[Federal Register: December 30, 1994]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 95
Mandatory Patent Licenses Under Section 308 of the Clean Air Act
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
SUMMARY: On occasion, a party attempting to comply with a standard of
the Clean Air Act [CAA] may be unable to meet the standard without
resort to a patented technology. CAA section 308 provides a mechanism
by which such a non-complying party may obtain a patent license where
it has been unsuccessful in its attempts to obtain a license on its
own. Under CAA section 308, the United States may require the owner of
the patented technology to grant the non-complying party a patent
license in exchange for a reasonable royalty if the patented technology
is necessary to meet the requirements in certain sections of the CAA.
The North American Free Trade Agreement (NAFTA) imposes certain
limits on the ability of the United States to force patent owners to
grant licenses under their patents. Section 104(b) of the North
American Free Trade Implementation Act requires EPA to issue a
regulation conforming CAA section 308 with the mandatory patent
licensing restrictions found in NAFTA article 1709(10).
EPA is issuing this rule to ensure that EPA's implementation of CAA
section 308 conforms with the requirements of NAFTA article 1709(10).
The rule establishes the policies and procedures EPA will follow prior
to applying to the Attorney General for a mandatory license under a
patent covering a technology necessary to enable compliance with the
new stationary sources standards, hazardous air pollutants standards,
or motor vehicle emission standards of the CAA.
EFFECTIVE DATE: January 30, 1995.
ADDRESSES: Materials relevant to this rulemaking are contained in EPA
Air Docket No. A-94-51: Environmental Protection Agency, 401 M Street,
SW., Washington, DC 20460. The Air and Radiation Docket and Information
Center is located in room M-1500, Waterside Mall (Ground Floor)
Environmental Protection Agency, 401 M Street, SW., Washington, DC
20460. Dockets may be inspected from 9 a.m. to 4 p.m., Monday through
Friday, except Federal holidays. A reasonable fee may be charged for
copying docket materials.
FOR FURTHER INFORMATION CONTACT: Thomas Gorman, Patent Counsel (Mail
Code 2379), Office of General Counsel, U.S. Environmental Protection
Agency, 401 M Street SW., Washington, DC 20460. Phone: (202) 260-1339.
This rule is promulgated under the authority of CAA section 308, as
amended, 42 U.S.C. 7608, and the North American Free Trade Agreement
Implementation Act, Public Law No. 103-182, section 104, 107 Stat.
2057, 2064 (1993).
Section 308 of the Clean Air Act provides for mandatory licensing
of patented technologies needed to meet certain CAA requirements. Under
section 308, the United States can require the owner of a patented
technology that is necessary to enable another party's compliance with
certain limitations of the Clean Air Act to permit the other party to
practice the patented technology in exchange for a reasonable royalty
set by a Federal court. In order to compel the licensing of a patent
under section 308, the EPA Administrator must ask the Attorney General
to certify to a Federal district court that the following conditions
(a) The patent must be necessary for compliance with the standards
of the CAA sections 111, 112 or 202;
(b) The patent right must be actively in use or intended for public
or commercial use and not otherwise reasonably available;
(c) No reasonable alternatives to licensing the patent can exist
for meeting the specified CAA standards; and
(d) Failure to license the patent may cause reduced competition or
monopoly conditions in any area of trade.
Upon certification of the above conditions to a Federal district
court by the Attorney General, the court may then order the patent
holder to license the patent under terms and conditions determined by
the court after a hearing.
Chapter 17 of the NAFTA addresses intellectual property issues
generally and article 1709 addresses patents specifically. NAFTA
article 1709 promotes the availability of patent protection for a broad
range of inventions and also limits the scope of permissible violations
of patent rights. The latter function is performed by paragraph 10 of
article 1709, which sets conditions for violating a patent holder's
right to decide the conditions for practice of the holder's patent.
NAFTA Article 1709(10) sets specific conditions that must be met by
the compulsory patent licensing statutes of any member country. The
conditions are as follows:
(a) Authorization of each compulsory license of a patent must be
considered on the individual merits;
(b) Any proposed compulsory licensee already must have made efforts
to obtain authorization from the patent holder;
(c) The scope and duration of an authorized compulsory patent
license must be limited;
(d) An authorized compulsory patent license must be non-exclusive;
(e) An authorized compulsory patent license must be non-assignable;
(f) An authorized compulsory patent license must be predominantly
for supply of the domestic market;
(g) The authorization of the compulsory patent license must be
terminable when the circumstances that led to the authorization cease
(h) Patent holders must be paid adequate compensation;
(i) Authorization decisions must be subject to judicial or other
(j) Compensation rates must be subject to judicial or other
(k) When an authorized compulsory use is necessary to remedy a
practice determined after judicial or administrative process to be
anti-competitive, a member country is allowed greater latitude in
applying conditions (a)-(j), including noncompliance with conditions
(b) and (f); and
(l) Authorization of the use of a patent in order to permit
exploitation of another patent shall not be granted except as a remedy
for an adjudicated violation of laws directed against anti-competitive
No direct conflict exists between NAFTA article 1709(10) and CAA
section 308. However, section 308 does not address a number of the
NAFTA conditions. The following rule establishes the policies and
procedures that EPA will follow before applying to the Attorney
General, pursuant to CAA section 308, for a mandatory license under a
patent covering a technology necessary to enable compliance with CAA
sections 111, 112 or 202. The procedures in the rule ensure that EPA's
implementation of CAA section 308 will conform to article 1709(10) of
Section 95.1 of the rule sets forth definitions of a number of
terms used in the rule. Section 95.2 identifies who is entitled to
petition the EPA for a mandatory patent license under section 308 and
the required contents of such petitions. Section 95.3 identifies
findings that EPA will have to make prior to making application to the
Attorney General for a mandatory patent license under CAA section 308.
These findings reflect the requirements of CAA section 308 and NAFTA
Article 1709(10). Section 95.4 of the rule sets forth certain
limitations that will be included in all mandatory patent licenses for
which EPA makes application to the Attorney General under CAA section
308. These limitations are in accord with the requirements of CAA
section 308 and NAFTA article 1709(10).
EPA published this rule in a notice of proposed rulemaking
published on August 29, 1994 (59 FR 44390). EPA received three comments
in response to the notice of proposed rulemaking. Each of the three
comments expressed the concern that the proposed rule might be used to
require mandatory licensing of patented products or processes that are
only marginally related to reducing air pollution. Each comment
suggested that the language of the proposed rule should be amended to
state that mandatory patent licenses under CAA section 308 may be
required only for patents relating to air pollution control.
This rule is not intended to limit the technologies for which
mandatory patent licenses may be sought under CAA section 308 more than
is already provided in CAA section 308. That is, the technology must be
necessary to enable compliance with CAA section 111 (new stationary
sources standards), section 112 (hazardous air pollutants), or section
202 (motor vehicle emission standards). However, EPA notes that under
the rule, the EPA Administrator may apply to the Attorney General for a
mandatory patent license pursuant to CAA section 308 only after
expressly finding that the patented technology is not otherwise
reasonably available, and that there are no other reasonable
alternatives for accomplishing compliance with CAA section 111, 112 or
202. These requirements help ensure that a mandatory patent license
will not be ordered pursuant to this rule where the patent is only
marginally related to meeting the standards of the CAA.
III. Procedural Requirements
A. Review Under Executive Order 12866
Under Executive Order 12866 (58 FR 51735 (October 4, 1993)), the
EPA must determine whether the regulatory action is ``significant'' and
therefore subject to review by the Office of Management and Budget
(OMB), and the requirements of the Executive Order. The Order defines
``significant regulatory action'' as one that is likely to result in a
rule that may: (1) Have an annual effect on the economy of $100 million
or more or adversely affect in a material way the economy, a sector of
the economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities; (2) create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) materially alter
the budgetary impact of entitlements, grants, user fees, or loan
programs, or the rights and obligations of recipients thereof; or (4)
raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in the Executive
Pursuant to the terms of Executive Order 12866, it has been
determined that this rule is not ``significant'' because none of the
listed criteria apply to this action. Consequently, this action was not
submitted to OMB for review under Executive Order 12866.
B. Review Under the Regulatory Flexibility Act
This rule was reviewed under the Regulatory Flexibility Act of
1980, Pub. L. 96-354, which requires preparation of a regulatory
flexibility analysis for any rule which is likely to have significant
economic impact on a substantial number of small entities. Pursuant to
section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b), EPA
certifies that this rule will not have a significant economic impact on
a substantial number of small entities. The rule codifies the existing
procedures for application of CAA section 308 and imposes no new
impacts on large or small entities. Therefore, no regulatory
flexibility analyses has been prepared.
D. Review Under the Paperwork Reduction Act
The information collection requirements in this rule have been
submitted to the Office of Management and Budget (OMB) under the
requirements of the Paperwork Reduction Act, 44 U.S.C. 3501, et seq. An
Information Collection document has been prepared by EPA (ICR No.
1714.01), and a copy may be obtained from Sandy Farmer, Information
Policy Branch, EPA Mail Code 2136, 401 M Street SW., Washington, DC
20460, or by calling (202) 260-2740.
The public reporting burden for this collection of information
would be a one-time burden for each petitioner. The burden was
estimated on the basis of the number of hours needed to complete a
single petition, along with the associated cost.
Completing a petition was estimated to require 21 hours at a cost
of $1482. This includes time for reviewing instructions, gathering
materials supporting the patent license, identifying other interested
parties, and composition of a statement of facts upon which the
petition is based. EPA received no comments regarding this information
collection requirement. ICR No. 1714.01 was approved by OMB, Control
Number 2060-0307, on October 3, 1994. Unless renewed, ICR No. 1714.01
will expire on October 31, 1997.
List of Subjects in 40 CFR Part 95
Environmental protection, Administrative practice and procedure,
Air pollution control, Inventions and patents, Patent licensing, North
American Free Trade Agreement (NAFTA), Reporting and recordkeeping
Dated: December 23, 1994.
Carol M. Browner,
Title 40, Code of Federal Regulations, is amended by adding part 95
PART 95-MANDATORY PATENT LICENSES
95.2 Petition for mandatory license.
95.3 Findings prior to application to Attorney General.
95.4 Limitations on mandatory licenses.
Authority: 42 U.S.C. 7609; Sec. 104, Pub. L. 103-182, 107 Stat.
Sec. 95.1 Definitions.
(a) As used in this part, all terms not defined in this section
shall have the meaning given them by the Act.
(b) Act means the Clean Air Act, as amended (42 U.S.C. Secs. 7401-
(c) Agency means the Environmental Protection Agency.
(d) Administrator means the Administrator of the Environmental
Sec. 95.2 Petition for mandatory license.
(a) Any party required to comply with sections 111, 112 or 202 of
the Act (42 U.S.C. 7411, 7412 or 7521) may petition to the
Administrator for a mandatory patent license pursuant to section 308 of
the Act (42 U.S.C. 7608), under a patent that the petitioner maintains
is necessary to enable the petitioner to comply with Sections 111, 112
or 202 of the Act.
(b)(1) Each petition shall be signed by the petitioner and shall
state the petitioner's name and address. If the petitioner is a
corporation, the petition shall be signed by an authorized officer of
the corporation, and the petition shall indicate the state of
incorporation. Where the petitioner elects to be represented by
counsel, a signed notice to that effect shall be included with the
petition at the time of filing.
(2) Each petition shall include a copy of the patent under which a
mandatory patent license is sought. The petition shall identify all
current owners of the patent and shall include a copy of all assignment
documents relevant to the patent that are available from the United
States Patent and Trademark Office.
(3) Each petition must identify any person whose interest the
petitioner believes may be affected by the grant of the license to
which the petition is directed.
(4) Each petition must contain a concise statement of all of the
essential facts upon which it is based. No particular form of statement
is required. Each petition shall be verified by the petitioner or by
the person having the best knowledge of such facts. In the case of
facts stated on information and belief, the source of such information
and grounds of belief shall be given. The statement of facts shall
include the following:
(i) An identification of the provisions of the Act and/or
regulations thereunder that the petitioner maintains petitioner will be
able to comply with if the petitioner is granted the patent license
that is the subject of the petition;
(ii) An identification of the nature and purpose of the
petitioner's intended use of the patent license;
(iii) An explanation of the relationship between the patented
technology and the activities to which petitioner proposes to apply the
patented technology, including an estimate of the effect on such
activities stemming from the grant or denial of the patent license;
(iv) A summary of facts demonstrating that the patent under which a
mandatory patent license is sought is being used or is intended for
public or commercial use;
(v) An explanation of why a mandatory patent license is necessary
for the petitioner to comply with the requirements of sections 111, 112
or 202 of the Act, and why the patented technology is not otherwise
(vi) An explanation of why there are no other reasonable
alternatives for accomplishing compliance with sections 111, 112 or 202
of the Act;
(vii) An explanation of why the unavailability of a mandatory
patent license may result in a substantial lessening of competition or
a tendency to create a monopoly in any line of commerce in any section
of the United States;
(viii) A summary of efforts made by the petitioner to obtain a
patent license from the owner of the patent, including the terms and
conditions of any patent license proposed by petitioner to the patent
(ix) The terms, if any, on which the owner of the patent has
proposed to grant the petitioner a patent license.
(5) Each petition shall include a proposed patent license that
states all of the terms and conditions that the petitioner proposes for
the patent license.
(6) Petitions shall be addressed to the Assistant Administrator for
Air and Radiation, Mail Code 6101, U.S. Environmental Protection
Agency, Washington, DC 20460.
(c) Petitions that do not include all of the information required
in paragraph (b) of this section shall be returned to the petitioner.
The petitioner may supplement the petition and resubmit the petition.
(d) If the Administrator, or the Administrator's designee, finds
that the criteria in Sec. 95.3 are not met, or otherwise decides to
deny the petition, a denial of the petition shall be sent to the
petitioner, along with an explanation of the reasons for the denial.
(e) If the Administrator, or the Administrator's designee, finds
that the criteria in Sec. 95.3 are met and decides to apply to the
Attorney General for a patent license under section 308 of the Act,
notice of such application shall be given to the petitioner, along with
a copy of the application sent to the Attorney General.
Sec. 95.3 Findings prior to application to Attorney General.
The Administrator, or the Administrator's designee, may apply to
the Attorney General for a mandatory patent license pursuant to section
308 of the Act (42 U.S.C. 7608) either in response to a petition under
Sec. 95.2 or on the Administrator's or designee's own initiative, only
after expressly finding that each one of the following mandatory
criteria is met:
(a) The application is for a patent license covering no more than
(b) The party to whom the proposed patent license is to be granted
has presented the Administrator or designee with evidence that such
party has made reasonable efforts to obtain a patent license from the
patent owner with terms similar to the license terms to be proposed in
the application to the Attorney General;
(c) The patent under which a patent license is sought in the
application to the Attorney General is being used or is intended for
public or commercial use;
(d) The mandatory patent license is necessary for a party to comply
with the requirements of sections 111, 112 or 202 of the Act (42 U.S.C.
7411, 7412 or 7521);
(e) The patented technology is not otherwise reasonably available,
and there are no other reasonable alternatives for accomplishing
compliance with sections 111, 112 or 202 of the Act (42 U.S.C. 7411,
7412 or 7521); and
(f) The unavailability of a mandatory patent license may result in
a substantial lessening of competition or a tendency to create a
monopoly in any line of commerce in any section of the United States.
Sec. 95.4 Limitations on mandatory licenses
(a) If the Administrator, or the Administrator's designee, decides
to apply to the Attorney General for a mandatory patent license in
accordance with Sec. 95.3, the application shall include a proposed
patent license with the following limitations:
(1) The scope and duration of the patent license shall be limited
to that necessary to permit the proposed licensee to comply with the
requirements the Act;
(2) The patent license shall be nonexclusive;
(3) The patent license shall be non-assignable, except with that
part of the enterprise or goodwill that enjoys the license;
(4) The patent license shall be for use of the licensed technology
in the United States only;
(5) The patent license shall extend only to those uses necessary to
enable the licensee to comply with sections 111, 112 or 202 of the Act
(42 U.S.C. 7411, 7412 or 7521);
(6) The patent license shall provide for termination, subject to
adequate protections of the legitimate interests of the licensed party,
when the circumstances that made the compulsory patent license
necessary cease to exist and are unlikely to recur; and
(7) The patent license shall provide for adequate remuneration that
takes into account the economic value of the license.
(b) The Administrator, or the Administrator's designee, may decide
as appropriate to include additional conditions, terms or limitations
on the scope of the patent license for which application is made to the
[FR Doc. 94-32268 Filed 12-29-94; 8:45 am]
BILLING CODE 6560-50-P
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