PATENTS, TRADEMARKS, AND COPYRIGHTS SEPTEMBER 4, 1974.-Ordered to be printed Mr. MCCLELLAN, from the Committee on the Judiciary, REPORT [Pursuant to S. Res. 56, 93d Cong., 1st sess.] INTRODUCTION During the first session of the 93d Congress, the Subcommittee on Patents, Trademarks and Copyrights was authorized by the Committee on the Judiciary pursuant to section 13 of Senate Resolution 56 to "conduct a complete examination and review of the administration of the Patent Office and a complete examination and review of the statutes relating to patents, trademarks and copyrights", and to submit a report of its activities in connection therewith. As part of its activities in 1973, the subcommittee studied and evaluated the 14 measures referred to it by the Committee on the Judiciary. These bills included legislation to provide for the general revision of the copyright laws and procedures, the general revision of the patent statutes and practices, the amendment of the trademark statutes, the reorganization of the administration of the Patent Office, and measures to afford private relief from the patent laws. Several of these measures were acted upon favorably by the subcommittee during the first session. The subcommittee also held public hearings on the legislation to provide for the general revision of both the patent and copyright laws and procedures. In addition, the staff of the subcommittee began an investigation into allegations of illegal and unethical promotional policies and practices existing in the record industry. The staff also provided assistance to Members of the Senate on matters relating to patents trademarks, and copyrights. 38-008 LEGISLATION A. Legislation reported by the subcommittee, passed by the Committee on the Judiciary, and approved by the Senate, but no action taken by the House of Representatives S. 71 (Mr. Gurney), for the relief of Uhel D. Polly. The current law provides that a patent application on an invention must be filed within 1 year after public use or sale in the United States. The purpose of this legislation is to enlarge the period during which public use may occur from 1 year to 2 years with respect to the subject patent. The remedy is required due to the fact that the patent agent of the application was derelict in his duties, and as a result the patent resulting from the application apparently is invalid. The subcommittee recognizes that the Government cannot guarantee the competence or integrity of patent attorneys or agents. Nevertheless. the subcommittee recommended relief in this instance where there has been an obvious and deliberate breach of the responsibilities of the patent agent, and the patent applicant had no reasonable way of protecting himself from the failures of the agent. However, the favorable action taken in this extraordinary case should not be regarded as a change in the subcommittee's general opposition to private patent relief bills, particularly those providing for exception to the general requirements of title 35. During consideration of the measure the subcommittee amended S. 71 to provide that nothing contained in the bill shall bar any person from exercising any right which vested prior to the effective date of this legislation. The subcommittee reported S. 71 favorably on May 21, 1973, and the Committee on the Judiciary reported it on May 31, 1973. The Senate passed the measure on June 7, 1973. A more complete statement of the Committee's views on this legislation can be found in Senate Report 194 of the 1st session of the 93d Congress. B. Legislation reported by the subcommittee but no action taken by the Committee on the Judiciary S. 1713 (Mr. Beall), for the relief of the Estate of Albert W. Small. The purpose of this legislation is to authorize and direct the Secretary of the Treasury to pay to the estate of Albert W. Small, out of any money in the Treasury not otherwise appropriated, the sum of $150,000 in full payment for all rights in respect to the cryptologic inventions of Albert W. Small which are now or at any time have been placed in security status by the War Department, the Department of Defense, or the Commissioner of Patents, including, but not limited to, all rights with respect to his inventions covered by patents 2,964,856 and 2,984,700 and by patent application serial No. 421,459. This measure was reported favorably by the subcommittee on September 24, 1973. C. Legislation pending in the subcommittee at the adjournment of the first session of the 93d Congress S. 1203 (Mr. Fannin for himself and Mr. Hart), to extend letters Patent Numbered 2,322,210, and for other purposes. S. 1321 (Mr. Hart), for the general reform and revision of the Patent Laws, title 35 of the United States Code, and for other purposes. S. Rept. 1135 The subcommittee held public hearings on this bill on September 11, 12 and 14, 1973. A more detailed discussion of the measure can be found elsewhere in this report. S. 1359 (Mr. McClellan), to amend section 9 of title 17 of the United States Code, regarding copyright of foreign nationals. S. 1360 (Mr. McClellan), to amend title 35 and title 17 of the United States Code to provide a remedy for postal interruptions in patent, trademark and copyright cases. S. 1361 (Mr. McClellan), for the general revision of the Copyright Law, title 17 of the United States Code, and for other purposes. Title I of this legislation provides for the general revision of the copyright law, title II establishes the National Commission on New Technological Uses of Copyrighted Works, and title III provides for the protection of ornamental designs of useful articles. Other than for the technical and perfecting amendments, the text of the measure is identical to S. 644, the copyright revision bill considered by the Subcommittee in the 92nd Congress. The Subcommittee held hearings on this legislation July 31-August 1, 1973. A more detailed discussion of the bill can be found elsewhere in this report. S. 1362 (Mr. McClellan for himself and Mr. Scott of Pennsylvania), to amend the Act to provide for the registration and protection of trademarks used in commerce, to carry out the provisions of certain international conventions, and for other purposes. This bill is known as the Unfair Competition Act. S. 1957 (Mr. McClellan), to amend title 35, Unitel States Code, "Patents", and for other purposes. The purposes of this legislation is to provide for a revision of title 35 and for an adjustment of the organization of the Patent Office within the Department of Commerce. Under the current patent law, the Commissioner of Patents is authorized to accept a late payment of an issue fee upon a showing of sufficient cause only if such payment is made within three months of the due date. In some situations the failure to make the payment was unavoidable and private bills have been introduced to direct the Commissioner to accept the late payment. This measure would eliminate the necessity for such bills by giving the Commissioner authority to accept a late payment upon a showing that the delay was unavoidable. At the present time. there are 19 positions which require Senate confirmation. This legislation would eliminate the requirement for the Senate to give its advice and consent to the position of Examiner-inChief of the Patent Office and would require Senate confirmation only of the Commissioner, the Deputy Commissioner, and the two Assistant Commissioners. The bill further provides that the number of Assistant Secretaries of Commerce shall be increased from seven to eight by the establishment of a position of Assistant Secretary of Commerce for Patents anl Trademarks. The Assistant Secretary of Commerce for Patents and Trademarks shall exofficio be the Commissioner of Patents. S. 2051 (Mr. McClellan, by request), to amend the Trademark Act to extend the time for filing oppositions, to eliminate the requirement for filing reasons of appeal in the Patent Office, and to provide for awarding attorney fees. S. Rept. 1135 S. 2469 (Mr. McClellan, by request), to carry into effect certain provisions of the Patent Corporation Treaty, and for other purposes. S. 2504 (Mr. Scott of Pennsylvania), for the general reform and modernization of the Patent Laws, the title 35 of the United States Code, and for other purposes. A more detailed discussion of the measure can be found elsewhere in this report. H.R. 7599, to amend the Trademark Act of 1946, and title 35 of the United States Code to change the name of the Patent Office to the "Patent and Trademark Office." H.R. 8981, to amend the Trademark Act to extend the time for filing oppositions, to eliminate the requirement for filing reasons of appeal in the Patent Office, and to provide for awarding attorney fees. This bill is identical to S. 1957. COPYRIGHT LAW REVISION During the first session of the 93d Congress, the subcommittee resumed hearings on legislation to provide for the general revision of the copyright laws and procedures. The legislative vehicle providing for the revision and on which hearings were held is S. 1361, a bill introduced on March 26, 1973, by the chairman of the subcommittee, Senator John L. McClellan. Title I of S. 1361 provides for the general revision of the copyright law, title II establishes the National Commission on New Technological Uses of Copyrighted Works, and title III provides for the protection of ornamental designs of useful articles. Other than for technical and perfecting amendments, the text of the measure is identical to S. 543, the copyright revision bill reported by the subcommittee in the 91st Congress. The technical amendments were necessary to change the effective dates of various provisions. The perfecting amendments consisted of the addition of a subsection to section 112 clarifying the right of nonprofit organizations to make under certain conditions copies of programs embodying copyrighted works of a religious nature; clarification of section 114 to make clear that the section prohibits the unauthorized dubbing of the sound record of a motion picture sound track; the addition of a clause in section 601 to clarify with respect to the restrictions of the importation of foreign manufactured works the application of the foreign national exemption to "works made for hire; and, the addition to chapter 8, Copyright Royalty Tribunal, of sections 808 and 809 fixing the effective date for the distribution of copyright royalties and specifying the scope of judicial review of final decisions by the Copyright Royalty Tribunal. The subcommittee held the hearings July 31 and August 1. During the two-day session, the subcommittee received testimony or written. statements from more than fifty individuals representing various creators and users of copyrighted materials. The purpose in reopening the hearings was to receive testimony on those issues on which significant developments had occurred since the previous hearings. These issues were cable televison royalty fees, carriage of sporting events by CATV, religious broadcasting exemptions, general educational exemptions, and library photocopying. Testimony on the cable television provisions of the bill focused primarily on the royalty fee schedule. The measure requires every S. Rept. 1135 cable system transmitting secondary signals under a compulsory license to pay copyright fees. The bill provides for a graduated fee schedule and specifies that a cable system shall pay copyright royalties ranging from 1% of annual gross receipts up to $160,000, to 5% of annual gross receipts totaling $640,000 or more. The legislation also specifies that the fees shall be paid quarterly to the Register of Copyrights for distribution to the copyright owners or their agents. If there is a controversy regarding the division of the royalties, the measure requires the Register of Copyrights to refer the dispute to the Copyright Royalty Tribunal for resolution of the matter. In addition to resolving disputes between claimants to copyright fees, the Copyright Royalty Tribunal, which is established in the Library of Congress, makes determinations regarding the adjustment of royalty rates paid to copyright owners by users of copyrighted works under the various systems of compulsory licensing created under the bill. With respect to cable television, the measure provides that any owner or user of a copyrighted work may file a petition with the Tribunal at the end of the three years from the effective date of the bill, and in each subsequent fifth year requesting that these rates be opened to review and possible adjustment. Representatives of the Motion Picture Association of America and the Association of Motion Picture and Television Producers testified in opposition to the rate schedule contained in the bill. They contended that the fees were too low and that the rates should be increased to provide adequate compensation to the owners of copyrighted material. It was further argued that sufficient data to determine a fair and reasonable rate to both parties was not available at the present time. Consequently, it was urged by the witnesses that the fee schedule be deleted from the bill, and the initial rates determined by the Copyright Royalty Tribunal under its arbitration procedures. Witnesses for the National Association of Broadcasters and the Association of Maximum Service Telecasters also testified in support of the proposal that the copyright fees should be first determined by arbitration and not by statute. It was their view that the Copyright Tribunal would be better equipped to resolve this complicated and complex issue to the satisfaction of copyright owners and the cable. interest. Spokesmen for the National Cable Television Association stated that Congress should establish the initial rate of copyright payments. By doing so, they argued, it would enable cable systems to become used to the concept of paying copyright fees and would also provide sufficient economic data over a three-year period to determine an equitable fee schedule. The witnesses also argued that the fees in the present schedule should be reduced by 50%. In addition, they advocated that systems with under 3,500 subscribers be exempted from payment of copyright fees. The carriage of sporting events by cable systems was also a subject on which testimony was received by the Subcommittee. In general, the bill provides that the copyright compulsory license does not apply to the carriage of a live professional sporting event if no broadcaster in the service area of the cable system has been authorized to carry the event. S. Rept. 1135 |