COPYRIGHT PROTECTION FOR SEMICONDUCTOR CHIPS WEDNESDAY, AUGUST 3, 1983 HOUSE OF REPRESENTATIVES, AND THE ADMINISTRATION OF JUSTICE, COMMITTEE ON THE JUDICIARY, The subcommittee met at 9:30 a.m. in room 2226 of the Rayburn House Office Building; Hon. Robert W. Kastenmeier (chairman of the subcommittee) presiding. Present: Representatives Kastenmeier, Synar, Schroeder, Frank, Hyde, Kindness, and Sawyer. Staff present: Michael J. Remington, chief counsel; Deborah Leavy, counsel; and Joseph V. Wolfe, associate counsel. Mr. KASTENMEIER. Please come to order. We are gathered here today to consider the extension of the Copyright Act for the protection of semiconductor chips and masks from unauthorized duplication. Before introducing our initial panel of congressional witnesses, I would like to make a brief introductory statement. Two weeks ago the subcommittee inaugurated a series of oversight hearings on copyright and technological change. During those hearings, which will continue throughout the 98th Congress, we learned that we as a society are entering a new age. We are rapidly changing from an industrial to an informational society. Everexpanding technologies, from computers to satellites to silicon chips to cable television, insure that the use and processing of information will be a key resource in the future. One might even call the information the "new capital." The problems that that change creates for our legal system, which of course has to deal with the ceaseless flux in as rational way as possible, are obvious. I am not even sure how to define the role of law in confronting change. Is the role of law to organize and redirect changes that started outside the law? Or is it to predict and stimulate change? Can law create new rights without negatively impacting on old rights? These are difficult questions. We do know that all changes in our society are subjected to the bedrock principles that are found in our Constitution. As pertains to copyright, the founders of this Nation recognized the need to define rights and creations which arise purely out of human intellect. Conferred on Congress was the power to promote the progress of science and the useful arts by se (1) curing for limited times to authors and inventors the exclusive right to their writings and discoveries. One of the issues before us is whether the bill in question, H.R. 1028, falls within that power. In brief, H.R. 1028 creates a new kind of copyrightable work, a "mask work." At this point, without objection, I would insert a copy of the bill into the hearing record. (A copy of H.R. 1028 appears at p. 489, app. 4.) I will defer to the congressional sponsors for a further explanation of the proposed legislation. Before introducing these sponsors, I would like to note for the record that this hearing is a sequel to a hearing held in the spring of 1979 during the 96th Congress. At that hearing held in San Jose, Calif., we discovered that a previously assumed consensus in support of the then-proposed legislation did not in fact exist. So we look forward to hearing what changes have been made in respect to that previous proposal, and are incorporated in the present bill. With these thoughts in mind, I would now like to call forward our introductory panel of witnesses: Congressman Don Edwards and Congressman Norman Mineta. These two respected Members represent the area commonly known and referred to as Silicon Valley. Don Edwards is a highly respected Member of the Committee on the Judiciary and the chief sponsor of the legislation before us. He also is a dear friend. Norm Mineta, former mayor of San Jose and a respected member of the Science and Technology Committee, is an original sponsor and longstanding supporter of the legislation. You might call our two witnesses in-house witnesses. Gentlemen, before asking you to proceed, I would also note that we have received a statement from Senator Charles McC. Mathias, Jr., who chairs our sister subcommittee in the Senate. And we would, without objection, accept that statement and make it part of the record. [The complete statement of Charles McC. Mathias follows:] PREPARED STATEMENT OF SENATOR CHARLES MCC. MATHIAS, JR. Chairman Kastenmeier, and members of the subcommittee, thank you for this opportunity to submit my comments on H.R. 1028, the Semiconductor Chip Protection Act of 1983. As you know, I have introduced a similar bill, S. 1201, in the Senate. First, let me commend you for holding this hearing in the issue of copyright protection for semiconductor chip design. The questions which will be discussed here today are important ones for the U.S. high technology effort in general, and for the semiconductor industry in particular. These questions don't have simple answers; but they demand our immediate attention. If we shrink from the complexity of the task before us, we may some day find that it's too late to begin. For that reason, I'm particularly pleased to see the House take up this essential legislation. This hearing reinforces my optimistic view that we may be able to enact chip protection legislation into law during the 98th Congress. Mr. Chairman, the semiconductor chip is revolutionizing the way we live today— the way we learn, the way we relax, the way we do business. This quarter-inch square of silicon is our newest breed of computer, which works harder and faster, with fewer breakdowns and less energy consumption, than its predecessors of a few decades or even a few years ago. And this greatly enhanced calculating power is available at a fraction of the cost of earlier computers. When we marvel at the wonders of modern technology, it's usually the work of the chip we're admiring. The microprocessor, the "computer on a chip," has made of our modern day conveniences possible. The chip is in the home, making dinner in the microwave over, setting the thermostat and tuning the radio; it's in the supermarket, adding up our purchases; it's in the car, controlling fuel consumption; it's in the hospital, helping doctors diagnose disease; it's in the schools, instructing our children; and it's in the office, doing the typing, the record-keeping, and almost everything else. Chip designs are constantly being upgraded and refined. Every year engineers double the number of components they can fit on a chip. By 1990, they hope to squeeze ten million transistors into a single chip. As chips increase in complexity, we will find more and more way to use them. Some of these uses are already in the experimental stage; others are still in the realm of science fiction, and others are as yet unimagined. But our progress toward these technological wonders may be delayed or frustrated if something isn't done to protect the products of innovative chip designers from piracy and theft. High tech firms spend huge amount of time and money on producing semiconductor chips. Engineers design intricate layouts of circuitry analogous to the architect's blueprint. Like the architect, the chip designer must find the most elegant solution to a specified set of needs and problems. Concentrating hundreds of thousands of transistors into such a tiny space is in itself no easy task; the real challenge is in finding ways to maximize and diversify the electronic possibilities of the transistors. As you will hear today, chip production is a fine and costly art. The design for the tiny chip is first laid out in a plan many feet square; then, small photographic "masks" are prepared, from which the image is transferred onto a silicon wafer, usually by a process similar to silk-screening. Several layers like these are built up, and the chip is born. The entire procedure-from conception to completion of the chip can take the innovating firm years, consuming millions of dollars and thousands of hours of the engineers' and technicians' time. Yet, these innovators are being ripped-off by onshore and offshore "chip pirates," who, for a fraction of the developers' cost, can now legally appropriate and use these chip designs as their own. All they need do is buy a computer or other device on the open market, remove its chips, scrape off the protective plastic coating, photograph the circuitry, enlarge these photographs and copy the designs in order to produce their own masks and thus their own chips. Then, the pirate firm can flood the market with cheap products. It can sell its products cheaply because it makes them cheaply—after all, the innovating firm already paid the R&D costs. The high tech pirate, like any other, catches a free ride on the creativity, financial investment, and hard work of others. That is why H.R. 1028 is so important. Current law gives only very limited protection to semiconductor chips. Patent law can protect the basic electronic circuitry used in the chip, but not its carefully developed design. By giving chip engineers and manufacturers copyright protection for a 10 year period, H.R. 1028 will protect their R&D investment. It will also protect innocent purchasers of pirated chips, by including a compulsory licensing provision allowing them to use that chip after paying a royalty to the innovating firm, thus eliminating any liability for innocent infringement. I urge all the members of this subcommittee to give prompt and serious attention to this thoughtful proposal. In the Senate, the Subcommittee on Patents, Copyrights and Trademarks held a fascinating hearing on S. 1201, the companion measure to the bill before you. As a result of several constructive suggestions made at that hearing, we have incorporated some improvements into our bill, and we hope to see subcommittee action on it in the near future. Finally, Mr. Chairman, I would like to commend Representative Edwards and Representative Mineta for the leadership that they have shown on this important issue. Four years ago, these two legislators introduced the first bill to give copyright protection to semiconductor chip design. The measure before you today is the direct descendant of that original initiative. It is a proposal which would, if adopted, expand the frontiers of the copyright law, while remaining true to the constitutional injunction on which all our intellectual property laws are based: to "promote the Progress of Science and Useful Arts." The ingenuity of an age that has produced a tool as remarkable as the computer chip should be able to devise laws adequate to protect it. As Thomas Jefferson so wisely observed in our nation's infancy: ... (L)aws and institutions must go hand in hand with the progress of the human mind. . . As new discoveries are made . . . institutions must advance also, and keep pace with the times." |