Enclosed as requested is ADAPSO's Statement regarding S. 1201, the Semiconductor Chip Protection Act of 1983. Insofar as H.R. 1028 parallels S. 1201, the same comments would apply. If we may be of additional help, please do not hesitate to call. Sincerely yours, Pan Palesti Ronald J. Palenski Associate General Counsel 1300 NORTH SEVENTEENTH STREET ARLINGTON, VIRGINIA 22209 (703) 522-5055 STATEMENT OF OSCAR H. SCHACHTER OF THE THE ASSOCIATION OF DATA PROCESSING SERVICE ORGANIZATIONS, INC. ON S. 1201 "SEMICONDUCTOR CHIP PROTECTION ACT OF 1983" May 19, 1983 Good Morning. My name is Oscar Schachter, and I am President of Advanced Computer Techniques Corporation, a computer services and software product company. I will represent the position of the Association of Data Processing Service Organizations (ADAPSO) with regard to the provisions of proposed S. 1201, cited as the "Semiconductor Chip Protection Act of 1983." Although ADAPSO represents principally the interests of computer service and software product companies, ADAPSO's members are vitally interested in the protection afforded to semiconductor chips which are a component of computer hardware. Many member companies of ADAPSO sell packages comprised of their own software and other companies' hardware. ADAPSO member companies develop software intended to operate with specific semiconductor chips. They also use computers and other electronic devices containing chips in providing data processing services to their customers. They are therefore concerned about the protection afforded semiconductor chips, as well as the provisions of proposed S. 1201 relating to compulsory licensing. It is ADAPSO's position that it is important to provide for semiconductor chips the protection which such vital components of our technology industry require. Such protection is also needed to maintain the necessary incentive for their further development and enhancement. ADAPSO further agrees that it is necessary to provide such protection while avoiding the imposition of punitive liability on users who were unaware of having purchased infringing semiconductor chips and who invested substantial amounts in manufacturing or operating equipment using these chips. ADAPSO does not however believe that an amendment of the Copyright Act, such as that proposed by S. 1201 is the best means of providing the protection needed by semiconductor chips. It is ADAPSO's position that a new form of protection should be considered for semiconductor chips. Enactment of S. 1201 would introduce a variety of new concepts into the basic copyright structure with the effect of raising Constitutional and other questions regarding their validity in the context of traditional copyright law. Some of the principal points ADAPSO would like to raise with regard to the proposed bill are: 1. Legislating that a semiconductor chip product is "a writing" (bill, sec. 2, p. 2, line 8) does not necessarily make it one. 2. The same question exists whether a chip is "a discovery," as protected by reason of 17 U.S.C. sec. 102(b) which denies copyright protection to any "... system, method of operation ... or discovery," etc. The fundamental idea/expression dichotomy which is a basic premise of copyright law is brought into question by making a "discovery" copyrightable. 3. If a chip is a "discovery" and protected by copyright law, the entire question of preemption of trade secret law by copyright is further complicated. A misappropriator of any trade secret in the chip "discovery" might be able to argue preemption more effectively than is now possible. Although most authorities have expressed the view that sec. 301 (the preemption section) of the present Copyright Act does not preempt trade secret protection, the bill might raise basic, and complex, questions in the relationship of the proposed statutory amendment to trade secret law. 4. It is not clear whether protection under the bill would make it an infringement for a third party to reverse engineer the chip, even if the third party "uses" only what the chip discloses as to unpatented methods, systems or ideas, (traditionally all unprotected under copyright) embodied in the chip and does not "use" from the chip embodiment any expression which is traditionally protected under copyright. 5. Another basic problem is the bill's creation of entirely new basic rights in the context of copyright law. For example among the new categories of copyright rights which the bill would enact would be rights such as exclusive rights to "use" a mask to make a chip and to "use" the chip itself (bill, sec. 4(3), p. 4, lines 1-2, 8-10). A "use" right is not presently a right which the Copyright Act provides under 17 U.S.C. sec. 106 for any other category of work. 6. In addition to enacting an "exclusive right... to use," the bill would add basic concepts and terminology heretofore unknown to the Copyright Act such as a right "to embody" (a mask work in a mask) (bill, sec. 4, p. 3, line 23) and a right "substantially to reproduce" (images of a mask work) (bill, sec. 4, p. 4, line 4). The new right "substantially to reproduce" would be in addition to, and not in lieu of, the existing right under 17 U.S.C. sec. 106(1) "to reproduce." 7. The substance of the basic rights which the bill would provide to chip proprietors are those largely analogous to the patent rights to make, use and sell, not the traditional copyright rights (bill, sec. 4, p. 3, line 22 to p. 4, line 10). 8. The bill presumably would not make independent creation of a mask or chip an infringement. However, it should be noted that any "discovery" (bill, sec. 2, p. 2, line 8), ideas, etc. which are protected against "use" would be given such protection without having to meet any novelty requirement. |