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 pro ecution of a tape piracy case or, for that matter, any criminal copyright infringe ment case. This lack of specific authority has resulted in critical storage problems 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, See 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 dispositiva of all counterfeit labels and all articles to which counterfeit labels have been affixed or which were intended to have had such labeis affixed.

(e) Except to the extent they are inconsistent with the provisions of this title, all provisions of section [new forfeiture section described below] Title 17, United States Code, are applicable to violations of subsection (4). 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, n'm negatives, or other articles by means of which such copies or platta p records may be reproduced, and all electronic, mechanical, or other devices for manufacturing, reproducing, assembling, using, transporting, distribuis 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 judicial forfeiture, and condemnation of vessels, vehicles, merchandise, and biggige for violations of the customis laws contained in Title 19, United States Code, (2) the disposition of such vessels, vehicles, merchandise, and bag gage or the proceeds from the sale 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 tipca the collector of customs or any other person with respect to the seizure and forfeiture of vessels, vehicles, merchandise, and baggage under the provis sions of the customs laws contained in Title 19 of the United States Code shall be performed with respect to seizure and forfeiture of all artides described in subsection (a) by such officers, agents, or other persons as Day 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 it 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 lina's the specifle rights of a sound recording copyright owner to those granted to copyright owners by parts (1) and (3) of Section 106. That is, soun i recording ecpyright owners have the right:

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

(1) to distribute copies, etc.

The right to prepare derivative works based on the copyrighted work (part 2 of Nects-n 1065) is withheld from a sound recording copyright owner despite Sectom 10, which states that such works are copyrightable and despite the fact that weynd recording copyright owners are entitled to make and copyright 6 rivative works under present law, 17 U S.C. 4 7. There is a real possibility that at manthorized diplicator who made a "derivative" work by slightly altering maut aut il copyrighted sound recording would claim that he did so legilly since The copyright owner is given no exclusive right to make derivative works,

T = pot ntial legal problem could be eliminated by including part (2) of SeeMum town in the list in Section 114 of exclusive rights granted to a sound recording ́t owner- an action which would grunt to sound recordi: g_copyright ensors, no pore rights than they presently possess, Section 366 shoud be - Add severd i gav to include part (2) of section 106.

etaren for concern is proposed Section 301 (pages 32-33), subparagraph ་ ls ས་ འtམ ལར་

stung in this title annuls or limits any rights or remedies under the euro ARW or statuts of any state with respect to:

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 that the Senate Committee on the Judiciary and the House of Representatives Committee on the Judiciary may waive a requirement that a final decision an 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 modized 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 circumstates, these circumstances be generally outlined in the Bill and that the tribuna be given authority upon good cause shown to extend the period of time Dr 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 articles of manufacture and the copyright laws which provide for registration and 1883ance of certificates of copyrights for the writings of authors. The new protect, a that is provided under the Bill is not presently available under the copyrinat laws and can only be obtained through a design patent after an exauitat a procedure which determines whether the ornamental design mee's 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 ty of ornamental design protection is only a maximum of ten years as com ared with the maximum of 14 years available for a design patent, it is granted with int the need of meeting the novelty and unobviousness requirements of the patent statute.

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 domain and ple use by others of the rights and benefits proposed under the present Bil' for sh ornamental designs. We believe that design patents, as are granted today are as far as the pubile should go to grant exclusive rights for ornamental designs of useful articles in the absence of an adequate showing that the new protect, of will provide substantial benefits to the general public which outweigh remove" Ľ such designs from free public use. While it has been said that the examinat »¤ procedure in the Patent Office results in serious delays in the issuance of a deszti jitent so as to be a significant problem and damaging to "Inventors" of or as 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 believed to be jiramount. If the contribution made to the public by the creation of an ornamental design of a useful article is insufficient to rise to patentable novelty, the design shou'd not be protected by law. The Department of Justice has es de sistentiș 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 prode uct's design, he may bring an unfair competition action against such copyistä. Crescent Tool Co. v. Kilborn & Bishop Co, 247 Fed. 299 (C A. 2 1917). See, ai90, Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225 (1964), and Compco Corp. T. Day Brite Lighting, Inc, 376 U.S. 234 (194).

Qite apart from our opposition to the merits of Title II. we also oppose erstment of the design protection provisions of this Bill which would provide a new class of actions against the United States since the Bili proposes to amend Meer, ti 149% m) to add the new type of design copy rights to the remedies avail℗ to inventors against the United States who have been issued. United States jatents when they are used by the United States without authorization of the orter. For example by amending Section 149s(a) in this way the Congress will be reating a completely new problem area fraught with difheu ties for govern#*! procurement. Government contractors who "reverse engineer' alleged tryje secrets in bidding competitively for government contracts would now be fed with the necessity of designing around the "packaging looks” of a product cutered by a design copyright which may not rise to the stature of patentable Byty under the patent laws. Thus, the "non-utilitarian looks" of a vehicle 1. may not be protectable as a design patent would be given conrright-type protection under the B1 We, therefore, strongly oppose the new type of protees posed by Title II of the BP1

Norton 149wcm) is also amended to provide for the first time for suits against Be United States for unauthorized use of inventions, whether patented or stented Thus, it would appear to permit a suit based on a trade secret cong an unpatented invention This, also, we strongly oppose as inconsistent mitting claims against the United States in 2% USC 14% to those recogtime! by the potent and ecpyright laws. No adequate showing has been made © type of protection, on balance, is in the publle interest.

De provision in section 220 whereby simultaneous suit can be filled against Ad inistrator who carries out the provisions of Title II (430) and an 1 tard unft niger of the design in that it subjects an alleged infenger to suit in eva je action even though the threshold question whether a certificate can

der the provisions of the law has not been decided as between the Adminand the applicant for registration is believed undesirable While it is any that the issuatice of certificates of regis ration will be frequently ** sed if certain basie requisites of applications are met hevertheless if a nabend arise of a refusal of bouance of a certificate of registration by nistrator, this should require a separate and distinctive noticħi sance there‹f, especially since governmental factions whorld not ly be mixed with the proprietary enforcement fune; as of co*** in sting-rivate righ to and remediem.

5 textural correct) fix at pear indicated in Title II as follow=

tes 22 and 23 appear reversed.

Mes tion 311” shou'd read "Section 211",

De 2, "hot"ake shou'd read "mort,«gee",

M. KASTENMETER. We would next like to call Mr. Rene D. Tegtmever, 1st Commissioner for Patents, representing the US Depart * of Commerce, Would you please identify your colleagues, MIGIMETER. Thank you, Mr. Chairman. With me today are D. 1 Allen and Rosemary" Bowie, both of whom are from the Come Ipartment and in particular from Patents,

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

atment of BINE D TIMEYER ASSISTANT COMMISSIONER

US DEPARTMENT OF COMMERCE

PATENTS,

I appreciate this opportunity to appear before y in a box 239+ et, is the views of the inpuuttiamat of Commerce and its su¡ ¡mort i with certain food,flix'join wh, f. 1 ■' all expi an

10% 27.5 ls the result of 20 yer rs of extensive eff at by the Copyright of e Iberry of Cotigrem ahl the Cot gress to revise the cynright law I *** and that the testimony of the Register of Copyrights inein josi a d.% !18+ the background concerning this effort and an outline of the prim-jal “ɔ of the hill 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 Denartment 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 1:

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, ereites a special problem for the Department of Commerce. Unger Title 15, United States Code, Chapter 23, the Secretary is required to establisa and maintain a clearinghouse for the collection and dissemination of scien'div. technical and engineering information. This is done through the Departmen ́s National Technical Information Service, culled NTIS.

As a matter of policy, Chapter 23 requires that each of the services and futetions provided be self-sustaining and self-liquidating, as much as possible, e ide sistent with its objectives. The Chapter specificnily states its poles the" tue general public shall not bear the cost of publications and other services Whii ik are for the special use and benefit of private groups and indiviqunis,

With the increased use of reprography, the difficulty of meeting the requires ment to disseminate teel nical information on a brisis that pays its own Way Las increased. It is cheaper for a purchaser to buy one copy of an expensive techam logical publication and photocopy it rather than to buy the number of c that are actually needed. The lack of copyright protection for most period ca s made available by NTIS makes this practice legal. However, if NTIS cat recoup the cost of preparing and Landling its publications, the disseminat, n of this material cannot be maintained on a self-sustaining and seli-liquida'ang basis.

t

An example of the potential harm which could arise from this lack of ecte right can be seen in the publication, "Directory of Computerized Data Files and Related Software Available from Federal Agencies- 1974". This document v. * 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 wir veving Federal agencies to gather the information and publishing the directors was not reimbursed from appropriations. In order to recoup NITS expeties ā price of $60 per copy was set for this 150-page d'rectory. Anyone choosing to make and sell competing photocopies could do so for a fraction of this prom 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 enstomers of NTIS, seven are foreign entities 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 belleve that copyright protection should be provided works distributed under Chapter 23, Title 15 of the United States Code, sini ar to that provided under § 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.

PREEMPTION

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, federal system for copyright. However, the language of subsection (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 prein; parts of the Ste law of unfair competition which are now codified in stature or established by Federal and State Court decisions applying the common law,