So that, I think the Register's statement, although he has reasoned it out well, fails to take into account that you are going to put an awful burden on American business.

Mr. WARNER. I said that I am perfectly willing to have it stricken. Mr. SHULMAN. This will take bookkeepers and bookkeepers to keep it straight.

Mr. WARNER. You mean on the Englishmen?

Mr. SHULMAN. Yes; it will take a whole staff. I think we ought to think of doing it in terms of good business.

Mr. WARNER. You can have one certificate only, of course. Mr. SHULMAN. We want to have merchandise sold throughout the world and not have it restricted.

Mr. BRYSON. Gentlemen, we appreciate your appearance here this morning. We will recess at this time.

(Thereupon, at 1 p. m., the subcommittee recessed subject to the call of the Chair.)

APPENDIX

MEMORANDUM

FEBRUARY 1, 1949.

To: Mr. Emanuel Celler, Chairman, Committee on the Judiciary of the House of Representatives.

From: Mr. Oscar R. Strackbein, representative of the International Allied Printing Trades Council, and Mr. Sam B. Warner, Register of Copyrights. Subject: A bill to amend the copyright law, title 17, United States Code, sections 16, 22, and 215.

This draft of a bill is submitted by Mr. Strackbein on behalf of the International Allied Printing Trades Council. The draft has been submitted to the Authors' League of America, the Book Manufacturers Institute, Inc., and the American Book Publishers' Council, and representatives of all these organizations have informally given it their support. It is confidently expected that they will all advocate the enactment of the bill. The bill has also the endorsement of the Copyright Office and the Library of Congress.

The purposes of the bill are two. The first is to ease what are believed to be unnecessarily severe restrictions on the copyright in the United States of books published abroad in the English language. The second is to permit applicants in foreign countries who desire United States copyright to substitute a payment in kind (an extra copy of the work and a catalog card) for the $4 fee. It is believed that this option will both make United States copyright available to many authors who cannot under present conditions secure American funds, and prove advantageous to the United States Treasury.

The accomplishment of these purposes should increase the flow of foreign works into the United States. It should also increase the good will of foreign authors, publishers, and readers toward us and hence the willingness of foreign countries to facilitate the importation of American books and other literary works. In short, the enactment of the bill should promote international cultural exchange of the advantages of democracy and of the American way of life.

Below is a detailed account of the proposed changes in the copyright law. The bill is designed to accomplish the following objectives:

1. Section 16: To eliminate the technical defect in section 16 created by the omission of the words "or periodical" after the word "book" in two places in the section. As the section is now worded, foreign books may be accorded copyright protection in the United States if manufactured here, but foreign periodicals may not, if the section is to be interpreted strictly. The Copyright Office has always believed the section should not be interpreted strictly in this regard and has allowed the copyright registration of foreign periodicals manufactured in the United States. The bill will make such action indisputably legal.

2. Section 16: To allow the importation into the United States of 1,500 copies of a book that has been registered for ad interim copyright. The cost of printing and publishing a book in the United States is at present such that, unless at least from 3,000 to 5,000 copies of the book are sold, the exact number varying with cost and price of the book, it is usually uneconomic to print and publish the book in the United States. The present situation is, therefore, that when a book is printed abroad in the English language unless an American publisher thinks he can sell more than 3,000 copies, the English publisher has no alternative but to proceed without American copyright. Since the book is not copyrighted in the United States, there is no limit to the number of copies that may be imported, subject of course to the payment of the tariff.

It is hoped that the provision for the importation of 1,500 copies will allow English publishers to test out parts of the American market and thus enable them to demonstrate to American publishers that the book will sell in such quantities as to justify its printing and publishing in the United States.

45

3. Section 22: To extend the period within which registration may be made in the United States Copyright Office to 6 months and that within which printing and publishing must be done in the United States to 5 years.

The present periods are 60 days and 6 months (60 days plus 4 months). It is believed that many books published abroad in the English language are not reprinted in the United States because the present periods are too short to allow the foreign author and publisher to make up their minds that it is worth while to try to publish in the United States, to make copyright registration, secure an American publisher, and then have the book printed and published. Before these matters can be accomplished, the copyright dates have passed and no American publisher will take the books, because if the book fails he alone must bear the loss; while if the book succeeds, any other American publisher can also print it and thus cut into his sales. It is hoped that lengthening these periods will increase the number of foreign books in the English language that are reprinted and sold in the United States.

4. Section 215: To give a foreign copyright applicant of a book published in English or in any other language the option of securing American copyright by depositing one copy of the book and paying $4 or depositing two copies and a library card describing the book. At present, the law requires the deposit of one copy and the payment of $4. Exchange restrictions are such in many countries that it is extremely difficult, if not impossible, to secure a license to export $4 to pay the fee. Thus the foreign copyright owner may be deprived of his opportunity to secure American copyright.

The proposed change in the statute permits the foreign author to substitute an extra copy of his book and a library card describing it for the $4 fee, if he so desires. In most cases, it will be to the advantage of the United States Treasury that he elect this option The Library of Congress will want the extra copy of the book and the cost of cataloging the book will amount to more than $4. Determining the true names of foreign authors and securing the other information necessary to catalog foreign books is an expensive matter. It is much more economical to have the foreign national library, which must catalog the book for its own purposes, print additional cards to send to the Library of Congress, than for the Library of Congress to do the research necessary to make the card. The total number of foreign works now received each year for copyright is about 3,000, so that the amount of revenue involved is in the neighborhood of $12,000.

5. Section 215: The last part of this section permits an American copyright owner to use the facilities of the United States Copyright Office to assist him whenever arrangements have been made with foreign countries which will permit the Copyright Office to facilitate deposit or registration.

This provision is an extension to other countries of the facilities which have been available for securing copyright registrations in El Salvador since 1908, when the Treaty of Mexico City of 1902 was ratified. The Library of Congress has exchange arrangements with many national libraries and is equipped to perform this service for many countries. The act does not require the American copyright owner to use the facilities of the Copyright Office unless he so desires.

THE LIBRARY OF CONGRESS, LEGISLATIVE REFERENCE SERVICE, Washington 25, D. C., February 23, 1949.

EFFECT OF THE HAVANA CHARTER ON THE MANUFACTURING CLAUSE OF THE COPYRIGHT LAW

1. A hasty reading of the Havana Charter might lead one to conclude that since the manufacturing clause of the copyright law is in the nature of an import restriction it would be nullified by section 1 of article 20 of the Havana Charter, which reads as follows:

"No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any Member on the importation of any product of any other Member country or on the exportation or sale for export of any product destined for any other Member country."

More careful analysis, however, raises doubt as to whether such a conclusion is correct. In fact, there seems to be reason to argue that since the manufacturing clause is in the nature of a limitation on a restrictive right (monopoly through copyright) it is not itself a restriction in the sense in which that term is used in article 20. The reasoning is developed in the following paragraphs.

2. Sections 106 and 107 of the copyright law.—Copyright, a government monopoly, is necessarily restrictive of imports. Section 106 of the copyright law which forbids the importation of works bearing false notice of copyright, of piratical copies of copyrighted works, is necessary to give meaning to the copyright monopoly itself. Section 107, which forbids the importation of works not produced in accordance with section 16 of the act (the manufacturing clause) likewise gives support to the manufacturing clause. There can be no doubt that such prohibitions are restrictive of international trade. The question is whether the copyright law and the manufacturing clause are themselves in violation of the Havana Charter. If not, there is a good reason to conclude that sections 106 and 107 of the copyright law are not in violation of the charter since they are necessary implementation devices.

3. The Havana Charter exempts copyright.-Nothing in the Havana Charter forbids copyrights, as such. In fact, they are specifically exempted in article 45, section 1 (v), by the following language:

"Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between Member countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Chapter shall be construed to prevent the adoption or enforcement by any Member of measures

* * *

"(v) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Chapter, including those relating to customs enforcement, the enforcement of monopolies operated under Section D of this Chapter, the protection of patents, trade marks and copyrights, and the prevention of deceptive practices

* *

Also, in article 46, section 3 (f), member governments are denied the right to extend copyrights to matters beyond the legitimate scope of such grants. The language is as follows:

"2. In order that the Organization may decide in a particular instance whether a practice has or is about to have the effect indicated in paragraph 1, the Members agree, without limiting paragraph 1, that complaints regarding any of the practices listed in paragraph 3 shall be subject to investigation in accordance with the procedure regarding complaints provided for in Articles 48 and 50, * *. "3. The practices referred to in paragraph 2 are the following:

*

*

"(f) extending the use of rights under patents, trade marks or copyrights granted by any Member to matters which, according to its laws and regulations, are not within the scope of such grants, or to products or conditions of production, use, or sale which are likewise not the subjects of such grants;"

4. The copyright law does not forbid the importation of either uncopyrighted or copyrighted materials, provided the terms of the copyright law are observed. Thus, there is nothing to prevent a British publisher from selling books or periodicals in the United States market without`enjoyment of the monopoly privilege conveyed by copyright.

5. Even though the manufacturing clause, considered narrowly, is itself a trade restriction, it is really a limitation on a monopoly grant. That is, it restricts the extension of the copyright privilege to books and periodicals actually manufactured in the United States (except those in languages other than English).

6. Analogy to "tariff" quotas.-There is some similarity between the relationship of the manufacturing clause to the privilege of copyright and the use of "tariff" quotas to limit the reduction of a tariff rate under the Reciprocal Trade Agreements Act. They are not quotas in the restrictive sense used in the Havana Charter; they are, rather, limitations on liberalizing tariff concessions intended to expand trade.

By way of illustration, the United States-Canadian Trade Agreement of 1939 lowered the United States rate of duty on milk from 61⁄2 cents per gallon to 31⁄4 cents per gallon, but confined the reduction to 3,000,000 gallons per calendar year. There was no restriction of imports beyond 3,000,000 gallons but such imports had to pay the full 6-cent rate. The 3,000,000-gallon figure is known as a "tariff" quota as distinguished from the ordinary quota device.

That "tariff" quotas are not included within the meaning of article 20 of the Havana Charter is indicated by the fact that they are specifically mentioned in section 5 of article 22 where it is provided that such quotas shall be subject to the same provisions regarding nondiscriminatory administration as are regular quotas. It would manifestly twist the intent of article 20 were it to be interpreted as forbidding the use of such a device.

Although argument by analogy is not always convincing, it might be worth while to place side by side the principal characteristics of "tariff" quotas and the

manufacturing clause of the copyright law. Such a comparison serves to bring into clearer relief both the similarities and the differencies between the two.

There are, of course, differences between the two cases. Even if the duty is reduced on a quantity of milk, additional milk can still enter under the old rate of duty. As soon as the tariff quota is filled the rate automatically reverts to its former level and the imports can continue. In the case of the copyright, however, the foreign publisher must make up his mind and choose between manufacturing in the United States under copyright protection or taking his chance on selling an uncopyrighted work.

The proposed bill, however, makes it easier for him to choose by extending the period of ad interim copyright protection.

Although argument by analogy is frequently fallacious, there seems in this case to be considerable parallelism between the manufacturing clause and "tariff" quotas. Accordingly, to the extent that the manufacturing clause is merely a limitation of a monopoly privilege it would seem to be excluded, technically, from the ban on quantitative restrictions set forth in article 20 of the Havana

Charter.

However, to the extent that the manufacturing clause is not necessary to insure the monopoly privilege bestowed on authorship by the copyright process but is, rather, intended to protect a segment of domestic labor and capital against foreign competition it would appear to be inconsistent with the spirit of article 20 of the Havana Charter.

In any event, since H. R. 2285 would liberalize the manufacturing clause of the copyright law, its enactment would appear to be consistent with the over-all intent of the Havana Charter.

HOWARD S. PIQUET, Senior Specialist, International Economics.

AUTHORS LEAGUE OF AMERICA INC.

Hon. EMANUEL CELLER,

Chairman of the Committee on the Judiciary,

New York, N. Y., March 3, 1949.

House of Representatives, Washington, D. C.

DEAR CONGRESSMAN CELLER: The views which we hold concerning H. R. 2285 were expressed at the hearing on February 25. Under ordinary circumstances, we would endorse most heartily the proposal to relax the rigid requirements of section 16 of the copyright code, commonly described as the manufacturing clause. In principle, we endorse that objective as a remedial measure, although we still hope that the time may come when it will be found consistent with our national interest to eliminate these restrictions entirely. We have the following suggestions to make:

1. We oppose that portion of the bill which appears on page 4, lines 7 to 19, inclusive. A period should be inserted after the word "work" on line 6, and the balance of section 3 should be eliminated.

2. Lines 1 to 6 on page 4 should be rephrased as follows: "That if the work be one of foreign origin, and if the application for registration be made within 1 year from the date of publication abroad, then the deposit of an extra copy of said work shall be accepted by the Register of Copyrights in lieu of and in satisfaction of the payment of the fee of $4."