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The IPC has worked with other U.S. companies to develop broad private sector support in the United States for the negotiation of a CATT intellectual property agreement. The approach contained in the report has been endorsed by numerous major business and intellectual properly organizations in the United States.

The three business groups plan co circulate the report widely within their governments and international institutions, such as the EC Commission and the GATT and WIPO secretariats. In addition, a joint effort will be launched to extend the trilateral consensus to the business communities in other indus

trialized countries and in the newly industrializing countries of Asia and Latin America. The three groups will also continus to work closely to monitor the GATT negotiations in order to secure the negotiation of the comprehensive agreement on intellectual property called for in their report.

Intellectual Property Rights Pushed

By KEITH M. ROCKWELL

Journal of Commerce Staff

companies from the United States,
WASHINGTON - A coalition of
Japan and Europe released a re-
ments to press for a broad
port Tuesday urging their govern
multilateral accord on the protec-
tion of patents, trademarks and
copyrights.

The coalition of Japan's Keidan-
ren, the Union of Industrial and
Employers' Confederations of Eu-
rope and the 13-member U.S.-based
Intellectual Property Committee,
called on their governments to ne-
gotiate improved protection
through the General Agreement on
Tariffs and Trade.

The thirteen US. companies in-
clude E.I. du Pont de Nemours &
Co., General Electric Co., General
Motors Corp., Merck and Co., Inter-
and Rockwell International Corp.
national Business Machines Inc.

The GATT Intellectual Property Panel would
have responsibility for enforcement of patent and
copyright laws. Countries that violate GATT law
could be subjected to trade restrictions and
denial of benefits under the GATT panel.

violations, the report recommends.

The panel has been thrashing
out the issue since the Uruguay
Round of GATT talks was launched
in October 1986.

An official who participated in
drawing up the report conceded the
negotiations were "tough" but said
all sides were pleased with the re-
sults.

He said the greatest obstacles to
consensus came from the Japanese
over protection of computer soft-
ware, trade secrets and sound re-
cordings.

According to the official, the
Japanese representatives would
have preferred to leave the issue of
software protection open.

The Geneva-based GATT should
form a code - similar to its code
for subsidies and standards - out-
lining minimum levels of protec-
tion, the report said. It also calls
for the global harmonization of na-
tional systems and the formation of
"effective, equitable and non-dis- retaliation for intellectual property in production. The coalition accept

On trade secrets, which include
production processes and strategy,
the Japanese wanted to retain the
ability to use "reverse engineering"

ed that position as long as such
practices don't violate existing
laws.

Trade secret infringement can
occur when an employee of one
company leaves for another and
brings company secrets along, a
concept the Japanese had difficulty
with.

"The Japanese had a hard time
codifying this... It's hard for
them to understand because they
have a policy of lifetime employ-
ment," said an official familiar
with the negotiations.

The third area of disagreement
involved demands by U.S. and Eu-
ropean members for 50-year copy-
right protection for sound
recordings. Japanese law gives 20
years' protection, and because the
report avoids asking for changes in
domestic intellectual property
laws, the Keidenran members were
apparently unwilling to press their
government.

Instead, the report expresses a
"preference" for 50-year protection.

The coalition now plans to bring
its report to GATT ministers and
seek to expand membership to oth-
er parts of the world including
Canada, Australia and Latin Amer-
ica.

Mr. Chairman, thank you for the opportunity to share with you our concerns about the anticompetitive implications of H.R. 1179. My name is James F. Fitzpatrick and I am here as counsel to State Farm

Insurance Companies. I am confident that State Farm's views on H.R. 1179 enjoy the support of the broad range of auto insurers.

State Farm is the nation's largest auto insurer, protecting some 29 million automobiles. In 1987, it paid approximately 6.7 million automobile property claims with an aggregate value of about $4.6 billion. State Farm is undoubtedly the largest single "purchaser" of automobile "crash parts" metal, plastic and glass

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components, such as fenders, hoods, doors and

windshields, used in the repair of damaged automobiles.

2

Like other insurers, State Farm has for many years supported a variety of cost containment measures in an attempt to hold down property damage costs, and thereby keep automobile insurance premiums as low as possible. State Farm has been a staunch proponent of auto safety standards, including passive restraints and bumper standards, and medical cost containment measures, as part of our continuing effort to keep insurance coverage at affordable prices by minimizing costs.

In this same vein, we have been engaged for almost two decades in efforts to bring competition to the crash parts market, which until recently has been under the near-monopoly control of automobile manufacturers and in which monopoly pricing has consequently been manifest. These efforts were frustrated and unproductive until recent years. For decades, the manufacture and supply of automobile "crash parts" sheet metal and plastic

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components such as fenders, hoods and doors used in

collision repairs

of the automakers.

-

were under a virtual monopoly lock In this $8 billion a year market,

the only place one could get a new fender to repair a GM, Ford or Toyota car was from a GM, Ford or Toyota dealer. In the last four or five years, however, competitive parts have been offered in this market, and the ensuing price competition has led to sharply lower

· 3

prices for those buying crash parts. For example, the price of a 1983 Omni fender fell from $140 in 1983 to $76 in 1986; a competitive product was available in 1986 for $65. By contrast, for parts for which there were no competitive products, the price remained stagnant or increased; the 1982-84 Cavalier fender, for example, cost $151 in 1983, $163 in 1985 and $150 in 1986.

During the brief time there has been competition in the crash parts market, we have also seen marked improvements in the warranties, distribution, and quality of the automakers' parts, as well as the competitive parts.

The ultimate potential benefit of continuing, and expanding, this price competition is staggering. Literally hundreds of millions of dollars in automobile repair costs are at stake, and automobile manufacturers have understandably been anxious to reestablish their monopoly control over the crash parts market.

The industrial design bill, if passed, would make their work easy. In the words of Ralph Oman, the Register of Copyrights, "An overprotective design bill could lead to a high cost, less competitive domestic market."1

See The Industrial Innovation and Technology Act: Hearings on S. 791 Before the Subcomm. on Patents, Copyrights and Trademarks of the Senate Comm. on the [Footnote continued on next page]