'•W«is|^' PUBLIC LAW 103-465—DEC. 8, 1994 108 STAT. 4905 a person, or by a higher education or research establishment on a contract basis with a person, shall be treated as noncountervailable, if the subsidy covers not more than 75 percent of the costs of industrial research or not more than 50 percent of the costs of precompetitive development activity, and such subsidy is Hmited exclusively to— "(I) the costs of researchers, technicians, and other supporting staff employed exclusively in the research activity, "(II) the costs of instruments, equipment, land, or buildings that are used exclusively and permanently (except when disposed of on a commercial basis) for the research activity, "(III) the costs of consultancy and equivalent services used exclusively for the research activity, including costs for bought-in research, technical knowledge, and patents, "(IV) additional overhead costs incurred directly as a result of the research activity, and "(V) other operating costs (such as materisds and supplies) incurred directiy as a result of the research activity. "(ii) DEFINITIONS. —For purposes of this subparagraph— "(I) INDUSTRIAL RESEARCH.—The term 'industrial research' means planned search or critical investig;ation aimed at the discovery of new knowledge, with the objective that such knowledge may be useful in developing new products, processes, or services, or in bringing about a significant improvfsment to existing products, processes, or services. "(II) PRECOMPETITIVE DEVELOPMENT ACTIV- ITY.—The term *precompetitive development activity* means the translation of industnal research findings into a plan, blueprint, or design for new, modified, or improved products, processes, or services, whether intended for sale or use, including the creation of a first prototype that would not be capable of commercisd use. The term also may include the conceptuEd formulation and design of products, processes, or services alternatives and initial demonstration or pilot projects, if these same projects cannot be converted or used for industrial application or commercial exploitation. The term does not include routine or periodic alterations to existing products, production Unes, msuiufacturirig processes, services, or other ongoing operations even if those alterations may represent improvements. "(iii) CALCULATION RULES.— "(I) IN GENERAL. —In the case of a research activity that spans both industrial research and {)recompetitive development activity, the allowable evel of the noncountervailable subsidy shall not exceed 62.5 percent of the costs set forth in
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