[Congressional Record (Bound Edition), Volume 149 (2003), Part 11]
[House]
[Pages 14263-14266]
[From the U.S. Government Publishing Office, www.gpo.gov]




       STANDARDS DEVELOPMENT ORGANIZATION ADVANCEMENT ACT OF 2003

  Mr. SENSENBRENNER. Mr. Speaker, I move to suspend the rules and pass 
the bill (H.R. 1086) to encourage the development and promulgation of 
voluntary consensus standards by providing relief under the antitrust 
laws to standards development organizations with respect to conduct 
engaged in for the purpose of developing voluntary consensus standards, 
and for other purposes, as amended.
  The Clerk read as follows:

                               H.R. 1086

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Standards Development 
     Organization Advancement Act of 2003''.

     SEC. 2. FINDINGS.

       The Congress finds the following:
       (1) In 1993, the Congress amended and renamed the National 
     Cooperative Research Act of 1984 (now known as the National 
     Cooperative Research and Production Act of 1993 (15 U.S.C. 
     4301 et seq.)) by enacting the National Cooperative 
     Production Amendments of 1993 (Public Law 103-42) to 
     encourage the use of collaborative, procompetitive activity 
     in the form of research and production joint ventures that 
     provide adequate disclosure to the antitrust enforcement 
     agencies about the nature and scope of the activity involved.
       (2) Subsequently, in 1995, the Congress in enacting the 
     National Technology Transfer and Advancement Act of 1995 (15 
     U.S.C. 272 note) recognized the importance of technical 
     standards developed by voluntary consensus standards bodies 
     to our national economy by requiring the use of such 
     standards to the extent practicable by Federal agencies and 
     by encouraging Federal agency representatives to participate 
     in ongoing standards development activities. The Office of 
     Management and Budget on February 18, 1998, revised Circular 
     A-119 to reflect these changes made in law.
       (3) Following enactment of the National Technology Transfer 
     and Advancement Act of 1995, technical standards developed or 
     adopted by voluntary consensus standards bodies have replaced 
     thousands of unique Government standards and specifications 
     allowing the national economy to operate in a more unified 
     fashion.
       (4) Having the same technical standards used by Federal 
     agencies and by the private sector permits the Government to 
     avoid the cost of developing duplicative Government standards 
     and to more readily use products and components designed for 
     the commercial marketplace, thereby enhancing quality and 
     safety and reducing costs.
       (5) Technical standards are written by hundreds of 
     nonprofit voluntary consensus standards bodies in a 
     nonexclusionary fashion, using thousands of volunteers from 
     the private and public sectors, and are developed under the 
     standards development principles set out in Circular Number 
     A-119, as revised February 18, 1998, of the Office of 
     Management and Budget, including principles that require 
     openness, balance, transparency, consensus, and due process. 
     Such principles provide for--
       (A) notice to all parties known to be affected by the 
     particular standards development activity,
       (B) the opportunity to participate in standards development 
     or modification,
       (C) balancing interests so that standards development 
     activities are not dominated by any single group of 
     interested persons,
       (D) readily available access to essential information 
     regarding proposed and final standards,
       (E) the requirement that substantial agreement be reached 
     on all material points after the consideration of all views 
     and objections, and
       (F) the right to express a position, to have it considered, 
     and to appeal an adverse decision.
       (6) There are tens of thousands of voluntary consensus 
     standards available for government use. Most of these 
     standards are kept current through interim amendments and 
     interpretations, issuance of addenda, and periodic 
     reaffirmation, revision, or reissuance every 3 to 5 years.
       (7) Standards developed by government entities generally 
     are not subject to challenge under the antitrust laws.
       (8) Private developers of the technical standards that are 
     used as Government standards are often not similarly 
     protected, leaving such developers vulnerable to being named 
     as codefendants in lawsuits even though the likelihood of 
     their being held liable is remote in most cases, and they 
     generally have limited resources to defend themselves in such 
     lawsuits.
       (9) Standards development organizations do not stand to 
     benefit from any antitrust violations that might occur in the 
     voluntary consensus standards development process.
       (10) As was the case with respect to research and 
     production joint ventures before the passage of the National 
     Cooperative Research and Production Act of 1993, if relief 
     from the threat of liability under the antitrust laws is not 
     granted to voluntary consensus standards bodies, both 
     regarding the

[[Page 14264]]

     development of new standards and efforts to keep existing 
     standards current, such bodies could be forced to cut back on 
     standards development activities at great financial cost both 
     to the Government and to the national economy.

     SEC. 3. DEFINITIONS.

       Section 2 of the National Cooperative Research and 
     Production Act of 1993 (15 U.S.C. 4301) is amended--
       (1) in subsection (a) by adding at the end the following:
       ``(7) The term `standards development activity' means any 
     action taken by a standards development organization for the 
     purpose of developing, promulgating, revising, amending, 
     reissuing, interpreting, or otherwise maintaining a voluntary 
     consensus standard, or using such standard in conformity 
     assessment activities, including actions relating to the 
     intellectual property policies of the standards development 
     organization.
       ``(8) The term `standards development organization' means a 
     domestic or international organization that plans, develops, 
     establishes, or coordinates voluntary consensus standards 
     using procedures that incorporate the attributes of openness, 
     balance of interests, due process, an appeals process, and 
     consensus in a manner consistent with the Office of 
     Management and Budget Circular Number A-119, as revised 
     February 10, 1998.
       ``(9) The term `technical standard' has the meaning given 
     such term in section 12(d)(4) of the National Technology 
     Transfer and Advancement Act of 1995.
       ``(10) The term `voluntary consensus standard' has the 
     meaning given such term in Office of Management and Budget 
     Circular Number A-119, as revised February 10, 1998.''; and
       (2) by adding at the end the following:
       ``(c) The term `standards development activity' excludes 
     the following activities:
       ``(1) Exchanging information among competitors relating to 
     cost, sales, profitability, prices, marketing, or 
     distribution of any product, process, or service that is not 
     reasonably required for the purpose of developing or 
     promulgating a voluntary consensus standard, or using such 
     standard in conformity assessment activities.
       ``(2) Entering into any agreement or engaging in any other 
     conduct that would allocate a market with a competitor.
       ``(3) Entering into any agreement or conspiracy that would 
     set or restrain prices of any good or service.''.

     SEC. 4. RULE OF REASON STANDARD.

       Section 3 of the National Cooperative Research and 
     Production Act of 1993 (15 U.S.C. 4302) is amended by 
     striking ``of any person in making or performing a contract 
     to carry out a joint venture shall'' and inserting the 
     following: ``of--
       ``(1) any person in making or performing a contract to 
     carry out a joint venture, or
       ``(2) a standards development organization while engaged in 
     a standards development activity,

     shall''.

     SEC. 5. LIMITATION ON RECOVERY.

       Section 4 of the National Cooperative Research and 
     Production Act of 1993 (15 U.S.C. 4303) is amended--
       (1) in subsections (a)(1), (b)(1), and (c)(1) by inserting 
     ``, or for a standards development activity engaged in by a 
     standards development organization against which such claim 
     is made'' after ``joint venture'', and
       (2) in subsection (e)--
       (A) by inserting ``, or of a standards development activity 
     engaged in by a standards development organization'' before 
     the period at the end, and
       (B) by redesignating such subsection as subsection (f), and
       (3) by inserting after subsection (d) the following:
       ``(e) Subsections (a), (b), and (c) shall not be construed 
     to modify the liability under the antitrust laws of any 
     person (other than a standards development organization) 
     who--
       ``(1) directly (or through an employee or agent) 
     participates in a standards development activity with respect 
     to which a violation of any of the antitrust laws is found,
       ``(2) is not a fulltime employee of the standards 
     development organization that engaged in such activity, and
       ``(3) is, or is an employee or agent of a person who is, 
     engaged in a line of commerce that is likely to benefit 
     directly from the operation of the standards development 
     activity with respect to which such violation is found.''.

     SEC. 6. ATTORNEY FEES.

       Section 5 of the National Cooperative Research and 
     Production Act of 1993 (15 U.S.C. 4304) is amended--
       (1) in subsection (a) by inserting ``, or of a standards 
     development activity engaged in by a standards development 
     organization'' after ``joint venture'', and
       (2) by adding at the end the following:
       ``(c) Subsections (a) and (b) shall not apply with respect 
     to any person who--
       ``(1) directly participates in a standards development 
     activity with respect to which a violation of any of the 
     antitrust laws is found,
       ``(2) is not a fulltime employee of a standards development 
     organization that engaged in such activity, and
       ``(3) is, or is an employee or agent of a person who is, 
     engaged in a line of commerce that is likely to benefit 
     directly from the operation of the standards development 
     activity with respect to which such violation is found.''.

     SEC. 7. DISCLOSURE OF STANDARDS DEVELOPMENT ACTIVITY.

       Section 6 of the National Cooperative Research and 
     Production Act of 1993 (15 U.S.C. 4305) is amended--
       (1) in subsection (a)--
       (A) by redesignating paragraphs (1), (2), and (3) as 
     subparagraphs (A), (B), and (C), respectively,
       (B) by inserting ``(1)'' after ``(a)'', and
       (C) by adding at the end the following:
       ``(2) A standards development organization may, not later 
     than 90 days after commencing a standards development 
     activity engaged in for the purpose of developing or 
     promulgating a voluntary consensus standards or not later 
     than 90 days after the date of the enactment of the Standards 
     Development Organization Advancement Act of 2003, whichever 
     is later, file simultaneously with the Attorney General and 
     the Commission, a written notification disclosing--
       ``(A) the name and principal place of business of the 
     standards development organization, and
       ``(B) documents showing the nature and scope of such 
     activity.

     Any standards development organization may file additional 
     disclosure notifications pursuant to this section as are 
     appropriate to extend the protections of section 4 to 
     standards development activities that are not covered by the 
     initial filing or that have changed significantly since the 
     initial filing.'',
       (2) in subsection (b)--
       (A) in the 1st sentence by inserting ``, or a notice with 
     respect to such standards development activity that 
     identifies the standards development organization engaged in 
     such activity and that describes such activity in general 
     terms'' before the period at the end, and
       (B) in the last sentence by inserting ``or available to 
     such organization, as the case may be'' before the period,
       (3) in subsection (d)(2) by inserting ``, or the standards 
     development activity,'' after ``venture'',
       (4) in subsection (e)--
       (A) by striking ``person who'' and inserting ``person or 
     standards development organization that'', and
       (B) by inserting ``or any standards development 
     organization'' after ``person'' the last place it appears, 
     and
       (5) in subsection (g)(1) by inserting ``or standards 
     development organization'' after ``person''.

     SEC. 8. RULE OF CONSTRUCTION.

       Nothing in this Act shall be construed to alter or modify 
     the antitrust treatment under existing law of--
       (1) parties participating in standards development activity 
     of standards development organizations within the scope of 
     this Act, or
       (2) other organizations and parties engaged in standard-
     setting processes not within the scope of this amendment to 
     the Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Wisconsin (Mr. Sensenbrenner) and the gentleman from Massachusetts (Mr. 
Delahunt) each will control 20 minutes.
  The Chair recognizes the gentleman from Wisconsin (Mr. 
Sensenbrenner).


                             General Leave

  Mr. SENSENBRENNER. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days within which to revise and extend 
their remarks and include extraneous material on the bill, H.R. 1086.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Wisconsin?
  There was no objection.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 1086, the Standards 
Development Organization Advancement Act of 2003. Technical standards 
play a critical, but sometimes overlooked, role in fostering 
competition and promoting public health and safety. Without standards, 
there would be no compatibility among broad categories of alternative 
products and less confidence in a range of building, fire and safety 
codes that advance the public welfare.
  Unlike most other countries, standards development is conducted by 
private, not-for-profit organizations in the United States. This 
approach reflects the fact that private organizations are better able 
to keep pace with the rapid pace of technological change. In 1996, 
Congress passed the National Technology Transfer and Advancement Act to 
encourage government agencies

[[Page 14265]]

to assist in the development and adoption of private, voluntary 
standards wherever possible. While this legislation has encouraged 
government adoption of privately developed standards, it has also 
increased the vulnerability of standards-developing organizations to 
antitrust litigation. The frequency with which standards-developing 
organizations are named in lawsuits stifles their ability to obtain 
technical information, hampers their efficiency and effectiveness, and 
undermines the public benefits which they advance.
  I introduced H.R. 1086 to address this problem. H.R. 1086 merely 
codifies the ``rule of reason'' for antitrust scrutiny of standards-
development organizations, limits their civil antitrust liability to 
actual damages, and provides for the recovery of attorneys' fees to 
substantially prevailing parties in antitrust cases filed against these 
organizations.
  However, H.R. 1086 does not automatically accord these protections to 
all standards-setting. These protections extend only to the standards-
development organizations which disclose the nature and scope of their 
activities to the Department of Justice and to the Federal Trade 
Commission. In addition, this legislation applies to standards-
developing organizations whose standards-setting process adheres to 
principles of openness, voluntariness, balance, cooperation, 
transparency, consensus, and due process. Finally, H.R. 1086 contains 
extensive notification requirements which ensure that all parties who 
may be affected by standard-developing activities are apprised of the 
scope and nature of these activities.
  Mr. Speaker, while several people deserve credit for this 
legislation, I would like to personally recognize House Science 
Committee chief counsel Barry Beringer, whose hard work and dedication 
brought this legislation to the floor and bring credit to this House.
  Mr. Speaker, I am also pleased that this legislation has attracted 
the cosponsorship of Judiciary Committee Ranking Member Conyers, as 
well as 12 of its members. In addition, H.R. 1086 continues the 
Judiciary Committee's bipartisan tradition of striking the proper 
balance between pro-competitive activity while ensuring the active role 
of Federal antitrust agencies in the promotion of competition in our 
market economy.
  Mr. Speaker, I reserve the balance of my time.
  Mr. DELAHUNT. Mr. Speaker, I yield myself such time as I may consume. 
I wish to express my strong support for this legislation and my 
appreciation to Chairman Sensenbrenner and Ranking Member Conyers for 
their bipartisan leadership in bringing it to the floor.
  Nearly 20 years ago, Congress passed legislation known as the 
National Cooperative Research Act of 1984 which permitted certain 
cooperative ventures to reduce their exposure to treble damages 
currently provided for under antitrust laws by making advance 
disclosures of their activities. The bill before us would provide 
similar relief to nonprofit organizations that develop voluntary 
technical standards, known as standards-development organizations, or 
commonly referred to as SDOs. As the chairman indicated, these 
standards developed by these organizations play an essential role in 
enhancing public safety, facilitating market access, and promoting 
trade and innovation.
  Yet despite these pro-competitive effects, these SDOs can find 
themselves named as defendants in suits between business competitors 
alleging violations of the antitrust laws. Once they are sued, these 
organizations are forced to expend considerable resources on protracted 
discovery proceedings before they are finally able to prevail on 
motions for summary judgment which occurs in 100 percent of the cases, 
from my information.
  The bill, like the National Cooperative Research Act before it, takes 
a moderate approach to addressing this problem. It does not create, as 
the chairman indicated, a statutory exemption or confer immunity from 
the operation of the antitrust laws. Most significantly, it merely 
``de-trebles'' antitrust damages in cases where accurate predisclosure 
of collaborative activities has been made to the Department of Justice 
and the FTC.
  I think this is the right approach. Congress should allow the 
antitrust laws to operate as they were meant to, without creating 
special exemptions and carve-outs for particular industries. This bill 
does not create an exemption for SDOs. Instead, it grants them limited 
relief of the same type and in the same manner as the relief provided 
for by the National Cooperative Research Act to certain cooperative 
joint ventures. It is a moderate approach, and it has worked well.
  Again, I want to thank the chairman and the ranking member of the 
Committee on the Judiciary for their cooperative joint venture in 
support of this bill. I would also like to acknowledge the efforts of 
my good friend, Jim Shannon, a former Member of this body and former 
Attorney General of the Commonwealth of Massachusetts. He currently 
serves as president and CEO of the National Fire Protection 
Association, an international organization that develops the fire 
safety codes and standards that protect all of us. The NFPA just 
happens to be based in my hometown of Quincy, Massachusetts; and Jim 
Shannon and this fine organization have worked very hard to advance 
this legislation. I want to acknowledge their efforts.
  Mr. Speaker, I urge support for this bill.
  Mr. CONYERS. Mr. Speaker, I am pleased to be a cosponsor of this 
legislation offered by Mr. Sensenbrenner. We have worked hard, along 
with a number of standard development organizations, technology 
companies and other private interests to craft a bill that will provide 
some important protections to encourage nonprofit standard development 
organizations, or SDOs, to continue their critical work of 
collaborating to set pro-competitive standards in this industries. SDOs 
set thousands of standards that keep us safe and provide uniformity for 
everything from fire protections to computer systems to building 
construction, for example.
  This bill provides a commonsense safe harbor for standard development 
organizations. Those that voluntarily disclose their activities to 
federal antitrust authorities will only be subject to single damages 
should a lawsuit later arise. Those who refuse to disclose their 
activities, or those who take actions beyond their disclosure, will 
still be subject to treble damages under the antitrust statutes. This 
bill does not exempt anyone from the antitrust laws, but it does apply 
the rule of reason to SDOs. Therefore the procompetitive market effects 
will be balanced against the anticompetitive market effects of an 
action before a violation of the antitrust laws is found. Organizations 
that commit per se violations--making agreements or standards about 
price, market share or territory division, for example--will still be 
fully liable for their actions.
  The rationale for such favored treatment is the SDOs, as nonprofits 
that serve a cross-section of an industry, are unlikely themselves to 
engage in anticompetitive activities. However, if free from the threat 
of treble damages, they can increase efficiency and facilitate the 
gathering a wealth of technical expertise from a wide array of 
interests to enhance product quality and safety while reducing costs.
  This is the third bipartisan bill in the last 20 years that has 
provided some limitation on damages for antitrust liability in order to 
encourage cooperative behaviors by entities seeking to engage in 
procompetitive activities. This policy has worked well for research and 
joint ventures under the National Cooperative Research and Production 
Act of 1993 and I trust it will improve the creative environment for 
standards setting organizations as well. An expansion of this policy to 
standard development organizations will allow them to improve their 
innovative efforts, involve a wider range of industries and technical 
entities, and improve product safety and development.
  I'd like to thank the chairman for his cooperative efforts on this 
bill and I urge my colleagues to support this bill.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, as a cosponsor of this 
legislation, I support H.R. 1086, ``The Standards Development 
Organization Advancement Act of 2003.''
  This act amends the National Cooperative Standards Development Act to 
provide antitrust protections to specific activities of standard 
development organizations (SDOs) relating to the development of 
voluntary consensus standards. Among other provisions, H.R. 1086 amends 
the NCRA to limit the recovery of antitrust damages against SDOs if the 
organizations predisclose the nature and scope of their standards 
development activity to the

[[Page 14266]]

proper antitrust authorities. H.R. 1086 also amends the NCRA to include 
SDOs in the framework of NCRA that awards reasonable attorneys' fees to 
the substantially prevailing party.
  The provisions of H.R. 1086 protect SDOs, and in turn, SDOs help 
protect consumers and the public. SDOs are nonprofit organizations that 
establish voluntary industry standards. These standards ensure 
competition within various industries, promote manufacturing 
compatibility, and reduce the risk that consumers will be stranded with 
a product that is incompatible with products from other manufacturers.
  The nature of the standards development process requires competing 
companies to bring their competitive ideas to the voluntary standards 
development process. When one of the companies believes its market 
position has been compromised by the standards development process that 
company will likely resort to litigation. It is not uncommon for the 
SDO to be named as a defendant. For nonprofit organizations like SDOs, 
litigation can be very costly and disruptive to their operations, and 
treble antitrust damages can be financially crippling.
  Under H.R. 1086, the recovery of damages against SDOs is limited if 
the organizations predisclose the nature and scope of their standards 
development activity to the proper antitrust authorities. Furthermore, 
SDOs are only liable for treble damages under antitrust laws if they 
fail to disclose the nature and scope of their voluntary standards 
setting activity.
  H.R. 1086 strikes a good balance. It does not grant SDOs full 
antitrust immunity, but it provides SDOs with protection from treble 
damages when they provide proper disclosure.
  H.R. 1086 also benefits the consumer. It enables the SDOs to develop 
industry standards that promote price competition, intensify corporate 
rivalry, and encourage the development of new products.
  Mr. Speaker, I support H.R. 1086, and I urge my colleagues to do 
likewise.

  Mr. DELAHUNT. Mr. Speaker, I yield back the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Wisconsin (Mr. Sensenbrenner) that the House suspend the 
rules and pass the bill, H.R. 1086, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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