TESTIMONY OF BRUCE A. LEHMAN, ESQ., SWIDLER & BERLIN, COUNSEL, INDUSTRIAL DESIGN COALITION; ACCOMPANIED BY KENNETH D. ENBORG, CHIEF TRADEMARK AND COPYRIGHT COUNSEL, GENERAL MOTORS LEGAL STAFF, ON BEHALF OF THE MOTOR VEHICLE MANUFACTURERS ASSOCIATION Mr. LEHMAN. Thank you very much, Mr. Chairman. I have submitted a written statement and with your permission, I would like to insert that in the record and then proceed with an oral summary of that statement. Mr. KASTENMEIER. Without objection, that will be allowed. Mr. LEHMAN. Mr. Chairman, Congressman Moorhead's bill, H.R. 1179, and a predecessor piece of legislation, H.R. 379, now together enjoy the support of 29 House co-sponsors. I'm here today on behalf of the Industrial Design Coalition, which is a coalition of over 40 trade associations and corporations that represent a vast cross-section of U.S. industry. A complete list of those is attached to my statement and they are all in support of H.R. 1179. Mr. Chairman and members of the committee, in a nutshell, there are four major reasons to enact H.R. 1179. First, a new design law is needed to recognize the value added contribution of America's growing white collar work force through the products we produce and market. You really referred to that in your own opening statement, Mr. Chairman. Secondly, current U.S. law clearly lags behind the world standard for design protection. Thirdly, current U.S. law is antiquated, arbitrary, and inconsistent in its application, even here in this country. It arbitrarily protects some products, but not others. Finally, H.R. 1179 is pro-consumer. It will encourage new and better product design, giving consumers choices, not copies. Mr. Chairman, after 10 years, those new choices will go into the public domain and be available for copying. The last decade has witnessed revolutionary changes in economic relationships throughout the world. American companies have experienced a wholesale foreign assault on their traditional markets for manufactured goods and a key ingredient of this assault has been the replication of unprotected U.S. technology and product design by foreign companies to capture consumer demand and markets, which were originally created by the product innovation and marketing efforts of U.S. companies. Without intellectual property protection for our innovations, we have been forced into an inevitably losing battle with foreign companies, who can expropriate our product designs and manufacture them, not only without development costs, but with low wage labor, unencumbered by the environmental and safety standards found in this country. The response, ironically, of many U.S. companies to this increased foreign competition has been to spend an even greater effort on product design and innovation, while attempting to reduce manufacturing costs through automation and increased worker productivity. This means that the percentage of workers involved in manufacturing, in many companies, has declined, while the number of employees involved in product design, in development and marketing, has increased. However, the value of the intellectual creations of this growing white collar work force is seriously jeopardized when the companies which employ them are unable to obtain full value for what those workers do. H.R. 1179 would address that problem. H.R. 1179 is not a radical proposal. In fact, the United States, as I mentioned, lags behind nearly every other industrialized nation in the world, even a nation like Korea, in the protection of industrial designs. The details of the design protection regimes of many of these other countries differ from one another, but they all provide far easier access to protection than does U.S. law. Mr. Chairman, it would be inaccurate to say that the U.S. today has no industrial property protection in designs; rather, it's more accurate to say that existing U.S. law is antiquated, incomplete, and inconsistent in its application and for this reason alone, it should be reexamined. Currently, there are three ways to protect industrial designs in our law. Of course, the first is design patents, and I think that Congressman Michel gave a very good illustration of some of the problems of design patents. Not only are they difficult to get from the patent office-taking 2 years, usually, with a very high standard to get them, but in seven cases out of ten, they are declared invalid when they are actually litigated in the court. In addition, however, to design patents, we do have protection of many industrial designs under copyright and trademark laws, particularly in things such as toys, lamps, and fabrics. Protection for these items has come into being through various court decisions that interpret existing law. However, product innovators who spend millions of dollars developing aerodynamic and sculpturallybeautiful automobiles, those who design components for electronic equipment, medical laboratories or industrial machinery are out of luck. Yet, toys and teddy bears will not supply America with the economic muscle it will need to compete in the 21st century. Ironically, we protect those, but we don't protect really valuable industrial property. We will need to look to the kinds of industries represented in the Industrial Design Coalition for America's future and those industries clearly need a modern design law. Finally, Mr. Chairman, H.R. 1179 is pro-consumer. Not only is the current U.S. law illogical and arbitrary in its application, but the high level of protection already available to some industrial products under copyright and trademark principles, belies the very fear and criticism directed toward some, including some other witnesses here today, toward H.R. 1179. The most serious criticism of the bill is that somehow, it's going to stifle competition by granting limited exclusivity for 10 years to design innovators. Yet, fabric and toy makers have now been protected for many years, with an even more comprehensive form of protection under the copyright law, which is much easier to get, lasts for up to 75 years, and there is no apparent anticompetitive effect. In fact, those are highly competitive industries, where one design comes out, a new one follows closely on its heels that may be even better. The industrial design legislation before you today will encourage creativity, diversity, a kind of "better mousetrap," that will produce choices for the American consumer and not copies. Mr. Chairman, this is a very carefully crafted bill. As you observed, it has a long history. Many people have laid their hands on it over the years to see that it is carefully crafted. It will have the effect of bringing us into line with other industrialized nations. On behalf of the companies of the Industrial Design Coalition, we urge its enactment. I would also, just in closing, Mr. Chairman, like to ask you to include in the record four documents which have been submitted to the Clerk: a letter from the United Auto Workers Union, a letter from the American Bar Association, and a letter from the U.S. Chamber of Commerce, all supporting this legislation. In addition, there is a recent press release from a coalition of Japanese, European, and American companies. That coalition represents all European and Japanese industry, as well as American industry, urging a higher level of design protection for the entire world. Mr. KASTENMEIER. Without objection, we will do that. [The prepared statement of Mr. Lehman follows:] FOUR REASONS TO ENACT INDUSTRIAL DESIGN LEGISLATION Summary of Statement of the Industrial Design Coalition in Support of H.R. 1179, A Bill To Provide Protection of Industrial Designs in Useful Articles H.R. 1179 Is Needed to Give Full Value to What American Workers Do A key In the last decade American companies have experienced a wholesale foreign assault on their traditional markets for manufactured goods. ingredient of this assault has been the replication of unprotected U.S. technology and product design by foreign companies to capture consumer demand and markets which were originally created by the product innovation and marketing efforts of U.S. companies. The response of many U.S. companies to increased foreign competition has been to spend even greater effort on product innovation, often increasing the number of employees involved in design, development, and marketing. However, the value of the intellectual creations of America's growing white-collar work force is seriously jeopardized when the companies which employ them are unable to obtain full value for what these workers do. U.S. Law Is Inconsistent With the World Standard H.R. 1179 is not a radical proposal. In fact, the United States today lags behind nearly every other industrialized nation in the protection of industrial designs. This is particularly embarrassing to the United States in our efforts to strengthen enforcement of intellectual property rights through GATT, the General Agreement on Tariffs and Trade. Current U.S. Law Is Antiquated, Under current interpretation of the copyright and trademark laws, many designs used in industrial products, particularly in such things as toys, lamps and fabric can be protected. However, product innovators who spend millions of dollars developing aerodynamic and sculpturally beautiful automobiles, those who design sophisticated components for electronic equipment, medical laboratories or advanced industrial machinery are out of luck. Yet, toys, teddy bears and tablecloths will not supply America with the economic muscle she will need to compete in the 21st century. We will need to look to the kinds of industries represented in the Industrial Design Coalition for that. And, those industries clearly need a modern design law. H.R. 1179 Is Pro Consumer Consumers and the interests of a competitive economy are best served when there are a wide range of available product choices. Under H.R. 1179 there will be an incentive to improve on every protected design by creating another which is even more attractive and innovative. The effect will be to encourage creativity, diversity and the kind of competition that produces choices, not copies, for America's consumers. |