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HR 2023 is divided into two titles: Title I. General Revision of the Copyrirlit Law and Title I. Protection of Original Ornamental Designs. As the Department views each title from a slightly different perspective, I would like to cutment on thein separately this morning.

The Department of Commerce would like to highlight three secific areas in our comments on Title I:

1. The lack of protection in U.S. government works,
2. Premption of state law with respurt to unfair competition, and
3. The inclusion of Canada in the manufacturing requirement.

PROTECTION OF GOVERNMENT WORKS

First, proposed section 105, in prohibiting copyright protection for genermont works, creiog a erial problem for the Department of Commerce inte Title 1). I'nited States (ove, Chapter 23. the Secretary is required to piabi na and maintain a clearinghouse for the collection and dissemination of lela shar, technical anki engineering infarination. This is dolie tarough the Departs National Trhnieul Intorintion Serice, culler STIS.

As a matter of polity, (hapter 23 r uires that curh of the services and 1111, tions provided be silmustunning and sel!-liquidating. as much as possible, sistent with its objectives. The Chapter specifically states it po!(*thao ti general public shall not br the cost of publications and other services Whib are for the vial use and l et it of private on and indisidual.

With the ineredne ure of reprography, the ditheuity of meeting the nature ment in diuine technical infurmatin on a basis that part is oln was was inorel-d. It is chur for a purchaser to buy one copy of an evenwire tryl.1." logical publication and photo it rather than to buy the lulu pro that are actually neil. The lack of cops right protection for hiast pro in de available by SIIS makes this practice legal. Iluserer, if NTIS ;( recep the cont of preparing and handling its publications, the dinin ton of this baterial (ulaut luaintained on a stoll-sunlaining and wilaligindeks basis

An erample of the potential harm which could arise from this lack of $18. right ein b in in the publication. "Dinetry of computeriza i Dnia Files id Keliatad Software Available fron Frueral agencies 197-1". This girl*1. * prepared in reos to the lar e numer of rrguts received for this in alle tion. It was prepared at NTIS expense. The approximaels $130.000) cost of *'ir Vesing F ril is to gath'r the information and publishits the limet W nt rembur * froin apropriations. In order to retup VIIS Ppim** a price of $t) M py wi8 mt fur this 130.;a ge diretory. Anyone choose to make and will competing photo wipind 2014 de un for a friction of this 1?,, Thus, it was necessary for NTIX to risk substantial moness to produce sub

product in the aim of os right protection

Unauthorized photoofsing is feially marious in connection with for! Sales; out of the right largest anstomers of STIS, seien are foreign pr,si* ; which pignse in much ing practions. It has also caud NTIS to l* tis !! in pricing its periodoals due to the much lower costs of duplication dote lir reale marketers and potential customers of government works whxh are text copis rightedi.

For the panne we bollere that maupright protection should be provide works di-ributo! under ("pter 3. T!!le 15 of the l'rited States (ie, "."'18 to that provide under 2 1p), Chapitror ira), Title 13, for standard refrima for you data prepared by the lejuartment of Commerre under the provisions of it Chapter, or in the alternative that the Congres rerinsider the statutesty ruirement that the prvirpe and functions provided under Chapter le Britsustaining and self-liquidating.

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Sand, we agree with the preemption of crate conrricht laro prenant to wtion 311m), nr.d with the principle en b ied in that time that t1ere sh":4 hea kirk'e, fremnl wiatrm for (upyright. However, the lanmunre of sul ** (b)(3) of wap jon 301 should. In our view, be madined to make it clear that the Die 'l rights in the nature of Anu riche itally added) will not the

arv manw 1!: in **atute or estabiled by Freral and State ('ourt dris, in applying the common law.

Section 301 (b) (3) is intended to exempt State unfair competition law froid the preemptive effect of section 301(a). Among the rights and remedies not preempted are those arising from the violation of rights "not equivalent to any exclusive rights within the general scope of copyright". These "not equivalent" rights are said to include "breaches of contract, breaches of trust, invasion of privacy, defamation, and deceptive trade practices such as passing off and false representation." The problem we have is that the listing is incomplete and the language is more limited than that which would describe the present scope or established State unfair competition law.

As a solution, we propose a more comprehensive and inclusive listing of unfair epetition torts in subsection (b) (3). The proposed amendment:

*(3) Activities violating rights that are not equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106, including breaches of contract, breaches of trust, invasion of privacy, defamation, and [deeptive trade practices such as passing off and false representation] acts, trade practices, or courses of conduct which cause or are likely to cause confusion, mistake or deception, or which are likely to result in passing off. false or misicading representations, disparagement, vorongful disclosure or misappropriation of @ trade secret or confidential information, or activities rohich othericise constitute unfair competition by misrepresentation or misappropriation." (Deletions bracketed; additions italicized)

in our opinion, this proposed amendment would more accurately state the rance of unfair competition torts which are now regulated by the states, so that the examples listed will not be limiting.

It should be noted that the phrase "unfair competition by ... misappropria. tion" is included in our amendment. Obviously, the "misappropriation" of all of the words of a literary work would be in the nature of copyright and State lars in this area should be preempted. However, we do not believe that the entire body of State unfair competition law based upon the landinark Supreme Court decision in International News Service v. Associated Prexs (248 US 215 (1918)) should be preempted. While some State decisions relying on the INS Cu may be held inapplicable under section 301(a), we believe that such a remerly should continue to be available for the type of conduct proseribed in the INS cise.

MANUFACTURING CLAUSE Third, proposed section 601, known as the "manufacturing clause", essentially Tuires that English language, nondramatic literary works by American domiciled anthors must be printed in the United States or Canada. The present Copyright statute does not include such a reference to Canada. The rationale for including Canada appears to be that wage standards in the U.S. and Canada are cumparable.

We are opposed to the inclusion of Canada in this provision. Such an inclusion would be a unilateral concession which we believe should be withheld for possible use by the United States as negotiating lererage in seeing compensating benefits during multilateral trade negotiations. We note that both houses of Congress indicated forcibly that l'nited States negotiators should obtain reciprocity for United States concessions when they enacted the Trade Act of 1974.

Additionally, including Canada in this provision would raise problems in our relations with other nations, in view of the "most favored nation" obligations in the General Agreement on Tariff and Trade (GATT) and other treaties. Thus, enactment of the bill containing this provision might bring abont the possibility of retaliation against the United States from countries other than Canada and might otherwise hamper our efforts to eliminate non-tariff trade barriers in the interest of our overall international trade objectives.

TITLE II

Title II of HR. 2223 would provide a new system for the protection of original ornamental designs of useful articles.

Designs eligible for protection under this title wonld have to be original. They cannot be staple or commonplace, or elements commonly used in the relevant trade, or dictated solely by utilitarian functions, or three dimensional features of wearing apparel. However, there would be no reqnirements that the design be new, and therefore no search of prior designs would be necessary in order to grant protection.

Title II would provide protection only against copying by others and would not give an exclusive right in the design itself. The term of protection would be for five years, renewable for one additional five-year term.

Infringement would include making, importing, selling or distributing for sale an article having a design copied from a protected design. Importantly however, an innocent seller or distributor would be an infringer only if he failed to reveal his source and then reordered the article after having received a personal written notice of the design protection. This is a greatly reduced level of liability when compared with that contained in Title I where a seller or distributor is liable as an infringer for the sale of a single unauthorized copyrighted work.

Design patent protection would continue to be available but a design patent and design protection under this title could not be maintained concurrently. Also, copyright protection for designs would be continued, except that it copyright protection and a design registration were obtained, the copyright protection would not extend to utilization of the design in the useful article protected by the design registration.

Today, original ornamental designs for useful articles may be eligible for fed. eral protection under the patent laws or in some instances, under the copyright law. In recent years, however, it has been generally agreed that the design patent laws do not provide adequate protection against design piracy. Because of the relatively short-lived popularity of many designs, a patent in some cases cannot be secured quickly enough to provide any useful protection.

The expense in obtaining a design patent today results primarily from the fact that the Patent and Trademark Office must examine an application to determine whether it is "new, original, and ornamental". At the present time it takes almost two years to obtain a design patent. Until the patent is granted, the designer or manufacturer markets the designs at his own peril, subject to it being freely copied. The alternative of withholding the design from the market until the patent issues is impractical in many industries where styles change rapidly and may even be seasonal.

Since the Supreme Court decision in Mazer v. Stein in 1954, the Copyright Office has accepted an increasing variety of registrations for designs embodied in useful articles so long as they meet the criteria of being artistic. However, there are still many types of designs for which copyright protection is unavailable, for instance, furniture and appliances. Moreover, the term of protection in the proposed copyright law, life of the author plus fifty years, is much too long for industrial designs which have a relatively short commercial life.

To exemplify the problems that exist under current practice we note complaints from domestic manufacturers that their designs have been copied in certain foreign areas, particularly in the far east. The imitations are then imported into and sold in the United States where they often enjoy a considerable price advantage over the article produced in the United States. We believe that Title II fills the need for more effective protection for design originators from this type of unfair competition because it provides quick, inexpensive and short term protection for original designs.

The Department of Commerce favors this legislation. However, we would like to highlight some of our specific recommendations which will bring title II of the bill more in line with other intellectual property protection both nationally and internationally and will generally improve the protection offered.

Section 204 (a) provides that protection for a design shall begin on the date when the design is first made public. In subsequent sections it is made clear that the design must be made public before an application for protection can be filed. This provision will put U.S. residents at a disadvantage if they desire to obtain protection of their design in foreign countries, many of which, for example Japan, refuse protection for a design which has been made public prior to the filing of an application for registration.

In order to prevent the possible loss of protection in foreign countries, it should not be required that the design be made public prior to registration. Instead, protection should commence on the date that the registration is published in the United States as provided for in section 212(a) of the bill, Protection which begins when the registration is published would provide notice to the public and would not penalize the person desiring to protect his design outside of the United States. This would also make Title II consistent with Title I which has eliminated the prior publication requirement for copyright protection.

Specific statutory language to effect this change will be submitted to the Congress at a later date.

(0 30 antara to limit an application to a dele de in This limitat ! #fran to be undervonry. An alliantion containing ten of twenty der

»! Do tere diil, ul: to propostane tlian an apoliontit containing one da De bewarb of prior design in teensary. A multiple derim applica: . id wave the applicant wrwork, thus, save him tine and in y 11 # save the Adnal trator prook time over antal number of Nalinit #,

This *t result in a lower fee Dr den. As long as a puta frei .d for each design contained in the application there wonid be no

iptor and tab the applicant and the Administrator would benefit, plane 'T ranseuided that multiple denoga applicatious be rattad und.

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. wtb orguin ante 1.ett to be sutauitted with a written dow".dra 1.)", THA D'p with ISO 11 I 11 * Ini Atent pumatologii D, A. *ir for

s ent and proteine the valldity of the doutor: Web t' t erg . , . d le applicable to the amanti ta for den testra to iterfronte ta h dewarntiot hould be permitted in lieu of an oth I

n t fre ironisins of wition 215 of this title are una nota de ter I n en ( pene. In our ofision, the desin ngintritsinslet De ; les ripartitik

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a rue to the individual tient of the intration 11 1, i. D's! fut le p ted to tear any portion of the expne of a dos

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STIMONY OF RENE D. TEGTMEYER, ASSISTANT COMMISSIOXT.R

FOR PATENTS, DEPARTMENT OF COMMERCE

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First, proposed section 105, in prohibiting copyright protection for Government works, creates a special problem for the Departilen! of Commerce. Under title 15, United States Code, chapter 23, tie Secretary is required to establish and maintain a clearinghouse for the collection and dissemination of scientific, technical, and engineers information. This is done through the Department's National Tech nical Information Service, called NTIS.

As a matter of policy, chapter 23 in section 1153 requires that each of the services and functions provided be self-sustaining and a 'f. liquidating, as much as possible, consistent with its objecures. Tivet chapter specifically states its policy that the general public shall 1x bear the cost of publications and other services which are for the real use and benefit of private groups and individuals.

With the increased use of reprography, the difficulty of meeting the requirement to disseminate technical information on a basis that j4* its own way has also increased. It is cheaper for a purchaser to this one copy of an expensive technological publication and photocopy it rather than to buy the number of copies that are actually nerd The lack of copyright protection for most periodicals made availalie by NTIS makes this practice legal. If ITIS cannot recoup the wat of preparing and handling its publications, the dissemination of this material cannot be maintained on a self-sustaining and self-liquidation basis.

In erample of the potentiel harm which could arise from this lack of copyright can be seen in the publication. "Directory of Computer ized Data Files and Related Software Available from Federal line cipan-1971."

This document was prepared in responan to the large numbrs of requests received for this information. It was prepared at NTIS C onse. The approximately $110.0*) cost of surveying Federal agill. cies to gather the information and publishing the directory was met reimbursed from appropriations. In order to recoup NTIS exponasa, price of $0 per copy was set for this 1.50-page directory. Arvone chooing to make and welcompeting photocopipe could do so for a fr gro. tion of this price. Thus, it was necessary for STIS to risk solwiania! monere to produce much a product in the alence of copyright protection.

Inauthorized photocopvino is capially serious in connection with foreign walita: out of the eight larget onomers of NTIS, spenare forein entities which engage in sich copying practices. It has a la cause ITIS to be limitad in priring periodien!« due to the much lowe cort of duplication done hermale merlatersd potential customers of Grussortment works which are not copvrighted.

For the reason, we believe that copyriqht protection shouli 1x provided for works distributed under chantar o tit'e 1.), similar to that proviiled unelen (e, chapter min), title 13, for standan roofrenice din prepared but.Iesartment of ('omperie uniter the provision of that chanter, or in the alternative that the ('ongress penisler the statutory murement that the prvices and functiring presided uniler chapter 23 by ITIS be self-sustaining and se!! laridating.

Tuming to the question of preemption, we arrree with the premttion of State copyright laws pursuant to section 301(a), and with

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