NEW YORK COUNTY LAWYERS' ASSOCIATION, New York, N. Y., May 17, 1979. MY DEAR SIR: Enclosed please find copy of report adopted by the Committee on Federal Legislation of the New York County Lawyers' Association on H.R. 1007. Very truly yours, RICHARD A. GIVENS, Chairman. REPORT NO. F-2-COMMITTEE ON FEDERAL LEGISLATION PROPOSED BILL TO AMEND THE COPYRIGHT ACT TO PROVIDE COPYRIGHT PROTECTION FOR IMPRINTED DESIGN PATTERNS ON SEMICONDUCTOR CHIPS RECOMMENDATION: REVISION This legislation is part of a continuing effort to give some intellectual property protection to the computer industry. Amendment of the Patent Act to achieve this is not considered likely, though perhaps some form of "petit patent" will be devised to accomplish this goal. At present, however, this proposed amendment of the Copyright Act is a useful step in the right direction. As presently drafted, the amendment would not cover anything but chips manufactured for semiconductors. The drafters have not taken account of a host of other uses of the same technology of photo-etching. A recently granted patent is attached, illustrating another use of the same technology. It is recommended that the new sentence that commences in line 6 be amended to read as follows: Such pictorial, graphic, and sculptural works shall also include the master photographic masks which are photographically enlarged or reduced and used to imprint patterns on materials that are chemically, mechanically or electronically etched or built up so as to produce complex parts, integrated circuit chips, flexwired circuitry, jewelry, etc., and include the imprinted patterns themselves even though they are used in connection with the manufacture of, or incorporated in, a useful article. Respectfully submitted, RICHARD A. GIVENS, Chairman Hon. ROBERT W. KASTENMEIER, TEXAS INSTRUMENTS, INC., Chairman, Subcommittee on Courts, Civil Liberties, and the Administration of Justice, Committee on the Judiciary, House of Representatives US Congress, Washington, D.C. DEAR MR. CHAIRMAN: We at Texas Instruments Incorporated followed with considerable interest your recent field hearings on H.R. 1007, legislation which would extend copyright protection to cover design features shown on the surface topology of an integrated circuit. Given the importance of this proposal, I am submitting the enclosed statement which outlines the reasoning which has led to our determination to recommend against passage of the legislation. I would appreciate your making it a part of the hearing record in order that the Subcommittee might have the benefit of the views of Texas Instruments. If I may be of assistance to you or your colleagues during your further deliberations on H.R. 1007, or similar proposals, I hope that you will call on me. Sincerely, GEORGE H. HEILMEIER, Corporate Research, Development and Engineering. STATEMENT OF GEORGE H. HEILMEIER, VICE PRESIDENT, CORPORATE RESEARCH, DEVELOPMENT, AND ENGINEERING TEXAS INSTRUMENTS, INC. Mr. Chairman and Members of the Subcommittee, On January 18, 1979 Representatives Don Edwards, Norman Mineta and Paul McCloskey, Jr. introduced legislation (H.R. 1007) that would extend copyright protection to the design pattern on the surface of an integrated circuit. Texas Instruments Incorporated is opposed to this proposed legislation for the following reasons: RESTRAINT ON TRADE The proposed legislation would establish a new form of protection that Texas Instruments believes would unduly restrain competition in the semiconductor industry. In addition, enactment would impede the dissemination of new technology and increase the cost to the consumer of products which utilize semiconductor industry technology. To date, the consumer has directly benefited from the semiconductor industry practice of manufacturers providing alternate sources for products introduced by their competitors. The result has been a rapid infusion of new technology and lower product costs. The proposed legislation would prohibit much of this alternate source practice, and the consumer would not benefit from price and product availability resulting from free competition, but rather would find the price and product availability sheltered under a monopoly position provided by copyright protection covering the product design. Texas Instruments believes that the new form of copyright protection which would be provided by the proposed legislation could constitute a restrictive trade practice that could be challenged in court. This holds true given the fact that the alternate source practice in the SC industry has been credited with promoting competition. For example, the FTC conducted a survey of the structure, conduct and performance of the semiconductor industry, and concluded in its January 1977 Staff Report that the industry was characterized by rapid innovation and technological change and that the freedom to provide alternate sources to products of competitors was very important. The most important feature of this industry is its rapid rate of innovation and technological change. Although it has a high rate of expenditures on research and development, those expenditures can only partially explain the rapid rate of innovation. Other features that are equally or more important are the use of second sourcing (i.e., copying), the mobility of technical personnel and the relatively low cost and ease of entry into the industry. The fact that companies can rapidly copy each other is very important. COMPLEXITY AND UNCERTAINTY The market which the SC industry serves demands that alternate sources be available for SC products. For example, OEM's (original equipment manufacturers) and the Department of Defense generally refuse to design SC products into their equipment unless there are multiple sources. To date, the practice of the SC industry has facilitated alternate sourcing and has resulted in rapid infusion of new technology into end-equipment. Under the proposed legislation, the alternate source activity permissible as "Reverse Engineering" is not clear. A profusion of litigation would seem to define the boundaries of permissible activity. A manufacturer would always have a contingent legal exposure should an argument of copyright infringement be raised. This would discourage new entrants into the industry and slow the infusion of new technology. It would also force a proliferation of formal secondsource agreements between competitors who desire to provide alternate source products. While the formal second-source agreements would obviate the legal exposure under the proposed legislation, they could increase the risk of challenge under the anti-trust laws by a disgruntled manufacturer denied a copyright license or by the Justice Department, challenging a joint development program between two competitors as constituting an agreement in restraint of trade. At the very least, enactment of H.R.1007 would impose a substantial burden on manufacturers in order to administer new license arrangements and to police against infringement. Texas Instruments does not believe that the proposed legislation (with its attendant administrative cost burden) is necessary in order to provide an incentive to conduct research and development. Rather, TI believes the economic rewards for research and development are obtained from the competitive advantage in being first to the market place with new products. INCONSISTENT WITH PATENT LAWS The patent law has been formulated to promote the progress of science and useful arts by providing protection for a new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof. The inventor receives a monopoly for 17 years, but only in return for fully disclosing the invention to the public and following an examination for patentability. The public, of course, is free to use the invention after the expiration of the patent. The proposed legislation directly relates to "science and useful arts"-the province intended to be covered by patent law. Further, the proposed legislation would provide even broader protection than the patent law inasmuch as no examination would be required prior to grant of the right, and since the protection would extend beyond the term of a patent. By way of illustration, the patent could disclose the chip design layout of an integrated circuit. Under the patent system, the public would be free to use the invention upon expiration of the patent. Features of the surface topology, however, would also be covered in a copyright under the proposed legislation such that any licensee under the patent may also be infringing the copyright. This would have the effect of extending the patent monopoly beyond its 17 years, since the copyright owner could still foreclose competition after 17 years, relying on his copyright. Even if the monopoly granted by the proposed legislation were limited to less than 17 years, the uncertainty of enforcement and other disadvantages mentioned make this proposed legislation undesirable. In summary, Texas Instruments believes that the proposed legislation is not necessary to provide an incentive to carry on research and development. TI believes it would be an undue restraint on trade, would add substantial cost and confusion to doing business in the SC industry, and would create rights which are inconsistent with the purpose and application of the U.S. patent laws. |