Berne under the terms of which "the determination of the holder of the copyright in a cinematograph work is reserved to the legislation of the country in which the protection is sought;" that colorization of the film was a distortion of the work not contemplated at the time the contract was entered into; and, even if it had been, the gravity of the harm done to the work violated the public policy of the forum (France's "ordre public") rendering void any contractual stipulation to the contrary. Defendants, the parties associated with the licensor/licensee interests, argued that the Berne Convention did not affect American contracts entered into before the effective date of adherence and was without any impact on the identification of the author of the film and that the application of Article 14bis (2) of the Berne Convention did not preclude the French judge from applying American law in order to identify the author.

In this test case of the choice of law, which ultimately went to the highest French court, there were questions of authorship, including the eligibility to claim the right, the scope of moral rights protection, and which country's law should be applied to

address each issue.

The lower courts that heard the case found for the plaintiffs and issued a preliminary injunction prohibiting the broadcast of the colorized film in France.

At the second level, the Paris Court of Appeals reversed and held for the defendants. In so doing this court announced the plaintiff's eligibility to enjoy protection was determined by the country of the work's origin. The Court also felt that applying U.S. law would not violate strongly held French public policy. Although Art 14bis (2) of the Berne Convention was on point, the appellate court felt that application of Art. 14bis(2) in order to determine ownership rights in motion pictures would undermine the general purpose of the Berne Convention, which is to promote international commerce in works of authorship.45

Ultimately France's Supreme Court, the Cour de cassation heard the case on May 28, 1991, and reversed the appellate decision.46 In its brief opinion, the French Supreme Court ruled that French law directly governs all questions of author's rights of integrity and attribution regardless of what territory is the country of origin. The Court did so without really discussing the law of the country of origin. As commentators noted:

The Court has...stressed the international applicability of the French concept of authorship and of these moral rights, whatever the country of the work's origin, the nationality or domicile of the work's creators, or the law governing the contract between creators and grantees.47

As this litigation went through the French courts another commentator noted that it threw

...light on the gaps in the Berne Convention. Owing to the contradictory provisions of this convention and in the absence of clear provisions relative to the ownership of rights, even countries like France, that pride themselves on defending the rights of authors, can legally expropriate the rights of copyright owners of complex works of foreign origin such as cinematographic or computer works.48

The French Supreme Court has ruled in favor of the director, but the matter is far from settled. The Supreme Court remanded the case to the Court of Appeals of Versailles for a decision on the merits of the moral rights claim. Also the litigation continues to provoke a great deal of commentary.49 It is clear from tracking this one case that the ambiguities have not been resolved.

44 Art 14bis(1) provides that a cinematographic work, once made, is protected as an original work and the copyright owner enjoys the same rights as other authors of original works.

Art. 14bis(2Xa) provides: "ownership of copyright in a cinematographic work shall be a matter for legislation in the country where protection is claimed."

45 Judgment of July 6, 1989, Cour d'appel, Paris, 143 R.I.D.A. 205(1989).

48 Judgment of May 28, 1991, Cass. civ. law, 1991 La Semaine Juridique (Juris-Classeur Periodique) J.C.P.II 21731. An English translation of the decision appears in the appendix to J. Ginsburg and P. Sirinelli Authors and Exploitations in International Private Law: The French Supreme Court and the Huston Film Colorization Controversy., 15 Columbia-VLA Journal of Law & the Arts 135 (1991).

47 See Ginsburg & Sirinelli at 137. The case was then remanded to the court of Appeals of Versailles for a decision on the merits of the moral rights claim.

48 Bertrand at 9-10.

49 Id. This case has provoked a great deal of thoughtful comment. See also Ginsburg and Sirinelli supra note 48; J. Ginsburg and P. Sirinelli, Author, Creation and Adaptation in Private International Law and French Domestic Law. Reflections Based on the Huston Case, 150 Revue Internationale du Droit D'Auteur 2 (1991)

B. EROSION OF NATIONAL TREATMENT THROUGH RECIPROCITY OR MATERIAL

RECIPROCITY

As discussed above there is a great deal of concern that national treatment, the basic principle under which international copyright agreements developed and flourished, is being eroded.

One commentator, who feels that national treatment is being eroded, observed:

Intellectual property has grown from twin roots. One-idealist in its thrust-recognizes the inherent value of individual creativity. The other— bred from utilitarian stock-looks to the economic and social benefits which are designed to flow from market protection. The tendency of the former is towards universality; its finest flowering was perhaps the French droit d'auteur, which offered protection to the authors of the world without distinction of nationality even in advance of bilateral or multi-national relations with other countries. The tendency of the latter is towards a narrow reciprocity: it sees no reason to give rights to foreigners whose own law does not provided equivalent benefits in return.50

Professor Cornish goes on to urge, as other commentators did earlier, that in the long run reciprocity may not be in the best interest of a country. He bemoans the zeal with which some countries have embraced it, and he notes that the United States elapsed into reciprocalism with its Semiconductor Chip Act, and this tendancy has spread to the EC directives, and proliferated in bilateral agreements in which one country promises to give a second better treatment than it does a third country.51

He concludes:

What will we do to our small but perfectly formed "new" right if some other country says that it is not good enough for them to offer reciprocity? The game is one that each country may play according to its own lights, and that is what led Stephen Ladas long ago to mark it down as dangerously disruptive of good international relations.52

Professor Cornish is not the only one to urge that "reciprocity should be used sparingly" and "that the... more generous offer of national treatment has much to commend it." 53

In the game of charge and countercharge as to who started down the slippery slope toward reciprocity, still another commentator has suggested that the United States and other common law countries are moving toward protection of author's rights while civil law countries are moving toward protection of economic rights.54

IV. CONCLUSION

You have before you the massive task of looking at all of these issues and determining the strengths and weaknesses of national treatment. I would close with an affirmation by a renowned copyright expert, Elisabeth Steup of Germany.

Certainly, a solution restricted to nationals may give national authors an immediate advantage and it is therefore very alluring. But in my opinion it is shortsighted, since solutions restricted to national authors will set examples for other national legislators and initiate a backward development from international protection to nationalism at a time when the international exchange in culture is growing and the international protection of authors is more needed than ever before.55

By solutions "restricted to nationals," Dr. Steup means reciprocity-based on legislation.

Dr. Steup delivered her affirmation of national treatment in 1977, but it holds true for today and is still important as we seek to protect the creativity of all authors.

In this statement, the Copyright Office has tried to place in context the issue of national treatment as applied in existing treaties and in several pending proposals.

62 Id. at 100, (emphasis added).

63 Id. See generally Ladas, supra note 1; Steup, supra note 7.

Theodore M. Shapiro, Droit de Suite: An Author's Right in the Copyright Law of the European Community, 4 ENT LR 118, 119 n. 5.

68 Supra, note 7 at 290.

APPENDIX 3.-STATEMENT OF SOFTWARE PUBLISHERS ASSOCIATION ON QUESTIONS CONCERNING A POSSIBLE PROTOCOL TO THE BERNE CONVENTION AND QUESTIONS CONCERNING A POSSIBLE INSTRUMENT ON THE PROTECTION OF RIGHTS OF PERFORMERS AND PRODUCERS OF PHONOGRAMS, APRIL 29, 1993

The Software Publishers Association ("SPA") is the principal trade association of the personal computer software industry, with offices in Washington, D.C., and Paris, France. SPA has over 1,000 members, including both large companies and hundreds of small companies. Its members represent the leading developers and publishers of personal computer products in the business, consumer, and education software markets.

We appreciate this opportunity to express our views to the Subcommittee. As requested, we will confine our remarks to those of the proposals in the WIPO documentation1 for the upcoming Meetings of the Committees of Experts in Geneva that concern an express acknowledgement in a Berne Protocol of the copyright owner's exclusive right of distribution, including importation, and the adoption of a similar right under the proposed New Instrument.

We agree with the WIPO Secretariat's assessment 2 that a right of first distribution and a right of importation are inseparable corollaries to the right of reproduction that the Berne Convention explicitly mandates.3 The exclusive public distribution right that U.S. law grants under 17 U.S.C. § 106(3) includes, with limited exceptions, both the exclusive right to import copies (id. § 602(a)) and the exclusive right to transfer possession of copies (the rental right), for direct or indirect commercial advantage, by rental, lease or lending (id. § 109(b)). Under our law, the importation right pertains to all works, the rental right to only sound recordings and computer programs. *

Our views on the recognition of the distribution and importation rights in the Berne Protocol apply as well to the adoption of those rights in the New Instrument. Although most of our members are not in the phonogram, or sound recording, business, many of our members are now-and many more in the future will be in the multimedia business. The digital "ones" and "zeros" of one class of copyrighted works are no different than those of another class. As digital technology develops, the legal and business treatment of the "ones" and "zeros" of one class of works must take into account how the "ones" and "zeros" of all other classes are treated.

A. IMPORTATION

We believe that under copyright law the copyright owners should have the right to determine where and how they market copies of their computer programs. We therefore agree with the WIPO Secretariat that the Protocol should state explicitly that the Berne text obligates members of the Union to protect the copyright owner's exclusive right of first distribution. For the same reason, we also support the Secretariat's proposal that, in recognizing the distribution right under Berne, the Protocol include a specific recognition that the distribution right embraces an exclusive importation right. The WIPO Memorandum indicates appropriately that the exclu

1 Questions Concerning a Possible Protocol to the Berne Convention Part III. New Items (Memorandum Prepared by the International Bureau for Committee of Experts on a Possible Protocol to the Berne Convention for the Protection of Literary and Artistic Works, 3d Sess., June 2125, 1993), Doc. No. BCP/CE/II/2-III (March 12, 1993) (“WIPO Part III Memorandum"); Questions Concerning Possible Instrument on the Protection of the Rights of Performers and Producers of Phonograms (Memorandum Prepared by the International Bureau for Committee of Experts on a Possible Instrument on the Protection of the Rights of Performers and Producers of Phonograms, June 28-July 2, 1993), Doc. No. INR/CE/I/2 (March 12, 1993) (“WIPO New Instrument Memorandum"). All citations to specific paragraph numbers are to the WIPO Part III Memorandum unless otherwise indicated.

2 See 19 13-23.

3922 ("[T]he right of first distribution is an inseparable corollary to the right of reproduction."); 23 ("[T]he existence of a right of importation may be deduced from the present text of the Berne Convention as an inseparable corollary to the right of reproduction.").

We strongly support the rental right under U.S. law. However, rather than expand now on the workings of the Computer Software Rental Amendments Act of 1990 since its enactment on December 1, 1990, we look forward to cooperating with the Register of Copyrights in the Register's preparation of the report to be submitted to Congress on that subject by December 1, 1993, under 17 U.S.C. 109(bX2XB).

See 49(a) and (bXi) of the WIPO Part III Memorandum.

sive importation right applies to copies made either with or without the copyright owner's authorization. 6

We assume that there is no intent to permit piratical copies to be imported as part of a person's luggage. It would therefore be desirable to clarify that the exception to the importation right for copies imported in a traveller's luggage for personal non-commercial use, does not extend to piratical copies. One way to do this would be to insert after the word "importation" in 149(b)(vii) the phrase: "of copies made with the (implicit or explicit) authorization of the author or other owner of copyright." As amended, the proposed language would be equivalent to the exception provided in 17 U.S.C. § 602(a)(2).

We recommend that the parenthetical restriction "(for distribution)" be deleted from the description of the importation right in ¶49(a). The aggregate effect of individual acts of unauthorized importation can amount to a distribution, and harm the copyright owner even though none of the individual acts is committed for the purpose of further distribution. Exceptions to the importation right can be provided more appropriately in the manner of ¶49(b)(vii) and 17 U.S.C. §602(a).

It is vital to the software industry that the exclusive right of importation enable the copyright owner to control parallel importation (i.e., of copies lawfully made)— and not merely the importation of infringing copies. For example, software copyright owners may use copy-protection to reduce unauthorized copying in countries where piracy is a greater risk than in other countries. Unauthorized importation of noncopy-protected versions into those countries where there is high risk of piracy can significantly increase the rate of piracy. On the other hand, unauthorized importation of copy-protected versions into countries where the copyright owner distributes copies without such a device disturbs unsuspecting users and may harm the copyright owner's "user-friendly" reputation in those countries.

In addition, features that are included in programs distributed domestically must sometimes be removed from export versions of the same program in order to comply with U.S. export regulations. Importation and sale of these "defeatured" export versions in the U.S. would thwart consumers' legitimate expectations and harm the copyright owner's reputation.

Still another reason that the software copyright owner must have control over parallel importation is that of pricing. Software developers introducing software products into new markets, especially developing countries, may wish to test the market at a lower price than they charge elsewhere for the product, lest pricing at the level otherwise required provide additional incentive for piracy. But the developer must be able to prevent the parallel importation that brings those lower-priced copies back into its existing market countries. Otherwise it will be in competition with its own copies and substantially undercut its existing market.

B. "DIGITAL DELIVERY"?

A Berne Protocol should clarify several issues. For example, it should state that rights under Berne and the Berne Protocol embrace transmission or retrieval of works in digital electronic form. The WIPO Memorandum on the proposed New Instrument discusses the concept of "Digital Delivery" of works, but does not assimilate that concept explicitly to any of the exclusive rights in ¶56.8 Digital delivery is an important means of exploiting all works in digital form, not merely sound recordings.

An exclusive right of digital delivery of works is an inseparable additional corollary to existing rights under Berne. The possession of physical copies is not transferred when works in digital form are transmitted to users or made available for users to retrieve. Nor need there be any transfer of ownership of a copy. In many instances the exploitation of a work in this fashion will necessarily involve reproduction of the work-either a temporary copy in volatile memory or a permanent copy on a magnetic medium. In sum, the work's presence, in practical effect, has been multiplied. Digital Delivery may thus prejudice the copyright owner's legitimate interests unreasonably if conducted without the copyright owner's authorization. In the future, digital delivery may not merely "conflict" with the work's "normal exploitation" but may well be the normal exploitation of many works.

Any Protocol should explicitly recognize a copyright owner's exclusive right to control all means, now known or later developed, by which works in digital electronic

•q49(a), (bXvi).

"The term "Digital Delivery" is introduced in ¶22 of the WIPO New Instrument Memorandum. As described below, our concerns cover a broad range of means by which works in digital form are or will be made available, and are not confined to the specific example in ¶ 22.

8 See WIPO New Instrument Memorandum, ¶¶ 22, 28(eXii), 56(b).