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At present, the government has no clear-cut authority to destroy infringing ar ticles which have been seized or otherwise obtained in the investigation or pros ecution of a tape piracy case or, for that matter, any criminal copyright infringement case. This lack of specific authority has resulted in critical storage problemas for many F.B.I. and U.S. Marshals' offices throughout the country and poses the embarrassing possibility that the government may be ordered to return known infringing articles to a convicted defendant.

With proper amendments, H.R. 2223 could eliminate this most serious problem. We strongly urge the following revisions:

1. There should be added to Section 506 a new subsection which should be designated as:

(b) When any person is convicted of any violation of subsection (a), the court in its judgment of conviction shall, in addition to the penalty therein prescribed, order the forfeiture and destruction or other disposition of all infringing copies or phonorecords and all implements, devices, equipment or other articles of whatever kind used or intended to be used in the manufac ture, use, or sale of such infringing copies or phonorecords.

Present subsections (b), (c), and (d) need to be redesignated as subsections (c), (d), and (e), respectively.

A conforming amendment should be made to Title 18, United States Code, Sec tion 2318, so that it reads as follows:

Section 2318:

(a) (present Section 2318).

(b) When any person is convicted of any violation of subsection (a), the court in its judgment of conviction shall, in addition to the penalty therein prescribed, order the forfeiture and destruction or other disposition of all counterfeit labels and all articles to which counterfeit labels have been affixed or which were intended to have had such labels affixed.

(c) Except to the extent they are inconsistent with the provisions of this title, all provisions of section [new forfeiture setion described below) Title 17, United States Code, are applicable to violations of subsection (a). 2. A new section should be added reading as follows;

(a) All copies or phonorecords manufactured, reproduced, distributed, sold, or otherwise used, intended for use, or possessed with intent to use in violation of section 306(a), and all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or purus records may be reproduced, and all electronic, mechanical, or other devices for manufacturing, reproducing, assembling, using transporting, distributs ing, or selling such copies or phonorecords may be seized and forfeited to the United States,

(b) All provisions of law relating to (1) the seizure, summary and judiclal forfeiture, and condemnation of vessels, vehicles, rerchandise, and hanggige for violations of the custon's laws contained in Title 19, United States Code, (2) the disposition of such vessels, vehicles, merchandise, and bag gage or the proceeds from the wile thereof, (3) the remission or mitication of such forfeiture, (4) the compromise of claims, and (5) the award of compensation to informers in respect of such forfeitures, shall apply to seizures and forfeitures incurred, or alleged to have been incurred, under the provisions of this section, insofar as applicable and not inconsistent with the provisions of this section; except that such duties as are imposed upon the collector of customs or any other person with respect to the seizure and forfeiture of vessels, vehicles, merchandise, and baggage under the proces sions of the customs laws contained in Title 13 of the United States Code shall be performed with respect to seizure and forfeiture of all articles described in subsection (a) by such officers, agents, or other persons as Hay be authorized or designated for that purpose by the Attorney General, Proposed Section 114 should be amended to provide for the copyright owner of a sound recording to have the right to make derivative works or if should be amended to clarify that persons other than the copyright owner do not have such a right absent consent of the copyright owner, notwithstanding the fact that the sound recording copyright owner would have no such right.

Section 114 limits the specific rights of a sound recording copyright owner to those granted to copy right owners by parts (1) and (3) of Section 106. That is, sout, i resord ng eops right owners have the right :

(1) to retroduce the copyrighted work in coples or phonorecords; and

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righted musical composition is an infringement of the composition copyright even though the duplicator tenders royalty payments and otherwise attempts to com ply with present compulsory licensing provisions. This is contained in the unal sentence of subpargraph (a) (1), which reads:

A person may not obtain a compulsory license for use of the [nondramatic musical] work in the duplication of a sound recording made by another. Since this prohibition is not limited to copyrighted sound recordings, the effect is to prevent the operation of the compulsory license mechanism for making copies of any sound recordings embodying copyrighted musical compositions. The De partment wholeheartedly supports this provision.

Section 804 deals with procedures before the tribunal which determines adjustment of copyright royalties and their distribution under specified sectious of the Bill. We object to the provision in subsection (e) of this Section Luat the Senate Committee on the Judiciary and the House of Representatives Committee on the Judiciary may waive a requirement that a final decision in each proceeding be rendered by the tribunal within one year from the certification. of the panel by the Register of Copyrights. The constitutional division of duties among the three principal branches of the government places in the Congress the legislative responsibilities. However, once a law has been enacted, it is for the Executive Branch to carry out the intents and purposes of the law as directed by the Congress. In our view, legislation, once enacted, should not be modified or waived by actions of a committee of the Congress. It is suggested that if waiver of the one-year requirement is desirable under particular circumstances, these circumstances be generally outlined in the Bill and that the tribunal be given authority upon good cause shown to extend the period of time for rendering decisions.

Of particular concern to this Department is the new form of copyright protes tion provided by Title II of the Bill. This new form of protection is a hybrid between design patents (35 U.S.C. § 171–173) issued for a period of up to 14 years by the Patent Office for new, original and ornamental designs of irticles of manufacture and the copyright laws which provide for registration and 1889snce of certificates of copyrights for the writings of authors. The new protect, ¤ that is provided under the Bill is not presently available under the copyrizat laws and can only be obtained through a design patent after an examirst a procedure which determines whether the ornamental design meets the criteria of patentability, including unobviousness in view of the prior art, as provided by 35 U.S.C. 102, 103. While the protection period as proposed for the new tyre of ornamental design protection is only a maximum of ten years as com and with the maximum of 14 years available for a design patent, it is granted with ut the need of meeting the novelty and unobviousness requirements of the patent stature.

A threshold consideration before finding that the needs are such that this new type of protection should be available is whether the benefits to the put he of such protection outweigh the burdens. We believe that insufficient need has been shown to date to justify removing from the public don ain and ; », le use by others of the rights and benefits proposed under the present Bil' for so ornamental designs. We believe that design patents, as are granted today, are as far as the public should go to grant exclusive rights for ornamental des.gus of useful articles in the absence of an adequate showing that the new protection will provide substantial benefits to the general public which outweigh remov2′′ such designs from free pubic use. While it has been said that the examinat n procedure in the Patent Office results in serious delays in the issuance of a design istent so as to be a significant problem and damaging to "inventors" of ortas mental designs of useful articles, the desirable free use of designs which do not rise to patentable invention of ornamental designs of useful articles are beneved to be paramount. If the contribution made to the put lle by the creation of an ornamental design of a useful article is insufficient to rise to patentable novel{T, the design should not be protected by law. The Department of Justice has ensistently opposed legislation of this character.

To omit federal statutory protection for the form of a useful object is not to deny the originator of that form any remedy whatsoever. If he can prove that competitors are passing off their goods as the originator's by copying the prod ucts design, he may bring an unfair competition action against such copy:sts Crescent Tool Co, v. Kibörn á Bishop Co. 247 Fed. 299 (C A. 2 1917). See, also, Sears, Roebuck a Co. v. Stiffel Co., 376 U.S. 225 (1964), and Compco Corp. v. Day Brite Lighting, Inc, 376 U.S. 234 (1964).

Quite apart from our opposition to the merits of Title II, we also oppose erament of the design protection provisions of this Bill which would provide a new class of actions against the United States since the Bill proposes to amend Bet, ʼn 14′ a) to add the new type of design copyrights to the remedies availe to inventors against the United States who have been hosted United States jater's when they are used by the United States without authorization of the Onner. For example by amending Section 1498(a) in this way the Congress will he reating a completely new problem area fraught with difheu ties for governnt pro urement. Government contractors who "reverse engineer" alleged trade secrets in bidding competitively for government contracts would now be fed with the necessity of designing around the “packaging looks” of a product astered by a design copyright which may not rise to the stature of patentable a ty under the patent laws. Thus, the "non-utilitarian looks" of a vehicle t may not be protectable as a design patent would be given copyright-type 1* tection, under the BoI-We, therefore, strongly oppose the new type of protees fios en posed by Title II of the Bill

Mention 149(a) is also amended to provide for the first time for suits against The United States for unauthorized use of inventions, whether patented or stratented. Thus, it would appear to permit a suit based on a trade secret eontaring an unpatented invention This, also, we strongly oppose as inconsistent **%, ting claims against the United States in 2% USC. 149% to those recogased by the pistent and copyright laws No adequate showing has been made Frantis type of protection, on balance, is in the public interest.

De provision in Section 220 whereby simultaneous suit can be filed ag list The Adi inistrator who carries out the provisions of Title II (42301 and an *ed infringer of the design in flat it subjects an alleged Infringer to suit in ℗ ka be actin even though the threshold question wietler a certificate can lavender the provisions of the law has not been decided as between the Admin

- and the applicant for registration is believed undesirable. While it is w's that fie issuance of certificates of registration will be frequer,tty refined if certain basie requisites of applications are met fevertheless if n malen d arise of a refusal of buiince of a certificate of registration by nistrator, this should require a wjarnte and distinctive, a tak ta bance there f, especially since governmental finctions shouldint be mixed with the proprietary enforces ent finet ons of cotere in ating ; r'va'e righ to and remediem.

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M: KASTEN METR. We would next like to call Mr. Rene D. Tegn.ever, Aant Comm.ss.oner for Patents, representing the US. Departs P of Commerce, Would you please identify your colleagues, MITMEYER Thank you. Mr. Chairman With me today are D. 1 Ailen and Rosemary Bowie, both of whom are from the Come For Ipartment and in particular from Patents.

Mr. KASTEN METER. I notice you have a prepared statement. You may Ie prepared statement of Mr. Tegtmeyer follows:]

Natwest of Base D. TriMETER ASSISTANT COMMISSIONER

UN DEPARTMENT OF COMMERCE

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Charman Lappreciate this opportunity to appear before Vi ir a les m the views of the inguistien! of C-mate row and itm support i with certain n..»l.Goal) 58 which I at all expl in

K203 la te result of 20 vening of extensive effort by the Copyright of e * 1 Teary of Congress and the Congress to revise the exponight law. I 'stel that the testimony of the Register of Copyrights included a discus the background concerning this effort and an outine of the principal an of the kill I will not attempt to be repetitive in this respect

H.R. 2223 is divided into two titles; Title I. General Revision of the Copyright Law and Title II. Protection of Original Ornamental Designs. As the Depart ment views each title from a slightly different perspective, I would like to comment on them separately this morning.

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

1. The lack of protection in U.S. government works,

2. Preemption of state law with respect 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 government works, creates a special problem for the Department of Commerce. Umier Title 15, United States Code, Chapter 23. the Secretary is required to estabibsa and maintain a clearinghouse for the collection and dissemination of scien",lic, technical and engineering information. This is done through the Departmen ́s National Technical Information Service, called NTIS,

As a matter of policy, Chapter 23 requires that each of the services and funetions provided be self-sustaining and self-liquidating, as much as possible, este sistent with its objectives. The Chapter specificaily states its policy tha" tue general public shail not bear the cost of publications and other services which are for the special use and benefit of private groms and individuals,

With the increased use of reprography, the ditheulty of meeting the requires. ment to disseminate technical information on a bisis that pays its own way Las increased. It is cheaper for a purchaser to buy one copy of an expensive teclito logical publication and photocopy it rather than to buy the number of clas that are actually needed. The lack of copyright protection for most period cuis made available by NTIS makes this practice legal. However, if NTIS cart recoup the cost of preparing and Landling its publications, the disseminata: là of this material cannot be maintained on a self-sustaining and sli-liqui latang basis.

An example of the potential harm which could arise from this lack of ecptright can be seen in the publication. "Directory of Computerized Data Files and Related Software Available from Federal Agencies 1974". This deeuroent was prepared in response to the large number of requests received for this information. It was prepared at NTIS expense. The approximately $150,000 cost of sure veving Federal agencies to gather the information and publishing the directory was not reimbursed from appropriations. In order to recoup NTIS expetes 4 price of $60 per copy was set for this 150-page directory. Anyone choosing to make and sell competing photocoples could do so for a fraction of this pre Thus, it was necessary for NTIS to risk substantial moneys to produce such a product in the absence of copyright protection.

Unauthorized photocopying is especially serions in connection with foreign sales; out of the eight largest customers of NTIS, seven are foreign est es which engage in such copying practices. It has also caused NTIS to be listed in pricing its periodicals due to the much lower costs of duplication done by resale marketers and potential customers of government works which are not copyrighted.

For these reasons, we believe that copyright protection should be provided works distributed under Chapter 23. Title 15 of the United States Code, sites ar to that provided under 6 290(e), Chapter 7(a), Title 15, for standard reference data prepared by the Department of Commerce under the provisions of that Chapter, or in the alternative that the Congress reconsider the statutory requirement that the services and functions provided under Chapter 23 be self-sustaining and self-liquidating.

PEFT MPTION

Second, we agree with the preemption of State copyright laws pursuant to section 301(a), and with the principle embodied in that section that there should be a single, federn) system for copyright. However, the language of subanetion (b) (3) of section 301 should. In our view, be modified to make it clear that the phrase "all rights in the nature of copyright" (italies added) will not be construed to freement parts of the State law of unfair competition which are now eodifed in statute or established by Federal and State Court decis, îns applying the common law,

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