- 36 common sense" in the words of Justice Holmes and the practical difficulties of changing unfair competition law in the light of Sears and Compco are considerable. 27) 28) Where lead time (about 2 years) is to be protected, the only injunctive relief that is significant is a preliminary injunction. The lead time period will be over before the case comes to trial, in most jurisdictions, so a permanent injunction is of no use. If the copying is not exact, there will be many difficult factual questions and a preliminary injunction will be out of the question. In copyright, where there are overtones carried over from free speech and the long-assumed right of an author to control his speech, injunctions are issued with a freedom that is surprising to the commercial world, where we are only talking about money and monetary damages are ordinarily sufficient. One situation where an injunction is reasonable is the case where the plaintiff is entering a market with a highly novel product. If his established competitors copy the product, we can never know what his market share would have been. Other situations should result in monetary damages. This startling feature is treated separately in a section of its own. It reflects current practice, not something anticipated in the future. 29) Electronics Feb. 10, 1983 pages 134-145. Re H.R. 1028. AMERICAN PATENT LAW ASSOCIATION, Hon. ROBERT W. KASTENMEIER, Chairman, Subcommittee on Courts, Civil Liberties, and the Administration of Justice, House of Representatives, Rayburn House Office Building, Washington, D.C. DEAR MR. CHAIRMAN: The American Intellectual Property Law Association (formerly the American Patent Law Association) is a national society of lawyers engaged in the practice of patent, trademark, copyright, licensing and related fields of law relating to intellectual property rights. The Association has been considering H.R. 1028, the "Semiconductor Chip Protection Act of 1983," since its introduction early in the 98th Congress. The Board of Directors of the Association has adopted the following Resolution which is relevant to the issue addressed by the bill: "Resolved, the American Intellectual Property Law Association endorses the principle of providing statutory registration-type protection for semiconductor and like chip mask patterns." As this Resolution implies, the Association does not support the enactment of H.R. 1028. We do understand that the Subcommittee you chair is actively considering revisions of H.R. 1028 or alternative methods of providing the effective protection this industry needs. If so, we strongly support those efforts. We recognize that this is a difficult and complicated legal problem. If we can assist you in any way, we would be pleased to do so. Sincerely, Enclosure. B. R. PRAVEL, President. SURVEY OF OPINION ON H.R. 1028 A BILL TO AMEND THE COPYRIGHT ACT TO PROVIDE FOR COPYRIGHT Protection of SemiconDUCTOR CHIPS And Masks Works The proposed legislation embodied in H.R. 1028/S. 1201 is intended to amend the copyright law, Title 17, of the U.S. Code to protect semiconductor chips and masks against unauthorized duplication. In previous debates there has been substantial agreement that some form of protection should be enacted, but substantial disagreement whether the copyright law is the proper means for providing protection. Under the proposed legislation, section 106 would be amended to provide certain exclusive rights in the case of mask works, a “mask work” being "a series of related images having the predetermined, three dimensional pattern of metallic, insulating, or semiconductor material present or removed from the layers of the semiconductor chip product." The exclusive rights would extend to the manufacture of a semiconductor chip using the images of the mask work and to the distribution or use of a semiconductor chip made with the mask works. Under certain circumstances compulsory licensing with respect to mask works is required. The duration of the copyright in mask works would endure for only ten years from the first authorized distribution, use in a commercial product, or manufacture in commercial quantities of the semiconductor chip. Also, it is provided that a purchaser of a semiconductor chip, who purchased it in good faith without having notice of infringement, would not be liable as an infringer. ARGUMENTS ADVANCED IN SUPPORT OF THE LEGISLATION The supporters of this legislation have urged that the legislation is needed, is appropriate, and should be enacted because: 1. The "mask works" as defined in the proposed legislation fall within the words "writings... of an author" as expressed in the U.S. Constitution, Article I, Section 8, cl. 8, which have been interpreted by the Supreme Court "to include any physical rendering of the fruits of creative, intellectual or aesthetic label." Goldstein v. California, 412 U.S. 546, 561 (1973). Even if "mask works" are not regulatable under Article I, Section 8, cl. 8, they are subject to federal control pursuant to the Commerce Clause of the Constitution. 2. Masks qualify as "original works of authorship" under Section 102(a) of the current Copyright Act. Extension of copyright protection to "mask works" is consistent with the philosophy of the existing Copyright Act. 3. A special statutory class is needed in section 106 for "mask works" because of the restrictive definition of "pictorial, graphic, and sculptural works" in section 101 of the Copyright Act. "Mask works" being somewhat unique require special defini tion as is set forth in the proposed legislation so that copyright protection can be tailored to the needs of such works. 4. The compulsory licensing of mask works, as provided for in the legislation, reflects the judgment that "mask works" are different from other copyright works and require greater accessibility by the public. 5. The period of protection of ten years is proper, again recognizing the special character of "mask works" and the realities of development in the semiconductor industry. 6. The provision protecting innocent purchasers of semiconductor chips containing infringements of mask works is desirable to protect those who use such chips innocently and who may have invested substantial sums in the course of doing so. 7. The present bill does not in any way undermine the basic concept that copyright protection extends only to the expression of an idea. The copyright protection called for by this legislation would only extend to the particular "expression" embodied in the individual masks-i.e., the configuration of lines on the mask. 8. Although an entirely new form of protection for "mask works" could conceivably be neacted into law, it is not a practical solution to the problem. Semiconductor chips need protection now, and the additional delay necessary to enact a new form of protection now, and the additional delay necessary to enact a new form of protection would be unacceptable. The administrative burden imposed on the government by a separate system of protection would be excessive and unnecessary. Furthermore, a separate statute could only create rights in mask works that would be similar to copyright in character, making the new statute redundant. ARGUMENTS ADVANCED IN OPPOSITION TO THE LEGISLATION The following arguments have been expresed by those who oppose the legislation: 1. A semiconductor chip product is not "a writing" within Article I, Section 8, cl. 8. Using Title 17 (Copyright) as a vehicle for protecting utilitarian items (chips) violates the Constitution. 2. This legislation also defines a chip mask pattern as "a discovery," which raises a conflict with 17 U.S.C. § 102(b) denying copyright protection to any". . . system, method of operation. . . or discovery.' 3. If a chip is indeed a "discovery" and protected by copyright law, the entire question of preemption of trade secret law by copyright vis-a-vis 17 U.S.C. § 301 is further complicated. 4. A question is raised whether a third party by "reverse engineering" the chip may infringe the copyright if the third party uses only what the chip discloses as to unpatented methods, systems, or ideas embodied in the chip which are traditionally not protected by copyright. 5. New basic rights are created by the bill including the exclusive right to "use" a mask to make a chip and to "use" the chip itself. Such a "use" right is a new concept under the copyright law and further obfuscates the section 301 preemption issue. 6. The legislation would add a new right "substantially to reproduce" (images of a mask work). The new right "substantially to reproduce" would be in addition to, and not in lieu of, the existing right under 17 U.S.C. § 106(1) "to reproduce." This is confusing. 7. The basic rights provided in this bill overlap or are analogous to patent rights to make, use and sell and are not those rights traditionally associated with copyright. 8. The bill selectively permits the term "copy" to apply to semiconductor chips only under a limited number of sections of the Copyright Act. Previously the Copyright Act provided for only two categories of tangible fixations of works: copies and phonorecords. However, the selected use of "copy" as it applies to chips will add confusion in this area of the law. 9. Since computer programs and data bases often are embodied in chips, the proposed legislation may inadvertently include these copyrighted works in its compulsory licensing provision. 10. The copyright term for copyright of mask works would be computed differently from any other works under the Copyright Act and have a different duration. This basic change may introduce unforseen problems. 11. The bill is based, in part, on the Commerce Clause of the Constitution while the remainder of the copyright law is based on the "authors and inventors" Clause, and creates confusion as to the constitutional basis for semiconductor mask work protection. The above lists represent some of the positions being taken by the supporters and opponents of this legislation. NICOLET, November 2, 1983. Hon. ROBERT W. KASTENMEIER, House of Representatives, Rayburn House Office Bldg., Washington, D.C. DEAR REPRESENTATIVE KASTENMEIER: Nicolet Instrument Corporation strongly supports the rapid passage of H.R. 1028, the Semiconductor Chip Protection Act of 1983. We urge you to support this bill The electronics industry is a vital contributor to Wisconsin's economy; Nicolet alone employs approximately 600 individuals. The industry's importance to Wisconsin's future economy is unquestioned. For the electronics industry to remain competitive, it is imperative that semiconductor designers have legal protections from pirate firms that copy their designs. H.R. 1028 gives semiconductor designers the protections necessary to continue the innovative progress that has contributed to the success of our industry. Passage of H.R. 1028 is particularly important at a time when new generations of semiconductor products will soon enter the market. Semiconductors must have legal protections as soon as possible if America is to keep its edge in the electronics field. Sincerely, Representative ROBERT KASTENMEIER, PATRICK D. LYNCH, Vice President, Planning and Development. HARCOURT BRACE JOVANOVICH, INC., Chairman, Subcommittee on Courts, Civil Liberties and the Administration of Justice, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: The Proprietary Rights Committee of the Information Industry Association is pleased to have the opportunity to provide comments with respect to the "Semiconductor Chip Protection Act of 1983". The IIA is a trade association comprised of nearly 200 companies, with annual revenues in the range of $5 billion dollars, and non-profit professional and educational organizations. These companies and organizations are the entrepreneurs of the information age. Our members are in the business of collecting, organizing, abstracting, indexing, distributing, and otherwise adding value to information. We are vitally concerned with the economics and the public policy that affect information content in the marketplace. A list of our members is attached for your reference. Earlier this year, the IIA Proprietary Rights Committee studied the provisions of H.R. 1028, and counsel to the Committee prepared the attached memorandum, dated April 18, 1983, which substantially reflects the views of the Committee on this bill. We would like to furnish copies of this memorandum to the Subcommittee and respectfully request that these comments be included in the record of the hearing held by the Subcommittee on August 3. Sincerely yours, MARSHA S. CAROW, Chair, Proprietary Rights Committee. SCHWAB, GOLDBERG, PRICE & DANNAY, April 18, 1983. The bill seeks to amend the Copyright Act to provide for semiconductor chips the protection which such important contributions to high technology deserve and which they require if the necessary incentive for their development is to be maintained and enhanced. The bill seeks to provide this protection while avoiding the imposition of catastrophic liability on those who have unknowingly purchased infringing chips and invested substantial sums in, for example, the manufacture or operation of complex computers or other expensive equipment designed around such chips. Such protection is needed, and such safeguards are needed. However, it is not clear that H.R. 1028 is the appropriate vehicle to satisfy either of these needs. 30-425 0-84--23 1. The specific wording of various provisions in the bill can profitably be scrutinized for possible drafting improvements. However, it is more appropriate to focus on basic and broader questions which are raised by the bill. Among these is the question whether an amendment to the Copyright Act is the appropriate legislative approach to achieve the bill's goals; or whether it would be more appropriate to consider the drafting and enactment of a sui generis statute. 2. Since neither the patent nor copyright statutes can provide the much needed protection without substantial alteration, or perhaps distortion, of their basic structure, a sui generis statute should perhaps be enacted. An analogy would be the proposal for protecting ornamental designs. (H.R. 2985, 98th Cong.) Chips per se are functional and would not come under that proposal, but it illustrates an approach to sui generis protection for works requiring it. 3. Saying that a semiconductor chip product is (alternatively) "a writing" (bill, § 2, p. 2, line 8) doesn't necessarily make it so; and there is substantial doubt the Constitution and case law would so interpret the phrase. 66 4. Also, saying that a chip is (alternatively) "a discovery" (loc. cit.) doesn't necessarily make it so. However, if it is, it may be barred from protection by reason of the present 17 U.S.C. § 102(b). That provision, by denying copyright protection to any system, method of operation. or discovery," etc., implements the fundamental idea/expression dichotomy which permeates the copyright law. A "discovery," of course, can be patentable subject matter under the Constitution and Title 35. 5. On the other hand, it is conceivable that the bill's categorization of a chip as a protectible "discovery" (bill, § 2, p. 2, line 8) might have the effect of providing copyright protection for a “discovery" by overriding sub silentio the prohibition under 17 U.S.C. § 102(b) against copyright protection for such a "discovery." The bill's effect, if any, on § 102(b) of the Act is not clear but is most important. 6. If the proposed legislation were to be so interpreted, a misappropriator of any trade secret in the chip "discovery" might be able to argue preemption more effectively than is now possible. Although most, but by no means all, authorities have expressed the view that § 301 (the preemption section) of the present Copyright Act does not preempt trade secret protection, the bill might thus raise basic, and complex, questions in the relationship of the proposed statutory amendment to trade secret law. 7. One argument presumably to be made by such a misappropriator would be that trade secret rights would be "equivalent" under 17 U.S.C. § 301 to one or more of those copyright rights which under the bill might now be afforded a "discovery," and that a "discovery" would be copyrightable subject matter under the Act as amended. 8. Even more important in the context of the preemption question is the fact that 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, § 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. § 106 for any other category of work. 9. It is not clear whether the copyright, or quasi-copyright, 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, procedures, systems, ideas, etc. (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. 10. The bill presumably would not make independent creation of a mask or chip an infringement. However, it should be noted that any "discovery" (bill, § 2, p. 2, line 8), ideas, etc. which are protected against "use" would be given such protection without having to meet any novelty requirement. 11. 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, § 4, p. 3, line 23) and a right "substantially to reproduce" (images of a mask work) (bill, § 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. § 106(1) "to reproduce." 12. The substance of the basic rights which the bill would provide to chip proprietors would be those largely analogous to the patent rights to make, use and sell, not the traditional copyright rights (bill, § 4, p. 3, line 22 to p. 4, line 10). 13. The bill would provide also a third alternative Constitutional basis for protection of chips: i.e., if their manufacture, use or distribution "is in or affects commerce" (bill, § 2, p. 2, lines 9-10). However, such a provision is found nowhere else in the Copyright Act. If the bill were enacted we would have the anomaly of an |