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 The existence of a horizontal relationship between a licensor and its licensees does not, in itself, indicate that the arrangement is anticompetitive. Identification of such relationships is merely an aid in determining whether there may be anticompetitive effects arising from a licensing arrangement. Such a relationship need not give rise to an anticompetitive effect, nor does a purely vertical relationship assure that there are no anticompetitive effects.

The following examples illustrate different competitive relationships among a licensor and its licensees.

Example 4

Situation: AgCo, a manufacturer of farm equipment, develops a new, patented emission control technology for its tractor engines and licenses it to FarmCo, another farm equipment manufacturer. AgCo’s emission control technology is far superior to the technology currently owned and used by FarmCo, so much so that FarmCo’s technology does not significantly constrain the prices that AgCo could charge for its technology. AgCo’s emission control patent has a broad scope. FarmCo does not contest the validity or enforceability of AgCo’s patent, and acknowledges that any improved emissions control technology it could develop in the foreseeable future would infringe AgCo’s patent.

Discussion: Because FarmCo’s emission control technology does not significantly constrain AgCo’s competitive conduct with respect to its emission control technology, AgCo’s and FarmCo’s emission control technologies are not close substitutes for each other. FarmCo is a consumer of AgCo’s technology and is not an actual competitor of AgCo in the relevant market for superior emission control technology of the kind licensed by AgCo. Furthermore, FarmCo is not a potential competitor of AgCo in that relevant market because FarmCo cannot develop an improved emission control technology without infringing AgCo’s patent. This means that the relationship between AgCo and FarmCo with regard to the supply and use of superior emissions control technology is vertical. Assuming that AgCo and FarmCo are actual or potential competitors in sales of farm equipment products, their relationship is horizontal in the relevant markets for farm equipment.


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 government was the Guchkov-Milyukov government. It was permitted to exist only long enough to expose the full falsity of "national unity" and to awaken the revolutionary resistance of the proletariat against the bourgeois propaganda to prostitute the Revolution in the interests of Imperialism. The obviously makeshift coalition ministry could not, under these circumstances, stave off a calamity; it was itself destined to become the chief bone of contention, the chief source of schism and divergence in the ranks of "revolutionary democracy." Its political existence—for of its "activities" we shall not speak—is simply one long dissolution, decently enveloped in vast quantities of words.

To contend against a complete breakdown on the economic and, particularly, on the food question, the Economic Department of the Executive Committee of the Soviets worked out a plan for an extensive system of state management in the most important branches of industry. The members of the Economic Department differ from the political managers of the Soviet not so much in their political tendencies as in a serious acquaintance with the economic situation of the country. For this very reason they were led to conclusions of a profoundly revolutionary character. The only thing their structure lacks is the driving force of a revolutionary policy. The government, for the most part capitalistic, could not possibly give birth to a system that was diametrically opposed to the selfish interests of the propertied classes. If Skobeleff, the Menshevist Minister of Labor, did not understand this, it was fully understood by the serious and efficient Konovalov, the representative of trade and industry.

Konovalov's resignation was an irreparable blow to the coalition ministry. The whole bourgeois press gave unmistakable expression to this fact. Then began anew the exploitation of the panic terror of the present leaders of the Soviet: the bourgeoisie threatened to lay the babe of authority at their door. The "leaders" answered by making believe that nothing special had happened. If the responsible representative of capital has left us, let us invite M. Buryshkin. But Buryshkin ostentatiously refused to have anything to do with surgical operations on private property. And then began the search for an "independent" minister of commerce and industry, a man behind whom stood nothing and nobody, and who might serve as an inoffensive letter-box, in which the opposing demands of labor and capital might be dropped. Meanwhile the economic expenses continue on their course, and the

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 Example 5

Situation: FarmCo develops a new valve technology for its engines and enters into a cross-licensing arrangement with AgCo, whereby AgCo licenses its emission control technology to FarmCo and FarmCo licenses its valve technology to AgCo. AgCo already owns an alternative valve technology that can be used to achieve engine performance similar to that using FarmCo’s valve technology and at a comparable cost to consumers. Before adopting FarmCo’s technology, AgCo was using its own valve technology in its production of engines and was licensing (and continues to license) that technology for use by others. As in, FarmCo does not own or control an emission control technology that is a close substitute for the technology licensed from AgCo. Furthermore, as in Example 4, FarmCo cannot develop an improved emission control technology that would be a close substitute for AgCo’s technology, without infringing AgCo’s patent.

Discussion: FarmCo is a consumer and not a competitor of AgCo’s superior emission control technology. As in Example 4, their relationship is vertical with regard to this technology. The relationship between AgCo and FarmCo in the relevant market that includes engine valve technology is vertical in part and horizontal in part. It is vertical in part because AgCo and FarmCo stand in a complementary relationship, in which AgCo is a consumer of a technology supplied by FarmCo. However, the relationship between AgCo and FarmCo in the relevant market that includes engine valve technology is also horizontal in part, because FarmCo and AgCo are actual competitors in the licensing of valve technology that can be used to achieve similar engine performance at a comparable cost. Whether the firms license their valve technologies to others is not important for the conclusion that the firms have a horizontal relationship in this relevant market. Even if AgCo’s use of its valve technology were solely captive to its own production, the fact that the two valve technologies are substitutable at comparable cost means that the two firms have a horizontal relationship.

As in Example 4, the relationship between AgCo and FarmCo is also horizontal in the relevant markets for farm equipment.

3.4 Framework for Evaluating Licensing Restraints

In the vast majority of cases, restraints in intellectual property licensing arrangements are evaluated under the rule of reason. The Agencies’ general approach in analyzing a licensing


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 restraint under the rule of reason is to inquire whether the restraint is likely to have anticompetitive effects and, if so, whether the restraint is reasonably necessary to achieve procompetitive benefits that outweigh those anticompetitive effects.

In some cases, however, courts have concluded that a restraint’s “nature and necessary effect are so plainly anticompetitive” that it should be treated as unlawful per se, without an elaborate inquiry into the restraint’s likely competitive effect. Among the restraints that have been held per se unlawful are naked price-fixing, output restraints, and market division among horizontal competitors, as well as certain group boycotts.

To determine whether a particular restraint in a licensing arrangement is given per se or rule of reason treatment, the Agencies will assess whether the restraint in question can be expected to contribute to an efficiency-enhancing integration of economic activity. In general, licensing arrangements promote such integration because they facilitate the combination of the licensor’s intellectual property with complementary factors of production owned by the licensee. A restraint in a licensing arrangement may further such integration by, for example, aligning the incentives of the licensor and the licensees to promote the development and marketing of the licensed technology, or by substantially reducing transactions costs. If there is no efficiency-enhancing integration of economic activity and if the type of restraint is one that has been accorded per se treatment, the Agencies will challenge the restraint under the per se rule. Otherwise, the Agencies will apply a rule of reason analysis.

Application of the rule of reason requires an inquiry into the likely competitive effects of the conduct in question. However, as the Supreme Court has noted, “‘[t]here is always something of a sliding scale in appraising reasonableness,’ and as such, ‘the quality of proof required should vary with the circumstances’”; what is required “is an enquiry meet for the case,


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 government activity assumed the form, chiefly, of the printing of paper-money, assignats.

Having as his senior colleagues Messrs. Lvov and Shingariev, it turned out that Chernov was prevented from revealing, in the domain of agrarian matters, even the radicalism of words only, which is so characteristic of this typical representative of the petite bourgeoisie. Fully aware of the role that was assigned to him, Chernov introduced himself to society as the representative, not of the agrarian revolution, but of agrarian statistics! According to the liberal bourgeois interpretation, which the Socialist ministers also made their own, revolution must be suspended among the masses in a passive waiting for the convocation of the Constituent Assembly, and as soon as the Social-Revolutionists enter the ministry of the landholders and manufacturers, the attacks of the peasants against the feudal agricultural system are stigmatized as anarchy.

In the field of international policy, the collapse of the "peace programs" proclaimed by the coalition government came about more swiftly and more catastrophically than could possibly have been expected. M. Ribot, the Premier of France, not only categorically and unceremoniously rejected the Russian peace formula and pompously reiterated the absolute necessity of continuing the war until a "complete victory" should be secured, but also denied the patriotic French Socialists their passports to the Stockholm Conference, which had been arranged with the co-operation of M. Ribot's colleagues and allies, the Russian Socialist ministers. The Italian government, whose policy of colonial conquests has always been distinguished by exceptional shamelessness, by a "Holy Egotism," replied to the formula of a "peace without annexations" with its separate annexation of Albania. Our government, and that includes the Socialist ministers, held up for two weeks the publication of the answers of its allies, evidently trusting in the efficacy of such petty devices to stave off the bankruptcy of their policy. In short, the question as to the international situation of Russia, the question of what it is that the Russian soldier should be ready to fight and die for, is still just as acute as on the day when the portfolio of Minister of Foreign Affairs was dashed from the hands of Milyukov.

In the Army and Navy Department, which is still eating up the lion's share of the national powers and of the national resources, the policy of prose and rhetoric holds undisputed sway.


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521 as having membranous leaves and the racemes in pairs at the end of the branches, so that probably he had var. gracilis in mind when he described the species; but for many years he applied the name to the typical form in the Botanical Gardens at Christchurch.

34. V. obovata, T. Kirk in Trans. N.Z. Inst. ix. (1877) 502.—An erect sparingly branched glabrous shrub 4–5 ft. high; branches stout, erect, ringed with the scars of the fallen leaves. Leaves shortly petioled, erect or suberect, laxly imbricating, ¾–1 in. long, ¼–⅓ in. broad, narrow-obovate, obtuse, gradually narrowed into the short broad fiat petiole, slightly concave when fresh, thick and coriaceous, margins entire. Racemes 2 or 3 near the tips of the branches, 1–2 in. long, slender, erect, lax-flowered; rhachis puberulous; pedicels short; bracts small, ovate, acute. Flowers white, ⅕ in. diam. Calyx 4-partite; segments ovate-oblong, obtuse. Corolla-tube short and broad, hardly longer than the calyx; limb 4-Iobed; lobes spreading, oblong, obtuse. Ripe capsules not seen.

35. V. monticola, Armstr. in Trans. N.Z. Inst. xiii. (1881) 354.—A much-branched glabrous shrub 2–5 ft. high; branches erect or spreading, densely leafy above, ringed with the scars of the fallen leaves below; bark brown. Leaves close-set, more or less imbricate, suberect or spreading, ⅔–1 in. long, ⅓–½ in. broad, obovate-oblong or elliptic-oblong, obtuse or subacute, narrowed into a very short thick petiole, thick and coriaceous, slightly concave above, somewhat rounded but not keeled beneath; midrib impressed beneath when dry. Racemes near the tips of the branches, longer than the leaves, 1–1½ in. long, dense-flowered; rhachis puberulous; pedicels very short, stout; bracts ovate-lanceolate, subacute. Flowers white, ¼ in. diam. Calyx deeply 4-partite; segments oblong-ovate, obtuse or subacute. Corolla-tube short and broad, barely longer than the calyx; limb 4-lobed; lobes ovate, spreading. Capsule ovate-oblong, acute, about twice as long as the calyx.

Mountain districts from Nelson to Otago, not uncommon. 2000–4500 ft. December–February.

This is the plant to which the name of lævis is usually applied in the South Island, but I believe erroneously, the true lævis having smaller and more rigid keeled leaves and a corymbose inflorescence. It agrees with an authentic specimen of V. monticola in Kirk's herbarium, but differs in several


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 looking to the circumstances, details, and logic of a restraint.” If the Agencies conclude that a restraint has no likely anticompetitive effects, they will treat it as reasonable, without an elaborate analysis of market power or the justifications for the restraint. Similarly, if a restraint facially appears to be of a kind that would always or almost always tend to reduce output or increase prices, and the restraint is not reasonably related to efficiencies, the Agencies will likely challenge the restraint without an elaborate analysis of particular industry circumstances.

Example 6

Situation: Gamma, which manufactures Product X using its patented process, offers a license for its process technology to every other manufacturer of Product X, each of which competes worldwide with Gamma in the manufacture and sale of X. The process technology does not represent an economic improvement over the available existing technologies. Indeed, although most manufacturers accept licenses from Gamma, none of the licensees actually uses the licensed technology. The licenses provide that each manufacturer has an exclusive right to sell Product X manufactured using the licensed technology in a designated geographic area and that no manufacturer may sell Product X, however manufactured, outside the designated territory.

Discussion: The manufacturers of Product X are in a horizontal relationship in the goods market for Product X. Any manufacturers of Product X that control technologies that are substitutable at comparable cost for Gamma’s process are also horizontal competitors of Gamma in the relevant technology market. The licensees of Gamma’s process technology are formally in a vertical relationship with Gamma, although that is not significant in this example because they do not actually use Gamma’s technology.

The licensing arrangement restricts competition in the relevant goods market among manufacturers of Product X by requiring each manufacturer to limit its sales to an exclusive territory. Thus, competition among entities that would be actual competitors in the absence of the licensing arrangement is restricted. Based on the facts set forth above, the licensing


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166 who will be referred to again in that connection, also enjoyed a high reputation as a physician. (1585-1629), the progenitor of a whole family of scholars, published a series of excellent anatomical, medical and physical works, which also received great recognition abroad. His main activity as a scientific author begins with the year 1611, when he became professor in the university, and ends with the year 1623, when he, after an unexpected recovery from a dangerous malady, in accordance with a vow which he made during his illness, devoted himself to theology and became a theological professor the following year. His son (1616-80) gained a European reputation as an anatomist. Already when he made his great journey through Europe, to the most celebrated universities, during the years 1637-46, his name was so well and favorably known that he was elected prorector and university "syndicus" in Padua, and the Messina academy offered him a professorship. He did not accept the position for the reason that he was unwilling to leave his own country for ever. He made his greatest reputation by his discovery of the lymphatic system,— a discovery which was, however, made about simultaneously by the Swedish scholar Olof Rudbek. Bartholin left numerous works full of important observations in almost every branch of medical science. From 1673 until his death he edited the "Acta medica et philosophica," a collection in five volumes, and he made himself numerous contributions to it. In the "Cista medica" and in various other works he contributed much valuable information in regard to the history of medicine in Denmark. Although he was exceedingly industrious in this field of study he still found time to occupy himself with other branches, such as theology and national history, and to write on these subjects dissertations, the ability of which was generally acknowledged. Thus Bartholin was affected by the mania of polymathy, which in his time had begun to become prevalent, but he must be regarded as a polyhistor in the best sense of the word, for he


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 arrangement does not involve a useful transfer of technology, and thus it is unlikely that the restraint on sales outside the designated territories contributes to an efficiency-enhancing integration of economic activity. Consequently, the evaluating Agency would be likely to challenge the arrangement under the per se rule as a horizontal territorial market allocation scheme and to view the intellectual property aspects of the arrangement as a sham intended to cloak its true nature.

If the licensing arrangement could be expected to contribute to an efficiency-enhancing integration of economic activity, as might be the case if the licensed technology were an advance over existing processes and used by the licensees, the Agency would analyze the arrangement under the rule of reason applying the analytical framework described in this section.

In this example, the competitive implications do not generally depend on whether the licensed technology is protected by patent, is a trade secret or other know-how, or is a computer program protected by copyright; nor do the competitive implications generally depend on whether the allocation of markets is territorial, as in this example, or functional, based on fields of use.

4 General Principles Concerning the Agencies’ Evaluation of Licensing Arrangements under the Rule of Reason

4.1 Analysis of Anticompetitive Effects

The existence of anticompetitive effects resulting from a restraint in a licensing arrangement will be evaluated on the basis of the analysis described in this section.

4.1.1 Market Structure, Coordination, and Foreclosure

When a licensing arrangement affects parties in a horizontal relationship, a restraint in that arrangement may increase the risk of coordinated pricing, output restrictions, or the acquisition or maintenance of market power. Harm to competition also may occur if the arrangement poses a significant risk of retarding or restricting the development of new or improved goods or processes. The potential for competitive harm depends in part on the degree of concentration in,


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 GENERAL DESCRIPTION OF THE DISTRICT, 7

1, RAMACHANDRAPURAM TALDE,

‘The Taluk of Ramachandrapuram is the largest and most important ofall, It is of the first class. It contains 131 Government villages, and 28 Zemindéri villages, and 4 Agrahdérams and Mokhdsés. It is situated in the centre of the District, being bounded on the south by the Gautami branch of the Godavery, on the north by the Taluk of Peddipuram and the Division of Cocanada, on the east by the Gautami branch of the Godavery, and on the west by the Taluk of Rajahmundry.

‘The area of the Taluk is 507 square miles. The population is 203,583. According to the quinquennial returns of 1866-67 it was 184,110, 80 that the increase since then has been 19,473. Of the present population 200,345 are Hindus, 3205 Mohammedans, and 5 Christians, There are 44,000 houses in the Taluk, of which 42,981 are inhabited. The cultivable area is 89,963 acres, assessed by the Settlement Department at 269,283 rupees.

The revenue of the Taluk for Fasli 1282, including the assessment. of the lands under occupation, water cess, the permanently-settled Bériz, or fixed revenues from Zemindiris, and other miscellaneous items, amounts to $33,968 rupees. The following are the details —

Trupeen.

Land assessment. : « = 325513 Water cess a a s : « 417,354 Permanently-sottled Rériz and Shrétriyam Jédi. 22,968 Other miscellancous items : : - 68,133 833,968

The rates of the land assessment, both for dry and wet cultivation, aceording to the new Survey and Settlement, which were introduced into this Taluk in Fasli 1276, vary from 6 annas to 20 rupees an acre. The rates are consolidated when the water is received from tanks and mountain streams. When lands assessed at dry rates are irrigated from the Aunicut channels, water cess is levied separately, according to the rates presoribed for each crop raised, namely, 4 rupees an aere for wet crops, 2 rupees for dry crops, 4 rupees for garden crops, and 8 rupees when they require water throughout the whole year, This Taluk is amply supplied with the means of irrigation. Thero are six Annicut main canals running through it in various directions, �


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 the difficulty of entry into, and the responsiveness of supply and demand to changes in price in the relevant markets.

When the licensor and licensees are in a vertical relationship, the Agencies will analyze whether the licensing arrangement may harm competition among entities in a horizontal relationship at either the level of the licensor or the licensees, or possibly in another relevant market. Harm to competition from a restraint may occur if it anticompetitively forecloses access to, or increases competitors’ costs of obtaining, important inputs, or facilitates coordination to raise price or restrict output. The risk of anticompetitively foreclosing access or increasing competitors’ costs is related to the proportion of the markets affected by the licensing restraint; other characteristics of the relevant markets, such as concentration, difficulty of entry, and the responsiveness of supply and demand to changes in price in the relevant markets; and the duration of the restraint. A licensing arrangement does not foreclose competition merely because some or all of the potential licensees in an industry choose to use the licensed technology to the exclusion of other technologies. Exclusive use may be an efficient consequence of the licensed technology having the lowest cost or highest value.

Harm to competition from a restraint in a vertical licensing arrangement also may occur if a licensing restraint facilitates coordination among entities in a horizontal relationship to raise prices or reduce output in a relevant market. For example, if owners of competing technologies impose similar restraints on their licensees, the licensors may find it easier to coordinate their pricing. Similarly, licensees that are competitors may find it easier to coordinate their pricing if they are subject to common restraints in licenses with a common licensor or competing licensors. The risk of anticompetitive coordination is increased when the relevant markets are concentrated and difficult to enter. The use of similar restraints may be common and procompetitive in an industry, however, because they contribute to efficient exploitation of the licensed property.

4.1.2 Licensing Arrangements Involving Exclusivity

A licensing arrangement may involve exclusivity in two distinct respects. First, the licensor may grant an exclusive license, or one or more partially exclusive licenses (such as territorial or field-of-use licenses), which limit the ability of the licensor to license others and possibly also to use


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 8 THE GODAVERY DISTRICT,

namely, the Cocanada canal, the Samuleotta canal, the Coringa canal, the Yanam canal, the Mandapéta canal, and the Injaram canal, These are used both for irrigation and navigation. There aro numerous minor irrigation channels, which are branches of the above main canals,

The products of the Taluk are chiefly paddy, Bengal gram, horse gram, green gram, black gram, red gram, gingelly and lamp oil seeds, hemp, coriander, fenugreek, mustard, jonna, eumboo, raggy, tobacco, sugarcane, chillies, onions, garlic, turmeric, yams, country yams, and sweet potatoes.

The soil is of ten different sorts and classes, as follows :—Allu- vial, permanently improved, regur pure (égadi in Telugu, usually called the black cotton soil), regur loamy, regur sandy, red clay, red loamy, ved sandy, arenaceous loamy, and arenaceons sandy,

Most of the Taluk is flat, only a few villages being on high rocky ground.

There are swamps in a few villages. The Gautami branch of the Godayery flows to the south and east of the Taluk, and falls into the sea near a village called Tirtdlamondi in the Taluk of Amalé- param.

Tu the Gautami Godavery there are several islands, usually called in this District lankas, which have been formed by the accumulation of sand and alluvium brought down by the freshes. These lankas are continually changing, some years being fertilised anew by the Godavery freshes ; but sometimes they are completely washed away or covered with sand, and thus rendered unfit for cultivation.

The Taluk is productive and healthy; but in the cold season it is feverish, because almost all the ground lying round the villages is under water. The principal towns of the Taluk, together with their population, aecording to the last census, are entered below.

Toswns. Population. Mandapéta 2 z A 5440 Drdkshérama e ‘ ‘ 2845 Alamiru - DB A 2395 Rémachandrapuram 5 c 2095

There is no special industry in this Taluk. The trade is chiefly in paddy, grain, oil seeds, dc., as well as in cloths manufactured in the �


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 GENERAL DESCRIPTION OF THE DISTRICT. 9

Taluk, These are bought by merchants residing in the Taluk, who transmit them to Cocanada and to other places, where they are freely sold for exportation.

The approximate average out-turn of the harvest in the Taluk in each grain, with its corresponding value, is as follows :—

Out-torn ia Garces, Value in Rupees,

Paddy. i = 31,500 1,575,000 Raggy - 3. 1,670 67,000 Jonna 4 :. 1,000 50,000 Other food grains. fe 1,670 67,000 Oilseeds. oD - 1,670 200,000 Other craps fs fi 43° 21,000 37,949 1,980,000

Tobaceo (in puttis). 3,900 150,000 2,130,000

Nearly half af the above products is consumed in the Taluk, and the rest is exported, There are no imports.

2. Nanasipuram Taux,

This Taluk is of the second class, and therefore ranks in size and in importance next to Rémachandrapuram. It is composed of 139 yillages, 120 being Government villages, 13 Zeminddri and Pro- prictary villages, and 6 Agrahdrams. It is situated in the south of the District, being bounded on the north by the Taluks of Tanuku and Bhimavaram, on the east by the Vainatéyam branch of the Godavery and the Taluk of Amaldpuram, on the west by the Taluk of Bhimavaram, and on the south by the sea.

The area of the Taluk is 450 square miles. The population, according to the last census, was 177,876. According to the quin- quennial returns of 1866-67 it was 161,537, 80 that the increase since that time has been 16,339, The number of Hindus is 174,253; of the Mohammedans, 3447; and of Christians, 147. There are 38,789 houses in the Taluk, of which 36,131 are inhabited. The assessed area is res,210 acres, bearing an assessment of 234,837 rupees, The revenue of the Taluk for Fasli 1242, including land �


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 10 THE GODAVERY DISTRICT,

tax, water cess, quit-rent on Inams, Péshkash, &., amounts to 578,953 rupees, as particularised below.

Rupees.

Assessment. . ' . 213,891 ‘Water cess. . . : 301,985 Péshkash. : : 5 13,865 Other miscellaneous items <. 49,212 578,953

The new Settlement rates were brought into operation in this Taluk in Fasli 1272.

In regard to the Government lands under the Annicat channels, dry rates have been imposed, subject to a separate cess for water according to the rates prescribed for each crop. They are as described in the Rémachandrapuram Taluk. Tho rates of water eess are the same for the whole district in regard to Government, Zemindari, and Tnam lands.

This Taluk is well supplicd with the means of irrigation by three qaain eanals, which are also used for navigation, namely, the Narasd- puram canal, the Gannavaram canal, and the Mukkamala canal. There are also numerous minor irrigation channels branching off from the above.

The products of this Taluk are chicfly paddy, Bengal gram, horse gram, cow gram, green gram, black gram, red gram, gingelly ond lamp oil seeds, hemp, coriander, fenugreek, mustard, jonna, cumboo, ragey, tobacco, sugar-cane, chillies, onions, garlic, turmeric, yams, country yams, limes, swect oranges, pumple-noses, ginger, cocoa-nuts, areca-nuts, betel-leaves, and plantains,

The soil of the ‘Taluk is of eight different sorts, namely, per- manently improved, regur pure, regur loamy, regur sandy, red loamy, red sandy, arenaceous loamy, arenaceous sandy. The Taluk is flat. Narasdpuram, or, as it is usually spelt, Nursapore, is a con- siderable scaport town. It is the headquarters of the Deputy Collector on General Duties, of the Tahsildar of the Taluk, of the Executive Engineer, and of the Assistant Superintendent of Police The District Munsiff’s Court and office of the Superintendent of Sea Customs are also situated in this town.

Some parts of the Tatak are very swampy. The branch of the Godavery called Vasishta flows through the centre of the Taluk, and falls into the sea near Antravédi. ‘There are somo islands in the

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 the technology itself. Generally, such exclusive licenses may raise antitrust concerns only if there is a horizontal relationship among licensors, or among licensees, or between the licensor and its licensee(s). Examples of arrangements involving exclusive licensing that may give rise to antitrust concerns include cross-licensing by competitors that collectively possess market power, grantbacks, and acquisitions of intellectual property rights.

A non-exclusive license of intellectual property that does not contain any restraints on the competitive conduct of the licensor or the licensee generally does not present antitrust concerns. That principle holds true even if the parties to the license are in a horizontal relationship, because the non-exclusive license normally does not diminish competition that would occur in its absence.

A second form of exclusivity, exclusive dealing, arises when a license prevents or restrains the licensee from licensing, selling, distributing, or using competing technologies. Exclusivity may be achieved by an explicit exclusive dealing term in the license or by other provisions such as compensation terms or other economic incentives. Such restraints may anticompetitively foreclose access to, or increase competitors’ costs of obtaining, important inputs, or facilitate coordination to raise price or reduce output. But they also may have procompetitive effects. For example, a licensing arrangement that prevents the licensee from dealing in other technologies may encourage the licensee to develop and market the licensed technology or specialized applications of that technology. The Agencies will take into account such procompetitive effects in evaluating the reasonableness of the arrangement.

The antitrust principles that apply to a licensor’s grant of various forms of exclusivity to and among its licensees are similar to those that apply to comparable vertical restraints outside the licensing context, such as exclusive territories and exclusive dealing. However, the fact that intellectual property may in some cases be misappropriated more easily than other forms of property may justify the use of some restrictions that might be anticompetitive in other contexts.

As noted earlier, the Agencies will focus on the actual practice and its effects, not on the formal terms of the arrangement. A license denominated as non-exclusive (either in the sense of


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 238 THE GODAVERY DISTRICT,

pore, in order to keep open his communications with Vizagapatam. Mrz. Andrews, who had returned thither, was sent back for the pur- pose of negotiating with the Rajah, whom he visited in his retreat among the hills, The Rajah was mollified by Mr. Andrews’ repro- sentations, and was induced to rejoin the English camp at Pedda- pore, The treaty was in some points altered to terms more favour- able to his interests, and it was agreed that “whatsoever sums he might furnish should be considered as a loan; and that the revenues of all the countries which might be reduced on the other side of the Godavery, excepting such as belonged to the French, either by establishment or grant in propriety, should be eqnally divided between him and the English.” *

At length, after the loss of much valuable time, the army moved from Peddapove on the 28th of January, and reached Ellore on the 6th of the following month. The Rajah, however, lingered on the way, occupying himself by levying contributions from the surround- ing country, During the interval which elapsed while waiting for him, Colonel Forde sent Captain Knox with a battalion of sepoys to take the French factory at Nursapore, where there was a garrison of roo Europeans and goo ar 400 sepoys. The Zemindar of this District, probably the Rajah of Mogulturrz, which is close to Nur- sapore, was invited to join the expedition; and he heartily re sponded to the invitation, met Captain Knox on the march, and rendered him every assistance in his power. The French had relied on the Zemindar’s help, atid, on finding it fail them, they quitted the factory, after having sunk in the river all the ammunition which they could not carry away. Leaving a few men to take charge of the factory, Captain Knox returned to Ellore, where the Rajah of Vizayanagaram was still detaining the army by his dilatory conduct.

Meanwhile, at the earnest request of M. Conflans, Salabut Jung had advanced to his assistance, and was approaching by the valley of the Kistna, Undeterred by the advent of this more numerous army, Colonel Forde marched straight to Masulipatam, and, after a siege which lasted just one month, carried the fort by a brilliant assault. On tho 14th of May he concluded a treaty with Salabut dung, who, awed “by the English success, and harassed by disputes with his brother, was glad to retrace his steps to Hyderabad. The following were the stipulations of this treaty, by which a consider-

�
 * One, vol. it, p, 473.


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 GENERAL DESCRIPTION OF THE DISTRICT, It

Vasishta Godavery, which are fertilised every year by tho freshes. The Narasépuram canal is connected with the Godavery by a lock. This affords excellent facilities for the carriage of goods from the interior of the distriet for exportation. The Taluk is productive and healthy. The principal towns, together with their population according to the census of 1871, are shown below.

Naraspuram. . : : 6819 Mogalturru. : . 5 - 4860 Pélakollu. 2 a 4 * AVL Atsanta =. 6 : 7 : 5846

The special industry of this Taluk is the manufacture of toys at WNaras4puram. Pélakollu is noted for its orchards. The trade of this Taluk is chiefly in paddy, pulses, jaggery, cil seeds, cloths, and cotton twist. These articles are bought by native merchants residing in the Taluk, and exported in considerable quantities. Cotton twist is also Imported from England for sale to the weavers, who form a large proportion of the population. Their handiwork formerly enjoyed a world-wide celebrity.

The approximate average out-turn of this Taluk in each grain, with its corresponding value, is mentioned below.

Out-turn in Garces, Value in Rupees,

Paddy : » 15,456 777s308 Jonna :. 2,660 133,000 Other food grains. ; 1,600 64,900 Oil seeds. : 5 1,600 192,000

Nearly half of this quantity is consumed in the Taluk, and the rest is exported,

3. AMALSrURAM TaLUK,

This Taluk ranks among the third class of Taluks, estimated according to the pay of their respective Vahsildars. 1t contains 172 villages, namely, 114 Government villages, 11 Mokhds4s and Agra- harames, and 47 Zemindari and Proprictary villages.

It is bounded on the north by the Gautami branch of the Godavery, and the Rémachandrapuram Taluk, on the south by the sea, on the east hy the Coringa Division and the sea, and on the west by the Vasishta branch of the Godayery and by the NarasApuram and Tanuku Taluks.

The area: of the Taluk is 437 square miles. The population is 206,885, being nearly the same as that of Rémachandrapuram, �


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 12 THE GODAVERY DISTRICT,

according to the census taken in November 1871. According to the quinquennial returns of 1866-67, it was 189,233, so that the subsequent increase has been 17,652. The number of Hindus is 203,668, and of Mobammedans, 3215. This Taluk is the strong- hold of Brahminism in the District, It contains 44,378 houses, of which 41,565 are inhabited, ‘The area assessed by the Settlement Department is 68,962 acres, bearing an annual assessment of 203,307 rupees. The land revenue of the Taluk, including water cesa, Pésh- kash, and all the sundry items, is 559,226 rupees.

This Taluk is irrigated by three main canals from the Annicut, namely, the Lolla canal, the Gannavaram canal, and the Amalapuram canal, These supply water to all the various branch irrigation chan- nels, The main canals are navigable.

The principal products of the Taluk are paddy, Bengal gram, horse gram, cow gram, green gram, black gram, red gram, gingelly and lamp oil seeds, coriander, fenugreek, mustard, jonna, cumbao, raggy, tobacco, chillies, onions, garlic, turmeric, cocoanuts, areca- nats, and sweet plantains.

The ecntral part of the Taluk is noted for its cocoanut, areca-nut, and plantain plantations.

The soil is of the following descriptions :—Alluvial, permancnily improved, regur pure, regur loamy, regur sandy, arenaceous loamy, arenaceous sandy, arenaceous heavy sandy.

This Taluk is flat. Some of the villages are swampy. The Vasishta, the Gautami, the Old Gautami, the Vainatéyam, and the Kausika branches of the Godayery flow through portions of this Taluk, or along its border, in their course to the sea. In the bed of the Vasishta Godayery there are valuable islands formed by aceumulated depasits of silt. This Taluk is very rich and produetive ; and it is generally healthy, but in the cold season it is somewhat feverish.

The principal towns, with their population, according to the census of 1871, are—

Amalépuram. . ee 7083 Palivela : 7 : 5 $315 Ambdéjipéta. : . e 3657

Rai. : : a 3 3470 There is no special industry in the Taluk, A good deal of covoa- nut oil is manufactured. The principal trade is in cocoa-nuta, areca nuts, cocoanut oil, paddy, grains, and oil sceds, cloths, and cotton twist. This Taluk is noted for its luscious plantains and its various �


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 GENERAL DESCRIPTION OF THE DISTRICT, ne

vegetable productions, These are exported by sea or by the navi- gable canals to Cocanada, Rajahinundry, Ellore, and other parts of the District for local consumption. The out-turn of the harvest and the value of the same ean be approximately stated as follows :— Out-tum in Garces, Value in Rupees,

Paddy a. - 9186 459,300 Dry grains. 2 ‘ 2660 106,490 Cocoa-nuts. < . 1000 60,000 Betelnuts. 1000 36,000

Nearly half of the macy meal grain, and one-third of the vego tables grown, is consumed within the Taluk, and the rest is exported to the other towns in the District. This Taluk imports no articles from other localities, salt excepted.

4 Taxcxu TaLux,

The Taluk of Tanuku is composed of 180 villages, both Govern- ment and Zemindari, 88 being Government villages, 65 Zemindari villages, and 27 Shrétriyam Agraldrams.

Tt is situated in the south of the District, and is bounded on the north by the Ellore and Yarnagidem Taluks, on the south hy the Narasipuram and the Bhimavaram Taluks, on the east by the Vasishta branch of the Godavery and the Amalipuram Taluk, and on the west by the Koléru (Colair) lake and the Taluk of Ellore,

The estimated area of this Taluk is 866 square mile. The population is 167,491 souls, of whom 164,705 are Hindus, 2637 Mohammedans, and 1oo Christians. According to the quinquennial returns of 1866-67 the population was 152,052, so that the subse- quent increase has been 15,439. There are 33,719 houses in tho Taluk, of which 33,655 ate inhabited. Tho revenue of the Taluk for Fasli 1282, including assessment, water tax, the permanently- settled Bériz, and other miscellaneous items, is 614,234 rupees, as particularised below.

Rupees, Land assessment. s = ‘i 155,802 Water cess : 292,192 Permanently-settled Bériz and Sinémiyan J ba. 127,810

Other miscellaneous items. Z. 38,430

614,234 �


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 exclusive licensing or in the sense of exclusive dealing) may nonetheless give rise to the same concerns posed by formal exclusivity. A non-exclusive license may have the effect of exclusive licensing if it is structured so that the licensor is unlikely to license others or to practice the technology itself. A license that does not explicitly require exclusive dealing may have the effect of exclusive dealing if it is structured to increase significantly a licensee’s cost when it uses competing technologies. However, a licensing arrangement will not automatically raise these concerns merely because a party chooses to deal with a single licensor or licensee, or confines its activity to a single field of use or location, or because only a single licensee has chosen to take a license.

Example 7

Situation: NewCo, the inventor and manufacturer of a new flat panel display technology, lacking the capability to bring a flat panel display product to market, grants BigCo an exclusive license to sell a product embodying NewCo’s technology. BigCo does not currently sell, and is not developing (or likely to develop), a product that would compete with the product embodying the new technology and does not control rights to another display technology. Several firms offer competing displays, BigCo accounts for only a small proportion of the outlets for distribution of display products, and entry into the manufacture and distribution of display products is relatively easy. Demand for the new technology is uncertain and successful market penetration will require considerable promotional effort. The license contains an exclusive dealing restriction preventing BigCo from selling products that compete with the product embodying the licensed technology.

Discussion: This example illustrates both types of exclusivity in a licensing arrangement. The license is exclusive in that it limits the ability of the licensor to grant other licenses. In addition, the license has an exclusive dealing component in that it restricts the licensee from selling competing products.

The inventor of the display technology and its licensee are in a vertical relationship and are not actual or potential competitors in the manufacture or sale of display products or in the sale or development of technology. Hence, the grant of an exclusive license does not affect competition between the licensor and the licensee. The exclusive license may promote competition in the manufacturing and sale of display products by encouraging BigCo to develop and promote the


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Rh combined a knowledge of several branches of knowledge with a complete mastery of one as his specialty. Among his pupils were many able men, among whom was also his own son, Kaspar Bartholin (1655-1738), a most excellent physician and anatomist.

A still more distinguished disciple of Bartholin was Ole Borch (1626-1690). Like his teacher he was also a polyhistor, but in a much wider sense, for he distinguished himself as philosopher, chemist, anatomist, botanist, physician, and philologist, and in all of these branches he wrote works of acknowledged merit. But chemistry and Latin were his specialties. In Latin he wrote poems, which, in their day, were received with great favor.

Niels Stensen (1638-1686) was also one of Bartholin's scholars and probably the most distinguished one of them all. There is no doubt that in this period he ranks "second only to Tyge Brahe." Having for several years studied medicine and anatomy in Copenhagen he went to Leyden to complete his studies. Here he made several very important anatomical discoveries, and when he afterwards came to Paris his skilful directions attracted such wide attention that already in his thirtieth year he was regarded as the first anatomist of Europe. In Paris he fell in with Bossuet and at the instigation of the latter he was misled into religious musings to which he, at times, would almost wholly abandon himself. During his stay in Florence, where he had been appointed professor of anatomy at the Academy del Cimento, he went over to Catholicism. Still, he once more gathered his strength for hard work in the field of science, and in so doing he laid the foundation of an entirely new branch of study, viz: of geognosy. During his stay in Italy he studied the mountain formations, made examinations of fossils, etc., and the result of these investigations is embodied in his "De solido intra


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 new product in the face of uncertain demand by rewarding BigCo for its efforts if they lead to large sales. Although the license bars the licensee from selling competing products, this exclusive dealing aspect is unlikely in this example to harm competition by anticompetitively foreclosing access, raising competitors’ costs of inputs, or facilitating anticompetitive pricing because the relevant product market is unconcentrated, the exclusive dealing restraint affects only a small proportion of the outlets for distribution of display products, and entry is easy. On these facts, the evaluating Agency would be unlikely to challenge the arrangement.

4.2 Efficiencies and Justifications

If the Agencies conclude, upon an evaluation of the market factors described in, that a restraint in a licensing arrangement is unlikely to have an anticompetitive effect, they will not challenge the restraint. If the Agencies conclude that the restraint has, or is likely to have, an anticompetitive effect, they will consider whether the restraint is reasonably necessary to achieve procompetitive efficiencies. If the restraint is reasonably necessary, the Agencies will balance the procompetitive efficiencies and the anticompetitive effects to determine the probable net effect on competition in each relevant market.

The Agencies’ comparison of anticompetitive harms and procompetitive efficiencies is necessarily a qualitative one. The risk of anticompetitive effects in a particular case may be insignificant compared to the expected efficiencies, or vice versa. As the expected anticompetitive effects in a particular licensing arrangement increase, the Agencies will require evidence establishing a greater level of expected efficiencies.

The existence of practical and significantly less restrictive alternatives is relevant to a determination of whether a restraint is reasonably necessary. If it is clear that the parties could have achieved similar efficiencies by means that are significantly less restrictive, then the Agencies will not give weight to the parties’ efficiency claim. In making this assessment, however, the Agencies will not engage in a search for a theoretically least restrictive alternative that is not realistic in the practical prospective business situation faced by the parties.

When a restraint has, or is likely to have, an anticompetitive effect, the duration of that restraint can be an important factor in determining whether it is reasonably necessary to achieve the putative procompetitive efficiency. The effective duration of a restraint may depend on a number of factors, including the option of the affected party to terminate the arrangement


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 unilaterally and the presence of contract terms (e.g., unpaid balances on minimum purchase commitments) that encourage the licensee to renew a license arrangement. Consistent with their approach to less restrictive alternative analysis generally, the Agencies will not attempt to draw fine distinctions regarding duration; rather, their focus will be on situations in which the duration clearly exceeds the period needed to achieve the procompetitive efficiency.

The evaluation of procompetitive efficiencies, of the reasonable necessity of a restraint to achieve them, and of the duration of the restraint, may depend on the market context. A restraint that may be justified by the needs of a new entrant, for example, may not have a procompetitive efficiency justification in different market circumstances.

4.3 Antitrust “Safety Zone”

Because licensing arrangements often promote innovation and enhance competition, the Agencies believe that an antitrust “safety zone” is useful in order to provide some degree of certainty and thus to encourage such activity. Absent extraordinary circumstances, the Agencies will not challenge a restraint in an intellectual property licensing arrangement if (1) the restraint is not facially anticompetitive and (2) the licensor and its licensees collectively account for no more than twenty percent of each relevant market significantly affected by the restraint. This “safety zone” does not apply to those transfers of intellectual property rights to which a merger analysis is applied.

Whether a restraint falls within the safety zone will be determined by reference only to goods markets unless the analysis of goods markets alone would inadequately address the effects of the licensing arrangement on competition among technologies or in research and development.

If an examination of the effects on competition among technologies or in research and development is required, and if market share data are unavailable or do not accurately represent competitive significance, the following safety zone criteria will apply. Absent extraordinary circumstances, the Agencies will not challenge a restraint in an intellectual property licensing arrangement that may affect competition in a technology market if (1) the


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 restraint is not facially anticompetitive and (2) there are four or more independently controlled technologies in addition to the technologies controlled by the parties to the licensing arrangement that may be substitutable for the licensed technology at a comparable cost to the user. Regarding potential effects in a research and development market, the Agencies, absent extraordinary circumstances, will not challenge a restraint in an intellectual property licensing arrangement if (1) the restraint is not facially anticompetitive and (2) four or more independently controlled entities in addition to the parties to the licensing arrangement possess the required specialized assets or characteristics and the incentive to engage in research and development that is a close substitute of the research and development activities of the parties to the licensing agreement. In evaluating close substitutes, the Agencies may consider numerous factors including the following: the nature, scope and magnitude of the R&D efforts of the other independently controlled entities; their access to financial support, intellectual property, skilled personnel or other specialized assets; their timing; and their ability, either acting alone or through others, to successfully commercialize innovations.

The Agencies emphasize that licensing arrangements are not anticompetitive merely because they do not fall within the scope of the safety zone. Indeed, it is likely that the great majority of licenses falling outside the safety zone are lawful and procompetitive. The safety zone is designed to provide owners of intellectual property with a degree of certainty in those situations in which anticompetitive effects are so unlikely that the arrangements may be presumed not to be anticompetitive without an inquiry into particular industry circumstances. It is not intended to suggest that parties should conform to the safety zone or to discourage parties falling outside the safety zone from adopting restrictions in their license arrangements that are reasonably necessary to achieve an efficiency-enhancing integration of economic activity. The Agencies will analyze arrangements falling outside the safety zone based on the considerations outlined in parts 3-5.

The status of a licensing arrangement with respect to the safety zone may change over time. A determination by the Agencies that a restraint in a licensing arrangement qualifies for inclusion


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 in the safety zone is based on the factual circumstances prevailing at the time of the conduct at issue.

5 Application of General Principles

5.0 This section illustrates the application of the general principles discussed above to particular licensing restraints and to arrangements that involve the cross-licensing, pooling, or acquisition of intellectual property. The restraints and arrangements identified are typical of those that are likely to receive antitrust scrutiny; however, they are not intended as an exhaustive list of practices that could raise competition concerns.

5.1 Horizontal Restraints

The existence of a restraint in a licensing arrangement that affects parties in a horizontal relationship (a “horizontal restraint”) does not necessarily cause the arrangement to be anticompetitive. As in the case of joint ventures among horizontal competitors, licensing arrangements among such competitors may promote rather than hinder competition if they result in integrative efficiencies. Such efficiencies may arise, for example, from the realization of economies of scale and the integration of complementary research and development, production, and marketing capabilities.

Following the general principles outlined in, the Agencies will often evaluate horizontal restraints under the rule of reason. Additionally, some restraints may merit per se treatment, including price-fixing, allocation of markets or customers, agreements to reduce output, and certain group boycotts.

Example 8

Situation: Two of the leading manufacturers of a consumer electronic product hold patents that cover alternative circuit designs for the product. The manufacturers assign their patents to a separate corporation wholly owned by the two firms. That corporation licenses the right to use the circuit designs to other consumer product manufacturers and establishes the license royalties. None of the patents is blocking; that is, each of the patents can be used without infringing a patent owned by the other firm. The different circuit designs are substitutable in


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to the front gate the theatrical man and the young farmer darted down the moonlit road. It was a straight highway, and the white dust added to the effect of the moon, that was now well over the trees.

But, to the surprise of the two men, no figure was in sight. As they reached the highway it was deserted, though it had been but a few seconds since Sandy had seen and called to the man in the road.

"He—he's gone!" gasped Sandy.

"So he is. Must have slipped to one side," agreed the manager. "Do you want to get him? Who was he?"

"That's jest what I don't know. First I thought he was 'Bige Tapper, who lives down th' road a piece. But 'Bige would have answered."

"But this fellow didn't, so he couldn't have been your friend," spoke Mr. Pertell. "And


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46 why should he have run when you hailed him?"

"That's what I can't understand," replied Sandy. "It's sort of suspicious; ain't it?"

"It surely is. Come on, let's have a look."

Together they went down the road in the direction taken by the mysterious stranger. But, though they looked on both sides, and peered amid the bushes, they saw no one. They called out, demanding to know who had gone past the house; but of course, in case the man was a suspicious character, they could hardly have expected an answer.

Their shouts, though, brought out Paul, who had not yet gone to bed, and he joined in the search.

"Who do you think he was?" the moving picture actor asked of Sandy, when they had given up the attempt to find the man.

"Oh, he might be some tramp. There's been chicken thieves around lately, and maybe he was lookin' for a chance to sneak into our hen-house."

"Well, I guess you've scared him off, at any rate," said the manager.

"There's an idea for a film," said Paul, with a laugh. "We can have a chicken-stealing. The thief gets caught in a bear trap, and can't get loose—farmer comes out with gun—chase over the fields and all that."


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Rh "Good!" cried Mr. Pertell. "We'll try something of that sort. I'm glad you mentioned it."

"Gosh!" exclaimed Sandy, admiringly. "You fellers would make a picture out of anything, I guess."

"That's what we would!" laughed Mr. Pertell.

They came back from the unsuccessful man hunt, and soon quiet settled down over Oak Farm.

"I only wish I could help them," mused Mr. Pertell as he retired. Yet he was destined to help them, and in a most surprising manner.

Yielding to the wish of Sandy, Paul and the manager said nothing the next morning of the chase after the man.

"It might only worry pa and ma," said the kind-hearted but simple-minded young farmer. "And they've got troubles enough as it is."

"They certainly have," agreed Mr. Pertell. "Nothing was disturbed last night, though; was there?"

"No, all th' hens seem to be around. I can't imagine who that fellow was. He must have had a guilty conscience, or he wouldn't have run when I hailed him," Sandy said.

The day was given over, on the part of the manager and Russ, to selecting the most favorable spots for the taking of scenes in the rural


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Most importantly, the government is implementing plans for the more efficient utilization of existing manpower resources. Time losses are estimated at 20-25% because of long coffee breaks, the use of worktime for personal chores, and generally apathetic attitudes toward work. Managers have encouraged workers to take fewer coffee breaks, to compete for production goals, and to utilize nonworking time for personal chores. New measures adopted in 1971 included the addition of four unpaid working shifts annually, a 10% cut in administrative staff, and an increase in production quotas.

Many workers resent these attempts to step up production, viewing them as a cut in their real wages, and as unfairly applied to workers as opposed to management. There is little sign of overt political unrest but morale and discipline are low and are expressed in slowdowns and a high rate of absenteeism. In 1971, Husak said that some 500,000 workers stay out of work daily because of real or feigned illness. Strict laws regulating absenteeism were passed to counteract this trend. Although rarely invoked, the new regulations provide punishment of up to 3 months in prison or a heavy fine for those who "systematically and without substantive cause miss work." On the positive side, Husak has emphasized the provision of food and consumer goods as a means of stemming worker discontent. These measures have had some effect, as official sources claim that absenteeism during the first 9 months of 1973 dropped to 189,000 per day.

Workers also resent the favoritism shown party members, who are assured of the best jobs and their children guaranteed space in crowded educational facilities. In some cases, enterprises having excess money in wage funds contribute bonuses to party members without regard to job performance. Following the 1968 invasion, moreover, many qualified technicians were removed from supervisory positions and replaced by "politically reliable" persons in a so-called consolidation process. Screening for political reliability was stepped up in 1972 following growing signs of worker unrest.

Attitudes toward work are also adversely affected by the magnitude of bribery and corruption in most industrial plants. Monetary or material payments are commonly made at all levels of administration to obtain spare parts, machinery, and raw materials.

The labor shortage is compounded by a high rate of turnover, termed the "chronic illness" of the Czech economy. Some one-fourth of all Czech workers change jobs annually either to improve their income and chances for advancement or because of dissatisfaction with the administration of their enterprise. The highest turnover is among young workers, many of whom are highly trained but cannot be placed in suitable jobs. Almost half of all workers under age 30 remain in their place of employment less than 2 years. The regime's efforts to reduce this rate of turnover include an emphasis on improving relations between supervisors and workers and giving rewards for length of service. In addition, a crackdown is underway on those enterprises which lure workers from other plants with excessive promises. Since June 1971, moreover, the national committees have been empowered to regulate employment in order to see to it that priority industries—mining, agriculture, and construction—receive the necessary personnel. The committees are informed by the Ministry of Labor and Social Affairs as to the numbers of workers and their qualifications in given regions and the requirements of the economy in the area. They are then expected to maintain a balance between manpower resources and industrial and agricultural requirements. In some cases, the committees have determined that enterprises have been requesting manpower far in excess of their requirements; they then advise the enterprise on a more effective utilization of existing manpower. Under the new uniform system of regulating employment, moreover, enterprises found to have a high turnover rate can be spotted and properly dealt with. Also, the committees are empowered to offer bonuses, free housing, moving expenses, and large interest-free loans in order to recruit personnel for high priority areas.

b. Labor legislation and organizations

As is true in other Communist countries, the regulation of labor is based upon the premise that the workers own the means of production and thus have a commonality of interests with the state and with management. Thus since 1948 labor legislation has been directed as much to the fulfillment of the economic plan as it is to the improvement and the safeguarding of the worker's lot. The present labor code closely regulates all aspects of employment—labor contracts, work hours, wages, health and safety, labor disputes, and the employment of women and children—but it has been applied almost consistently in favor of the state. Except for a brief period during the Dubcek government, strikes have been illegal and collective bargaining as practiced in the Western countries is nonexistent. Because of increasing dissatisfaction with the present code, the regime in late 1973 was preparing a new labor code which is

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48 dramas. A good background, and places where the lighting effects would be proper for exposing the films, were essentials. Some scenes were to be laid in the village proper, and when the moving picture manager and his photographer went about, making notes of likely spots, they were watched curiously by the village loungers.

Mr. Pertell paid a visit to Squire Blasdell in reference to getting permission to burn the old barn on the Apgar place.

"Well, you can do it if you pay me my price," said the crabbed man, who was a local judge and lawyer, acting for several clients.

The price was sufficiently high, Mr. Pertell thought, but he had no choice.

"That's a valuable barn!" said the squire.

"It's only fit for kindling wood," protested the manager. "And that's what I propose to use it for."

"Well, it's a sin to burn down a building like that," went on the squire. "But this is a queer world, anyhow. And I want my money in advance."

He was so unpleasant about the matter that, after arranging for the destruction of the barn, Mr. Pertell left without carrying out his half-formed resolution of asking for more time for the payment of the Apgar mortgage.


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Rh "I'd better try to find some other way of helping them," thought the manager. "If I said they were in hard circumstances the squire might get suspicious and foreclose at once. Then I would have to take my company away, and I couldn't get the rural dramas. No, I'll wait a while. But I would like to help Sandy and his folks."

During the two days that Mr. Pertell and Russ were mapping out the locations of the various scenes for the plays, the others of the company were becoming familiar with Oak Farm, and the delightfully quaint house where they were to remain all summer.

There were many little nooks where one could spend a quiet hour with a book, and there was good fishing in the stream that, in times past, had furnished power for the old grist mill. The mill was now in ruins, but it was very picturesque, and Mr. Pertell planned to make it the scene of several little plays.

Three days after the arrival at Oak Farm, matters were in readiness for filming the first play. It was a simple little drama, concerning a country girl and boy, and Alice and Paul Ardite were the chief characters.

This was something of a blow to Miss Laura Dixon, who had counted on being with Paul in the play. Miss Dixon rather liked Paul, but since


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50 the advent of Alice he had become more and more interested in the latter.

"I don't care!" exclaimed Miss Dixon, as she flounced into the room she shared with Miss Pennington. "I'm not going to stay with this company any more, with those two amateurs taking all the best parts."

"It is a shame," agreed Miss Pennington. "I just can't bear that Ruth DeVere, with her blue eyes. She can use them very effectively, too."

"Indeed she can! What do you say if we look for another engagement? I just hate the country."

"So do I, with all the bugs and things. But, really, I can't go. I got Mr. Pertell to give me an advance on my salary, and I can't leave him now. Besides, other places aren't so easy to get. Look here," and she held out a copy of a dramatic paper which contained an unusual number of "cards" of performers who were "at liberty." That is, they had no work, but were anxious for some.

"Summer is a bad time for quitting a sure place," went on Miss Pennington. "We'll just have to stick, Laura."

"I suppose so. But I can't bear those two girls!"

"Neither can I!"


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Rh But Alice and Ruth concerned themselves very little with their jealous rivals, though they were aware of the feeling against them. Alice and Paul acquitted themselves well in the little play.

There was only one difficulty—Mr. Bunn, as usual.

He and Mr. Sneed had been cast as farm hands to fill in the background of the play. When the former Shakespearean player learned that he was to wear overalls and carry a hoe over his shoulder, he rebelled.

"What! I play that character?" he cried. "A clod—a country bumpkin? Never! I will go back to New York first!"

"Very well; go!" exclaimed Mr. Pertell, who occasionally became exasperated over the actor's objections. "Only don't come back looking for an engagement with this company."

Wellington Bunn, striking a tragic attitude, was silent a moment. Then he said, very quietly:

"Where is that hoe?"

With Mr. Sneed it was different. He did not so much care what character he played, but he was always "looking for trouble." Even in the simple character of a country farmer he was apprehensive.

"I don't know how to use a hoe," he protested.


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52 "I'm sure to do the wrong thing with it. I know something will happen!"

"How can something happen?" asked Mr. Pertell. "All you have to do is to stand in a row of corn, and dig up the dirt with the hoe. You're only in the scene about two minutes. Surely you can hill corn!"

"I never did it."

"I'll show you," offered Sandy, good-naturedly.

"Say!" cried Russ, "why not put Sandy in the picture, too?"

"Good idea!" exclaimed Mr. Pertell. "Sandy, get a hoe!"

"What! Me in movin' pictures? Why, I never acted in my life."

"So much the better. You'll be all the more natural!" said the manager. "Get in the focus, Sandy!"

And the young farmer did. The scene seemed to be going very well, and Paul and Alice in the role of country sweethearts made an effective picture in the green cornfield.

In the background Mr. Bunn, Mr. Sneed and Sandy were industriously hoeing corn. Suddenly the "grouchy" actor dropped his hoe, and pulling up one foot so that he could hold it in his hands, he cried out:


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Rh "There! I knew something would happen! I cut my foot with that old hoe!"

"Cut that out, Russ!" called the manager, sharply. "We don't want that in the scene."

"I stopped the camera," answered the operator.

An examination disclosed the fact that Mr. Sneed was not hurt at all. His shoe had not even been cut by the hoe, which had slipped off a stone because of his clumsiness.

"Go on with the play," ordered Mr. Pertell. "And let's have no more nonsense."

Paul and Alice resumed their places. They assumed as nearly as possible the pose they had when the break occurred. Russ began to turn the handle of the camera. Sandy had to be excused for a time to look after some farm work.

Later, when the pictures would be developed and printed, enough of the film could be cut out so that the audience, looking at the screen, would know nothing of what had occurred.

There are many trick pictures made, and many times little accidents occur in filming a play. But by the judicious use of the knife, and the fitting together of the severed film, all pictures not wanted are eliminated.

In the case of trick pictures, or when some accident scene is shown, the camera takes views


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54 up to a certain point with real persons posing before it. Then the mechanism is stopped, "dummies" are substituted for real personages, and the taking of the film goes on. So the little "break" caused by Mr. Sneed could be covered up.

"But I knew something would happen," he said. "That hoodoo of coming out on track thirteen is still after us," and he limped along the row of corn.

The scene was almost over, when a movement was observed amid the waving stalks, back of where Paul and Alice were posing.

"Who's that!" cried Mr. Pertell, sharply, from his place beside Russ at the camera. "Keep back, whoever you are. Don't get into the picture—you'll spoil it."

An instant later there was a bellow, as of a score of automobile horns, and an immense black bull came rushing through the corn, heading directly for Paul and Alice.

"Oh!" screamed Alice, as Paul caught her in his arms.


text: The Moving Picture Girls at Oak Farm/Chapter 6


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 that each permits the manufacture at comparable cost to consumers of products that consumers consider to be interchangeable.

Discussion: In this example, the manufacturers are horizontal competitors in the goods market for the consumer product and in the related technology markets. The competitive issue with regard to a joint assignment of patent rights is whether the assignment has an adverse impact on competition in technology and goods markets that is not outweighed by procompetitive efficiencies, such as benefits in the use or dissemination of the technology. Each of the patent owners has a right to exclude others from using its patent. That right does not extend, however, to the agreement to assign rights jointly. To the extent that the patent rights cover technologies that are close substitutes, the joint determination of royalties likely would result in higher royalties and higher goods prices than would result if the owners licensed or used their technologies independently. In the absence of evidence establishing efficiency-enhancing integration from the joint assignment of patent rights, the Agency may conclude that the joint marketing of competing patent rights constitutes horizontal price-fixing and could be challenged as a per se unlawful horizontal restraint of trade. If the joint marketing arrangement results in an efficiency-enhancing integration, the Agency would evaluate the arrangement under the rule of reason. However, the Agency may conclude that the anticompetitive effects are sufficiently apparent, and the claimed integrative efficiencies are sufficiently weak or not reasonably related to the restraints to warrant challenge of the arrangement without an elaborate analysis of particular industry circumstances.

5.2 Price Maintenance

Minimum Resale Price Maintenance (RPM) typically refers to a vertical pricing arrangement in which a manufacturer requires its resellers to agree to sell the manufacturer’s products at or above a specified minimum price. An analogous arrangement can occur in the intellectual property context when a licensor conditions a license on the resale price of the product incorporating the licensed technology.

As with RPM agreements that apply to outright sales of goods, the Agencies will apply a rule of reason analysis to price maintenance in intellectual property licensing agreements. The


text:
Consolidated Appropriations Act, 2005/Division E

{{SECTION|DIVISION E|DIVISION E}} — DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES APPROPRIATIONS ACT, 2005

 * TITLE I — DEPARTMENT OF THE INTERIOR
 * TITLE II — RELATED AGENCIES
 * TITLE III — GENERAL PROVISIONS
 * TITLE IV — SUPPLEMENTAL APPROPRIATIONS FOR URGENT WILDLAND FIRE SUPPRESSION ACTIVITIES
 * TITLE V — GENERAL REDUCTION

This division may be cited as the "Department of the Interior and Related Agencies Appropriations Act, 2005".


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 Agencies will analyze vertical price restrictions in licensing agreements on a case-by-case basis, evaluating the competitive benefits and harms from such agreements. Agreements constituting a horizontal cartel will be considered per se illegal.

5.3 Tying Arrangements

A “tying,” “tie-in,” or “tied sale” arrangement has been defined as “an agreement by a party to sell one product … on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that [tied] product from any other supplier.” Conditioning the ability of a licensee to license one or more items of intellectual property on the licensee’s purchase of another item of intellectual property or a good or a service has been held in some cases to constitute illegal tying. Although tying arrangements may result in anticompetitive effects, such arrangements can also result in significant efficiencies and procompetitive benefits. In the exercise of their prosecutorial discretion, the Agencies will consider both the anticompetitive effects and the efficiencies attributable to a tie-in. The Agencies would be likely to challenge a tying arrangement if: (1) the seller has market power in the tying product, (2) the arrangement has an adverse effect on competition in the relevant market for the tying product or the tied product, and (3) efficiency justifications for the


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 arrangement do not outweigh the anticompetitive effects. The Agencies will not presume that a patent, copyright, or trade secret necessarily confers market power upon its owner.

Package licensing—the licensing of multiple items of intellectual property in a single license or in a group of related licenses—may be a form of tying arrangement if the licensing of one intellectual property right is conditioned upon the acceptance of a license of another, separate intellectual property right. Package licensing can be efficiency enhancing under some circumstances. When multiple licenses are needed to use any single item of intellectual property, for example, a package license may promote such efficiencies. If a package license constitutes a tying arrangement, the Agencies will evaluate its competitive effects under the same principles they apply to other tying arrangements.

5.4 Exclusive Dealing

In the intellectual property context, exclusive dealing occurs when a license prevents the licensee from licensing, selling, distributing, or using competing technologies. Exclusive dealing arrangements are evaluated under the rule of reason. In determining whether an exclusive dealing arrangement is likely to reduce competition in a relevant market, the Agencies will take into account the extent to which the arrangement (1) promotes the exploitation and development of the licensor’s technology and (2) anticompetitively forecloses the exploitation and development of, or otherwise constrains competition among, competing technologies.

The likelihood that exclusive dealing may have anticompetitive effects is related, inter alia, to the degree of foreclosure in the relevant market, the duration of the exclusive dealing arrangement, and other characteristics of the input and output markets, such as concentration, difficulty of entry, and the responsiveness of supply and demand to changes in price in the relevant markets. If the Agencies determine that a particular exclusive dealing arrangement may have an anticompetitive effect, they will evaluate the extent to which the restraint


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 encourages licensees to develop and market the licensed technology (or specialized applications of that technology), increases licensors’ incentives to develop or refine the licensed technology, or otherwise increases competition and enhances output in a relevant market.

5.5 Cross-Licensing and Pooling Arrangements

Cross-licensing and pooling arrangements are agreements of two or more owners of different items of intellectual property to license one another or third parties. These arrangements may provide procompetitive benefits by integrating complementary technologies, reducing transaction costs, clearing blocking positions, and avoiding costly infringement litigation. By promoting the dissemination of technology, cross-licensing and pooling arrangements are often procompetitive.

Cross-licensing and pooling arrangements can have anticompetitive effects in certain circumstances. For example, collective price or output restraints in pooling arrangements, such as the joint marketing of pooled intellectual property rights with collective price setting or coordinated output restrictions, may be deemed unlawful if they do not contribute to an efficiency-enhancing integration of economic activity among the participants. When cross-licensing or pooling arrangements are mechanisms to accomplish naked price-fixing or market division, they are subject to challenge under the per se rule.

Settlements involving the cross-licensing of intellectual property rights can be an efficient means to avoid litigation and, in general, courts favor such settlements. When such cross-licensing involves horizontal competitors, however, the Agencies will consider whether the effect of the settlement is to diminish competition among entities that would have been actual or potential competitors in a relevant market in the absence of the cross-license. In the absence of offsetting efficiencies, such settlements may be challenged as unlawful restraints of trade.


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 Pooling arrangements generally need not be open to all who would like to join. However, exclusion from cross-licensing and pooling arrangements among parties that collectively possess market power may, under some circumstances, harm competition. In general, exclusion from a pooling or cross-licensing arrangement among competing technologies is unlikely to have anticompetitive effects unless (1) excluded firms cannot effectively compete in the relevant market for the good incorporating the licensed technologies and (2) the pool participants collectively possess market power in the relevant market. If these circumstances exist, the Agencies will evaluate whether the arrangement’s limitations on participation are reasonably related to the efficient development and exploitation of the pooled technologies and will assess the net effect of those limitations in the relevant market.

Another possible anticompetitive effect of pooling arrangements may occur if the arrangement deters or discourages participants from engaging in research and development, thus retarding innovation. For example, a pooling arrangement that requires members to grant licenses to each other for current and future technology at minimal cost may reduce the incentives of its members to engage in research and development because members of the pool have to share their successful research and development and each of the members can free ride on the accomplishments of other pool members. However, such an arrangement can have procompetitive benefits, for example, by exploiting economies of scale and integrating complementary capabilities of the pool members, (including the clearing of blocking positions), and is likely to cause competitive problems only when the arrangement includes a large fraction of the potential research and development in a research and development market.


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 Example 9

Situation: As in, two of the leading manufacturers of a consumer electronic product hold patents that cover alternative circuit designs for the product. The manufacturers assign several of their patents to a separate corporation wholly owned by the two firms. That corporation licenses the right to use the circuit designs to other consumer product manufacturers and establishes the license royalties. In this example, however, the manufacturers assign to the separate corporation only patents that are blocking. None of the patents assigned to the corporation can be used without infringing a patent owned by the other firm.

Discussion: Unlike the previous example, the joint assignment of patent rights to the wholly owned corporation in this example does not adversely affect competition in the licensed technology among entities that would have been actual or potential competitors in the absence of the licensing arrangement. Moreover, the licensing arrangement is likely to have procompetitive benefits in the use of the technology. Because the manufacturers’ patents are blocking, the manufacturers are not in a horizontal relationship with respect to those patents. None of the patents can be used without the right to a patent owned by the other firm, so the patents are not substitutable. As in Example 8, the firms are horizontal competitors in the relevant goods market. In the absence of collateral restraints that would likely raise price or reduce output in the relevant goods market or in any other relevant antitrust market and that are not reasonably related to an efficiency-enhancing integration of economic activity, the evaluating Agency would be unlikely to challenge this arrangement.


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 The material and psychological causes for the condition of the army are too deep to be disposed of by ministerial prose and poetry. The substitution of General Brussilov for General Alexiev means a change of these two officers, no doubt, but not a change in the army. The working up of the popular mind and of the army into an "offensive," and then the sudden dropping of this catchword in favor of the less definite catchword of a "preparation for an offensive," show that the Army and Navy Ministry is still as little capable of leading the nation to victory as M. Tereschenko's Department was of leading the nation to peace.

The picture of the importance of the Provisional Government reaches its climax in the labors of the Ministry for Foreign Affairs, which, to use the words of the most loyal Soviet of Peasants' Delegates, "with partiality" filled the officers of the local administrations with feudal landholders. The efforts of the active portion of the population gain for them the communal self-governments, by right of conquest, and, without waiting for the Constituent Assembly, are immediately stigmatized in the state-police jargon of the Dans as anarchy, and are greeted by the energetic opposition of the government which, by its very composition, is fully protected against all energetic action when it is really of creative character.

In the course of the last few days, this policy of general bankruptcy has found its most repulsive expression in the Cronstadt incident. The vile and out-and-out corrupt campaign of the bourgeois press against Cronstadt, which is for them the symbol of revolutionary internationalism and of distrust in the government-coalition, both of which are emblems of the independent policy of the great masses of the people, not only took possession of the government and of the Soviet leaders, but turned Tseretelli and Skobeleff into ringleaders in the disgusting persecution of the Cronstadt sailors, soldiers and workers.

At a moment when revolutionary internationalism was systematically displacing patriotic Socialism in the factories and work-


text:
Author:Mibu no Tadamine

Works

 * Kokin Wakashū, as compiler
 * Tadamine Juttei
 * Tadamine Juttei

title: Author:Mibu no Tadamine


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 shops and among the soldiers at the front, the Socialists in the ministry, obedient to their masters, were risking the hazardous game of overthrowing the revolutionary proletarian advance-guard with one single blow, and thus preparing the "psychological moment" for the session of the All-Russian Congress of Soviets. To rally the peasant-petit-bourgeois democracy around the banner of bourgeois liberalism, that ally and captive of Anglo-French and American capital, politically to isolate and "discipline" the proletariat,—that is now the principal task in the realization of which the government bloc of Mensheviki and Social-Revolutionists is expending all its energies. An essential part of this policy is found in the shameless threats of bloody repressions and the provocations of open violence.

The death-struggle of the coalition ministry began on the day of its birth. Revolutionary Socialism must do everything in its power to prevent this death-struggle from terminating in the convulsion of civil war. The only way to do this is not by a policy of yielding and dodging, which merely whets the appetite of the fresh-baked statesmen, but rather a policy of aggressive action all along the line. We must not permit them to isolate themselves: we must isolate them. We must answer the wretched and contemptible actions of the Coalition government by making clear even to the most backward among the laboring masses the full meaning of this hostile alliance which masquerades publicly in the name of the Revolution. To the methods of the propertied classes and of their Menshevist-Social-Revolutionist appendage in dealing with the questions of food, of industry, of agriculture, of war, we must oppose the methods of the proletariat. Only in this way can liberalism be isolated and a leading influence be assured to the revolutionary proletariat over the urban and rural masses. Together with the inevitable downfall of the present government will come the downfall of the present leaders of the Soviet of Workers' and Soldiers' Delegates. To preserve the authority of the Soviet as a representative of the Revolution, and to secure for it a continuance of its functions as a directive power, is now within the power only of the present minority of the Soviet. This will become clearer every day. The epoch of Dual Impotence, with the government not able and the Soviet not daring, is inevitably culminating in a crisis of unheard-of severity. It is our part to husband our energies for this moment, so that the question of authority may be met with in all its proportions.


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 5.6 Grantbacks

A grantback is an arrangement under which a licensee agrees to extend to the licensor of intellectual property the right to use the licensee’s improvements to the licensed technology. Grantbacks can have procompetitive effects, especially if they are nonexclusive. Such arrangements provide a means for the licensee and the licensor to share risks and reward the licensor for making possible further innovation based on or informed by the licensed technology, and both of these benefits promote innovation in the first place and promote the subsequent licensing of the results of the innovation. Grantbacks may adversely affect competition, however, if they substantially reduce the licensee’s incentives to engage in research and development and thereby limit rivalry.

A non-exclusive grantback allows the licensee to practice its technology and license it to others. Such a grantback provision may be necessary to ensure that the licensor is not prevented from effectively competing because it is denied access to improvements developed with the aid of its own technology. Compared with an exclusive grantback, a non-exclusive grantback, which leaves the licensee free to license improvements technology to others, is less likely to harm competition.

The Agencies will evaluate a grantback provision under the rule of reason, considering its likely effects in light of the overall structure of the licensing arrangement and conditions in the relevant markets. An important factor in the Agencies’ analysis of a grantback will be whether the licensor has market power in a relevant technology or research and development market. If the Agencies determine that a particular grantback provision is likely to reduce significantly licensees’ incentives to invest in improving the licensed technology, the Agencies will consider the extent to which the grantback provision has offsetting procompetitive effects, such as (1) promoting dissemination of licensees’ improvements to the licensed technology, (2) increasing the licensors’ incentives to disseminate the licensed technology, or (3) otherwise increasing competition and output in a relevant technology or research and development


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 market. In addition, the Agencies will consider the extent to which grantback provisions in the relevant markets generally increase licensors’ incentives to innovate in the first place.

5.7 Acquisition of Intellectual Property Rights

Certain transfers of intellectual property rights are most appropriately analyzed by applying the principles and standards used to analyze mergers, particularly those in the 2010 Horizontal Merger Guidelines. The Agencies will apply a merger analysis to an outright sale by an intellectual property owner of all of its rights to that intellectual property and to a transaction in which a person obtains through grant, sale, or other transfer an exclusive license for intellectual property (i.e., a license that precludes all other persons, including the licensor, from using the licensed intellectual property). Such transactions may be assessed under section 7 of the Clayton Act, sections 1 and 2 of the Sherman Act, and section 5 of the Federal Trade Commission Act.

Example 10

Situation: Omega develops a new, patented pharmaceutical for the treatment of a particular disease. The only drug on the market approved for the treatment of this disease is sold by Delta. Omega’s patented drug has almost completed regulatory approval by the Food and Drug Administration. Omega has invested considerable sums in product development and market testing, and initial results show that Omega’s drug would be a significant competitor to Delta’s. However, rather than enter the market as a direct competitor of Delta, Omega licenses to Delta the right to manufacture and sell Omega’s patented drug. The license agreement with Delta is nominally nonexclusive. However, Omega has rejected all requests by other firms to obtain a license to manufacture and sell Omega’s patented drug, despite offers by those firms of terms that are reasonable in relation to those in Delta’s license.

Discussion: Although Omega’s license to Delta is nominally nonexclusive, the circumstances indicate that it is exclusive in fact because Omega has rejected all reasonable offers by other


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There have never been so many pacifists as at this moment, when people are slaying each other on all the g^eat highways of our planet. Each epoch has not only its own technology and political forms, but also its own style of hypocrisy. Time was when the nations destroyed each other for the glory of Christ's teachings and the love of one's neighbor. Now Christ is invoked only by backward governments. The advanced nations cut each other's throats under the banners of pacifism … a league of nations and a durable peace. Kerensky and Tseretelli shout for an offensive, in the name of an "early conclusion of peace."

There is no Juvenal for this epoch, to depict it with biting satire. Yet we are forced to admit that even the most powerful satire would appear weak and insignificant in the presence of blatant baseness and cringing stupidity, two of the elements which have been released by the present war.

Pacifism springs from the same historical roots as democracy. The bourgeoisie made a gigantic effort to rationalize human relations, that is, to supplant a blind and stupid tradition by a system of critical reason. The guild restrictions on industry, class privileges, monarchic autocracy—these were the traditional heritage of the middle ages. Bourgeois democracy demanded legal equality, free competition and parliamentary methods in the conduct of public affairs. Naturally, its rationalistic criteria were applied also in the field of international relations. Here it hit upon war, which appeared to it as a method of solving questions that was a complete denial of all "reason." So bourgeois democracy began to point out to the nations — with the tongues of poesy, moral philosophy and certified accounting—that they would profit more by the establishment of a condition of eternal peace. Such were the lexical roots of bourgeois pacifism.

From the time of its birth pacifism was afflicted, however, with