchanging information among competitors

5 relating to production (other than production by such

6 venture) of a product, process, or service if such infor7 mation is not reasonably required to carry out the

8 purpose of such venture,

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

10 any other conduct restricting, requiring, or otherwise

11 involving the production (other than the production

12 by such venture) of a product, process, or service,

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

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

15 such venture unless such use is for the production of

16 a new product or technology, and

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

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

19 any other conduct to restrict or require participation

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

21 unilateral or joint activity that is not reasonably re22 quired to carry out the purpose of such venture.’’.

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

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

25 4302) is amended—
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1 (1) by striking ‘‘research and development’’ the

2 first place it appears;

3 (2) by striking ‘‘and development’’ the last place

4 it appears and inserting ‘‘, development, product,

5 process, and service’’; and

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

7 ‘‘For the purpose of determining a properly defined, rel8 evant market, worldwide capacity shall be considered to the

9 extent that it may be appropriate in the circumstances.’’.

10 (e) TECHNICAL AND CONFORMING AMENDMENTS.—The

11 National Cooperative Research Act of 1984 (15 U.S.C. 4301

12 et seq.) is amended—

13 (1) in section 4—

14 (A) in subsections (a)(1), (b)(1), (c)(1), and

15 (e) by striking ‘‘research and development’’ each

16 place it appears; and

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

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

19 (2) in section 5(a) in the matter preceding para20 graph (1) by striking ‘‘research and development’’.

21 (f) DISCLOSURE.—Section 6 of the National Coopera22 tive Research Act of 1984 (15 U.S.C. 4305) is amended—

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

24 DEVELOPMENT’’;

25 (2) in subsection (a)—
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1 (A) in paragraph (1) by striking ‘‘and’’ at

2 the end,

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

4 at the end and inserting ‘‘, and’’, and

5 (C) by inserting the following after para6 graph (2):

7 ‘‘(3) if a purpose of such venture is the produc8 tion of a product, process, or service, as referred to in

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

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

11 controls any party to such venture whether separately

12 or with one or more other persons acting as a group

13 for the purpose of controlling such party.’’; and

14 (3) in subsections (a), (d)(2), and (e) by striking

15 ‘‘research and development’’ each place it appears.

16 (g) LIMITATION.—The National Cooperative Research

17 Act of 1984 (15 U.S.C. 4301 et seq.) is amended by adding

18 at the end the following:

19 ‘‘APPLICATION OF SECTION 4 PROTECTIONS TO

20 PRODUCTION OF PRODUCTS, PROCESSES, AND SERVICES

21 ‘‘SEC. 7. Notwithstanding sections 4 and 6, the protec22 tions of section 4 shall not apply with respect to a joint

23 venture’s production of a product, process, or service, as re24 ferred to in section 2(a)(6)(D), unless—

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

26 are located in the United States or its territories, and
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1 ‘‘(2) each person who controls any party to such

2 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 by

11 this section is to inform Congress and the American people

12 of the effect of the National Cooperative Research and Pro13 duction Act of 1993 on the competitiveness of the United

14 States in key technological areas of research, development,

15 and production.

16 (b) ANNUAL REPORT BY THE ATTORNEY GENERAL.—

17 In the 30-day period beginning at each 1-year interval after

18 the date of the enactment of this Act, the Attorney General

19 shall submit to the Committee on the Judiciary of the House

20 of Representatives and the Committee on the Judiciary of

21 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-
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1 month period for which such report is made, includ2 ing—

3 (A) the purpose of each joint venture;

4 (B) the identity of each party described in

5 section 6(a)(1) of such Act, and

6 (C) the identity and nationality of each

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

8 and

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

10 brought during such period under the antitrust laws

11 by the Department of Justice, and by the Federal

12 Trade Commission, with respect to joint ventures for

13 which notice was filed under such section at any

14 time.

15 (c) TRIENNIAL REPORT BY THE ATTORNEY GEN16 ERAL.—In the 30-day period beginning at each 3-year in17 terval after the date of the enactment of this Act, the Attor18 ney General, after consultation with such other agencies as

19 may be appropriate, shall submit to the Committee on the

20 Judiciary of the House of Representatives and the Commit21 tee on the Judiciary of the Senate—

22 (1) a description of the technological areas of re23 search, development, and production most commonly

24 pursued by joint ventures for which notice was filed

25 under section 6(a) of the National Cooperative Re-
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1 search and Production Act of 1993 during the 3-year

2 period for which such report is made, and an analy3 sis of the trends in the competitiveness of United

4 States industry in such areas; and

5 (2) an update of the report submitted by the At6 torney General under subsection (d) to reflect changes

7 in foreign law’s antitrust treatment of joint ventures.

8 (d) REVIEW OF ANTITRUST TREATMENT UNDER FOR9 EIGN LAWS.—Not later than 1 year after the date of enact10 ment of this Act, the Attorney General, after consultation

11 with such other agencies as may be appropriate, shall sub12 mit to the Committee on the Judiciary of the House of Rep13 resentatives and the Committee on the Judiciary of the Sen14 ate a report on the antitrust treatment of United States

15 businesses that are parties to joint ventures under the law

16 of each foreign nation whose domestic businesses filed notice

17 under section 6(a) of the National Cooperative Research

18 and Production Act of 1993 at any time.