Section 301(b) (3) is intended to exempt State unfair competition law from 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 incinde “breaches of contract, breaches of trust, invasion of privacy, defamation, and deceptive trade practices such as passing off and false reursentation The problem we have is that the listing is incomplete and the language is more limited than that which would describe the present scope of esta mushed State unfair competition law.

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

(65) Activities violating rights that are not equivalent to any of the exclusive Prt's witlan the general scope of copyright as specified by section 106, including ! vart es of contract, breaches of trust, invasion of privacy, defamation, and Govtive trade practices such as passing off and false representation] acts, jergeti va or coursea of conduct schich cause or are likely to cause confusion, mistake or deception, or schich are likely to result in passing off, false or moricading representations, disparagement, terongful disclosure or mutappropriation of a trade secret or confiential information, or activities which otherwise cons atitute wifiar competition by misrepresentation or misappropriation." (I× letions k ́arketesi, ndilitions itaucized)

... vať op chion, this proposed an endment would more accurately state the rise of infair competition forts which are now regulated by the states, so that freeman, les listed will not be limiting

Pochod be noted that Pe phrase "ur fair competition by ... misapproprin

am incfuded in our amendment. Obviously, the "misappropriatim of all at the words of a literary work would be in the nature of copyright and State Tymkin this area should be preempted. However, we do not believe that the te hals of state unfair con petifact Low based upon the landmark 81; reme

etin in International No on Device V. Azmevated Prom (2) U8 215 i stou.d be preetupted. While non e State decisions reiving on the INS ay be held in applicable under section 301 in), we be deve that such a ren ely ad ol'anae to be avanabie for the type of conduct proscribed in the INS

MANUFACTURING CHAUBE

* 1* posed section 001, known as the "n, inufacturing elit e”, essentia"y that 1 g h lang inge, 1, st. dramaffe literary W ras by

21 ora 11 not be prted in the United States or Car udg. The present statute des hot ir atv'e wch a refcretice to Catch Per fr bada appears to be that wage standards in the US and Cana la are

↑ therefore no march of prior designs would be Lovessary in order to pra e 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 if 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 federal 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 dete re mine 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 certon 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 Tyle 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 US, residents at a disadvantage if they decre to obtain protection of their design in foreign countries, many of which, for example Japan, refuse protection for a design which has been made pubile prior to the Bling of an application for registration.

In order to prevent the possible loss of protection in foreign countries, it shou'd not be required that the design be made publie prior to registration. Instend, 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 pullie 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.

Section 200 appears to limit an application to a single design This limitation a pears to be unnecesary. An application containing ten or twenty designs wood be no more difficult to process than an application containing one design be ause no search of prior designs is necessary. A multiple design application d save the applieint paperwork, thus, save him time and money. It would #save the Administrator processing time over an equal number of single

alons This might result in a lower fee per design. As long as a serrate fre is paid for each design contained in the application there would be no les of revenue and both the applicant and the Administrator would benefit. We have tranfire recommended that multiple design applications be permitted under

ive 11 requires that the application be accompanied by a statement setting fti facts about the design, and that such statement must be under oath Smilar re, i regents in Titie 35, United States Code, covering patent and trademark perctures permi' such required statements to be submitted with a written de lara, a cordance with 18 USC, 1001 making a false statement punishale by a fre or fr.prisonment and jeopardizing the validity of the douent. We believe fach, a provimi siti shot d be applicable to the application for design registrat.t. Iterefore wnch declaration should be permitted in lieu of an outh

t ·

I e present fee provisions of section 215 of this title are unacceptacle to the In artment of Commerce. In our op-mon, the design registration syster, suon d be man; ete's self supporting because the benents of the design registration #% ont ac rue to the individual recipient of the registration 17 is e

abon'd not be expected to bear any portion of the expense of a design

■ study done in 1964, the $15 fee for the design registration under a bill ar to the present one, was found to be inadeqinte to provide 100, cost The $15 apt ication fee would be even more inadequate today. Retter tats propose different fee levels for each of the functions specified in * 15m), the ixpartment of Con.merce proposes that section 215 te arct ded tient,rety to give the Administrator the discretion to establish elarges with Part Timer 100°% of the cost of operation of the design registration wysteri ar appron his currently being considered by Congres in vari us 12- to rew the patent laws.

TESTIMONY OF RENE D. TEGTMEYER, ASSISTANT COMMISSIONER FOR PATENTS, DEPARTMENT OF COMMERCE

M. THE TMEYER, Mr. Charmai, I appreciate t s opportunity to ** war before your subcommittee to express the views of the Departtod of Commerce and ts support for H.R. 2223 with certain modificaI shall explain.

1.

B 2.5s the result of 2) years of extensive effort by the Copyright 6e of the I. orary of Coigress and the Congress itself to revise vricht law. I understand that the testimony of the Reg ster gits included a discussion of the bacs ground cot, erning tand an out'ire of therrncipal provisions of the bill I w::l itrit to be rețet tive inth respect

HR:

3 « divided into twot flex: 1 tle 1, General Re, son of the gt Law; and 1 t'e 11. Protest on of Original Ornamental home Actie I portrent views each t t'e from a sly different e, I won il fa cant est enthem what tela

1. The test of Con me would be to highlight three specifie

or commertson titie I

Noftrot tonals Government works and t'enfest toy of the Importment of Cominere,

! Preemption of State law with respect to unfair content on, and The elusion of an exemption for Carady on the ran facting

First, proposed section 105, in prohibiting copyright protection for Government works, creates a special problem for the Department of Commerce. Under title 15, United States Code, chapter 23, the Secretary is required to establish and maintain a clearinghouse for the collection and dissemination of scientific, technical, and engineering information. This is done through the Department's National Technical 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 selfliquidating, as much as possible, consistent with its objectives. The chapter specifically states its policy that the general public shall not bear the cost of publications and other services which are for the special 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 pays its own way has also increased. It is cheaper for a purchaser to buy one copy of an expensive technological publication and photocopy it rather than to buy the number of copies that are actually needed. The lack of copyright protection for most periodicals made available by NTIS makes this practice legal. If NTIS cannot recoup the cost of preparing and handling its publications, the dissemination of this material cannot be maintained on a self-sustaining and self-liquidating basis.

An example of the potential harm which could arise from this lack of copyright can be seen in the publication, "Directory of Computerized Data Files and Related Software Available from Federal Agen

cies-1974."

This document 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 surveying Federal agencies to gather the information and publishing the directory was not reimbursed from appropriations. In order to recoup NTIS expenses, a price of $60 per copy was set for this 150-page directory. Anyone choosing to make and sell competing photocopies could do so for a frac tion of this price. 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 serious in connection with foreign sales: out of the eight largest customers of NTIS, seven are foreign entities which engage in such copying practices. It has also caused NTIS to be limited in pricing periodienls due to the much lower cost of duplication done by resale marl eters and potential customers of Government works which are not copyrighted.

For these reasons, we believe that copyright protection should be provided for works distributed under chanter 23, title 15, similar to that provided under § 290(e), chapter 7(4), title 15, for standard reference data prepared by the Derartment 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 by NTIS be self-sustaining and selfhamidating.

Turning to the question of preemption, we agree with the preemp tion 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" will not be construed to preempt parts of the State law of unfair competition When are now codited in statute or established by Federal and State cort decisions applying the common law.

Section 301(b) (3) is intended to exempt State unfair competition law from the preemptive effect of section 301(a). Among the rights at i 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 by the bill to in 1„de “breaches of contract, breaches of trust, invasion of privacy, elation, and deceptive trade practices such as passing off and fal-e robry sentation.” The problem we have is that this listing is incompe, and the language is more limited than that which would de

the present scope of established State unfair competition law. Aasoiution, we propose a mote comprehensive and inclusive listing of affair competition torts in subsection (b) (3). The proposed amend

(3) Activities violating rights that are not equivalent to any of the exclusive figats within the general scope of copyright as specified by section 106, including es of contract, breaches of trust, invasion of privacy, defamation, and » trade practices of courses of conduct which cause or are likely to cause slot, mistake or deception or which are likely to result in passing off, faise 啤 event! og representations, disparagement, wrongful dis losure or mi-appro ñol a trade secret or confidential information, or activities which otherwise aaaa uir unfair competition by misrepresentation or misappropriation.

In our opinion, this proposed amendment would more accurately state the range 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 Parropriation" is included in our amendment, Obviously, the sappropriation" of all of the words of a literary work would be % the nature of copyright, and State laws in this area should be prepared. However, we do not believe that the entire body of State xr competition law based upon the landmark Supreme Court deci van International News Service v. Associated Prom (24× U.S. 215 67% a should be preempted. While some State decisions relying on AVN case may be held inapplicable under section 301(a), we beeve that such a remedy should continue to be available for the type derat proser-bed in the IVS case,

Ing to the third point in title I. the proposed section Gol, known the manufacturing clans," essent.ally requires that English lan【age, not, itamatie literary works by American domiciled authors

binted in the United States or Canada. The present copyright stik te does not include such a reference to Canada. The ration the for ng Canada appears to be that wage standards in the United ves and Canada are comparable.

ike are opposed to the inclusion of Canada in this provision. Such son would be a unilateral concession which we believe should sæd for possible use by the United States as negotiating levers Age of wegung compensating benefits during multilateral trade negoFans We note that both Houses of Congress indicated forcibly that