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ith due regarde profession

the com

quirements for an item of safety equipment. permitted to propose an appropriate standThe study must take into account research ard to the VESC for its consideration, a step and test data available from any source. For which would be a prerequisite to promulgathis purpose, the Commission may "collect, tion of & federal standard by the Secretary. correlate, analyze and evaluate" research and Although the industry proposal would protests carried on by other agencies, public vide that the Secretary could request the and private. But except for such "library. VESC to act upon his proposal within 180 type" research, it is not authorized to carry days or such longer time as he might specify. on any research and testing of its own. It it would appear that the VESC compact, tho may contract for research and testing. but organization's legally binding constitutional only 11 requested to do so by & stato or document, would require it to adhere to tho governmental agency, and then only 11 the time-consuming procedure which has been requesting agency provides the necessary outlined above. If the VESC had not prefunds. The Commission may not accept pri viously recommended a standard on the parvate funds for any purpose.

ticular subject, it would probably have to On the basis of its study of need, the inter- conduct the entire proceeding. Even if it state agency must publish & report. No less had previously studied the particular subthan sixty days later, it must hold one or Ject. It would, at a minimum, have to pubmore public hearings.

lish & new or amended report, hold new Finally, after these steps are completed, hearings after allowing a sixty-day interval, "and with due regard for standards recom- and consider the opinions of appropriate mended by appropriate professional and tech professional and technical associations and nical associations and agencies," the Com- agencies before acting on the Secretary's mission may issue recommended rules, regu- proposal. It seems extremely unlikely that lations or codes.

such a procedure could be carried out within Party states are obligated to consider the 180 days or anything approximating this rules, regulations or codes issued by the period of time, and the proposed scheme Commission, but they are not obligated to appears to be not only unnecessary and un. accept them. One of the two alternativo desirable but completely unworkable 11 ono methods of adoption requires amrmative ac assumes that the Secretary would request tion by the stato legislature for the rule, the VESC to act within the 180-day period. regulation or code to take efect. The second The Secretary would no doubt be under alternative method is adoption by adminis- heavy pressure to exercise the discretion trative action of a party state's motor vehicle which the industry bill would give him to agency. If A state chooses this alternative, allow a longer period within which the VESC Its motor vehicle agency must adopt the rule, could respond to his proposal. regulation or code within six months. The In order for the Secretary to act under tho administrative agency may "declino to Industry proposal, however, not only would adopt" but only after public hearing, & spe- it be necessary to carry out these VESC procific finding that a variation from the Com- ccedings, but the Secretary would then have mission's recommendation "is necessary to to hold an APA section 4 proceeding as well. the public safety." and a recital of the rea. It is easy to envision It requiring five years sons on which the finding is based. Forty- or more before the Secretary is able to profour states and the District of Columbia aromulgate enforceable standards, with tho now members of the compact. In all but automobile manufacturers themselves con& few of the member states the enabling trolling the timing to a great extent. legislation provides that the legislature must Although Mr. Bugas stated before the pass upon standards proposed by the VESC. House Committee on Interstate and Foreign

We may only guess how long the adoption Commerce that the amendments proposed of motor vehicle safety standards by the by the industry "would involve no delay in VESC might take, since it has never yet tho development and establishment of naAdopted one, although Congress authorized tional safety standards, we believe it is the formation of Interstate compacts in the obvious that this is far from the case. field of traffic safety by passage of the Beamer I n his remarks upon signing Proclamation resolution in 1958 and the VESC was orga- 3718, declaring the week of May 16 M Nanized in 1963. Surely, however, the study tional Transportation Week, President John. of need, publication of a report, holding of son stated that the Highway Safety Act of one or more hearings after an interval of at 1966 "will establish & program of strict saloty least sixty days, consideration of standards standards for our automobiles." "The Alter. recommended by appropriate professional native to Federal standards," he said, "18 and technical associations and agencies, and unthinkable: 50 different sets of standards Anally formulation of a standard would con. for 60 different states." The industry prosume a very considerable period of time. posal, while it would not result in 60 different Moreover, since the proposed act would au- sets of standards, would permit differences thorize the automobile manufacturers col- among the states to delay for a very long lectively to propose standards to the VESO period of time the introduction of federal and the compact requires tho VIPSC to con- standards. sider standards recommended by "appropri. One additional respect in which powor ate professional and technical associations might be taken from the Secretary and trans. and agencies" before acting, the automobilo ferred to the VESC under the industry promanufacturers would be able to some oxtent posal warrants comment. The Industry proto induence the timing on introduction of posal, in section 102(d), would require, rather new safety devices.

than authorize, the Secretary to establish The industry proposal would require tho as a motor vehicle safety standard any standSecretary to allow such initial timo (not ex. ard issued by the VDSC which he found apceeding two years from the date of enactment propriate and necessary to accomplish the of this Act) as he considers reasonable for purposes of the Act. Since under that secmotor vehicle manufacturers to propose and tion the Becretary would be authorized to for the VESC to adopt a particular motor establish other standards only 11 any existing vehicle safety standard. Presumably, this motor vehicle safoty standard is inadequate, means the Secretary must allow reasonable he would probably be barred from issuing time for the procedure which has been out. any standard except the standard adopted lined to be carried out. It may be somewhat by the VESC, unless he were willing to and optimistic to think that this procedure could that the VESC standard was inadequate. be carried out even within the two-year The Secretary might well believe that anmaximum time limit which would be im other standard was preferable to the standard posed. In any event the Secretary would recommended by tine VESC, although ho have to allow reasonable time for the VESO might not be prepared to determine that to act on its own before he would even be the standard recommended by the VKSO

19642

m inadequate. In this situation be woud industry. It appear to be so interpreted by be precluded from adopting the preferable the industry. The Washington Post on May standard.

13 reported an industry spokesman to have The net effect of these disabilities of the stated that under this provision the auto proposed procedure is that in the name of makers could not be expected to make "basic desiring to allow the states to play a role, tho changes" such as an impact-absorbent front hands of the Secretary would be severoly end for all models in a single year. The tled. It is signincant that the present in spokesman is reported to have sald further dustry proposal does not call for strengthen that the industry is accustomed to basic Ing the VESC and opening it to federal par model changes only every 3-4 years. In ticipation. At the hearings on S. 3006, when some instances, the urgency of the need for the Industry proposed a joint voluntary Ac- new safety devices may justify some disruption program with frequent consultations tion of the present cycle. The balancing of with Congress, the Secretary, the VESC and the urgency of the need for new devicos other governmental agencies, the industry against whatever disruption may result is spokesman, John S. Bugas, Vico President of a matter appropriately left to the secretary. Ford Motor Company, testined that tho V330 Moreover, while it might & DDear reasonable presently has "& very small stan, inadequato that a "standard should be consistent with in our opinion." (966) and "as it exists today. ••• Innovation (and progressiveness," Mr. really cannot do this job." (1026) He indi. Bugua tostided before the Senate Commerce cated that the VESC has been concerned Committee that the mere authorization of primarily with matters relating to driver the Secretary to set standards would intertero safety. Including driver licensing. registri with innovation and progressivonese. This tlon, vehicle inspection, and law enforco- suggests the type of litigation those broadly ment. In response to a question by Chair phrased standards might invito. man MAONUSON whether the VESC had ever Accordingly, we oppose section 102 (h) (2) discussed the designing of automobila "in in toto. a way that might show an activity or interest Another criterion, that of section 102 (h) in how a car is designed for saloty rousons," (1), Moo appears to be welghted against the he answered. "To my knowledge, they have desirability of action and contains general not." (967) Mr. Bugas suggested that "ono terms that may breed unwarranted chalof the basic defects in VPSC has been its longes to the authority of tho Secretary and inability, for whatever ronson I don't know, to the edectiveness of the standards ho seto. Ito inability to Anance its operations." (1077) This provision requires that "the bonest to "The State Commissioner," he statod, "Iro- be derived by any ••• safety standard quently don't have money onough to go to should be clearly warranted in the light of

meeting." Senator HARTKE pointed out all relevant factors." Conceivably, in a simi. that even wero the Federal government to lar manner, the requirement of 102(h) (3) help anance the VESC. since many state leg that costs be commonsurate with "the bene

slatures only meet every other year. It might At to be achieved" can raise serious probleme bo three years before thero would be match

to ovaluation of the benents of safety. ing funds from many state organizations. While we do not nad particularly objection(1028) These statements contrast sharply able the criteria set forth in 102(b) (4) and with the testimony of Mr. Bugas beforo the 102(b) (6), the abovo problema presented by House Committee on Interstato ind Foroin the articulation of those Ipocinc criteria load Commerce that: "The Vehicle Equipment us to prefer the approach taken by the Safety Commission is already authorized to Administration bill. issue vehicle safety standards for adoption Under the Administration bill, the secreby the states, and no change in its present tary would have authority to establish "apstructure would be required."

propriate" Federal safety standards t he The industry proposal would also amond docides that there is a "nood" for standards section 105 of the bill, which authorizes the to achievo "adequate" motor vehicle safety Secretary to cooperate with federal agencies, to protect the public against "unreasonablestate or other public agencies, business, tramo risks. The Administration bill also universities or other institutious in the plan. requires a "performance" standard which is ning or development of safety standards and "practicable," "which meets the need for Inspection and testing methods, to specif- motor vehicle safety," and "which provide. cally refer to the VESC as one of the state objective criteria on which the public may agencies which might be consulted and man- rely in aasuring motor vehicle safets" (Sec. ufacturers of motor vehicles and motor vehi- 101(b)). These criteria do not poso any cle equipment as businesses which might be problem of unconstitutional delegation of consulted. These are logical parties with authority and have the virtue of avoiding whom the Secretary might consult, and he the potentiality of unduly tying the Secrewould clearly have the power to cooperate tary's hands that the proposed criteria have. with thesc groups under the bill as presently Il, however, It 18 concluded that speciác cri. written. Therefore, an amendment which teria are necessary they can be more approwould specify these two groups in particular priately written than those proposed by tho seems unnecessary.

industry. (2) The Criteria for the Secretary's Action: (3) The Unwarranted Ertension of AntiA second critical shortcoming in the indus

trust immunity: A third danger posed by try proposal is that at least some of the cri- the industry proposed bill 18 that it might teria which it would require the Secretary well create an unwarranted Implied immuto follow in cetablishing standards are overly nity from the antitrust law. restrictive, while others appear to be unnec The Industry proposal authorizes and enessary and can serve best to breed pointles courages automobile manufacturers (a) to litigation. (Section 102 (h).)

collaborate in formulating standards; (b) to Among other things, the Secretary, in order collaborate in designing, testing and producto establish a standard. would be required ing vehicles and equipment relating to such to make Andings of fact that it was "con- standards; and (c) to agree with each other sistent with the continuation or adoption to comply with standards proposed to the by motor vehicle manufacturers of emclent VESC or the secretary before these standards designing, engineering, and manufacturing are adopted. practices, and with innovation, progressive- In our judgment this statutory authorizaness, and customary model changes in the tion and encouragement is unnecessary and automotive industry." (Sec. 102(h) (2).) unwise. The antitrust laws do not prevent This criterion suggests that the introduction the achievement of desirable progressiveness of cafety devices, however urgent the need in the design and manufacture of safety for them might be, could not be allowed to equipment and vehicles. There is reason interfere with the customary cycle of the to predict that, in fact, competition among

the very large and able companies that comprise the automobile industry can accelerate the development of safety devices. The collaboration authorized by the Industry proposal, however, may well have a braking effect upon the development of safety devices.

For example, section 102 (c)(3) would authorize the automobile manufacturers to agree to comply voluntarily with standards proposed to the Secretary or VESC before the government adopted standards. The danger in allowing the manufacturer to agree on minimum standards is that in practice these standards might well be regarded by the industry as absolute standards, which are not to be exceeded. Nor is it clear why agreements are necessary in this area. II. having propoced a standard, companies unilaterally determine that public opinion requires that thoy comply with or excoed that standard, antitrust ilability is not a real threat.

Second, section 102(c) would authorize tho manufacturers to work Jointly "in designing, testing, and producing motor vehicle or motor vehiclo equipment" for the purpose of developing. evaluating or complying with proposed standards. Some of this activity might well ralse serious problems under the antitrust lawsuch a joint production of motor vehicles to comply with proposed standards in effect a partial merger in an industry already characterized by extremo concentration.

On the other hand, other activity covered by the provision, such as Joint testing of new safety devices, would not ordinarily niso antitrust problems. The polnt is, however, that in an industry of so tev participants, oach of which is a largo corporation with substantial rosources, the valid need for col. laborative action, weighed against the por sible adverse consequences of such collaborttion, does not warrant any special protection from ordinary antitrust principio. Such principles are not unduly inhibiting: they do not threaten to impede progrew in the development of safo cars. The Heart doctrine aflords ample room for consultation among the companies in Invoking the governmental processes. Consultation with the Antitrust Division under the Business Review Proce dure can assure the industry of the safety from antitrust prosecution of any collabon. tive effort.

Although the industry amendment would provide that the statute would not make lawful anything otherwise forbidden by the antitrust laws, such language is not an ade quate saloguard. In a rule of reason situstion & court could not help but be affected to some extent by the fact that the statuto explicitly authorizes and encourages cooperation in the production of motor vehicles and equipment. Similarly, the court could not help but be impressed by the fact that the statute authorizes and encourages the members of the industry to agree to comply with the standard. they are proposing even beforo these standards are adopted. II, as may well be the case, most of the antitrust problems raised by such collective action are not of a per se variety, the fact of legislative author ization and encouragement would undoubte edly affect a court's disposition of the anti

court's disposition of the antiIssue, despite any explicit disclaimer. At this point, it is not at all clear from other & competitive or a safety point of view that this type of collaborative effort is essential or wise.

(4) The Inappropriate Standards of Judi cial Review: The industry proposal would make various amendments relating to judi cial review of action taken by the Secretary and the procedure to be followed by the Secretary. These amendments are contained in proposed sections 102(1) and 103.

The industry proposal would amend section 103(a) (3) to substitute a new standard

for judicial review of determinations made 19013 by the Secretary. Under the Administration bill Andings of the Secretary as to facts, 11 supported by substantial evidence, would be conclusive. The industry proposal provides that Andings of the Secretary with respect to questions of fact "shall be sustained 11 based upon a fair evaluation of the entire record of the proceedings on which tbe Secretary based his order."

This new standard for judicial review represents an attempt to obtain a form of trial de novo in the Courts of Appeals, which would review the orders of the Secretary. Such review would be inappropriate and extremely burdensomo on the Courts of Appeals, which aro accustomed to reviewing determinations of fact under a "substantial ovidence" test. The latter test is the ono konerally contained in statutor providing for court review of decisions or order of regu. latory agencies. See, 6.9., 18 U.S.C. 21(c) and 16 U.S.C. 828(1), relating to TTC and FPC orders. We see no reason why similar language should not be used here.

The industry propound would aleo amend section 103(M) (3) to provide specinc authortnation to the reviewing court to stay the order of the Secretary pending anal dotormination of the review procoedings, and would make jurisdiction in this rospect, M well as to amrm or modify tho Secretary's order, exclusive. This amendment seems undesirable in two respects. First, the specifc authorization to the reviewing court to stay the Secretary's order is unnecessary. since such power, subject to appropriate limitations, 18 already given to the reviewing court under section 10(d) of the APA Act (6 U.S.C. 1009(d)). While the industry proposed statutory authorization is unnecessary, it might also have the undesirable effect of removing the limitations on the power to grant stays contained in section 10(d), sinco these Ilmitations are not contained in the proposed statutory amendment. Second, by making the court's jurisdiction to stay tho Secrotary's order exclusive, this provision might take away the power which the Secretary otherwise would have under section 10(d) to postpone the effective date of action taken by him pending judicial review. It is probably desirable that the Secretary retain this power.

Section 103 (a) (3) would also be amended by the industry proposal to provide that, "The Court shall not sustain the order of the Secretary 11 he failed to comply with any requirement imposed upon him by section 102." Section 10(e) of the APA Act provides that the reviewing court shall hold unlawful and set aside agency action which is not in "observance of procedure required by law." The industry provision might invalidate action of the Secretary taken in substantial compliance with the spocided proceduro but with some minor de ciency not prejudicial to any party, whereas the provision of the APA Act would not. Accordingly. we oppose all the amendments which the industry proposal would make to section 103 (0) (8).

The industry proposal would also provido in section 102(1) that the Secretary "sball base each such order upon a fair evaluation of the entire record which is before him pursuant to such section 4, and ho shall sot forth in such order findings of fact and conclusions on all relevant matters."

T his amendment is undesirable. Because of Ita reference to a record and Anding of fact, it may be intended to requiro the Secretary to conduct a formal adjudicatory proceeding, in accordance with sections 7 and 8 of the APA Act (5 US.O. 1006. 1007), rather than a rule making proceeding. The rule making proceeding apparently contemplated by the Administration bill, since the Secretary is authorized to promulgato standards in accordance with section 4 of tb. APA

Act (5 U.S.C. 1003 ), which prescribes the rule A new section 109 (a) would provide that making proceeding. We prefer the exibility before any violation of the title is reported of the Administration bill and suggest that by the Secretary to the Attorney General the agency should retain the discretion, pro- or any United States Attorney for instituvided by section 4 of the APA Act, to deter- tion of an injunction proceeding, the person mine whether to hold formal bearings with against whom the proceeding is contemplated opportunity for cross-examination.

shall be given notice and opportunity to pre(5) The Unwarranted Narrowing of PTO sent his views, elther orally or in writing. hibitions: The Industry proposed amend with regard to such contemplated proceedments to sections 107, 108, 109 and 110 would ing. and, except where knowing and willful severely restrict the acts which would be conduct is involved, such person shall also prohibited by the statuto and reduce the be given a reasonable opportunity to take penalties which might be imposed for viola corrective measures to achieve compliance. tions. In a number of rospects these change. This would permit a period of delay before may impair the emclency of tho proposed an injunction could be obtained, although legislation.

swift action may be necessary in the interest (a) Under Section 107(a)(1) of the Ad- of public safety. ministration bill it would be unlawful for the report submitted with the industry any person to manufacture for sale, soll, odor drust bill states that this provision to confor uale, or introduco or dollvor for Introduc- sistent with section 306 of the Federal Food, tion in interstato commerce, or import into Drug and Cosmetic Act (21 0.8.0. 886). the United States any motor vehiclo or Itam Howovor, that section calls for notice and of motor vehicle equipment unless it is in harias "bolore any violation • • • 18 reconformity with such standards n are pre portod ...for institution of . criminal scribed by the Secretary. This would be proooodias • •.." (Ep basis supplied.) a strict liability standard. The industry pro The courts, moreover, have construed this posal would only prohibit "knowingly and provision to be inapplicable in a civil action willfully" selling motor vehiclos or equipment for injunction. The report also cites socTalling to meet federal standards. The tion of tho Administrativo Procedure Act, standard of llability would be that of inton. Thich oftar Internt parties A TAAAOnable tional torts.

opportunity to take corrective measures to Especially in view of the fact that the curo a violation before proceedings can be Administration bill does not in the version instituted. However, that section only apwe have studied provide for criminal unc- pllos to proceedings relatiog to revocations tions, an intontional tort standard seems far and suspensions of licenses. too permissive. Under the industry proposal

Wo would generally not favor imposition manufacturers may not be found in violation

of criminal penalties for violation of the Act. of the act although they sold vehicles in Were criminal sanctions croated, the statuto reckless disregard of whethor they complied

might bave to be narrowed in the respects with federal standards.

we have notod, and it would also undoubtedly Unlike S. 3006, the Brako Muld and Seat

receive & Darrower judicial construction. Belt Standards legislation, which only pro

There would also be some dimculty in deterhibit knowing and willful violations, are

mining on which individuals criminal poncriminal statutes.

alties chould be imposed. Under the antiWe have no objection to the certifcation

truat laws criminal sanctions are imposed device for protecting sellers who are assured

upon individuals who have been particiby the manufacturer or importer of compli

pants in conspiratorial activity. The indlance with safety standards. Boction 107(*) viduals responsible for noncompliance with (3), 5(1).

safety standards, howover, would not be us (b) The industry proposal would amond

end readily identidable. section 108(a) to place & $100,000 Ilmitation

(6) Other Limiting Amendments: A num. on the penalty which could be imposed for

ber of other amendments proposed by indusany "related series of violations" of the Act.

try would limit the power and discretion of It would also delete the provision that a vio

the Secretary in various ways. lation of section 107 or regulations Incued

(a) The authority of the Secretary to thereunder shall constituto a separate viola

establish standards would be limited to protion with respect to each motor vobicle or

tecting the public against death and personal item of motor vehicle equipment. We are

injury, whereas the Administration bill would opposed to these amondmonts. Whllo somo

also authorize him to formulate standards to overall limitations may be desirable for a ro

protect against property damage. See reclated series of violations, « limit of $100,000

tions 2, 101(a). 102(C) (2) and 104(a). In would seem unreasonably low and would not

support of this limitation, the industry act as a strong dotorrent. Dolotion of the

argues only that standards to protect against provision deaning what constitutos a sepa

death or personal Injury may be inconsistent rate violation of the act would loave this

with standards to protect against property matter uncertain. Since the dodation in

damages. While it is true that those goals the Administration bill appears to be . re

may be inconsistent in some circumstances, sonable one, wo oppose the deletion.

It is clear enough that priority should be The industry proposal would also ollminato

given to protection against death and perthe seizuro remedy provided in section 110

sonal Injury in such cases. Surely, the fact (a). This is undoubtedly an extraordinary

that the Secretary's ability to protect against remedy to be used rarely. It may be destra

property damages would be limited to some ble to provide such a remedy, both to bavo

extent by tho priority to be given to protectIt avallable for an extraordinary situation

ing life and person is no roason for denying and becauso It may act as a powerful dotar

him the power to protect against property rent to violation of the act. Howovor, i

damages where this can be accomplished conadequate deterrenta wo otherwise provided,

sistent with other alms. WO seo no strong need for the provision.

(b) Section 102(8) of the industry bili (c) A new section 107(c) would provido

would require tho Secretary to comply with that nothing in the act shall be construod

the same procedure in amending or withto require the Secretary to report for Impool.

drawing a standard as in originally issuing tion of a civil penalty or institution of in

one. The Secretary would arst have to rejunction proceedings minor violations of tho act whenever the Socretary believes that tho

quest the VESC to issue such an amendment public interest will be adequately served by

or withdrawal. It seems particularly unA suitable written notice or warning. No

desirable to limit the Secretary's power to defnition of what would constituto o "minor

withdraw a standard and to require such violation" is given. This provision soms

time-consuming proceedings, since experiunnecessary but 11 it is retained "mpor vio ence may demonstrate & standard to be iplations" should be donnod.

adequate or, perhape, even barmful.

19644

well.

(C) The industry proprosal would elimi- effect with respect to a motor vehicle or Item nate from the present section 111(b) the of motor vehicle equipment, state standards requirement that manufacturers establish with respect thereto would be null and void. and maintain such records as the Secretary The industry section 102(1) would premay reasonably require and also the provi- empt state standards only if they differ from sion th:t manufacturers shall permit omcers federal standards, consistent with the apdesignated by the Secretary to inspect appro proach followed in the Tire Safety BIII. prlate hooks, papers, records and documents. Such an amendment seems desirable and These provisions in the Administration bill may be necessary to enable the states to are important means for the Secretary to impose standards for used cars. ensure compliance with the Act and should The Bureau of the Budget has advised that not be liminated.

there is no objection to the submission of (d) Section 113 of the Administration bill

this report from the standpoint of the Adwould require the Secretary to utilize the ministration's program. services, research, and testing facilities of

Sincerely. other departments and agencies to the maxi

RAMSEY CLARK, muni extent practicable in order to avold

Deputy Attorney General. duplication in facilities and services. The industry proposal would add to this provi

DEPARTMENT OF JUSTICE, sion the requirement that the Secretary uti

April 6, 1966. lize the facilities of competent private agen- Honorable WARREN G. MAGNUSON, cles to the maximum extent practicable. It Chairman, Committee on Commerce, would be undesirable to limit the flexibility United States Senate, of the Secretary in this manner. He should Washington, D.C. be free to use private facilities to the extent DEAR SENATOR MAGNUSON: In response to he determines to be desirable. Moreover, in your request for comments upon the testithis conr.cction we belleve the Administra- mony beforc the Committee on Commerce tion bill should clearly state that the Secre- on April 5, 1966 by Mr. John S. Bugas, Vicetary has power to undertake research and President of the Ford Motor Company and development of experimental automobiles. Chairman of the Automobile Manufacturers In view of the highly concentrated structure Safety Administrative Committee, we have of the Industry this additional source of the following preliminary observations. research and innovation would be valuable. We have not as yet had the opportunity

(e) Section 102(b) (102(1) of the industry for a full consideration of specinc legislative bill] would be amended to require the Secre- proposals, or of the question whether, in the tary to give due consideration to the criteria context of specific legislation on joint action, of Section 102(h), discussed at length in a narrowly drafted antitrust Immunity propart (2) above. in determining the effective vision is elther necessary or desirable. Howdate for standards. Our comments earlier ever, we understand Mr. Bugas to have conwith respect to these criteria apply here as tended generally that concern over the appli

cation of the antitrust laws has prevented (1) The industry proposes to add & new and would prevent joint research and other section 114 which would provide that in a cooperative endeavors to forward the use of civil action for infringement of & patent safety devices by members of the automobile of the United States where the defendant industry, and has also prevented and would establishes that the infringement was neces. prevent the exchange of information consary for compliance with a federal motor cerning appropriate standards of safety. To vehicle safety standard, relief shall be con document his concern, Mr. Bugas stated that Aned to a reasonable royalty for making or the automobile industry 18 presently under using the patented Invention. While it ap- antitrust investigation with respect to expears to be intended that this provision haust emission devices. apply to all patents, "patents of the United As for the investigation referred to by Mr. states" might be interpreted to mean patents Bugns, we note Arst that it was commenced owned by the United States Government, in only within the past Arteen months and which case the provision would have very could not have been the basis for previous limited effect. Perhaps a different descrip- industry inactivity. More importantly, the tion of the patents covered should be chosen charges being investigated by the Antitrust

This provision can unnecessarily dull the Division are of cooperative efforts to suppress, incentive for any member of the industry or not to promote, the utilization of auto emisany Independent part manufacturer to push sion devices possible type of abuse which research. The possibility of a new defense hardly strengthens the case for & grant of in Infringement actions, which will be passed antitrust immunity. upon by a number of different courts and Nor is there anything persuasive in the may lead to dlverging conclusions as to the general argument that the vagueness of the "necessity" for licensing, would increase pat- Antitrust laws prevents the formation of any ent litigation and would substantially quality cooperative effort to develop safety devices the expectation for rewards of prospective or to exchange information concerning standpatent holders.

ards. The antitrust laws do not prohibit On the other hand, we recognize that there such arrangements where Joint efforts seem may be situations in which the advancement necessary and constructive and are not acof safety requires that a patented Invention companied by unduly restrictive collateral be available generally on a reasonable royalty agreements. Moreover, clarifcation of the basis. We believe that 11 the Secretary applicability of the antitrust laws to any should promulgate a standard that requires particular proposal has always been readily the use of a device for which there is but one Available by consultation with the Departpatent holder, he should be empowered and ment of Justice and submission of a proposal required to provide for compulsory licensing under the Business Review Procedure or for of that patent on a reasonable royalty basis other review. (As an example, the major on the request of any prospective licensee. networks and press Associations requested the I alternative patented devices are avallable, Division to review & proposal for industry. he should be authorized in his discretion wide cooperative efforts in the compilation (upon his determination that availability at of returns in the forthcoming national elec& reasonable cost of equipment needed for tions. After consultation and revision, the compliance with the 'safety standards BO industry Was advised the Division did not requires) to provide for compulsory licensing intend to take action under the antitrust on a reasonable royalty basis of each such laws against the arrangement.) alternative patent on the request of any General arguments for blanket statutory prospective licensee.

Immunity from the antitrust 1&ws for co(8) Under section 102(b) of the Admin operative endeavors, therefore, do not appear istration bill, 11 federal standards were in sound. Such immunity seems to be not only

740

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