corporations and 16.7 percent in terms of sales. Ibid. at 3, 4. As to the nature of the
joint R&D projects, 54.3 percent of the total cases were developmental research. Basic
and applied research were 13.6 and 32.1 percent respectively. In the case of large
corporations with capital of more than 10 billion yen, the total basic and application
research amounted to 52.1 percent.
Regulation No. 418/85 of 19 December 1984 on the application of Art. 85(3) of the
Treaty to categories of research and development agreements, O.J Eur. Comm. (No.
L 53) 5 ( 1985), entered into force March 1, 1985, and applicable until December 31,
1997. The statutory framework of Reg. 418 is complex and can best be illustrated by
highlighting its most important features. It applies to three categories of agreements
involving R&D: (1) joint research and development of products or processes and joint
exploitation of the results of that R&D; (2) joint exploitation of the results of R&D
product or processes pursuant to a prior agreement between the same parties; and
(3) joint research and development of products without joint exploitation should the
agreement fall within the purview of Art. 85(1). Under Reg. 418, joint exploitation is
interpreted to mean joint manufacturing and licensing to third parties. Joint distribution and sales, however, are not covered and require individual exemptions pursuant
to Art. 85(3).
Professor Jorde testified on July 26, 1989, in favor of both a registration and certification approach. See Jorde and Teece ( 1989c). Legislation advancing a registration
approach for production joint ventures has also been introduced in the Senate by Senators Patrick Leahy (D-VT) and Strom Thurmond (R-SC) (S. 1006). Three aspects
of H.R. 4611 bear noting. First, relevant market definition under rule of reason
analysis would specifically consider the worldwide capacity of suppliers. Second,
foreign participation in a production joint venture would be limited to 30 percent of
the voting securities or equity interests, and all production facilities would have to be
located in the United States or its territories. Third, apparently production joint
ventures would not be limited to efforts designed to commercialize joint R&D, nor
need they be related to innovation.
See Department of Justice release, "Thornburgh Mosbacher Send Revision Legislation
to Congress" ( May 7, 1990) (supporting and detailing "legislation designed to facilitate
joint production ventures"), reported at Antitrust and Trade Regulation Report 58,
no. 1465 ( May 10, 1990), p. 701.
As Richard Nelson ( 1990) notes, a wide variety of new kinds of organizational arrangements is emerging to support innovation. He predicts, and we concur, that some
will succeed, and some will not. Our concern is that because the requirements of
innovation are not well understood in mainstream economics and in contemporary
antitrust analysis, there is significant danger that the performance of U.S. firms will
be impaired by outdated antitrust law.
Aoki M. 1989 "Global Competition, Firm Organization, and Total Factor Productivity:
A Comparative Micro Perspective." Paper presented at the International Seminar
on the Contributions of Science and Technology to Economic Growth, OECD, Paris (June).
Arrow Kenneth J. 1962. "Economic Welfare and the Allocation of Resources for Invention." In National Bureau of Economic Research, ed. The Rate and Direction of
Inventive Activity. Princeton: Princeton University Press, pp. 609-625.
Arthur Thomas C. 1986. "Farewell to the Sea of Doubt: Jettisoning the Constitutional
Sherman Act". California Law Review 74:263-376.