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rials. At the same time we recognize the political realities of the present situation, and accordingly accept and support the present language of Section 601 in the interests of facilitating passage of the bill as a whole. We do express the hope that this section can be eventually eliminated from the statute, as it constitutes a continuing temptation to developing countries to impose a variety of protectionist measures that work generally to restrict the international flow of information and educational materials.

U.S. COUNCIL FOR AN OPEN WORLD ECONOMY, INC.,

Washington, D.C., September 4, 1975.

REPEAL THE “MANUFACTURING CLAUSE" OF THE COPYRIGHT LAW

(By David J. Steinberg, President, U.S. Council for an Open World Economy)

The copyright law's "manufacturing clause," first enacted in 1891 and liberalized several times over the past 84 years, basically requires (with certain exceptions) that a person desiring full U.S. copyright protection for a book in the English language must have that book manufactured in the United States. Referred to by its supporters as a justifiable condition to the granting of a monopoly, the "clause" is in fact a trade barrier with Buy American features. It does not belong in the copyright law at all, whether or not justifiable as economic policy. To the extent that it has had any economic justification, it should be only a marginal, transitional part of a coherent policy of government assistance to an industry whose problems and needs have been carefully diagnosed. This has never been U.S. practice regarding this or any other trade barrier.

Repeal of the "manufacturing clause" is a long overdue reform that belongs in the copyright law revision now being considered by Congress. The slight modifications of the “clause" in the current bill, whatever their merits, are not enough. The best course would be total repeal of the "clause,” or at least the programing of repeal-scheduling it to take effect perhaps a year or two from the date of enactment of the new legislation (though not precluding interim enforcement of whatever improvements now in the bill are adopted).

The decision to repeal, worthy for its own sake, could be helpful in inducing other countries to discontinue certain practices impeding U.S. exports, but should not be made conditional on such concessions. It could (and should) set in motion a coherent government assessment of the strengths and weaknesses of the printing industry and the most constructive form of government assistance, if assistance is needed at all.

Retaining the "manufacturing clause" in one form or another is not only a barrier to commerce. It is also (by seeming to respond to the problems of the printing industry) a barrier to direct, constructive attention to the real needs of the industry for whose benefit this aged protectionism has been kept on the books. It is also a barrier to American authors unable to find publishers in the United States, and a barrier to American publishers eager for greater flexibility with which to achieve greater efficiency and greater market opportunities.

It is long past time to free the copyright law, the book writers and the publishing industry from this encumbrance. It is time for enlightened attention to the best interests of all the people whose lives and livelihoods are affected by this issue—the needs of the printing industry no less than those of anyone else,

(This statement presents the writer's personal views and does not necessarily, in every detail, reflect the views of the U.S. Council for an Open World Economy or the Council's trustees. The Council is a nonprofit organization engaged in research and public education on the merits and problems of achieving an open international economic system.)

COUNIHAN, CASEY & LOOMIS,

Washington, D.C., October 24, 1975. Re: H.R. 2223, Copyright Bill. HERB FUCHS, Esq., Counsel, House Judiciary Subcommittee on Courts, Civil Liberties and the

Administration of Justice, Rayburn Building, Washington, D.C. DEAR HERB: We understand that you will probably only have one more day of hearings on H.R. 2223 (Ms. Barbara Ringer will testify as Register of Copyrights on October 30, 1975) and then the Subcommitte will go to mark-up.

Mr. Horner and I appreciated very much the opportunity to meet with you on September 12, 1975 to discuss some of the technical aspects of the manufacturing clause issue which we did not have adequate time to present in our oral testimony before the Subcommittee on September 18, 1975.

I thought this might be a good time to re-express our interest in three technical issues involving the manufacturing clause in Section 601 of the bill. At pages 12 to 14 of our statement (enclosed), note the three technical issues involving (1) "work for hire, foreign subsidiary of domestic employer", (2) definition of term "literary material", and (3) definition of the term “preponderantly" as it relates to nondramatic literary material.

We would respectfully request that these three clarifications be made in the Committee Report or possibly in the form of technical amendments to the bill itself if you feel that is more appropriate.

Should you have any questions on this, we would be glad to answer them.
With best regards.
Sincerely,

STEPHEN F. OWEN, Jr.,
General Counsel, Book Manufacturers' Institute.

STATEMENT REGARDING THE CANADIAN EXEMPTION, SUGGESTED FOR INCLUSION IN

THE COMMITTEE REPORT

Canada is specifically exempted from the provisions of Section 601, the so called "manufacturing clause" of the bill. This exemption is included as a result of an agreement reached in Toronto in 1968 among representatives of American and Canadian publishers, printing trade unions and book manufacturers. Upon addition of the Canadian exemption in American legislation, that agreement contemplates Canadian adoption of the Florence Agreement, prompt removal of the punitive Canadian tariffs on printed matter and the removal of other Canadian restraints on printing and publishing trade between the two countries. The Canadian exemption is included in Section 601 in the expectation that these changes will be made. If for any reason Canada does not move promptly to carry out its obligations under the Toronto Agreement, we would expect Congress to remove the Canadian exemption.

Mr. KASTEN MEIER. I would again remind the witnesses that there are time limitations. I don't like to break into your presentations, but if you are unaware of your time limitation, Mr. Fuchs, our counsel, will be happy to inform you. I say this because it is our hope to cover four subject areas this morning, and we cannot do so if people exceed the time allotted to them.

I would now like to call Mr. Irwin Karp, counsel, Authors League of America, Inc.

TESTIMONY OF IRWIN KARP, COUNSEL, AUTHORS LEAGUE OF

AMERICA, INC.

Mr. Karp. Mr. Chairman, I ask that our complete statement be included in the record, and I will try to summarize in the time allotted to me the points made by the Authors League on the manufacturing clause.

The restrictions and penalties of the manufacturing clause apply to two classes of work; namely, books and periodical contributions, and only to those authorized by U.S. citizens and domiciliaries.

The rights of these authors are used as hostages to compel publishers to manufacture U.S. editions of books by American authors in this country. Forfeiture of the author's rights here is the penalty for noncompliance.

Your committee, in 1967, concluded that there is no justification on principle for the manufacturing clause and recommended its ultimate repeal. The Authors League agrees. It urges the clause be phased out of the Copyright Act no later than the end of 1982.

The league reluctantly accepts the new version of the clause in section 601 as a compromise. It eliminates some injustices, and properly allows manufacture in Canada. But it still inflicts harsh restraints and injury on American authors of books who publish abroad.

We recommend two changes in the clause, which will eliminate some of those damages to these authors; injuries which do not even serve the

purpose of the clause. Our statement also discloses the reasons why the clause is unconstitutional, probably, because its arbitrary and discriminatory classifications violate the fifth and first amendments. Time being short, I will not summarize those.

I do wish to call your attention to the two changes we recommend in section 601, on page 5 of our statement. The first would exempt from the manufacturing clause copies of an American author's book which were produced abroad by a foreign publisher to actually publish the work outside the United States and was not a citizen or domiciliary of the United States. More than 2,000 copies, under these circumstances, could be imported without forfeiting protection of the author's U.S. publishing rights.

The purpose of the manufacturing clause is to compel publishers to manufacture U.S. editions. Primarily, the purpose, as a previous speaker pointed out, is to prevent U.S. publishers from sending works abroad for printing and other manufacturing activities. But American authors do not have books published abroad by foreign publishers in order to deprive U.S. printers of work. American authors publish abroad because they reside there, or because they cannot find an American publisher.

The manufacturing clause cannot wring blood from this stone. It is therefore pointless to prohibit U.S. authors, whose works are published abroad, from having more than 2,000 copies of these works from being distributed to American readers.

The restriction in this area simply denies them the right to reach the American public, or compels them to forfeit protection for their U.S. publishing rights in order to get those books into the country. It must be emphasized that while the new clause would not destroy U.S. author's copyrights completely as the present clause does, it stiĩl deprives American authors protection for their publishing rights if more than 2,000 copies are imported.

Most American authors derive all of their income solely from their publishing rights. So this modification, while laudatory, is probably useless to 80 or 90 percent of the American authors.

I thank you for the opportunity of presenting this brief statement. [The prepared statement of Irwin Karp follows:]

STATEMENT OF IRWIN KARP, COUNSEL, THE AUTHORS LEAGUE OF AMERICA

SEC. 601-"THE MANUFACTURING CLAUSE" Mr. Chairman, my name is Irwin Karp. I am counsel for the Authors League of America, the national society of professional writers. The Authors League appreciates this opportunity to state its views on the "manufacturing clause"Sec. 16 of the present law, and Sec. 601 of the Copyright Revision Bill. A majority of the League's members write books, and poems, stories, articles and

57–786—76—pt. 3—21

other contributions to periodicals. The restrictions and penalties of the “manufacturing clause" apply only to these classes of copyrighted works, and only to those authored by United States citizens or domiciliaries.

Although American authors are primary victims of the manufacturing clause, they are innocent casualties of an economic conflict between publishers and the American printing industry and unions. The present clause, and the proposed modification, seek to compel publishers to manufacture U.S. editions of American authors' books in this country. Both use the author's rights as a hostage for that purpose.

As your Committee's 1967 Report stated, “there is no justification on principle for a manufacturing requirement in the copyright statute ..." Sec. 601 is a "compromise” provision. As your Committee recommended, the clause ultimately should be repealed. The Authors League agrees. It believes that the manufac. turing limitations should be phased out of the Copyright Act, eliminated before a specified date–e.g. December 31, 1982. Although Sec. 601 eliminates some inequities of Sec. 16, it nonetheless imposes harsh and unjustifiable restrictions on American authors' rights. Moreover, both sections may violate the Fifth and First Amendments. And the Authors League believes that changes should be made in Sec. 601 to eliminate pointless injury to American authors.

THE PRESENT LAW

Sec. 16 prevents an American author from securing U.S. copyright in a book or periodical contribution if the first edition is manufactured abroad. If ad intcrim copyright is secured, the author has a 5 year reprieve to have an edition manufactured and published here. Failing that, all U.S. protection is lost. Sec. 16 also deprives American authors of all U.S. protection if foreign-made copies are distributed here, even though U.S. copyright was previously secured by publishing an American-made edition in this country. Many American authors have been deprived of U.S. copyright protection by the manufacturing clause.

TIE REVISION BILL

Sec. 601 would eliminate some of the onerous provisions of Sec. 16. American authors would obtain U.S. copyright in books and other nondramatic literary material, whether manufactured here or abroad. The new manufacturing requirements would be satisfied by production in the United States or Canada. And the Authors League strongly supports the inclusion of Canadian manufacture as some relief from the limitations that remain in Sec. 601.

Sec. 601 still imposes manufacturing restrictions on the rights of American authors of books and other nondramatic literary material. No more than 2,000 foreign-made copies may be imported. If additional copies are distributed here with the author's permission, he loses protection for his U.S. publishing rights. Anyone could publish his book without his permission, and without paying him. Protection against further infringements can only be recovered by publication of an authorized edition manufactured here or in Canada.

Importation of more than 2,000 copies would not completely destroy an American author's copyright, as Sec. 16 now provides. The right to make motion picture or television versions, and other non-publishing rights would not be impaired. But most American authors of books earn their income solely from their publishing rights. Thus, the new clause would continue to penalize those U.S. writers whose books were published abroad.

THE DAMAGING EFFECTS OF SEC. 601

American authors do not have their books published abroad in order to have the printing done more cheaply. The production of a book, including the printing, is the publisher's responsibility. The publisher, not the author, selects the printer and negotiates the price for manufacturing the book; the publisher, not the author, pays this and the other costs of production.

American authors turn to foreign publishers when they reside, work or study abroad. They choose publishers in the same country because the relationship is too personal to conduct at long distance. Sec. 601 recognizes this reality by exempting from its restrictions all foreign authors and any American author domiciled abroad for more than one year preceding importation and distribution of foreign-made copies of his book in this country. There is another reason why American authors turn to foreign publishers—they cannot find an American publisher willing to issue their books,

Sec. 601 would deny many of these authors the right to disseminate their works to American readers. An author who published abroad, and could not find an American publisher to issue his book here, would be barred from distributing more than 2,000 foreign-made copies-on penalty of losing protection against infringing editions,

Moreover, Sec. 601 would deny some American authors protection for their U.S. publishing rights. Foreign publishers sometimes may insist, as a condition for accepting a manuscript, on authorization to export copies to this country; and will manage to distribute them here. American authors who must publish abroad would thus face two alternatives: (i) granting that authorization, and losing protection against infringing American editions; or (ii) denying authorization, losing the sole opportunity of publication which the foreign publisher represents. Other American authors, ignorant of the manufacturing requirements, will grant foreign publishers these export rights. Sec. 601 will prove, as Sec. 16 has, a trap for unwary U.S. writers.

THE MANUFACTURING CLAUSE AND THE FIFTH AMENDMENT

The classification of authors and types of works subject to the manufacturing clause is so arbitrary and discriminatory that it well may violate the Fifth Amendment. Shapiro v. Thompson, 394 U.S. 618 (1969) repeated this quotation from two prior opinions :

“[W]hile the Fifth Amendment contains no equal protection clause, it does forbid discrimination that is ‘so unjustifiable as to be violative of due process.' Schneider v. Rusk, 377 U.S. 163, 168 (1964); Bolling v. Sharpe, 347 U.S. 497 (1954). [at. p. 642]

In Shapiro v. Thompson, the Court ruled unconstitutional an Act of Congress which established a one-year residence requirement for welfare assistance in the District of Columbia, because the discrimination involved in the statutory plan of classifying new and old residents violated the Due Process Clause of the Fifth Amendment. In Schneider v. Rusk, the statute was held to violate the Due Process Clause because it discriminated between two classes of American citizens who resided abroad, favoring the native born over the naturalized.

Sec. 601 (and Sec. 24) impose two sets of discriminatory classifications on one class of American authors. First, American authors of books are subjected to their restrictions and penalties, Sec. 601 exempts from those provisions all foreign authors (except those domiciled here). Under Sec. 9 of the present law : British, French, Soviet and other authors from the nations belonging to the Universal Copyright Convention are exempt from the restrictions of Sec. 16 (except those domiciled here). Under Sec. 601, and the present law, books in English by these foreign authors, made abroad, may be imported and distributed in the United States—without any limitation on quantity, without any diminution of V.S. pullishing or other rights.

This utter discrimination finds no justification in the Copyright Clause of the Constitution which authorizes the granting of exclusive right(s) to “Allthors", without excluding any nationality. Nor does the discrimination find justification in economic reality. Books by foreign authors, when sold in this country, can be made here or abroad. Importation of foreign-manufactured copies of books by those authors will deprive American printers of the work they would have if the copies were produced here.

Second, the manufacturing clauses unjustly discriminate between American authors of books (and periodical contributions) and all authors of other classes of copyrighted works. American and foreign producers of film and television programs (the "author" for copyright purposes) can manufacture these works abroad and import unlimited numbers of copies into the United States without impairing the complete protection of all of their rights under the U.S. Copyright Act. Foreign-made copies of sheet music, records, graphic works and other copyrighted works by American authors—also can be imported into the United States without diminishing the protection afforded by our copyright statute.

There is no constitutional justification for this arbitrary discrimination against American authors of books and other literary works. In its last Amendment of the Copyright Act dealing with Sec. 16, the Congress found that foreign manufacture of books in English no longer represented any threat to the "domestic printing industry." (No. 2608, 83rd Cong. ; 2d Sess., p. 3631 )

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